SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996 Commission file number 014140
F I R S T A L B A N Y C O M P A N I E S I N C .
====================================================
(Exact name of registrant as specified in its charter)
New York 22-2655804
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
30 S. Pearl Street, Albany, New York 12207
- ------------------------------------ ------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (518) 447-8500
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
none none
- ------------------- ------------------------
Securities registered pursuant to Section 12(g) of the Act:
Common stock par value $.01 per share
- -------------------------------------------------------------------------------
(Title of class)
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 such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing require-
ments for the past 90 days. Yes X No
------ ------
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
As of March 14, 1997, 5,171,279 shares, par value $.01 per share, were
outstanding. The aggregate market value of the shares of common stock of
the Registrant held by non-affiliates (based upon the closing price of
Registrant's shares as reported on the NASDAQ system on March 14, 1997,
which was $11.25) was approximately $17,597,508.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive proxy statement to be filed with
the Securities and Exchange Commission are incorporated by reference into
Part III.
</PAGE>
<PAGE>
Part I
Item 1. Business
- -----------------
First Albany Companies Inc. (the Company), through its wholly owned subsidiary
First Albany Corporation (First Albany), conducts a full service investment
banking business with brokerage activity centered in New York and New England.
These activities include securities brokerage for individual and institutional
customers, and market-making and trading of corporate, government, and municipal
securities. In addition, First Albany underwrites and distributes municipal and
corporate securities, provides securities clearance activities for other
brokerage firms, and offers financial advisory services to its customers.
Another of the Company's subsidiaries is First Albany Asset Management
Corporation ("Asset Management"). Asset Management serves as investment manager
to individual and institutional customers. Asset Management directs the invest-
ment of customer and mutual fund assets by making investment decisions, placing
purchase and sales orders, and providing research, statistical analysis,
and continuous supervision of the portfolios.
Brokerage services to retail and institutional customers are provided through
First Albany's salesforce of Investment Executives and Institutional
Salespeople. First Albany believes that its Investment Executives and
Institutional Salespeople are a key factor to the success of its business.
Over the last five years, the number of full-time Investment Executives and
Institutional Salespeople has grown from approximately 213 to 304, many of whom
joined First Albany after previous associations with national brokerage firms.
First Albany has organized its business to focus on and serve the needs and
financial/capital requirements of institutions, individuals, corporations,
and municipalities. As investment bankers, First Albany is positioned to
advise, manage, and conduct a variety of activities as requested including
underwritings, initial and secondary offerings, advisory services, mergers
and acquisitions, and private placements. As a brokerage firm, First
Albany offers customers a full array of investment opportunities.
First Albany operates a total of 25 Retail, Institutional, and Investment
Banking offices in 8 states. First Albany's executive office and largest
sales office are both located in Albany, New York.
The Company (formed in 1985) and First Albany (formed in 1953) are New York
corporations. First Albany is a member of the New York Stock Exchange,
Inc. ("NYSE"), the American Stock Exchange, Inc. ("ASE"), and the Boston
Stock Exchange, Inc. ("BSE") and is registered as a broker-dealer with the
Securities and Exchange Commission ("SEC"). First Albany is also a member
of the National Association of Securities Dealers, Inc. ("NASD") and the
Securities Investor Protection Corporation ("SIPC"), which insures customer
funds and securities deposited with a broker-dealer up to $500,000 per
customer, with a limitation of $100,000 on claims for cash balances. First
Albany has obtained additional coverage of $24,500,000 per account from
National Union, a wholly owned subsidiary of American International Group
(AIG), America's largest commercial insurer. Both companies are rated A+15
(highest rating) by A.M. Best.
</PAGE>
<PAGE>
Sources of Revenues
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A breakdown of the amount and percentage of revenues from each principal
source for the periods indicated follows:
<TABLE>
For the Years Ended
- --------------------------------------------------------------------------------
December 31, December 31, September 29, September 30,
1996 1995 1995 1994
(three-months)
- --------------------------------------------------------------------------------
Amount Percent Amount Percent Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
(In thousands of dollars)
Securities commissions:
Listed $ 20,507 12.2% $ 5,128 13.7% $ 17,852 14.5% $ 14,201 13.2%
Over-the-counter 7,749 4.6 1,402 3.7 4,395 3.6 3,588 3.3
Options 1,894 1.1 382 1.0 1,240 1.0 911 0.8
Mutual funds 12,258 7.3 2,712 7.3 8,228 6.7 10,586 9.8
Other 303 0.2 15 0.1 174 0.1 267 0.3
- --------------------------------------------------------------------------------
Sub-total 42,711 25.4 9,639 25.8 31,889 25.9 29,553 27.4
Principal trans-
actions 63,438 37.7 12,322 32.9 43,198 35.1 36,167 33.6
Investment banking 19,558 11.6 5,435 14.5 14,625 11.9 19,164 17.8
Clearing revenues 1,100 0.7 267 0.7 1,059 0.8 1,151 1.1
Fees and other 9,144 5.4 1,603 4.3 6,155 5.0 5,427 5.0
- --------------------------------------------------------------------------------
Total operating
revenues 135,951 80.8 29,266 78.2 96,926 78.7 91,462 84.9
- --------------------------------------------------------------------------------
Interest income 32,240 19.2 8,138 21.8 26,173 21.3 16,222 15.1
- --------------------------------------------------------------------------------
Total revenues $168,191 100.0%$ 37,404 100.0% $123,099 100.0% $107,684 100.0%
================================================================================
</TABLE>
In July 1996, the Company changed its fiscal year end to a calendar year
end. Accordingly, results from operations for the period ending December
31, 1996 reflect a twelve-month period ("calendar year") while results for
the transitional period ending December 31, 1995 reflect a three-month
period.
Securities Commissions
- ----------------------
In executing customers' orders to buy or sell listed securities and
securities in which it does not make a market, First Albany generally acts
as an agent and charges a commission.
Principal Transactions
- ----------------------
First Albany buys and maintains inventories of municipal debt, corporate
debt, and equity securities as a "market maker" for sale of those
securities to other dealers and to customers. A staff of 53 traders,
underwriters, and assistants manages First Albany's inventory of
securities. First Albany Investment Executives work directly with these
traders. As of December 31, 1996, First Albany made a market in 175 common
stocks quoted on National Association of Securities Dealers Automated
Quotation ("NASDAQ") and other less actively traded securities. First
Albany also trades municipal bonds and taxable debt obligations, including
U.S. Treasury bills, notes, and bonds; U.S. Government agency notes and
bonds; bank certificates of deposit; mortgage-backed securities; and
corporate obligations. Principal transactions have been a significant
source of revenue and should continue to be so in the future. Continuation
of these activities depends on the availability of sufficient capital and
the services of highly skilled traders, Investment Executives, and
Institutional Salespeople.
In fiscal 1995, First Albany added an institutional municipal risk trading
operation, in which certain inventory positions are hedged by highly liquid
future contracts. Most of the inventory positions are carried
</PAGE>
</PAGE>
for the purpose of generating sales by the retail and institutional salesforce.
First Albany's trading activities require the commitment of capital and may
place First Albany's capital at risk. Profits and losses are dependent
upon the skill of traders, price movement, trading activity, and the size
of inventories.
In executing customers' orders to buy or sell in the over-the-counter
market in a security in which it makes a market, First Albany may sell to
or purchase from its customers at a price which is substantially equal to
the current inter-dealer market price, plus or minus a markup or markdown.
Alternatively, First Albany may act as an agent, executing a customer's purchase
or sale order with another broker-dealer, who acts as a market maker, at the
best inter-dealer market price available and charging a commission.
The following table sets forth the highest, lowest, and average month-end
inventories (including the net of securities owned and securities sold, but
not yet purchased) for calendar 1996 by securities category where First
Albany acted as principal.
<TABLE>
<S> Highest Lowest Average
(In thousands of dollars) Inventory Inventory Inventory
<C> <C> <C>
- --------------------------------------------------------------------------------
State and municipal bonds $137,223 $41,726 $82,393
Corporate obligations 21,075 5,974 10,941
Corporate stocks 4,988 2,171 3,304
U.S. Government and federal
agencies obligations 10,072 3,072 6,323
</TABLE>
Underwriting and Investment Banking
- -----------------------------------
First Albany manages, co-manages, and participates in tax-exempt and
corporate securities distributions. For the periods indicated, the table
below highlights the number and dollar amount of corporate and tax-exempt
securities offerings managed or co-managed by First Albany and the number
and amount of First Albany's underwriting participations in syndicates,
including those managed or co-managed by First Albany:
<TABLE>
<CAPTION>
Corporate Stock and Bond Offerings
Managed or Co-Managed Syndicate Participations
- --------------------------------------------------------------------------------
Year Number of Amount of Number of Amount of
Ended Issues Offering Participations Participation
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
(In thousands of dollars)
December 1996 9 $ 348,292 177 $ 218,452
December 1995
(three-months) 2 86,828 74 73,303
September 1995 13 514,583 203 227,170
September 1994 13 483,814 334 349,723
September 1993 3 158,300 344 366,314
September 1992 4 212,451 322 130,938
</TABLE>
<TABLE>
<CAPTION> Tax-Exempt Bond Offerings
Managed or Co-Managed Syndicate Participations
- --------------------------------------------------------------------------------
Year Number of Dollar Number of Dollar
Ended Issues Amount Participations Amount
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
(In thousands of dollars)
December 1996 267 $ 19,291,904 302 $ 3,226,226
December 1995
(three-months) 47 6,322,205 59 522,292
September 1995 113 12,235,469 222 1,362,845
September 1994 123 14,744,502 332 1,598,182
September 1993 171 18,379,821 349 1,741,206
September 1992 179 14,482,448 328 1,137,423
</TABLE>
</PAGE>
<PAGE>
Participation in an underwriting syndicate or selling group involves both
economic and regulatory risks. An underwriter or selling group member may
incur losses if it is forced to resell the securities it is committed to
purchase at less than the agreed-upon purchase price. In addition, under
the federal securities laws, other statutes, and court decisions with
respect to underwriters' liabilities and limitations on indemnification of
underwriters by issuers, an underwriter is subject to substantial potential
liability for material misstatements or omissions in prospectuses and other
communications with respect to underwritten offerings. Further,
underwriting or selling commitments constitute a charge against net capital
and First Albany's underwriting or selling commitments may be limited by
the requirements that it must at all times be in compliance with the net
capital rule. See "Net Capital Requirements".
Interest
- --------
First Albany derives interest income primarily from the financing of
customer margin loans, securities lending activities, and securities owned.
Customers' securities transactions are effected on either a cash or margin
basis. In margin transactions, First Albany extends credit, which is
collateralized by securities and cash in the customer's account, to the
customer. In accordance with Federal Reserve Bank regulations, NYSE
regulations, and internal policy, First Albany earns interest income as a
result of charging customers at a rate of up to 2% over the brokers' call
rate.
During the past several years, cash balances in customers' accounts have
been a source of funds to finance customers' margin account debit balances.
SEC regulations restrict the use of customers' funds by broker-dealers by
providing generally that free credit balances and funds derived from
pledging and lending customers' securities are to be used only to finance
customers' margin account debit balances, and, to the extent not so used,
the funds must be deposited in a special reserve bank account for the
exclusive benefit of customers. The regulations also require broker-
dealers, within designated periods of time, to obtain physical possession
or control of, and to segregate, customers' fully paid and excess margin
securities.
In the ordinary course of both its trading and brokerage activities, First
Albany borrows securities to cover short sales and to complete transactions
in which customers or other brokers have failed to deliver securities by
the required settlement date. First Albany also lends securities to other
brokers and dealers for similar purposes.
When borrowing securities, First Albany is required to deposit cash or
other collateral, or to post a letter of credit with the lender and receive
a rebate (based on the amount of cash deposited) calculated to yield a
negotiated rate of return. When lending securities, First Albany receives
cash and generally pays a rebate (based on the amount of cash received) to the
other party to the transaction. Securities borrow and loan transactions are
executed pursuant to written agreements with counter-parties which provide that
the securities borrowed or loaned be marked to market on a daily basis and that
excess collateral be refunded or that additional collateral be furnished in
the event of changes in the market value of the securities. Collateral
adjustments are usually made on a daily basis through the facilities of
various clearinghouses.
Operations, Clearing, and Systems
- ---------------------------------
First Albany's operations include: execution of orders; processing of
transactions; receipt, identification, and delivery of funds and
securities; custody of customers' securities; internal financial control;
and compliance with regulatory and legal requirements.
The volume of transactions handled by the operations staff fluctuates
substantially. The monthly number of purchase and sale transactions
processed for the periods indicated were as follows:
</PAGE>
<PAGE>
<TABLE>
<CAPTION>
Number of Monthly
Transactions
<S> ----------------------------
Year Ended High Low Average
-------------- <C> <C> <C>
December 1996 96,033 62,694 72,473
December 1995 (three months) 77,275 57,918 64,538
September 1995 71,407 44,409 54,254
September 1994 58,245 40,537 47,257
September 1993 51,745 37,276 43,409
September 1992 43,068 30,907 36,346
</TABLE>
First Albany has established internal controls and safeguards against
securities theft, including use of depositories and periodic securities
counts. As required by the NYSE and certain other authorities, First
Albany carries fidelity bonds covering loss or theft of securities as well
as embezzlement and forgery.
First Albany clears its own securities transactions and posts its books and
records daily. Periodic reviews of controls are conducted, and
administrative and operations personnel meet frequently with management to
review operating conditions. Operations, compliance, and legal personnel
monitor compliance with applicable laws, rules, and regulations.
In addition to processing its own customer transactions, First Albany
processes, for a fee, the transactions of other brokerage firms whose
customer accounts are carried on a fully disclosed basis with all security
positions, margin accounts receivable, and credit balances reflected on the
books and records of First Albany.
Financial Services
- ------------------
Customized financial services are available to customers of First Albany.
The Financial Planning Department advises customers on a variety of
interrelated financial matters, including investment portfolio review, tax
management, insurance analysis, education and retirement planning, and
estate analysis. For a fee, financial planners will prepare a detailed
analysis with specific recommendations aimed at accumulating wealth and
attaining financial goals.
First Albany also offers a range of retirement plans, including IRAs, SEP
Plans, profit sharing, 401(k), and pension programs. Fixed and variable
annuities are available as well as life, disability, and nursing home
insurance programs, limited partnership interests in real estate, oil and
gas drilling, and similar ventures.
Research
- --------
First Albany maintains a professional staff of equity analysts. Research
is focused on six industry sectors: technology, health care, financial
services, energy, utilities, and basic industry. First Albany employs 13
analysts and 15 research assistants who support First Albany's
institutional and retail brokerage and corporate finance activities.
In fiscal 1995, First Albany enlarged the scope of its research in the
technology sector by entering into a strategic alliance with the META
Group, Inc. ("META"). META, an independent market assessment company,
provides research and analysis of developments and trends in information
technology ("IT"), including computer hardware, software, communications
and related information technology industries to both IT users and IT
vendors. The alliance with META enables First Albany to provide its
investors with insights drawn from META's analysis of technology trends,
user experience, and vendor pricing and negotiating tactics.
Research services include review and analysis of the economy; general
market conditions; technology trends, industries and specific companies via
both fundamental and technical analyses; recommendations of
</PAGE>
<PAGE>
specific action with regard to industries and specific companies; review of
customer portfolios; preparation of research reports which are provided to
retail and institutional customers; and responses to inquiries from customers
and Investment Executives. In addition, First Albany purchases outside
research services including economic reports, charts, data bases, company
analyses, and technical analyses.
Retail Business
- ---------------
Revenues from First Albany's retail brokerage activities are generated
through customer purchases and sales of stocks, bonds, mutual funds, and
other investment products. For the calendar year ended December 31, 1996,
the three month period ended December 31, 1995 and fiscal years 1995, and
1994, these revenues accounted for approximately 45%, 49%, 53%, and 54% of
operating revenues, respectively.
Institutional Business
- ----------------------
Revenues generated from securities transactions with major institutions for
the calendar year ended December 31, 1996, the three month period ended
December 31, 1995 and fiscal years 1995, and 1994, accounted for
approximately 34%, 36%, 31%, and 29% of operating revenues, respectively.
Institutional revenues are derived from sales of tax-exempt securities,
taxable debt obligations, and equities and are generated by 83
Institutional Salespeople.
Municipal Bond Business
- -----------------------
The tax-exempt department consists of 70 professionals and offers a broad
range of services, including primary market underwriting, secondary market
trading, institutional sales, sales liaison with branches, portfolio
analysis, credit analysis, investment banking services, and financial
advisory services.
Sales revenues from all secondary market tax-exempt products were $15.0
million for the calendar year ended December 31, 1996; $3.2 million for the
three-month period ended December 31, 1995; $12.9 million in fiscal 1995;
and $9.0 million in fiscal 1994.
Employees
- ---------
At December 31, 1996, the Company had 769 full-time employees, of which 221
were Retail Investment Executives, 112 were Institutional Salespeople and
Institutional Traders, 137 were in branch sales support, 145 were in other
revenue producing positions, 78 were in operations, and 76 were in other
support and administrative functions.
New Investment Executives are required to take examinations given by the
NASD and approved by the NYSE and all principal exchanges as well as state
securities authorities in order to be registered. There is intense
competition among securities firms for Investment Executives with proven
sales production records. The Company considers its employee relations to be
good and believes that its compensation and employee benefits are competitive
with those offered by other securities firms. None of the Company's employees
are covered by a collective bargaining agreement.
Competition
- -----------
First Albany is engaged in a highly competitive business. Its competition
includes, with respect to one or more aspects of its business, all of the
member organizations of the NYSE and other registered securities exchanges,
all members of the NASD, members of the various commodity exchanges, and
commercial banks and thrift institutions. Many of these organizations are
national firms and have substantially greater financial and human resources
than First Albany. Discount brokerage firms seeking to expand their share of
the retail market, including firms affiliated with commercial banks and thrift
institutions, are devoting substantial funds to advertising and direct
solicitation of customers. In many instances, First Albany is competing
directly with such organizations. In addition, there is competition for
investment funds from the real estate, insurance, banking, and savings and loan
industries. The Company believes that the principal
</PAGE>
<PAGE>
factors affecting competition for the securities industry are the quality and
ability of professional personnel and relative prices of services and products
offered.
Regulation
- ----------
The securities industry in the United States is subject to extensive
regulation under federal and state laws. The SEC is the federal agency
charged with administration of the federal securities laws. Much of the
regulation of broker-dealers, however, has been delegated to self-
regulatory organizations, principally the NASD and the national securities
exchanges. These self-regulatory organizations adopt rules (subject to
approval by the SEC) which govern the industry and conduct periodic
examinations of member broker-dealers. Securities firms are also subject
to regulation by state securities commissions in the states in which they
are registered. First Albany is currently registered as a broker-dealer in
50 states and the District of Columbia.
The regulations to which broker-dealers are subject cover all aspects of
the securities business, including sales methods, trade practices among
broker-dealers, capital structure of securities firms, recordkeeping, and
conduct of directors, officers, and employees. Additional legislation,
changes in rules promulgated by the SEC and by self-regulatory
organizations, or changes in the interpretation or enforcement of existing
laws and rules often directly affect the method of operation and
profitability of broker-dealers. The SEC, self-regulatory organizations,
and state security regulators may conduct administrative proceedings which
can result in censure, fine, suspension, or expulsion of a broker-dealer,
its officers, or employees. The principal purpose of regulation and
discipline of broker-dealers is the protection of customers and the
securities markets rather than protection of creditors and stockholders of
broker-dealers.
Net Capital Requirements
- ------------------------
As a broker-dealer and member of the NYSE, First Albany is subject to the
Uniform Net Capital Rule promulgated by the SEC. The rule is designed to
measure the general financial condition and liquidity of a broker-dealer,
and it imposes a minimum amount of net capital requirement deemed necessary
to meet the
broker-dealer's continuing commitments to its customers.
A broker-dealer may be required to reduce its business and to restrict
withdrawal of subordinated capital if its net capital is less than 4% of
aggregate debit balances; it may be prohibited from expanding its business
and declaring cash dividends if its net capital is less than 5% of
aggregate debit balances; and it will be subject to closer supervision by
the NYSE if its net capital is less than 6% of aggregate debit balances.
Compliance with the Net Capital Rule may limit those operations which
require the use of its capital for purposes, such as maintaining the
inventory required for a firm trading in securities, underwriting
securities, and financing customer margin account balances. Net capital
and aggregate debit balances change from day to day and, at December 31,
1996, First Albany's net capital was $16,478,000 which was 12% of its
aggregate debit balances (2% minimum requirement) and $13,783,000 in excess
of required minimum net capital.
Item 2. Properties
- -------------------
In February 1997, the Company has a total of 25 Retail, Institutional, and
Investment Banking offices in 8 states, all of which are leased or rented.
The Company's executive offices are located at 30 South Pearl Street,
Albany, New York. The order entry, trading, investment banking, research,
data processing, operations, and accounting activities are centralized in
this Albany office. The offices at 30 South Pearl Street are operated
under a lease which currently expires in the year 2002. All other offices
are subject to lease or rental agreements that expire at various times
through March 2008. These leases, in the opinion of management, are
sufficient to meet the needs of the Company. A list of locations are as
follows:
</PAGE>
<PAGE>
Albany, NY Garden City, NY Norwich, NY
30 South Pearl St. Retail Sales Retail Sales
Retail & Institutional
Sales, Investment Banking,
DP, Research Hartford, CT Oneonta, NY
Back Office Retail & Institutional Sales Retail Sales
80 State St. Johnstown, NY Philadelphia, PA
Retail Sales Retail Sales Institutional
Sales
Bonita Springs, FL Manchester, NH Pittsfield, MA
Institutional Sales Retail Sales Retail Sales
Boston, MA Morristown, NJ Sewickley, PA
Retail & Institutional Sales Institutional Sales Institutional
Investment Banking, DP, Research Sales
Buffalo, NY Nashua, NH Syracuse, NY
Retail Sales Retail Sales Retail Sales
Colchester, VT New York, NY Vestal, NY
Retail Sales One Penn Plaza Retail Sales
Retail & Institutional Sales
Elmira, NY Investment Banking, DP, Research
Retail Sales Back Office
Fairfield, CT 17 State. St. Wellesley, MA
Retail Sales Retail Sales 40 Grove St.
Operations Institutional
Sales
330 Washington St.
Retail Sales
Item 3. Legal Proceedings
- --------------------------
In the normal course of business, the Company has been named a defendant,
or otherwise has possible exposure, in several claims. Certain of these
are class actions which seek unspecified damages that could be substantial.
Although there can be no assurance as to the eventual outcome of litigation
in which the Company has been named as a defendant or otherwise has
possible exposure, the Company has provided for those actions it believes
are likely to result in adverse dispositions. Although further losses are
possible, the opinion of management, based upon the advice of its attorneys
and general counsel, is that such litigation will not, in the aggregate,
have a material adverse effect on the Company's liquidity or financial
position, although it could have a material effect on quarterly or annual
operating results in the period in which it is resolved.
Item 4. Submission of Matters to a Vote of Security Holders.
- -------------------------------------------------------------
None.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
- --------------------------------------------------------------------------
The Company's common stock trades on the NASDAQ Stock Market under the
symbol "FACT". As of March 14, 1997 there were approximately 850 holders of
record of the Company's common stock. The following table sets forth the
high and low bid quotations for the common stock as adjusted for subsequent
stock dividends, along with cash dividends during each quarter for the
fiscal years ended:
</PAGE>
<PAGE>
<TABLE>
<S>
December 31, 1996 Quarters Ended
- --------------------------------------------------------------------------------
Stock Price Range Mar. 29 June 28 Sept. 27 Dec. 31
<C> <C> <C> <C>
- --------------------------------------------------------------------------------
High $10 1/8 $10 3/8 $10 3/8 $10 3/4
Low $ 9 $ 9 $ 9 $ 8 5/8
Cash Dividend per Share $0.05 $0.05 $0.05 $0.05
</TABLE>
<TABLE>
<S> <C>
December 31, 1995 Three-month period
- --------------------------------------------------------------------------------
Stock Price Range Dec. 31
- --------------------------------------------------------------------------------
High $ 9 1/2
Low $ 7 1/8
Cash Dividend per Share $ 0.05
</TABLE>
<TABLE>
September 29, 1995 Quarters Ended
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stock Price Range Dec. 31 Mar. 31 June 30 Sept. 29
- --------------------------------------------------------------------------------
High $ 6 1/2 $ 6 7/8 $ 7 1/4 $ 7 3/8
Low $ 5 3/4 $ 5 7/8 $ 6 3/8 $ 6 3/8
Cash Dividend per Share $ .05 $ .05 $ .05 $ 0.05
</TABLE>
The Board of Directors has from time to time authorized the Company to
repurchase shares of its common stock either in the open market or
otherwise. As of December 31, 1996, the total number of treasury shares was
311,809. When appropriate, the Company will consider making additional
purchases.
During calendar 1996, the Company declared and paid four quarterly cash
dividends totaling $.20 per share of common stock, and declared and issued
two 5% common stock dividends.
In January 1997, subsequent to the period reflected in this report, the
Company declared the regular quarterly cash dividend of $0.05 per share
payable on February 25, 1997 to shareholders of record on February 11,
1997.
</PAGE>
<PAGE>
Item 6. Selected Financial Data
- --------------------------------
The following selected financial data have been derived from the
Consolidated Financial Statements of the Company.
First Albany Companies Inc.
FIVE YEAR FINANCIAL SUMMARY
(In thousands of dollars except per share amounts)
<TABLE>
For the Years Ended
Dec. 31, Dec. 31, Sept. 29, Sept. 30, Sept.24, Sept. 25,
For the years ended 1996 1995 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Operating Results
Revenues:
Commissions $ 42,711 $ 34,941 $ 31,889 $ 29,553 $ 28,884 $ 24,569
Principal trans-
actions 63,438 44,821 43,198 36,167 34,857 31,405
Investment banking 19,558 16,311 14,625 19,164 23,265 16,065
Fees and other 10,244 7,530 7,214 6,578 5,901 4,782
- --------------------------------------------------------------------------------
Operating revenues 135,951 103,603 96,926 91,462 92,907 76,821
Interest income 32,240 28,075 26,173 16,222 9,483 8,999
- --------------------------------------------------------------------------------
Total revenues 168,191 131,678 123,099 107,684 102,390 85,820
Interest expense 26,030 21,985 19,904 10,467 5,257 5,078
- --------------------------------------------------------------------------------
Net revenues 142,161 109,693 103,195 97,217 97,133 80,742
- --------------------------------------------------------------------------------
Expenses (excluding interest):
Compensation and
benefits 95,691 74,596 71,064 65,513 64,388 51,558
Clearing, settlement
and brokerage costs 2,868 2,378 2,258 1,894 1,981 1,978
Communications and data
processing 10,897 8,244 7,794 7,198 6,209 5,213
Occupancy and
depreciation 8,527 6,909 6,660 5,710 5,395 5,130
Selling 7,246 5,231 4,817 4,779 4,152 3,410
Other 7,840 5,912 5,382 4,755 6,242 4,534
- --------------------------------------------------------------------------------
Total expenses
(excl. interest) 133,069 103,270 97,975 89,849 88,367 71,823
- --------------------------------------------------------------------------------
Income before income
taxes 9,092 6,423 5,220 7,368 8,766 8,919
Income tax expense 3,592 2,363 1,870 2,876 3,375 3,352
- --------------------------------------------------------------------------------
Net income $ 5,500 $ 4,060 $ 3,350 $ 4,492 $ 5,391 $ 5,567
================================================================================
Per Common Share: *
Earnings-primary $ 1.02 $ 0.77 $ 0.65 $ 0.87 $ 1.03 $ 1.10
Cash dividend 0.20 0.20 0.20 0.20 0.20 0.20
Book value 8.32 7.52 7.26 6.79 6.06 5.12
- --------------------------------------------------------------------------------
Financial Condition:
Total assets $675,785 $510,081 $543,255 $482,749 $514,794 $203,877
Notes payable 4,583 1,641 1,791 94 456 1,334
Obligations under
capitalized leases 1,426
Subordinated debt 5,000 2,250 2,750
Stockholders' equity 42,274 37,558 36,192 33,230 30,088 25,272
- --------------------------------------------------------------------------------
</TABLE>
*All per share figures have been restated for common stock dividends paid.
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management's Discussion and Analysis of Financial Condition and
- ------------------------------------------------------------------------
Results of Operations.
- ----------------------
BUSINESS ENVIRONMENT
First Albany Corporation (First Albany), a wholly owned subsidiary of
First Albany Companies Inc. (the Company), is a full service investment
banking and brokerage firm. Its primary business includes the
underwriting, distribution, and trading of fixed income and equity
securities. The investment banking and brokerage businesses earn revenues
in direct correlation with the general level of trading activity in the
stock and bond markets. This level of activity cannot be controlled by the
Company; however, many of the Company's costs are fixed. Therefore, the
Company's earnings, like those of others in the industry, reflect the
activity in the markets and can fluctuate accordingly.
In July 1996, the Company changed its fiscal year end to a calendar year
end. Accordingly, results from operations for the period ending December
31, 1996 reflect a twelve-month period ("calendar year") while results for
the transitional period ending December 31, 1995 reflect a three-month
period.
This is a highly competitive business. The competition includes not
only full service national firms and discount houses, but also mutual funds
that sell directly to the customer as well as banks that offer a variety of
investment products.
1996 was an unusually good year for the equity markets in general and many
securities firms in particular. The bond markets did not fare as well as
long-term interest rates rose as the economy recovered from the growth
recession of 1995. The yield on long-term U.S. Treasury bonds rose from
5.99% to 6.72% while the Dow Jones Industrial Average rose from 5117 to
6448. As a result, stock prices registered a total return of 22.8% as
measured by the S&P 500, and bonds registered a return of 2.9% as measured
by the Lehman Brothers Government/Corporate Index. The stock market return
was unusual. The compound annual returns with all the dividends and
interest reinvested between 1926 and 1995 for corporate bonds was 5.7%, for
government bonds 5.2%, and for equities 10.5%.
Although First Albany remains optimistic about the outlook for equity
prices in 1997, a pullback in prices could occur. If such a pullback
should occur, it would have a damaging effect on the secondary markets.
Revenues from security trading, commission revenues, and underwriting fees
and profits of First Albany Corporation would most likely suffer. In such
an environment, it would be difficult for all securities firms to maintain
growth and earnings comparable to the levels achieved in 1996.
</PAGE>
<PAGE>
RESULTS OF OPERATIONS
FIRST ALBANY COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS (cont.)
<TABLE>
1996 vs.
Twelve Months Ended 1995 Percentage
<S> December 31, December 31, Increase Increase
(In thousands of <C> <C> <C> <C>
dollars) 1996 1995 (Decrease) (Decrease)
Revenues:
Commissions $ 42,711 $ 34,941 $ 7,770 22%
Principal transactions 63,438 44,821 18,617 42%
Investment banking 19,558 16,311 3,247 20%
Fees and others 10,244 7,530 2,714 36%
- --------------------------------------------------------------------------------
Operating revenues 135,951 103,603 32,348 31%
Interest income 32,240 28,075 4,165 15%
- --------------------------------------------------------------------------------
Total Revenues 168,191 131,678 36,513 28%
Interest expense 26,030 21,985 4,045 18%
- --------------------------------------------------------------------------------
Net revenues 142,161 109,693 32,468 30%
- --------------------------------------------------------------------------------
Expenses
(excluding interest):
Compensation and
benefits 95,691 74,596 21,095 28%
Clearing, settlement and
brokerage cost 2,868 2,378 490 21%
Communications and
data processing 10,897 8,244 2,653 32%
Occupancy and
depreciation 8,527 6,909 1,618 23%
Selling 7,246 5,231 2,015 39%
Other 7,840 5,912 1,928 33%
- --------------------------------------------------------------------------------
Total expenses (excluding
interest) 133,069 103,270 29,799 29%
- --------------------------------------------------------------------------------
Income before income
taxes 9,092 6,423 2,669 42%
Income tax expense 3,592 2,363 1,229 52%
- --------------------------------------------------------------------------------
Net income $ 5,500 $ 4,060 $ 1,440 35%
================================================================================
Net interest income
Interest income $ 32,240 $ 28,075 $ 4,165 15%
Interest expense 26,030 21,985 4,045 18%
- --------------------------------------------------------------------------------
Net interest income $ 6,210 $ 6,090 $ 120 2%
================================================================================
</TABLE>
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS (cont.)
Calendar Year 1996 Compared with Calendar Year 1995
Net Income
- ----------
Net income for the calendar year ended December 31, 1996 was $5.5
million or $1.02 per share compared to $4.1 million or $0.77 per share a
year ago. This year's revenue gain reflects significant increases in both
the firm's institutional and retail divisions. Net revenues increased over
60% for our equity capital markets division and over 50% for our fixed
income capital markets division, while revenues in the retail division
increased nearly 25%. In the second half of 1996, continued strong
revenues were offset in part by our investments in people and systems.
Management anticipates that this pressure on margins will continue for the
first half of 1997.
Commissions
- -----------
Commission revenues increased $7.8 million or 22% in calendar 1996
reflecting active trading in all major markets. Revenues from listed
stocks and over-the-counter agency stock commissions increased $4.5 million
or 19% with mutual fund commission revenues increasing $3.1 million or 33%.
Principal Transactions
- ----------------------
Principal transactions increased $18.6 million or 42% in calendar 1996.
This growth was comprised of an increase in equity securities of $10.3
million, an increase in municipal bonds of $0.7 million, an increase in
taxable fixed income of $5.9 million and an increase in investment income
of $1.7 million, primarily from META Group, Inc.
Investment Banking
- ------------------
Investment banking revenues increased $3.2 million or 20% in calendar
1996. Revenues from selling concessions were up $0.7 million (municipals
increased $1.6 million, equities decreased $0.8 million and taxable fixed
income decreased $0.1 million), underwriting fees increased $0.5 million
(primarily equities), and investment banking fees increased $2.0 million
(municipal finance fees increased $1.5 million while corporate finance fees
increased $0.5 million).
Fees and Others
- ---------------
Fees and other revenues increased $2.7 million or 36% in calendar 1996
primarily reflecting increased service charge income and financial service
revenues.
Compensation and Benefits
- -------------------------
Compensation and benefits increased $21.1 million or 28% in calendar 1996
due primarily to the increase in revenues. Sales-related compensation
increased $17.8 million, salaries increased $2.7 million, and benefits
increased $0.6 million.
Communications and Data Processing
- ----------------------------------
Communications and data processing increased $2.7 million or 32% in
calendar 1996. Communications expense increased $2.2 million due mainly
to the firm's continued commitment to upgrading technology, its increase in
personnel and the growth of its business related activity. Data processing
expense increased $0.5 million due in most part to a greater number of
transactions.
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS (cont.)
Occupancy and Depreciation
- --------------------------
Occupancy and depreciation expense increased $1.6 million or 23% in
fiscal 1996 primarily as a result of our continuing investment in new
automated systems.
Selling
- -------
Selling expense increased $2.0 million or 39% in fiscal 1996 mainly
reflecting greater promotional- related expenses resulting from increased
retail and institutional activity.
Other
- -----
Other expense increased $1.9 million or 33% in fiscal 1996 due to an
increase in consulting costs and expenses related to an upgrade in our
customer statement.
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS (cont.)
<TABLE>
1995 vs.
Three Months Ended 1994 Percentage
<S> December 31, December 31, Increase Increase
(In thousands of <C> <C> <C> <C>
dollars) 1995 1994 (Decrease) (Decrease)
- --------------------------------------------------------------------------------
Revenues:
Commissions $ 9,639 $ 6,587 $ 3,052 46%
Principal transactions 12,322 10,699 1,623 15%
Investment banking 5,435 3,749 1,686 45%
Fees and others 1,870 1,553 317 20%
- --------------------------------------------------------------------------------
Operating revenues 29,266 22,588 6,678 30%
Interest income 8,138 6,237 1,901 30%
- --------------------------------------------------------------------------------
Total Revenues 37,404 28,825 8,579 30%
Interest expense 6,631 4,551 2,080 46%
- --------------------------------------------------------------------------------
Net revenues 30,773 24,274 6,499 27%
- --------------------------------------------------------------------------------
Expenses (excluding interest):
Compensation and
benefits 20,433 16,900 3,533 21%
Clearing, settlement and
brokerage cost 613 493 120 24%
Communications and
data processing 2,264 1,814 450 25%
Occupancy and
depreciation 1,842 1,593 249 16%
Selling 1,563 1,149 414 36%
Other 1,576 1,046 530 51%
- --------------------------------------------------------------------------------
Total expenses (excluding
interest) 28,291 22,995 5,296 23%
- --------------------------------------------------------------------------------
Income before income
taxes 2,482 1,279 1,203 94%
Income tax expense 929 436 493 113%
- --------------------------------------------------------------------------------
Net income $ 1,553 $ 843 $ 710 84%
================================================================================
Net interest income
Interest income $ 8,138 $ 6,237 $ 1,901 30%
Interest expense 6,631 4,551 2,080 46%
- --------------------------------------------------------------------------------
Net interest income $ 1,507 $ 1,686 $ (179) (11)%
================================================================================
</TABLE>
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS (cont.)
Three Months Periods Ended December 31, 1995 and December 31, 1994
Net Income
- ----------
Net income for the quarter ended December 31, 1995, was $1.6 million
or $0.29 per share compared to $0.8 million or $0.18 per share a year ago.
Most of the firm's business units showed significant revenue gains in the
three month period ending December 31, 1995 compared to the three month
period ending December 31, 1994. Revenues in both the equity capital
markets and municipal divisions increased over 50%, while revenues in the
retail division were up almost 20%.
Commissions
- -----------
Commission revenues increased $3.1 million or 46% in the three month
period ending December 31, 1995 reflecting active trading in all major
markets. Revenues from listed and over-the-counter agency stock commissions
increased $2.0 million or 44% with mutual fund commission revenues
increasing $1.0 million or 57%.
Principal Transactions
- ----------------------
Principal transactions increased $1.6 million or 15% in the three month
period ending December 31, 1995. This growth was comprised of an increase
in equity securities of $0.9 million, an increase in municipal bonds of
$0.3 million and an increase in taxable fixed income of $0.4 million.
Investment Banking
- ------------------
Investment banking revenues increased $1.7 million or 45% in the three
month period ending December 31, 1995. Revenues from selling concessions
were up $1.0 million (equities increased $0.4 million, municipals increased
$0.4 million and taxable fixed income increased $0.2 million), underwriting
fees increased $0.6 million (primarily municipal bonds), and investment
banking fees increased $0.1 million (municipal finance fees increased $0.3
million while corporate finance fees decreased $0.2 million).
Fees and Others
- ---------------
Fees and other revenues increased $0.3 million or 20% reflecting
increased service charge income and financial service revenues.
Compensation and Benefits
- -------------------------
Compensation and benefits increased $3.5 million or 21% due primarily to
the increase in revenues. Sales-related compensation increased $2.4
million, salaries increased $0.9 million, and benefits increased $0.2
million.
Communications and Data Processing
- ----------------------------------
Communications and data processing increased $0.5 million or 25% in the
three month period ending December 31, 1995. Communications expense
increased $0.4 million due mainly to the firm's buildup in institutional
equity sales and research. Data processing expense increased $0.1 million
due primarily to a greater number of transactions.
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS (cont.)
Selling
- -------
Selling expense increased $0.4 million or 36% mainly reflecting higher
promotional related costs resulting from institutional sales activity.
Other
- -----
Other expenses increased $0.5 million or 51% in the three month period
ending December 31, 1995, partially due to an increase in consulting costs.
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS (cont.)
<TABLE>
1995 vs.
Twelve Months Ended 1994 Percentage
<S> September 29, September 30, Increase Increase
(In thousands <C> <C> <C> <C>
of dollars) 1995 1994 (Decrease) (Decrease)
- --------------------------------------------------------------------------------
Revenues:
Commissions $ 31,889 $ 29,553 $ 2,336 8%
Principal transactions 43,198 36,167 7,031 19%
Investment banking 14,625 19,164 (4,539) (24)%
Fees and others 7,214 6,578 636 10%
- --------------------------------------------------------------------------------
Operating Revenues 96,926 91,462 5,464 6%
Interest income 26,173 16,222 9,951 61%
- --------------------------------------------------------------------------------
Total Revenues 123,099 107,684 15,415 14%
Interest expense 19,904 10,467 9,437 90%
- --------------------------------------------------------------------------------
Net revenues 103,195 97,217 5,978 6%
- --------------------------------------------------------------------------------
Expenses (excluding interest):
Compensation and
benefits 71,064 65,513 5,551 8%
Clearing, settlement and
brokerage cost 2,258 1,894 364 19%
Communications and
data processing 7,794 7,198 596 8%
Occupancy and
depreciation 6,660 5,710 950 17%
Selling 4,817 4,779 38 1%
Other 5,382 4,755 627 13%
- --------------------------------------------------------------------------------
Total expenses (excluding
interest) 97,975 89,849 8,126 9%
- --------------------------------------------------------------------------------
Income before income
taxes 5,220 7,368 (2,148) (29)%
Income tax expense 1,870 2,876 (1,006) (35)%
- --------------------------------------------------------------------------------
Net income $ 3,350 $ 4,492 $ (1,142) (25)%
================================================================================
Net interest income
Interest income $ 26,173 $ 16,222 $ 9,951 61%
Interest expense 19,904 10,467 9,437 90%
- --------------------------------------------------------------------------------
Net interest income $ 6,269 $ 5,755 $ 514 9%
================================================================================
</TABLE>
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS (cont.)
Fiscal Year 1995 Compared with Fiscal Year 1994
Net Income
- ----------
Net income for the 1995 fiscal year was $3.4 million or $0.65 per share
compared to $4.5 million or $0.87 per share earned in fiscal 1994. During
fiscal 1995, both the Company's municipal and equity institutional
businesses showed substantial growth, along with an ongoing solid
contribution by the retail division. The Company continued to make
investments in people and technology, which have negatively impacted short-
term operating results.
Commissions
- -----------
Commission revenues increased $2.3 million or 8% in fiscal 1995,
reflecting active trading in institutional equities. Revenues from listed
and over-the-counter stock commissions increased $4.6 million or 25%, while
mutual fund commission revenues decreased $2.3 million or 22%.
Principal Transactions
- ----------------------
Principal transactions increased $7.0 million or 19% in fiscal 1995.
This growth was comprised of an increase in equities of $2.1 million, an
increase in municipal bonds of $7.8 million (primarily due to the addition
in fiscal 1995 of an institutional municipal risk trading operation), a
decrease in taxable fixed income securities of $2.1 million, and a decrease
in investment income of $0.8 million. A primary reason for the decrease in
investment income was the result of an unrealized gain of $1.4 million
recorded in fiscal 1994 due to the Company's investment in a firm which
completed an initial public offering in February 1994.
Investment Banking
- ------------------
Investment banking revenues decreased $4.5 million or 24% in fiscal
1995. Revenues from selling concessions decreased $3.4 million (equities
decreased $2.4 million, while municipal bonds decreased $1.2 million and
taxable fixed income increased $0.2 million), underwriting fees decreased
$0.2 million, and investment banking fees decreased $0.9 million (corporate
finance fees decreased $0.1 million, while municipal finance fees decreased
$0.8 million). The drop in investment banking revenues was largely a
result of an industry-wide decline in underwriting activity.
Compensation and Benefits
- -------------------------
Compensation and benefits increased $5.6 million or 8% in fiscal 1995.
Sales-related compensation was $0.9 million higher and salaries increased
$3.8 million causing benefits to rise $0.9 million.
Occupancy and Depreciation
- --------------------------
Occupancy and depreciation expense increased $1.0 million or 17% in
fiscal 1995 primarily due to the firm's increased investment in new
automated systems.
Income Taxes
- ------------
Income taxes decreased $1.0 million or 35% in fiscal 1995 due to a
decrease in pre-tax earnings. The Company's effective tax rate decreased
to 36% from 39% as a result of an increased proportion of tax-exempt
interest income to income before taxes.
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS (cont.)
LIQUIDITY AND CAPITAL RESOURCES
A substantial portion of the Company's assets, similar to other
brokerage and investment banking firms, is liquid, consisting of cash and
assets readily convertible into cash. These assets are financed primarily
by the Company's interest-bearing and non-interest-bearing payables to
customers; payables to brokers and dealers collateralized by loaned
securities; and bank lines-of-credit. Securities borrowed and securities
loaned will fluctuate due primarily to the current level of business
activity in this area. Net payables to others increased due primarily to
the adjustment to record securities owned on a trade date basis. (Amounts
receivable and payable for securities transactions that have not reached
their contractual settlement are recorded net on the statement of financial
condition.) Securities owned will fluctuate as a result of changes in the
level of positions held to facilitate customer transactions and changes in
market conditions. Net receivables from customers increased due to an
increase in customer margin debits. Short-term bank loans increased due
primarily to an increase in securities owned and an increase in net
receivables from customers.
At fiscal year-end 1996, First Albany Corporation and Northeast
Brokerage Services Corporation, both registered broker-dealer subsidiaries
of First Albany Companies Inc., were each in compliance with the net
capital requirements of the Securities and Exchange Commission and had
capital in excess of the minimum required.
Management believes that funds provided by operations and a variety of
committed and uncommitted bank lines-of-credit-totaling $200,000,000 of
which approximately $65,288,000 were unused as of December 31, 1996-will
provide sufficient resources to meet present and reasonably foreseeable
short-term financial needs.
During calendar 1996, the Company declared and paid four quarterly cash
dividends totaling $0.20 per share of common stock, as well as declared and
issued two 5% common stock dividends. During the transitional period ending
December 31, 1995, the Company declared and paid a quarterly cash dividend
of $0.05 per share along with a 5% common stock dividend.
In January 1997, subsequent to the period reflected in this report, the
Company declared the regular quarterly cash dividend of $0.05 per share
payable on February 25, 1997, to shareholders of record on February 11,
1997.
Management believes that funds provided by operations will be sufficient
to fund the acquisition of office equipment, leasehold improvements, and
other long-term requirements.
</PAGE>
<PAGE>
Item 8. Financial Statements and Supplementary Data.
- -----------------------------------------------------
Index to Financial Statements and Supplementary Data
----------------------------------------------------
Page
----
REPORT OF INDEPENDENT ACCOUNTANTS 23
FINANCIAL STATEMENTS:
Consolidated Statements of Income For the Calendar
Year Ended December 31, 1996; the three-month
Transition Period ended December 31, 1995;
the Fiscal Year Ended September 29, 1995, and
the Fiscal Year Ended September 30, 1994 24
Consolidated Statements of Financial Condition
as of December 31, 1996, December 31, 1995
(unaudited) and September 29, 1995 25
Consolidated Statements of Changes in Stockholders'
Equity for the Calendar Year Ended December 31,
1996; the three-month Transition Period ended
December 31, 1995, the Fiscal Year Ended
September 29, 1995, and the Fiscal Year Ended
September 30, 1994 26
Consolidated Statements of Cash Flows for the
Calendar Year Ended December 31, 1996; the
Three-month Transition Period ended
December 31, 1995; the Fiscal Year Ended
September 29, 1995, and the Fiscal Year Ended
September 30, 1994 27
Notes to Consolidated Financial Statements 28-41
SUPPLEMENTARY DATA:
Selected Quarterly Financial Data (Unaudited) 42
</PAGE>
<PAGE>
Report of Independent Accountants
Board of Directors and Stockholders
First Albany Companies Inc.
We have audited the accompanying consolidated statements of financial
condition of First Albany Companies Inc. as of December 31, 1996 and
September 29, 1995 and the related statements of income, changes in
stockholders' equity and cash flows for the year ended December 31, 1996, the
three months ended December 31, 1995 and the years ended September 29, 1995 and
September 30, 1994 as listed in Item 14(a) of this Form 10-K. These financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of First Albany
Companies Inc. as of December 31, 1996, and September 29, 1995, and the
consolidated results of their operations and their cash flows for the year ended
December 31, 1996, the three months ended December 31, 1995, and for each of the
years ended September 29, 1995 and September 30, 1994 in conformity with
generally accepted accounting principles. In addition, in our opinion, the
financial statement schedule referred to above, when considered in relation to
the basic financial statements taken as a whole, presents fairly, in all
material respects, the information required to be included therein.
As described in Note 1, the Company changed its fiscal year from the last
Friday in September to a calendar year basis ending December 31.
COOPERS & LYBRAND L.L.P.
Albany, New York
February 7, 1997
</PAGE>
<PAGE>
First Albany Companies Inc.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of dollars, except per share amounts)
<TABLE>
Three-Month
Transition Period
December 31, December 31, September 29, September 30,
For the years ended 1996 1995 1995 1994
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Revenues:
Commissions $ 42,711 $ 9,639 $ 31,889 $ 29,553
Principal transactions 63,438 12,322 43,198 36,167
Investment banking 19,558 5,435 14,625 19,164
Interest 32,240 8,138 26,173 16,222
Fees and other 10,244 1,870 7,214 6,578
- --------------------------------------------------------------------------------
Total revenues 168,191 37,404 123,099 107,684
Interest expense 26,030 6,631 19,904 10,467
- --------------------------------------------------------------------------------
Net revenues 142,161 30,773 103,195 97,217
- --------------------------------------------------------------------------------
Expenses (excluding
interest):
Compensation and
benefits 95,691 20,433 71,064 65,513
Clearing, settlement and
brokerage costs 2,868 613 2,258 1,894
Communications and data
processing 10,897 2,264 7,794 7,198
Occupancy and
depreciation 8,527 1,842 6,660 5,710
Selling 7,246 1,563 4,817 4,779
Other 7,840 1,576 5,382 4,755
- --------------------------------------------------------------------------------
Total expenses (excluding
interest) 133,069 28,291 97,975 89,849
- --------------------------------------------------------------------------------
Income before income
taxes 9,092 2,482 5,220 7,368
Income tax expense 3,592 929 1,870 2,876
- --------------------------------------------------------------------------------
Net income $ 5,500 $ 1,553 $ 3,350 $ 4,492
================================================================================
Net income per common and
common equivalent share*
Primary $ 1.02 $ 0.29 $ 0.65 $ 0.87
Fully diluted $ 1.02 $ 0.29 $ 0.64 $ 0.87
================================================================================
</TABLE>
*All per share figures have been restated to reflect the stock dividends paid.
The accompanying notes are an integral
part of the consolidated financial statements.
</PAGE>
<PAGE>
First Albany Companies Inc.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands of dollars)
<TABLE>
December 31, December 31, September 29,
1996 1995 1995
(unaudited)
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
Assets
Cash $ 4,005 $ 5,450 $ 3,253
Cash segregated under federal regulations 1,300
Securities purchased under agreement
to resell 2,869
Securities borrowed 344,904 283,785 376,919
Receivables from:
Brokers, dealers and clearing agencies 1,856 7,231 1,889
Customers 128,130 99,759 88,610
Others 8,181 17,492 4,965
Securities owned 156,154 80,586 54,187
Investments 6,157 1,470 1,838
Office equipment and leasehold
improvements, net 12,584 6,075 6,062
Other assets 10,945 6,933 5,532
- --------------------------------------------------------------------------------
Total Assets $675,785 $510,081 $543,255
================================================================================
Liabilities and Stockholders' Equity
Liabilities
Short-term bank loans $134,712 $112,292 $ 53,288
Securities loaned 350,577 283,146 388,523
Payables to:
Brokers, dealers and clearing agencies 3,150 3,281 3,104
Customers 48,174 48,274 38,335
Others 56,615 5,000 4,135
Securities sold but not yet purchased 10,075 4,407 3,892
Accounts payable 1,928 2,457 1,696
Accrued compensation 11,649 7,617 8,108
Accrued expenses 5,622 4,408 4,191
Notes payable 4,583 1,641 1,791
Obligations under capitalized leases 1,426
- --------------------------------------------------------------------------------
Total Liabilities 628,511 472,523 507,063
- --------------------------------------------------------------------------------
Commitments and Contingencies
Subordinated debt 5,000
- --------------------------------------------------------------------------------
Stockholders' Equity
Preferred stock; $1.00 par value;
authorized 500,000 shares; none issued
Common stock; $.01 par value; authorized
10,000,000 shares; issued 5,390,594;
4,889,747; and 4,889,747 respectively 54 49 49
Additional paid-in capital 25,591 20,257 20,257
Retained earnings 18,556 19,153 17,822
Less treasury stock at cost (1,927) (1,901) (1,936)
- --------------------------------------------------------------------------------
Total Stockholders' Equity 42,274 37,558 36,192
- --------------------------------------------------------------------------------
Total Liabilities and Stockholders'
Equity $675,785 $510,081 $543,255
================================================================================
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
</PAGE>
<PAGE>
First Albany Companies Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Periods Ended December 31, 1996,
December 31, 1995, September 29, 1995, and September 30, 1994
(In thousands of dollars except for number of shares)
<TABLE>
Common Stock Additional
Issued Paid-In Retained Treasury Stock
Shares Amount Capital Earnings Shares Amount
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Balance
September 24, 1993 4,023,421 $ 40 $13,142 $18,719 (320,786) $(1,813)
Issuance of re-
stricted stock 132 (104) 16,028 104
Stock dividends
declared 412,033 4 3,215 (3,219) (37,973)
Cash dividends paid (742)
Options exercised (47) 64,281 379
Treasury stock purchase (130,000) (1,072)
Net income 4,492
- --------------------------------------------------------------------------------
Balance
September 30, 1994 4,435,454 44 16,489 19,099 (408,450) (2,402)
Issuance of re-
stricted stock 186 (155) 19,635 130
Stock dividends
declared 454,293 5 3,582 (3,587) (35,175)
Cash dividends paid (815)
Options exercised (70) 58,251 336
Net income 3,350
- --------------------------------------------------------------------------------
Balance
September 29, 1995 4,889,747 49 20,257 17,822 (365,739) (1,936)
Cash dividends paid (217)
Options exercised (5) 6,370 35
Net income 1,553
- --------------------------------------------------------------------------------
Balance
December 31, 1995 4,889,747 49 20,257 19,153 (359,369) (1,901)
Issuance of re-
stricted stock 340 45 74,557 413
Stock dividends
declared 500,847 5 4,994 (4,999) (38,768)
Cash dividends paid (932)
Options exercised (211) 136,276 806
Treasury stock purchase (124,505) (1,245)
Net income 5,500
- --------------------------------------------------------------------------------
Balance
December 31, 1996 5,390,594 $ 54 $25,591 $18,556 (311,809) $(1,927)
================================================================================
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
</PAGE>
<PAGE>
First Albany Companies Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
<TABLE>
Three Months
Dec. 31, Dec. 31, Sept.29, Sept. 30,
For the years ended 1996 1995 1995 1994
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 5,500 $ 1,553 $ 3,350 $ 4,492
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 3,230 691 2,302 1,511
Deferred income taxes 146 587 (1,278) 658
Undistributed earnings of
affiliate (555)
Unrealized investment gains (2,343)
(Increase) decrease in operating assets:
Cash and securities segregated
under federal regs. 1,300 (1,300) 250
Securities purchased under
agreement to resell (2,869) 2,806
Securities borrowed, net (12,243) (1,641)
Net receivables from brokers,
dealers, and clearing agencies (5,165)
Net receivable from customers (28,471) (1,210) (10,394) (12,364)
Net receivable from others (11,662) 15,865 (16,584)
Securities owned, net (69,900) (27,354) (33,031) 2,355
Other assets (4,158) (150) 1,283 (294)
Increase (decrease) in operating liabilities:
Securities sold under agreement
to repurchase (2,825)
Securities loaned, net 6,312 13,335
Net payables to brokers, dealers,
and clearing agencies 5,244 (2,351) (1,997)
Net payable to others 60,926
Accounts payable and accrued
expenses 4,717 487 382 (2,158)
- --------------------------------------------------------------------------------
Net cash used in operating
activities (20,921) (55,766) (10,537) (25,791)
- --------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of furniture, equipment,
and leaseholds (8,288) (705) (3,213) (3,043)
(Increase) decrease in
investments (1,789) (1,838)
- --------------------------------------------------------------------------------
Net cash used in investing
activities (10,077) (705) (5,051) (3,043)
- --------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds of short-term bank
loans, net 22,420 59,004 14,367 28,990
Proceeds (payments) of
subordinated debt 5,000 (2,250)
Proceeds (payments) of notes
payable 2,942 (150) 1,697 (362)
Payments of obligations under
capitalized leases (25)
Payments for purchases of common
stock for treasury (1,245) (1,072)
Proceeds from issuance of common
stock from treasury 595 31 266 332
Proceeds from issuance of restricted
stock 798 161 132
Dividends paid (932) (217) (815) (742)
- --------------------------------------------------------------------------------
Net cash provided by
financing activities 29,553 58,668 15,676 25,028
- --------------------------------------------------------------------------------
Increase (decrease) in cash (1,445) 2,197 88 (3,806)
Cash at beginning of the period 5,450 3,253 3,165 6,971
- --------------------------------------------------------------------------------
Cash at the end of the period $ 4,005 $ 5,450 $ 3,253 $ 3,165
================================================================================
SUPPLEMENTAL CASH FLOW DISCLOSURES
Income Tax Payments $ 3,410 $ 608 $ 1,753 $ 2,660
Interest Payments $25,404 $ 6,273 $18,989 $10,108
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
</PAGE>
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. Significant Accounting Policies
Organization and Nature of Business
- -----------------------------------
The consolidated financial statements include the accounts of First Albany
Companies Inc. and its wholly owned subsidiaries (the "Company"). First
Albany Corporation (the "Corporation") is the Company's principal
subsidiary and a registered broker-dealer. The Corporation is registered
with the Security and Exchange Commission ("SEC") and is a member of
various exchanges and the National Association of Securities Dealers, Inc.
The Corporation's primary business includes securities brokerage for
individual and institutional customers, and market-making and trading of
corporate, government, and municipal securities. In addition, the
Corporation underwrites and distributes municipal and corporate securities,
provides securities clearance activities for other brokerage firms, and
offers financial advisory services to its customers. Another of the
Company's subsidiaries is First Albany Asset Management Corporation ("Asset
Management"). Under management agreements, Asset Management serves as
investment manager to individual and institutional customers. Asset
Management directs the investment of customer and mutual fund assets by
making investment decisions, placing purchase and sales orders, and
providing research, statistical analysis, and continuous supervision of the
portfolios. All significant intercompany balances and transactions have
been eliminated in consolidation. Investments in affiliates which are not
majority owned are reported using the equity method.
In July 1996, the Company changed its fiscal year end to a calendar year
end. Accordingly, results from operations for the period ending December
31, 1996 reflect a twelve-month period ("calendar year") while results for
the transitional period ending December 31, 1995 reflect a three-month
period. Previously, the Company's fiscal year end was the last Friday in
September, and therefore, the Company's fiscal year would contain either a
52 or 53 week period. The fiscal years ended September 29, 1995 and
September 30, 1994 contained 52 weeks and 53 weeks, respectively.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Securities Transactions
- -----------------------
Proprietary securities transactions are recorded on trade date, as if
they had settled. Profit and loss arising from all securities transactions
entered for the account and risk of the Company are recorded on trade date.
Customers' securities transactions are reported on a settlement date basis
(normally the third business day following the transaction) with related
commission income and expenses reported on a trade date basis.
As a broker-dealer, the Corporation values marketable securities at
market value and securities not readily marketable at fair value as
determined by management. The resulting unrealized gains and losses are
included as revenues from principal transactions. First Albany Companies
Inc. also purchases securities for investment purposes and, as a non-broker-
dealer, classifies them as trading securities and values them at market
value, unless they are restricted, in which case they are valued at cost.
</PAGE>
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Resale and Repurchase Agreements
- --------------------------------
Transactions involving purchases of securities under agreements to
resell or sales of securities under agreements to repurchase are treated as
collateralized financing transactions and are recorded at their contracted
resale or repurchase amounts plus accrued interest. It is the policy of
the Company to obtain possession or control of collateral with a market
value equal to or in excess of the principal amount loaned under resale
agreements. Collateral is valued daily, and the Company may require
counterparties to deposit additional collateral or return collateral
pledged, when appropriate. At December 31, 1996, the Company had entered
into a resale agreement in the amount of $2,869,000.
Securities-Lending Activities
- -----------------------------
Securities borrowed and securities loaned are recorded at the amount of
cash collateral advanced or received. Securities borrowed transactions
require the Company to deposit cash or other collateral with the lender.
With respect to securities loaned, the Company receives collateral in the
form of cash or other collateral in an amount generally in excess of the
market value of securities loaned. The Company monitors the market value
of securities borrowed and loaned on a daily basis, with additional
collateral obtained or refunded as necessary.
Office Equipment and Leasehold Improvements
- -------------------------------------------
Office equipment and leasehold improvements are stated at cost less
accumulated depreciation of $11,682,000 at December 31, 1996, $10,513,000
at December 31, 1995 (unaudited), and $9,834,000 at September 29, 1995.
Depreciation is provided on a straight-line basis over the shorter of the
estimated useful life of the asset or the term of the lease.
Statement of Cash Flows
- -----------------------
For purposes of the statement of cash flows, the Company considers
amounts in demand deposit accounts at various financial institutions, other
than those segregated under federal regulations, to be cash equivalents.
Investment Banking
- ------------------
Investment banking revenues include gains, losses, and fees, net of
syndicate expenses, arising from securities offerings in which the Company
acts as an underwriter or agent. Investment banking revenues also include
fees earned from providing merger-and-acquisition and financial
restructuring advisory services. Investment banking management fees are
recorded on offering date, sales concessions on trade date, and underwriting
fees at the time the underwriting is completed and the income is reasonably
determinable.
Income Taxes
- ------------
The amount of current taxes payable is recognized as of the date of the
financial statements, utilizing currently enacted tax laws and rates.
Deferred income taxes are recognized for the future tax consequences of
"temporary differences" which are attributable to differences between the
financial statement and tax basis of existing assets and liabilities.
</PAGE>
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Earnings per Common Share
- -------------------------
Net income per common and common equivalent share have been computed
based upon the weighted average number of common shares and dilutive common
equivalent shares (stock options) outstanding. The weighted average number
of common shares and dilutive common equivalent shares were:
<TABLE>
Three-month
transition period
December 31, December 31, September 29, September 30,
1996 1995 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Primary 5,376,396 5,337,241 5,187,600 5,157,227
Fully diluted 5,376,396 5,405,337 5,222,654 5,157,227
</TABLE>
All per share figures, as well as the weighted average number of common
and dilutive common equivalent shares, have been restated for all stock
dividends declared.
Reclassifications
- -----------------
Certain amounts in the financial statements have been reclassified to
conform with the 1996 presentation.
NOTE 2. Receivables From and Payables To Brokers, Dealers, and Clearing Agencies
Amounts receivable from and payable to brokers, dealers, and clearing
agencies, other than correspondents, as of:
<TABLE>
<S> <C> <C> <C>
(In thousands of dollars) December 31, December 31, September 29,
1996 1995 1995
(unaudited)
---------------------------------------------------------------------------
Securities failed to deliver $ 1,856 $ 3,893 $ 1,882
Receivable from clearing agencies 3,338 7
---------------------------------------------------------------------------
Total receivables $ 1,856 $ 7,231 $ 1,889
===========================================================================
Securities failed to receive $ 3,150 $ 3,281 $ 3,060
Payable to clearing agencies 44
---------------------------------------------------------------------------
Total payables $ 3,150 $ 3,281 $ 3,104
===========================================================================
</TABLE>
NOTE 3. Receivables From and Payables To Customers
Receivables from and payables to customers include amounts due on cash
and margin transactions. Securities owned by customers are held as
collateral for receivables. Such collateral is not reflected in the
financial statements. Total unsecured and partly secured customer
receivables were $329,000, $307,000 and $125,000 as of December 31, 1996,
December 31, 1995 (unaudited) and September 29, 1995, respectively. An
allowance for doubtful accounts, based upon an aging of accounts receivable
and specific identification, was recorded for $304,000, $219,000, and
$125,000 as of December 31, 1996, December 31, 1995, (unaudited) and
September 29, 1995, respectively.
</PAGE>
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 4. Receivables From Others
Amounts receivable from others as of:
<TABLE>
<S> <C> <C> <C>
================================================================================
(In thousands of dollars) December 31, December 31, September 29,
1996 1995 1995
(unaudited)
- --------------------------------------------------------------------------------
Adjustment to record securities
on a trade date basis, net $11,249
Others $ 8,181 6,243 $ 4,965
- --------------------------------------------------------------------------------
Total $ 8,181 $17,492 $ 4,965
================================================================================
</TABLE>
For proprietary securities transactions, amounts receivable and payable
for securities transactions that have not reached their contractual
settlement date are recorded net on the statement of financial condition.
NOTE 5. Securities Owned And Sold, But Not Yet Purchased
Securities owned and sold, but not yet purchased consisted of the
following as of:
<TABLE>
================================================================================
<S> <C> <C> <C>
(In thousands of dollars) December 31, December 31, September 29,
1996 1995 1995
(unaudited)
- --------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
Sold, but Sold, but Sold, but
not yet not yet not yet
Owned Purchased Owned Purchased Owned Purchased
- --------------------------------------------------------------------------------
Marketable
U.S. government and federal
agencies obligations $ 6,124 $ 2,923 $ 7,149 $ 1,191 $ 5,164 $ 1,045
State and municipal
bonds 137,223 4,976 63,882 231 39,936 244
Corporate obligations 9,486 824 2,997 796 3,558 1,246
Corporate stocks 2,171 1,352 5,982 2,189 4,869 1,357
Options 1 20 100
Not readily marketable
securities, fair value 1,149 556 560
- --------------------------------------------------------------------------------
$156,154 $10,075 $80,586 $ 4,407 $54,187 $ 3,892
================================================================================
</TABLE>
Securities not readily marketable include investment securities (a) for
which there is no market on a securities exchange or no independent
publicly quoted market, (b) that cannot be publicly offered or sold unless
registration has been effected under the Securities Act of 1933, or (c)
that cannot be offered or sold because of other arrangements, restrictions,
or conditions applicable to the securities or to the Company.
NOTE 6. Investments
At year end 1996, the Company owned approximately 2,037,000 common shares
(or 35% of the shares outstanding) of Mechanical Technology Incorporated
(MTI), which operates in upstate New York. The Company's investment in MTI
is recorded under the equity method and approximated $2,588,000, which
included goodwill of approximately $922,000 which is being amortized.
At December 31, 1996, the aggregate market value of the Company's shares of MTI
stock was $4,074,000.
</PAGE>
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The Company's equity in MTI's net income, recorded on a one-quarter delay
basis, was $555,000 during the year ended December 31, 1996, related
primarily to a gain recorded from discontinued operations.
At year end 1996, the Company owned 200,000 shares of META Group, Inc.
This investment was carried at the value of $3,569,000 at December 31,
1996. Part of this investment is recorded at cost due to certain
restrictions placed on the sale of these securities. The other portion of
these securities became readily marketable pursuant to Financial Accounting
Standards No. 115 "Accounting for Certain Investments in Debt and Equity
Securities", resulting in an unrealized gain of $2.3 million for the year
ended December 31, 1996. The fair market value of this investment was
$5,400,000 at December 31, 1996.
NOTE 7. Bank Loans
Short-term bank loans are made under a variety of committed and
uncommitted bank lines of credit which are limited to financing securities
eligible for collateralization under these arrangements. This includes
Company owned securities and certain customer owned securities purchased on
margin, subject to certain regulatory formulae. These loans bear interest
at fluctuating rates based primarily on the Federal Funds interest rate.
The average weighted interest rates on these loans were 6.8%, 5.7% and 7.5%
at December 31, 1996, December 31, 1995, and September 29, 1995,
respectively. Short-term bank loans and unused lines of credit were
collateralized by Company owned securities of $100,244,000 and customers'
margin account securities of $106,822,000 at December 31, 1996.
A note for $4,583,333, which is collateralized by fixed assets, is payable
in monthly principal payments of $114,583 and accrued interest. Interest
is at the 90-day U.S. Treasury Securities rate (7.48% at December 31, 1996)
plus 2.5%. The note matures April 1, 2000.
Future annual principal loan repayment requirements as of December 31,
1996 are as follows:
<TABLE>
=========================================
(In thousands of dollars)
<S> <C>
-----------------------------------------
1997 $1,375
1998 1,375
1999 1,375
2000 458
-----------------------------------------
Total $4,583
=========================================
</TABLE>
NOTE 8. Obligations under Capitalized Leases
In December, 1996, the Company entered into a capital lease for office
equipment totaling approximately $1,451,000.
</PAGE>
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following is a schedule of future minimum lease payments under
capital leases together with the present value of the net minimum lease
payments as of December 31, 1996:
<TABLE>
-----------------------------------------------
(In thousands of dollars)
<S> <C>
-----------------------------------------------
1997 $ 333
1998 333
1999 335
2000 306
2001 380
2002 11
-----------------------------------------------
Total Minimum Lease Payments 1,698
Less: Amount Representing Interest 272
-----------------------------------------------
Present Value of Minimum Lease Payments $1,426
===============================================
</TABLE>
NOTE 9. Payables To Others
Amounts payable to others as of:
<TABLE>
<S> <C> <C> <C>
(In thousands of dollars) December 31, December 31, September 29,
1996 1995 1995
(unaudited)
--------------------------------------------------------------------------
Adjustment to record
securities on a trade date
basis, net $ 39,401 $ 773
Others 17,214 $ 5,000 3,362
--------------------------------------------------------------------------
Total $ 56,615 $ 5,000 $ 4,135
==========================================================================
</TABLE>
For proprietary securities transactions, amounts receivable and payable
for securities transactions that have not reached their contractual
settlement date are recorded net on the statement of financial condition.
NOTE 10. Subordinated Debt
During 1996, the Company increased its subordinated debt by $5,000,000.
This subordinated debt bears interest at 9.25%. Interest is paid monthly
with the principal amount due at maturity on July 31, 2001. The loan
agreement includes financial covenants for debt and equity. One of the
more significant covenants requires First Albany Corporation to maintain a
minimum net capital (as defined by Rule 15c 3-1 of the Securities and
Exchange Commission) of $7,500,000. The amount of net capital as of
December 31, 1996 was $16,478,000. The lender has the right to exercise
stock options on 84,000 shares of the Company's stock at $11.90 per share.
This right expires July 31, 2000.
NOTE 11. Stockholders' Equity
During calendar 1996, the Company declared and paid four quarterly cash
dividends totaling $0.20 per share of common stock, and also declared and
issued two 5% common stock dividends. During the transitional period ending
December 31, 1995, the Company declared and paid a quarterly cash dividend
of $0.05 per share along with a 5% common stock dividend.
In January 1997, subsequent to the period reflected in this report, the
Board of Directors declared the regular quarterly cash dividend of $0.05
per share payable on February 25, 1997, to shareholders of record
</PAGE>
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
on February 11, 1997. (Stockholders' Equity and all per share figures have
been adjusted to reflect all common stock dividends.)
NOTE 12. Income Taxes
Under the asset and liability method, deferred income taxes are recognized
for the tax consequences of "temporary differences" by applying enacted
statutory tax rates applicable for future years to differences between the
financial statement and tax basis of existing assets and liabilities. The
effect of tax rate changes on deferred taxes is recognized in the income
tax provision in the period that includes the enactment date.
The components of income taxes are:
<TABLE>
================================================================================
<S> <C> <C> <C> <C>
(In thousands of Three-Months
dollars) December 31, December 31, September 29, September 30,
1996 1995 1995 1994
- --------------------------------------------------------------------------------
Federal
Current $ 2,455 $ 260 $ 2,051 $ 1,463
Deferred (3) 416 (904) 466
State and local
Current 991 82 1,097 755
Deferred 149 171 (374) 192
================================================================================
Total income taxes $ 3,592 $ 929 $ 1,870 $ 2,876
================================================================================
</TABLE>
The reasons for the difference between the expected income tax expense
using the federal statutory rate and the income tax expense are as follows:
<TABLE>
================================================================================
<S> <C> <C> <C> <C>
(In thousands of Three-Months
dollars) December 31, December 31, September 29, September 30,
1996 1995 1995 1994
- --------------------------------------------------------------------------------
Income taxes
at federal
statutory rate $ 3,092 $ 844 $ 1,775 $ 2,505
State income taxes,
net of federal income
taxes 753 167 477 625
Tax-exempt interest
income (420) (126) (514) (348)
Non-deductible expenses 167 44 132 94
- --------------------------------------------------------------------------------
Total income taxes $ 3,592 $ 929 $ 1,870 $ 2,876
================================================================================
</TABLE>
The temporary differences that give rise to significant portions of
deferred tax assets are as follows:
<TABLE>
============================================================================
<S> <C> <C> <C>
(In thousands of dollars) December 31, December 31, September 29,
1996 1995 1995
(unaudited)
--------------------------------------------------------------------------
Receivables $ 128 $ 67 $ 80
Securities held for investment (964) (262) (345)
Fixed assets 486 309 267
Deferred compensation 1,631 1,633 2,057
Other 190 (130) 145
--------------------------------------------------------------------------
Total deferred tax assets $ 1,471 $ 1,617 $ 2,204
==========================================================================
</TABLE>
</PAGE>
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The Company has not recorded a valuation allowance for deferred tax assets
since income in the carryback period is sufficient to realize the benefit
of future deductions.
NOTE 13. Employee Benefit Plans
The Company maintains a deferred profit sharing plan (Internal Revenue
Code Section 401(k) Plan) which permits eligible employees to defer a
percentage of their compensation. Company contributions to eligible
participants may be made at the discretion of the Board of Directors.
During the year ended December 31, 1996, the transitional period ending
December 31, 1995, and the years ended September 29, 1995, and September
30, 1994 the Company contributed $103,000, $0, $140,000, and $56,000,
respectively.
The Company also maintains an Employee Stock Bonus Plan (Internal Revenue
Code Section 401(a)) which permits eligible employees to contribute up to
8% of their compensation on an after-tax basis. The Company makes matching
contributions equal to a percentage of each employee's contributions.
Company contributions vest in accordance with the Plan and are tax deferred
until withdrawal. Employee and Company contributions are invested solely
in the common stock of the Company. During the year ended December 31,
1996, the transitional period ending December 31, 1995, and the years ended
September 29, 1995, and September 30, 1994, the Company contributed
$617,000, $163,000, $408,000, and $334,000, respectively.
NOTE 14. Incentive Plans
In 1982, the Company established a Stock Incentive Plan (the "1982 Plan")
which, as amended by stockholders in 1987, authorized issuance of options
to officers and key employees to purchase up to 800,000 shares of common stock.
On February 27, 1989, stockholders approved adoption of the First Albany
Companies Inc. 1989 Stock Incentive Plan (the "1989 Plan"). Coincident with
the adoption of the 1989 Plan, the 1982 Plan was terminated. Options previously
granted under the 1982 Plan remain valid in accordance with the terms of the
grant of such options; however, the grant of new options under the 1982 Plan
was ended. Both the 1982 Plan and 1989 Plan enable the Company to grant
incentive stock options (ISOs) which meet the requirements of Section 422A of
the Internal Revenue Code of 1954, as amended, and nonqualified stock options
(NSOs). ISOs are granted at prices not less than fair value at the date of the
grant; NSOs may be issued at prices less than fair market value. ISOs and NSOs
may not have a term of more than ten years. Under certain conditions, the
Company is required to purchase shares issued under this Plan at prices ranging
from the original exercise or award price to the greater of the then book or
market value. If NSOs are exercised, the difference between the option price
and the selling price will be recognized as an expense in the income statement.
In addition, under the 1989 Plan, stock appreciation rights (SARs) may be
granted in tandem with ISOs or NSOs. SARs may be exercised only if the
related options (or portions thereof) are surrendered and at such time as
the fair market value of the shares underlying the option exceeds the
option price for such shares. Upon exercise of SAR and surrender of the
related 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 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. 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. As of December 31, 1996, no SARs have been granted.
Option transactions for the 3-year period ended December 31, 1996
under the 1982 Plan were as follows: (all are ISOs)
</PAGE>
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
<TABLE>
Shares Weighted Average
Subject Exercise
to Option Price
- --------------------------------------------------------------------------------
<S> <C> <C>
Balance at September 24, 1993 39,950 $ 5.39
Options granted 3,280 5.07
Options exercised (7,220) 5.14
Options terminated (4,410) 4.76
- --------------------------------------------------------------------------------
Balance at September 30, 1994 31,600 4.95
Options granted 2,908 4.60
Options exercised (11,605) 4.76
- --------------------------------------------------------------------------------
Balance at September 29, 1995 22,903 4.47
Options granted 1,145 4.08
Options exercised (4,923) 4.26
- --------------------------------------------------------------------------------
Balance at December 31, 1995 19,125 4.04
Options granted 1,959 3.75
Options exercised (4,022) 3.55
- --------------------------------------------------------------------------------
Balance at December 31, 1996 17,062 $ 3.73
================================================================================
</TABLE>
There were no shares available for grants of options under the 1982 Plan
at December 31, 1996; December 31, 1995; September 29, 1995; and September
30, 1994. During calendar year 1996, the Company declared two 5% common
stock dividends. These dividends resulted in an additional 1,959 options
authorized. All shares subject to options were exercisable at the end of
each period presented. At December 31, 1996, options outstanding and
exercisable under the 1982 Plan had an average exercise price of $3.73 and
an average remaining contractual life of 1.48 years.
Option transactions for the 3-year period ended December 31, 1996 under
the 1989 Plan were as follows: (all are ISOs)
<TABLE>
Shares Weighted Average
Subject Exercise
to Option Price
- --------------------------------------------------------------------------------
<S> <C> <C>
Balance at September 24, 1993 459,345 $ 5.40
Options granted 176,862 6.77
Options exercised (57,061) 5.23
Options terminated (11,663) 4.98
- --------------------------------------------------------------------------------
Balance at September 30, 1994 567,483 5.86
Options granted 199,454 7.28
Options exercised (46,646) 4.59
Options terminated (479) 4.51
- --------------------------------------------------------------------------------
Balance at September 29, 1995 719,812 5.85
Options granted 47,569 6.06
Options exercised (1,447) 7.14
- --------------------------------------------------------------------------------
Balance at December 31, 1995 765,934 5.60
Options granted 262,441 8.51
Options exercised (132,255) 4.39
Options terminated (51,359) 6.59
- --------------------------------------------------------------------------------
Balance at December 31, 1996 844,761 $ 6.11
================================================================================
</TABLE>
</PAGE>
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
On May 30, 1996, the Company's stockholders approved an amendment to the
1989 Plan, which was adopted by the Board of Directors on April 25, 1996.
This amendment increased the number of shares available for issuance under
the 1989 plan by 500,000. Additionally, during calendar year 1996, the
Company declared two 5% common stock dividends. These dividends resulted
in an additional 133,983 options authorized.
There were 760,402; 337,501; 332,456 and 431,374 shares available for
grants of options at December 31, 1996, December 31, 1995, September 29,
1995 and September 30, 1994, respectively.
The following table summarizes information about stock options outstanding
under the 1989 Plan at December 31, 1996:
<TABLE>
<C> <C>
Outstanding Exercisable
<C> <C> <C> <C> <C> <C>
Exercise Average Average
Price Average Life Exercise Exercise
Range Shares (years) Price Shares Price
- --------------------------------------------------------------------------------
$3.51-$4.35 378,940 4.40 $ 3.79 373,135 $ 3.78
$6.48-$7.39 272,621 5.04 7.09 208,155 7.22
$9.29 193,200 3.81 9.29
- --------------------------------------------------------------------------------
844,761 4.48 $ 6.11 581,290 $ 5.01
================================================================================
</TABLE>
At December 31, 1995, 634,204 options with an average exercise price of
$5.27 were exercisable; at September 29, 1995, 557,442 options with an
average exercise price of $5.41 were exercisable; and at September 30,
1994, 523,625 options with an average exercise price of $5.91 were
exercisable.
As discussed in Note 10, the Company granted options to purchase 84,000
shares of the Company's stock pursuant to a subordinated debt agreement
entered into in 1996. The market price of the Company's stock at the date
of agreement was $10 per share. The exercise price of these options is
$11.90 per share, and they expire on July 31, 2000.
The Company has elected to follow Accounting Principals Board No. 25
"Accounting for Stock Issued to Employees" ("APB 25") in accounting for the
stock option plans. Under APB 25, no compensation cost has been recognized
in 1996, 1995, and 1994. Had compensation cost and fair value been
determined pursuant to Financial Accounting Standard No. 123 (FAS 123)
"Accounting for Stock-Based Compensation", net income would have decreased
from $5,500,000 to $5,294,000 in 1996 and from $3,350,000 to $3,245,000 in
1995. Primary earnings per share would decrease from $1.02 to $0.98 in
1996 and from $0.65 to $0.63 in 1995. Fully diluted earnings per share
would decrease from $1.02 to $0.98 in 1996 and from $0.64 to $0.62 in 1995.
The initial impact of FAS 123 on pro forma earnings per share may not be
representative of the effect on income in future years because options vest
over several years and additional option grants may be made each year. The
weighted average fair value of options granted during 1996 and 1995 under
FAS 123 was $3.21 and $2.45, respectively.
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted
average assumptions used for grants in 1996 and 1995, respectively:
dividend yield of 2.76% for both years; expected volatility of 54.7% for
both years; risk-free interest rates ranging from 5.17% to 6.26% in 1996
and 5.38% to 6.66% in 1995; and expected lives of 2.6 and 1.2 years for
1996 and 1995, respectively.
In 1992, the Company established the First Albany Companies Inc.
Restricted Stock Plan which authorized the issuance of up to 370,996 shares
of common stock (adjusted for all stock dividends) to
</PAGE>
<PAGE>
The First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
certain key employees of the Company. Awards under this plan expire over a
four-year period after the award date and are subject to certain
restrictions including continued employment. As of December 31, 1996,
105,226 shares have been awarded under this plan. The fair market value of
the awards will be amortized over the period in which the restrictions are
outstanding.
The Company has various other incentive programs which are offered to
eligible employees. These programs consist of cash incentives and deferred
bonuses. Amounts awarded vest over periods ranging from three to five
years. Costs are amortized over the vesting period and aggregated
$4,484,000 in 1996, $395,000 in the transitional period ending December 31,
1995, $1,343,000 for the year ended September 29, 1995, and $1,828,000 for the
year ended September 30, 1994.
NOTE 15. Commitments and Contingencies
The Company's headquarters, sales offices, and certain office and communication
equipment are leased under noncancellable operating leases, which expire at
various times through 2008. Future minimum annual rentals payable are as
follows:
<TABLE>
-------------------------------
<S> <C>
-------------------------------
(In thousands of dollars)
1997 $ 5,888
1998 6,166
1999 6,505
2000 4,677
2001 4,286
Thereafter 19,229
-------------------------------
Total $46,751
===============================
</TABLE>
Annual rental expense including utilities for the year ended December 31,
1996, the transitional period ending December 31, 1995, and the fiscal
years ended September 29, 1995 and September 30, 1994 approximated
$4,175,000, $906,000, $3,630,000, and $3,955,000, respectively.
In the normal course of business, the Company has been named a defendant,
or otherwise has possible exposure, in several claims. Certain of these
are class actions which seek unspecified damages which could be
substantial. Although there can be no assurance as to the eventual outcome
of litigation in which the Company has been named as a defendant or
otherwise has possible exposure, the Company has provided for those actions
it believes are likely to result in adverse dispositions. Although further
losses are possible, the opinion of management, based upon the advice of
its attorneys and general counsel, is that such litigation will not, in the
aggregate, have a material adverse effect on the Company's liquidity or
financial position, although it could have a material effect on quarterly
or annual operating results in the period in which it is resolved.
The Company is contingently liable under bank stand-by letter of credit
agreements, executed in connection with security clearing activities,
totaling $3,200,000 at December 31, 1996.
NOTE 16. Net Capital Requirements
The Corporation is subject to the SEC's Uniform Net Capital Rule (Rule
15c3-1), which requires the maintenance of minimum net capital. The
Corporation has elected to use the alternative method, permitted
by the Rule, which requires that the Corporation maintain a minimum net
capital equal to 2 percent of aggregate debit balances arising from
customer transactions, as defined. At December 31, 1996, the
</PAGE>
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Corporation had net capital of $16,478,000 which equaled 12% of aggregate
debit balances and $13,783,000 in excess of required minimum net capital.
NOTE 17. Financial Instruments with Off-Balance-Sheet Risk
In the normal course of business, the Company's customer and correspondent
clearance activities involve the execution, settlement, and financing of
various customer securities transactions. These activities may
expose the Company to off-balance-sheet risk in the event the customer or
other broker is unable to fulfill its contracted obligations, and the
Company has to purchase or sell the financial instrument underlying the
contract at a loss.
The Company's customer securities activities are transacted on either a
cash or margin basis. In margin transactions, the Company extends credit
to its customers, subject to various regulatory and internal margin
requirements, collateralized by cash and securities in the customers'
accounts. In connection with these activities, the Company executes and
clears customer transactions involving the sale of securities not yet
purchased, substantially all of which are transacted on a margin basis
subject to individual exchange regulations. Such transactions may expose
the Company to significant off-balance-sheet risk in the event margin
requirements are not sufficient to fully cover losses that customers may
incur. In the event the customer fails to satisfy its obligations, the
Company may be required to purchase or sell financial instruments at
prevailing market prices to fulfill the customer's obligations.
The Company seeks to control the risks associated with its customer
activities by requiring customers to maintain margin collateral in
compliance with various regulatory and internal guidelines. The Company
monitors required margin levels daily and, pursuant to such guidelines,
requires the customer to deposit additional collateral, or to reduce
positions, when necessary.
The Company's customer financing and securities settlement activities
require the Company to pledge customer securities as collateral in support
of various secured financing sources such as bank loans and securities
loaned. In the event the counterparty is unable to meet its contractual
obligation to return customer securities pledged as collateral, the Company
may be exposed to the risk of acquiring the securities at prevailing market
prices in order to satisfy its customer obligations.
The Company controls this risk by monitoring the market value of
securities pledged on a daily basis and by requiring adjustments of
collateral levels in the event of excess market exposure. In addition, the
Company establishes credit limits for such activities and monitors
compliance on a daily basis.
In addition, the Company has sold securities that it does not currently
own and therefore will be obligated to purchase such securities at a future
date. The Company has recorded these obligations in the financial
statements at the market values of the related securities and will incur a
loss if the market value of the securities increases.
The Company acts as a manager and co-manager in underwriting security
transactions. In this capacity, there is risk if the potential customer
does not fulfill the obligation to purchase the securities. This risk is
mitigated by the fact that the Company deals primarily with institutional
investors. In most cases, no one institutional customer subscribes to the
majority of the securities being sold, thereby spreading the risk for
this type of loss among many established customers. The Company also
maintains credit limits for these activities and monitors compliance with
applicable limits and industry regulations on a daily basis.
</PAGE>
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 18. Concentrations of Credit Risk
The Company is engaged in various trading and brokerage activities whose
counterparties primarily include broker-dealers, banks, and other financial
institutions. In the event counterparties do not fulfill their
obligations, the Company may be exposed to risk. The risk of default
depends on the credit worthiness of the counterparty or issuer of the
instrument. The Company seeks to control credit risk by following an
established credit approval process, monitoring credit limits, and
requiring collateral where appropriate.
The Company purchases debt securities and may have significant positions
in its inventory subject to market and credit risk. In order to control
these risks, security positions are monitored on at least a daily basis.
Should the Company find it necessary to sell such a security, it may not be
able to realize the full carrying value of the security due to the
significance of the position sold. The Company reduces its
exposure to changes in securities valuation with the use of municipal bond
index futures contracts. (See Note 20.) If a single security position
held in inventory represents a significant portion of net capital, referred
to as "undue concentration" as defined by SEC Rule 15c3-1, the Company may
not be able to realize the full carrying value of the security if the
entire position was required to be sold. The total value of securities
held in inventory at December 31, 1996, December 31, 1995 (unaudited) and
September 29, 1995 which met this criterion was $76,151,000, $29,214,000,
and $8,659,000, respectively. The securities held in inventory at December
31, 1996 which met the criterion were sold subsequently at a net realized
gain.
NOTE 19. Market Value of Financial Instruments
The financial instruments of the Company are reported on the Statement of
Financial Condition at market or fair value or at carrying amounts that
approximate fair value with the exception of its investments described in
Note 6. The fair value of other financial assets and liabilities
(consisting primarily of receivables from and payables to brokers, dealers,
clearing agencies and customers; securities borrowed and loaned; and bank
loans payable) is considered to approximate the carrying value due to the
short-term nature of the financial instruments.
The Company also enters into transactions in financial instruments that
are not recognized in the Statement of Financial Condition. The notional
amounts of the open transactions at December 31, 1996 are disclosed in Note
20.
NOTE 20. Derivative Financial Instruments
The Company does not engage in the proprietary trading of derivative
securities with the exception of highly liquid index futures contracts and
options. These index futures contracts and options are used to hedge
securities positions in the Company's inventory. Gains and losses on these
financial instruments are included as revenues from principal transactions.
Trading profits and losses relating to these financial instruments were as
follows:
<TABLE>
================================================================================
(In thousands of <C> <C> <C>
dollars) Year Ended Three-Months Year Ended
<S> December 31, 1996 December 31, 1995 September 29,1995
- --------------------------------------------------------------------------------
Trading Profits-State
and Municipal Bonds $2,032 $2,345 $5,068
Index Futures Hedging 594 (457) (1,350)
Trading Profits-Corporate Stocks 1,159
Options (206)
- --------------------------------------------------------------------------------
Net Revenues $2,626 $1,888 $4,671
================================================================================
</TABLE>
</PAGE>
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
During the year ended September 30, 1994, the Company did not engage in
proprietary trading of index future contracts and options.
As of December 31, 1996, the contractual or notional amounts related to
these financial instruments were as follows:
<TABLE>
================================================================================
<S> <C> <C>
(In thousands of dollars) Average Notional or Year End Notional or
Contract Market Value Contract Market Value
- --------------------------------------------------------------------------------
Index Futures Contracts $(7,750) $(5,881)
- --------------------------------------------------------------------------------
</TABLE>
As of September 29, 1995, the contractual or notional amounts related to
these financial instruments were as follows:
<TABLE>
================================================================================
<S> <C> <C>
(In thousands of dollars) Average Notional or Year End Notional or
Contract Market Value Contract Market Value
- --------------------------------------------------------------------------------
Index Futures Contracts $(5,819) $(20,773)
Options 121 100
</TABLE>
The contractual or notional amounts related to these financial instruments
reflect the volume and activity and do not reflect the amounts at risk.
The amounts at risk are generally limited to the unrealized market
valuation gains on the instruments and will vary based on changes in market
value. Futures contracts are executed on an exchange, and cash settlement
is made on a daily basis for market movements. Open equity in the futures
contracts are recorded as receivables from clearing organizations. The
settlement of these transactions is not expected to have a material adverse
effect on the financial condition of the Company.
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
SUPPLEMENTARY DATA
SELECTED QUARTERLY FINANCIAL DATA
(Unaudited)
(In thousands of dollars, except per share data)
<TABLE>
Quarters Ended
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 - Calendar Year Mar. 29 June 28 Sep. 27 Dec. 31
- --------------------------------------------------------------------------------
Total revenues $ 40,290 $ 42,213 $ 37,951 $ 47,738
Interest expense (4,954) (5,173) (5,972) (9,932)
- --------------------------------------------------------------------------------
Net revenues 35,336 37,040 31,979 37,806
Total expenses (excluding interest)(32,479) (34,460) (30,375) (35,756)
- --------------------------------------------------------------------------------
Income before income taxes 2,857 2,580 1,604 2,050
Income tax expense (1,103) (995) (673) (821)
- --------------------------------------------------------------------------------
Net income $ 1,754 $ 1,585 $ 931 $ 1,229
================================================================================
Net income per common
and common equivalent share:
Primary $ .32 $ .30 $ .17 $ .23
Fully diluted $ .32 $ .30 $ .17 $ .23
</TABLE>
<TABLE>
Three months ended
- --------------------------------------------------------------------------------
<S> <C>
1995 - Transitional Period Dec. 31
- --------------------------------------------------------------------------------
Total revenues $ 37,404
Interest expense (6,631)
- --------------------------------------------------------------------------------
Net revenues 30,773
Total expenses (excluding interest) (28,291)
- --------------------------------------------------------------------------------
Income before income taxes 2,482
Income tax expense (929)
- --------------------------------------------------------------------------------
Net income $ 1,553
================================================================================
Net income per common
and common equivalent share:
Primary $ .29
Fully diluted $ .29
</TABLE>
<TABLE>
Quarters Ended
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 - Fiscal Year Dec. 31 Mar. 31 June 30 Sept. 29
- --------------------------------------------------------------------------------
Total revenues $ 28,825 $ 27,884 $ 32,760 $ 33,630
Interest expense (4,551) (4,173) (5,681) (5,499)
- --------------------------------------------------------------------------------
Net revenues 24,274 23,711 27,079 28,131
Total expenses (excluding
interest) (22,995) (22,994) (25,494) (26,492)
- --------------------------------------------------------------------------------
Income before income taxes 1,279 717 1,585 1,639
Income tax expense (436) (205) (592) (636)
- --------------------------------------------------------------------------------
Net income $ 843 $ 512 $ 993 $ 1,003
================================================================================
Net income per common
and common equivalent share:
Primary $ .16 $ .10 $ .19 $ .19
Fully diluted $ .16 $ .10 $ .19 $ .19
</TABLE>
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
All per share figures have been restated for common stock dividends paid.
The sum of the quarters' earnings per share amount does not always equal
the full fiscal year's amount due to the effect of averaging the number of
shares of common stock and common stock equivalents throughout the year.
Item 9. Changes in and Disagreements with Accountants on Accounting and
- ------------------------------------------------------------------------
Financial Disclosure.
- --------------------
None.
</PAGE>
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
- -----------------------------------------------------------
Except as set forth below, the information required by this item will be
contained under the caption "Election of Directors" in the Company's
definitive proxy statement for the Annual Meeting of Stockholders to be
held on or about May 15, 1997. Such information is incorporated herein by
reference to the proxy statement.
Information (not included in the Company's definitive proxy statement for
the 1997 Annual Meeting of Stockholders) regarding certain executive
officers of the Company is as follows:
Edwin T. Brondo, age 49, Vice President of the Company and Senior Vice
President and Chief Administrative Officer of First Albany Corporation,
joined First Albany Corporation in 1993 and was elected Vice President of
First Albany Companies Inc. in 1994. He previously held senior management
positions at Bankers Trust, Goldman Sachs, and Morgan Stanley.
David J. Cunningham, age 50, Chief Financial Officer of the Company and
Senior Vice President and Chief Financial Officer of First Albany
Corporation, joined First Albany Corporation in 1975 and has served as
Chief Financial Officer of First Albany Corporation since 1980 and First
Albany Companies Inc. since fiscal 1986.
Michael R. Lindburg, age 47, Secretary, and General Counsel of the Company, and
Senior Vice President, Managing Director of Retail Sales of First Albany
Corporation, joined First Albany Corporation in 1986 and has served as Vice
President, Secretary, and General Counsel of First Albany Companies Inc. since
1986. He previously served as Vice President and General Counsel of the Boston
Stock Exchange.
Item 11. Executive Compensation.
- --------------------------------
The information required by this item will be contained under the caption
"Compensation of Executive Officers and Directors" in the Company's
definitive proxy statement for the Annual Meeting of Stockholders to be
held on or about May 15, 1997. Such information is incorporated herein by
reference to the proxy statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
- -----------------------------------------------------------------------
The information required by this item will be contained under the caption
"Stock Ownership of Principal Owners and Management" in the Company's
definitive proxy statement for the Annual Meeting of Stockholders to be
held on or about May 15, 1997. Such information is incorporated herein by
reference to the proxy statement.
Item 13. Certain Relationships and Related Transactions.
- --------------------------------------------------------
The information required by this item will be contained under the caption
"Certain Transactions" in the Company's definitive proxy statement for the
Annual Meeting of Stockholders to be held on or about May 15, 1997. Such
information is incorporated herein by reference to the proxy statement.
</PAGE>
<PAGE>
Part IV
Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K.
- -------------------------------------------------------------------------
(a) (1) The following financial statements are included in Part II, Item 8:
Report of Independent Accountants
Financial Statements:
Consolidated Statements of Income For the Calendar
Year Ended December 31, 1996; the three-month
Transition Period ended December 31, 1995
and; the Fiscal Year Ended September 29, 1995, and
the Fiscal Year Ended September 30, 1994
Consolidated Statements of Financial Condition
as of December 31, 1996, December 31, 1995
(unaudited) and September 29, 1995
Consolidated Statements of Changes in Stockholders'
Equity for the Calendar Year Ended December 31,
1996; the three-month Transition Period ended
December 31, 1995, the Fiscal Year Ended
September 29, 1995, and the Fiscal Year Ended
September 30, 1994
Consolidated Statements of Cash Flows for the
Calendar Year Ended December 31, 1996; the
Three-month Transition Period ended
December 31, 1995; the Fiscal Year Ended
September 29, 1995, and the Fiscal Year Ended
September 30, 1994
Notes to Consolidated Financial Statements
(2) The following financial statement schedule for the periods 1996,
1995, and 1994 are submitted herewith:
Schedule II-Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable or
the required information is shown in the financial statements or notes
thereto.
</PAGE>
<PAGE>
(3) Exhibits included herein:
Exhibit
Number Description
- ------ -----------
3.1 Certificate of Incorporation of First Albany Companies Inc. (filed as
Exhibit No. 3.1 to Registration Statement No. 33-1353).
3.2 By-laws of First Albany Companies Inc. (filed as Exhibit No. 3.2 to
Registration Statement No. 33-1353).
3.2a By-laws of First Albany Companies Inc., as amended (as filed as
Exhibit No. 3.2a to Form 10-K for the fiscal year ended September 24,
1993).
3.2b By-laws of First Albany Companies Inc., as amended (restated for
purpose of this filing).
4 Specimen Certificate of Common Stock, par value $.01 per share (filed
as Exhibit No. 4 to Registration Statement No. 33-1353).
10.6 Deferred Profit Sharing Plan of First Albany Corporation effective
October 1, 1982, as amended by shareholder vote, dated January 19,
1987 (filed as Exhibit 10.6 to Form 10-K for the fiscal year ended
September 30, 1986).
10.7 Incentive Stock Option Plan of First Albany Corporation effective
October 1, 1982, as amended by shareholder vote, dated January 19, 1987
(filed as Exhibit 10.7 to Form 10-K for the fiscal year ended September
30, 1987).
10.10 First Albany Companies Inc. Stock Bonus Plan effective July 8, 1987
(filed as Registration Statement No. 33-15220 (Form B) dated July 8,
1987).
10.10a First Albany Companies Inc. Stock Bonus Plan, as amended,
effective June 25, 1990 (filed as Registration Statement No. 33-35166
(Form S-8) dated June 25, 1990).
10.10b First Albany Companies Inc. Stock Bonus Plan, as amended,
effective February 4, 1994 (filed as Registration Statement 33-52153
(Form S-8) dated February 4, 1994).
10.10c First Albany Companies Inc. Stock Bonus Plan, as amended,
effective June 2, 1995 (filed as Registration Statement 33-59855
(Form S-8) dated June 2, 1995).
10.10d First Albany Companies Inc. Stock Bonus Plan, as amended,
effective June 2, 1995 (filed as Registration Statement 333-18645
(Form S-8) dated December 23, 1996).
10.12 First Albany Companies Inc. 1989 Stock Incentive Plan effective
February 27, 1989, as approved by shareholder vote dated February 27,
1989 (filed as Exhibit 10.12 to Form 10-K for the fiscal year ended
September 30, 1989).
10.15 Lease dated June 12, 1992, between First Albany Companies Inc.
and Olympia and York Limited Partnership for office space at 53 State
Street, Boston, Massachusetts (filed as Exhibit 10.15 to Form 10-K for
the fiscal year ended September 25, 1992).
10.16 The First Albany Companies Inc. Restricted Stock Plan as adopted
by the Company on April 27, 1992 (filed as Exhibit 10.16 to Form 10-K
for the fiscal year ended September 25, 1992).
</PAGE>
<PAGE>
(3) Exhibits included herein: (continued)
Exhibit
Number Description
- ------- -----------
10.18 Sublease dated October 13, 1995 between First Albany Companies
Inc. and KeyCorp for office facilities at 30 South Pearl Street,
Albany, New York. (Filed as Exhibit 10.18 to Form 10K for fiscal year
ended September 29, 1995).
10.19 Term Loan Agreement dated March 29, 1996 between First Albany
Companies Inc. and OnBank Trust & Co.
10.20 Subordinated Loan Agreement dated September 16, 1996 between
First Albany Companies Inc. and Sharon M. Duker.
10.21 Master Equipment Lease Agreement dated September 25, 1996 between
First Albany Companies Inc. and KeyCorp Leasing Ltd.
10.22 Lease dated March 21, 1996, between First Albany Companies Inc.
and Mid-City Associates for office space at One Penn Plaza, New York,
New York.
11 Computation of per share earnings.
22 List of Subsidiaries of First Albany Companies Inc.
24 Consent of Coopers & Lybrand L.L.P.
24b Reports on Form 8-K:
No reports on Form 8-K have been filed by the Registrant during the
last quarter of the period covered by this report.
27 Financial Data Schedule BD
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
PERIODS ENDED DECEMBER 31, 1996, DECEMBER 31, 1995,
SEPTEMBER 29, 1995, AND SEPTEMBER 30, 1994
<TABLE>
COL. A COL. B COL. C COL. D COL. E
<C> <C> <C> <C> <C>
Additions
Balance at Charged to Balance
Beginning Costs and at End of
Description of Period Expenses Deductions Period
- --------------------------------------------------------------------------------
Allowance for doubtful
accounts -- deducted
from receivables from
customers:
Calendar Year 1996 $ 219,000 $ 120,000 $ 35,000 $ 304,000
Three Month
Transition
Period 1995 $ 125,000 $ 94,000 $ 0 $ 219,000
Fiscal Year 1995 $ 106,000 $ 120,000 $ 101,000 $ 125,000
Fiscal Year 1994 $ 125,000 $ 120,000 $ 139,000 $ 106,000
</TABLE>
</PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
FIRST ALBANY COMPANIES INC.
By: /s/ GEORGE C. MCNAMEE
---------------------
George C. McNamee,
Chairman and Co-Chief Executive Officer
Date: March 26, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
Signature Title Date
/s/ GEORGE C. MCNAMEE Chairman and Co-Chief
- --------------------- Executive Officer March 26, 1997
George C. McNamee
/s/ ALAN P. GOLDBERG President and Co-Chief
- -------------------- Executive Officer March 26, 1997
Alan P. Goldberg
/s/ DAVID J. CUNNINGHAM Vice President and March 26, 1997
- ----------------------- Chief Financial Officer
David J. Cunningham (Principal Accounting Officer)
/s/ HUGH A. JOHNSON, JR. Vice President and Director March 26, 1997
- ------------------------
Hugh A. Johnson, Jr.
/s/ J. ANTHONY BOECKH Director March 26, 1997
- ---------------------
J. Anthony Boeckh
/s/ WALTER M. FIEDEROWICZ Director March 26, 1997
- -------------------------
Walter M. Fiederowicz
/s/ DANIEL V. MCNAMEE Director March 26, 1997
- ---------------------
Daniel V. McNamee
/s/ CHARLES L. SCHWAGER Director March 26, 1997
- -----------------------
Charles L. Schwager
Director March , 1997
- --------------------
Benaree P. Wiley
</PAGE>
<PAGE>
30
EXHIBIT 3.2b
AMENDED AND RESTATED
BYLAWS
-of-
FIRST ALBANY COMPANIES INC.
(herein called the "Corporation")
ARTICLE I
Shareholders
Section 1.01. Annual Meeting. The annual meeting of the
stockholders of the Corporation for the election of directors and for the
transaction of such other business as may properly come before such meeting
shall be held at the principal office of the Corporation in the City of
Albany, New York, on such date and at such time as may be fixed by the
Board of Directors.
Section 1.02. Special Meetings. Special meetings of the
shareholders, for any purpose or purposes, may be called at any time by the
President or by resolution of the Board of Directors. Special meetings of
shareholders shall be held at such place as shall be fixed by the person or
persons calling the meeting and stated in the notice or waiver of notice of
the meeting. At any special meeting only such business may be transacted
which is related to the purpose or purposes set forth in the notice or
waiver of notice of the meeting.
Section 1.03. Notice of Meetings of Shareholders. Whenever
shareholders are required or permitted to take any action at a meeting,
written notice shall be given stating the place, date and hour of the
meeting and, unless it is the annual
</PAGE>
<PAGE>
meeting, indicating that it is being issued by or at the direction of the
person or persons calling the meeting.
Notice of a special meeting shall also state the purpose or purposes for
which the meeting is called. If, at any meeting, action is proposed to be
taken which would, if taken, entitle shareholders fulfilling the
requirements of Section 623 of the Business Corporation Law to receive
payment for their shares, the notice of such meeting shall include a
statement of that purpose and to that effect and shall be accompanied by a
copy of said Section 623 or an outline of its material terms. A copy of
the notice of any meeting shall be given, personally or by mail, not less
than ten nor more than fifty days before the date of the meeting, to each
shareholder entitled to vote at such meeting. If mailed, such notice is
given when deposited in the United States mail, with postage thereon
prepaid, directed to the shareholder at his address as it appears on the
record of shareholders, or, if he shall have filed with the Secretary of
the Corporation a written request that notices to him be mailed to some
other address, then directed to him at such other address.
When a meeting is adjourned to another time or place, it shall not
be necessary to give any notice of the adjourned meeting if the time and
place to which the meeting is adjourned are announced at the meeting at
which the adjournment is taken, and at the adjourned meeting any business
may be transacted that might have been transacted on the original date of
the meeting. However, if after the adjournment, the Board of Directors
fixes a new record date for the adjourned meeting, a notice of the
adjourned meeting shall be given to each shareholder of record on the new
record date entitled to notice under the next preceding paragraph.
Section 1.04. Waivers of Notice. Notice of meeting need not be
given to any shareholder who submits a signed waiver of notice, in person
or by proxy, whether before or after the meeting. The attendance of any
shareholder at a meeting, in person or by proxy, without protesting prior
to the conclusion of the meeting the lack of notice of such meeting, shall
constitute a waiver of notice by him.
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Section 1.05. Quorum. The holders of a majority of the shares
entitled to vote thereat shall constitute a quorum at a meeting of
shareholders for the transaction of any business.
When a quorum is once present to organize a meeting, it is not
broken by the subsequent withdrawal of any shareholders.
The shareholders present may adjourn the meeting despite the
absence of a quorum and at any such adjourned meeting at which the
requisite amount of voting stock shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed.
Section 1.06. Fixing Record Date. For the purpose of determining
the shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or to express consent to or
dissent from any proposal without a meeting, or for the purpose of
determining shareholders entitled to receive payment of any dividend or the
allotment of any rights, or for the purpose of any other action, the Board
of Directors may fix, in advance, a date as the record date for any such
determination of shareholders. Such date shall not be more than fifty nor
less than ten days before the date of such meeting, nor more than fifty
days prior to any other action.
When a determination of shareholders of record entitled to notice
of or to vote at any meeting of shareholders has been made as provided in
this section, such determination shall apply to any adjournment thereof,
unless the Board of Directors fixes a new record date under this section
for the adjourned meeting.
Section 1.07. List of Shareholders at Meetings. A list of
shareholders as of the record date, certified by the corporate officer
responsible for its preparation or by a transfer agent, shall be produced
at any meeting of shareholders upon the request thereat or prior thereto of
any shareholder. If the right to vote at any meeting is challenged, the
inspectors of election, or person presiding thereat, shall require such
list of shareholders to be produced as evidence of the right of the persons
challenged to vote at such meeting, and all persons who appear from such
list to be shareholders entitled to vote thereat may vote at such meeting.
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Section 1.08. Proxies. Every shareholder entitled to vote at a
meeting of shareholders or to express consent or dissent without a meeting
may authorize another person or persons to act for him by proxy.
Every proxy must be signed by the shareholder or his attorney-in-
fact. No proxy shall be valid after the expiration of eleven months from
the date thereof unless otherwise provided in the proxy. Every proxy shall
be revocable at the pleasure of the shareholder executing it, except as
otherwise provided in this section. The authority of the holder of a proxy
to act shall not be revoked by the incompetence or death of the shareholder
who executed the proxy unless, before the authority is exercised, written
notice of an adjudication of such incompetence or of such death is received
by the corporate officer responsible for maintaining the list of
shareholders.
Except when other provision shall have been made by written
agreement between the parties, the record holder of shares which he holds
as pledgee or otherwise as security or which belong to another, shall issue
to the pledgor or to such owner of such shares, upon demand therefor and
payment of necessary expenses thereof, a proxy to vote or take other action
thereon.
A shareholder shall not sell his vote or issue a proxy to vote to
any person for any sum of money or anything of value, except as authorized
in this section and Section 620 of the Business Corporation Law.
A proxy which is entitled "irrevocable proxy" and which states
that it is irrevocable, is irrevocable when it is held by any of the
following or a nominee of any of the following:
(1) A Pledgee;
(2) A person who has purchased or agreed to purchase the
shares;
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(3) A creditor or creditors of the Corporation who extend or
continue credit to the Corporation in consideration of
the proxy if the proxy states that it was given in
consideration of such extension or continuation of
credit, the amount thereof, and the name of the person
extending or continuing credit;
(4) A person who has contracted to perform services as an
officer of the Corporation, if a proxy is required by
the contract of employment, if the proxy states that it
was given in consideration of such contract of
employment, the name of the employee and the period of
employment contracted for;
(5) A person designated by or under an agreement under
paragraph (a) of said Section 620.
Notwithstanding a provision in a proxy, stating that it is
irrevocable, the proxy becomes revocable after the pledge is redeemed, or
the debt of the Corporation is paid, or the period of employment provided
for in the contract of employment has terminated, or the agreement under
paragraph (a) of said Section 620 has terminated; and, in a case provided
for in subparagraph (3) or (4) above, becomes revocable three years after
the date of the proxy or at the end of the period, if any, specified
therein, whichever period is less, unless the period of irrevocability is
renewed from time to time by the execution of a new irrevocable proxy as
provided in this section. This paragraph does not affect the duration of a
proxy under the second paragraph of this section.
A proxy may be revoked, notwithstanding a provision making it
irrevocable, by a purchaser of shares without knowledge of the existence of
the provision unless the existence of the proxy and its irrevocability is
noted conspicuously on the face or back of the certificate representing
such shares.
Section 1.09. Selection and Duties of Inspectors. The Board of
Directors, in advance of any shareholders' meeting, may appoint one or more
inspectors to act at the meeting or any adjournment thereof. If inspectors
are not so appointed, the person presiding at a shareholders' meeting may,
and on the request of any shareholder entitled to vote thereat shall
appoint one or more inspectors. In case any person appointed fails to
appear or act, the vacancy may be filled by appointment made by the Board
of Directors in advance of the meeting or at the meeting by the person
presiding thereat. Each inspector, before entering upon the discharge of
his duties, shall take and sign an oath faithfully to execute the duties of
inspector at such meeting with strict impartiality and according to the
best of his ability.
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The inspectors shall determine the number of shares outstanding
and the voting power of each, the shares represented at the meeting, the
existence of a quorum, the validity and effect of proxies, and shall
receive votes, ballots or consents, hear and determine all challenges and
questions arising in connection with the right to vote, count and tabulate
all votes, ballots or consents, determine the result, and do such acts as
are proper to conduct the election or vote with fairness to all
shareholders. On request of the person presiding at the meeting or any
shareholder entitled to vote thereat, the inspectors shall make a report in
writing of any challenge, question or matter determined by them and execute
a certificate of any fact found by them. Any report or certificate made by
them shall be prima facie evidence of the facts stated and of the vote as
certified by them.
Unless appointed by the Board of Directors or requested by a
shareholder, as above provided in this section, inspectors shall be
dispensed with at all meetings of shareholders.
Section 1.10. Qualification of Voters. Every shareholder of
record shall be entitled at every meeting of shareholders to one vote for
every share standing in his name on the record of shareholders, except as
expressly provided otherwise in this section and except as otherwise
expressly provided in the Certificate of Incorporation of the Corporation.
Treasury shares and shares held by another domestic or foreign
corporation of any type or kind, if a majority of the shares entitled to
vote in the election of directors of such other corporation is held by the
Corporation, shall not be shares entitled to vote or to be counted in
determining the total number of outstanding shares.
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Shares held by an administrator, executor, guardian, conservator,
committee, or other fiduciary, except a trustee, may be voted by him,
either in person or by proxy, without transfer of such shares into his
name. Shares held by a trustee may be voted by him; either in person or by
proxy, only after the shares have been transferred into his name as trustee
or into the name of his nominee.
Shares held by or under the control of a receiver may be voted by
him without the transfer thereof into his name if authority so to do is
contained in an order of the court by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the
pledgee, or a nominee of the pledgee.
Redeemable shares which have been called for redemption shall not
be deemed to be outstanding shares for the purpose of voting or determining
the total number of shares entitled to vote on any matter on and after the
date on which written notice of redemption has been sent to holders thereof
and a sum sufficient to redeem such shares has been deposited with a bank
or trust company with irrevocable instruction and authority to pay the
redemption price to the holders of the shares upon surrender of
certificates therefor.
Shares standing in the name of another domestic or foreign
corporation of any type or kind may be voted by such officer, agent or
proxy as the bylaws of such corporation may provide, or, in the absence of
such provision, as the board of directors of such corporation may
determine.
If shares are registered on the record of shareholders of the
Corporation in the name of two or more persons, whether fiduciaries,
members of a partnership, joint tenants, tenants in common, tenants by the
entirety or otherwise, or if two or more persons have the same fiduciary
relationship respecting the same shares, unless the secretary of the
Corporation is given written notice to the contrary and is furnished with a
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copy of the instrument or order appointing them or creating the
relationship wherein it is so provided, their acts with respect to voting
shall have the following effect:
(1) If only one votes, the vote shall be accepted by the
Corporation as the vote of all;
(2) If more than one vote, the act of the majority so voting
shall be accepted by the Corporation as the vote of all,
(3) If more than one vote, but the vote is equally divided on any
particular matter, the vote shall be accepted by the Corporation as a
proportionate vote of the shares; unless the Corporation has evidence, on
the record of shareholders or otherwise, that the shares are held in a
fiduciary capacity. Nothing in this paragraph shall alter any requirement
that the exercise of fiduciary powers be by act of a majority, contained in
any law applicable to such exercise of powers (including Section 10-10.7 of
the Estates, Powers and Trusts Law of the State of New York);
(4) When shares as to which the vote is equally divided are
registered on the record of shareholders of the Corporation in the name of,
or have passed by operation of law or by virtue of any deed of trust or
other instrument to two or more fiduciaries, any court having jurisdiction
of their accounts, upon petition by any of such fiduciaries or by any party
in interest, may direct the voting of such shares for the best interest of
the beneficiaries. This paragraph shall not apply in any case where the
instrument or order of the court appointing fiduciaries shall otherwise
direct how such shares shall be voted; and
(5) If the instrument or order furnished to the Secretary of the
Corporation shows that a tenancy is held in unequal interests, a majority
or equal division for the purposes of this paragraph shall be a majority or
equal division in interest.
Notwithstanding the foregoing paragraphs of this section, the
Corporation shall be protected in treating the persons in whose names
shares stand on the record of shareholders as the owners thereof for all
purposes.
Section 1.11. Vote of Shareholders. Directors shall be elected
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by a plurality of the votes cast at a meeting of shareholders by the
holders of shares entitled to vote in the election. Whenever any corporate
action, other than the election of directors, is to be taken by vote of the
shareholders, it shall, except as otherwise required by the Business
Corporation Law or by the Certificate of Incorporation of the Corporation,
be authorized by a majority of the votes cast at a meeting of shareholders
by the holders of shares entitled to vote thereon.
The vote upon any question before any shareholders' meeting need
not be by ballot.
Section 1.12. Written Consent of Shareholders. Whenever
shareholders are required or permitted to take any action by vote, such
action may be taken without a meeting on written consent, setting forth the
action so taken, signed by the holders of all outstanding shares entitled
to vote thereon. This paragraph shall not be construed to alter or modify
the provisions of any section of the Business Corporation Law or any
provision in the Certificate of Incorporation of the Corporation not
inconsistent with the Business Corporation Law under which the written
consent of the holders of less than all outstanding shares is sufficient
for corporate action.
Written consent thus given by the holders of all outstanding
shares entitled to vote shall have the same effect as a unanimous vote of
shareholders.
ARTICLE II
Directors
Section 2.01. Management of Business:
Qualifications of Directors. The business of the Corporation
shall be managed under the direction of its Board of Directors. Each
member of the Board of Directors shall be at least eighteen years of age.
Directors need not be stockholders.
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<PAGE>
The Board of Directors, in addition to the powers and authority
expressly conferred upon it by statute, by the Certificate of Incorporation
of the Corporation, by these Bylaws and otherwise, is hereby empowered to
exercise all such powers as may be exercised by the Corporation, except as
expressly provided otherwise by the Constitution and statutes of the State
of New York, by the Certificate of Incorporation of the Corporation and by
these Bylaws.
Section 2.02. Number. The number of directors which shall
constitute the entire Board of Directors shall be eight, but this number
may be increased and subsequently again increased or decreased by an
amendment to these Bylaws, except that the number shall never be less than
three nor more than nine and that no decrease shall shorten the term of any
incumbent director.
Section 2.03. Election and Term. At each annual meeting of
shareholders, directors shall be elected to hold office until the next
annual meeting, subject to the provisions of Section 2.05 hereof. Each
director shall hold office until the expiration of the term for which he is
elected, and until his successor has been elected and qualified.
Section 2.04. Resignations. Any director of the Corporation may
resign at any time by giving written notice to the Board of Directors, the
President or the Secretary of the Corporation. Such resignation shall take
effect at the time specified therein, if any, or if no time is specified
therein, then upon receipt of such notice by the addressee; and, unless
otherwise provided therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 2.05. Removal of Directors. Any or all of the directors
may be removed at any time (a) for cause by vote of the shareholders or by
action of the Board of Directors or (b) without cause by vote of the
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shareholders, except as expressly provided otherwise by Section 706 of the
Business Corporation Law.
Section 2.06. Newly Created Directorships and Vacancies. Newly
created directorships resulting from an increase in the number of directors
and vacancies occurring in the Board of Directors for any reason except the
removal of directors without cause may be filled by vote of the Board of
Directors. If the number of directors then in office is less than a
quorum, such newly created directorships and vacancies may be filled by
vote of a majority of the directors then in office. The Board of Directors
shall fill vacancies occurring in the Board of Directors by reason of the
removal of directors without cause.
A director elected to fill a vacancy shall hold office until the
next meeting of shareholders at which the election of directors is in the
regular order of business, and until his successor has been elected and
qualified.
Section 2.07. Quorum and Vote of Directors. At all meetings of
the Board of Directors, a majority of the entire Board of Directors shall
be necessary and sufficient to constitute a quorum for the transaction of
business. The vote of a majority of the directors present at the time of
the vote, if a quorum is present at such time, shall be the act of the
Board of Directors, except as expressly provided otherwise in these Bylaws
and by the statutes of the State of New York.
A majority of the directors present, whether or not a quorum is
present, may adjourn any meeting of the Board of Directors to another time
and place. Notice of any adjournment need not be given if such time and
place are announced at the meeting.
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Section 2.08. Annual Meeting. The newly elected Board of
Directors shall meet immediately following the adjournment of the annual
meeting of shareholders in each year at the same place and no notice of
such meeting shall be necessary.
Section 2.09. Regular Meetings. Regular meetings of the Board of
Directors may be held at such times and places as shall from time to time
be fixed by the Board of Directors and no notice thereof shall be
necessary.
Section 2.10. Special Meetings. Special meetings may be called
at any time by the President, or by resolution of the Board of Directors.
Special meetings shall be held at such places as shall be fixed by the
person or persons calling the meeting and stated in the notice or waiver of
notice of the meeting.
Special meetings of the Board of Directors shall be held upon
notice to the directors. Notice of a special meeting need not be given to
any director who submits a signed waiver of notice whether before or after
the meeting, or who attends the meeting without protesting, prior thereto
or at its commencement, the lack of notice to him.
Unless waived, notice of each special meeting of the Board of
Directors, stating the time and place of the meeting, shall be given to
each director by delivered letter, by telegram or by personal communication
either over the telephone or otherwise, in each such case not later than
the third day prior to the meeting, or by mailed letter deposited in the
United States mail with postage thereon prepaid not later than the seventh
day prior to the meeting. Notices of special meetings of the Board of
Directors and waivers thereof need not state the purpose or purposes of the
meeting.
Section 2.11. Telephonic Meetings. A member of the Board of
Directors or any committee thereof may participate in a meeting of the
Board of Directors or of such committee by means of a conference telephone
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or similar communications equipment allowing all persons participating in
the meeting to hear each other at the same time, and participation in a
meeting by such means shall constitute presence in person at such meeting.
Section 2.12. Compensation. Directors shall receive such fixed
sums and expenses of attendance for attendance at each meeting of the Board
of Directors or of any committee and such salary as may be determined from
time to time by the Board of Directors; provided that nothing herein
contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
Section 2.13(a)Committees. The Board of Directors, by resolution
adopted by a majority of the entire Board of Directors, may designate from
among its members an Executive Committee and other committees, each
consisting of three or more directors, and each of which, to the extent
provided in the resolution, shall have all the authority of the Board of
Directors, except that no such committee shall have authority as to the
following matters:
(a) The submission to shareholders of any action that needs
shareholders' approval under the Business Corporation Law
(b) The filling of vacancies in the Board of Directors or in any
committee.
(c) The fixing of compensation of the directors for serving on
the Board of Directors or on any committee.
(d) The amendment or repeal of the Bylaws, or the adoption of
new Bylaws.
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(e) The amendment or repeal of any resolution of the Board of
Directors which by its terms shall not be so amenable or
repealable.
The Board of Directors may designate one or more directors as
alternate members of any such committee, who may replace any absent member
or members at any meeting of such committee. Each such committee shall
serve at the pleasure of the Board of Directors.
Regular meetings of any such committee shall be held at such times
and places as shall from time to time be fixed by such committee and no
notice thereof shall be necessary. Special meetings may be called at any
time by any officer of the Corporation or any member of such committee.
Notice of each special meeting of each such committee shall be given (or
waived) in the same manner as notice of a special meeting of the Board of
Directors. A majority of the members of any such committee shall
constitute a quorum for the transaction of business and the act of a
majority of the members present at the time of the vote, if a quorum is
present at such time, shall be the act of the committee.
Section 2.13(b). Audit Committee. There shall be an Audit
Committee of the Board of Directors which shall serve at the pleasure of
the Board of Directors and be subject to its control. The Committee shall
have at least three members, two of whom shall be independent outside
directors. Members shall be appointed by the Chairman, subject to approval
of the Board. The committee shall recommend to the Board of Directors the
appointment or discharge of the corporation's independent auditors, shall
review and approve the scope and plan of the annual audit, shall review the
results of such audit, and shall perform such other duties as may be
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lawfully delegated to it from time to time by the Board of Directors.
Section 2.13(c). Executive Compensation Committee.
There shall be an Executive Compensation Committee of the Board of
Directors which will serve at the pleasure of the Board of Directors and be
subject to its control. The Committee shall have at least three members,
all of whom shall be independent outside directors appointed by the
Chairman, subject to the approval of the Board of Directors. The Committee
shall approve the compensation of the executive officers of the company,
and shall have such other duties as may be lawfully delegated to it from
time to time by the Board of Directors.
Section 2.14. Interested Directors. No contract or other
transaction between the Corporation and one or more of its directors, or
between the Corporation and any other corporation, firm, association or
other entity in which one or more of the Corporation's directors are
directors or officers, or have a substantial financial interest, shall be
either void or voidable for this reason alone or by reason alone that such
director or directors are present at the meeting of the Board of Directors,
or of a committee thereof, which approves such contract or transaction, or
that his or their votes are counted for such purpose.
(1) If the material facts as to such director's interest in such
contract or transaction and as to any such common
directorship, officership or financial interest are
disclosed in good faith or known to the Board of Directors
or committee, and the Board of Directors or committee
approves such contract or transaction by a vote sufficient
for such purpose without counting the vote of such
interested director or, if the votes of the disinterested
directors are insufficient to constitute an act of the Board
of Directors as defined in Section 708 of the Business
Corporation Law, by unanimous vote of the disinterested
directors; or
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(2) If the material facts as to such director's interest in such
contract or transaction and as to any such common
directorship, officership or financial interest are
disclosed in good faith or known to the shareholders
entitled to vote thereon, and such contract or transaction
is approved by vote of such shareholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a
committee which approves such contract or transaction.
ARTICLE III
Officers
Section 3.01 Election or Appointment; Number. The officers of
the Corporation shall be elected or appointed by the Board of Directors.
The officers shall be a President, a Secretary, a Treasurer, and such
number of Vice Presidents, Assistant Secretaries and Assistant Treasurers,
and such other officers, as the Board of Directors may from time to time
determine. Any person may hold two or more offices at the same time,
except the offices of President and Secretary. Any officer may, but no
officer need, be chosen from among the Board of Directors.
Section 3.02. Term. Subject to the provisions of Section 3.03
hereof, all officers shall be elected or appointed to hold office for the
term for which he is elected or appointed or until his death and until his
successor has been elected or appointed and qualified.
The Board of Directors may require any officer to give security
for the faithful performance of his duties.
Section 3.03. Removal. Any officer elected or appointed by the
Board of Directors may be removed by the Board of Directors with or without
cause.
The removal of an officer without cause shall be without prejudice
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to his contract rights, if any. The election or appointment of an officer
shall not of itself create contract rights.
Regular meetings of any such committee shall be held at such times
and places as shall from time to time be fixed by such committee and no
notice thereof shall be necessary. Special meetings may be called at any
time by any officer of the Corporation or any member of such committee.
Notice of each special meeting of each such committee shall be given (or
waived) in the same manner as notice of a special meeting of the Board of
Directors. A majority of the members of any such committee shall
constitute a quorum for the transaction of business and the act of a
majority of the members present at the time of the vote, if a quorum is
present at such time, shall be the act of the committee.
Section 2.14. Interested Directors. No contract or other
transaction between the Corporation and one or more of its directors, or
between the Corporation and any other corporation firm, association or
other entity in which one or more of the Corporation's directors are
directors or officers, or have a substantial financial interest, shall be
either void or voidable for this reason alone or by reason alone that such
director or directors are present at the meeting of the Board of Directors,
or of a committee thereof, which approves such contract or transaction, or
that his or their votes are counted for such purpose.
Section 3.04. Authority. The President shall be the chief
executive officer of the. Corporation and shall direct the policy of the
Corporation on behalf of the Board of Directors. The other officers shall
have the authority, perform the duties and exercise the powers in the
management of the Corporation usually incident to the offices held by them,
respectively, and/or such other authority, duties and powers as may be
assigned to them from time to time by the Board of Directors or the
President.
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ARTICLE IV
Capital Stock
Section 4.01. Certificates of Stock. Certificates representing
shares of the stock of the Corporation shall be in such form as shall be
approved by the Board of Directors. Every certificate shall be signed by
the President and the Secretary or an Assistant Secretary, or the Treasurer
or an Assistant Treasurer and sealed with the seal of the Corporation.
Such seal may be a facsimile engraved or printed. There shall be entered
upon the stock books of the Corporation the number of each certificate
issued, the name of the person owning the shares represented thereby, the
number of shares, and the date of issuance thereof.
Section 4.02. Transfer of Stock. A stock book shall be kept at
the principal office of the Corporation containing the names,
alphabetically arranged, of all persons who are stockholders of the
Corporation showing their places of residence, the number of shares of
stock held by them respectively, the time when they respectively became
owners thereof, and the amount paid thereon. Transfers of shares of the
stock of the corporation shall be made only on the books of the Corporation
by the holder of record thereof, or by his attorney thereunto duly
authorized by a power of attorney executed in writing and filed with the
Secretary, and upon the surrender of the certificate or certificates for
such shares properly endorsed and accompanied by all necessary Federal and
State stock transfer tax stamps. No stockholder, however, shall be
entitled to any transfer of his stock in violation of any restrictions
lawfully applicable thereto.
Section 4.03. Registered Holders. The Corporation shall be
entitled to treat and shall be protected in treating the persons in whose
names shares or any warrants, rights or options stand on the record of
shareholders, warrant holders, rights holders or option holders, as the
case may be, as the owners thereof for all purposes and shall not be bound
to recognize any equitable or other claim to, or interest in, any such
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share, warrant, right or option on the part of any other person, whether or
not the Corporation shall have notice thereof, except as expressly provided
otherwise by the statutes of the State of New York.
Section 4.04. New Certificates. The Corporation may issue a new
certificate for shares in the place of any certificate theretofore issued
by it, alleged to have been lost or destroyed, and the Board of Directors
may, in its discretion, require the owner of the lost or destroyed
certificate, or his legal representatives, to give the Corporation a bond
sufficient (in the judgment of the directors) to indemnify the Corporation
against any claim that may be made against it on account of the alleged
loss or destruction of any such certificate or the issuance of such new
certificate. A new certificate may be issued without requiring any bond
when, in the judgment of the directors, it is proper so to do.
ARTICLE V
Financial Notices to Shareholders
Section 5.01. Dividends. When any dividend is paid or any other
distribution is made, in whole or in part, from sources other than earned
surplus, it shall be accompanied by a written notice (a) disclosing the
amounts by which such dividend or distribution affects stated capital,
capital surplus and earned surplus, or (b) if such amounts are not
determinable at the time of such notice, disclosing the approximate effect
of such dividend or distribution upon stated capital, capital surplus and
earned surplus and stating that such amounts are not yet determinable.
Section 5.02. Share Distribution and Changes. Every distribution
to shareholders of shares, whether certificated or uncertificated, or a
change of shares which affects stated capital, capital surplus or earned
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surplus shall be accompanied by a written notice (a) disclosing the amounts
by which such distribution or change affects stated capital, capital
surplus and earned surplus, or (b) if such amounts are not determinable at
the time of such notice, disclosing the approximate effect of such
distribution or change upon stated capital, capital surplus and earned
surplus and stating that such amounts are not yet determinable.
When issued shares are changed in any manner which affects stated
capital, capital surplus or earned surplus, and no distribution to
shareholders of any shares, whether certificated or uncertificated,
resulting from such change is made, disclosure of the effect of such change
upon the stated capital, capital surplus and earned surplus shall be made
in the next financial statement covering the period in which such change is
made that is furnished by the Corporation to holders of shares of the class
or series so changed or, if practicable, in the first notice of dividend or
share distribution or change that is furnished to such shareholders between
the date of the change of shares and the next such financial statement, and
in any event within six months of the date of such change.
Section 5.03. Cancellation of Reacquired Shares.
When reacquired shares other than converted shares are cancelled,
the stated capital of the Corporation is thereby reduced by the amount of
stated capital then represented by such shares plus any stated capital not
theretofore allocated to any designated class or series which is thereupon
allocated to the shares cancelled. The amount by which stated capital has
been reduced by cancellation of reacquired shares during a stated period of
time shall be disclosed in the next financial statement covering such
period that is furnished by the Corporation to all its shareholders or, if
practicable, in the first notice of dividend or share distribution that is
furnished to the holders of each class or series of its shares between the
end of the period and the next such financial statement, and in any event
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to all its shareholders within six months of the date of the reduction of
capital.
Section 5.04. Reduction of Stated Capital. When a reduction of
stated capital has been effected under Section 516 of the Business
Corporation Law, the amount of such reduction shall be disclosed in the
next financial statement covering the period in which such reduction is
made that is furnished by the Corporation to all its shareholders or, if
practicable, in the first notice of dividend or share distribution that is
furnished to the holders of each class or series of its shares between the
date of such reduction and the next such financial statement, and in any
event to all its shareholders within six months of the date of such
reduction.
Section 5.05. Application of Capital Surplus to Elimination of a
Deficit. The Corporation may apply any part or all of its capital surplus
to the elimination of any deficit in the earned surplus account, upon
approval by vote of the shareholders. The application of capital surplus
to the elimination of a deficit in the earned surplus account shall be
disclosed in the next financial statement covering the period in which such
elimination is made that is furnished by the Corporation to all its
shareholders or, if practicable, in the first notice of dividend or share
distribution that is furnished to holders of each class or series of its
shares between the date of such elimination and the next such financial
statement, and in any event to all its shareholders within six months of
the date of such action.
Section 5.06. Conversion of Shares. Should the Corporation
issue any convertible shares, then, when shares have been converted, they
shall be cancelled and disclosure of the conversion of shares during a
stated period of time and its effect, if any, upon stated capital shall be
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made in the next financial statement covering such period that is furnished
by the Corporation to all its shareholders or, if practicable, in the first
notice of dividend or share distribution that is furnished to the holders
of each class or series of its shares between the end of such period and
the next such financial statement, and in any event to all its shareholders
within six months of the date of the conversion of shares.
ARTICLE VI
Miscellaneous
Section 6.01. Offices. The principal office of the Corporation
shall be in The City of Albany, County of Albany, State of New York. The
Corporation may also have offices at other places, within and/or without
the State of New York.
Section 6.02. Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its incorporation and the
words "Corporate Seal New York" provided, that the form of such seal shall
be subject to alteration from time to time by the Board of Directors.
Section 6.03. Checks. All checks or demands for money shall be
signed by such person or persons as the Board of Directors may from time to
time determine.
Section 6.04. Fiscal Year. The fiscal year of the Corporation
shall be the calendar year ending on each December 31.
Section 6.05. Books and Records. The Corporation shall keep
correct and complete books and records of account and shall keep minutes of
the proceedings of its shareholders, Board of Directors and each committee
thereof, if any, and shall keep at the office of the Corporation in the
State of New York or at the office of its transfer agent or registrar in
the State of New York, a record containing the names and addresses of all
shareholders, the number and class of shares held by each and the dates
when they respectively became the owners of record thereof. Any of the
foregoing books, minutes or records may be in written form or in any other
form capable of being converted into written form within a reasonable time.
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<PAGE>
Section 6.06. Duty of Directors. A director shall perform his
duties as a director, including his duties as a member of any committee of
the Board of Directors upon which he may serve, in good faith and with that
degree of care which an ordinarily prudent person in a like position would
use under similar circumstances. In performing his duties, a director
shall be entitled to rely on information, opinions, reports, or statements
including financial statements and other financial data, in each case
prepared or presented by:
(a) one or more officers or employees of the Corporation or of
any other corporation of which at least fifty percentage of the outstanding
shares of stock entitling the holders thereof to vote for the election of
directors is owned directly or indirectly by the Corporation, whom the
director believes to be reliable and competent in the matters presented,
(b) counsel, public accountants or other persons as to matters
which the director believes to be within such person's professional or
expert competence, or
(c) a committee of the Board of Directors upon which he does not
serve, duly designated in accordance with a provision of the Certificate of
Incorporation or these Bylaws, as to matters within its designated
authority, which committee the director believes to merit confidence, so
long as in so relying he shall be acting in good faith and with such degree
of care which an ordinarily prudent person in a like position would use
under similar circumstances, but he shall not be considered to be acting in
good faith if he has knowledge concerning the matter in question that would
cause such reliance to be unwarranted. A person who so performs his duties
shall have no liability by reason of being or having been a director of the
Corporation.
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<PAGE>
Section 6.07. Indemnification of Directors and Officers.
(a) The Corporation shall indemnify any person made, or
threatened to be made, a party to an action or proceeding
(other than one by or in the right of the Corporation to
procure a judgment in its favor), whether civil or criminal,
including an action by or in the right of any other
corporation of any type or kind, domestic or foreign, or any
partnership, joint venture, trust, employee benefit plan or
other enterprise, which any Director or Officer of the
Corporation served in any capacity at the request of the
Corporation, by reason of the fact that he, his testator or
intestate, was a Director of the Corporation ("Director"),
or Officer of the Corporation appointed or elected by the
Board of Directors ("Officer"), or served such other
corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise in any capacity, against
judgments, fines, amounts paid in settlement and reasonable
expenses, including attorneys' fees actually and necessarily
incurred as a result of such action or proceeding, or any
appeal therein, to the maximum extent permitted and in the
manner prescribed by the Business Corporation Law.
(b) The Corporation shall indemnify any person made, or
threatened to be made, a party to an action by or in the
right of the Corporation to procure a judgment in its favor
by reason of the fact that he, his testator or intestate, is
or was a Director or Officer of the Corporation, or is or
was serving at the request of the Corporation as a Director
or Officer of any other corporation of any type or kind,
domestic or foreign, of any partnership, joint venture,
trust, employee benefit plan or other enterprise, against
amounts paid in settlement and reasonable expenses,
including attorneys' fees, actually and necessarily incurred
by him in connection with the defense or settlement of such
action, or in connection with an appeal therein, to the
maximum extent permitted and in the manner prescribed by the
Business Corporation Law.
(c) Expenses incurred by any party entitled to indemnification
under this Section 6.07 in defending a civil or criminal
action or proceeding shall be paid by the Corporation in
advance of the final disposition of such action or
proceeding to the maximum extent permitted and in the manner
prescribed by the Business Corporation Law.
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(d) The Corporation shall pay the expenses (including attorney's
fees) of any person made a witness in a civil or criminal
action or proceeding, by reason of the fact that he is or
was a Director or Officer of the Corporation, or serves or
served any other corporation of any type or kind, domestic
or foreign, or any partnership, joint venture, trust,
employee benefit plan, or other enterprise in any capacity
at the request of the Corporation, subject to any
limitations required by the Business Corporation Law.
(e) The Corporation shall pay the expenses (including attorney's
fees) of any Director or Officer of the Corporation incurred
in prosecuting or defending an action or proceeding to
enforce any rights to indemnification or advancement of
expenses granted under these bylaws or otherwise, subject to
any limitations required by the Business Corporation Law.
(f) The foregoing provisions of this section shall be deemed to
be a contract between the Corporation and each Director and
Officer of the Corporation who serves in such capacity at
any time while this section and the relevant provisions of
the Business Corporation Law are in effect, and any repeal
or modification of this section or such provisions of the
Business Corporation Law shall not affect any rights or
obligations then existing with respect to any state of facts
then or theretofore existing as it relates to any action or
proceeding theretofore or thereafter brought or threatened
based in whole or in part upon any such state of facts;
provided, however, that the right of indemnification
provided in this section shall not be deemed exclusive of
any other rights to which any Director or Officer of the
Corporation may now be or hereafter become entitled apart
from this section, whether by a resolution of shareholders,
a resolution of Directors, or an agreement providing for
such indemnification. Subject to the foregoing, wherever
this section refers to the Business Corporation Law, it
shall mean the Business Corporation Law of the State of New
York, as the same exists or may hereafter be amended. The
rights of a Director or Officer hereunder shall continue
after such person has ceased to be a Director or Officer and
shall inure to the benefit of such person's heirs,
executors, administrators and personal representatives.
Section 6.08. When Notice or Lapse of Time Unnecessary; Notices
Dispensed with when Delivery Is Prohibited. Whenever, under the Business
Corporation Law or the Certificate of Incorporation of the Corporation or
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these Bylaws or by the terms of any agreement or instrument, the
Corporation or the Board of Directors or any committee thereof is
authorized to take any action after notice to any person or persons or
after the lapse of a prescribed period of time, such addition may be taken
without notice and without the lapse of such period of time, if at any time
before or after such action is completed the person or persons entitled to
such notice or entitled to participate in the action to be taken or, in the
case of a shareholder, by his attorney-in-fact, submit a signed waiver of
notice of such requirements.
Whenever any notice or communication is required to be given to
any person by the Business Corporation Law, the Certificate of
Incorporation of the Corporation or these Bylaws, or by the terms of any
agreement or instrument, or as a condition precedent to taking any
corporate action and communication with such person is then unlawful under
any statute of the State of New York or of the United States or any
regulation, proclamation or order issued under said statutes, then the
giving of such notice or communication to such person shall not be required
and there shall be no duty to apply for license or other permission to do
so. Any affidavit, certificate or other instrument which is required to be
made or filed as proof of the giving of any notice or communication
required under the Business Corporation Law shall, if such notice or
communication to any person is dispensed with under this paragraph, include
a statement that such notice or communication was not given to any person
with whom communication is unlawful. Such affidavit, certificate or other
instrument shall be as effective for all purposes as though such notice or
communication had been personally given to such person.
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<PAGE>
Whenever any notice or communication is required or permitted to
be given by mail, it shall, except as otherwise expressly provided in the
Business Corporation Law, be mailed to the person to whom it is directed at
the address designated by him for that purpose or, if none is designated,
at his last known address. Such notice or communication is given when
deposited, with postage thereon prepaid, in a post office or official
depository under the exclusive care and custody of the United States post
office department. Such mailing shall be by first class mail except where
otherwise required by the Business Corporation Law.
Section 6.09. Entire Board of Directors. As used in these
Bylaws, the term entire "Board of Directors" means the total number of
directors which the Corporation would have if there were no vacancies.
Section 6.10. Amendment of Bylaws. These Bylaws may be amended
or repealed and new Bylaws adopted by the Board of Directors or by vote of
the holders of the shares at the time entitled to vote in the election of
any directors, except that any amendment by the Board changing the number
of directors shall require the vote of a majority of the entire Board of
Directors and except that any Bylaw adopted by the Board of Directors may
be amended or repealed by the shareholders entitled to vote thereon as
provided in the Business Corporation Law.
If any Bylaw regulating an impending election of directors is
adopted, amended or repealed by the Board of Directors, there shall be set
forth in the notice of the next meeting of shareholders for the election of
directors the Bylaw so adopted, amended or repealed, together with a
concise statement of the changes made.
</PAGE>
<PAGE>
Section 6.11. Section Headings and Statutory References. The
headings of the Articles and Sections of these Bylaws have been inserted
for convenience of reference only and shall not be deemed to be a part of
these Bylaws.
Brd.459
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EXHIBIT 10.19
TERM NOTE
$5,500,000.00
March 29, 1996
Albany, New York
FOR VALUE RECEIVED, FIRST ALBANY COMPANIES INC., a domestic
corporation with its principal executive office and place of business
located at 30 South Pearl Street, Albany, New York 12207 (the "Borrower")
promises to pay to the order of ONBANK & TRUST CO., a domestic banking
corporation with its principal executive office located at Syracuse, New
York (the "Lender"), at 80 State Street, Albany, New York 12207, or such
other place as the Lender may, from time to time, designate in writing, the
principal sum of Five Million Five Hundred Thousand and no/100
($5,500,000.00) Dollars together with interest on the principal balance
from time to time unpaid hereon from the date hereof, at a fluctuating per
annum interest rate (the "Note Rate") in the following manner:
Interest only on the unpaid principal amount hereof, at the Note Rate,
shall be due and payable on April 1, 1996. On the first day of each month
thereafter, commencing May 1, 1996 and concluding April 1, 2000, the
Borrower shall make payments of interest at the Note Rate together with
payments of principal calculated in accordance with a four (4) year
straight line amortization schedule. In addition, the entire unpaid
principal balance hereof, together with accrued interest thereon and
accrued late charges, if any, and all other sums due hereunder shall be
finally due and payable on April 1, 2000.
The Note Rate shall be equal, at all times, to the average yield to an
investor for United States Treasury Securities adjusted to a constant
maturity of ninety (90) days (the "Index") plus two and one-half (2.5%)
percent. The Note Rate shall be initially established by reference to the
most recent index published by the Federal Reserve Board prior to the
closing and, thereafter, the Note Rate shall be adjusted on the first day
of each calendar quarter (each such date being an "Adjustment Date") with
reference to the most recent Index published by the Federal Reserve Board
prior to each Adjustment Date.
All payments hereunder shall be applied first to the payment of
accrued late payments, if any, then to the payment of interest at the
aforesaid rate on the principal amount remaining unpaid and the balance, if
any, shall be applied in reduction to principal. Interest shall be
computed on the basis of a year of 360 days for the actual number of days
elapsed and shall accrue from the date of advance of funds until receipt of
payment by the Lender.
This Note may be prepaid without penalty at any time.
In the event that any payment required by this Note shall
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become overdue for a period in excess of fifteen (15) days, a late charge
of six (.06) cents for each One ($1.00) dollar so overdue may be charged by
the holder hereof for the purpose of defraying the expense incident to
handling such delinquent payment.
The Borrower agrees that in the event of a happening of one or more of
the following, each of which shall be an "Event of Default", and the
expiration of fifteen (15) days from the date of Borrower's actual receipt
of written notice of said Event(s) of Default, provided said Event(s) of
Default are not cured or substantially remedied within said fifteen (15)
days, (1) the breach of any of the covenants and agreements contained in
this Note or in the GENERAL SECURITY AGREEMENT dated on even date herewith
from the Borrower to the Lender (the "Agreement") which secures this Note;
(2) the occurrence of an event of default pursuant to the Agreement;(3) the
dissolution of the Borrower; (4) any petition of bankruptcy being filed by
or against the Borrower hereof and said petition, if involuntary, is not
dismissed within six (6) months from the date of filing thereof; (5) the
making by the Borrower of an assignment for the benefit of creditors then
the whole of the principal sum or any part thereof, and of other sums of
money secured by the Agreement, shall, forthwith or thereafter, at the
option of the Lender become immediately due and payable without demand or
notice.
All of the covenants, agreements, terms and conditions of the
Agreement are hereby incorporated herein with the same and effect as if set
forth at length.
The Borrower shall deliver to the Lender, so long as the indebtedness
evidenced by this Note shall be outstanding, (1) within 120 days (120) of
its fiscal year end, an audited financial statement (Form 10K) for Borrower
prepared by Borrower's Certified Public Accountant; and (2) within forty-
five (45) days of the end of each fiscal quarter an interim financial
statement (Form 10Q).
The Borrower shall maintain, at all times, a minimum net capital equal
to three (3) times the minimum net capital as calculated and defined by the
Securities and Exchange Commission's Uniform Net Capital Rule (Rule 15C 3-
1).
The Borrower shall not grant any security interest in the Collateral
(as that term is defined in the Agreement) without the prior written
approval of the Lender, which approval may be withheld in the exercise of
the Lender's sole discretion.
The Borrower shall maintain, with respect to the Collateral (as that
term is defined in the Agreement), a physical hazard insurance policy
providing insurance coverage against loss or damage to the Collateral by
fire and any of the risk covered by
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insurance of the type now known as "all risk coverage" in an amount not
less than the principal balance of the loan evidenced by this Note. All
such insurance maintained by the Borrower shall name the Lender as an
additional insured, shall be non-cancelable and non-amendable without
thirty (30) days written notice to the Lender, and shall be in the form and
substance satisfactory to the Lender and its counsel. Duplicate originals
or certified copies of each such policy of insurance shall be delivered to
the Lender upon the execution of this Note and renewal certificates
therefor shall be delivered to the Lender by the Borrower at least thirty
(30) days prior to the expiration date of each such policy. Coinsurance is
not permitted.
Notwithstanding anything to the contrary herein contained, to the
extent that the total amount of interest received in any year exceeds the
maximum rate permitted by law, then the amount so determined to be in
excess shall be applied in reduction of principal of this Note.
This Note may not be changed or terminated orally.
Presentment for payment, notice of dishonor, protest and notice of
protest are hereby waived. No waiver of any provision hereof shall be
enforceable against the Lender unless in writing, signed by an officer of
the Lender, and shall be limited solely to the one event specified therein.
In the event this Note is placed with an attorney for collection, the
Borrower shall pay all reasonable attorney fees and expenses incurred by
the Lender in connection therewith.
IN WITNESS WHEREOF, the undersigned has executed this Note the day and
year first above written.
FIRST ALBANY COMPANIES INC.
By: /s/ David Cunningham
------------------------
David J. Cunningham
Senior Vice President
Chief Financial Officer
STATE OF NEW YORK )
) SS.:
COUNTY OF ALBANY )
On this 29th day of March, 1996, before me personally came David J.
Cunningham, to me known, who being by me duly sworn, did depose and say
that he is a Senior Vice President of FIRST ALBANY COMPANIES INC., the
corporation described in, and which executed the above instrument, and that
he signed his name thereto by order of the board of directors of said
corporation as the act and deed of said corporation.
Notary Public /s/ Patrick J. Mackrell
</PAGE>
<PAGE>
GENERAL SECURITY AGREEMENT
In consideration of one or more loans, letters of credit or other
financial accommodations made, issued or extended by ONBANK & TRUST CO., a
domestic banking corporation with its principal executive office located
in Syracuse, New York and a place of business at 80 State Street, Albany,
New York 12207 (the "Bank") to the undersigned (the "Borrower") , the
Borrower hereby agrees that the Bank shall have the rights, remedies and
benefits hereinafter set forth.
The term "Liabilities" shall mean and include any and all
indebtedness, obligations and liabilities of any kind of the Borrower to
the Bank or to others to the extent of their participations granted or
interest therein created or acquired by them or for them by the Bank, now
or hereafter existing, arising directly between the Borrower and the Bank
or acquired outright, conditionally, or as collateral security from
another by the Bank, absolute contingent, joint and/or several, secured or
unsecured, due or not due, liquidated or unliquidated, arising by
operation of law or otherwise, direct or indirect, including but not
limiting the generality of the foregoing, indebtedness,
obligations or liabilities to the Bank of the Borrower regardless of how
or when incurred.
The term "Collateral" shall mean and include all of the Borrower's
furniture, trade fixtures, equipment, including, but not limited to,
machinery, of every kind, nature and description, including but not
limited to the computers and computer equipment, wherever located, and to
the full extent of Borrower's interest therein, whether now owned or
hereafter acquired including any substitutions, additions, and
replacements thereof.
The term "Securities Collateral" shall mean and include the
securities described on Schedule "All attached hereto and made part hereof
consisting of one (1) pages.
In order to secure repayment of the Liabilities the Borrower hereby
grants the Bank a security interest in the Collateral and Securities
Collateral.
At any time and from time to time, upon the request of the Bank, the
Borrower will give, execute, deliver, file and/or record any notice,
statement, instrument, document, agreement or other papers that may be
necessary or desirable, or that the Bank may request, in order to create,
preserve, perfect or validate any security interest granted pursuant
hereto or to enable the Bank to exercise and enforce its rights hereunder
or with respect to such security interest, and, further, permit
representatives of the Bank, at any time, upon reasonable notice to the
Borrower, to inspect the Collateral.
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The right is expressly granted to the Bank, at its discretion, to file
in those jurisdictions where the same is permitted one or more financing
statements under the Uniform Commercial Code signed only by the Bank,
naming the Borrower as debtor and the Bank as secured party, and
indicating therein the types or describing the items of Collateral herein
specified. Without the prior written consent of the Bank, the Borrower
will not file or authorize or permit to be filed in any jurisdiction any
such financing or like statement in which the Bank is not named as sole
secured party.
The Borrower hereby acknowledges that the security
interests) previously granted by the Borrower to The Hudson City Savings
Institution ("Hudson City") have been or will be assigned by the Bank and
specifically consents to the assignment of any and all financing
statements filed by or on behalf of Hudson City to the Bank. The Borrower
specifically consents that the security interest in the Collateral shall
apply as security for the Liabilities.
The Bank shall have the rights and remedies with respect to the
Collateral of a secured party under the Uniform Commercial Code (whether
or not the Code is in effect in the jurisdiction where the rights and
remedies are asserted). In addition, with respect to the Collateral, or
any part thereof, the Bank may, in the event of default, sell or cause the
Collateral to be sold in the City of Albany, New York, or elsewhere, in
one or more sales or parcels, at such price as the Bank may deem best, and
for cash or on credit or for future delivery, without assumption of any
credit risk, all or any portion of the Collateral, at public or private
sale, without demand or performance or notice of intention to sell or of
time or place of sale (except such notice as is required by applicable
statute and cannot be waived) and the Bank or anyone else may be the
purchaser of any or all of the Collateral so sold and thereafter hold the
same absolutely, free from any claim or right of whatsoever kind, any such
demand, notice or right and equity being hereby expressly waived and
released. The Borrower will pay to the Bank all expenses incidental to
the enforcement of any of the provisions hereof, including but not limited
to attorney's fees, expenses incurred by the Bank in connection with
repossession or any actual or attempted sale of any of the Collateral or
receipt of the proceeds thereof, and for the care of the Collateral and
defending or asserting the rights and claims of the Bank in respect
thereof, by litigation or otherwise, including expenses of insurance; and
all such expenses shall be Liabilities within the terms of this agreement.
No delay on the part of the Bank in exercising any power or right
hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any power or right hereunder preclude other or further
exercise thereof or the exercise of any
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other power or right. No waiver shall be enforceable against the Bank
unless in writing, signed by an officer of the Bank, and shall be limited
solely to the one event specified therein. The rights, remedies and
benefits herein expressly specified are cumulative and not exclusive of
any rights, remedies or benefits which the Bank may otherwise have.
No provision hereof shall be modified or limited except by a written
instrument signed by an officer of the Bank, expressly referring hereto
and to the provision so modified or limited. This agreement shall be
binding upon the assigns or successors of the Borrower, and shall inure to
the benefit of and be enforceable by the Bank, its successors, transferees
and assigns; shall constitute a continuing agreement, applying to all
future as well as existing transactions; and if all transactions between
the Bank and the Borrower shall be at any time terminated, shall be
equally applicable to any new transactions thereafter. Unless the context
otherwise requires all terms used herein which are defined in the Uniform
Commercial Code shall have the meaning therein stated.
If this agreement shall be terminated or revoked by operation of law,
the Borrower will indemnify and save the Bank harmless from any loss which
may be suffered or incurred by the Bank in acting hereunder prior to the
receipt by the Bank, its successors, transferees or assigns of notice of
such termination or revocation. In the event that any part of this
agreement is determined by any court of competent jurisdiction to be
unenforceable, the balance of this agreement shall remain in full force
and effect unless the Bank gives the Borrower written notice by registered
mail, return receipt requested, of its intention to terminate this
agreement, in which event all of the obligations of the Borrower to the
Bank shall immediately become due and payable.
The Borrower warrants and represents that all Collateral in which a
security interest is or will be granted to the Bank is and will at all
times be valid and subsisting, free and clear of all liens and
encumbrances, except the one created hereunder; is and will be without
defenses, offsets and counterclaims; that the Borrower will defend the
title and security interest at its own cost and expense; will furnish the
Bank with such financial statements as the Bank may reasonably request;
will keep the collateral in good condition and repair; will not assign or
otherwise dispose of the Collateral; will furnish the Bank from time to
time, upon the request of the Bank, a list of the Collateral specifying
the cost, acquisition date, and location of each item; will keep the
Collateral fully insured against all risk and procure an extended coverage
rider and a rider providing that in the event of a loss, the proceeds then
shall be payable to the Bank, and said insurance policy or policies shall
not be cancelable unless on thirty (30) days written notice to the Bank;
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that all representations are continuing in nature; that the Borrower is
authorized to execute this agreement; that the Borrower is in good standing
in the state of its incorporation, is authorized and licensed to do
business in every state where it does business, that the execution of this
agreement does not violate its certificate of incorporation, its by-laws or
any other agreement.
This agreement has been executed in the State of New York and shall
be interpreted, and the rights and liabilities of the parties hereto
determined, in accordance with the laws of State of New York. As part of
the consideration for the Bank making any loans hereunder, the Borrower
hereby agrees that all actions or proceedings arising directly or
indirectly from or touching upon this agreement shall be litigated only in
courts having a situs within of the State of New York, and the Borrower
hereby consents to the jurisdiction of any local, state or federal court
located within the State of New York.
Notwithstanding any term, provision or covenant to the contrary
contained herein, upon receipt of evidence, satisfactory to the Bank and
its counsel, that the security interest granted herein has been duly
perfected as a first security interest and lien in the Collateral in all
jurisdictions in which the Collateral is located, the Bank shall terminate
and release its security interest in the Securities Collateral.
This agreement shall be a continuing agreement and shall apply to all
future as well as existing transactions.
Dated: March 29, 1996 Albany, New York
FIRST ALBANY COMPANIES INC.
By: /s/ David J. Cunningham
-----------------------
David J. Cunningham
Senior Vice President
Chief Financial Officer
AGREED TO THIS 29th DAY OF
MARCH, 1996,
ONBANK & TRUST CO.
By: ____________________
Robert G. Burke
Vice President
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ESCROW AGREEMENT
AGREEMENT made this 29 day of March, 1996 by and between FIRST ALBANY
COMPANIES INC., a domestic corporation with its principal executive office
and on office for the transaction of business located at 30 South Pearl
Street, Albany, New York 12207 (the "Assignor"), ONBANK & TRUST CO., a
domestic banking corporation with its principal executive office located in
Syracuse, New York and an office for transaction of business located at 80
State Street, Albany, New York (the "Assignee"), and FIRST ALBANY
CORPORATION, a domestic corporation with its principal executive office and
an office for the transaction of business located at 30 South Pearl Street,
Albany, New York 12207 (the "Escrow Agent").
W I T N E S S E T H
WHEREAS, the Assignor is indebted to the Assignee in the amount of Five
Million Five Hundred Thousand and 00/100 ($S,500,000.00) Dollars as
evidenced by the TERM NOTE (the "Note") given by the Assignor to the
Assignee, for valuable consideration, on even date herewith (the "Loan");
and
WHEREAS, in order to induce the Assignee to make one or more loans to
the Assignee, the Assignor has executed and delivered a GENERAL SECURITY
AGREEMENT, dated on even date herewith (the "Agreement"), whereby the
Assignor has granted a security interest in certain property of the
Assignor as identified and described therein.
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NOW, the parties hereto, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, agree as follows that:
1. The parties have delivered to Escrow Agent an executed duplicate
original of the Agreement, in which the Assignor has pledged and granted
to the Assignee a security interest in, inter alia, the securities held by
Assignor in First Albany Corporation account number 3301-1020, consisting
of the securities described on Schedule "A" attached hereto and made part
hereof (the "Securities Collateral"), as security for a loan from the
Assignee to the Assignor. The parties acknowledge that the Collateral has
been assigned and pledged to the Assignee by the Assignor, that the
Assignee has a security interest therein and that the Collateral is being
held by the Escrow Agent.
2. Subject to Section 3 hereof the Escrow Agent shall not be
authorized to sell the securities constituting the Securities Collateral
or to buy new securities without prior written consent of the Assignor and
the Assignee. The Escrow Agent has no liability to either the Assignor or
the Assignee with respect to fluctuations in the value of the securities
constituting the Securities Collateral, or to maintain any minimum value
of the securities constituting the Securities Collateral.
3. Unless restrained by court order or stayed by operation of
bankruptcy law, upon receipt of written notice from the Assignee that an
event of default (as defined in the Agreement or in the Note) has
occurred, the Escrow Agent will immediately
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transfer all Securities Collateral to the Assignee in cash or in kind
(less customary brokerage liquidation expenses, if any) irrespective of
direction subsequent to the date hereof from the Assignor or its
representatives to the contrary.
4. The Assignor has heretofore delivered to the Escrow Agent all
necessary documents of transfer or stock powers and authorizations to
transfer the Securities Collateral to the Assignee at any future time, and
the Escrow Agent will not require any other written documentation or
release from the Assignee other than the written notice referred to in
paragraph 2 above, and a simple receipt from the Assignee for Securities
Collateral following, or simultaneously with, tender of possession, in
order to transfer the Securities Collateral to the Assignee. The Escrow
Agent waives any right of set-off it may have against the Securities
Collateral senior to that of the Assignee.
5. Until receipt of written notice from the Assignee, all income
generated from the Securities Collateral will be reported pursuant to the
tax identification number for the Assignor. All dividends and interest
received by the Escrow Agent on the Securities Collateral will be held by
the Escrow Agent as part of the Securities Collateral.
6. The Assignor and the Escrow Agent hereby represent and warrant
that the Securities Collateral is not subject to any claim pledge,
assignment or other encumbrance except as set forth in this Agreement.
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7. The Escrow Agent agrees to make appropriate notations on its
records (including computer software) to clearly indicate that the
Securities Collateral has been assigned and pledged to the Assignee, and
the Assignee has a first security interest in and lien on said Securities
Collateral which has been perfected by delivery of the Securities
Collateral to the Escrow Agent. Said Securities Collateral will not be
commingled with any 'other account of the Assignor, but shall remain
segregated subject to the terms of and conditions of the Agreement.
8. The Escrow Agent shall have no duties or responsibilities other
than those expressly set forth herein.
9. The Escrow Agent may rely conclusively and shall be protected in
acting upon any order, notice, demand, certification, statement,
instrument, report or other paper or document (not only as to its due
execution and the validity and effectiveness of its provisions, but also as
to the truth and acceptability of any information therein contained) which
is believed by the Escrow Agent to be genuine and to be signed or presented
by the proper person or persons. The Escrow Agent shall not be bound by
any notice or demand, or any waiver, modification, termination or
rescission of this agreement or any of the terms hereof, unless evidenced
by a writing delivered to the Escrow Agent signed by all other parties
hereto and, if the duties or rights of the Escrow Agent are affected,
unless it shall give its prior written consent thereto.
10. The Escrow Agent shall be indemnified and held harmless
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by the Assignor from and against any and all expenses (including reasonable
counsel fees and disbursements and including any liability for taxes and
for penalties in respect of taxes, or investment income on the Securities
Collateral), or loss suffered by the Escrow Agent in connection with any
action, suit or other proceeding involving any claim, or in connection with
any claim or demand which in any way, directly or indirectly, arises out of
or relates to this Agreement, the services of the Escrow Agent hereunder,
the Securities Collateral or other property held by it hereunder or any
income earned from investment of such Securities Collateral, unless it
shall have been judicially determined that such claim or demand arises out
of gross negligence of the Escrow Agent. For the purposes hereof, the term
"expense" or "loss" shall include all amounts paid or payable to satisfy
any claim, demand, action, suit or proceeding settled with the express
written consent of the Escrow Agent, and all costs and expenses,
disbursements, paid or incurred in investigating or defending against any
such claim, demand, action, suit or proceeding.
ii. It is understood and agreed that should any dispute arise with
respect to the payment and/or ownership or right of possession of the
Securities Collateral and earnings thereon, the Escrow Agent is authorized
and directed, subject to the provisions contained herein, to retain in its
possession, without liability to anyone, all or any part of said Securities
Collateral and payments, thereon until such dispute shall have been settled
either by mutual agreement by the parties concerned
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or by the final order, decree or judgment of a court or other tribunal of
competent jurisdiction in the United States of America and time for appeal
has expired and no appeal has been perfected, but the Escrow Agent shall be
under no duty whatsoever to institute or defend any such proceedings.
12. The Escrow Agent may resign at any time by giving fifteen (15)
days written notice to the other parties hereto in which case the
Securities Collateral shall be delivered to the Assignee.- with all
necessary documents of transfer, or stock powers and authorizations to
effect transfer of the Securities Collateral to the Assignee as collateral
for the Loan.
13. Notwithstanding anything to the contrary contained herein, the
Escrow Agent shall disburse and/or release the Securities Collateral or any
portion thereof, pursuant to the terms of any joint written order signed by
duly authorized officer of the Assignor and a duly authorized officer of
the
Assignee.
14. This agreement shall terminate automatically on the first to
occur of (i) the disposition of the Securities Collateral and all earnings
thereon in accordance with this Agreement or (ii) the payment of the Loan.
This Agreement may also be terminated by written notice to the Escrow Agent
duly executed by the Assignor and the Assignee that this Agreement has been
terminated. Unless written notice is received by the Escrow Agent that an
event of default has occurred, in the event of termination all Securities
Collateral, including all earnings
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thereon, shall be disbursed to the Assignor.
15. This Agreement may be executed in several counterparts, each of
which shall be considered a legal original for all purposes. Any fully
signed counterpart may be introduced into evidence in any action or
proceeding without having to produce the others.
16. Any notices required or permitted to be given hereunder shall be:
(i) given by registered or certified mail, postage prepaid, return receipt
requested, or (ii) personally delivered or (iii) forwarded by overnight
courier service (iv) or by facsimile, transmission confirmed, in each
instance addressed to the addresses set forth below or facsimile numbers
(or such other addresses as the parties may for themselves designate in
writing as provided herein for the purpose of receiving notices hereunder);
IF TO THE ASSIGNOR:
First Albany Companies Inc.
30 South Pearl Street
Albany, New
Attn: David J. Cunningham
Facsimile: (518) 447-8068
IF TO THE ASSIGNEE:
OnBank & Trust Co.
80 State Street
Albany, New York 12207
Attn: Commercial Credit Department
Facsimile: (518) 432-5518
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IF TO THE ESCROW AGENT:
First Albany Corporation
30 South Pearl Street
Albany, New York 12207
Attn: Michael R. Lindburg, Esq.
Facsimile: (518) 447-8068.
All notices shall be in writing and shall be deemed given upon actual
delivery.
IN WITNESS WHEREOF, the undersigned parties hereto have signed this
Agreement as of the 29th day of March, 1996.
FIRST ALBANY COMPANIES INC.
BY:________________________________
David J. Cunningham
Senior Vice President
Chief Financial Officer
FIRST ALBANY CORPORATION
BY:________________________________
David J. Cunningham
Senior Vice President
Chief Financial Officer
ONBANK & TRUST CO.
BY:________________________________
Robert G. Burke
Vice President
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PARTICIPATION AGREEMENT
THIS AGREEMENT made the 29 day of March, 1996, between OnBank & Trust Co.,
a New York banking corporation, located and having its principal place of
business at 80 State Street, Albany, New York 12201, hereinafter referred
to as "OnBank", and The Hudson City Savings Institution, a New York banking
corporation, located and having its principal place of business at One
Hudson City Centre, Hudson, New York 12534, hereinafter referred to as
"Hudson",
WHEREAS, the above parties desire to participate in the funding of a
loan to First Albany Companies Inc. in the proportions hereinafter set
forth which loan shall be evidenced by a certain note in the principal
amount of Five Million Five Hundred Thousand and 00/100 Dollars
($5,500,000.00), a copy of which is attached hereto as Exhibit A,
hereinafter referred to as the "Note", running from First Albany Companies
Inc. to OnBank, and which Note shall be secured by a security interest in
all furniture, fixtures, machinery and equipment of First Albany Companies
Inc., as evidenced by a general Security Agreement ("Agreement") , a copy
of which is attached hereto as Exhibit B, now owned or hereafter acquired,
and wheresoever located, including all proceeds therefrom, and
WHEREAS, said Lenders are authorized by law and by their governing
Boards to grant this loan,
NOW, THEREFORE, in consideration of One Dollar ($1.00) lawful money of
the United States, each to the other in hand paid, receipt and sufficiency
whereof is hereby acknowledged, and the covenants and agreements herein
contained, the parties hereto do hereby
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mutually covenant and agree as follows:
1. The principal amount of the Note to be granted to First Albany
Companies Inc. shall be in the sum of $5,500,000.00 and the participation
of each of the parties hereto shall be as follows:
OnBank 50% or $2,750,000.00
The Hudson City Savings Institution 50% or $2,750,000.00
TOTAL 100% or $5,500,000.00
The parties hereto each agree to make these funds available at the loan
closing, provided, however, that the attorneys for each of the parties
shall be fully satisfied that First Albany Companies Inc. is in compliance
with all of the terms and conditions of the commitment letters, has
executed and/or delivered all documents required in connection with this
loan, and is not otherwise in default. The investment made by each of said
parties hereto shall not be junior or subordinate one to the other, but
shall be equal and coordinate in lien.
2. The ownership rights of Hudson as set forth herein shall not in any
way be affected by any rights of any secured or unsecured creditor of
OnBank, including any trustee in bankruptcy, nor shall same in any manner
be considered an asset of OnBank.
3. The Note and Security Agreement shall run to and be taken in the
name of OnBank and the parties hereto are to participate as aforesaid in
the proportion of such original principal amount or any reduced amount from
time to time outstanding. It is agreed by the
parties hereto that this loan shall be serviced by OnBank without a
servicing fee. In this regard, OnBank will handle all collections and will
keep all records thereof in its normal course of business, which records,
among other things, shall reflect the interest of the parties
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hereto in the Note in the manner satisfactory to the examining authority.
Such records shall be accessible for inspection by Hudson at all reasonable
times during business hours. In the event it is necessary for OnBank to
incur any out-of-pocket expenses during the course of servicing the loan,
OnBank shall consult with Hudson prior to incurring such expenses, such
expenses shall be borne equally by the parties and Hudson shall pay to
OnBank its proportionate share of such out-of-pocket expenses upon request.
4. In the event of any default under the terms and conditions of
the said Note or Security Agreement, OnBank will immediately notify Hudson
of such default and, after consultation with Hudson, all appropriate and
commercially reasonable steps will be taken to immediately remedy such
default; if such default is not cured, appropriate proceedings shall be
instituted by OnBank for the benefit of both parties hereto to include
collecting the amount due and/or exercising the rights granted under the
Security Agreement; in the event of repossession of the collateral pledged
by First Albany Companies Inc., OnBank agrees to take possession of the
collateral in its name and to hold the same in trust in proportion to the
respective unpaid balances of OnBank's and Hudson's shares of the loan.
OnBank agrees to consult with Hudson regarding collection, safeguarding
and disposition of the collateral and to act in a commercially reasonable
manner in this regard. Any monies received from disposition of the
collateral (after deduction of necessary expenses incurred in connection
with the collection, safeguarding and disposition of the collateral) shall
be paid to OnBank and Hudson in equal shares. No distribution of monies
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shall be made to one of the parties, without the other party also receiving
the same amount, to be paid at the same time.
5. If requested, each of the parties hereto shall receive certified
true copies of the Note and Security Agreement, as well as applicable
certificates of insurance and also copies of all other documents executed
by First Albany Companies Inc. and/or any of its subsidiaries, agents,
attorneys or other representatives in connection with the loan.
6. OnBank shall maintain possession of the original Note and
Security Agreement and all other original instruments, documents,
agreements and policies of fire and other hazard insurance in connection
with this loan, as a trustee for the parties pursuant to this Agreement.
7. OnBank agrees to use its best efforts to collect all sums due in
accordance with the terms of the Note, Security Agreement, and all
agreements supplemental thereto, to act in a commercially reasonable manner
and to receive same for the pro rata benefit of the parties hereto,
including any and all interest or other payments on account of income, and
any and all amortization or other payments on account of principal, and any
other funds paid to it in connection with the Note and Security Agreement,
and to promptly remit to Hudson its proportionate share.
8. OnBank shall consult with Hudson regarding all management
decisions and shall not take any action in this regard (except for normal
loan servicing) without first consulting Hudson, and shall not, without the
prior written consent of Hudson, make or consent to any modification or
alteration of the terms of the Note, Security Agreement
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or any other loan documents, or make or consent to any release,
substitution or exchange of the collateral.
9. The parties acknowledge that the current indebtedness owing by
First Albany Companies Inc. to Hudson shall be paid in full out -of the
proceeds of this new loan. If requested by OnBank, and after payment in
full by First Albany Companies Inc. to Hudson of all amounts due on the
current outstanding obligation of First Albany Companies Inc., Hudson
agrees to assign to OnBank, for the purposes of this loan, all UCC-1
filings made pursuant to the provisions of 1 previous Security Agreements
given to Hudson by First Albany Companies Inc. and also by First Albany
Corporation. Such assignments will not effect Hudson's rights pursuant to
this Participation Agreement.
10. No party hereto makes any warranty of any kind, express or
implied, with respect to the Note and no party shall be liable to the other
for any loss not due to its own negligence. Specifically, and without
limiting the above, Hudson makes no warranties or representations with
respect to the validity of any UCC-1 statements previously filed by Hudson
which are to be assigned to OnBank, and neither party shall have any
liability to the other with respect to any claim that such documents were
not properly filed and/or that Hudson does not have a perfected security
interest in the collateral previously pledged to Hudson by First Albany
Companies Inc. and/or First Albany Corporation pursuant to previous
Security Agreements.
ii. OnBank shall forward to Hudson copies of any and all
correspondence, demands, notices or other pertinent information regarding
the condition of the loan and shall provide Hudson with
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monthly status reports regarding the payment history of the loan. 12.
This Agreement, the Note and Security Agreement, or any part thereof or
interest therein, shall not be assigned, sold, or in any manner pledged as
collateral by either party without the express written consent of the other
party.
the 13.
This Agreement contains the entire- agreement between
parties and the same cannot be modified or changed, except by an instrument
in writing executed on behalf of the parties hereto in like manner. This
Agreement effects only the rights of the parties hereto and no rights shall
arise herefrom for the benefit of any other party. No other person or
entity, other than the parties hereto shall be entitled to rely upon any of
the terms hereof.
14. Any notices or demands required by this Agreement shall be in
writing and delivered personally or mailed to the party entitled to such
notice or demand at the address set forth above, opposite its name, or at
such other address as any party may notify the others in writing. Such
notices shall be directed as follows:
ONBANK HUDSON
OnBank & Trust Co. The Hudson City Savings Institution
80 State Street One Hudson City Centre
P.O. Box 1191 P.O. Box 76
Albany, NY 12201-1191 Hudson, New York 12534
Att: Mr. Robert G. Burke, Att: Mr. Sidney D. Richter,
Vice-President Senior Vice President
IN WITNESS WHEREOF, the parties hereto have caused this
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Agreement to be executed by their duly authorized officers the day and year
first above written.
ONBANK & TRUST CO. THE HUDSON CITY SAVINGS INSTITUTION
By:___________________________ By:_____________________________________
ROBERT G. BURKE, WILLIAM J. MAY
Vice President Commercial Loan Officer
STATE OF NEW YORK :
Ss.:
COUNTY OF ALBANY :
On this 29th day of March, 1996, before me personally came WILLIAM J.
MAY, to me known, who, being by me duly sworn, did depose and say that he
resides in Saratoga, New York; that he is a Commercial Loan Officer at The
Hudson City Savings Institution, the corporation described in and which
executed the foregoing instrument; and that he signed his name thereto by
order of the Board of Trustees of said corporation.
________________________
Notary Public
STATE OF NEW YORK :
Ss.:
COUNTY OF ALBANY :
On this 29th day of March, 1996, before me personally came ROBERT G.
BURKE, to me known, who, being by me duly sworn, did depose and say that is
the Vice President of OnBank & Trust Co., the corporation described in and
which executed the foregoing instrument; and that he signed his name
thereto by order of the Board of Directors of said corporation.
________________________
Notary Public
<PAGE> EXHIBIT 10.20
SUBORDINATED LOAN AGREEMENT
Subordinated Loan Agreement dated as of September 16, 1996 between
First Albany Corporation, a New York corporation (the "Company"), and
Sharon M. Duker (the "Lender").
WITNESSETH:
1. CERTAIN DEFINITIONS. All terms not specifically defined in
this Agreement shall be construed in accordance with the Act, the
Rules and Regulations promulgated thereunder, and the Constitution,
Rules and Regulations of the Exchange. As used in this Agreement:
"Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"Aggregate Debit Items" means aggregate debit items of the
Company as defined in Exhibit A to Rule 15c3-3 as in effect as of the
date any determination is made thereunder.
"Aggregate Indebtedness" means aggregate indebtedness of the
Company as defined in subparagraph (c) (1) of Rule 15c3-1 as in effect
as of the date any determination is made thereunder.
"CEA" means the Commodity Exchange Act.
"CFTC" means the Commodities Futures Trading Commission.
"Change of Control" has the meaning ascribed to it in Section 8
hereof.
"Commission" means the Securities and Exchange Commission or any
agency of the United States succeeding to its authority.
"FOCUS Report" means Form X-17A-5 promulgated under Section 17 of
the Act and Rule 17a-5.
"Effective Date" means the date an executed copy of this
Agreement is approved by the Exchange.
"Event of Acceleration" means any event described in Section 7.B
of this Agreement.
"Event of Default" means any event described in Section 7.A of
this Agreement.
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I
"Examining Authority" means the Exchange, provided, however,
that, upon termination of the Company as a member firm of the
Exchange, the term Examining Authority shall refer to such regulatory
body having responsibility for inspecting or examining the Company for
compliance with financial responsibility requirements under Section
13(c) of SIPA and Section 17(d) of the Act.
"Exchange" means the New York Stock Exchange, Inc. and other
exchanges.
"Net Capital" means net capital of the Company as defined in
subparagraph (c) (2) of Rule 15c3-1 as in effect as of the date any
determination is made thereunder.
"Note" means the Note as defined in Section 3.A of this Agreement
in the amount of $5,000,000.00.
"Rule" means the respective rule promulgated pursuant to the Act
and any successor rule thereto.
"SIPA" means the Securities Investor Protection Act of 1970, as
amended from time to time.
"Subordinated Agreement" means subordinated loan agreements
and secured demand note agreements as defined in subparagraph (a) (2)
of Appendix D to Rule 15c3-1.
"Tangible Net Worth" means the excess of total assets over total
liabilities, total assets and total liabilities each to be determined
in accordance with generally accepted accounting principles consistent
with those applied in the preparation of the financial statements
referred to in Section 2.C hereof, excluding, however, from the
determination of total assets all assets which would be classified as
intangible assets including, without limitation, goodwill (whether
representing the excess of cost over equity or any premium paid in
excess of assets acquired or otherwise) and any write-up of the book
value of assets resulting from a revaluation thereof after the date of
such financial statements all as determined under generally accepted
accounting principles.
2. REPRESENTATIONS AND WARRANTIES. The Company represents,
covenants and warrants that as of the closing date hereunder:
A. Corporate Existence and Power. The Company is a
corporation duly formed and validly existing under the laws of the
State of New York, and has the corporate power to make this Agreement
and to borrow and perform the obligations
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hereunder. The Company is duly licensed or qualified in all states
wherein the character of the property owned or the nature of the
business transacted by it, in the opinion of management of the
Company, makes licensing or qualification necessary and is in good
standing, and will remain in good standing, as a member of the
Exchange.
B. Corporate Authority. The making and performance by the
Company of this Agreement have been duly authorized by all necessary
action on the part of the Company and will not violate any provision
of federal, state or local law or its Articles of Incorporation or
Certificate of Incorporation or result in a breach of, or constitute a
default under, or require any consent under, any material indenture or
loan or credit or other agreement to which the Company is a party or
by which the Company or its property may be bound or affected.
C. Financial Condition. The balance sheet of the Company as at
September 30, 1995, the statements of profit and loss and surplus of
the Company for the audit year ending on that date, the FOCUS Report
of the Company dated September 30, 1995, heretofore furnished to the
Lender are complete and correct and fairly present the financial
condition of the Company as at the dates of said balance sheet, FOCUS
Report and the results of the Company's operations for the audit year
ended on the date of said balance sheet. Such financial statements
were prepared in accordance with generally accepted principles and
practices of accounting consistently applied. To the best of the
Company's knowledge and belief, it has no contingent obligations, or
unusual forward or long term commitments not disclosed by or reserved
against in said balance sheet as of September 30, 1995, or in said
FOCUS Report dated September 30, 1995, and, to the best of the
Company's knowledge and belief, at the present time there are no
unrealized or anticipated losses from any unfavorable commitments of
the Company which have not been disclosed to the Lender.
Since September 30, 1995, there has been no material adverse
change in the financial condition of the Company from that set forth
in said balance sheet as at September 30, 1995, or in said FOCUS
Report dated September 30,1995.
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D. Titles; Liens. Other than as described in Schedule I
hereto, the Company has good and marketable title to all of the
properties and assets reflected in the latest financial statement
(except such as have been disposed of in the ordinary course of
business for a fair consideration), free and clear of all mortgages,
liens, encumbrances, except such minor irregularities in title which
will not interfere with the occupation, use and enjoyment by the
Company of such properties and assets in the normal course of business
of the Company.
E. Taxes. The Company has filed all tax returns required to be
filed and has paid all taxes shown thereon to be due, including
interest and penalties, if any, or has provided adequate reserves for
the payment thereof. The Company is not a party to any material action
or proceeding by any governmental authority for the assessment or
collection of taxes nor has any material claim for assessment or
collection of taxes been asserted against the Company.
F. Licenses, etc. The Company possesses all licenses, permits
and approvals necessary for the conduct of its business as now
conducted and presently proposed to be conducted as, in the opinion of
the management of the Company, is required by law or the rules of the
Commission, the Exchange, the National Association of Securities
Dealers, Inc. and each other association, corporation or governmental
agency or body having appropriate authority (except such licenses,
permits or approvals by authorities outside the United States the
failure to possess which will not, individually or in the aggregate,
result in a material liability on the part of the Company or
materially impair the right or ability of the Company to carry on its
business substantially as now conducted and proposed to be conducted).
G. Governmental Consent. All consents, approvals or
authorizations of, or filings, registrations or qualifications with,
any governmental authority (including, without limitation, any State
securities commission) required by any statute, rule of regulation now
in effect on the part of the Company as a condition to the valid
execution and delivery of this Agreement, the valid offer of the Note
to the Lender, the valid payment of the Note in accordance with the
terms thereof and of this Agreement have been duly obtained and
performed.
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H. Stock Exchange Approvals. The Company has obtained all
consents, approvals or authorizations of the Exchange and of other
securities exchanges of which the Company is a member that are
required on the part of the Company in connection with the due
execution, delivery and performance of this Agreement, the offer,
issue and delivery of the Note and the consummation of the
transactions contemplated by such instruments.
I. Broker-Dealer Registration. The Company is registered as a
broker-dealer under the Act and is also registered where necessary in
the opinion of the management of the Company as a broker-dealer with
the proper authorities of every State of the United States.
J. NASD and Exchange Memberships. The Company is a member
organization in good standing of the National Association of
Securities Dealers, Inc.
("NASD"), and the following securities exchanges: the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the Boston Stock
Exchange.
K. SIPA Agreement. The Company is not in arrears with respect
to any assessment made upon the Company by the Securities Investor
Protection Corporation.
3. TERMS OF THE LOAN.
A. The Note. The obligation of the Company to repay the
aggregate unpaid principal amount of the loan made to it pursuant
hereto shall be evidenced by a promissory note of the Company in
substantially the form of Exhibit A hereto. The Note shall bear
interest on the unpaid principal amount thereof, from the date thereof
at a rate of 9.25%. The entire unpaid balance of principal together
with accrued interest shall be due and payable July 31,2001.
B. Permissive Prepayment on Note. On or after December 31,
1997, with the prior written permission of the Exchange, the Company,
may, at its option, prepay to the Lender all or any portion of the
aggregate principal amount of the Note prior to the final scheduled
maturity date of the Note (a "Voluntary Prepayment").
No prepayment of the Note shall be made, however, if, after
giving effect thereto and to all other payments of principal of
outstanding subordinated loan agreements of the
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Company, including the return of any secured demand note and the collateral
therefor held by the Company, the maturity or accelerated maturity of which
are scheduled to occur within 6 months after the date of such Voluntary
Prepayment or other prepayment, without reference to any projected profit
or loss of the Company:
(i) in the event that the Company is not operating pursuant to
the alternative net capital requirement provided for in paragraph
(f) of the Rule (as defined in paragraph D(i) below), the
aggregate indebtedness of the Company would exceed 1,000
percentum of its net capital as those terms are defined in the
Rule or any successor rule as in effect at the time such
Voluntary Prepayment is to be made (or such other percentum as
may be made applicable at such time to the Company by the
Exchange or the Commission), or
(ii) in the event that the Company is operating pursuant to such
alternative net capital requirement, the net capital of the
Company would be less than 5 percentum (or such other percentum
as may be applicable to the Company at the time of such Voluntary
Prepayment by the Exchange or the Commission) of aggregate debit
items computed in accordance with Exhibit A to Rule 15c3-3 under
the Act or any. successor rule as in effect at such time, or
(iii) in the event that the Company is registered as a future
commission merchant under the CEA, the net capital of the Company
(as defined in the CEA or the regulations thereunder less the
market value of commodity options purchased by option customers
on or subject to the rules of a contract market, provided,
however, the deduction for each option customer shall be limited
to the amount of customer funds in such option customer's account
as in effect at the time of such Voluntary Prepayment) would be
less than 7 percentum (or such other percentum as may be made
applicable to the Company at the time of such Voluntary
Prepayment by the CFTC) of the funds required to be segregated
pursuant to the CEA and the regulations thereunder, or
(iv) the Company's net capital, as defined in the Rule or any
successor rule as in effect at the time of such Voluntary
Prepayment, would be less than 120 percentum (or such other
percentum as may be made applicable to the Company at the
</PAGE>
<PAGE>
time of such Voluntary Prepayment by the Exchange or the
Commission) of the minimum dollar amount required by the Rule as
in effect at such time (or such other dollar amount as may be
made applicable to the Company at the time of such Voluntary
Prepayment by the Exchange or the Commission), or
(v) in the event that the Company is registered as a futures
commission merchant under the CEA, its net capital, as defined in
the CEA or the regulations thereunder as in effect at the time of
such Voluntary Prepayment would be less than 120 percentum (or
such other percentum as may be made applicable to the Company at
the time of such Voluntary Prepayment by' the CFTC) of the
minimum dollar amount required by the CEA or the regulations
thereunder as in effect at such time (or such other dollar amount
as may be made applicable to the Company at the time of such
Voluntary Prepayment by the CFTC), or
(vi) in the event that the Company is subject to the provisions
of paragraph (a)(6)(v) or (a)(7)(iv) or (c) (2) (x) (b) (1) of
the Rule, the net capital of the Company would be less than the
amount required to satisfy the 100% test (or such other percentum
test as may be made applicable to the Company at the time of such
Voluntary Prepayment by the Exchange or the Commission) stated in
such applicable paragraph.
If any Voluntary Prepayment or other prepayment of aggregate
principal under the Note is made to the lender prior to a scheduled
maturity date, and if the Company's Net Capital is less than the
amount required to permit such prepayment pursuant to this section
3.B, the Lender irrevocably agrees to repay the Company the sum so
paid to be held by the Company pursuant to the provisions of this
Agreement as if such prepayment had never been made; provided,
however, that any suit for the recovery of any such prepayment must be
commenced within two years of the date of such prepayment.
C. Payment. All payments of fees under this Agreement or of
principal and interest on the Note shall be made in lawful money of
the United States of America and in immediately available funds.
Interest on the Note and any other charges to be made hereunder shall
be calculated on the basis of actual days elapsed and a year of 360
days. If any principal of or interest on the Note or other amount
payable by the Company hereunder falls
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<PAGE>
due on a Saturday, Sunday or a legal holiday in the State of New York,
then such due date shall be extended to the next succeeding full
Business Day, and in the case of such an extension as to principal,
interest shall be payable in respect of such extension.
D. Suspended Repayment. The Company's obligation to pay all or
a portion of the principal amount of the loan hereunder on a scheduled
maturity date or any accelerated maturity date ("Amount Due") shall be
suspended, and the obligation shall not mature for any period of time
during which after giving effect to such payment, together with the
payment of any other obligation of the Company under other
subordinated loan agreements payable during such period and the return
of any secured demand note and the collateral therefor held by the
Company and returnable during such period,
(i) in the event that the Company is not operating pursuant
to the alternative net capital requirement provided for in
paragraph (0 of Rule 15c3-1 (the "Rule") under the Securities
Exchange Act of 1934, as amended, the aggregate indebtedness of
the Company would exceed 1200 percentum of its net capital as
those terms are defined in the Rule or any successor rule as in
effect at the time payment is to be made (or such other
percenturn as may be made applicable to the Company at the time
of such payment by the Exchange or the Commission), or
(ii) in the event that the Company is operating pursuant to
such alternative net capital requirement, the net capital of the
Company would be less than 5 percentum (or such other percentum
as may be made applicable to the Company at the time of such
payment by the Exchange or the Commission) of aggregated debit
items computed in accordance with Exhibit A to Rule 15c3-3 under
the Act or any successor rule as in effect at such time, or
(iii) in the event that the Company is registered as a
futures commission merchant under the CEA, the net capital of the
Company (as defined in the CEA or the regulations thereunder as
in effect at the time of such payment) would be less than 6
percentum (or such other percentum as may be made applicable to
the Company at the time of such payment by the CFTC) of the funds
required to be segregated pursuant to the CEA and the regulations
thereunder, or
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(iv) the Company's net capital, as defined in the Rule or
any successor rule as in effect at the time of such payment,
would be less than 120 percentum (or such other percentum as may
be made applicable to the Company at the time of such payment by
the Exchange or the Commission) of the minimum dollar amount
required by the Rule as in effect at such time (or such other
dollar amount as may be made applicable to the Company at the
time of such Voluntary Prepayment by the Exchange or the
Commission), or
(v) in the event that the Company is registered as a
futures commission merchant under the CEA, and if its net
capital, as defined in the CEA or the regulations thereunder as
in effect at the time of such payment, would be less than 120
percentum (or such other percentum as may be made applicable to
the Company at the time of such payment by the CFTC) of the
minimum dollar amount required by the CEA or the regulations
thereunder as in effect at such time (or such other dollar amount
as may be made applicable to the Company at the time of such
payment by the CFTC), or
(vi) in the event that the Company is subject to the
provisions of paragraph (a) (6) (v) or (a) (7) (iv) or (c) (2)
(x) ~) (1) of the Rule, the net capital of the Company would be
less than the amount required to satisfy the 1000% test (or such
other percentum test as may be made applicable to the Company at
the time of such payment by the Exchange or the Commission)
stated in such applicable paragraph (the net capital necessary to
enable the Company to avoid such suspension of its obligation to
pay the principal amount hereof being hereafter referred to as
the "Applicable Minimum Capital").
During any such suspension, the Company shall, as promptly as
is consistent with the protection of its customers, reduce its
business to a condition whereby the Amount Due, with accrued
interest thereon, together with any other obligation of the
Company under subordinated loan agreements payable at or prior to
the payment of the Amount Due can be repaid and any secured demand
note and the collateral therefore held by the Company and
returnable at or prior to the payment of the Amount Due can be
returned, all without Net Capital being below the Applicable
Minimum Capital, at which time the obligation to pay
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<PAGE>
the Amount Due shall mature and the Company shall repay the Amount
Due, plus accrued interest, not later than upon 5 days' prior written
notice to the Exchange. Upon any such suspension, the Company and the
Lender recognize and agree that the Company may be summarily suspended
by the Exchange.
The Company agrees that, if its obligations to pay the Amount Due
is ever suspended for a period of six months, it will promptly take
whatever steps are necessary to effect a rapid and orderly complete
liquidation of its business. The date on which such liquidation
commences shall be deemed, for purposes of the Lender's claims
hereunder, to constitute the maturity date for each Subordination
Agreement of the Company then outstanding but the right of the
respective lenders to receive payment under this and such other
Subordination Agreements shall remain subordinated, and have priority
rank, in accordance with the terms hereof and thereof, respectively.
If payment of aggregate principal under the Note is made to the
Lender on a scheduled maturity date and, immediately after any such
payment, Net Capital is less than the Applicable Minimum Capital, the
Lender irrevocably agrees to repay to the Company the sum so paid, to
be held by the Company pursuant to the provisions of this Agreement as
if such payment had never been made; provided, however, that any suit
for the recovery of any such payment must be commenced within two
years of the date of such payment.
E. Subordination of this Agreement. The Lender. irrevocably
agrees that the obligations of the Company with respect to the payment
of principal and interest on the Note are and shall be subordinate in
right of payment and subject to the prior payment or provision for
payment in full of (i) all claims of all other present and future
creditors of the Company whose claims are not similarly subordinated
(claims under the Note shall rank pari passu with claims similarly
subordinate) or are not junior in right of payment to claims under
such Note and (ii) claims which are now or hereafter expressly stated
in the instruments creating such claims to be senior in right of
payment to the claims of the class of claims under the Note, arising
out of any matter occurring prior to the maturity date of the Note. In
the event of appointment of a receiver or trustee of the Company or in
the event of its insolvency or liquidation pursuant to SPA or
otherwise, its bankruptcy, assignment for the benefit of creditors,
reorganization whether or not pursuant to bankruptcy laws, or any
other
</PAGE>
<PAGE>
marshalling of the assets and liabilities of the Company, the holder
of the Note shall not be entitled to participate or share, ratably or
otherwise, in the distribution of the assets of the Company until all
claims of all other present and future creditors of the Company, whose
claims are senior to the Note, have been fully satisfied, or provision
has been made therefor.
4. CONDITIONS OF LENDING. The obligation of the Lender to make the
loan hereunder is subject to the following conditions precedent:
A. Proof of Corporate Action. The Lender shall have received
certified copies of all corporate action taken by the Company to
authorize the execution and delivery of this Agreement and the Note,
and such other papers as the Lender or its counsel shall reasonably
require.
B. Delivery of the Note. As of the date of the initial
borrowing the Lender shall have received from the Company a duly
executed Note.
5. AFFIRMATIVE COVENANTS. The Company agrees that until payment in
full of the Note, unless the Lender shall otherwise consent in writing
it will:
A. Financial Statements, Reports, etc. Furnish the Lender:
(i) within ninety (90) days after the end of each audit
year of the Company a balance sheet and statements of income,
together with supporting schedules, and the FOCUS Report of the
Company as at the end of such audit year, all audited and
unqualifiedly certified by independent certified public
accountants of recognized standing selected by the Company and
acceptable to the Lender showing the financial condition of the
Company at the close of such year and the results of operations
of the Company during such year, along with the Company's
computation of Net Capital and the Company's computation of the
ratio of Net Capital to Aggregate Debit Items, which computations
are to be as of the last day of the audit year;
(ii) within thirty (30) days after the end of each of the
first three audit quarters in each audit year, the FOCUS Report
of the Company, certified by a duly authorized officer of the
Company, along with the Company's computation of Net Capital and
the Company's computation of the ratio of Net Capital to
aggregate Debit Items, which computations are to be as of the
last day of the audit quarter;
</PAGE>
<PAGE>
(iii) promptly as it may occur any amendment to its
Articles of Incorporation or Certificate of Incorporation;
(iv) promptly, from time to time, such other information
regarding the operations, business, affairs and financial
condition of the Company as the Lender may reasonably request.
B. Taxes. Pay and discharge all taxes, assessments and
governmental charges or levies imposed on the Company or its income or
profits or any of its property prior to the date on which penalties
attached hereto, except any such tax, assessment, charge or levy the
payment of which may be or is being contested in good faith and by
proper proceedings and for which the Company is maintaining adequate
reserves.
C. Maintenance of Existence: Conduct of Business. Maintain its
existence as a Corporation and all of its rights, privileges and
franchises necessary or desirable in the normal conduct of its
business, and will conduct its business in an orderly, efficient and
regular manner.
D. Notices. Furnish the Lender, promptly after knowledge
thereof shall have come to the attention of any executive officer of
the Company, written notice of (i) any threatened or pending
litigation or governmental or administrative proceeding against the
Company which would materially and adversely affect the business and
property of the Company, (ii) the occurrence of any Event of Default
hereunder or any event which with notice or the passage of time or
both would constitute such an Event of Default and (iii) the
occurrence of any default under any other material agreement to which
the Company is a party or any event which with notice or the passage
of time or both would constitute such a default; and in the case of
(i) , (ii) and (iii) except to the extent such occurrence would hot
have a material adverse effect on the financial condition of the
Company.
6. NEGATIVE COVENANTS. The Company agrees that until payment in full
of the Note, unless the Lender shall otherwise agree in writing, it will
not:
A. Limitation of Liens. Create or suffer to exist any security
interest, mortgage, pledge, lien, charge, encumbrance, assignment or
transfer upon or of any of its property or assets now owned and
hereafter acquired, excluding, however, from the operation of this
covenant:
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<PAGE>
(i) liens that exist on the date hereof;
(ii) securities and commodities now owned or hereafter
acquired by the Company in the ordinary course of its business as
a broker and dealer in securities;
(iii) deposits or pledges to secure payment of worker's
compensation, unemployment insurance, old age pensions or other
social security;
(iv) deposits or pledges to secure performance of bids,
tenders, contracts (other than contracts for the payment of
money), or leases, public or statutory obligations, surety or
appeal bonds, or other deposits or pledges for purposes of like
general nature in the ordinary course of business;
(v) liens for property taxes not delinquent and liens for
taxes or other governmental charges which in good faith are being
contested or litigated;
(vi) mechanics', carriers', workmen's, repairmen's or other
like liens arising in the ordinary course of business securing
obligations which are not overdue for a period of sixty (60)
days, or which are in good faith being contested or litigated;
(vii) liens in favor of the Company or any wholly-owned
subsidiary of the Company;
(viii) purchase money liens on property or equipment; and
(ix) liens for the sole purpose of extending, renewing or
replacing in whole or in part any of the foregoing.
B. Total Liabilities Permit, at any time, the ratio of
aggregate indebtedness to Tangible Net Worth to exceed 20.0 to 1.0.
C. Sell. Lease. etc. Sell, lease, transfer or otherwise dispose
of all or substantially all of its assets.
D. Dissolution, etc. Dissolve or liquidate.
E. Net Capital Provision. Permit, at any time:
(i) Net Capital to be less than $7,500,000.00, which shall
include funds advanced pursuant to this Agreement; or
(ii) Net Capital to be less than 3.5 times the amount of
two percent (2%) of total debits as determined per Exhibit A of
Rule 15c3-3, and
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</PAGE>
(iii) Net Capital in excess of five percent (5%) of
total debits as determined per Exhibit A of Rule 15c3-3 to be
less than 50% of the amount of Net Capital attributable to the
Note.
F. Total Capitalization. Permit, at any time, total capital as
shown in the audited financial statements of the Company (excluding
therefrom, however, all indebtedness of the Company to the Lender
hereunder), to be less than $9,500,000.
7. A. Events of Default. Upon the occurrence of any one of
the events described below in subparagraphs (i) through (v) the
Lender by written notice to the Company, with a copy to the
Exchange, may declare the unpaid principal amount of and all
accrued interest on the Note to be immediately due and payable
whereupon the same shall become due and payable without
presentment, demand, protest or further notice of any kind. The
Lender may rescind and annul any such declaration of acceleration
upon written notice to the Company and to the Exchange, but no
such rescission or annulment shall impair the Lender's right to
declare subsequent accelerations. If on the date such Event of
Default occurs, liquidation of the Company has not already
commenced, all unpaid principal and accrued interest with respect
to all other subordination agreements of the Company then
outstanding shall be due and payable, but the rights of the
respective lenders thereunder shall remain subordinate as
provided in Section 3 of the Cash Subordination Agreement.
(i) The making of an application by the Securities
Investor Protection Corporation for a decree adjudicating
that customers of the Company are in need of protection
under SPA and the failure of the Company to obtain the
dismissal of such application within 30 days; or
(ii) (a) If the Company is not operating pursuant
to the alternative net capital requirements provided for in
Paragraph (f) of Rule 15c3-1, Aggregate Indebtedness being
in excess of 1500 percentum of Net Capital, or (1') if the
Company is operating pursuant to such alternative net
capital requirements, Net Capital being less than that
percentum of Aggregate Debit Items which is required to be
maintained by the Company by said Paragraph (f) as from time
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<PAGE>
to time in effect or, if the Company is registered as a futures
commission merchant, 4% of the funds required to be segregated
under the Commodities Exchange Act and the regulations
promulgated thereunder, if greater, in either case throughout a
period of 15 consecutive Business Days commencing on the day the
Company first determines and notifies the Exchange or the Company
first received notice from the Commission of such fact; or
(iii) Revocation by the Commission of the broker-dealer
registration of the Company; or
(iv) Suspension or revocation for at least ten (10) days by
the Exchange of the Company's status as a member organization of
the Exchange; or
(v) Any receivership, insolvency, liquidation pursuant to
SPA or otherwise, bankruptcy, assignment for benefit of
creditors, reorganization, whether or not pursuant to bankruptcy
laws, or any other marshaling of the assets and liabilities of
the Company.
B. Events of Acceleration. Upon the occurrence of any one of
the events described below in subparagraphs (i) through (v) and after
six months from the Effective Date, the Lender by written notice to
the Company, with a copy to the Exchange, may acceleration the date on
which the unpaid principal amount and all accrued interest on the Note
is scheduled to mature, to the last business day of a calendar month
which is not less than six months after notice of acceleration is
received by the Company and the Exchange.
(i) Failure to make payment of (a) interest on the Note
when due, or (b) principal of the Note when due, on a scheduled
maturity date, and any such failure continuing for more than ten
(10) business days after the giving of written notice to the
Company of such failure; or
(ii) Any material representation or warranty of the Company
set forth in Section 2 of this Agreement is determined to have
been inaccurate in a material respect at the time made; or
</PAGE>
<PAGE>
(iii) Default in the performance of any covenant
set forth in Section 5 of this Agreement, and such default
continuing for more than ten (10) business days after
written notice thereof; or
(iv) Default in the compliance with any covenant set
forth in Section 6 of this Agreement, and such default
continuing for more than ten (10) business days after
written notice thereof; or
(v) Action against the Company is taken by any
governmental regulatory authority which specifically affects
the Company and which, in the reasonable opinion of the
Lender, will materially and adverse affect the Company's
ability to pay the principal of, and interest on, the Note.
8. CHANGE OF CONTROL.
A. Upon the occurrence of a Change of Control (as defined
below), the Lender shall have the right to require the Company to
repurchase the Note, in whole but not in part, pursuant to the
offer described in paragraph ~) below (the "Change of Control
Offer") at a purchase price (the "Repurchase Price") in cash
equal to the aggregate principal amount thereof plus accrued and
unpaid interest thereon, if any, to the Change of Control Payment
Date (as defined below).
B. Within 30 calendar days subsequent to the date of any
Change of Control but no earlier than six months following the
Effective Date, the Company shall mail a notice to the Lender
stating: (i) that a Change of Control has occurred and that a
Change of Control Offer is being made pursuant to this Section 8;
and (ii) the Repurchase Price and the date by which the Note
shall be tendered for repurchase, which date shall be a date
occurring no earlier than six (6) months and no later than seven
(7) months subsequent to the date on which such notice is mailed
(the "Change of Control Payment Date");
C. On the Change of Control Payment Date the Lender shall
surrender the Note to the Company, the Company shall pay to the
Lender the Repurchase Price and the Note shall be canceled. If
the Note is not so tendered, then, the Note shall continue to
accrue interest and the principal will be due at maturity in the
same manner as if such Change of Control had not occurred.
</PAGE>
<PAGE>
D. A "Change of Control" means an event or series of
events by which (i) any "person" or "group" becomes the
"beneficial owner" (each as defined under Section 13d of the
Act), directly or indirectly, of 50% or more of the total voting
power of all classes of voting stock of the Company or First
Albany Companies Inc. ("FACI") or (ii) the Company or FACI
consolidates with or merges into any other entity, other than a
wholly-owned subsidiary of the Company or FACI, or any other
entity merges into the Company or FACI or conveys, transfers or
leases all or substantially all of its assets to any entity or
group of entities as a result of which the existing shareholders
of the Company or FACI immediately prior thereto hold less than
50% of the combined voting power of the voting stock of the
surviving entity.
9. MISCELLANEOUS.
A. No Waiver; Remedies Cumulative. No failure on the part
of the Lender to exercise, and no delay in exercising, any right
hereunder shall preclude any other or further exercise thereof or
the exercise of any other right. The remedies herein provided
are cumulative and not exclusive of any remedies provided by law.
B. Survival of Representations. All representations and
warranties made herein shall survive the making of the loan
hereunder and delivery of the Note.
C. Construction. This Agreement and the Note shall be
deemed to have been made under the laws of the State of New York,
without regard to its principals of conflicts of law, and shall
be construed in accordance with the laws of said state.
D. Successors and Assigns. This Agreement shall be binding
upon, and shall inure to the benefit of, the Company, the Lender
and their respective successors and assigns.
E. Notices. Notices shall be given to the Lender and the
Company by personal delivery or by registered or certified mail,
return receipt requested, addressed as follows:
If to the Company, to:
Chief Financial Officer
First Albany Corporation
30 South Pearl Street
Albany, New York 12207
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<PAGE>
If to the Lender, to:
Sharon M. Duker
c/o William F. Duker
Duker & Barrett
100 State Street
Albany, New York 12207
If to the New York Stock Exchange, to:
Finance Coordinator
New York Stock Exchange
20 Broad Street
New York, New York 10005
F. Accredited Investor/Limitations on Transfer The
Lender acknowledges and represents that (i) it is an accredited
investor, as that term is defined in Rule 501 promulgated under the
Securities Act of 1933, as amended (the "Act") by virtue of Lender
having a net worth, either individually or with Lender's spouse, of at
least $1,000,000, (ii) it is acquiring the Note for investment
purposes only and not with a view to, or for sale in connection with,
any distribution of the Note, or with any present intention of selling
the Note, or any part thereof, and (iii) it will not transfer the
Note, or any part thereof, unless such transfer complies with the
registration requirements of the Act or an exemption from such
registration requirements is applicable to such transfer.
G. Disclaimer. The Lender, by accepting the Note, irrevocably
agrees that its making of the loans evidenced by the Note is not being
made in reliance upon the standing of the Company as a member
organization of the Exchange or upon the Exchange's surveillance of
the Company's financial position or its compliance with the
constitution, rules and practices of the Exchange. The Lender has
made such investigation of the Company and its Officers and employees
as the Lender deems necessary and appropriate under the circumstances.
The Lender is not relying upon the Exchange to provide any information
concerning or relating to the Company and agrees that the Exchange has
no responsibility to disclose to the Lender any
</PAGE>
<PAGE>
information concerning or relating to the Company which it may now or
in the future have. The Lender agrees that neither the Exchange, its
special trust fund, nor any director, officer, trustee or employee of
the Exchange, shall be liable to the Lender with respect to this
Agreement or the Note or the repayment thereof of any interest
thereon.
H. Assignment. The Note may not be transferred, sold, assigned,
pledged or otherwise encumbered or otherwise disposed of, and no lien,
charge or other encumbrance may be created or permitted to be created
hereon without the prior written consent of the Exchange and the
Company, except that the Company shall not without its consent to such
transfer to a member of Lender's immediate family. Any transfer not
permitted by the foregoing shall be void.
I. Exchange Approval. This Agreement shall not be modified or
amended without the prior written approval of the Exchange.
J. Entire Agreement. This Agreement and the Note embody the
entire agreement as to the subject matter hereof between the Company
and the Lender and no other evidence of such agreement has been or
will be executed without the prior written consent of the Exchange.
K. Cancellation. Neither this Agreement nor the Note shall be
subject to cancellation by either party except as may be permitted
hereunder.
L. Notice to CFTC. So long as the Company is a futures
commission merchant as that term is defined in the Commodity Exchange
Act, the Company agrees, consistent with the requirements of Section
1.17Q) of the regulations of the CFTC, that:
(i) whenever prior written notice by the Company to the
Exchange is required pursuant to the provisions of this
Agreement, the same prior written notice shall be given by the
Company to (a) the CFTC at its principal office in Washington,
D.C., Attention: Chief Accountant of Division of Trading and
Markets, and/or (1,) the commodity exchange of which the Company
is a member and which is then designated by the CFTC as the
Company's designated self-regulatory organization (the ("DSRO"),
and
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<PAGE>
(ii) whenever prior written consent, permission or approval
of the Exchange is required pursuant to the provisions of this
Agreement, the Company shall also obtain the prior written
consent, permission or approval of the CFTC and/or of the DSRO,
and
(iii) whenever the Company receives written notice of
acceleration of maturity pursuant to the provisions of this
Agreement, the Company shall promptly give written notice thereof
to the CFTC at the address above stated and/or the DSRO.
M. Status of Proceeds The proceeds of the loan evidenced hereby
shall be dealt with in all respects as capital of the Company, shall
be subject to the risks of its business, and may be deposited in an
account or accounts in the Company's name in any bank or trust
company.
</PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day of the year first written above.
FIRST ALBANY CORPORATION LENDER:
By:_________________________ __________________________
Name: Sharon M. Duker
Title:
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<PAGE>
NOTE
$5,000,000.00 Albany, New York
September 16, 1996
FOR VALUE RECEIVED, the undersigned FIRST ALBANY CORPORATION, a New York
corporation with offices at 30 South Pearl Street, Albany, New York 12207,
promises to pay to the order of Sharon M. Duker, (herein called the
"Lender"), at the office of the Lender in Albany, New York or at such other
place in New York as may be designated from time to time by the Lender, the
sum of Five Million ($5,000,000.00) Dollars and to pay interest on the
disbursed, unpaid principal, from the date hereof, at the rate of nine and
one-quarter (9.25%) percent per annum.
The undersigned promises to pay the principal and interest as follows:
(a) Accrued interest to be paid on the 31st day of September, 1996,
and on the last day of each succeeding month thereafter during
the term hereof.
(b) The entire unpaid balance of principal together with accrued
interest to be paid to the Lender on the 31st day of July, 2001.
All amounts paid pursuant to this paragraph shall be applied first to the
payment of accrued interest to the date of payment and then to the
reduction of principal.
The undersigned agrees to pay accrued interest and/or principal when due.
This Note is subject to the terms, covenants and conditions set forth in a
Subordinated Loan Agreement by and between the undersigned and the Lender,
dated the date hereof (the "Loan Agreement"), and all such terms, covenants
and conditions of such Loan Agreement are all hereby incorporated in this
Note, with the same force and effect as though said terms, covenants and
conditions were fully set forth herein. The prepayment of any portion of
the principal or interest due under this Note shall be allowed in
accordance with the terms of the Loan Agreement.
DEFAULT. Upon the occurrence of certain Events of Default, specified in
the loan Agreement, the principal of and interest on this Note may be
declared due and payable either immediately or as set forth therein. The
payment of principal of the Note may be suspended upon the occurrence of
certain events specified in the Loan Agreement, and such suspension will
not constitute a default hereunder.
The undersigned agrees to pay all costs and expenses incurred by the holder
hereof in enforcing this Note, including, without limitation, reasonable
attorneys' fees and legal expenses.
FIRST ALBANY CORPORATION
(CORPORATE SEAL)
By:_________________________
ATTEST: Alan P. Goldberg
President
_______________________
EXHIBIT 10.21
MASTER EQUIPMENT LEASE AGREEMENT
THIS MASTER EQUIPMENT LEASE AGREEMENT dated as of September 25, 1996
is made by and between KEYCORP LEASING LTD., a Delaware corporation with
its principal place of business at 54 State Street, Albany, New York 12207
("Lessor"), and FIRST ALBANY COMPANIES INC., a New York corporation with
its principal place of business at 41 State Street, Albany, NY 12207
("Lessee").
TERMS AND CONDITIONS OF LEASE
1. Lease. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Equipment, subject to and upon the terms and conditions
set forth herein. Each Equipment Schedule shall constitute a separate and
enforceable lease Incorporating all the terms and conditions of this Master
Equipment Lease Agreement as if such terms and conditions were set forth in
full in such Equipment Schedule. In the event that any term or condition of
this Equipment Schedule conflicts with or is inconsistent with any term or
condition of this Master Equipment Lease Agreement, the terms and
conditions of the Equipment Schedule shall govern.
2. Disclaimer of Warranties. LESSOR MAKES NO (AND SHALL NOT BE
DEEMED TO HAVE MADE ANY) WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY MATTER
WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE DESIGN, OPERATION OR
CONDITION OF, OR THE QUALITY OF THE MATERIAL, EQUIPMENT OR WORKMANSHIP IN,
THE EQUIPMENT, ITS MERCHANTABILITY OR ITS FITNESS FOR ANY PARTICULAR
PURPOSE, THE STATE OF TITLE THERETO OR ANY COMPONENT THERETO, THE ABSENCE
OF LATENT OR OTHER DEFECTS (WHETHER OR NOT DISCOVERABLE), AND LESSOR HEREBY
DISCLAIMS THE SAME; IT BEING UNDERSTOOD THAT THE EQUIPMENT IS LEASED TO
LESSEE "AS IS" AND ALL SUCH RISKS, IF ANY, ARE TO BE BORNE BY LESSEE. NO
DEFECT IN, OR UNFITNESS OF, THE EQUIPMENT, OR ANY OF THE OTHER FOREGOING
MATTERS, SHALL RELIEVE LESSEE OF THE OBLIGATION TO PAY RENT OR OF ANY OTHER
OBLIGATION HEREUNDER. LESSEE HAS MADE THE SELECTION OF THE EQUIPMENT FROM
THE SUPPLIER BASED ON ITS OWN JUDGMENT AND EXPRESSLY DISCLAIMS ANY RELIANCE
UPON ANY STATEMENTS OR REPRESENTATIONS MADE BY LESSOR. LESSOR IS NOT
RESPONSIBLE FOR ANY REPAIRS, SERVICE, MAINTENANCE OR DEFECT IN THE
EQUIPMENT OR THE OPERATION THEREOF. IN NO EVENT SHALL LESSOR BE LIABLE FOR
ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES (WHETHER UNDER THE UCC OR
OTHERWISE), INCLUDING, WITHOUT LIMITATION, ANY LOSS, COST OR DAMAGE TO
LESSEE OR OTHERS ARISING FROM ANY OF THE FOREGOING MATTERS, INCLUDING,
WITHOUT LIMITATION, DEFECTS, NEGLIGENCE, DELAYS, FAILURE OF DELIVERY OR NON-
PERFORMANCE OF THE EQUIPMENT. ANY WARRANTY BY THE SUPPLIER IS HEREBY
ASSIGNED TO LESSEE BY LESSOR WITHOUT RECOURSE. SUCH WARRANTY SHALL NOT
RELEASE LESSEE FROM ITS OBLIGATION TO LESSOR TO PAY RENT, TO PERFORM ALL
OTHER OBLIGATIONS HEREUNDER AND TO KEEP, MAINTAIN AND SURRENDER THE
EQUIPMENT IN THE CONDITION REQUIRED BY SECTIONS 12 AND 13 HEREOF. Lessee's
execution and delivery of a Certificate of Acceptance shall be conclusive
evidence as between Lessor and Lessee that the Items of Equipment described
therein are in all of the foregoing respects satisfactory to Lessee, and
Lessee shall not assert any claim of any nature whatsoever against Lessor
based on any of the foregoing matters; provided, however, that nothing
contained herein shall in any way bar, reduce or defeat any claim that
Lessee may have against the Supplier or any other person (other than
Lessor).
3. Non-Cancelable Lease. THIS LEASE IS A NET LEASE AND LESSEE'S
OBLIGATION TO PAY RENT AND PERFORM ITS OBLIGATIONS HEREUNDER ARE ABSOLUTE,
IRREVOCABLE AND
UNCONDITIONAL UNDER ANY AND ALL CIRCUMSTANCES WHATSOEVER AND SHALL NOT BE
SUBJECT TO ANY RIGHT OF SET OFF, COUNTERCLAIM, DEDUCTION, DEFENSE OR OTHER
RIGHT WHICH LESSEE MAY HAVE AGAINST THE SUPPLIER, LESSOR OR ANY OTHER
PARTY. LESSEE SHALL HAVE NO RIGHT TO TERMINATE (EXCEPT AS EXPRESSLY
PROVIDED HEREIN) OR CANCEL THIS LEASE OR TO BE RELEASED OR DISCHARGED FROM
ITS OBLIGATION HEREUNDER FOR ANY REASON WHATSOEVER, INCLUDING, WITHOUT
LIMITATION, DEFECTS IN, DESTRUCTION OF, DAMAGE TO OR INTERFERENCE WITH ANY
USE OF THE EQUIPMENT (FOR ANY REASON WHATSOEVER, INCLUDING, WITHOUT
LIMITATION, WAR, ACT OF GOD, STRIKE OR GOVERNMENTAL REGULATION), THE
INVALIDITY, ILLEGALITY OR UNENFORCEABILITY (OR ANY ALLEGATION THEREOF) OF
THIS LEASE OR ANY PROVISION HEREOF, OR ANY OTHER OCCURRENCE WHATSOEVER,
WHETHER SIMILAR OR DISSIMILAR TO THE FOREGOING, WHETHER FORESEEN OR
UNFORESEEN.
</PAGE>
<PAGE>
MASTER EQUIPMENT LEASE AGREEMENT
R94-100.996
4. Definitions. Unless the context otherwise requires, as used in
this Lease, the following terms shall have the respective meanings
indicated below and shall be equally applicable to both the singular and
the plural forms thereof:
(a) "Applicable Law" shall mean all applicable Federal, state,
local and foreign laws (including, without limitation, any Environmental
Law, industrial hygiene and occupational safety or similar laws),
ordinances, judgments, decrees, injunctions, writs and orders of any
Governmental Authority and rules, regulations, orders, licenses and permits
of any Governmental Authority.
(b) "Appraisal Procedure" shall mean the following procedure for
obtaining an appraisal of the Fair Market Sales Value or the Fair Market
Rental Value. Lessor shall provide Lessee with the names of three
independent Appraisers. Within ten (10) business days thereafter, Lessee
shall select one of such Appraisers to perform the appraisal. The selected
Appraiser shall be instructed to perform its appraisal based upon the
assumptions specified in the definition of Fair Market Sales Value or Fair
Market Rental Value, as applicable, and shall complete its appraisal within
twenty (20) business days after such selection. Any such appraisal shall be
final, binding and conclusive on Lessee and Lessor and shall have the legal
effect of an arbitration award. Lessee shall pay the fees and expenses of
the selected Appraiser.
(c) "Appraiser" shall mean a person engaged in the business of
appraising property who has at least ten years' experience in appraising
property similar to the Equipment.
(d) "Authorized Signer" shall mean those officers of Lessee, set
forth on an incumbency certificate (in form and substance satisfactory to
Lessor) delivered by Lessee to Lessor, who are authorized and empowered to
execute this Lease, the Equipment Schedules and all other documents the
execution of which is contemplated hereby.
(e) "Certificate of Acceptance" shall mean a certificate of
acceptance, in form and substance satisfactory to Lessor, executed and
delivered by Lessee in accordance with Section 7 hereof indicating, among
other things, that the Equipment described therein has been accepted by
Lessee for all purposes of this Lease.
(f) "Default" shall mean any event or condition which, with the
passage of time or the giving of notice, or both, would constitute an Event
of Default.
(g) "Environmental Law" shall mean any federal, state, or local
statute, law, ordinance, code, rule, regulation, or order or decree
regulating, relating to. or imposing liability upon a person in connection
with the use, release or disposal of any hazardous, toxic or dangerous
substance, waste, or material as same may relate to the Equipment or its
operation.
(h) "Equipment" shall mean an item or items of personal property
designated from time to time by Lessee which are described on an Equipment
Schedule and which are being or will be leased by Lessee pursuant to this
Lease, together with all replacement parts, additions and accessories
incorporated therein or affixed thereto.
(i) "Equipment Group" shall consist of all Items of Equipment
listed on a particular Equipment Schedule.
(j) "Equipment Location" shall mean the location of the
Equipment, as set forth on an Equipment Schedule, or such other location
(approved by Lessor) as Lessee shall from time to time specify in writing.
(k) "Equipment Schedule" shall mean each equipment lease
schedule from time to time executed by Lessor and Lessee with respect to an
Equipment Group, pursuant to and incorporating by reference all of the
terms and conditions of this Master Equipment Lease Agreement.
(l) "Event of Default" shall have the meaning specified in
Section 22 hereof.
(m) "Fair Market Rental Value" or "Fair Market Sale Value" shall
mean the value of each Item of Equipment for lease or sale, unless
otherwise specified herein as determined between Lessor and Lessee, or, if
Lessor and Lessee are unable to agree, pursuant to the Appraisal Procedure,
which would be obtained in an arms-length transaction between an informed
and willing lessor or seller (under no compulsion to lease or sell) and an
informed and willing lessee or buyer (under no compulsion to lease or
purchase). in determining the Fair Market Rental Value or Fair Market Sale
Value of the Equipment, (a) such Fair Market Rental Value or Fair Market
Sale Value shall be calculated on the assumption that the Equipment is in
the condition and repair required by Sections 12 and 13 hereof, and (b)
there shall be excluded from the calculation thereof the value of any
upgrades and attachments made pursuant to Section 14 hereof in which the
Lessor does not own an interest; provided, however, that, unless otherwise
provided in such Section 22, for purposes of Section 22 of the Lease, Fair
Market Sale Value of the Equipment shall be determined based upon the
actual facts and circumstances then prevailing without regard to the
assumptions in clause (a) above.
(n) "Governmental Action" shall mean all authorizations,
consents, approvals, waivers, filings and declarations of any Governmental
Authority, including, without limitation, those environmental and operating
permits required for the ownership, lease, use and operation of the
Equipment.
(o) "Governmental Authority" shall mean any foreign, Federal,
state, county, municipal or other governmental authority, agency, board or
court.
(p) "Guarantor" shall mean any guarantor of Lessee's obligations
hereunder.
(q) "Item of Equipment" shall mean each item of the Equipment.
MASTER EQUIPMENT LEASE AGREEMENT
R94-100.996
2
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<PAGE>
(r) "Late Payment Rate" shall mean an annual interest rate equal
to the lesser of 18% or the maximum interest rate permitted by Applicable
Law.
(s) "Lease", "hereof", "herein" and "hereunder" shall mean, with
respect to an Equipment Group, this Master Equipment Lease Agreement and
the Equipment Schedule on which such Equipment Group is described,
including all addenda attached thereto and made a part thereof.
(t) "Lien" shall mean all mortgages, pledges, security
interests, liens, encumbrances, claims or other charges of any kind
whatsoever.
(u) "Purchase Agreement" shall mean any purchase agreement or
other contract entered into between the Supplier and Lessee for the
acquisition of the Equipment to be leased hereunder.
(v) "Related Equipment Schedule" shall have the meaning set
forth in Section 27 hereof.
(w) "Renewal Notice" shall have the meaning set forth in Section
32 hereof.
(x) "Return Notice" shall have the meaning set forth In Section
13 hereof.
(y) "Rent" shall mean the periodic rental payments due hereunder
for the leasing of the Equipment, as set forth on the Equipment Schedules,
and, where the context hereof requires, all such additional amounts as may
from time to time be payable under any provision of this Lease.
(z) "Rent Commencement Date" shall mean, with respect to an
Equipment Group, the date on which Lessor disburses funds for the purchase
of such Equipment Group, as determined by Lessor in its sole discretion.
(aa) "Rent Payment Date" with respect to an Equipment Group,
shall have the meaning set forth in the Equipment Schedule associated
therewith.
(ab) "Stipulated Loss Value" shall mean, as of any Rent Payment
Date and with respect to an Item of Equipment, the amount determined by
multiplying the Total Cost for such Item of Equipment by the percentage
specified in the applicable Stipulated Loss Value Supplement opposite such
Rent Payment Date.
(ac) "Stipulated Loss Value Supplement" with respect to an
Equipment Group, shall have the meaning set forth in the Equipment Schedule
associated therewith.
(ad) "Supplier" shall mean the manufacturer or the vendor of the
Equipment, as set forth on each Equipment Schedule.
(ae) "Term" shall mean the Initial Term, as defined in Section 8
hereof, and any Renewal Term, as defined. in Section 8 hereof.
(af) "Total Cost" shall mean, with respect to an Item of
Equipment, (1) the acquisition cost of such item of Equipment (including
Lessors capitalized costs), as set forth on the Equipment Schedule on which
such item of Equipment is described, or (2) if no such acquisition cost is
specified, the Suppliers invoice price for such Item of Equipment plus
Lessors capitalized costs, or (3) if no such acquisition cost is specified
and no such invoice price is obtainable, an allocated price for such Item
of Equipment based on the Total Cost of all Items of Equipment set forth on
the Equipment Schedule on which such Item of Equipment is described, as
determined by Lessor in its sole discretion.
5. Supplier Not an Agent. LESSEE UNDERSTANDS AND AGREES THAT (i)
NEITHER THE SUPPLIER, NOR ANY SALES REPRESENTATIVE OR OTHER AGENT OF THE
SUPPLIER, IS (1) AN AGENT OF LESSOR OR (2) AUTHORIZED TO MAKE OR ALTER ANY
TERM OR CONDITION OF THIS LEASE, AND (ii) NO SUCH WAIVER OR ALTERATION
SHALL VARY THE TERMS OF THIS LEASE UNLESS EXPRESSLY SET FORTH HEREIN.
6. Ordering Equipment. Lessee has selected and ordered the Equipment
from the Supplier and, if appropriate, has entered into a Purchase
Agreement with respect thereto. Lessor shall accept an assignment from
Lessee of Lessee's rights, but none of Lessee's obligations, under any such
Purchase Agreement. Lessee shall arrange for delivery of the Equipment so
that it can be accepted in accordance with Section 7 hereof. If an Item of
Equipment is subject to an existing Purchase Agreement between Lessee and
the Supplier, Lessee warrants that such Item of Equipment has not been
delivered to Lessee as of the date of the Equipment Schedule applicable
thereto. If Lessee causes the Equipment to be modified or altered, or
requests any additions thereto prior to the Rent Commencement Date, Lessee
(i) acknowledges that any such modification, alteration or addition to an
Item of Equipment may affect the Total Cost, taxes, purchase and renewal
options, if any, Stipulated Loss Value and Rent with respect to such Item
of Equipment, and (ii) hereby authorizes Lessor to adjust such Total Cost,
taxes, purchase and renewal options, if any, Stipulated Loss Value and Rent
as appropriate. Lessee hereby authorizes Lessor to complete each Equipment
Schedule with the serial numbers and other identification data of the
Equipment Group associated therewith, as such data is received by Lessor.
7. Delivery and Acceptance. Upon acceptance for lease by Lessee of
any Equipment delivered to Lessee and described in any Equipment Schedule,
Lessee shall execute and deliver to Lessor a Certificate of
Acceptance. LESSOR SHALL HAVE NO OBLIGATION TO ADVANCE FUNDS FOR THE
PURCHASE OF THE EQUIPMENT UNLESS AND UNTIL LESSOR SHALL HAVE RECEIVED A
CERTIFICATE OF ACCEPTANCE
MASTER EQUIPMENT LEASE AGREEMENT
R94-100.966
3
</PAGE>
<PAGE>
RELATING THERETO EXECUTED BY LESSEE. Such Certificate of Acceptance shall
constitute Lessee's acknowledgment that Such Equipment (a) was received by
Lessee, (b) is satisfactory to Lessee in all respects and is acceptable to
Lessee for lease hereunder, (c) is suitable for Lessee's purposes, (d) is
in good order, repair and condition, (e) has been installed and operates
properly, in accordance with and to the extent required under the terms of
applicable Supplier agreements, and (f) is subject to all of the terms and
conditions of this Lease (including, without limitation, Section 2 hereof).
8. Term; Survival. With respect to any Item of Equipment, unless
otherwise specified thereon, the initial term of this Lease (the "Initial
Term") shall commence on the date on which such Item of Equipment is
delivered to Lessee, and, unless earlier terminated as provided herein,
shall expire on the final Rent Payment Date for such Item of Equipment.
With respect to an Item of Equipment, any renewal term of this Lease
(individually, a "Renewal Term"), as contemplated hereby shall commence
immediately upon the expiration of the Initial Term or any prior Renewal
Term, as the case may be, and, unless earlier terminated as provided
herein, shall expire on the date on which the final payment of Rent is due
and paid hereunder. All obligations of Lessee hereunder shall survive the
expiration, cancellation or other termination of the Term hereof.
9. Rent. With respect to Each Item of Equipment, Lessee shall pay
the Rent set forth on the Equipment Schedule applicable to such Item of
Equipment, commencing on the Rent Commencement Date, and, unless otherwise
set forth on such Equipment Schedule, on the same day of each payment
period thereafter for the balance of the Term. Rent shall be due whether or
not Lessee has received any notice that such payments are due. All Rent
shall be paid to Lessor at its address set forth on the Equipment Schedule,
or as otherwise directed by Lessor in writing.
10. Location; Inspection; Labels. The Equipment shall be delivered
to the Equipment Location and, except as used in the Lessee's ordinary
course of business, shall not be removed therefrom, (a) without Lessors
prior written consent, which consent shall not be unreasonably withheld,
and (b) unless Lessor shall be able to adequately protect its interests in
the Equipment, including any necessary Uniform Commercial Code filings.
Lessor shall have the right to enter upon the Equipment Location and
inspect the Equipment at any reasonable time. Lessor may, without notice to
Lessee, remove the Equipment if the Equipment is, in the opinion of Lessor,
being used beyond its capacity or is in any manner improperly cared for,
abused or misused. At Lessors request, Lessee shall affix labels stating
that the Equipment is owned by Lessor permanently in a prominent place on
the Equipment and shall keep such labels in good repair and condition.
11. Use; Alterations. Lessee shall use the Equipment lawfully and
only in the manner for which it was designed and intended and so as to
subject it only to ordinary wear and tear. Lessee shall comply with all
Applicable Law. Lessee shall immediately notify Lessor in writing of any
existing, pending or threatened investigation, inquiry, claim or action by
any Governmental Authority in connection with any Applicable Law or
Governmental Action which could adversely affect the Equipment or this
Lease. Lessee, at its own expense, shall make such alterations, additions
or modifications or Improvements to the Equipment as may be required from
time to time to meet the requirements of Applicable Law or Governmental
Action. Except as otherwise permitted herein, Lessee shall not make any
alterations, additions, modifications or improvements to the Equipment
without Lessors prior written consent.
12. Repairs and Maintenance. Lessee, at Lessee's own cost and
expense, shall (a) keep the Equipment in good repair, good operating
condition and working order and in compliance with the manufacturers
specifications, and (b) enter into and keep in full force and effect during
the Term hereof a maintenance agreement with the manufacturer of the
Equipment, or a manufacturer-approved maintenance organization, to
maintain, service and repair the Equipment so as to keep the Equipment in
as good operating condition and working order as it was when it first
became subject to this Lease and in compliance with the manufacturers
specifications. Upon Lessors request, Lessee shall furnish Lessor with an
executed copy of any such maintenance agreement. An alternate source of
maintenance may be used by Lessee with Lessors prior written consent.
Lessee, at its own cost and expense and within a reasonable period of time,
shall replace any part of any Item of Equipment that becomes worn out,
lost, stolen, destroyed, or otherwise rendered permanently unfit or
unavailable for use (whether or not such replacement is covered by the
aforesaid maintenance agreement), with a replacement part of the same
manufacture, value, remaining useful life and utility as the replaced part
immediately preceding the replacement (assuming that such replaced part is
in the condition required by this Lease). Such replacement part shall be
free and clear of all Liens. Notwithstanding the foregoing, this paragraph
shall not apply to any Loss or Damage (as defined in Section 16 hereof) of
any item of Equipment.
13. Return of Equipment. Upon the expiration (subject to Section 32
hereof and except as otherwise provided in an Equipment Schedule) or
earlier termination of this Lease, Lessee, at its sole expense, shall
return the
MASTER EQUIPMENT LEASE AGREEMENT
R94-100.996
4
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<PAGE>
Equipment to Lessor by delivering such Equipment F.A.S. or F.O.B. to such
location or such carrier (packed for shipping) as Lessor shall specify.
Lessee agrees that the Equipment, when returned, shall be in the condition
required by Section 12 hereof. All components of the Equipment shall have
been properly serviced, following the manufacturers written operating and
servicing procedures. such that the Equipment is eligible for a
manufacturer's standard, full service maintenance contract without Lessors
incurring any expense to repair or rehabilitate the Equipment. If, in the
opinion of Lessor, any Item of Equipment fails to meet the standards set
forth above, Lessee agrees to pay on demand all costs and expenses incurred
in connection with repairing such Item of Equipment and restoring it so as
to meet such standards, assembling and delivering such item of Equipment.
Lessee shall give Lessor ninety (90) days written notice (the "Return
Notice") that Lessee is returning the Equipment as provided for above. If
Lessee fails to return any Item of Equipment as required hereunder, then,
all of Lessee's obligations under this Lease (including, without
limitation, Lessee's obligation to pay Rent for such Item of Equipment at
the rental then applicable under this Lease) shall continue in full force
and effect until such Item of Equipment shall have been returned in the
condition required hereunder.
14. Equipment Upgrades/Attachments. In addition to the requirements
of Section 11 hereof, Lessee, at its own expense, may from time to time add
or install upgrades or attachments to the Equipment during the Term;
provided, that such upgrades or attachments (a) are readily removable
without causing material damage to the Equipment, (b) do not materially
adversely affect the Fair Market Sale Value, the Fair Market Rental Value,
residual value, productive capacity, utility or remaining useful life of
the Equipment, and (C) do not cause such Equipment to become "limited use
property" within the meaning of Revenue Procedure 76-30, 1976-2 C.B. 647
(or such other successor tax provision), as of the applicable delivery date
or the time of such upgrade or attachment. Any such upgrades or attachments
which are not required by Section 11 hereof and which can be removed
without causing damage to or adversely affecting the condition of the
Equipment, or reducing the Fair Market Sale Value, the Fair Market Rental
Value, residual value, productive capacity, utility or remaining useful
life of the Equipment shall remain the property of Lessee; and upon the
expiration or earlier termination of this Lease and provided that no Event
of Default exists, Lessee may, at its option, remove any such upgrades or
attachments and, upon such removal, shall restore the Equipment to the
condition required hereunder.
15. Sublease and Assignment (a) WITHOUT LESSOR'S PRIOR WRITTEN
CONSENT, LESSEE SHALL NOT (i) ASSIGN, TRANSFER, PLEDGE, HYPOTHECATE OR
OTHERWISE DISPOSE OF THIS LEASE. THE EQUIPMENT OR ANY INTEREST THEREIN, OR
(ii) SUBLET OR LEND THE EQUIPMENT TO, OR PERMIT THE EQUIPMENT TO BE USED
BY, ANYONE OTHER THAN LESSEE OR LESSEE'S QUALIFIED EMPLOYEES OR LESSEE'S
WHOLLY OWNED SUBSIDIARIES.
(b) Lessor, at any time with or without notice to Lessee, may
sell, transfer, assign and/or grant a security interest in this Lease, any
Equipment Schedule or any Item of Equipment. In any such event, any such
purchaser, transferee, assignee or secured party shall have and may
exercise all of Lessor's rights hereunder with respect to the items to
which any such sale, transfer, assignment and/or security interest relates,
and LESSEE SHALL NOT ASSERT AGAINST ANY SUCH PURCHASER, TRANSFEREE,
ASSIGNEE OR SECURED PARTY ANY DEFENSE, COUNTERCLAIM OR OFFSET THAT LESSEE
MAY HAVE AGAINST LESSOR. Lessee acknowledges that no such sale, transfer,
assignment and/or security interest will materially change Lessee's duties
hereunder or materially increase its burdens or risks hereunder. Lessee
agrees that upon written notice to Lessee of any such sale, transfer,
assignment and/or security Interest, Lessee shall acknowledge receipt
thereof in writing and shall comply with the directions and demands of
Lessor's successor or assign.
16. Loss of or Damage to Equipment. (a) Lessee shall bear the
entire risk of loss, theft, destruction, disappearance of or damage to any
and all Items of Equipment ("Loss or Damage") from any cause whatsoever
during the Term hereof until the Equipment is returned to Lessor in
accordance with Section 13 hereof. No Loss or Damage shall relieve Lessee
of the obligation to pay Rent or of any other obligation under this Lease.
(b) In the event of Loss or Damage to any Item of Equipment,
Lessee, at the option of Lessor, shall within thirty (30) days following
such Loss or Damage: (1) place such Item of Equipment in good condition and
repair, in accordance with the terms hereof; (2) replace such Item of
Equipment with replacement equipment (acceptable to Lessor) in as good
condition and repair, and with the same value, remaining useful economic
life and utility, as such replaced Item of Equipment immediately preceding
the Loss or Damage (assuming that such replaced Item of Equipment is the
condition required by this Lease), which replacement equipment shall be
free and dear of all Liens; or (3) pay to Lessor the sum of (i) all Rent
due and owing hereunder with respect to such Item of Equipment (at the time
of such payment) plus (ii) the Stipulated Loss Value as of the Rent Payment
Date next following the date of such Loss or Damage with respect to such
Item of Equipment, as set forth on the Schedule applicable thereto. Upon
Lessors receipt of the payment required under subsection (3) above, Lessee
shall be entitled to Lessors interest in such Item of Equipment, in its
then condition and location, "as is" and "where is", without any
warranties, express or implied. If Lessee replaces the Item of Equipment
pursuant to subsection (b) above, title to such replacement equipment shall
immediately (and without further act) vest in Lessor and thereupon shall be
deemed to constitute
MASTER EQUIPMENT LEASE AGREEMENT
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5
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<PAGE>
Items of Equipment and be fully subject to this Lease as if originally
leased hereunder. If Lessee fails to either restore or replace the Item of
Equipment pursuant to subsection (1) or (2) above, respectively, Lessee
shall make the payment under subsection (3) above.
17. Insurance. (a) Lessee, at all times during the Term hereof
(until the Equipment shall have been returned to Lessor) and at Lessee's
own cost and expense, shall maintain (1) insurance against all risks of
physical loss or damage to the Equipment (including theft and collision for
Equipment consisting of motor vehicles) in an amount not less than the full
replacement value thereof or the Stipulated Loss Value thereof, whichever
is greater, and (2) comprehensive public liability insurance including
blanket contractual liability for personal and bodily injury and property
damage in an amount satisfactory to Lessor.
(b) All insurance policies required hereunder shall (1) require
30 days' prior written notice of cancellation or material change in
coverage to Lessor (any such cancellation or change, as applicable, not
being effective until the thirtieth (3Oth) day after the giving of such
notice); (2) name "KeyCorp and its subsidiaries and affiliated companies,
including KeyCorp Leasing Ltd." as an additional insured under the public
liability policies and name Lessor as sole loss payee under the property
insurance policies; (3) not require contributions from other policies held
by Lessor; (4) waive any right of subrogation against Lessor; (5) in
respect of any liability of any of Lessor, except for the insurers' salvage
rights in the event of a Loss or Damage, waive the right of such insurers
to set-off, to counterclaim or to any other deduction, whether by
attachment or otherwise, to the extent of any monies due Lessor under such
policies; (6) not require that Lessor pay or be liable for any premiums
with respect to such Insurance covered thereby; a) be in full force and
effect throughout any geographical areas at any time traversed by any Item
of Equipment; and (8) contain breach of warranty provisions providing that,
in respect of the interests of Lessor in such policies, the insurance shall
not be invalidated by any action or inaction of Lessee or any other person
(other than Lessor) and shall insure Lessor regardless of any breach or
violation of any warranty, declaration or condition contained in such
policies by Lessee or by any other person (other than Lessor). Prior to the
first date of delivery of any Item of Equipment hereunder, and thereafter
not less than is days prior to the expiration dates of the expiring
policies theretofore delivered pursuant to this Section, Lessee shall
deliver to Lessor a duplicate original of all policies (or in the case of
blanket policies, certificates thereof issued by the insurers thereunder)
for the insurance maintained pursuant to this Section.
18. General Tax Indemnification. Lessee shall pay when due and shall
indemnify and hold Lessor harmless from and against (on an after-tax basis)
any and all taxes, fees, withholdings, levies, imposts, duties, assessments
and charges of any kind and nature (together with interest and penalties
thereon)(including, without limitation, sales, use, gross receipts,
personal property, ad valorem, business and occupational, franchise, value
added, leasing, leasing use, documentary, stamp or other taxes) imposed
upon or against Lessor, Lessor's assigns, Lessee or any Item of Equipment
by any Governmental Authority with respect to any Item of Equipment or the
manufacturing, ordering, sale, purchase, shipment, delivery, acceptance or
rejection, ownership, titling, registration, leasing, subleasing,
possession, use, operation, removal, return or other dispossession thereof
or upon the rents, receipts or earnings arising therefrom or upon or with
respect to this Lease, excepting only all Federal, state and local taxes on
or measured by Lessors net income (other than income tax resulting from
making any alterations, improvements, modifications, additions, upgrades,
attachments, replacements or substitutions by Lessee). Whenever this Lease
terminates as to any Item of Equipment, Lessee shall, upon written request
by Lessor, advance to Lessor the amount determined by Lessor to be the
personal property or other taxes on said item which are not yet payable,
but for which Lessee is responsible, provided Lessor provides Lessee with
copies of tax bills supporting Lessor's request.
19. Lessors Right to Perform for Lessee. If Lessee fails to perform
or comply with any of its obligations contained herein, Lessor may (but
shall not be obligated to do so) itself perform or comply with such
obligations, and the amount of the reasonable costs and expenses of Lessor
incurred in connection with such performance or compliance, together with
interest on such amount at the Late Payment Rate, shall be payable by
Lessee to Lessor upon demand. No such performance or compliance by Lessor
shall be deemed a waiver of the rights and remedies of Lessor or any
assignee of Lessor against Lessee hereunder or be deemed to cure the
default of Lessee hereunder.
20. Delinquent Payments; Interest. If Lessee fails to pay any Rent
or other sums under this Lease when the same becomes due, Lessee shall pay
to Lessor a late charge equal to five percent (5%) of such delinquent
amount. Such late charge shall be payable by Lessee upon demand by Lessor
and shall be deemed Rent hereunder. In no event shall such late charge
exceed the maximum amounts permitted under Applicable Law.
21. Personal Property; Liens. Lessor and Lessee hereby agree that
the Equipment is and shall at all times remain, personal property
notwithstanding the fact that any Item of Equipment may now be, or
hereafter become, in any manner affixed or attached to real property or any
improvements thereon. Lessee shall at all times
MASTER EQUIPMENT LEASE AGREEMENT
R94-100.996
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</PAGE>
<PAGE>
keep the Equipment free and clear from all Liens. Lessee shall (i) give
Lessor immediate written notice of any such Lien, (ii) promptly, at
Lessee's sole cost and expense, take such action as may be necessary to
discharge any such Lien, and (iii) indemnify and hold Lessor, on an after-
tax basis, harmless from and against any loss or damage caused by any such
Lien.
22. Events of Default; Remedies. (a) As used herein, the term
"Event of Default" shall mean any of the following events: (1) Lessee fails
to pay any Rent within fifteen (15) days after the same shall have become
due; (2) Lessee or any Guarantor becomes insolvent or makes an assignment
for the benefit of its creditors, which is not dismissed within sixty (60)
days; (3) a receiver, trustee, conservator or liquidator of Lessee or any
Guarantor or of all or a substantial part of Lessee's or such Guarantors
assets is appointed with or without the application or consent of Lessee or
such Guarantor, respectively; (4) a petition is filed by or against Lessee
or any Guarantor under any bankruptcy, insolvency or similar legislation;
(5) Lessee or any Guarantor violates or fails to perform any provision of
either this Lease or any other loan, lease or credit agreement or any
acquisition or purchase agreement with Lessor or any other party; (6)
Lessee violates or fails to perform any covenant or representation made by
Lessee herein; (7) any representation or warranty made herein or In any
Lease, certificate, financial statement or other statement furnished to
Lessor shall prove to be false or misleading in any material respect as of
the date on which the same was made; (8) Lessee makes a bulk transfer of
all, or substantially all, of its assets; or (9) there is a material
adverse change in Lessee's or any Guarantors financial condition since the
first Rent Commencement Date of any Equipment Schedule executed in
connection herewith. An Event of Default with respect to any Equipment
Schedule hereunder shall, at Lessors option, constitute an Event of Default
for all Equipment Schedules hereunder and any other agreements between
Lessor and Lessee.
(b) Upon the occurrence of an Event of Default, Lessor may do
one or more of the following as Lessor in ifs sole discretion shall elect:
(1) proceed by appropriate court action or actions, either at law or in
equity, to enforce performance by Lessee of the applicable covenants of
this Lease or to recover damages for the breach thereof; (2) sell any item
of Equipment at public or private sale; (3) hold, keep idle or lease to
others any Item of Equipment as Lessor in its sole discretion may
determine; (4) by notice in writing to Lessee, terminate this Lease,
without prejudice to any other remedies hereunder; (5) demand that Lessee,
and Lessee shall, upon written demand of Lessor and at Lessee's expense
forthwith return all Items of Equipment to Lessor or its order in the
manner and condition required by, and otherwise in accordance with all of
the provisions of this Lease, except those provisions relating to periods
of notice; (6) enter upon the premises of Lessee or other premises where
any Item of Equipment may be located and, without notice to Lessee and with
or without legal process, take possession of and remove all or any such
Items of Equipment without liability to Lessor by reason of such entry or
taking possession, and without such action constituting a termination of
this Lease unless Lessor notifies Lessee in writing to such effect; (7) by
written notice to Lessee specifying a payment date, demand that Lessee pay
to Lessor, and Lessee shall pay to Lessor, on the payment date specified in
such notice, as liquidated damages for loss of a bargain and not as a
penalty, any unpaid Rent due prior to the payment date specified in such
notice plus whichever of the following amounts Lessor, in its sole
discretion, shall specify in such notice (together with interest on such
amount at the Late Payment Rate from the payment date specified in such
notice to the date of actual payment): (i) an amount, with respect to an
Item of Equipment, equal to the Rent payable for such Item of Equipment for
the remainder of the then current Term thereof, after discounting such Rent
to present worth as of the payment date specified in such notice on the
basis of a per annum rate of discount equal to five percent (5%) from the
respective dates upon which such Rent would have been paid had this Lease
not been terminated; or (ii) the Stipulated Loss Value, computed as of the
payment date specified in such notice or, if such payment date is not a
Rent Payment Date, the Rent Payment Date next following the payment date
specified in such notice (provided. however, that, with respect to any item
of Equipment returned to or repossessed by Lessor, the amount recoverable
under this clause (ii) shall be reduced (but not below zero) by an amount
equal to the Fair Market Sales Value (taking into account its actual
condition) of such Item of Equipment; (8) cause Lessee, at its expense, to
promptly assemble any and all Items of Equipment and return the same to
Lessor at such place as Lessor may designate in writing; and (9) exercise
any other right or remedy available to Lessor under applicable law or
proceed by appropriate court action to enforce the terms hereof or to
recover damages for the breach hereof or to rescind this Lease. In
addition, Lessee shall be liable, except as otherwise provided above, for
any and all unpaid Rent due hereunder before or during the exercise of any
of the foregoing remedies, and for legal fees and other costs and expenses
incurred by mason of the occurrence of any Event of Default or the exercise
of Lessors remedies with respect thereto, including without limitation the
repayment in full of any costs and expenses necessary to be expended in
repairing any Item of Equipment in order to cause it to be in compliance
with all maintenance and regulatory standards imposed by this Lease. If an
Event of Default occurs, to the fullest extent permitted by law, Lessee
hereby waives any right to notice of sale and further waives any defenses,
rights, offsets or claims against Lessor because of the manner or method of
sale or disposition of any items of Equipment. None of Lessors rights or
remedies hereunder are intended to be exclusive of, but each shall be
cumulative and in addition to any other right or remedy referred to
hereunder or otherwise available to Lessor or its assigns at law or in
equity. No express or implied waiver by Lessor of any Event of Default
shall constitute a waiver of any other Event of Default or a waiver of any
of Lessors rights.
MASTER EQUIPMENT LEASE AGREEMENT
R94-100.996
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<PAGE>
23. Notices. All notices and other communications hereunder shall be
in writing and shall be transmitted by hand, overnight courier or certified
mail (return receipt requested), postage prepaid. Such notices and other
communications shall be addressed to the respective party at the address
set forth above or at such other address as any party may from time to time
designate by notice duly given in accordance with this Section. Such
notices and other communications shall be effective upon receipt.
24. General Indemnification. Lessee shall pay, and shall indemnify
and hold Lessor harmless on an aftertax basis from and against, any and all
liabilities, causes of action, claims, suits, penalties, damages, losses,
costs or expenses (including attorneys' fees), obligations, liabilities,
demands and judgments, and Liens, of any nature whatsoever (collectively, a
"Liability") arising out of or in any way related to: (a) this Lease or any
other written agreement entered into in connection with the transaction
contemplated hereby and thereby (including, without limitation, a Purchase
Agreement, if any) or any amendment, waiver or modification of any of the
foregoing or the enforcement of any of the terms hereof or any of the
foregoing, (b) the manufacture, purchase, ownership, selection, acceptance,
rejection, possession, lease, sublease, operation, use, maintenance,
documenting, inspection, control, loss, damage, destruction, removal,
storage, surrender, sale, use, condition, delivery, nondelivery, return or
other disposition of or any other matter relating to any Item of Equipment
or any part or portion thereof (including, in each case and without
limitation, latent or other defects, whether or not discoverable, any claim
for patent, trademark or copyright Infringement and any and all Liabilities
in any way relating to or arising out of injury to persons, properties or
the environment or any and all Liabilities based on strict liability in
tort, negligence, breach of warranties or violations of any regulatory law
or requirement, (c) a failure to comply fully with any Environmental Law
with respect to the Equipment or its operation or use, and (d) Lessee's
failure to perform any covenant, or breach of any representation or
warranty, hereunder; provided, that the foregoing indemnity shall not
extend to the Liabilities to the extent resulting solely from the gross
negligence or willful misconduct of Lessor. Lessee shall deliver promptly
to Lessor (i) copies of any documents received from the United States
Environmental Protection Agency or any state, county or municipal
environmental or health agency and (ii) copies of any documents submitted
by Lessee or any of its subsidiaries to the United States Environmental
Protection Agency or any state, county or municipal environmental or health
agency concerning the Equipment or its operation.
25. Severability; Captions. Any provision of this Lease or any
Equipment Schedule 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, and any such prohibition or unenforceability shall not
invalidate or render unenforceable such provision in any other
jurisdiction. Captions are intended for convenience or reference only, and
shall not be construed to define, limit or describe the scope or intent of
any provisions hereof.
26. Lessors Expense. Lessee shall pay all costs and expenses of
Lessor, including attorneys' fees and the fees of any collection agencies,
incurred by Lessor in enforcing any of the terms, conditions or provisions
hereof or in protecting Lessors rights hereunder.
27. Related Equipment Schedules. In the event that any Item of
Equipment covered under any Equipment Schedule hereunder may become
attached or affixed to, or used in connection with, Equipment covered under
another Equipment Schedule hereunder (a "Related Equipment Schedule"),
Lessee agrees that, if Lessee elects to exercise a purchase or renewal
option under any such Equipment Schedule, or if Lessee elects to return the
Equipment under any such Equipment Schedule pursuant to Section 13 hereof,
then Lessor, in its sole discretion, may require that all Equipment leased
under all Related Equipment Schedules be similarly disposed of.
28. Financial and Other Data. During the Term hereof, Lessee shall
furnish Lessor, as soon as available and in any event within 60 days after
the end of each quarterly period (except the last) of each fiscal year,
and, as soon as available and in any event within 120 days after the last
day of each fiscal year, financial statements of Lessee and each Guarantor,
in each case certified by an independent public accountant if customarily
available or requested. Lessee shall also furnish such other financial
reports, information or data as Lessor may reasonably request from time to
time.
29. Commitment Fee Requirement. An amount equal to the first.
periodic payment of Rent must accompany each Lessee proposal for an
Equipment Schedule hereunder. THIS COMMITMENT FEE IS NON-REFUNDABLE;
provided, however, that, upon Lessors acceptance of Lessee's proposal to
enter into such Equipment Schedule, such commitment fee shall be applied to
the first periodic payment of Rent thereunder.
MASTER EQUIPMENT LEASE AGREEMENT
R94-100.996
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<PAGE>
30. No Affiliation with the Supplier. Lessee hereby represents and
warrants to Lessor that, except as previously disclosed in writing to
Lessor, neither Lessee nor any of its officers or directors (if a
corporation) or partners (if a partnership) has, directly or indirectly,
any financial interest in the Supplier.
31. Representation and Warranties of Lessee. Lessee represents and
warrants that: (a) Lessee is a corporation duly organized and validly
existing in good standing under the laws of the state of its incorporation;
(b) the execution, delivery and performance of this Lease and all related
Instruments and documents: (1) have been duly authorized by all necessary
corporate action on the part of Lessee, (2) do not require the approval of
any stockholder, partner, trustee, or holder of any obligations of Lessee
except such as have been duly obtained, and (3) do not and will not
contravene any law, governmental rule, regulation or order now binding on
Lessee, or the charter or by-laws of Lessee, or contravene the provisions
of, or constitute a default under, or result in the creation of any lien or
encumbrance upon the property of Lessee under, any indenture, mortgage,
contract or other agreement to which Lessee is a party or by which it or
its property is bound; (c) this Lease and all related instruments and
documents, when entered into, will constitute legal, valid and binding
obligations of Lessee enforceable against Lessee in accordance with the
terms thereof; (d) there are no pending actions or proceedings to which
Lessee is a party, and them are no other pending or threatened actions or
proceedings of which Lessee has knowledge, before any court, arbitrator or
administrative agency, which, either individually or in the aggregate,
would adversely affect the financial condition of Lessee, or the ability of
Lessee to perform its obligations hereunder; (e) Lessee is not in default
under any obligation for the payment of borrowed money, for the deferred
purchase price of property or for the payment of any rent under any lease
agreement which, either individually or in the aggregate, `would have the
same such effect; (f) under the laws of the state(s) in which the Equipment
is to be located, the Equipment consists solely of personal property and
not fixtures; (g) the financial statements of Lessee (copies of which have
been furnished to Lessor) have been prepared in accordance with generally
acceptable accounting principles consistently applied ("GAAP"), and fairly
present Lessee's financial condition and the results of its operations as
of the date of and for the period covered by such statements, and since the
date of such statements there has been no material adverse change in such
condiftions or operations; (h) the address stated above is the chief place
of business and chief executive office, or In the case of individuals, the
primary residence, of Lessee; (i) Lessee does not conduct business under a
trade, assumed or fictitious name; and (j) the Equipment is being leased
hereunder solely for business purposes and that no item of Equipment will
be used for personal, family or household purposes.
32. Renewal And Purchase Options. With respect to an Equipment
Schedule and the Equipment Group set forth thereon, so long as no Default
or Event of Default shall have occurred and is continuing, then, upon not
less than ninety (90) days prior written notice to Lessor, (the "Renewal
Notice") Lessee may (a) at the expiration of the initial Term, or any
Renewal Term, purchase all, but not less than all, of the Equipment Group
for the Fair Market Sale Value of such Equipment Group, payable in cash to
Lessor upon the expiration of the Initial Term or any Renewal Term, as the
case may be, (b) at the expiration of the Initial Term, renew this Lease on
a month to month basis at the same Rent payable at the expiration of the
Initial Term, or (c) at the expiration of the Initial Term, renew' this
Lease for a minimum period of not less than twelve (12) consecutive months
at the then current Fair Market Rental Value. If Lessee fails to give
Lessor the Return Notice or the Renewal Notice at least ninety (90) days
before the expiration of the Initial Term, Lessee shall be deemed to have
chosen option (b) above. If Lessee exercises option (a) above, Lessee shall
purchase the Equipment "as is" and "where is" and without any warranties,
express or implied, by Lessor.
33. Lessee's Waivers. To the extent permitted by Applicable Law,
Lessee hereby waives (a) any and all rights and remedies which it may now
have or which at any time hereafter may be conferred upon it by statute
(including, without limitation, Article 2A of the Uniform Commercial Code,
as applicable) or otherwise, (1) which may limit or modify Lessor's rights
or remedies hereunder, (2) to terminate, cancel, quit, repudiate or
surrender this Lease, except as expressly provided herein; (3) to reject,
revoke acceptance or accept partial delivery of the Equipment; (4) to
recover damages from Lessor for any breach of warranty or for any other
reason provided, however, that no such waiver shall preclude Lessee from
asserting any such claim against Lessor in a separate cause of action; or
(5) to setoff or deduct all or any part of any claimed damages resulting
from Lessor's default, if any, under this Lease.
34. UCC Filings. LESSEE HEREBY APPOINTS LESSOR OR ITS ASSIGNEE AS ITS
TRUE AND LAWFUL ATTORNEY IN FACT, IRREVOCABLY AND COUPLED WITH AN INTEREST,
TO EXECUTE AND FILE ON BEHALF OF LESSEE ALL UCC FINANCING STATEMENTS WHICH
IN LESSOR'S SOLE DISCRETION ARE NECESSARY OR PROPER TO SECURE LESSOR'S
INTEREST IN THE EQUIPMENT IN ALL APPLICABLE JURISDICTIONS.
35. Miscellaneous. Time is of the essence with respect to this
Lease. Any failure of Lessor to require strict performance by Lessee or any
waiver by Lessor of any provision herein shall not be construed as a
consent or waiver of any provision of this Lease. Neither this Lease nor
any Equipment Schedule may be
MASTER EQUIPMENT LEASE AGREEMENT
R94-110.996
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<PAGE>
amended except by a writing signed by Lessor and Lessee. This Lease and
each Equipment Schedule shall be binding upon, and inure to the benefit of,
the parties hereto, their permitted successors and assigns. This Lease will
be binding upon Lessor only if executed by a duly authorized officer or
representative of Lessor at Lessors principal place of business as set
forth above. This Lease, and all other documents (the execution and
delivery of which by Lessee is contemplated hereunder), shall be executed
on Lessee's behalf by Authorized Signers of Lessee. THIS LEASE IS BEING
DELIVERED IN THE STATE OF NEW YORK AND SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
36. Jury Trial Waiver. LESSOR AND LESSEE HEREBY WAIVE TRIAL BY JURY IN
ANY ACTION OR PROCEEDING TO WHICH LESSOR OR LESSEE MAY BE PARTIES ARISING
OUT OF OR IN ANY WAY PERTAINING TO THIS LEASE. THIS WAIVER IS MADE
KNOWINGLY, WILLINGLY AND VOLUNTARILY BY THE LESSOR AND THE LESSEE WHO EACH
ACKNOWLEDGE THAT NO REPRESENTATIONS HAVE BEEN MADE BY ANY INDIVIDUAL TO
INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS
EFFECT.
37. More than One Lessee. If more than one person or entity executes
this Lease, each Equipment Schedule, and all addenda or other documents
executed in connection herewith or therewith, as "Lessee," the obligations
of "Lessee" contained herein and therein shall be deemed joint and several
and all references to "Lessee" shall apply both individually and jointly.
38. Quiet Enjoyment. So long as no Event of Default has occurred and
is continuing, Lessee shall peaceably hold and quietly enjoy the Equipment
without interruption by Lessor or any person or entity claiming through
Lessor.
39. Entire Agreement. This Lease, together with all Equipment
Schedules, riders and addenda executed by Lessor and Lessee collectively
constitute the entire understanding or agreement between Lessor and Lessee
with respect to the leasing of the Equipment, and there is no understanding
or agreement, oral or written, which is not set forth herein or therein. By
initialing below, Lessee hereby further acknowledges the conditions of this
Section 39.
Lessee's
Initials:______________
40. Execution in Counterparts. This Master Equipment Lease Agreement
may be executed in several counterparts, each of which shall be an original
and all of which shall constitute but one and the same instrument.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease as of
the day and year first above written.
Lessor:
KEYCORP LEASING LTD.
By:_______________________________
Name:
Title:
Lessee:
FIRST ALBANY COMPANIES INC.
By:_______________________________
Name:
Title:
MASTER EQUIPMENT LEASE AGREEMENT
R94-100.996
10
</PAGE>
<PAGE>
CERTIFICATE OF SECRETARY
OF
FIRST ALBANY COMPANIES INC.
I, ____________________, the duly elected and qualified Secretary of
FIRST ALBANY COMPANIES INC., (The "Corporation"), do hereby certify:
a. That attached hereto as exhibit A are complete and correct copies
of resolutions adopted by the Board of Directors of the Corporation,
authorizing the actions referred to therein; said resolutions constitute
all of the resolutions adopted by Such Board of Directors relating to such
matters: such resolutions have not been in any way modified, amended,
annulled, rescinded or revoked and am in full force and effect as of the
date hereof; and
b. The persons listed In Exhibit B attached hereto are duly
qualified and acting officers of the Corporation, holding on the date
hereof the offices set forth opposite their names and the signatures
appearing opposite their names are the genuine signatures of such officers.
IN WITNESS WHEREOF, I have hereunto signed my name this ____ day of
_____________, 1996.
________________________
Secretary
</PAGE>
<PAGE>
Exhibit B
INCUMBENCY CERTlFICATE
Name: Office: Signature:
__________________________ ___________________________
___________________________
__________________________ ___________________________
___________________________
__________________________ ___________________________
___________________________
__________________________ ___________________________
___________________________
__________________________ ___________________________
___________________________
</PAGE>
<PAGE>
Exhibit A
RESOLUTION OF THE BOARD OF DIRECTORS OF
FIRST ALBANY COMPANIES INC.
DATED__________, 1996.
WHEREAS, the Board of Directors of FIRST ALBANY COMPANIES INC. (the
"Corporation") desire that the Corporation enter into an equipment leasing
transaction with KeyCorp Leasing Ltd., as lessor, for the purpose of
leasing the equipment (the "Equipment") described in a Master Equipment
Lease Agreement and various equipment schedules from time to time entered
into with respect thereto (collectively, the "Lease");
NOW, THEREFORE, BE IT RESOLVED, that (i) the execution and delivery of
the Lease by the Corporation and the financing of the acquisition of the
Equipment am hereby authorized, approved, ratified and confirmed in all
respects, and (ii) the Corporation hereby is, and the Authorized Officers
(as defined below) hereby are, authorized and empowered to negotiate and
enter into the Lean and such other documents as may be necessary,
advisable, or proper in connection with the above transaction, and be it;
FURTHER RESOLVED, that _________________________, ___________________
of the Corporation, and __________________________,
_________________________of the Corporation (herein the "Authorized
Officers') be, and hereby are, authorized to execute and deliver the Lease
and any and all certificates, documents, instruments or other papers as may
be necessary or desirable in order to consummate the transactions therein
contemplated, and that all actions heretofore taken or taken hereinafter by
the Authorized Officers in furtherance of the actions herein authorized am
ratified, confirmed, adopted and approved in all respects.
EXHIBIT 10.22
Agreement of Lease
BETWEEN
MID.CITY ASSOCIATES
Landlord
AND
FIRST ALBANY COMPANIES INC.
Tenant
Premises in One Penn Plaza
New York, New York 10119
Dated: March 21, 1996
Wien, Malkin & Bettex Leslie Susser, Esq.
Attorneys for Landlord Attorney for the Tenant
60 East 42nd Street 6 East 43rd Street - 19th Floor
New York, New York 10165 New York, New York 10017-4609
</PAGE>
<PAGE>
TABLE OF CONTENTS
ARTICLE PAGE
1 Rent 2
2 Occupancy 2
S Alterations and Installations 2
4 Repairs 5
5 Requirements of Law; Fire Insurance 6
6 Subordination 7
7 Loss, Damage, Reimbursement, Liability, Etc8
S Destruction-Fire or Other Cause 10
9 Eminent Domain 12
10 Assignment & Subletting 15
11 Access to Demised Premises 20
12 Certificate of Occupancy 21
13 Bankruptcy 21
14 Default 24
15 Remedies of Landlord; Waiver of Redemption25
16 Fees and Expenses; Interest 27
17 No Representations by Landlord 27
18 End of Term 28
19 Quiet Enjoyment 28
20 Definitions 29
21 Adjacent Excavation-Shoring 29
22 Rules and Regulations 30
23 No Waiver 31
24 Waiver of Trial by Jury 32
25 Inability to Perform 32
26 Notices 33
27 Services 34
28 Escalation - Cost of Living Adjustments 42
29 Building Energy Escalation 44
30 Condition of Premises 47
31 Arbitration 48
32 Indemnity 48
33 Vault and Basement Space 48
34 Occupancy and Use by Tenant 49
35 Name of Building 50
36 Invalidity of Any Provision, Etc. 50
37 Captions 51
38 Certificate of Tenant 51
39 Security Deposit 53
40 Broker 54
41 Possession 54
42 Submission of Lease 55
43 Memorandum of Lease 55
44 Successors and Assigns 55
Exhibit A 59
Exhibit B 60
Exhibit C 65
</PAGE>
<PAGE>
RIDER TABLE OF CONTENTS
Article Page
45 Commencement Date; Term; Rent; Initial
Alteration Work; Work Contribution 67
46 Tax and Operating Expense Escalation 73
47 Alterations 81
48 Non-Disturbance Agreement 84
49 Renewal Option 85
50 Expansion Space 89
51 Miscellaneous 92
52 Security Deposit/Letter of Credit 96
</PAGE>
<PAGE>
AGREEMENT OF LEASE made as of this 21st day of March 1996 between
Min-Ciry ASSOCIATES, a general partnership with its office at 60
East 42nd Street, New York, New York 10165, hereinafter referred to
as "Landlord", or "Lessor", and FIRST ALBANY COMPANIES' INC., a New
York corporation with an office at 3O South pearl Street, Albany,
New York 12207
hereinafter referred to as "Tenant", or
"Lessee".
WITNESSETH:
Landlord hereby leases to Tenant and Tenant hereby hires from
Landlord, in the building known as One Penn Plaza in the Borough of
Manhattan, City of New York (hereinafter referred to as the
"Building"), the following space: the entire rentable area of the
42nd Floor, consisting of approximately 33,774 rentable square feet
(which space is hereinafter referred to as "the demised premises" or
"the premises") approximately as shown on the plan or plans or
diagram or diagrams annexed hereto as "Exhibit A" (or incorporated
by reference into this Lease as though physically attached hereto);
for the term of years to commence
and to end as in Article 45 provided
(plus, if the term hereof commences on a day other than the first
day of a month, so many days as are necessary for the term to end on
the last day of the last month of the term) or until such term shall
sooner cease and terminate as hereinafter provided; at fixed annual
rental rates (without electricity) and subject to Article 28
adjustment) of $ set forth in Article 45 hereof.
The first month's rent due under this Lease shall be paid by Tenant
upon execution of this Lease.
</PAGE>
<PAGE>
* typical retail branch of a
2
Tenant agrees to pay said fixed annual rent in lawful money of the
United States, in equal monthly installments in advance on the first day of
each calendar month during said term, at the office of Landlord or such
other place in the United States of America as Land-lord may designate,
without any setoff or deduction whatsoever, except such deduction as may be
occasioned by the occurrence of any event permitting or requiring a
deduction from or abatement of rent as specifically set forth herein.
Should the obligation to pay rent commence on any day other than on the
first day of a month, then the fixed rent for the unexpired portion of such
month shall be adjusted and prorated on a per diem basis.
The parties hereto, for themselves, their heirs, distributees, execu
tors, administrators, legal representatives, successors and assigns, hereby
covenant as follows:
ARTICLE 1
RENT
1.01.Tenant shall pay the fixed annual rent and additional rent as
above and as hereinafter provided, in United States legal tender, by
cash or by good and sufficient check drawn on a New York City bank
which is a member of the New York Clearing House or a successor
thereto. All sums other than fixed annual rent payable by Tenant
hereunder shall be deemed additional rent and payable on demand,
unless other payment dates are hereinafter provided.
ARTICLE 2
OCCUPANCY
2.01. Tenant may not use or occupy the
demised premises as a *savings bank, state or Federal savings and
loan association or commercial bank. or trust Company. Tenant shall
use and occupy the demised premises solely for executive and general
offices relating to Tenant's business,** and for no other purpose.
ARTICLE 3
ALTERATIONS AND INSTALLATIONS
3.01.Tenant shall make no alterations, installations, additions or
Improvements in or to the demised premises without Landlord's
______________________
**including for the installation, maintenance and operation in a
portion of the demised premises of a securities trading room and
computer room relating to Tenant's business and Tenant shall use and
occupy the demised premises for no other purpose. Any such
installation shall be effected in accordance with the applicable
provisions of this Lease, including Articles 3 and 47, and in
accordance with all applicable laws, rules and regulations.
* Landlord will not unreasonably withhold or delay its approval of
Tenant's contractors with respect to nonstructural interior
alteration work which does not affect utility services or plumbing
or electrical lines or other systems of the Building. Additionally,
within ten (10) days after a written request by Tenant, Landlord
shall provide Tenant with a list of three (3) additional contractors
who are approved for work in the Building, for any work or trade
specified by Tenant in its request.
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<PAGE>
3
prior written consent; all such work shall be done only by
contractors or mechanics designated by Landlord as approved for the
Building. All such work, alterations, installations, additions and
improvements shall be done at Tenant's sole expense and at such
times and in such manner as Landlord may from time to time
reasonably designate. Prior to commencement of such work, Tenant
shall obtain and deliver to Landlord a written letter of
authorization, in form satisfactory to Landlord's counsel, signed by
all architects, engineers, surveyors and designers to become
involved in such work, which shall confirm that*** any of their
drawings or plans are to be removed from any filing with
governmental authorities on the request of Landlord
3.02. Any mechanic's lien, filed against the demised premises or
the Building for work claimed to have been done for or materials
claimed to have been furnished to Tenant shall be discharged by
Tenant at its expense within thirty (30) days after notice to
Tenant, by payment, filing of the bond required by law, or
otherwise.
Notice is hereby given that Landlord shall not be liable for any
labor or materials furnished or to be furnished to Tenant upon
credit, and that no mechanic's or other lien for any such labor or
materials shall attach to or affect the reversion or other estate or
interest of Landlord in and to the demised premises.
3.03. All alterations, installations, additions and improvements
made and installed by Landlord, shall become and be the property of
Landlord and shall remain upon and be surrendered with the demised
premises as a part thereof at the end of the term of this Lease.
3.04. All alterations, installations, additions and improvements
made and installed by Tenant, or at Tenant's expense, upon or in the
demised premises which are of a permanent nature and which cannot be
removed without damage to the demised premises or Building, and all
related telephone, telecommunications and data processing equipment
and wiring and conduits, supplemental electrical cabling and wiring,
and related items, shall become and be the property of Landlord and
shall remain upon and be surrendered with the demised premises as a
part thereof at the end of the term of this Lease.** except that the
Landlord shall have the right and privilege at any time prior to or
with three (3) months after the termination of the Lease to serve
notice upon Tenant requiring that nay or all of such alterations,
installations, additions and improvements, equipment, wiring,
cabling and conduits, shall be removed and, in the event of service
of such notice, Tenant will, at Tenant's own cost and expense,
promptly remove the same in accordance with such request, and
restore the premises to its original condition, ordinary wear and
tear excepted. The obligations under this Section shall survive the
expiration or sooner termination of the term of this Lease.
** See Rider Article 47 for Landlord's right to require Tenant to
remove certain installations from the demised
premises at the end of the term of this Lease.
*** in the event such work is discontinued or abandoned,
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4
3.05. Where furnished by or at the expense of Tenant, all
furniture, furnishings and trade fixtures, including without
limitation, murals, business machines and equipment, counters,
screens, grille work, special paneled doors, cages, partitions,
metal railings, closets, paneling, lighting fixtures and equipment,
drinking fountains, refrigerators, and any other movable property
shall remain the property of Tenant which may at its option remove
all or any part thereof at any time prior to the expiration of the
term of this Lease. In case Tenant shall decide not to remove any
part of such property, Tenant shall notify Landlord in writing not
less than three (3) months prior to the expiration of the term of
this Lease, specifying the items of property which it has decided
not to remove. If, within thirty (30) days after the service of such
notice, Landlord shall request Tenant to remove any of the said
property, Tenant shall at its expense remove the same in accordance
with such request. As to such property, which Landlord does not
request Tenant to remove, the same shall be, if left by Tenant,
deemed abandoned by Tenant and thereupon the same shall become the
property of the Landlord.
3.06. If any alterations, installations, additions, improvements
or other property which Tenant shall have the right to remove or be
requested by Landlord to remove as provided* hereinabove (herein in
this Section 3.06 called the "property") are not removed on or prior
to the expiration of the term of this Lease, Landlord shall have the
right to remove said property and to dispose of the same without
accountability to Tenant and at the sole and reasonable cost and
expense of Tenant. In case of any damage to the demised premises or
the Building resulting from the removal of the property, Tenant
shall repair such damage or, in default thereof, shall reimburse
Landlord for Landlord's reasonable cost in repairing such damage.
The obligations under this Section shall survive the expiration or
sooner termination of the term of this Lease.
3.07.Tenant shall keep records of Tenant's alterations,
installations, additions and improvements, and the cost thereof**
Tenant shall, within 45 days after demand by Landlord, furnish to
Landlord copies of such records and cost if Landlord shall require
same in connection with any proceeding to reduce the assessed
valuation of the Building, or in connection with any proceeding
instituted pursuant to Article 9 hereof.
* in Articles 47 or 51 of this Lease
** , for a period of three (3) years after the completion of same.
* and subject to Section 7.05 of this Lease,
** within thirty (30) days after written notice of same (except in
an emergency. in which case no such notice shall be required),
</PAGE>
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5
ARTICLE 4
REPAIRS
4.01. Tenant shall take good care of the demised premises and the
fixtures and appurtenances therein and shall promptly, at its sole
cost and expense, make all repairs and replacements, necessary to
keep the demised premises in good working order and condition
including structural repairs when these which are made necessary by
the act, omission or negligence of Tenant or its agents or employees
(subject to Section 7.05 hereof). Except as otherwise provided in
Section 3.05 of this Lease,* all damage or injury to the demised
premises and to its fixtures, glass, appurtenances and equipment or
to the Building or to its fixtures, glass, appurtenances and
equipment caused by the moving of Tenant's property in or out of the
Building, or by the installation or use of Tenant's property, or by
the use of the demised premises in a manner contrary to the purposes
for which same are leased to Tenant, shall be repaired, restored or
replaced promptly by Tenant at its sole cost and expense, which
repairs, restorations and replacements shall be in quality and class
equal to the original work or installations. If Tenant fails to make
such repairs, restorations or replacements**, same may be made by
Landlord at the expense of Tenant and such expense shall be
collectible as additional rent and shall be paid by Tenant within 15
days after rendition of a bill therefor. Landlord, at Landlord's
expense, shall effect all necessary repairs and replacements in and
to the demised premises which are not the obligation of Tenant
hereunder.***
4.02. Tenant shall not place a load upon any floor of the
demised premises exceeding the floor load per square foot area which
such floor was designed to carry and which is allowed by law.
Landlord certifies that the floor of the demised premises will carry
50 pounds live load per square foot of floor space and 20 pounds for
partitions per square foot of floor space. If Tenant shall desire a
floor load in excess of that set forth above, Landlord agrees
(provided Landlord's architects, in their sole discretion, find that
the work necessary to increase such floor load does not adversely
affect the structure of the Building, and further provided that such
work will not interfere with the amount or availability of any space
adjoining alongside, above or below the demised premises or
unreasonably interfere with the occupancy of other tenants in the
Building) to strengthen and reinforce the same so as to give the
live load desired provided Tenant shall submit to Landlord the plans
showing the locations of and the
______________________
*** including, without limitation, any structural repair or
replacement or any repair or replacement to the Building HVAC,
electrical, mechanical or plumbing systems serving the demised
premises, including leaks in the windows, and any repair or
replacement to the exterior and public portions of the Building,****
**** provided (subject to Section 7.05 of this Lease) such repair or
replacement is not made necessary by the act, omission or negligence of
Tenant.
______________________
*comparable first class building in mid-town Manhattan.
**, unless such work is required to remedy a condition that
threatens the health or safety of any occupant of the demised
premises, in which case Landlord shall employ so-called overtime
labor to remedy such condition.
</PAGE>
<PAGE>
6
desired floor live load for the areas in question and provided
further that Tenant shall agree to pay for or reimburse Landlord on
demand for the cost of such strengthening and reinforcement as well
as any other costs to and expenses of Landlord occasioned by or
resulting from such strengthening or reinforcement.
4.03. Business machines and mechanical equipment belonging to
Tenant which cause vibration, noise, cold or heat that may be
transmitted to the Building structure or to any leased space to such
a degree as to be reasonably objectionable to Landlord or to any
other tenant in the Building shall be placed and maintained by
Tenant at its expense in settings of cork, rubber or spring type
vibration eliminators sufficient to absorb and prevent such
vibration or noise, cold or heat. The parties hereto recognize that
the operation of elevators, air conditioning and heating equipment
will cause some vibration, noise, heat or cold which may be
transmitted to other parts of the Building and demised premises.
Landlord shall be under no obligation to endeavor to reduce such
vibration, noise, heat or cold beyond what is customary in current
good building practice for a building such as One Penn Plaza.*
4.04. Except as provided in Article 25 hereof and except as
otherwise provided in this Lease there shall be no allowance to
Tenant for a diminution of rental value and no liability on the part
of Landlord by reason of inconvenience, annoyance or injury to
business arising from the making of any repairs, alterations,
additions or improvements in or to any portion of the Building or
the demised premises or in or to fixtures, appurtenances or
equipment thereof, provided that Landlord shall use reasonable
diligence seek to minimize any interference with Tenant's business
operations. Tenant understands that work will be effected on
business days during normal business hours **
ARTICLE 5
REQUIREMENTS OF LAW; FIRE INSURANCE
5.01. Tenant, at its expense, shall comply with all laws, orders
and regulations of Federal, State, County and Municipal authorities,
and with any direction of any public officer or officers, pursuant
to law, which shall impose any violation, order or duty upon
Landlord or Tenant with respect to the demised premises, or the use
or occupation thereof
5.02. Tenant shall not do or permit to be done any act or thing
upon said premises, which will invalidate or be in conflict with New
York Standard fire insurance policies covering the Building, and
fixtures and property therein, or which**** would increase the rate
of fire
***provided such compliance is necessitated by Tenant's particular
manner of use of the demised premises (as distinguished from general
office use thereof.) Landlord agrees that it will comply with all
laws, rules and regulations applicable to the demised premises or
the Building, other than such laws, rules and regulations (i) with
which Tenant is expressly obligated to comply by the terms of this
Lease or (ii) which by the express provisions thereof are the direct
obligation of Tenant. (See Section 14.04 for Tenant's right to
contest legal requirements.)
****(based on Tenant's particular manner of use of the demised
premises, as distinguished from general and executive office use
thereof)
</PAGE>
<PAGE>
7
insurance applicable to the Building to an amount higher than it
otherwise would be; and Tenant shall neither* do nor permit to be
done any act or thing upon said premises which shall or might
subject Landlord to any liability or responsibility for injury to
any person or persons or to property by reason of any business or
operation being carried on upon said premises; but nothing in this
Section 5.02 shall prevent Tenant's use of the demised premises for
the purposes stated in Article 2 hereof.
5.03. If as a result of** any act or omission by Tenant or
violation of this Lease, the rate of fire insurance applicable to
the Building shall be increased to an amount higher than it
otherwise would be, Tenant shall reimburse Landlord for all
increases of Landlord's fire insurance premiums so caused; such
reimbursement to be additional rent payable upon the first day of
the month following any outlay by Landlord for such increased fire
insurance premiums. In any action or proceeding wherein Landlord and
Tenant are parties, a schedule or "make up" of rates for the
Building or demised premises issued by the body making fire
insurance rates for said premises, shall be presumptive evidence of
the facts therein stated and of the several items and charges in the
fire insurance rate then applicable to said premises.
ARTICLE 6
SUBORDINAT!ON
6.01. This Lease is subject and subordinate to that certain
Agreement Restating Indenture of Lease, dated July 10, 1970 between
The Bowery Savings Bank, as Lessor, and Mid-City Associates, as
Lessee (hereinafter sometimes called "The Ground Lease") and to the
rights of Lessor thereunder, and to al] first mortgages which may
now or hereafter encumber The Ground Lease, and to all renewals,
modifications, consolidations, replacements and extensions of The
Ground Lease and of such mortgages.
6.02. In the event of a termination of The Ground Lease, or if
the interests of Landlord under this Lease are transferred by reason
of or assigned in lieu of foreclosure or other proceedings for
enforcement of any such mortgage, or if the holder of any such
mortgage acquires a lease in substitution therefor, then the Tenant
under this Lease will, at the option to be exercised in writing by
the Lessor under said Ground Lease or such purchaser, assignee or
lessee, as the case may be, (i) attorn to it and will perform for
its benefit all the terms, covenants and conditions of this Lease on
the Tenant's part to be performed with the same force and effect as
if said Lessor or such
* knowingly or negligently
**Tenant's particular manner of use of the demised premises (as
distinguished from general office use thereof)
</PAGE>
<PAGE>
8
purchaser, assignee or lessee, were the Landlord originally named in
this Lease, or (ii) enter into a new lease with said Lessor or such
purchaser, assignee or lessee, as Landlord, for the remaining term of
this Lease and otherwise on the same terms and conditions and with the
same options then remaining.
ARTICLE 7
LOSS, DAMAGE, REIMBURSEMENT, LIABILITY, ETC.
7.01. Landlord or its agents shall not be liable for any injury or
damage to persons or property resulting from fire, explosion, falling
plaster, steam, gas, electricity, water, rain or snow or leaks from any
part of the Building, or from the pipes, appliances or plumbing works or
from the roof, street or subsurface or from any other place or by
dampness or by any other cause of whatsoever nature, unless any of the
foregoing shall be caused by or due to the negligence of Landlord, its
agents, servants or employees.
7.02. *Tenant shall reimburse Landlord for all expense, damages or
fines incurred or suffered by Landlord, and for which Landlord has not
been or will not be reimburse4 by insurance, by reason of any breach,
violation or nonperformance by Tenant, or its agents, servants or
employees, of any covenant or provision of this Lease, or by reason of
damage to persons or property caused by moving property of or for Tenant
in or out of the Building, or by the installation or removal of
furniture or other property of or for Tenant except as provided in
Section 3.05 of this Lease, or by reason of or arising out of the
carelessness, negligence or improper conduct of Tenant, or its agents,
servants or employees, in the use or occupancy of the demised premises.
7.08. Tenant shall give Landlord notice in case of fire or accidents in
the demised premises promptly after Tenant is aware of such event.
7.04. Tenant agrees to look solely to Landlord's estate and interest in
the land and Building, or the lease of the Building, or of the land and
Building, and the demised premises*** the satisfaction of any right or
remedy of tenant for the collection of a judgment (or other judicial
process) requiring the payment of money by Landlord, in the event of any
liability by Landlord, and no other property or assets of Landlord shall
be subject to levy, execution, attachment, or other enforcement
procedure for the satisfaction of Tenant's remedies
*Subject to section 7.05 of this Lease,
** (or the proceeds thereof, including the net proceeds from
insurance or any condemnation award)
</PAGE>
<PAGE>
9
under or with respect to this Lease, the relationship of Landlord and
tenant hereunder, or Tenant's use and occupancy of the demised premises,
or any other liability of Landlord to Tenant (except for negligence).
7.05. (a) Landlord agrees that, if obtainable at no additional cost,
it will include in its fire insurance policies appropriate clauses
pursuant to which the insurance companies (i) waive all right of
subrogation against Tenant with respect 10 losses payable under such
policies and/or (ii) agree that such policies shall not be invalidated
should the insured waive in writing prior to a loss any or all right of
recovery against any party for losses covered by such policies. But
should any additional premiums be exacted for any such clause or
clauses, Landlord shall be released from the obligation hereby imposed
unless Tenant shall agree to pay such additional premium.
(b) Tenant agrees to include, if obtainable at no additional
cost, in its fire insurance policy or policies on its furniture, furnish
ings, fixtures and other property removable by Tenant under the pro-
visions of its lease of space in the Building appropriate clauses
pursuant to which the insurance company or companies (i) waive the right
of subrogation against Landlord and any tenant of space in the Building
who shall have executed a similar waiver as set forth in this section
7.05(b), with respect to losses payable under such policy or policies
and/or (ii) agree that such policy or policies shall not be invalidated
should the insured waive in writing prior to a loss any or all right of
recovery against any party for losses covered by such policy or
policies. But should any additional premium be exacted for any such
clause or clauses, Tenant shall be released from the obligation hereby
imposed unless Landlord or the other tenants shall agree to pay such
additional premium.
(c) Provided that Landlord's right of full recovery under its
policy or policies aforesaid is not adversely affected or prejudiced
thereby, Landlord hereby waives any and all right of recovery which it
might otherwise have against Tenant, its servants, agents and employees,
for loss or damage occurring to the Building and the fixtures,
appurtenances and equipment therein, to the extent the same is covered
by Landlord's insurance, notwithstanding that such loss or damage may
result from the negligence or fault of Tenant, its servants, agents or
employees. Provided that Tenant's right of full recovery under its
aforesaid policy or policies is not adversely affected or prejudiced
thereby, Tenant hereby waives any and all right of
</PAGE>
<PAGE>
10
recovery which it might otherwise have against Landlord, its servants,
and employees, and against every other tenant in the Building who shall
have executed a similar waiver as set forth in this Section 7.05(c) for
loss or damage to Tenant's furniture, furnishings, fixtures and other
property removable by Tenant under the provisions hereof to the extent
that same is covered by Tenant's insurance, notwithstanding that such
loss or damage may result from the negligence or fault of Landlord, its
servants, agents or employees, or such other tenant and the servants,
agents or employees thereof.
(d) Landlord and Tenant hereby agree to advise the other promptly
if the clauses to be included in their respective insurance policies
pursuant to subparagraphs (a) and (b) above cannot be obtained.
Landlord and Tenant hereby also agree to notify the other promptly of
any cancellation or change of the terms of any such policy which would
affect such clauses.
ARTICLE 8
DESTRUCTION-FIRE OR OTHER CAUSE
8.01. If the Building shall be partially damaged or destroyed or if
the demised premises shall be partially or totally damaged or destroyed
by fire, casualty or other cause, then, whether or not the damage or
destruction shall have resulted from the fault or neglect of Tenant, or
its servants, employees, agents, visitors or licensees (and if this
Lease shall not have been canceled as in this article hereinafter
provided), Landlord will repair the damage, and restore, replace, and
rebuild the Building and the demised premises at its expense, with
reasonable dispatch and continuity after notice to it of the damage or
destruction; provided, however, that Landlord shall not be required to
repair or replace any installation made by Tenant.* If the demised
premises shall be partially damaged or partially destroyed, the rent
and additional rent payable hereunder shall be abated to the extent
that the demised premises shall have been rendered untenantable or
unfit for Tenant's use and Tenant does not occupy such damaged or
destroyed part of the premises on other than an emergency basis for the
period from the date of such damage or destruction to the date that the
damage shall be repaired or restored. If the demised premises or a
major part thereof shall be totally, or substantially totally, damaged
or destroyed or rendered completely, or substantially completely,
Untenantable on account of fire, casualty or other cause, the rent and
additional rent shall completely abate as of the date of the damage or
* which is not covered by Landlord's fire insurance policy for the
Building.
</PAGE>
<PAGE>
11
destruction and until Landlord shall repair, restore, replace and
rebuild the demised premises (subject to Landlord's right to elect not
to restore the same as hereinafter provided); provided, however, that
should Tenant reoccupy a portion of the demised premises for the
purpose of conducting business during the period the restoration work
is taking place and prior to the date that the same is made completely
tenantable, rent and additional rent shall be apportioned and payable
by Tenant in proportion to the part of the demised premises occupied by
it Nevertheless, in case of any substantial damage or destruction to
the demised premises, Tenant, in addition to and without waiver of any
other rights or remedies available to it, may cancel this Lease by
written notice to Landlord, if (i) within 60 days from the date of the
damage or destruction, Landlord does not file a proof of loss with its
insurer; (ii) within 90 days of the date of damage or destruction
Landlord does not let a contract or contracts which shall provide for
the complete restoration of the demised one year premises within a
period of one year two years from the date of the damage or
destruction; (iii) work un3er. such contract or contracts has not
commenced within 120 days of the date of said damage or destruction; or
(iv) said work is not prosecuted with reasonable diligence to its
completion; provided that Tenant shall not be entitled to cancel this
Lease pursuant to this sentence more than thirty (30) days after
Landlord shall have given written notice to Tenant that the state of
facts specified in clause (i), (ii) or (iii) of this sentence, as the
case may be, has occurred. The period for the commencement or
completion of the required repairs and restoration work shall be
extended by the number of days lost (not to exceed, however, nine
months one year) in the event such loss results from strike, act of
God, war, governmental action, national or state or municipal
emergency, or any cause beyond the reasonable control of Landlord. *
8.02. In case the Building or the demised premises shall be
substantially damaged or destroyed by fire or other cause at any time
during the last two years of the term of this Lease, then Landlord or
Tenant may cancel this Lease upon written notice to the other party
Tenant given within ninety (90) days after such damage or destruction.
8.03. If the Building shall be so damaged at any time during the
term of this Lease that Landlord shall decide to demolish it or to
rebuild it, then in either of such events, Landlord may, within ninety
(90) days after such fire or other casualty, elect to cancel this Lease
by giving Tenant a notice in writing of such decision, and thereupon
the
*Notwithstanding the foregoing, in case of any substantial damage or
destruction to the demised premises, and if Landlord, subject to
Section 25.01 of this Lease (except that such one (1) year period shall
not be extended by more than nine (9) months as a result of any such
occurrence), shall not substantially complete such repair and
restoration work within one (1) year after that date of the fire or
other casualty, then Tenant may terminate this lease by thirty (30)
days prior to written notice to Landlord (unless such work is
substantially completed within thirty (30) days after Tenant gives such
termination notice, in which case such termination notice shall be null
and void and of nor force and effect.)
</PAGE>
<PAGE>
*In connection with repair or restoration work in any portion of the
demised premises, Landlord will use reasonable efforts to minimize any
interference with Tenant's business operations in the remaining portion
of the demised premises. Tenant understands that work will be effected
on business days during normal business hours, unless such work is
required to remedy a condition that threatens the health or safety of
any occupant, in which case Landlord shall employ so-called
overtime labor to remedy such condition.
12
term of this Lease shall expire by lapse of time upon the thirtieth day
after such notice is given, and Tenant shall vacate the demised
premises and surrender the same to Landlord.
8.04. In the event of the termination of this Lease pursuant to the
provisions of this Article, this Lease shall expire as fully and
completely on the date fixed in such notice of termination as if that
were the date definitely fixed for the expiration of this Lease, but
the rent and additional rent shall be apportioned and shall be paid up
to and including the date of such damage or destruction, and any
prepaid rent or prepaid additional rent shall be refunded to Tenant.
8.05. No damages, compensation or claim shall be payable by
Landlord for inconvenience, loss of business or annoyance arising from
any repair or restoration of any portion of the demised premises or of
the Building. *
8.06. The provisions of this Article shall be considered an express
agreement governing any case of damage or destructi6n of the Building
or the demised premises by fire or other casualty and Section 227 of
the Real Property Law of the State of New York1 and any other law of
like import now or hereafter in force providing for such contingency
shall have no application.
ARTICLE 9
EMINENT DOMAIN
9.01. In the event that the whole of the demised premises shall be
lawfully condemned or taken in any manner for any public or quasi-
public use or purpose, this Lease and the term and estate hereby
granted shall forthwith cease and terminate as of the date of vesting
of title (hereinafter referred to as the "date of taking"), and Tenant
shall have no claim against Landlord for, or make any claim for, the
value of any unexpired term of this Lease, and the rent and additional
rent shall be apportioned as of such date.
9.02. In the event that any part of the demised premises shall be
so condemned or taken, then this Lease shall be and remain unaffected
by such condemnation or taking, except that the rent and additional
rent allocable to the part so taken shall be apportioned as of the date
of taking provided, however, that Tenant may elect to cancel this Lease
in the event that*** more than twenty-five (25%) of the demised
premises should be so condemned or taken, provided such notice of
election is given by Tenant to Landlord not later than thirty
** such condemnation or taking results in Tenant being unable to
reasonably use the demised premises for the purposes
permitted hereunder (a "Material Taking"),
</PAGE>
<PAGE>
13
(30) days after the date when title shall vest in the condemning
authority. Upon the giving of such notice, this Lease shall terminate
on the thirtieth day following the date of such notice and the rent and
additional rent shall be apportioned as of such termination date. Upon
such partial taking and this Lease continuing in force as to any part
of the demised premises, the rent and additional rent shall be
diminished by an amount representing the part of said rent and
additional rent properly applicable to the portion or portions of the
demised premises which may be so condemned or taken. If as a result of
the partial taking (and this Lease continuing in force as to the part
of the demised premises not so taken), any part of the demised premises
not taken is damaged. Landlord agrees with reasonable promptness to
commence the work necessary to restore the damaged portion to the
condition existing immediately prior to the taking, and prosecute the
same with reasonable diligence to its completion. In the event Landlord
and Tenant are unable to agree as to the amount by which the rent and
additional rent shall be diminished, the matter shall be determined by
arbitration in accordance with the provisions of Article 31 of this
Lease. Pending such determination, Tenant shall pay to Landlord the
rent as fixed by Landlord, subject to adjustment in accordance with the
arbitration.
9.03. Nothing hereinabove provided shall preclude Tenant from
appearing, claiming, proving and receiving in the condemnation
proceeding, Tenant's moving expenses, and the value of Tenant's
fixtures, or tenant1s alterations, installations and improvements which
do not become part of the Building, or property of Landlord, provided
Landlord's award is not thereby diminished.
9.04. In the event* that more than twenty-five (25%) of the demised
premises shall be so taken and Tenant shall not have elected to cancel
this Lease as above provided, the entire award for a partial taking
shall be paid to Landlord, and Landlord, at Landlord's own expense,
shall to the extent of the net proceeds (after deducting reasonable
expenses including attorneys' and appraisers' fees) of the award
restore the unaffected part of the Building to substantially the same
condition and tenantability as existed prior to the taking.
Until said unaffected portion is restored, Tenant shall be entitled to
a proportionate abatement of rent for that portion of the premises
which is being restored and is not usable until the completion of the
restoration or until the said portion of the premises is used by
Tenant, whichever occurs sooner. Said unaffected portion shall be
restored
* of a Material Taking
t
k
</PAGE>
<PAGE>
14
within a reasonable time but not more than six (6) months after the
taking provided, however, if Landlord is delayed by strike, lockout,
the elements, or other causes beyond Landlord's control, the time for
completion shall be extended for a period equivalent to the delay.
Should Landlord fail to complete the restoration within the said six
(6) months or the time as extended, Tenant may elect to cancel this
Lease and the term hereby granted in the manner and with the same
results as set forth in the next two sentences of this Section 9.04. If
such partial taking shall occur in the last two years of the term
hereby granted, either party, irrespective of the area of the space
remaining, may elect to cancel this Lease and the term hereby granted,
provided such party shall, within thirty (30) days after. such taking,
give notice to that effect, and upon the giving of such notice, the
rent shall be apportioned and paid to the date of expiration of the
term specified and this Lease and the term hereby granted shall cease,
expire and come to an end upon the expiration of said thirty days
specified in said notice. If either party shall so elect to end this
Lease and the term hereby granted, Landlord need not restore any part
of the demised premises and the entire award for partial condemnation
shall be paid to Landlord, and Tenant shall have no claim to any part
thereof, except as to the items set forth in Section 9.03 where same
are applicable.
9.05. In the event a]l or any part of the demised premises shall be
taken for a temporary use or occupancy, (a) demised term shall not be
reduced or affected in any way except as provided in (d) below, (b)
Tenant shall continue to be responsible for all of its obligations
hereunder and shall continue to pay all rents and additional rents when
due, (c) Tenant shall be entitled to receive that portion of the award
which represents reimbursement for the cost of restoration of the
demised premises, compensation for the use and occupancy of the demised
premises and for any taking of Tenant's property, except that, if the
temporary period of taking shall extend beyond the expiration of the
term of this Lease, the portion of the award representing compensation
for the use and occupancy of the demised premises shall be apportioned
between Landlord and Tenant as of said expiration date of said term and
Landlord shall receive that portion of the award which represents
reimbursements for the cost of restoration of the demised premises, and
(d) if the date of temporary taking of more than 25% of the demised
premises shall occur during the last three (3) years of the term of
this Lease. Tenant may elect to cancel this Lease by notice of election
given by Tenant to Landlord not later than thirty (30) days after the
date when title shall vest in the condemning authority. Upon the giving
of such notice, this Lease shall terminate on the thirtieth day
following the date of such notice and the rent and additional rent
shall be apportioned as of such termination date, with Landlord, and
not
</PAGE>
<PAGE>
* (except as otherwise specifically provided in this Article).
** (except as otherwise specifically provided in this Article)
*** but with a full release of Tenant from any and all obligations
accruing under this Lease from and after the effective date of such
assignment,
15
Tenant, to receive the portion of the award which represents reimburse
ment for the cost of restoration of the demised premises and the
portion of the award representing compensation for the use and
occupancy of the demised premises for the time subsequent to the
cancellation date.
ARTICLE 10
ASSIGNMENT AND SUBLETTING
10.01. Tenant, for itself, its heirs, distributees, executors, admin
istrators, legal representatives, successors and assigns, expressly
covenants that it shall not assign, mortgage or encumber this Lease,
nor underlet, or suffer or permit the demised premises or any part
thereof to be used or occupied by others, without the prior written
consent of Landlord in each instance.* The merger or consolidation of
a corporate lessee or sublessee where the net worth of the resulting
corporation is less than the net worth of the lessee or sublessee
immediately prior to such merger or consolidation shall be deemed an
assignment of this lease or of such sublease. If this Lease be
assigned, or if the demised premises or any part thereof be underlet or
occupied by anybody other than Tenant, Landlord may, after default by
Tenant, collect rent from the assignee, undertenant or occupant, and
apply the net amount collected to the rent herein reserved, but no
assignment, underletting, occupancy or collection shall be deemed a
waiver of the provisions hereof, the acceptance of the assignee,
undertenant or occupant as tenant, or a release of Tenant from the
further performance by Tenant of covenants on the part of Tenant herein
contained. The consent by Landlord to an assignment or underletting
shall not in any wise be construed to relieve Tenant from obtaining the
express consent in writing of Landlord to any further assignment or
underletting. In no event shall any permitted sublessee assign or
encumber its sublease or further sublet all or any portion of its
sublet space, or otherwise suffer or permit the sublet space or any
part thereof to be used or occupied by others, without Landlord's prior
written consent in each instance. A modification, amendment or
extension of a sublease shall be deemed a sublease.
10.02. If Tenant desires to assign this Lease or to sublet all or
any portion of the demised premises, it shall** first submit in
writing to Landlord the documents described in Section 10.03 hereof,
and shall offer in writing, (i) with respect to a prospective
assignment, to assign this Lease to Landlord without any payment of
moneys or other consideration therefor,* or, (ii) with respect to a
prospective subletting, to sublet to Landlord the portion of the
demised premises involved "Leaseback Area") for the term specified by
Tenant in its offer and at the lower of (a) Tenant's proposed subrental
or (b) at the same rate of fixed rent and additional rent; and
otherwise on the same terms,
</PAGE>
<PAGE>
16
covenants and conditions (including provisions relating to escalation
rents), as are contained herein and as are allocable and applicable to
the portion of the demised premises to be covered by such subletting.
The offer shall specify the date when the Leaseback Area will be made
available to Landlord, which date shall be in no event earlier than
ninety (90) sixty (60) days nor later than one hundred eighty (180)
days following the acceptance of the offer. If an offer of sublease is
made, it shall in addition specify the duration of the term of the
proposed sublease as fixed by Tenant, except that if the proposed
sublease will result in all or substantially all of the demised
premises being sublet, then Landlord shall have the option to extend
the term of the proposed sublease for the balance of the term of this
Lease less one (1) day.
Landlord shall have a period of thirty (30) ninety (90) days from
the receipt of such offer to either accept or reject the same. Landlord
or its agents or designees shall have the right, during such time, at
reasonable times during business hours, to enter the demised premises
to exhibit same to prospective subtenants. If Landlord shall accept
such offer, Tenant shall then execute and deliver to Landlord, or to
anyone designated or named by Landlord, an assignment or sublease, as
the case may be, in either case in a form reasonably satisfactory to
Landlord's counsel.
If a sublease is so made to Landlord or its designee, it shall
expressly:
(a) permit Landlord to make further subleases of all or any
part of the Leaseback Area and (at no cost or expense to
Tenant) to make and authorize any and all changes,
alterations, installations and improvements in such space as
Landlord may deem necessary for such subletting, at Landlord's
expense;
(b) provide that Tenant will at all times permit reasonably
appropriate means of ingress to and egress from the Leaseback
Area;
(c) negate any intention that the estate created under such
sublease be merged with any other estate held by either of the
parties;
(d) provide that Landlord shall accent the Leaseback Area "as
is" except that Landlord, at Landlord's Tenant's expense,
shall perform all such work and make all such alterations as
may be required physically to separate the Leaseback Area from
the remainder of the demised premises and to permit lawful
occupancy, it being
</PAGE>
<PAGE>
* letter of intent with respect to
** (see Section 10.04 below), provided that the material terms thereof
are substantially the same as those set forth in the letter of intent
described in section 10.03 above.
***, provided that the material terms thereof are substantially the
same as those set forth in the letter of intent described in Section
10.03 above.
17
intended that Tenant shall have no other cost or expense in
connection with the subletting of the Leaseback Area;
(e) provide that at the expiration of the term of such
sublease Tenant will accept the Leaseback Area in its then
existing condition, subject to the obligations of Landlord to
make such repairs thereto as may be necessary to preserve the
Leaseback Area in good order and condition, ordinary wear and
tear excepted.
Landlord shall indemnify and save Tenant harmless from all ob
ligations under this Lease as to the Leaseback Area during the period
of time it is so sublet, except for fixed annual rent and additional
rents, if any, due under the within Lease, which are in excess of the
rent and additional rents due under such sublease.
Subject to the foregoing, performance by Landlord, or its
designee, under a sublease of the Leaseback Area shall be deemed
performance by Tenant of any similar obligation under this Lease and
any default under any such sublease shall not give rise to a default
under a similar obligation contained in this Lease, nor shall Tenant be
liable for any default under this Lease or deemed to be in default
hereunder if such default is occasioned by or arises from any act or
omission of the tenant under such sublease or is occasioned by or
arises from any act or omission of any occupant holding under or
pursuant to any such sublease.
10.03. If Tenant requests Landlord's consent to a specific assign
ment or subletting, it shall submit in writing to Landlord (i) the name
and address of the proposed assignee or sublessee, (ii) a duly executed
counterpart of *the proposed agreement of assignment or sublease***
(iii) reasonably satisfactory information as to the nature and
character of the business of the proposed assignee or sublessee, and as
to the nature of its proposed use of the space, and (iv) banking,
financial or other credit information relating to the proposed assignee
or sublessee reasonably sufficient to enable Landlord to determine the
financial responsibility and character of the proposed assignee or
sublessee.
10.04. If Landlord shall not have accepted Tenant's offer, as
provided in Section 10.02, then Landlord will not unreasonably withhold
condition or delay its consent to Tenant's request for consent to such
specific assignment or subletting*** (where Tenant will not move the
conduct of its business to another building in New York City in
violation of Article 34 hereof). ****Any consent of Landlord under
this Article shall be subject to the terms of this Article and
conditional upon there being no default by Tenant, beyond any grace
period,
**** Additionally, Landlord shall respond to Tenant with thirty (30)
days after Tenant's offer and request to the specific assignment or
subletting. If Landlord fails to respond with such thirty (30) day
period, then Tenant may notify Landlord in writing of such failure. If
Landlord again fails to respond with five (5) business days after it
receives such notice, then Landlord shall be deemed to have consented
to such request (provided such notice by Tenant reminds Landlord in
writing that its failure to respond with such five (5) business day
period will constitute such deemed consent by Landlord).
</PAGE>
<PAGE>
* the costs of Tenant, if any, in effecting the transaction, including
reasonable alteration costs, commissions, advertising costs and legal
fees)
** When the primary purpose of the transaction is to transfer this
lease; the
18
under any of the material terms, covenants and conditions of this Lease
at the time that Landlord's consent to any subletting or assignment is
requested and on the date of the commencement of the term of any
proposed sublease & the effective date of any proposed assignment.
10.05.Tenant understands and agrees that whether Landlord's written
consent thereto is required or not required, no assignment or
subletting shall be effective unless Tenant causes to be delivered to
Landlord a duly executed copy of the sublease or assignment (unless it
was theretofore delivered to Landlord). Any such sublease shall provide
that the sublessee shall comply with all applicable terms and
conditions of this Lease to be performed by the Tenant hereunder. Any
such assignment of lease shall contain an assumption by the assignee of
all of the terms, covenants and conditions of this Lease to be
performed by the Tenant.
10.06.If Landlord shall not have accepted any required Tenant's offer
and/or Tenant effects any assignment or subletting then Tenant
thereafter shall pay to Landlord a sum equal to (a) fifty percent (50%)
of any rent or other consideration paid to Tenant by any subtenant
which (after deducting the costs of Tenant, if any, in effecting the
subletting, including reasonable alteration costs, commissions and
legal fees) is in excess of the rent allocable to the subleased space
which is then being paid by Tenant to Landlord pursuant to the terms
hereof; and (b) fifty percent (50%) of any other profit or gain (after
deducting* any necessary expenses incurred) realized by Tenant from any
such subletting or assignment. All sums payable hereunder by Tenant
shall be payable to Landlord as additional rent upon receipt thereof by
Tenant.
10.07.Anything herein contained to the contrary notwithstanding:
(a) Tenant shall not advertise (but may list with-brokers)
its space for assignment or subletting at a rental rate lower
than the greater of the then Building rental rate for such
space. Or the rental rate then being paid by Tenant to
Landlord.
(b) **The transfer of a majority of the issued and outstanding
capital stock of, or of a controlling interest in, any
corporate tenant or subtenant of this Lease or a majority of
the total interest in any partnership tenant or subtenant,
however accomplished, and whether in a single transaction or
in a series of related or unrelated transactions. shall be
deemed an assignment of this Lease or of such sublease.*** The
transfer of outstanding capital stock of any corporate tenant,
for purposes of this Article, shall not include sale of such
stock by persons other than those deemed "insiders" within the
meaning of the Securities Exchange Act of 1984 as amended, and
which sale is effected through "over-the-counter market" or
through any recognized stock exchange.
*** The conversion of a partnership tenant or subtenant to a liability
company or limited liability partnership shall deemed an assignment of
this Lease or of such sublease.
</PAGE>
<PAGE>
*The term "Affiliate" as used in this Article shall mean any entity
controlled by, controlling or under common control with Tenant. The
term "control" shall mean ownership of more than fifty percent (50%) of
the equity and voting interest in any entity.
**and the reputation and experience of the transferee or of the
resulting or surviving corporation, as the case may be (or, if it is a
new entity,***
19
(c) No assignment or subletting shall be made:
(i) To any person or entity which shall at that time be a
tenant, subtenant or other occupant of any part of ~ of
which the demised premises form a part, or who negotiated
deals with Landlord or Landlord's agent (directly or through
a broker) with respect to space in the building during the
six (6) months immediately preceding Tenant's request for
Landlord's consent;
(ii) By the legal representatives of the Tenant or by any
person to whom Tenant's interest under this Lease passes by
operation of law, except in compliance with the provisions
of this Article;
(iii) To any person or entity for the conduct of a business
which is not in keeping with the standards and the general
character of the Building of which the demised premises form
a part
10.08.Anything hereinabove contained to the contrary notwithstanding,
the offer-back to Landlord provisions of Section l0.02 and section
10.06 hereof shall not apply to, and Landlord hereby grants will not
reasonably withhold or delay its consent to, an assignment of this
lease, or sublease of all or part of the demised premises, to: the
parent of Tenant or to an Affiliate (as hereinafter defined) a wholly
owned subsidiary of Tenant or of said parent of Tenant, provided the
net worth of the transferor or sublessor after such transaction, is
equal to or greater than its net worth immediately prior to such
transaction, and provided also that any such transaction complies with
the other provisions of this Article.*
10.09.Anything hereinabove contained to the contrary notwithstanding,
the offer-back to Landlord provisions of Section 10.02 hereof shall not
apply to, and Landlord will not unreasonably withhold condition, or
delay its consent to, an assignment of this Lease, or sublease of all
or part of the demised premises, to: any corporation (i) to which
substantially all the assets of Tenant are transferred or (ii) into
which Tenant may be merged or consolidated, provided that the net worth
experience and reputation of such transferee or of the resulting or
surviving corporation, as the case may be, is equal to or greater than
the net worth experience and reputation of Tenant and of any guarantor
of this Lease immediately prior to such transfer** and provided, also,
that any such transaction complies with the other provisions of this
Article. ******
10.10.No consent from Landlord shall be necessary under Sections 10.08
and 10.09 hereof where (i) reasonably satisfactory proof is delivered
to Landlord that the net worth and other provisions of 10.08 and 10.09,
as the case may be, and the other provisions of this Article, have been
satisfied and (ii) Tenant (provided it is still in existence), in a
writing reasonably satisfactory to Landlord's attorneys, agrees to
remain primarily liable jointly and severally with any transferee****
or assignee, for the obligations of Tenant under this Lease.****
***the reputation and experience of its principals), it is reasonably
acceptable to Landlord;
******(except that Section 10.06 shall only apply to the extent that a
specific value is ascribed to the Lease in any of the documents
relating to the transaction).
*****or any other permitted securities brokerage firm
****10.11. If and so long as First Albany Companies Inc., or its
Affiliate***** is in actual occupancy of the demised premises, and such
party is not in default beyond any grace period under any of the
material terms, covenants or conditions of this Lease, then the
provisions of Section 10.02 shall not apply to, and Landlord hereby
grants its consent to, the licensing by Tenant, from time to time, of
up to an aggregate of fifteen percent (15%) of the rentable square foot
area of the demised premises, for use by accountants, lawyers or
securities industry professionals; but any such licensing shall be
subject to all other applicable provisions of this Article.
</PAGE>
<PAGE>
* The provisions of this Section 10.12 shall not apply if Landlord
arbitrarily or in bad faith withholds, delays or conditions its consent
or approval to any proposed assignment or subletting under this
Article.
20
10.11.In no event shall Tenant be entitled to make, nor shall Tenant
make, any claim, and Tenant hereby waives any claim, for money damages
(nor shall Tenant claim any money damages by way of setoff,
counterclaim or defense) based upon any claim or assertion by Tenant
that Landlord has unreasonably withheld or unreasonably delayed its
consent or approval to a proposed assignment or subletting as provided
for in this Article. Tenant's sole remedy shall be an action or
proceeding to enforce any such provision, or for specific performance,
injunction or declaratory judgment. *
ARTICLE 11
ACCESS TO DEMISED PREMISES
11.01.Tenant shall permit Landlord, or its agents or designees, to
erect, use and maintain pipes, ducts and conduits in and through the
demised premises, provided the same are installed adjacent to or
concealed behind walls, floor and ceilings of the demised premises and
are installed by such methods and at such locations as will not
materially interfere with or impair Tenant's layout or use of the
demised premises or damage the appearance thereof** Landlord or its
agents or designees shall have the right, but only upon request made
to Tenant or any authorized employee of Tenant at the demised premises
to enter the demised premises, other than vaults or other enclosures
where money, securities or other valuables or confidential documents
are kept, at reasonable times during business hours, for the making of
such repairs or alterations as Landlord shall be required or shall have
the right to make by the provisions of this Lease or any other lease in
the Building and, subject to the foregoing, shall also have the right
to enter the demised premises for the purpose of inspecting them or
exhibiting them to prospective purchasers or lessees of the entire
Building or to prospective mortgagees of the fee or of the Landlord's
interest in the property of which the demised premises are a part or to
prospective assignees of any such mortgages or to the holder of any
mortgage on the Landlord's interest in the property, its agents or
designees. Landlord shall be allowed to take all material into and upon
the demised premises that may be required for the repairs or
alterations above mentioned as the same is required for such purpose
without the same constituting an eviction of Tenant in whole or in
part, and the rent reserved shall in no wise abate, except as otherwise
provided in this Lease, while said repairs or alterations are being
made, by reason of loss or interruption of the business of
**or reduce the rentable area of the demised premises (other than a de
minimis extent).
***reasonable request (which shall be at least 24 hours notice, except
in an emergency) made
</PAGE>
<PAGE>
* Landlord, at its expense, shall repair any damage to the demised
premises including Tenant's finish work, which is caused by any such
work or as a result of any such entry of the demised premises by
Landlord or its agents or employees.
21
Tenant because of the prosecution of any such work provided that,
Landlord shall seek use reasonable diligence to minimize any
interference with Tenant's business operations, as in Section 4.04
provided. *
11.02.Landlord or its agents or designees may, during the six (6) nine
(9) months prior to the expiration of the term of this Lease, at
reasonable times during business hours** enter the demised premises to
exhibit same to prospective tenants.
11.03.If Tenant shall not be personally present to open and permit an
entry into the demised premises at any time when for any reason an
entry therein shall be urgently necessary by reason of fire or other
emergency,*** Landlord or Landlord's agents may forcibly enter the same
without rendering Landlord or such agents liable therefor (if during
such entry Landlord or Landlord's agents shall accord reason able care
to Tenant's property) and without in any manner affecting the
obligations and covenants of this Lease.
ARTICLE 12
CERTIFICATE OR OCCUPANCY
12.01.Tenant will not at any time use or occupy the demised premises in
violation of the certificate of occupancy issued for the Building.
Landlord represents that the certificate of occupancy for the Building
will permit the use of the demised premises for the purposes specified
in this Lease. Landlord will make no changes in the Building which
would result in a change in the certificate of occupancy which prevents
Tenant from using the demised premises for the purposes specified in
this Lease.
ARTICLE 13
BANKRUPTCY
13.01.Subject to then applicable law and to the provisions of Section
13.03, if at any time prior to the date herein fixed as the
commencement of the term of this Lease there shall be filed by or
against Tenant in any court pursuant to any statute either of the
United States or of any State a petition in bankruptcy or insolvency or
for reorganization or for the appointment of a receiver or a trustee of
all or a portion of Tenant's property, or if Tenant makes an assignment
for the benefit of creditors, or petitions for or enters into an
arrangement with creditors, this Lease shall ipso facto be canceled and
terminated, in which event neither Tenant nor any person
** , after reasonable prior notice (which may be oral and given on
the same day),
*** and Landlord has used reasonable efforts to contact an authorized
representative of Tenant, whose name and telephone number have
theretofore been provided to Landlord in writing,
</PAGE>
<PAGE>
22
claiming through or under Tenant or by virtue of any statute or of an
order of any court shall be entitled to possession of the demised
premises and Landlord, in addition to the other rights and remedies
given by Section 13.04 hereof and by virtue of any other provision
herein or elsewhere in this Lease contained or by virtue of any statute
or rule of law, may retain as liquidated damages any rent, security
deposit or monies received by it from Tenant or others in behalf of
Tenant upon the execution hereof.
13.02.Subject to then applicable law and to the provisions of Section
13.03, if at the date fixed as the commencement of the term of this
Lease or if at any time during the term hereby demised there shall be
filed by or against Tenant in any court pursuant to any statute either
of the United States or of any State a petition in bankruptcy or
insolvency or for reorganization or for the appointment of a receiver
or trustee of all or a portion of Tenant's property, or if Tenant makes
an assignment for the benefit of creditors, or petitions for or enters
into an arrangement with creditors, Landlord may at Landlord's option,
serve upon Tenant or any such trustee, receiver, or assignee, a notice
in writing stating that this Lease and the term hereby granted shall
cease and expire on the date specified in said notice, which date shall
be not less than ten days after the serving of said notice, and this
Lease and the term hereof shall then expire on the date so specified as
if that date had originally been fixed in this Lease as the expiration
date of the term herein granted.* (Thereupon, neither Tenant nor any
person claiming through or under Tenant by virtue of any statute or of
an order of any court shall be entitled to possession or to remain in
possession of the demised premises but shall forthwith quit and
surrender the premises, and Landlord, in addition to the other rights
and remedies Landlord has by virtue of any other provision herein or
elsewhere in this Lease contained or by virtue of any statute or rule
of law, may retain as liquidated damages any rent, security, deposit or
monies received by it from Tenant or others in behalf of Tenant.
13.03.In the event that at any times mentioned in either Sections 13.01
or 13.02 there shall be instituted against Tenant an involuntary
proceeding for bankruptcy, insolvency, reorganization or any other
relief described in Sections 13.01 and 13.02, Tenant shall have 120
ninety (90) days in which to vacate or stay the same before this Lease
shall terminate or before Landlord shall have any right to terminate
this Lease, provided the rent and additional rent then in arrears, if
any, are paid within thirty (30) fifteen (15) days after the
institution of
* Notwithstanding the foregoing, if and so long as Tenant is not in
default under this Lease beyond any grace period, Landlord shall not
exercise such termination right.
</PAGE>
<PAGE>
23
such proceeding, and further provided that the rent and additional rent
which shall thereafter become due and payable are paid when due, and
Tenant shall not otherwise be in default in the performance of the
terms and covenants of this Lease.
13.04.In the event of the termination of this Lease pursuant to
Sections 13.01, 13.02 or 13.03 hereof, Landlord shall forthwith,
notwithstanding any other provisions of this Lease to the contrary, be
entitled to recover from Tenant as and for liquidated damages an amount
equal to the difference between the rent reserved hereunder for the
unexpired portion of the term demised and the then fair and reasonable
rental value of the demised premises for the same period, if lower than
the rent reserved at the time of termination. If such premises or any
part thereof be re-let by Landlord for the unexpired term of said
Lease, or any part thereof, before presentation of proof of such
liquidated damages to any court, commission or tribunal, the amount of
rent reserved upon such re-letting shall be prima facie the fair and
reasonable rental value for the part or the whole of the premises so re-
let during the term of the re-letting. Nothing herein contained shall
limit or prejudice the, right of Landlord to prove for and obtain as
liquidated damages by reason of such termination, an amount equal to
the maximum allowed by any statute or rule of law in effect at the time
when, and governing the proceedings in which such damages are to be
proved, whether or not such amount be greater, equal to, or less than
the amount of the difference referred to
above.
</PAGE>
<PAGE>
*30 (15 in case of a payment default)
**(or its permitted designee, sublessee, licensee or other successor-in-
interest)
***unless Tenant prevails in such action or preceding,
24
ARTICLE 14
DEFAULT
14.01. If Tenant defaults in fulfilling any of the covenants of this
Lease, including the payment of rent or additional rent, or if the
demised premises become abandoned vacant or deserted, then in any one
or more of such events, upon Landlord serving a written* days' notice
upon Tenant specifying the nature of said default and upon the
expiration of said 30 (15)days, if Tenant shall have failed to comply
with or remedy such default, or if the said default or omission
complained of shall be of such a nature that the same cannot be
completely cured or remedied within said 30-day period and if Tenant
shall not have diligently commenced to take action towards curing such
default within such day period and shall not thereafter with reasonable
diligence and in good faith proceed to remedy or cure such default, or
if any execution or attachment shall be issued against Tenant or any of
Tenant's property whereupon the demised premises shall be occupied by
someone other than Tenant** and such occupancy shall continue for a
period of thirty (30) days after written notice from Landlord, then
Landlord may serve a written 10 days' notice of cancellation of this
Lease upon Tenant, and, upon the expiration of said 10 days, this Lease
and the term hereunder and any rights of renewal or extension thereof
shall end and expire as fully and completely as if the date of
expiration of such 10-day period were the day herein originally fixed
for the end and expiration of this Lease and the term hereof and Tenant
shall then quit and surrender the demised premises to Landlord but
Tenant shall remain liable as hereinafter provided. If Tenant shall at
any time default hereunder, and if Landlord shall institute an action
or summary proceedings against Tenant based upon such default, then***
Tenant will reimburse Landlord for the expense of reasonable attorney's
fees and disbursements thereby incurred by Landlord.
14.02. If the notices provided for in Section 14.01 hereof
shall have been given, and the term shall expire as aforesaid, or if
Tenant shall make default in the payment of the rent reserved herein or
any item of additional rent herein provided or any part of either or in
making any other payment herein provided for, then and in any of
such events Landlord may, without notice, re-enter the demised premises
either by force or otherwise, and dispossess Tenant, the legal
representatives of Tenant or other occupant of the demised premises,
by summary proceedings or otherwise and remove their effects and
</PAGE>
<PAGE>
25
hold the premises as if this Lease had not been made, and Tenant hereby
waives the service of notice of intention to reenter and to institute
legal proceedings to that end.
14.03.Notwithstanding any lease term expiration or termination under
this Article 14 prior to the Lease expiration date originally fixed
herein, Tenant's obligation to pay any and all rent and additional rent
under this Lease shall continue to and cover all periods up to the date
originally fixed for the expiration of the term hereof.
14.04.Notwithstanding the provisions of Section 14.01 hereof, Tenant,
at its own cost and expense, in its name and/or (wherever necessary)
Landlord's name, may contest, in any manner permitted by law (including
appeals to a court, or governmental department or authority having
jurisdiction in the matter), the validity or the enforcement of any
governmental act, regulation or directive with which Tenant is required
to comply pursuant to this Lease, and may defer compliance therewith
provided that:
(a)such non-compliance shall not subject Landlord to criminal
prosecution or subject the land and/or Building at One Penn Plaza, New
York City to lien or sale;
(b) such non-compliance shall not be in violation of any fee
mortgage, or of any ground of underlying lease or any mortgage thereon;
(c)Tenant shall first deliver to Landlord a surety bond issued
by a surety company of recognized responsibility, or other security
satisfactory to Landlord, indemnifying and protecting Landlord against
any loss or injury by reason of such non-compliance; and
(d) Tenant shall promptly and diligently prosecute such
contest.
Landlord, without expense or liability to it, shall cooperate with
Tenant and execute any documents or pleadings required for such
purpose, provided that Landlord shall reasonably be satisfied that the
facts set forth in any such documents or pleadings are accurate.
ARTICLE 15
REMEDIES OF LANDLORD; WAIVER OF REDEMPTION
15.01.In case of such re-entry, expiration and/or dispossess by summary
proceedings or otherwise as set forth in Article 14 hereof (a)
</PAGE>
<PAGE>
26
the rent shall become due thereupon and be paid up to the time of such
re-entry, dispossess and/or expiration, together with such reasonable
expenses as Landlord may incur for legal expenses, reasonable
attorneys' fees, brokerage, and/or putting the demised premises in good
order or for preparing the same for re-rental; (b) Landlord may re-let*
the premises or any part or parts thereof, either in the name of
Landlord or otherwise, for a term or terms, which may at Landlord's
option be less than or exceed the period which would otherwise have
constituted the balance of the term of this Lease and may grant
concessions or free rent; and/or (c) Tenant shall also pay Landlord as
damages for the failure of Tenant to observe and perform said Tenant's
covenants herein contained, any deficiency between the rent hereby
reserved and/or covenanted to be paid and the net amount, if any, of
the rents collected on account of the lease or leases of the demised
premises for each month of the period which would otherwise have
constituted the balance of the term of this Lease. The failure or
refusal of Landlord to re-let the premises or any part or parts thereof
shall not release or affect Tenant's liability for damages. In
computing such damages there shall be added to the said deficiency such
reasonable expenses as Landlord may incur in connection with re-
letting, such as legal expenses, reasonable attorneys fees, brokerage
and for keeping the demised premises in good order or for preparing the
same for re-letting. Any such damages shall be paid in monthly
installments by Tenant on the rent days specified in this Lease and any
suit brought to collect the amount of the deficiency for any month
shall not prejudice in any way the rights of Landlord to collect the
deficiency for any subsequent month by a similar proceeding. Landlord,
at Landlord's option, may make such alterations, repairs, replacements
and/or decorations in the demised premises as Landlord, in Landlord's
sole judgment, considers advisable and necessary for the purpose of re-
letting the demised premises; and the making of such alterations and/or
decorations shall not operate or be construed to release Tenant from
liability hereunder as aforesaid. Landlord shall in no event be liable
in any way whatsoever for failure or refusal to re-let the demised
premises or any parts thereof, or, in the event that the demised
premises are re-let, for failure to collect the rent thereof under such
re-letting. In the event of a breach or threatened breach by Tenant of
any of the covenants or provisions hereof, Landlord shall have the
right of injunction and the right to invoke any remedy allowed at law
or in equity as if re-entry, summary proceedings and other remedies
were not herein provided for. Mention in this Lease of any particular
remedy, shall not preclude Landlord from any other remedy, in law or in
equity.
* (Landlord shall seek to relet the demised premises provided there
is no other comparable space in the Building then available for leasing
by Landlord
</PAGE>
<PAGE>
27
15.02.Tenant hereby expressly waives any and all rights of redemption
granted by or under any present or future laws in the event of Tenant
being evicted or dispossessed for any cause, or in the event of
Landlord obtaining possession of demised premises, by reason of the
violation by Tenant of any of the covenants and conditions of this
Lease or otherwise.
ARTICLE 16
FEES AND EXPENSES; INTEREST
16.01.If Tenant shall default in the observance or performance of any
term or covenant on Tenant's part to be observed or performed under or
by virtue of any of the covenants, terms or provisions in any Article
of this Lease, (a) Landlord may remedy such default for the account of
Tenant, immediately and without notice in case of emergency, or in any
other case only provided that Tenant shall fail to remedy such default
with all reasonable dispatch after Landlord shall have notified Tenant
in writing of such default and the applicable grace period for curing
such default shall have expired and (b) if Landlord makes any
reasonable expenditures or incurs any reasonable obligations for the
payment of money in connection with such default including, but not
limited to, reasonable attorneys' fees in instituting, prosecuting or
defending any action or proceeding, such sums paid or obligations
incurred, with interest, shall be deemed to be additional rent
hereunder and shall be paid by Tenant to Landlord upon rendition of a
bill to Tenant therefor.
If Tenant is more than ten (10) day's late in making any payment due to
Landlord from Tenant under this Lease, then interest shall become due
and owing to Landlord on such payment from the date when it was due,
computed as provided in Section 20.04 hereof.
ARTICLE 17
NO REPRESENTATIONS BY LANDLORD
17.01. Landlord or Landlord's agents have made no representations or
promises with respect to the said Building or demised premises except
as herein expressly set forth. (SEE RIDER ARTICLE 51)
</PAGE>
<PAGE>
28
ARTICLE 18
END OF TERM
18.01.Upon the expiration or other termination of the term of this
Lease, Tenant shall quit and surrender to Landlord the demised
premises, broom clean, in good order and condition, ordinary wear and
tear and damage by fire, the elements or other casualty excepted, and
Tenant shall remove all of its property except as otherwise provided
herein provided Tenant's obligation to observe or perform this covenant
shall survive the expiration or sooner termination of the term of this
Lease.
18.02.Tenant agrees it shall indemnify and save Landlord harmless
against all costs, claims, loss or liability resulting from delay by
Tenant in so surrendering the premises, including, without limitation,
any claims made by any succeeding tenant founded on such delay.
Additionally, the parties recognize and agree that other damage to
Landlord resulting from any failure by Tenant timely to surrender the
premises will be substantial, will exceed the amount of monthly rent
theretofore payable hereunder, and will be impossible of accurate
measurement. Tenant therefore agrees that if possession of the premises
is not surrendered to Landlord within ten (10) days one (1) day after
the day of the expiration or sooner termination of the term of this
Lease, then Tenant will pay Landlord, as liquidated damages, for each
month and for each portion of any month during which Tenant holds over
in the premises after expiration or termination of the term of this
Lease, a sum equal two three times the average. rent and additional
rent which was payable per month under this Lease during the last six
months of the term thereof. The aforesaid obligations shall survive the
expiration or sooner termination of the term of this Lease.
ARTICLE 19
QUIET ENJOYMENT
19.01. Landlord covenants and agrees with Tenant that upon Tenant
paying the rent and additional rent and observing and performing all
the terms, covenants and conditions, on Tenant's part to be observed
and performed, Tenant may peaceably and quietly enjoy the premises
hereby demised, subject, nevertheless, to the terms and conditions of
this Lease, and to the ground leases, underlying leases and mortgages
hereinbefore mentioned.
</PAGE>
<PAGE>
29
ARTICLE 20
DEFINITIONS
20.01.The term "Landlord" as used in this Lease means only the owner,
or the mortgagee in possession, for the time being of the land and
Building (or the owner of a lease of the Building or of the land and
Building), so that in the event of any transfer of title to said land
and Building or said lease, or in the event of a lease of the Building,
or of the land and Building, upon notification to Tenant of such
transfer or lease the said transferor Landlord shall be and hereby is
entirely freed and relieved of all existing or future covenants,
obligations and liabilities of Landlord hereunder, and it shall be
deemed and construed as a covenant running with the land without
further agreement between the parties or their successors in interest,
or between the parties and the transferee of title to said land and
Building or said lease, or the said lessee of the Building, or of the
land and Building, that the transferee or the lessee has assumed and
agreed to carry out any and all such covenants, obligations and
liabilities of Landlord hereunder.
20.02.The words "re-enter" and "re-entry" as used in this Lease are not
restricted to their technical legal meaning.
20.03.The term "business days" as used in this Lease shall exclude
Saturdays, Sundays and all days observed by the Federal, State or local
government as legal holidays as well as all other days recognized as
holidays under applicable union contracts.
20.04.Except as otherwise specifically provided in this Lease, whenever
payment of interest is required by the terms hereof, it shall be
computed as follows: for an individual or partnership tenant, computed
at the maximum legal rate of interest; for a corporate tenant, computed
at* two (2%) percent per month unless there is an applicable maximum
legal rate of interest which then shall be used.
ARTICLE 21
ADJACENT EXCAVATION-SHORING
21.01.If an excavation shall be made upon land adjacent to the demised
premises, or shall be authorized to be made, Tenant shall afford to the
person causing or authorized to cause such excavation, license to enter
upon the demised premises for the purpose of doing
* the lower of (i) the rate of interest publicly announced New York
from time to time by Chase Manhattan Bank, N.A. its prime rate plus
four percent (4%) per annum, or (ii) applicable maximum legal rate of
interest
*Landlord shall seek to cause such work to be effected in a manner
which minimizes interference with Tenant's business operations in the
demised premises.
</PAGE>
<PAGE>
30
such work as shall be necessary to preserve the wall of or the Building
of which the demised premises form a part from injury or damage and to
support the same by proper foundations without any claim for damages or
indemnity against Landlord, or diminution or abatement of rent.*
ARTICLE 22
RULES AND REGULATIONS
22.01.Tenant and Tenant's servants, employees and agents shall observe
faithfully and comply strictly with the Rules and Regulations set forth
in Exhibit B attached hereto and made part hereof entitled "Rules and
Regulations" and such other and further reasonable Rules and
Regulations as Landlord or Landlord's agents may from time to time
adopt provided, however, that in case of any conflict or inconsistency
between the provisions of this Lease and of any of the Rules and
Regulations as originally or as hereafter adopted, the provisions of
this Lease shall control. Reasonable written notice of any additional
Rules and Regulations shall be given to Tenant. In case Tenant disputes
the reasonableness of any additional Rule or Regulation hereafter made
or adopted by Landlord or Landlord's agents, the parties hereto agree
to submit the question of the reasonableness of such Rule or Regulation
for decision to the Chairman of the Board of Directors of the
Management Division of the Real Estate Board of New York, Inc., or to
such impartial person or persons as he may designate, provided however,
if Tenant objects to submitting the question to such Chairman or to his
designee or designees, the same shall be submitted to arbitration as
set forth in Article 81 hereof, and the determination of the Chairman,
his designee or designees, or the arbitrators as the case may be, shall
be final and conclusive upon the parties hereto. The right to dispute
the reasonableness of any additional Rule or Regulation upon Tenant's
part shall be deemed waived unless the same shall be asserted by
service of a notice in writing upon Landlord within 60 days after
written notice to Tenant of the adoption of any such additional Rule or
Regulation. Nothing in this Lease contained~shal1 be construed to
impose upon Landlord any duty or obligation to enforce the Rules and
Regulations or the terms, covenants or conditions in any other lease,
against any other tenant of the Building, and Landlord shall not be
liable to Tenant for violation of the same by any other tenant, its
servants, employees, agents, visitors or licensees. Landlord shall
enforce or not enforce the Rules and Regulations uniformly, and
Landlord shall not apply the Rules and Regulations against Tenant in a
discriminatory manner.
</PAGE>
<PAGE>
31
ARTICLE 23
NO WAIVER
23.01.No agreement to accept a surrender of this Lease shall be valid
unless in writing signed by Landlord. No employee of Landlord or of
Landlord's agents shall have any power to accept the keys of said
premises prior to the termination of this Lease. The delivery of keys
to any employee of Landlord or of Landlord's agent shall not operate as
a termination of this Lease or a surrender of the premises. In the
event of Tenant at any time desiring to have Landlord sublet the
premises for Tenant's account, Landlord or Landlord's agents are
authorized to receive said keys for such purpose without releasing
Tenant from any of the obligations under this Lease. The failure of
Landlord or Tenant to seek redress for violation of, or to insist upon
the strict performance of, any covenant or condition of this Lease or
any of the Rules and Regulations set forth herein, or hereafter adopted
by Landlord, shall not prevent a subsequent act, which would have
originally constituted a violation, from having all the force and
effect of an original violation. The receipt by Landlord or payment by
Tenant of rent with knowledge of the breach of any covenant of this
Lease shall not be deemed a waiver of such breach. The failure of
Landlord to enforce any of the Rules and Regulations set forth herein,
or hereafter adopted, against Tenant and/or any other tenant in the
Building shall not be deemed a waiver of any such Rules and
Regulations. No provision of this Lease shall be deemed to have been
waived by Landlord or Tenant, as the case may be unless such waiver be
in writing signed by Landlord.* No payment by Tenant or receipt by
Landlord of a lesser amount than the monthly rent herein stipulated
shall be deemed to be other than on account of the earliest stipulated
rent, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment of rent be deemed an accord and
satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such rent or
pursue any other remedy in this Lease provided.
23.02.This Lease contains the entire agreement between the parties, and
any executory agreement hereafter made shall be ineffective to change,
modify, discharge or effect an abandonment of it in whole or in part
unless such executory agreement is in writing and signed by the party
against whom enforcement of the change, modification, discharge or
abandonment is sought.
*the other party.
</PAGE>
<PAGE>
ARTICLE 24
WAIVER OF TRIAL BY JURY
24.01.Landlord and Tenant do hereby waive trial by jury in any action,
proceeding or counterclaim brought by either of the parties hereto
against the other on any matters whatsoever arising out of or in any
way connected with this Lease, the relationship of Landlord and Tenant,
Tenant's use or occupancy of the demised premises, and/or any other
claims (except claims for personal injury or property damage), and any
emergency statutory or any other statutory remedy. It is further
mutually agreed that in the event Landlord commences any summary
proceeding for non-payment of rent, Tenant will not interpose and does
hereby waive the right to interpose any counterclaim of whatever nature
or description in any such proceeding *
ARTICLE 25
INABILITY TO PERFORM
25.01.If, by reason of (1) strike, (2) labor troubles, (3) governmental
pre-emption in connection with a national emergency, (4) any rule,
order or regulation of any governmental agency, (5) conditions of
supply or demand which are affected by war or other national, state or
municipal emergency, or (6) any cause beyond Landlord's control,
Landlord shall be unable to fulfill its obligations under this Lease or
shall be unable to supply any service which Landlord is obligated to
supply, this Lease and Tenant's obligation to pay rent hereunder shall
in no wise be affected, impaired or excused. As Landlord shall learn of
the happening of any of the foregoing conditions, Landlord shall
promptly notify Tenant of such event and, if ascertainable, its
estimated duration, and will proceed promptly and diligently with the
fulfillment of its obligations as soon as reasonably possible.
If, for any reason whatsoever, unless the result of the causes
set forth in numbers (l)-(6) of the first paragraph of this Section
25.01, or because of failure of the public utility supplying
electricity or heat to the Building to supply such service: (a) all of
the elevators in the banks of elevators which service the floor or
floors on which the demised premises are located be inoperative for
more than seven (7) ten (10) consecutive business days so that to
obtain access to any floor of the demised premises it would be
necessary to walk up or down more than four flights of stairs (a flight
of stairs shall consist of all stairs in a
* , provided Tenant does not thereby waive any defense or the right
to assert such claim in a separate action or proceeding
</PAGE>
<PAGE>
*, in addition to any rights Tenant may have under this Lease or in
law or at equity,
** Except for rent bills (which may be sent by regular mail) and
emergency repair notices (which may be hand delivered to the demised
premises), any
*** three (3) business days after
33
public stairway of the Building between one floor and the floor above
or below), unless elevators in a bank of elevators which service floors
above or below the floors upon which the demised premises are located
are in operation and if Tenant used same it would not be necessary to
walk up or down more than four flights of stairs, or (b) if the heating
or air conditioning system which services the demised premises be
inoperative for a period of more than seven (7) ten (10) consecutive
business days during the days when said system would normally be
operating to service the Building, so that Tenant and its employees
cannot and do not use, except on an emergency basis, part or all of the
demised premises for the purposes for which the premises are leased,
Tenant shall* be entitled to an abatement of rent for each day after
said seven (7) ten (10) day period for such portion of the demised
premises which is inaccessible or which cannot be used as above set
forth.
ARTICLE 26
NOTICES
26.01.**Any notice or demand, consent, approval or disapproval required
to be given by the terms and provisions of this Lease, or by any law or
governmental regulation, either by Landlord to Tenant or by Tenant to
Lan4lord, shall be in writing. Unless otherwise required by such law or
regulation such notice or demand shall be given, and shall be deemed to
have been served and given by Landlord and received by Tenant,*** when
Landlord shall have deposited such notice or demand by registered or
certified mail return receipt requested, enclosed in a securely closed
post-paid. wrapper, in a United States Government general or branch
post office, or official depository with the exclusive care and custody
thereof, addressed to Tenant, at the address set forth after Tenant's
name on page 1 of this Lease. After Tenant shall occupy the demised
premises, the address of Tenant for notices, demands, consents,
approvals or disapprovals shall be One Penn Plaza, New York, N.Y.,
10119.**** Such notice, demand, consent, approval or disapproval
shall be given, and shall be deemed to have been served and given by
Tenant and received by Landlord,*** when Tenant shall have deposited
such notice or demand by registered or certified mail return receipt
requested, enclosed in a securely requested, closed postpaid wrapper,
in a United States Government general or branch post office or,
official depository with the exclusive care and custody thereof,
addressed to Landlord at 60 East 42nd Street, New York, N.Y., 10165.
Either party may, by notice as aforesaid, designate a different address
or addresses for notices, demands, consents, approvals or disapprovals.
****, with a copy of any default notice to: First Albany Companies
Inc., 30 South Pearl Street, Albany, New York 12207, Attention:
General Counsel
</PAGE>
<PAGE>
* Landlord represents that it is presently the policy of the Building
that Landlord viii furnish such air-conditioning, ventilation and
heating services on all weekdays except for: New Year's Day, Christmas
Day, Memorial Day, Fourth of July, Labor Day and Thanksgiving Day;
provided, however, that if any such holiday falls on a Saturday or
Sunday and the applicable union observes such holiday on a weekday
prior to or subsequent to such actual holiday then no such service will
be provided on such weekday.
34
ARTICLE 27
27.01.Landlord shall provide necessary passenger elevator facilities on
business days from 8:00 A. M. to 6:00 P.M. and shall have sufficient
elevators available at all other times. At Landlord's option, the
elevators shall be operated by automatic control or by manual control,
or by a combination of both of such methods. (SEE RIDER ARTICLE 51)
27.02.Landlord at its expense shall cause the space in the demised
premises other than any space used for the preparation or consumption
of food or for storage to be kept clean in accordance with the
standards set forth in Exhibit C attached hereto and made a part hereof
entitled "Cleaning Schedule".
27.03.(a)Landlord at its expense, shall, through the air conditioning
system of the Building, furnish to the demised premises on an all year
round basis, air conditioning, ventilation and the hours
from 8:00 A.M. to 6:00 P.M. on business days.* Provided tenant shall
comply with Building Regulations, the air conditioning system will be
designed to provide summer interior conditions of 78F when outside
conditions are 95F and winter interior conditions of 68F with outside
conditions of 10F.***
(b) Landlord at its expense, will maintain*** the air
conditioning system in a manner befitting a first class building and
will use all reasonable care to keep the same in proper and efficient
operating condition. Tenant acknowledges that it has been advised that
the conditions hereinbefore described cannot be maintained in the event
of the occupancy of the demised premises by more than an average of one
person for each 100 square feet of usable area or if Tenant installs
and operates lighting, machines and appliances the total connected
electrical load of which exceeds 4 1/2 watts per square foot of usable
area.
(c) Tenant agrees to keep and cause to be kept closed all the
windows in and the exterior doors to the demised premises at all times,
and Tenant agrees to cooperate fully with Landlord and to abide by all
the regulations and requirements which Landlord may reasonably
prescribe for the proper functioning and protection of said air
conditioning system.
(d) The Tenant acknowledges it has been advised that the Building
has sealed windows and that, therefore, the air in the
**and repair (provided such repair is not necessitated by the act,
omission or negligence of Tenant or its agents or employees)
***Landlord will turn on the air-conditioning system sufficiently in
advance to enable the system to meet the design specifications set
forth above, during the hours set forth above.
</PAGE>
<PAGE>
*, but in no event at a rate greater than the then Building rate
charged for such service. The rate for such overtime EVAC service shall
be pro-rated between Tenant and any other Tenant who requests and
receives such service at the same time as Tenant.
**Subject to Sections 27.04(g) and (h) below, if
35
demised premises can become stale and even unbreathable when the
ventilating, air-conditioning, and heating system is not operating.
Tenant agrees that Landlord shall not be obligated to operate such
ventilating, air-conditioning, and heating system after or before
regular business hours as set forth in Section 27.03(a) except after
prior written notice from and payment by Tenant as hereinafter
specified. Tenant agrees that Landlord's failure to operate such system
in the absence of such notice and payment shall not be deemed a partial
or other eviction, or disturbance of Tenant's use, enjoyment, or
possession of the premises, and shall not render Landlord liable for
damages, by abatement of rent or otherwise, and Tenant shall not be
relieved from any obligation under this Lease. Landlord will provide
Tenant with ventilation, air-conditioning; or heating at times other
than during regular business hours, at the hourly rate hereinafter set
forth, provided that Tenant shall give written notice prior to 1:00
P.M. in the case of such service on business days and prior to 1:00 P.
M. on Fridays in the case of such service on Saturdays and Sundays (or
8:00 P.M. on the preceding business day, in the case of holidays). The
hourly rate for such ventilating, air-conditioning, or heating service
shall-be the Landlord's actual operating cost per hour plus 10% *
27.04.(a) Landlord shall furnish to Tenant the electric energy which
Tenant requires in the demised premises on a "rent inclusion" basis.
There shall be no charge to Tenant therefor by way of measuring the
same on any meter or otherwise, electric current being included as an
additional service in the fixed annual rent payable hereunder. Landlord
shall not in anywise be liable or responsible to Tenant for any loss or
damage or expense which Tenant may sustain or incur if either the
quantity or character of electric service is changed or is no longer
available or suitable for Tenant's requirements, unless such change is
caused by the willful or negligent act or omission of Landlord.
(b) **and so long as Landlord provides electricity to the demised
premises on a rent inclusion basis, Tenant agrees that the fixed annual
rent shall be increased by the amount of the Electricity Rent Inclusion
Factor (the "ERIF"), as hereinafter defined, to compensate Landlord as
hereinafter provided, for its obtaining and making available to Tenant
the redistribution of electric current as an additional service,
through the presently installed electrical facilities, for Tenant's
reason-able use of ordinary lighting and light office equipment, during
ordinary business hours. The "Electricity Rent Inclusion Factor" shall
</PAGE>
<PAGE>
36
mean the amount determined by applying the estimated connected
electrical load of Tenant, which shall be deemed to be the demand (KW),
and hours of use thereof, which shall be deemed to be the energy (KWH),
as determined by the electrical consultant as hereinafter provided, to
the rate charged for such load and energy usage in the SC-4, Rate I
Service Classification in effect on March 1, 1996 May 1, 1992 (and not
the time-of-day rate schedule, if any), as increased or decreased by
all electricity cost changes of Landlord since March 1, 1996 May 1,
1992, as hereinafter provided.
The parties acknowledge that the fixed annual rent hereinabove
set forth has not yet been, but is to be, increased by the ERIF.
Tenant, therefore, agrees to have the fixed annual rent hereinabove set
forth so increased by an ERIF of $3.00 per rentable square foot, to be
paid in equal monthly installments, in advance, from the date when
Landlord commenced to furnish electricity to Tenant on a rent inclusion
basis.
If the cost to Landlord of electricity shall have been. or shall
be, increased or decreased subsequent to March 1, 1996 May 1, 1992
(whether such change occurs prior to or during the term of this Lease),
by change in Landlord's electric rates or service classifications, or
by any increase or decrease subsequent to the last such electric rate
or service classification change, in fuel adjustments or charges of any
kind, or by taxes, imposed on Landlord's electricity purchases, or on
Landlord's electricity redistribution, or for any other such reason,
then the aforesaid ERIF portion of the fixed annual rent shall be
changed in the same percentage as any such change in cost due to
changes in electric rates or service classifications, and, also,
Tenant's payment obligation, for electricity redistribution, shall
change from time to time so as to reflect any such increase or decrease
in fuel adjustments or charges, and such taxes.
Any such percentage change in Landlord's cost due to change in
Landlord's electric rates or service classifications, shall be computed
on the basis of the average consumption of electricity for the Building
for the twelve full months immediately prior to the rate change or
other such change in cost, energy and demand, and any changed methods
of or rules on billing for same, applied on a consistent basis to the
new electric rate or service classification and to the immediately
prior existing electric rate or service classification. The parties
acknowledge that they understand that it is anticipated that electric
rates, charges, etc., may be changed by virtue of time-of-day rates or
other methods of billing, and that the foregoing reference to changes
in methods of or rules on billing is intended to include any such
change.
</PAGE>
<PAGE>
37
The parties agree that a reputable, independent electrical consultant
firm, selected by Landlord ("Landlord's consultant"), may from time to
time make surveys in the demised premises covering the electrical
equipment and fixtures and use of current therein. If such survey shall
disclose a change in Tenant's connected electrical load or hours of
energy use, then the connected electrical load and energy usage portion
of the ERIF shall be changed in accordance with such survey, and the
ERIF redetermined, accordingly, by Landlord's consultant. The fixed
annual rent shall be appropriately adjusted effective as of the date of
any such change in connected load and/or energy usage, as disclosed by
said survey. In no event, whether because of surveys, rate changes or
for any other reason, is such originally specified $2.85 per square
foot ERIF portion of the fixed annual rent (plus any net increase
thereof, but not decrease, by virtue of all electricity rate or service
classification changes of Landlord subsequent to May 1, 1992) to be
reduced.
The determination of changes in the ERIF by Landlord's consultant shall
be binding and conclusive on Landlord and on Tenant unless within
thirty (30) fifteen (15) days after the delivery of copies of such
determination to Landlord and Tenant, either Landlord or Tenant
disputes such determination by written notice Landlord to the other.
If Tenant either party disputes the determination, it shall, at its own
expense, within sixty (60) forty-five (45) days after advising the
other Landlord of such dispute, obtain from a reputable independent
electrical consultant its own survey of Tenant's electrical lighting
and power load and hours of energy use, and a determination of such
change in the ERIF in accordance with the provisions of this Article.
Tenant's consultant and Landlord's consultant then shall seek to agree
on a finding of such determination of such change in the ERIF. If they
cannot agree, they shall choose a third reputable electrical consultant
whose cost shall be shared equally by Landlord and Tenant, to make a
similar survey, and the determination of such ERIF change by such third
electrical consultant shall be controlling. (If they cannot agree on
such third consultant, within ten (10) days, then either party may
apply to the Supreme Court in the County of New York for the
appointment of such third consultant.) However, pending such
determination, Tenant shall pay to Landlord the amount of ERIF as
determined by Landlord's consultant; provided however, if the amount of
ERIF determined as aforesaid by such third consultant is different from
that determined by Landlord's consultant, then Landlord and Tenant
shall make adjustment for any deficiency owed by Tenant or overage paid
by Tenant pursuant to the determination of Landlord's consultant,
</PAGE>
<PAGE>
*, provided Landlord does so, also, with respect to all other rent
inclusion tenants on the same riser as Tenant,
**, except as provided in Section 27.04(j), below.
***and light office equipment as described in Section 27.04(b) below
38
(c) Landlord reserves the right to discontinue furnishing
electric energy to Tenant* at any time upon sixty (60) days' written
notice to Tenant, and from and after the effective date of such termina
tion, Landlord shall no longer be obligated to furnish Tenant with
electric energy, provided, however, that such termination date may be
extended for a time reasonably necessary for Tenant to make arrange
ments to obtain electric service directly from the public utility
company servicing the Building. If Landlord exercises such right of
termination, this Lease shall remain unaffected thereby and shall
continue in full force and effect; and thereafter Tenant shall
diligently arrange to obtain electric service directly from the public
utility company servicing the Building, and may, at no charge to
Tenant, utilize the then existing electric feeders, risers and wiring
serving the demised premises to the extent available and safely capable
of being used for such purpose and only to the extent of Tenant's then
authorized connected load. Landlord shall be obligated to pay no part
of any cost required for Tenant's direct electric service**.
Commencing with the date when
Tenant receives such direct service and as long as Tenant shall
continue to receive such service, the fixed annual rental rate payable
under this Lease shall be reduced by the amount of the ERIF portion
thereof which; was payable hereunder immediately prior to the date when
Tenant received such direct service.
(d) Tenant agrees that at all times its use of electric current
shall not exceed the capacity of existing feeders to the Building or
the risers or wiring installation. Tenant agrees not to connect any
additional electrical equipment of any type to the Building electric
distribution system, other than typewriters, lamps and small office
machines*** which consume comparable amounts of electricity, without
Landlord's prior written consent, which consent shall not be unreason
ably withheld, conditioned or delayed. Any additional risers, feeders,
or other equipment proper or necessary to supply Tenant's electrical
requirements, upon written request of Tenant, will be installed by
Landlord, at the sole cost and expense of Tenant, if, in Landlord's
reasonable judgment, the same are necessary and in Landlord's sole
judgment will not cause permanent damage or injury. to the Building or
the demised premises or cause or create a dangerous or hazardous
condition or entail excessive or unreasonable alterations, repairs or
expense to Landlord or interfere with or disturb other tenants or
occupants.
(e) Supplementing Section 86.03 hereof, if all or part of the
ERIF payable in accordance with subdivision (b) of this Section 27.04
becomes uncollectible or reduced or refunded by virtue of any law,
order or regulation, the parties agree that, at Landlord's option, in
lieu of the ERIF, and in consideration of Tenant's use of the
building's electrical distribution system and receipt of redistributed
electricity and payment by Landlord of consultants' fees and other
</PAGE>
<PAGE>
39A
(g) Notwithstanding anything to the contrary set forth in this
Section 27.04, the term "ordinary business hours" shall be deemed to
include electricity for use on a 24 hour basis, if that
use is consistent for the normal business operation of a brokerage
office or is necessary to comply with the cleaning and other services
to be performed by the Landlord, including those referred to on Exhibit
C.
(h) The phrase "Tenants reasonable use of ordinary lighting and
light office equipment" referred to in Section 27.04(b) of this Lease
shall be deemed to include Tenant's reasonable use of clocks,
refrigerators, lamps, typewriters, fax machines, copiers, TVs, videos,
fans, phones, microwaves, personal computers, and other machines and
equipment which are then normal or customary for use in a securities
brokerage office, and of supplemental HVAC units approved by Landlord
as in Article 5l provided.
(i) Landlord shall, at Landlord's expense, be responsible for all
electric service redistributed to the demised premises, and shall
repair or replace at its expense any electric meter, panel board and
all wires, wiring, feeders, risers, conductors and other electrical
equipment serving the demised premises, provided that the same have not
been damaged by the act, omission or negligence of Tenant, its agents
or employees.
(j) Notwithstanding anything to the contrary set forth in Section
27.04(c) of this Lease, Landlord shall not discontinue furnishing
redistributed electric energy until Tenant is reasonably able to obtain
such electric energy directly from the public utility. Tenant has been
advised that the public utility installs its meter(s) for its direct
customers. All additional panel boards, feeders, risers, wiring,
conductors and other electrical equipment, which may be required to
obtain electric energy directly form the public utility, whether or not
located within the demised premises, shall be installed and maintained
by the Landlord at Landlord's expense where discontinuance is at the
election of Landlord (as distinguished from future law or regulations
requiring such change).
</PAGE>
<PAGE>
*See Section 27.04(g), (h), (i) and (j) on page 39A following this
page.
** (as distinguished from a normal office pantry)
***Tenant shall employ an exterminator reasonably acceptable to
Landlord on a regular basis,
39
redistribution costs, the fixed annual rental rate(s) to be paid under
this Lease shall be increased by an "alternative charge" which shall be
a sum equal to $3.00 per year per rentable sq. ft. of the demised
premises, changed in the same percentage as any increases or decreases
in the cost to Landlord for electricity for the entire building
subsequent to May 1, 1992, March 1, 1996, because of rate changes, such
percentage change to be computed as in subdivision (b) of this Section
27.04 provided.
(f) Anything hereinabove to the contrary notwithstanding, in no
event is the ERIF or any "alternate charge" to be less than an amount
equal to the total of Landlord's payment to the public utility for the
electricity consumed by Tenant (and any taxes thereon or on
redistribution of same) plus 5% thereof for transmission line loss,
plus 15% thereof for other redistribution costs.
27.05.* Subject to the provisions of Section 25.01, Landlord
reserves the right to stop services on the air conditioning, elevator,
plumbing and electric systems when necessary by reason of accident or
emergency or for repairs, alterations, replacements or improvements,
provided that except in case of emergency, Landlord will notify Tenant
in advance, if possible, of any such stoppage and, if ascertainable,
its estimated duration, and will proceed diligently with the work
necessary to resume such service as promptly as possible and in a
manner so as to minimize interference with the Tenant's use and
enjoyment of the demised premises.
27.06.Landlord, at its expense will supply tenant with an adequate
quantity of hot and cold water for lavatory, cleaning, pantry and
drinking purposes. If Tenant requires water for any additional
purpose, Tenant shall pay the cost thereof at the cost to Landlord as
the same is measured by a meter to be installed and maintained at
Tenant's expense.
27.07.In the event Tenant shall employ any contractor to do in the
demised premises any work permitted by Section 3.01 of this Lease, such
contractor and any subcontractor shall agree to employ only such labor
as will not result in jurisdictional disputes or strikes. Tenant will
inform Landlord in writing of the names of any contractor or
subcontractor Tenant proposes to use in the demised premises at least
five (5) days prior to the beginning of work by such contractor or
subcontractor.
27.08.If Tenant is permitted hereunder to and does have a separate
kitchen or cafeteria area for the preparation or consumption of food**
in the demised premises, Tenant shall pay to Landlord the cost of
removal from the Building of any refuse or rubbish from such area
and*** the cost of employing on a regular basis, an exterminator to
keep the demised premises free from vermin; and Tenant shall provide a
refrigerated garbage storage room, the plans and specifications thereof
to be
</PAGE>
<PAGE>
*, except if delivered by U.P.S., Federal Express or the U.S. Postal
Service.
**, or may have light meals delivered to the Building from restaurants
or delis outside the building (or front restaurants or delis in the
commercial portion of the building),
40
approved by Landlord, or other means of disposing of garbage reasonably
satisfactory to Landlord.
27.09.It is expressly agreed that only Landlord or any one or more
persons, firms or corporations authorized in writing by Landlord will
be permitted to furnish: laundry, linen, towels, drinking water, ice
and other similar supplies and services to tenants and licensees in the
Building.
Landlord may fix, in its own absolute reasonable discretion, at
any time and from time to time, the hours during which and regulations
under which such supplies and services are to be furnished. Landlord
expressly reserves the right to act as or to designate, at any time and
from time to time, an exclusive supplier of all or any one or more of
the said supplies and services, provided that the quality thereof and
the charges therefor are reasonably comparable to that of other
suppliers; and Landlord furthermore expressly reserves the right to
exclude from the Building any person, firm or corporation attempting to
furnish any of said supplies or services but not so designated by
Landlord.
27.10.It is expressly agreed that only Landlord or any one or more
persons, firms or corporations authorized in writing by Landlord will
be permitted to sell, deliver or furnish any food or beverages
whatsoever for consumption within the demised premises or elsewhere in
the Building. Landlord expressly reserves the right to act as or to
designate at any time, or from time to time, an exclusive supplier or
suppliers of such food and beverages; and Landlord further expressly
reserves the right to exclude from the Building any person, firm or
corporation attempting to deliver or purvey any such food or beverages
but not so designated by Landlord.* It is understood, however, that
Tenant or regular office employees of Tenant who are not employed by
any supplier of such food or beverages or by any person, firm or
corporation engaged in the business of purveying such food or beverages
may personally bring food or beverages into the Building** for consump
tion within the demised premises by the said Tenant or employees of
Tenant, but not for resale to or for consumption by any other tenant,
or the employees or guests of any other tenant. Landlord may fix in
its absolute reasonable discretion, at any time and from time to time,
the hours during which, and the regulations under which food and
beverages may be brought into the Building by Tenant or its regular
employees.
27.11.Tenant acknowledges that it has been advised that the cleaning
contractor for the Building may be a division or affiliate of
</PAGE>
<PAGE>
** Landlord represents that it is currently the policy of the
Building not to charge tenants for the removal from the demised
premises of broken down cardboard boxes or recyclables.
***provided that the quality of service rendered is equivalent,
41
Landlord. Tenant agrees to employ such contractor or such other office
maintenance contractor as Landlord may from time to time designate, for
all waxing, polishing, lamp replacement, cleaning and maintenance work
of or in the demised premises, and Tenant's furniture, fixtures and
equipment, provided that the quality thereof and the charges therefor
are reasonably comparable to that of other contractors or individuals.
Tenant shall not employ any other such contractor or individual without
Landlord's prior written consent, but nothing herein contained shall
prohibit Tenant from performing such work for itself by use of its own
regular employees.
27.12.Landlord will not be required to furnish any other services,
except as provided in this Article 27, and except that Landlord agrees
to provide on business days (not including Saturdays, Sundays and
holidays) the cleaning set forth in Exhibit C hereof. Tenant shall pay
to Landlord, on demand, a reasonable charge* for the removal from the
demised premises of any refuse and rubbish of Tenant as shall not be
contained in the waste receptacles described in Exhibit C.** Landlord,
its cleaning contractor and their employees shall have after-hours
access to the demised premises and the use of tenant's light, power and
water in the demised premises as may be reasonably required for the
purpose of cleaning the demised premises.
27.18.If Tenant contests the reasonableness of any charges made by any
supplier or contractor designated by Landlord as set forth in any
section of this Article 27, Landlord and Tenant shall each obtain two
bona fide bids for such work from independent reputable contractors,
and not controlled directly or indirectly by Landlord or affiliated
with Landlord or Landlord's Managing Agent, or by or with Tenant, and
the average of the four bids thus obtained shall be the standard of
comparison in determining the reasonableness of such charges. If the
supplier or contractor designated by Landlord is unwilling to accept
the average of such bids as full payment for its suppliers or services,
Landlord may substitute another supplier or contractor who will accept
such average as full payment,*** or if Landlord fails to make such
substitution within fifteen (15) days after the ascertainment of the
average of the bids, Tenant shall be free to make its own arrangements
for such work or supplies for the remainder of the term.
27.14.Landlord shall manage and maintain the Building as a first class
office building. Tenant and its employees shall occupy and use the
demised premises in a manner befitting such building.
* (not to exceed the then Building's rate charged for such service)
</PAGE>
<PAGE>
42
ARTICLE 29
ESCALATION - COST OF LIVING ADJUSTMENTS
28.01 The fixed annual rent reserved in this Lease and payable by
Tenant hereunder shall be adjusted, as of the times and in the manner
set forth in this Article:
(a) Definitions: For the purposes of this Article 28 the following
definitions shall apply:
(i) The term "Base Year" shall mean the full calendar year
during which the term of this Lease commences.
(ii) The term "Price Index" shall mean the "Consumer Price
Index" published by the Bureau of Labor Statistics of
the U.S. Department of Labor, All Items, New York,
N.Y. - North-eastern, N.J., for urban wage earners and clerical
workers, or a successor or substitute index
appropriately adjusted.
(iii) The term "Price Index or the Base Year" shall mean the
average of the monthly All Items Price Indexes for each of
the 12 months of the Base Year.
(b) Effective as of each January and July subsequent to the Base Year
there shall be made a cost of living adjustment of the
annual rental rate payable hereunder. The July
adjustment shall be based on the percentage difference between the
Price Index for the preceding month of June and the
Price Index for the Base Year. The January adjustment shall
be based on such percentage difference between the Price Index of the
preceding month of December and the Price Index for the
Base Year.
(i) In the event the Price Index for June in any calendar year
during the term of this Lease reflects an increase over
the Price Index or the Base Year, then the fixed annual
rent originally herein provided to be paid as of the July 1st following
such month of June (unchanged by any adjustments under
this Article) all be multiplied by the percentage
difference between the Price Index for June and the Price Index for the
Base Year, and the resulting sum shall be added to such fixed annual
rent, effective as of such July 1st. Said adjusted
annual rent shall thereafter be payable hereunder, in equal
monthly installments, until it is readjusted pursuant to the terms of
this Lease.
</PAGE>
<PAGE>
43
(ii) In the event the Price Index for December in any calendar
year during the term of this Lease reflects an increase over
the Price Index for the Base Year, then the fixed annual
rent originally herein provided to be paid as of the January 1st
following such month of December (unchanged by an adjust
ments under this Article) shall be multiplied by the
percentage difference between the Price Index for December and
the Price Index for the Base Year, and the resulting sum shall be added
to such fixed annual rent effective as of January 1st. Said
adjusted annual rent shall thereafter be payable
hereunder, in equal monthly installments, until it is readjusted
pursuant to the terms of this Lease.
The following illustrates the intention of the parties
hereto as to the computation of the aforementioned cost of living
adjustment in the annual rent payable hereunder:
Assuming that said fixed annual rent (is $10,000, that the
Price Index for the Base Year was 102.0 d that the
Price Index for the month of June, in a calendar year
following the Base Year was 105.0, then the percentage in increase thus
reflected, i.e., 2.941% (3.0/102.0) would be multiplied by
$10,000, and said fixed annual rent would be increased by
$294.10 effective as of July 1st of said calendar year.
In the event that the Price Index ceases to use 1982-1984=100
as the basis of calculation, or a substantial change is made in the
terms or number of items contained in the Price Index, then the Price
Index shall be adjusted to the figure that would have been arrived at
had the manner of computing the Price Index in effect at the date of
this Lease not been altered. In the event such Price Index (or a
successor or substitute index) is not available, a reliable
governmental or other non-partisan publication evaluating the
information theretofore used in determining the Price Index shall be
used.
No adjustments or recomputations, retroactive or otherwise shall
be made due to any revision which may later be made in the first
published figure of the Price Index for any month.
(c) The statements of the cost of living adjustment to be
furnished by Landlord as provided in subdivision (b) above shall
consist of data prepared for the Landlord by a firm of Certified Public
Accountants (who may be the firm now or then currently employed by
Landlord for the audit of its accounts). The statements thus furnished
</PAGE>
<PAGE>
44
to Tenant shall constitute a final determination as between Landlord
and Tenant of the cost of living adjustment for the periods represented
thereby.
(d) In no event shall the fixed annual rent originally provided
to be paid under this Lease (exclusive of the adjustments under this
Article) be reduced by virtue of this Article.
(e) Any delay or failure of Landlord , beyond July or January
of any year, in computing or billing for the rent adjustments
hereinabove provided, shall not constitute a waiver of or in any way
impair the continuing obligation of Tenant to pay such rent adjustments
hereunder.
(f) Notwithstanding any expiration or termination of this
Lease prior to the lease expiration date originally provided herein
(except in the case of a cancellation by mutual agreement) Tenant's
obligation to pay rent as adjusted under this Article shall continue
and shall cover all periods up to said lease expiration date, and shall
survive any earlier expiration or termination of this Lease.
ARTICLE 29
BUILDING ENERGY ESCALATION
29.01 For purposes of this Article, the term "Building Energy Costs"
shall mean the costs and expenses incurred or borne by Landlord for
steam, oil, electricity or any other fuel or energy source purchased
or used for the Building (other than electricity which is redistributed
to tenants on a rent inclusion or a submetering basis); the parties
acknowledge and agree that forty (40%) percent of the Building's
payment to the public utility for the purchase of electricity shall be
deemed to be payment for electricity purchased or used for the
Building. The term "the proportionate share" shall mean a percentage
computed on the basis of a fraction, the numerator of which is the
rentable square foot area of the demised premises and the denominator
of which is the total rentable square foot area of the office and
commercial space in the Building (excluding garage space). The parties
acknowledge and agree that the total rentable square foot area of the
presently demised premises shall be deemed to be
sq. ft., and that the rentable square foot area of the office and
commercial space in the Building shall be deemed to be 2,072,136 sq.
ft. The term "Base Year" shall mean the full calendar year prior to
the year during which the term of this Lease commences. The term
</PAGE>
<PAGE>
45
"comparative year" shall mean the calendar year in which the term of
this Lease commences and each subsequent calendar year.
If the Building Energy Costs for any comparative year shall be
greater than those for the Base Year, Tenant shall pay to Landlord, as
additional rent, a sum equal to Tenant's proportionate share of the
excess of the Building Energy Costs for such comparative year over
those for the Base Year (such amount being hereinafter called the
"Energy Payment").
1. Following the expiration of each comparative year and
after receipt thereof from Landlord's certified public accountants,
Landlord shall submit to Tenant a statement, certified by Landlord,
setting forth the Building Energy Costs for the preceding comparative
year and the Energy Payment, if any, due to Landlord from Tenant for
such comparative year. The rendition of such statement to Tenant shall
constitute prima facie proof of the accuracy thereof and, if such
statement shows an Energy Payment due from Tenant to Landlord with
respect to the preceding comparative year then (a) Tenant shall make
payment of any unpaid portion thereof within ten (10) days after
receipt of such statement; and (b) Tenant shall also pay to Landlord,
as additional rent, within ten (10) days after receipt of such
statement, an amount equal to the product obtained by multiplying the
total Energy Payment for the preceding comparative year by a fraction,
the denominator of which shall be 12 and the numerator of which shall
be the number of months of the current comparative year which shall
have elapsed prior to the first day of the month immediately following
the rendition of such statement; and (c) Tenant shall also pay to
Landlord, as additional rent, commencing as of the first day of the
month immediately following the rendition of such statement and on the
first day of each month thereafter until a new statement is rendered,
1/12th of the total Energy Payment for the preceding comparative year.
The aforesaid monthly payments based on the total Energy Payment for
the preceding comparative year shall be adjusted to reflect, if
Landlord can reasonably so estimate, known increases in rates, for the
current comparative year, applicable to the categories involved in
computing Building Energy Costs, whenever such increases become known
prior to or during such current comparative year. The payments required
to be made under (b) and (c) above shall be credited toward the Energy
Payment due from Tenant for the then current comparative year, subject
to adjustment as and when the statement for such current comparative
year is rendered by Landlord
</PAGE>
<PAGE>
46
Tenant shall make Energy Payments on account of such payments due
for the first comparative year on the basis of reasonable estimates
prepared by Landlord, payments to be made monthly on the first day of
each month during such first comparative year. The payments based on
such estimates shall then be adjusted by the parties following the
expiration of said first comparative year, on the basis of landlord's
actual costs for that year.
Landlord's certified public accountant may rely on landlord's
allocations and estimates wherever allocations or estimates are needed
for Building Energy Costs. The statements of the Building Energy Costs
thus furnished by Landlord to Tenant shall constitute a final
determination as between Landlord and Tenant of the Building Energy
Costs for the periods represented thereby, unless Tenant within sixty
(60) days after they are furnished shall give a notice to Landlord that
it disputes their accuracy or their appropriateness, which notice
shall specify the particular respects in which the statement is
inaccurate. Pending the resolution of such dispute, Tenant shall pay
the additional rent to Landlord in accordance with the statements
furnished by Landlord. After payment of said additional rent, Tenant
shall have the right, during reasonable business hours and upon not
less than five (5) business days' prior written notice to Landlord, to
examine Landlord's books and records with respect to the foregoing,
provided such examination is commenced within (30) days and concluded
within sixty (60) days following the rendition of the statement in
question.
Any dispute as to said statement shall be resolved by arbitration
in accordance with the provisions of Article 31 hereof, which arbitra
tion shall be by three (3) arbitrators each of whom shall have at least
ten (10) years' experience in the supervision of the operation and
management of major office buildings in Manhattan.
2. In no event shall the fixed annual rent under this Lease
be reduced by virtue of this Article.
3. If the commencement date of the term of this Lease is not
the first day of the first comparative year, then the additional rent
due hereunder for such first comparative year shall be a proportionate
share of said additional rent for the entire comparative year, said
proportionate share to be based upon the length of time that the Lease
term shall have been in existence during such first comparative year.
Upon the date of any expiration or termination of this Lease (except
termination because of Tenant's default) whether the same be the date
</PAGE>
<PAGE>
47
hereinabove set forth for the expiration of the term or nay prior or
subsequent date, a proportionate share of said additional rent for the
comparative year during which such expiration or termination occurs
shall immediately become due and payable by Tenant to Landlord, if it
was not theretofore already billed and paid. The said proportionate
share shall be based upon the length of time that this Lease shall have
been in existence during such comparative year. Landlord shall as soon
as practicable cause statements of the Building Energy Costs for that
comparative year to be prepared and furnished to Tenant. Landlord and
Tenant shall thereupon make appropriate adjustments of amounts then
owing.
4. Landlord's and Tenant's obligation to make the
adjustments referred to in subdivision (3) above shall survive any
expiration or termination of this Lease
5. A delay or failure of landlord in billing any Energy
Payment hereinabove provided shall not constitute a waiver of or in any
way impair the continuing obligation of Tenant to pay such
Energy Payments hereunder.
ARTICLE 30
CONDITION OF PREMISES
30.01.* Tenant expressly acknowledges that it has inspected the
demised premises and is fully familiar with the physical condition
thereof. Tenant agrees to accept the demised premises in its as is
condition and Tenant acknowledges that Landlord shall have no
obligation to do any work in and to the demised premises in order to
make them suitable and ready for occupancy and use by Tenant **except
for any work which may be hereinafter specified in this Article as work
which Landlord will substantially complete in the demised premises
prior to the commencement date of the term of this Lease. If any such
work is not so completed by Landlord prior to the commencement date of
the term of this Lease then Tenant's obligation to pay fixed annual
rent shall not commence until the substantial completion of any such
work
[Any such Landlord's work is to be set forth at
this point, or
in a schedule annexed to this Lease]
* Except as provided in Article 51 of this Lease,
** , except as provided in Article 46 hereof.
</PAGE>
<PAGE>
48
ARTICLE 31
ARBITRATION
31.01.In each case specified in this Lease in which resort to
arbitration shall be required, such arbitration (unless otherwise speci
fically provided in other Sections of this Lease) shall be in New York
City in accordance with the Commercial Arbitration Rules of the
American Arbitration Association and the provisions of this Lease, and
judgment upon the award rendered by the arbitrators may be entered in
any court having jurisdiction thereof.
ARTICLE 32
INDEMNITY
32.01 Tenant shall indemnify and save Landlord harmless from and
against any liability or expense arising from the use or occupation of
the demised premises by Tenant or anyone on the premises with Tenant's
permission, or from any breach of this Lease.
ARTICLE 33
VAULT AND BASEMENT SPACE
33.01.Landlord shall have the right from time to time, to substitute
for the basement space, if any, then occupied by Tenant, comparable
space in the basement, provided Landlord shall give at least thirty
(30) days' prior written notice to Tenant of its intention so to do. No
vault or basement space not within the property line of the Building is
leased hereunder, anything to the contrary indicated elsewhere in this
Lease notwithstanding. Any vault or basement space not within the
property line of the Building, which Tenant may be permitted to use or
occupy, shall be used or occupied under revocable license and if the
amount of such space be diminished or required by any governmental
authority having jurisdiction, Landlord shall not be subject to any
liability nor shall Tenant be entitled to abatement of rent, nor shall
such diminution or abatement be deemed a constructive or actual
eviction. Any fee or license charge or tax of municipal authorities for
such vault or basement space shall be paid by Tenant to Landlord as
additional rent within thirty (30) five (5) days after written demand
therefor. If such fee, tax or charge shall be for vault or basement
space greater in area than that occupied by Tenant, the charge to
Tenant shall be pro-rated.
</PAGE>
<PAGE>
49
ARTICLE 34
OCCUPANCY AND USE BY TENANT
34.01 (a) Tenant acknowledges that its continued occupancy of the
demised premises, and the regular conduct of its business therein, are
of utmost importance to the Landlord in the renewal of other leases in
the building, in the renting of vacant space in the building, in the
providing of electricity, air conditioning, steam and other services to
the tenants in the building, and in the maintenance of the character
and quality of the tenants in the building. Tenant therefore covenants
and agrees that it will occupy the entire demised premises, and will
conduct its business therein in the regular and usual manner,
throughout the term of this Lease. Tenant acknowledges that Landlord is
executing this Lease in reliance upon these covenants and that these
covenants are a material element of consideration inducing the Landlord
to execute this Lease. Tenant further agrees that if it vacates the
demised premises or fails to so conduct business therein, at any time
during the term of this Lease, without the prior written consent of
the Landlord, then all rent and additional rent reserved in this Lease
from the date of such breach to the expiration date of this Lease shall
become immediately due and payable to Landlord.
(b) The parties recognize and agree that the damage to Landlord
resulting from any breach of the covenants in subdivision (a) hereof
will be extremely substantial, will be far greater than the rent
payable for the balance of the term of this Lease, and will be
impossible of accurate measurement. The parties, therefore, agree that
in the event of a breach or threatened breach of the said covenants, in
addition to all of Landlord's other rights and remedies, at law or in
equity or otherwise, Landlord shall have the right of injunction to
preserve Tenant's occupancy and use. The words "become vacant or
deserted" as used elsewhere in this Lease shall include Tenant's
failure to occupy or use as by this Article required.
(c) If Tenant breaches either of the covenants in subdivision (a)
above, and this Lease be terminated because of such default, then, in
addition to Landlord's rights of re-entry, restoration, preparation for
and rerental, and anything elsewhere in this Lease to the contrary
notwithstanding, Landlord shall retain its right to judgment on and
collection of Tenant's aforesaid obligation to make a single payment to
Landlord of a sum equal to the total of all rent and additional rent
reserved for the remainder of the original term of
</PAGE>
<PAGE>
50
this Lease, subject to future credit or repayment to Tenant in the
event of any rerenting of the premises by Landlord, after first
deducting from rerental income all expenses incurred by Landlord in
reducing to judgment or otherwise collecting Tenant's aforesaid
obligation, and in obtaining possession of restoring, preparing for and
re-letting the premises. In no event shall tenant be entitled to a
credit or repayment for rerental income which exceeds the sums payable
by Tenant hereunder or which covers a period after the original term of
this Lease.
ARTICLE 35
NAME OF BUILDING
35.01.Landlord shall have the full right at any time to name and change
the name of the Building and to change the designated address of the
Building. The Building may be named after any person, firm, or
otherwise, whether or not such name is, or resembles, the name of a
tenant of the Building.
ARTICLE 36
INVALIDITY OF ANY PROVISION, ETC.
36.01.If any term, covenant, condition or provision of this Lease or
the application thereof to any circumstance or to any person, firm or
corporation shall be invalid or unenforceable to any extent, the
remaining terms, covenants, conditions and provisions of this Lease or
the application thereof to any circumstances or to any person, firm or
corporation other than those as to which any term, covenant, condition
or provision is held invalid or unenforceable, shall not be affected
thereby and each remaining term, covenant, condition and provision of
this Lease shall be valid and shall be enforceable to the fullest
extent permitted by law.
36.02.If any term, covenant, condition or provision of this Lease is
found invalid or unenforceable to any extent, by a final judgment or
award which shall not be subject to change by any appeal, then either
party to this Lease may initiate an arbitration in accordance with the
provisions of Article 31, which arbitration shall be by three (3)
arbitrators each of whom shall have at least ten (10) years' experience
in the supervision of the operation and management of major office
buildings in Manhattan. Said arbitrators shall devise a valid and
enforceable substitute term, covenant, condition or provision
</PAGE>
<PAGE>
51
for this Lease which shall as nearly as possible carry out the
intention of the parties with respect to the terms, covenant, condition
or provisions theretofore found invalid or unenforceable. Such
substitute term, covenant, condition or provision, as determined by the
arbitrators, shall thereupon be deemed a part of this Lease.
36.08.In the event the fixed annual rent or additional rent or any part
thereof provided to be paid by Tenant under the provisions of this
Lease during the demised term shall become uncollectible or shall be
reduced or required to be reduced or refunded by virtue of any Federal,
State, County or City law, order or regulation, or by any direction of
a public officer or body pursuant to law, or the orders, rules, code or
regulations of any organization or entity formed pursuant to law,
whether such organization or entity be public or private, then
Landlord, at its option, may at any time thereafter terminate this
Lease, by not less than thirty (30) days' written notice to Tenant, on
a date set forth in said notice, in which event this Lease and the term
hereof shall terminate and come to an end on the date fixed in said
notice as if the said date were the date originally fixed herein for
the termination of the demised term. Landlord shall not have the right
so to terminate this Lease if Tenant within such period of thirty (30)
days shall in writing lawfully agree that the rentals herein reserved
are a reasonable rental and agree to continue to pay said rentals, and
if such agreement by Tenant shall then be legally enforceable by
Landlord.
ARTICLE 37
CAPTIONS
37.01.The captions are inserted only as a matter of convenience and for
reference, and in no way define, limit or describe the scope of this
Lease nor the intent of any provision thereof.
ARTICLE 38
CERTIFICATE OF TENANT
38.01.Tenant shall, without charge, at any time and from time to time,
within twenty (20) ten (10) days after request by Landlord, deliver a
written instrument to Landlord or any other person, firm or corporation
specified by Landlord, duly executed and acknowledged, certifying:
(a)That this Lease is unmodified and in full force and effect or,
if there has been any modification, that the same is in full force
and effect as modified and stating any such modification;
</PAGE>
<PAGE>
52
(b) Whether or not there are then existing any setoffs or defenses
against the enforcement of any of the agreements, terms,
covenants, or conditions of this Lease and any modification
thereof upon the part of Tenant to be performed or complied with,
and, if so, specifying the same;
(c) The dates to which the basic rent, and additional rent, and
other charges hereunder, have been paid; and
(d) Whether the term of this Lease has commenced and rent become
payable thereunder; and whether Tenant has accepted possession of
the demised premises; and whether Landlord has substantially
completed its required work under Article 30 hereof.
38.02.Tenant agrees that, except for the first month's rent hereunder,
it will pay no rent under this Lease more than thirty (30) days in
advance of its due date, and, in the event of any act or omission by
Landlord, Tenant will not exercise any right to terminate this Lease or
to remedy the default and deduct the cost thereof from rent due
hereunder until Tenant shall have given written notice of such act or
omission to the Ground Lessor and to the holder of any first mortgage
on the Ground Lease who shall have furnished such holder's last address
to Tenant, and until a reasonable time for remedying such act or
omission shall have elapsed following the giving of such notices,
during which time such Lessor or holder shall have the right, but shall
not be obligated, to remedy or cause to be remedied such act or
omission.
38.03 Anything in this Lease contained to the contrary notwithstanding,
under no circumstances shall the holder of any first mortgage on the
Ground Lease or, if the interests of Landlord under this Lease are
transferred by reason of, or assigned in lieu of, foreclosure or other
proceedings for enforcement of such mortgage, or if the holder of such
mortgage acquires a lease in substitution therefor, then such
purchaser, assignee, or lessee, as the case may be, whether or not it
shall have succeeded to the interests of the landlord under this Lease,
be subject to or liable for any offsets or deductions from rent,
claims or defenses which the Tenant might have against any prior
landlord under this Lease.
</PAGE>
<PAGE>
***The security deposit shall be deposited in an interest bearing
account with a banking institution in New York City selected by
Landlord, and any interest earned thereon (less the maximum
administrative fee allowed by law to which Landlord shall be entitled
under the law) shall be added onto and become part of the security
deposit.
53
ARTICLE 39
SECURITY DEPOSIT
39.01.Tenant has deposited with landlord the sum of $180,128 as
security for the faithful performance and observance by Tenant of the
terms, provisions and conditions of this Lease; it is. agreed that in
the event Tenant defaults in respect of any of the terms, provisions
and conditions of this Lease, *including, but not limited to, the
payment or rent and additional rent, landlord may (but shall not be
required to) use, apply or retain the whole or any part of the security
so deposited to the extent required for the payment of any rent and
additional rent or any other sum as to which Tenant is so in default or
for any sum which Landlord may expend or may be required to expend by
reason of Tenant's default in respect of any of the terms covenants and
conditions of this Lease, including but not limited to, any damages or
deficiency in the reletting of the premises, whether such damages or
deficiency accrued before or after summary proceedings or other re-
entry by Landlord. Tenant shall, upon demand, deposit with Landlord the
full amount of security deposit so used or applied by Landlord, in
order that Landlord shall have the full security deposit on hand at all
times during the term of this Lease. In the event that Tenant shall
fully and faithfully comply with all of the material terms,
provisions, covenants and conditions of this Lease, the security shall
be returned to Tenant after the date fixed as the end of the Lease and
after delivery of entire possession of the demised premises to
Landlord.** In the event of a sale of the land and building or leasing
of the building, of which the demised premises form a part, landlord
shall have the right to transfer the security to the vendee or lessee
and Landlord shall thereupon be released by Tenant from all liability
for the return of such security: and Tenant agrees to look to the new
Landlord solely for the return of said security; and it is agreed that
the provisions hereof shall apply to every transfer or assignment made
of the security to a new landlord. Tenant further covenants that it
will not assign or encumber or attempt to assign or encumber the monies
deposited herein as security and that neither Landlord nor its succes
sors or assigns shall be bound by any such assignment, encumbrance,
attempted assignment or attempted encumbrance.***
* beyond any applicable notice and/or grace period
** , except that Landlord may retain any portion of such security
which Landlord reasonably believes is required to cure any then
existing default with respect to any non-material term, provision,
covenant or condition of this Lease.
</PAGE>
<PAGE>
54
ARTICLE 40
BROKER
40.01.Tenant represents and warrants that it neither consulted nor
negotiated with any broker or finder with regard to the demised
premises other than Helmsley-Spear, Inc. and The Galbreath Company.
L.P.
Tenant agrees to indemnify, defend and save Landlord harmless from and
against any claims for fees or commissions from anyone other than
Helmsley-Spear, Inc. and The Galbreath Company. L.P.
with whom Tenant has dealt in connection with the demised premises or
this Lease. Landlord agrees to pay any commission or fee owing to the
aforesaid Helmsley-Spear, Inc. and The Galbreath Company. L.P.
ARTICLE 41
POSSESSION
41.01.Supplementing Articles 25 and 80 hereof, if Landlord shall be
unable to give possession of the premises on the commencement date of
the term of this Lease, because of the holding-over or retention of
possession of any tenant or occupant, or for any other reason, Landlord
shall not be subject to any liability for such failure. In such event,
this Lease shall stay in full force and effect, without extension of
its term. However, the rent hereunder shall not commence until the
premises are made available for occupancy by Tenant (with the
substantial completion in the premises of any work required by this
Lease to be completed therein by Landlord at Landlord's expense prior
to the commencement date of the term of this Lease). If Landlord is
unable to give possession of the premises on the commencement date of
the term, because changes, repairs or decorations being made for
Tenant's use at Tenant's expense have not been completed, there shall
be no abatement of rent and the rent shall commence on the date
specified herein. If permission is given to Tenant to occupy the
premises, or other premises, prior to the commencement date of the
term, such occupancy shall be deemed to be pursuant to the terms of
this Lease, except that the parties shall separately agree as to the
obligation of Tenant to pay rent for such occupancy. The provisions of
this Article are intended to constitute an "express provision to the
contrary" within the meaning of Section 223-a of the New York Real
Property Law.
</PAGE>
<PAGE>
55
ARTICLE 42
SUBMISSION OF LEASE
42.01.It is understood and agreed that this Lease is submitted to
Tenant on the understanding that it shall not be considered an offer
and shall not bind Landlord in any way until (i) Tenant has duly
executed and delivered duplicate originals to Landlord and (ii)
landlord has executed and delivered one of said originals to Tenant.
ARTICLE 43
MEMORANDUM OF LEASE
43.01.This lease shall not be recorded without the prior written
consent of Landlord. At the request of either party, Landlord and
Tenant shall promptly execute, acknowledge and deliver a memorandum
with respect to this Lease sufficient for recording. Such memorandum
shall not in any circumstances be deemed to change or otherwise affect
any of the obligations or provisions of this Lease.
ARTICLE 44
SUCCESSORS AND ASSIGNS
44.01.The covenants, conditions and agreements contained in this Lease
shall bind and inure to the benefit of Landlord and Tenant and their
respective heirs, distributees, executors, administrators, successors,
and, except as otherwise provided in this Lease, their assigns.
IN WITNESS WHEREOF, Landlord and Tenant have respectively executed this
Lease as of the day and year first above written.
SEE RIDERS ANNEXED HERETO AND MADE A PART HEREOF
MID-CIT ASSOCIATES
By: HELMSLEY-SPEAR, INC., Agent
Witness: (as to Landlord) (Landlord)
/s/ Jerome P. Cirillo By: /s/ Daniel E. Nertha
- --------------------- -------------------------
Daniel E. Nertha
Vice-President
FIRST ALBANY COMPANIES INC.
(Tenant)
By: /s/ Edwin T. Brondo
Name: Edwin T. Brondo
Title: Vice President
Tenant's Federal I.D. Number
</PAGE>
<PAGE>
56
STATE OF NEW YORK}
COUNTY OF NEW YORK } ss: (Landlord)
On the day of , 19,before me personally
came ,residing at
,to me known and
known to me to be a member of MID-CITY ASSOCIATES, a general Co-
partnership and the person described in and who executed the foregoing
instrument in the name of MID-CITY ASSOCIATES and he duly acknowledged
to me that he executed the same as and for the act and deed of MID-
CITY ASSOCIATES.
(Notary Public)
STATE OF NEW YORK}
COUNTY OF NEW YORK } ss: (Landlord)
On the day of,19 , before me personally
came , to me known, who being by me duly sworn, did
depose and say that he resides at , that
he
is the of HELMSLEY-SPEAR, INC., a New York
corporation, the corporation mentioned in, and foregoing instrument;
and that he signed h name thereto by
order of the Board of Directors of said corporation.
(Notary Public)
</PAGE>
<PAGE>
STATE OF NEW YORK}
COUNTY OF NEW YORK } ss: (Corporate Tenant)
On the day of , 19,before me personally
came ,to me known, who being by me
duly sworn, did depose and say that he resides at
, that he
is the of
a corporation, the corporation mentioned
in, and which executed the foregoing instrument; and that he signed his
name thereto by order of the Board of Directors of said corporation.
(Notary Public)
STATE OF NEW YORK}
COUNTY OF NEW YORK } ss: (Partnership Tenant)
On the day of , 19,before me personally
came ,residing at
, to me known and known to me to be
a member of a co-partnership and the person
described in and who executed the foregoing instrument in the name of
and he duly acknowledged to me that he executed the same as and for the
act and deed of
(Notary Public)
</PAGE>
<PAGE>
58
STATE OF NEW YORK}
COUNTY OF NEW YORK } ss: (Individual Tenant)
On the day of , 19, before me personally
came , to me known and known to me to be the
individual described in, and who executed the foregoing instrument, and
acknowledged to me that he executed the same.
(Notary Public)
</PAGE>
<PAGE>
59
EXHIBIT A
The plan(s) or diagram(s) comprising this Exhibit are attached
hereto at the back cover of this Lease.
</PAGE>
<PAGE>
60
EXHIBIT B
RULES AND REGULATIONS
1. The sidewalks, and public portions of the Building, such as en
trances, passages, courts, elevators, vestibules, stairways, corridors
or halls shall not be obstructed or encumbered by any tenant or used
for any purpose other than ingress and egress to and from the demised
premises.
2. No awnings or other projections shall be attached to the outside
walls of the Building. No curtains, blinds, shades, louvered openings
or screens shall be attached to or hung in, or used in connection with,
any window or door of the demised premises, without the prior written
consent of Landlord* unless installed by Landlord.
3. No sign, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed by any tenant on any part of
the outside of the demised premises or Building or on corridor walls.
Signs on entrance door or doors shall conform to building standard
signs, samples of which are on display in Landlord's rental office.
Signs on entrance doors shall, at the tenant's expense, be inscribed,
painted or affixed for each tenant by sign makers approved by
Landlord.** In the event of the violation of the foregoing by any
tenant, Landlord may remove same without any liability, and may charge
the expense incurred by such removal to the tenant or tenants violating
this rule.
4. The sashes, sash doors, skylights, windows, heating, ventilating
and air conditioning vents and doors that reflect or admit light and
air into the halls, passageways or other public places in the building
shall not be covered or obstructed by any tenant, nor shall any
bottles, parcels, or other articles be placed on the window sills.
5. No show cases or other articles shall be put in front of or
affixed to any part of the exterior of the Building, nor placed in the
public halls, corridors or vestibules without the prior written consent
of Landlord.
* (which consent shall not be unreasonably withheld or delayed),
**which approval shall not be unreasonably withheld or delayed.
</PAGE>
<PAGE>
61
6. Whenever Tenant shall submit to landlord any plan, agreement or
other document for Landlord's consent or approval, or review and
acceptance, Tenant agrees to pay landlord as additional rent, on
demand, a processing fee in a sum equal to the reasonable fee of any
architect, engineer or attorney employed by landlord to review said
plan, agreement or document. *
7. The water and wash closets and other plumbing fixtures shall not
be used for any purposes other than those for which they were
constructed, and no sweepings, rubbish, rags, or other substances shall
be thrown therein. All damages resulting from any misuse of the
fixtures shall be borne by the Tenant who, or whose servants,
employees, agents, visitors or licensees, shall have caused the same.
8. No tenant shall in any way deface any part of the demised
premises or the Building of which they form a part. No tenant shall lay
linoleum, or other similar floor covering, so that the same shall come
in direct contact with the floor of the demised premises, and, if
linoleum or other similar floor covering is desired to be used, an
interlining of builder's deadening felt shall be first affixed to the
floor, by a paste or other material, soluble in water, the use of
cement or other similar adhesive material being expressly prohibited.
9. No bicycles, vehicles or animals of any kind shall be brought
into or kept in or about the premises. No cooking shall be done or
permitted by any Tenant on said premises except in conformity to law
and then only in the utility kitchen, if any, as set forth in Tenant's
layout, which is to be primarily used by Tenant's employees for heating
beverages and light snacks. No tenant shall cause or permit any unusual
or objectionable odors to be produced upon or permeate from the demised
premises.
10. No space in the Building shall be used for manufacturing,
distribution, or for the storage of merchandise or for the sale of
merchandise, goods or property of any kind at auction.
11. No tenant shall make or permit to be made. any unseemly or
disturbing noises or disturbing noises or reasonably disturb or
interfere with occupants of the Building or neighboring buildings or
premises or those having business with them, whether by the use of any
musical instrument,
* The provisions of this Rule 6 shall not apply to the Initial
Alteration Work (as hereinafter defined in Article 45).
</PAGE>
<PAGE>
62
radio, talking machine, unmusical noise, whistling, singing, or in any
other way. No tenant shall throw anything out of the doors, windows or
skylights or down the passageways.
12. No tenant, nor any of the tenant's servants, employees, agents,
visitors or licensees, shall at any time bring or keep upon the demised
premises any inflammable, combustible or explosive fluid, or chemical
substance, other than reasonable amounts of cleaning fluids and
solvents required in the normal operation of tenant's business offices.
13. No additional locks or bolts of any kind shall be placed upon any
of the doors or windows by any tenant, nor shall any changes be made in
existing locks or the mechanism thereof, without the prior written
approval of the landlord and unless and until a duplicate key is
delivered to Landlord. Each tenant must, upon the termination of his
tenancy, restore to the Landlord all keys of stores, offices and toilet
rooms, either furnished to, or otherwise procured by, such tenant, and
in the event of the loss of any keys, so furnished, such tenant shall
pay to landlord the cost thereof.
14. All removals, or the carrying in or out of any safes, freight,
furniture or bulky matter of any description, must take place during
the hours and pursuant to such procedures as Landlord or its agent may
reasonably determine from time to time. Landlord reserves the right to
inspect all freight to be brought into the Building and to exclude from
the Building all freight which violates any of these Rules and
Regulations or the Lease of which these Rules and Regulations are a
part.
15. No tenant shall occupy or permit any portion of the premises
demised to it to be occupied as an office for a public stenographer or
typist, or for the possession, storage, manufacture, or sale of liquor,
narcotics, tobacco in any form, or as a barber or manicure shop or as a
public employment bureau or agency, or for a* public finance (personal
loan) business. No tenant shall engage or pay any employees on the
demised premises, except those actually working for such tenant on said
premises, nor advertise for laborers giving an address at said
premises.
16. Landlord shall have the right to prohibit any advertising by any
tenant, mentioning the Building, which, in Landlord's reasonable
opinion, tends to impair the reputation of the Building or its
* personal loan business (except as may be incidental to Tenant's
business). The foregoing shall not apply to possession by Tenant and
its employees of small quantities of liquor and tobacco for personal
use, and of narcotics prescribed by a medical doctor or otherwise
lawful for personal use.
</PAGE>
<PAGE>
63
desirability as a building for offices, and upon written notice from
landlord, tenants shall refrain from or discontinue such advertising.
17. Landlord reserves the right to exclude from the Building between
the hours of 6:00 P.M. and 8:00 A.M. and at all hours on Sundays and
legal holidays all persons who do not present a pass to the Building
signed by a tenant. Each tenant shall be responsible for all persons
for whom such pass is issued and shall be liable to Landlord for all
acts of such persons.
18. At the option of Tenant Landlord, the Tenant may agree to
purchase from
Landlord or its agents all lamps and bulbs used in the demised premises
and to pay for the cost of installation thereof.
19. The premises shall not be used for lodging or sleeping or for any
immoral or illegal purpose.
20. Tenant shall employ pay to Landlord the cost of an exterminator*
to keep the demised premises free from vermin.**
21. The requirements of tenants will be attended to only upon
application at the office of the Building. Building employees shall not
perform any work or do anything outside of their regular duties, unless
under special instructions from the office of Landlord.
22. Canvassing, soliciting and peddling in the Building are
prohibited and each tenant shall cooperate to prevent the same.
23. There shall not be used in any space, or the public halls of any
building, either by any tenant or by jobbers or others, in the delivery
or receipt of merchandise, any hand trucks, except those equipped with
rubber tires and side guards. No hand trucks shall be used in passenger
elevators.
24. Tenants, in order to obtain maximum effectiveness of the cooling
system, shall lower and/or close Venetian or vertical blinds or drapes
when the sun's rays fall directly on windows of demised premises and
shall permit Landlord to install and maintain on the interior of said
windows mylar or other such insulating materials.
25. In order that the Building can and will maintain a uniform ap
pearance to those outside of same, each Tenant in building perimeter
areas shall (a) use only*** building standard lighting in
*reasonably acceptable to Landlord
**(or, at Tenant's option, Tenant may pay Landlord the reasonable cost
of such exterminator, and Landlord will arrange for such service).
*** lighting reasonably approved by Landlord
</PAGE>
<PAGE>
64
areas where lighting is visible from the outside of the Building and
(b) use only building standard venetian or vertical blinds* in window
areas which are visible from the outside of the Building.
26. Replacement of ceiling tiles after they are removed for Tenant by
telephone company installers, in both the demised premises and the
public corridors, will be charged to Tenant on a per tile basis. **
27. All paneling, grounds or other wood products not considered fur
niture shall be of fire retardant materials. Before installation of any
such materials, certification of the materials' fire retardant
characteristics shall be submitted to Landlord, or its agents, in a
manner satisfactory to the Landlord.
Whenever the above rules conflict with any of the rights or obligations
of Tenant pursuant to the provisions of the Articles of this Lease, the
provisions of the Articles shall govern.
* reasonably approved by landlord
** The foregoing shall not apply to any full floor premises occupied
by Tenant.
</PAGE>
<PAGE>
**This Section ("Lavatories in the Core") is not part of Landlord's
cleaning obligation under Section 27.12 of this Lease. This Section
appears here soley as a reference in connection with
Subdivision of Article 51 of this Lease.
65
EXHIBIT C
CLEANING SCHEDULE
GENERAL
All linoleum, rubber, asphalt file and other similar types of hard-
surfaced flooring to be swept nightly, using approved dust-check type
of mop.
All carpeting and rugs to be vacuum-cleaned nightly.
Hand dust and wipe clean all furniture, fixtures and window sills
nightly; wash sills when necessary.
Empty and clean nightly all waste receptacles of customary office
size.
Empty and clean all ash trays and screen all sand urns nightly. Dust
interior of all waste disposal cans and baskets nightly; damp-dust as
necessary.
Wash clean all water fountains and coolers nightly.
Dust all telephones as necessary.
Sweep all private stairway structures nightly.
LAVATORIES IN THE CORE **
Sweep and wash all lavatory floors nightly using proper disinfect-
ants. Wash and polish all minors, powder shelves, bright work and
enameled surfaces in all lavatories nightly.
Wash and disinfect all basins, bowls and urinals throughout all
lavatories, nightly.
Wash all toilet seats, nightly.
Empty paper towel receptacles and transport waste paper to designated
area in basement, nightly.
Fill toilet tissue holders, towel receptacles and soap dispensers,
nightly.
Empty sanitary disposal receptacles, nightly
Thoroughly wash and polish all wall tile and stall surface as often as
necessary.
*Dust and clean all glass furniture tops with impregnated cloths.
</PAGE>
<PAGE>
-67-
RIDER ATTACHED TO AND FORKING A PART OF
LEASE BETWEEN KID-CITIC ASSOCIATES, LANDLORD,
MD FIRST ALBANY COMPANIES INC., TENANT
ARTICLE 45
Commencement Date; Term; Rent; Initial
Alteration Work; Work Contribution, Etc.
A. The term of this Lease shall commence on the date (the
"Commencement Date") when this Lease is executed and delivered by
Landlord and Tenant, and Landlord makes available to Tenant possession
of the demised premises; and the term of this Lease shall expire on the
last day of the twelfth Lease Year (as hereinafter defined), unless it
shall sooner end as in this Lease provided.
Landlord shall, in accordance with the foregoing, fix the
Commencement Date and notify Tenant of the date so fixed. When the
Commencement Date has so been determined; the parties hereto shall,
within thirty (30) days thereafter, at Landlord's request, execute a
written agreement confirming such date as the Commencement Date. Any
failure of the parties to execute such written agreement shall not
affect the validity of the Commencement Date as fixed and determined by
Landlord, as aforesaid.
The term "Lease Year" when used in this Lease shall mean the twelve
months commencing on the first day of the month following the month in
which occurs the Rent Commencement Date (as hereinafter defined) and
each subsequent period of twelve months. The first Lease Year shall
include the period, if any, from the Rent Commencement Date to the end
of the month in which the Rent Commencement Date occurs.
The term "Rent Commencement Date" when used in this Lease shall mean
the date which is 150 days after the Commencement Date.
B. Supplementing the preface of this Lease, Tenant shall pay
Landlord fixed annual rent (without electricity and subject to increase
by the Escalated Amount, as hereinafter defined and described in this
Subdivision B) at the following rates:
$500,000 a year for the first Lease Year;
$750,000 a year for the second Lease Year;
$950,000 a year for the third Lease Year;
</PAGE>
<PAGE>
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$1,013,220 a year for each of the fourth and fifth
Lease Years;
$1,046,994 a year for each of the sixth, seventh,
eighth and ninth Lease Years; and
$1,080,768 a year for each of the tenth, eleventh and
twelfth Lease Years.
The foregoing fixed annual rental rates shall be increased by an
amount equal to the Escalated Amount (as hereinafter defined), for the
period from January 1, 2000 through the expiration of the initial term
of this Lease. For purposes of this Lease, the "Escalated Amount"
shall mean an amount equal to the total of all real estate tax and
operating expense escalation additional rent due under Article 46 of
this Lease for the 1999 comparative year (as hereinafter defined in
said Article 46). The Escalated Amount shall not include any amount
paid under said Article 46 during the 1999 comparative year on account
of any other comparative year. Landlord acknowledges that the final
determination of the real estate tax and operating expense escalation
additional rent due under said Article 46 for the 1999 comparative year
may be delayed due to Tenant's right under said Article 46 to dispute
such amounts and to audit Landlord's books and records with respect to
the operating expenses for the Building; pending the resolution of any
such dispute, the Escalated Amount shall be deemed to be the amounts
set forth in the statements furnished to Tenant under Article 46 for
the 1999 comparative year; upon the resolution of any such dispute (and
the final determination of the real estate tax and operating expense
escalation additional rent due under said Article 46 for the 1999
comparative year), Landlord and Tenant shall make adjustment for any
overage paid by Tenant or for any deficiency owed by Tenant.
C. Supplementing Article 41 of this Lease and Subdivision A of
this Article:
Tenant acknowledges that it has been advised that the demised
premises is currently occupied by a certain tenant (the "Existing
Tenant") pursuant to a certain lease with Landlord, the term of which
expires on May 31, 1996.
Landlord shall not be liable to Tenant in any way if the Existing
Tenant fails to vacate all or any portion of the demised premises by or
before the May 31, 1996 expiration date of the term of its Lease.
However, if such tenant fails to vacate such space by or before such
expiration date, Landlord will then use reasonable diligence to cause
such tenant to vacate such space, including, without limitation, the
commencement and diligent prosecution of a summary holdover dispossess
proceeding.
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Notwithstanding anything contained herein to the contrary, if
Landlord is unable to make possession of the demised premises available
to Tenant within twelve (12) months after the date of this Lease, then,
at Tenant's election to be exercised by written notice given by Tenant
to Landlord within ten (10) days after the end of such twelve (12)
month period (time being of the essence), unless Landlord makes
possession of such space available to Tenant within twenty (20) days
after the end of such ten (10) day period, the term of this Lease shall
end as if the last day of such twelve (12) month period were the date
originally set forth in this Lease as the expiration date of the term,
and the parties shall have no further obligations or liabilities to
each other hereunder, except that Landlord shall return any advance
rent or security deposit paid by Tenant hereunder.
D. Supplementing Article 30 of this Lease, Tenant agrees that it
will effect all such alterations, additions and improvements in and to
the demised premises as are necessary for Tenant to conduct its
business therein (the "Initial Alteration Work"). Such Initial
Alteration Work shall include the installation of all new partitions,
floor covering, ceiling, wall covering, lighting, fixtures and
equipment, so as to create a first class office installation in the
demised premises. Such Initial Alteration Work may also include the
installation in the demised premises of a file room, a computer room
and an uninterrupted power supply (UPS) Landlord agrees that the
Initial Alteration Work may be effected in stages over a period of time
between the commencement date of the term of this Lease and October 31,
1997.
Tenant shall, within thirty (30) days after the execution of this
Lease by Tenant, furnish Landlord for its approval a complete set of
architectural and engineering plans and specifications for the Initial
Alteration Work. Landlord, promptly upon receipt of same, shall
approve such plans and specifications, or return them with advice as to
what changes are required for its approval to be forthcoming. In the
event such plans and specifications are so returned to Tenant, Tenant
shall revise them to incorporate such changes as are required for
Landlord's approval to be forthcoming and shall resubmit such revised
plans and specifications to Landlord, within five (5) days after they
are returned (unapproved) by Landlord. Such plan approval process
shall continue until Landlord has approved a complete set of
architectural and engineering plans and specifications for the Initial
Alteration Work.
Tenant, at its own cost and expense (except as provided in
Subdivision F of this Article), will cause the Initial Alteration Work
to be effected in a good and workmanlike manner, in accordance with
Tenant's approved plans and specifications, in accordance with the
provisions of Article 3, as supplemented by
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Article 47, and all other applicable provisions of this Lease, and in
compliance with all applicable laws, rules and regulations.
E. Landlord agrees that, at its sole cost and expense, it will
effect the following work ("Landlord's Work") in and to the demised
premises:
(a) In connection with the Initial Alteration Work, Landlord
shall be solely responsible for and shall, at Landlord's expense,
cause to be effected any removal, encapsulation, encasement or
other treatment of asbestos required by laws, rules, regulations
or ordinances of any governmental authority having jurisdiction
over the demised premises (and Landlord will provide Tenant with
documentary evidence of such abatement work, including any form
required in order for Tenant to obtain its building permit).
However, Landlord and Tenant agree that any such compliance made
necessary by improvements or other work effected by or for Tenant
after Tenant opens for business at the demised premises, shall be
effected at Tenant's expense
(b) Landlord shall effect all work necessary to remove the
internal stairway between the 41st and 42nd floors of the
Building, including without limitation, the closing of the slab
between such floors.
(c) Tenant acknowledges that it has been advised that there is
currently a 400 amp, 460 volts, three phase switch located on the
11th floor of the Building. Landlord will effect all work
necessary to extend such existing electrical service to a new
switch on the 42nd floor of the Building at a location designated
by Landlord. It is further acknowledged and understood, however,
that the extension of such electrical service to the 42nd floor
of the Building will result in a so-called "line loss" of
available amperage, resulting in actual delivered service of
between 275 and 325 amps at 460 volts, three phase.
Landlord will effect Landlord's Work in a good and workmanlike
manner, and in accordance with all applicable laws, rules and
regulations. Landlord will effect Landlord's Work simultaneously with
the performance of the Initial Alteration Work by Tenant. Tenant shall
cooperate with Landlord by providing Landlord and its contractors with
such access to the demised premises as is necessary for Landlord to
effect all of Landlord's Work. Landlord shall cooperate with Tenant by
consulting with
</PAGE>
<PAGE>
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Tenant and its contractors and by using reasonable diligence to
coordinate the performance of Landlord's Work with the performance of
the Initial Alteration Work.
F. Landlord will reimburse Tenant for up to the first $1,350,960 of
the costs of labor and materials, excluding architectural and
engineering fees and the costs of Tenant's personal property (as
described in Section 3.05), in effecting the Initial Alteration Work.
If such costs are lower than $1,350,960, then Landlord's aforedescribed
contribution obligation shall be satisfied by its reimbursing Tenant
such amount lower than $1,350,960. Any such costs in excess of
$1,350,960 shall be paid promptly by Tenant.
In connection with the Initial Alteration Work, Tenant shall
provide Landlord with true copies of paid bills or bills which have
been certified by Tenant as approved for payment, showing the cost of
the items of the Initial Alteration Work to be included in the
aforesaid total up to $1,350,960 and Landlord shall reimburse Tenant
for the amount set forth in said bills in accordance with Landlord's
obligation hereunder. (See Subdivision G of this Article.)
The foregoing work contribution by Landlord shall be conditioned
on Tenant not being in default, beyond any applicable notice and/or
grace period, under any of the material terms, covenants and conditions
of this Lease. Upon the occurrence of any such default by Tenant, such
reimbursement obligation shall be deemed suspended unless and until
Tenant fully cures such default, at which time such reimbursement
obligation shall resume and continue until Tenant has received the full
amount thereof (or Tenant again so defaults).
G. Anything contained herein to the contrary notwithstanding, if
Tenant, at any time during the term of this Lease after Tenant has been
granted all or a portion of the work contribution described in this
Article, breaches any covenant, condition or provision of this Lease
and fails to cure such breach within any applicable grace period, and
provided that this Lease is terminated by Landlord because of such
default, then, in addition to all other damages and remedies herein
provided and to which Landlord may otherwise be entitled, Landlord
shall also be entitled to the repayment of the unamortized portion of
any work contribution theretofore enjoyed by Tenant, which sum shall be
deemed additional rent hereunder and shall be due upon demand by
Landlord. Such unamortized portion shall be computed by multiplying
the total work contribution enjoyed by Tenant hereunder by a fraction,
the numerator of which shall be 144 minus the total number of calendar
months of the term of this Lease which have elapsed after the
Commencement Date but prior to such termination, and denominator of
which shall be 144. The obligation of Tenant to pay such additional
rent (or damages) to
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-72-
Landlord shall survive the expiration or sooner termination of the term
of this Lease.
Landlord agrees that any additional rent (or damages) which
Tenant is obligated to pay to Landlord pursuant to the immediately
preceding grammatical paragraph shall be set off against any damages
which Tenant is obligated to pay to Landlord on account of any future
rents or additional rents under this Lease (see subdivisions (a) and
(c) of Section 15.01).
H. If and so long as Tenant shall not be in default under any of the
material terms, covenants or conditions of this Lease, beyond any grace
period, Tenant shall be entitled to a rent credit in the amount of
$33,415, which rent credit shall be applied, until fully depleted,
against the first fixed annual rents due to Landlord under this Lease.
</PAGE>
<PAGE>
RIDER ATTACHED TO AND FORMING
A PART OF LEASE BETWEEN
MID-CITY ASSOCIATES, LANDLORD
AND FIRST ALBANY COMPANIES INC. ,TENANT
73
ARTICLE 46
TAX AND OPERATING EXPENSE ESCALATION
Tenant shall pay to landlord, as additional rent, tax escalation
and operating expense escalation in accordance with this Article:
(a) Definitions: For the purpose of this Article, the following
definitions shall apply:
(i)The term "base year" as hereinafter set forth for the
determination of expense escalation, shall mean the calendar year
1997.
(ii) The term "base tax year" as hereinafter set forth for
the determination of real estate tax escalation shall mean the
average of the New York City real estate tax years commencing
July 1, 1996 and ending June 30, 1997 and commencing July 1, 1997
and ending June 30, 1998 (i.e. "base tax year" representing an
amount of taxes).*
(iii) The term "The Percentage" shall mean 1.630 percent
(1.630%) for real estate tax escalation and shall mean 1.751
percent (1,751%) for expense escalation. The Percentage has been
computed on the basis of a fraction, the numerator of which is
the rentable square foot area of the presently demised premises
and the denominator of which is the total rentable square foot
area of the office and commercial space in the building project
(excluding garage space), for tax escalation and the denominator
of which is the total rentable square foot area of the office
space in the building project, for expense escalation. The
parties acknowledge and agree that the total rentable square foot
area of the presently demised premises shall be deemed to be
33.774 sq. ft., and that the rentable square foot area of the
office and commercial space in the building project shall be
deemed to be 2,072,136 sq. ft. and that of its office space shall
be deemed to be 1,928,539 sq. ft.
(iv) The term "the building project" shall mean all of the
land together with the improvements in which landlord has an
interest below 33rd Street, in Pennsylvania Station and below, on
and above ground level in the block bounded by 34th Street, 8th
Avenue, 33rd Street, and 7th Avenue, exclusive of the frontage
100 feet deep west of 7th Avenue and the frontage 52 feet 5 1/2
inches deep east of 8th Avenue (i.e., Block 783. Lot 1).
(v) The term "comparative year" for tax escalation and
shall mean the New York City real estate tax year commencing July
1, 19 and each subsequent period of twelve (12) months;* for
expense
* or such other period of twelve (12) months occurring during the term
of this Lease as hereafter may be duly adopted as the fiscal year for
real estate tax purposes by the City of New York.
*From and after January 1, 2000, the "base year" shall mean the
calendar year 1999, and the "base tax year" shall mean the average of
the New York City real estate tax years commencing July 1, 1998 and
ending June 30, 1999 and ending June 30, 2000 (i.e., "base tax Year"
representing an amount of taxes).
</PAGE>
<PAGE>
****Where more than one assessment is imposed by the City of New York
for any tax year, whether denominated an "actual assessment" or a
"transitional assessment" or otherwise, the phrases herein "assessed
value" and "assessments" shall mean whichever of the actual,
transitional or other assessment is designated by the City of New York
as the taxable amount for that tax year.
***** (and, from and after January 1, 2000, for each of tax year
1998/99 and tax year 1999/2000)
74
escalation "comparative year" shall mean the twelve (12) months
following the base year and each subsequent period of twelve (12)
months *
(vi) The term "real estate taxes" shall mean the total of
all taxes and special or other assessments levied, assessed or imposed
at any time by any governmental authority upon or against the
building project** and also any tax or assessment levied, assessed or
imposed at any time by any governmental authority in connection with
the receipt of income or rents from said building project to the extent
that same shall be in lieu of all or a portion of any of the aforesaid
taxes or assessments, or additions or increases thereof, upon or
against said building project*** a due to a future change in the method
of taxation or in the taxing authority, or for any other reason, such
franchise, income, transit, profit or other tax or governmental
imposition, however designated, shall be levied against Landlord in
substitution in whole or in part for the real estate taxes, or in lieu
of additions to or increases of said real estate taxes. Then such
francise, income, transit, profit or other tax or governmental
imposition shall be deemed to be included within the definition of
"real estate taxes" for the purpose hereof. As to special assessments
which are payable over a period of time extending beyond the term of
this Lease, only a pro rata portion thereof, covering the portion of
the term of this Lease unexpired at the time of the imposition of such
assessment, shall be included in "real estate taxes". If, by law, any
assessment may be paid in installments, then, for the purposes hereof
(a) such assessment shall be deemed to have been payable in the maximum
number of installments permitted by law and (b) there shall be included
in real estate taxes, for each comparative year in which such
installments may be paid, the installments of such assessment so
becoming payable during such comparative year, together with interest
payable during such comparative year.
(vii)****Where a "transition assessment" is imposed by the City
of New York for any tax (fiscal) year, then the phases "assessed value"
and "assessments" shall mean the transition assessment for that tax
(fiscal) year.
(viii) The phrase "real estate taxes payable during the base tax year"
shall mean that amount obtained by multiplying the assessed value of
the building project for each of tax year 1996/97 and tax year
1997/98***** by the applicable tax rate for such year and then
obtaining the avenge of the taxes for such two tax years.
*(so that real estate taxes for any comparative year will be the
average of the real estate taxes payable for two different tax years).
**, any assessment by a business improvement district (BID),
***A franchise, income, transit, profit or other tax or governmental
imposition shall not be included within the definition of real real
estate taxes for purposes hereof, unless,
</PAGE>
<PAGE>
* (calculated in accordance with generally applied real estate
practice, consistently applied)
** the following if incurred or borne in accordance with sound
management practices:
***,provided the same are not leased or to be leased to space tenants;
75
(ix) The term "Expenses" shall mean the total of all the costs
and expenses incurred or borne by Landlord* with respect to the
operation and maintenance of the building project and the services
provided tenants therein, including, but not limited to, the costs and
expenses incurred for and with respect to** steam and any other fuel;
water rates and sewer rents; air-conditioning; ventilation and heating;
cleaning, by contract or otherwise, window washing (interior and
exterior); elevators; escalators; porter and matron service; Building
electric current;* protection and security; lobby decoration, repairs;
association fees or dues; maintenance; painting of non-tenant areas***
replacements and improvements which are appropriate for the continued
operation of the building project**** fire, extended coverage, boiler
and machinery, sprinkler, apparatus, public liability and property
damage, rental and plate glass insurance and any insurance required by
a mortgagee; management fees; supplies; wages, salaries, disability
benefits, pensions, hospitalization, retirement plans and group
insurance respecting employees of the Landlord up to and including the
building manager; uniforms and working clothes for such employees and
the cleaning thereof; expenses imposed on the Landlord pursuant to any
law or to any collective bargaining agreement with respect to such
employees; workmen's compensation insurance, payroll, social security,
unemployment and other similar taxes with respect to such employees.
Provided, however, that***** the foregoing costs and expenses shall
exclude or have deducted from them, as the case may be and as shall be
appropriate:
(a) leasing commissions******
(b) Managing agents' fees or commissions in excess of the rates then
customarily charged for building management for buildings of like class
and character;
(c) executives' salaries above the grade of building manager;
(d) expenditures for capital improvements except those which under
generally applied real estate practice are expensed or regarded as
deferred expenses and except for capital expenditures
*i.e. Building electric current shall be deemed to mean all electricity
purchased for the Building except that which is redistributed to
tenants in the Building; the parties acknowledge and agree that Forty
percent (40%) of the Building's payment to the public utility for the
purchase of electricity shall be deemed to be payment for Building
electric current.
****and which are not capital in nature, except as provided in (d)
below);
***** notwithstanding the foregoing,
******and other lease related expenses, including legal fees;
</PAGE>
<PAGE>
76
required by law, in either of which cases the cost thereof shall be
included in Expenses for the base year and the comparative year in
which the costs are incurred and subsequent comparative years, on a
straight line basis, to the extent that such items are amortized over
an appropriate period, but not less more than ten years, with an
interest factor equal to the prime rate of the Chemical Bank of New
York at the time of Landlord's having incurred said expenditure.
(e) amounts received by Landlord through proceeds of insurance to the
extent the proceeds are compensation for expenses which were previously
included in Expenses hereunder;
(f) cost of repairs or replacements incurred by reason of fire or
other casualty, but only to the extent to which Landlord is compensated
therefor through proceeds of insurance, or caused by the exercise of
the right of eminent domain;
(g) advertising and promotional expenditures;
(h) legal fees for disputes with tenants and legal and auditing fees,
other than legal and auditing fees reasonably incurred in connection
with the maintenance and operation of the Building or in connection
with the preparation of statements required pursuant to additional rent
or lease escalation provisions;
(i) costs incurred in performing work or furnishing services for
individual tenants (including this Tenant) at such tenant's expense to
the extent that such work or service is in excess of any work or
service landlord at its expense is obligated to furnish to this Tenant;
costs of performing work or furnishing services for tenants other than
this Tenant at Landlord's expense to the extent that such work or
service is in excess of any work or service landlord is obligated to
furnish to this Tenant at Landlord's expense; if any work or service is
performed or furnished by landlord to or for any tenant other than this
Tenant at such tenant's expense, then, but only to the extent that
landlord is obligated to perform such work or furnish such service to
or for this Tenant at landlord's expense, such work or service shall be
deemed to have been performed or furnished to. such other tenant at
landlord's expense and shall therefore be included in Expenses. *
If landlord shall purchase any item of capital equipment or make
any capital expenditure designed to result in net savings or reductions
in Expenses, then the costs for same shall be included in Expenses. The
costs of capital equipment or capital expenditures are
* ;see page 76A following this page.
</PAGE>
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-76A-
(j)real estate taxes;
(k)capital improvements, except as provided in (d) above;
(1)interest on debt or amortization payments or any other
payments under any mortgage or under any ground or underlying lease;
(m)real estate brokerage commissions and other expenses which
are related to the sale of the Building;
(n)services to retail stores or ground floor offices;
(o)all items and services for which Tenant or other tenants
reimburse Landlord or are paid by third parties or which third parties
are liable to pay or reimburse Landlord;
(p)costs of correcting defects (whether lawful or otherwise) and
the construction of the Building;
(q)Any cost representing an amount paid to a person or entity
affiliated with Landlord or any of its principals which is in excess of
the amount which would have been paid had there not been such a
relationship; and
(r) Landlord's general business operation overhead,
including, without limitation, compensation paid to its officers,
directors and partners other than the salary for the building manager.
</PAGE>
<PAGE>
-77A-
After Landlord has furnished Tenant with the aforesaid statement,
Tenant shall pay Landlord, together with the monthly installments of
rent due on June 1 and December 1 of each such comparative year, an
amount equal to one half (1/2) of the total sum of additional rent due
from Tenant to Landlord pursuant to such statement for such comparative
year. If, during the term of this Lease, any such taxes are required
by the taxing authority or by a mortgagee's tax escrow requirements, to
be paid, in full or in quarterly or other installments, on any other
date or dates than as presently required, then Tenant's tax escalation
payment(s) shall be correspondingly accelerated so that said payments
are due at least thirty (30) days prior to the date proportionate
payments are due to the taxing authority or the mortgagee. If a
statement is furnished to Tenant after the commencement of the
comparative year in respect of which such statement is rendered, Tenant
shall, within thirty (30) days thereafter pay to Landlord an amount
equal to those installments or the total tax escalation payable as
provided in the preceding sentence during the period prior to the
first day of the month next succeeding the month in which the
applicable statement has been furnished.
</PAGE>
<PAGE>
77
so to be included in Expenses for the base year and the comparative
year in which the costs are incurred and subsequent comparative years,
on a straight line basis, to the extent that such items are amortized
over such period of time as reasonably can be estimated as the time in
which such savings or reductions in Expenses are expected to equal
Landlord's costs for such capital equipment or capital expenditure,
with an interest factor equal to the prime rate of the chemical Bank of
New York at the time of Landlord's having incurred said costs. If
Landlord shall lease any such item of capital equipment designed to
result in net savings or reductions in Expenses, then the rentals and
other costs paid pursuant to such leasing shall be included in Expenses
for the comparative year in which they were incurred.
If during all or part of the base year or of any comparative
year. Landlord shall not furnish any particular items(s) of work or
service (which would constitute an Expense hereunder) to portions of
the building project, due to the fact that such portions are not
occupied or leased, or because such item of work or service is not
required or desired by the tenant of such portion, or such tenant is
itself obtaining and providing such item of work or service, or for
other reasons, then, for the purposes of computing the additional rent
payable hereunder, the amount of the expenses for such item for such
period shall be increased by an amount equal to the additional
operating and maintenance expenses which would reasonably have been
incurred during such period by Landlord if it had at its own expense
furnished such item of work or services to such portion of the building
project
(b) Real Estate Taxes:
1.In the event that the real estate taxes payable for any
comparative year shall exceed the amount of such real estate taxes
payable during the base tax year, Tenant shall pay to Landlord, as
additional rent for such comparative year, an amount equal to The
Percentage of the excess.* By or after the start of the comparative
year following the base tax year, and by or after the start of each
comparative year thereafter, Landlord shall furnish to Tenant a
statement of the real estate taxes payable for such comparative year,
and a statement of the real estate taxes payable during the base tax
year.** If the real estate taxes payable for such comparative year
exceed the real estate taxes payable during the base tax year,
additional rent for such comparative year, in an amount equal to The
Percentage of the excess, shall be due from Tenant to Landlord and such
additional rent shall be payable to Tenant to Landlord*** within ten
(10) days after receipt of the aforesaid statement.
* (See Subdivision (i) of this Article.)
** Upon Tenant's written request, Landlord shall provide Tenant with
copies of all pertinent tax bills.
***as follows: (See page 77A following this page)
</PAGE>
<PAGE>
*actual, then customary, out-of-pocket
**Landlord's obligations under this Subdivision (b) 3 shall survive the
end of the term of this Lease.
***(See Subdivision (i) of this Article.)
****such CPA or by Landlord, in reasonable detail
78
2. Should the real estate taxes payable during the base tax year
be reduced by final determination of legal proceedings, settlement or
otherwise, then, the real estate taxes payable during the base tax year
shall be correspondingly revised, the additional rent theretofore paid
or payable hereunder for all comparative years shall be recomputed on
the basis of such reduction, and Tenant shall pay to Landlord as
additional rent, within thirty (30) ten (10) days after being billed
therefor, any deficiency between the amount of such additional rent as
theretofore computed and the amount thereof dues as the result of such
recomputations. Should the real estate taxes payable during the base
tax year be increased by such final determination of legal proceedings,
settlement or otherwise, then appropriate recomputation and adjustment
also shall be made.
3. If, after Tenant shall have made a payment of additional rent
under this subdivision (b), Landlord shall receive a refund of any
portion of the real estate taxes payable for any comparative year after
the base tax year on which such payment of additional rent shall have
been based, as a result of a reduction of such real estate taxes by
final determination of legal proceedings, settlement or otherwise,
Landlord shall within then (10) days after receiving the refund pay to
Tenant The Percentage of the refund less The Percentage of* expenses
(including attorney's and appraiser's fees) incurred by Landlord in
connection with any such application or proceeding. If, prior to the
payment of taxes for any comparative year, Landlord shall have obtained
a reduction of that comparative year's assessed valuation of the
building project, and therefor of said taxes, then the term "real
estate taxes" for that comparative year shall be deemed to include the
amount of Landlord's* expenses in obtaining such reduction in assessed
valuation, including attorney's fees and appraisers' fees.**
(c) Expenses:
1. If the Expenses for any comparative year shall be greater than
the Expenses for the base year, Tenant shall pay to Landlord, as
additional rent for such comparative year, in the manner hereinafter
provided, an amount equal to The Percentage of the excess of the
Expenses for such comparative year over the Expense for the base year
(such amount being hereinafter called the "Expense Payment").***
Following the expiration of each comparative year and after
receipt thereof from Landlord's certified public accountant, Landlord
shall submit to Tenant a statement, certified by**** Landlord, setting
forth the Expenses for the preceding comparative year, the
</PAGE>
<PAGE>
79
Expenses for the base year, and the Expense Payment, if any due to
Landlord from Tenant for such comparative year. The rendition of such
statement to Tenant shall constitute prima facie proof of the accuracy
thereof and, if If such statement shows an Expense Payment due from
Tenant to Landlord with respect to the preceding comparative year then
(i) Tenant shall make payment of any unpaid portion thereof within
thirty (30) ten (10) days after receipt of such statement; and (ii)
Tenant shall also pay to Landlord, as additional rent, within thirty
(30) ten (10) days after receipt of such statement, an amount equal to
the product obtained by multiplying the total Expense Payment for the
preceding comparative year by a fraction, the denominator of which
shall be twelve (12) and the numerator of which shall have elapsed
prior to the first day of the month immediately following the rendition
of such statement; and (iii) Tenant shall also pay to Landlord, as
additional rent, commencing as of the first day of the month following
rendition of such statement and on the first day of each month
thereafter until a new statement is rendered, one-twelth (1/12) of the
total Expense Payment for the preceding comparative year. The
aforesaid monthly payments based on the total Expense Payment for the
preceding comparative year shall be adjusted to reflect, if Landlord
can reasonable so estimate, known increases or decreased in rates, for
the current comparative year, applicable to the categories involved in
computing Expenses, whenever such increases become known prior to or
during such current comparative year. The payments required to be made
under (ii) and (iii) above shall be credited toward the Expense Payment
due from Tenant for the then current comparative year, subject to
adjustement as and when the statement for such current comparative year
is rendered by Landlord.*
(d) The statements of the real estate taxes and of the Expenses
to be furnished by Landlord as provided in subdivisions (b) and (c)
above shall be certified by Landlord, and shall be prepared in
reasonable detail for the Landlord by a certified public accountant
(who may be the CPA now or then currently employed by Landlord for the
audit of its accounts); said certified public accountant may rely on
Landlord's allocations and estimates wherever operating cost
allocations or estimates are needed for this Article. The statement
thus furnished to Tenant shall** constitute a final determination as
between Landlord and Tenant of the real estate taxes and Expenses for
the periods represented thereby, unless Tenant within ninety (90)
thirty (30) days after they are furnished shall give a written notice
to Landlord that it disputes their accuracy or their appropriateness.
which notice shall specify the
* If such statement for such current comparative year indicates that
the payments made under (ii) and (iii) above exceeded the actual
Expense Payment for such comparative year, by an amount equal to the
greater of (a) $100,000 or (b) 10%, then Landlord shall pay Tenant
interest on the amount of such overpayment, at the rate set forth in
Section 20.04 hereof, from the date such overpayment was made by
Tenant.
**, subject to mathematical errors in calculation and computation,
</PAGE>
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80
particular respects in which the statement is inaccurate or
inappropriate.
If Tenant shall so dispute said statements then, pending the
resolutions of such dispute, Tenant shall pay the additional rent to
Landlord in accordance with the statements furnished by Landlord*
(e) In no event shall the fixed annual rent under this Lease be
reduced by virtue of this Article.
(f) If the term of this Lease commences on a day which is not the
first day of a comparative year, then the additional rent due hereunder
for such comparative year shall be a proportionate share of said
additional rent for the entire comparative year, said proportionate
share to be based upon the length of time that the term of this Lease
will be in existence during such comparative year. Upon the date of any
expiration or termination of this Lease (except termination because of
Tenant's default), whether the same be the date hereinabove set forth
for the expiration of the term or any prior or subsequent date, a
proportionate share of said additional rent for the comparative year
during which such expiration or termination occurs shall immediately
become due and payable by Tenant to landlord, if not theretofore
already billed and paid. The said proportionate share shall be based
upon the length of time that this Lease shall have been in existence
during such comparative year. Landlord shall, as soon as reasonably
practicable, compute the additional rent due from Tenant, as aforesaid,
which computations shall either be based on that comparative year's
actual figures or be an estimate based upon the most recent statements
theretofore prepared by Landlord and furnished to Tenant under
subdivisions (b) and (c) above. If an estimate is used, then Landlord
shall cause statements to be prepared on the basis of the comparative
year's actual figures as soon as they are available, and within ten
(10) days after such statement or statements are prepared by Landlord
and furnished to Tenant, Landlord and Tenant shall make appropriate
adjustments of any estimated payments theretofore made.
(g) Landlord's and Tenant's obligation to make the adjustments
referred to in subdivision (f) above shall survive any expiration or
termination of this Lease.
(h) Any delay or failure of landlord in billing for any
additional rent hereunder shall not constitute a waiver of or in any
way impair the continuing obligation of Tenant to pay such additional
rent.
(i) (See Page 80B following this page.)
*(i) (See Page 80A following this page.)
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After payment of said additional rent with respect to operating
expenses only, Tenant shall have the right, during reasonable business
hours and upon not less than twenty (20) days' prior written notice to
Landlord, to examine Landlord's relevant books and records with respect
to the foregoing (including such records in respect to the base year),
provided such examination is commenced within eighteen (18) months
after the giving of such written notice by Tenant and concluded within
thirty (30) days thereafter. Landlord shall cooperate with Tenant by
making available to Tenant such relevant books and records as Tenant
reasonably requires in connection with such examination.
Any such dispute as to operating expenses shall be resolved by
arbitration in accordance with the provisions of Article 31 of this
Lease. In the event the award in any such arbitration shows that
Tenant was overcharged by at least an amount equal to the greater of
(i) $100,000 or (ii) ten percent (10%) of the Expense Payment
determined to be due hereunder, then Landlord shall, in addition to
refunding to Tenant the amount of such overcharge, pay Tenant interest
on such amount, at the rate set forth in Section 20.04 of this Lease,
from and after the date payment was made by Tenant
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Notwithstanding anything hereinabove contained to the contrary, it is
the intention of the parties that this Tenant's obligation to pay
escalation additional rents for Expenses and for real estate taxes
shall be capped or limited for the period through the calendar year
1999. The intention is that the cap be based on a limitation on the
increase of Expenses from and after the base year and a limitation in
the increase of real estate taxes from and after the base tax year.
The total of the Expense Payment and the real estate tax escalation
additional rent payable hereunder for the 1998 comparative year shall
not be more than an amount equal to ten percent (10%) of the total of
the Expense Factor and the Tax Factor (each as hereinafter defined);
and the total of the Expense Payment and the real estate tax escalation
additional rent payable hereunder for the 1999 comparative year shall
not be more than an amount equal to twenty percent (20%) of the total
of the Expense Factor and the Tax Factor.
For Purposes of this cap or limitation on escalation additional rents,
the "Expense Factor" shall mean an amount equal to (x) The Percentage
for expense escalation (1.751%) multiplied by (y) the Expenses for the
base year; and The "Tax Factor" shall mean an amount equal to (x) The
Percentage for real estate tax escalation (1.630%) multiplied by (y)
the real estate taxes payable for the base tax year.
The following illustrates the manner in which the above is intended to
operate:
For example only: If the Expenses for the base year are
$13,500,000 and the real estate taxes payable for the base tax
year are $12,500,000, then the Expense Factor would be:
1.751% x $13,500,000 or $236,385;
and the Tax Factor would be:
1.630% x $12,500,000 or $203,750;
</PAGE>
<PAGE>
- 8OC-
accordingly, the total of Expense Payment and real estate tax
escalation additional rent payable hereunder for the 1996 comparative
year shall not be more than an amount equal to:
10% x ($236,385 + $203,750) or $44,013.50 and
the total Expense Payment and real estate tax escalation additional
rent payable hereunder for the 1999 comparative year shall not be more
than an amount equal to:
20% x ($236,385 + $203,750) or $88,027.
It is understood and agreed that there shall be no limitation or so-
called cap on any increase in the amount of real estate tax or
operation expense escalation additional rent due hereunder for the
comparative year 2000 or for any comparative year thereafter during the
term of this Lease.
</PAGE>
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Article 47
Alterations
A. Supplementing Article 3 hereof, Landlord will not unreasonably
withhold, condition or delay approval of written requests of Tenant to
make non-structural interior alterations, additions and improvements
(herein referred to as "alterations") in and to the demised premises,
provided that such alterations do not adversely affect utility services
or plumbing and electrical lines or other Systems of the Building. All
alterations shall be performed in accordance with the following terms
and conditions:
(a) All such alterations costing more than $50,000 shall be
performed in accordance with plans and specifications first submitted
to Landlord for its prior written approval. Landlord shall be given, in
writing, a good description of all other alterations.
(b) All alterations shall be done in a good and workmanlike
manner. Tenant shall, prior to the commencement of any such
alterations, at its sole cost and expense, obtain and exhibit to
Landlord any governmental permit required in connection with such
alterations.
(c) All alterations shall be done in compliance with all
other applicable provisions of this Lease and with all applicable laws,
ordinances, directions, rules and regulations of governmental
authorities having jurisdiction, including, without limitation, The
Americans with Disabilities Act of 1990 and New York City Local Law No.
58/87 and similar present or future laws, and rules and regulations
issued pursuant thereto, and also (except as provided in Subdivision E
of Article 45) No. 76 and similar present or future laws, and rules and
regulations issued pursuant thereto, on abatement, storage,
transportation and disposal of asbestos, which work, if required, shall
be effected at Tenant's sole cost and expense, by contractors and
consultants approved by Landlord and in strict compliance with the
aforesaid laws and regulations and with Landlord's rules and
regulations thereon.
(d) All work shall be performed with union labor having the
proper jurisdictional qualifications.
(e) Tenant shall keep the Building and the demised premises
free and clear of all liens for any work or material claimed to have
been furnished to Tenant or to the demised premises.
(f) Prior to the commencement of any work by or for Tenant,
Tenant shall furnish to Landlord certificates
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evidencing the existence of the following insurance (of Tenant or of
any contractor performing such work for Tenant):
(i) Worker's compensation insurance covering all
persons employed for such work and with respect to
whom death or bodily injury claims could be
asserted against Landlord, Tenant or the demised
premises.
(ii) Broad form general liability insurance
written on an occurrence basis naming Tenant as an
insured and naming Landlord and its designees as
additional insureds, with limits of not less than
$3,000,000 combined single limit for personal
injury in any one occurrence, and with limits of
not less than $500,000 for property damage. (The
foregoing limits may be revised from time to time
by Landlord to such higher limits as Landlord from
time to time reasonably requires.) Tenant, at its
sole cost and expense, shall cause all such
insurance to be maintained at all times when the
work to be performed for or by Tenant is in
progress. All such insurance shall be in a company
authorized to do business in New York and all
policies, or certificates therefor, issued by the
insurer and bearing notation evidencing the
payment of premiums, shall be delivered to
Landlord. Blanket coverage shall be acceptable,
provided that coverage meeting the requirements of
this paragraph is assigned to Tenant's location at
the demised premises.
(g) All work to be performed by Tenant shall be done in
manner which will not unreasonably interfere with or disturb other
tenants and occupants of the Building.
(h) Any alterations or other work and installations in and
for the demised premises, which shall be consented to by Landlord as
provided herein, and which is effected by Landlord, its agents or
contractors at Tenant's request, shall be paid for by Tenant promptly
when billed.
(i) Supplementing Section 3.04 of this Lease, Landlord may
require Tenant to remove from the demised premises, upon the expiration
or sooner termination of the term of this Lease, any nonstandard office
installation (e.g., internal stairways, private lavatories, etc., but
not raised flooring or
</PAGE>
<PAGE>
- 83 -
pantries) made by or for Tenant, provided Landlord makes such election
at the time it approves such installation (but only if Tenant's request
for approval reminds Landlord in writing of the need to make such
election)
B. Supplementing Article 3 hereof, and notwithstanding anything
to the contrary contained in this Article, Landlord's prior written
approval will not be required with respect to non-structural interior
alterations costing $50,000 or less, or decorative work such as
painting or wall covering, provided that such alterations or decorative
work do not affect utility services or plumbing or electrical lines or
other systems of the Building; and provided, further, that all such
alterations and decorative work shall be performed in accordance with
the provisions set forth in Article 3, as supplemented by this Article
47, and all other applicable provisions of the Lease (except the
requirement of Landlord's approval of plans and specifications for such
work; Tenant, nevertheless, shall be required to provide Landlord with
a copy of any existing plans and specifications for such work, or a
good written description, as the case may be, at least ten (10) days
prior to the start of the alteration in question).
</PAGE>
<PAGE>
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Article 48
Non - Disturbance Agreement
Supplementing Article 6 of this Lease, Landlord will obtain, for
the benefit of Tenant, from the ground lessor under The Ground Lease
and/or from the holder of any mortgage which may now or hereafter
encumber The Ground Lease or Landlord's interest in the Building, a non-
disturbance agreement in the form then customarily used by such ground
lessor and/or mortgagee, providing in any event in substance that so
long as Tenant is not in default under this Lease beyond any applicable
notice and/or grace period, then the grantor of such non-disturbance
agreement will not disturb Tenant's occupancy or terminate this Lease
or take any action to recover possession of the demised premises,
notwithstanding any default under, or termination of, such ground lease
or any foreclosure of such mortgage Tenant agrees to execute and
deliver the aforedescribed non-disturbance agreements. Any fees or
costs imposed by the grantor of the non-disturbance agreement or its
attorneys for the granting of such non-disturbance agreement, shall be
shared equally by Landlord and Tenant.
</PAGE>
<PAGE>
-85-
Article 49
Renewal Option
Tenant shall have the option to extend and renew the term of this
Lease with respect to the then existing demised premises in its then
"as is" condition, for one (1) additional period of five (5) years
commencing on the first day of the thirteenth Lease Year, and ending on
the last day of the seventeenth Lease Year, upon the same terms and
conditions as contained in this Lease (unless changed or modified by
mutual agreement) except that (i) the fixed annual rental rate, without
electricity (but subject to increase pursuant to Section 27.04 and to
escalation additional rents pursuant to Article 46 hereof), for the
extended term shall be a sum equal to the fair and reasonable annual
market rental value of the demised premises as of the first day of the
thirteenth Lease Year, taking into account the rentals at which leases
are being concluded for comparable space in the Building and in
comparable buildings in the same rental area as the Building; (ii) for
the extended term, the terms "base year" for operating expense
escalation and "base tax year" for real estate tax escalation, under
Article 46, each shall be deemed to mean the calendar year during which
the first day of the thirteenth Lease Year occurs (so that taxes for
the base tax year will be the average of the taxes payable for two (2)
different tax years), the "comparative year(s)" under Article 46 shall
be unchanged; and (iii) this Lease, as extended, shall not contain the
renewal option provided in this Article or the rent credit or work
contribution set forth in Article 45.
The exercise of such option shall only be effective upon, and in
strict compliance with, the following terms and conditions:
1. Written notice of such election shall be given by Tenant to
Landlord not later than twelve (12) months prior to the expiration date
of the initial term (the "Initial Term") of this Lease. Time shall be
of the essence in connection with the exercise of any election of
Tenant hereunder.
2. The fair and reasonable annual market rental value of the
demised premises effective as of the commencement of the extended term
shall take into account, also, the five (5) year term of the extension,
and it shall be determined, as aforesaid, during the last nine (9)
months of the Initial Term. Landlord and Tenant shall seek to agree as
to the amount of such fair and reasonable annual market rental value
for the demised premises. If they shall not agree as to such value by
the start of the last eight (8) months of the Initial Term, then and in
such event said fair and reasonable annual market rental value shall be
determined by appraisal as hereinafter in this Article provided.
</PAGE>
<PAGE>
-86-
Notwithstanding the foregoing, and any appraisal as hereinafter
provided, the parties understand and agree that in no event shall the
fixed annual rental rate (without electricity) for the extended term be
less than the aggregate of the fixed annual rental rate (without
electricity) payable as of the last month of the Initial Term, plus the
sum of the operating expense escalation and real estate tax escalation
additional tents payable under Article 46 for the last twelve (12)
months of the Initial Term.
If at the commencement date of the extended term, the amount of
the fixed annual rental rate payable during said term in accordance
with the foregoing paragraphs of this Article shall not have been
determined, then, pending such determination, Tenant shall pay fixed
annual rent at a rate equal to 120% of the fixed annual rental rate
payable hereunder as of the last month of the initial term of this
Lease (the "Temporary Rate"). After the determination by appraisal of
the fair and reasonable annual market rental value of the demised
premises, if the fixed annual rental rate payable pursuant to this
Article is greater than the Temporary Rate, Tenant shall promptly pay
to Landlord the difference between the rent theretofore paid at the
Temporary Rate and the greater rental rate determined after the
appraisal; and the greater fixed annual rental rate so determined after
the appraisal shall be payable during the extended term; if said rental
rate is lower than the Temporary Rate, Landlord shall promptly remit
any overpayment made by Tenant; and the fixed annual rental rate so
determined hereunder shall be payable during the extended term.
3. Upon determination of the fixed annual rent, for the
extended term, Landlord and Tenant shall execute, acknowledge and
deliver to each other an agreement specifying the amount of the fixed
annual rental rate for such extended term (but any failure to execute
such an agreement shall not affect Tenant's obligation to pay and
Landlord's right to receive such fixed annual rent).
4. Tenant shall not be in default under any of the material
terms, covenants and conditions of this Lease beyond any grace period
hereunder (i) at the time Tenant gives written notice to Landlord of
its election to extend the term of this Lease; or (ii) at the
commencement date of the extended term.
5. If Landlord and Tenant shall be unable to agree as to the
fair and reasonable annual market rental rate by the date hereinabove
set forth, then and in such event said fair and reasonable annual
market rental value for the demised premises shall be determined as
follows:
Either party shall give a notice to the other, stating the name
and address of an impartial person to act as appraiser hereunder, and
within thirty (30) days after the receipt of such
</PAGE>
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-87-
notice, the other party shall give notice to the sender of the first-
mentioned notice, likewise, stating the name and address of an
impartial person to act as appraiser hereunder.
The appraisers so specified in such notices shall be licensed
real estate brokers doing business in the Borough of Manhattan, City
and State of New York (including such brokers who specialize in acting
as such brokers to tenants), each having not less than twenty (20)
years active experience as real estate brokers in said Borough.
In making their determinations, the appraisers shall consider and
follow the directions set forth in this Article.
Before proceeding to determine the fair and reasonable annual
market rental value of the demised premises ("the value"), as
aforedescribed, the appraisers so appointed shall subscribe and swear
to an oath fairly and impartially to determine such value. If, within
thirty (30) days following the appointment of the latter of said
appraisers, said two appraisers shall be unable to agree upon the said
value, the said appraisers shall appoint, by an instrument in writing,
as third appraiser, an impartial person, similarly qualified, who upon
taking a similar oath, shall proceed with the two appraisers first
appointed to determine the said value. The written decision of any two
of the appraisers so appointed, fixing such value, shall be binding and
conclusive on the parties.
If, within forty-five (45) days following the appointment of the
third appraiser, any two of the appraisers have not by written decision
fixed such value then the third appraiser shall find as correct the
value that was determined by either the appraiser specified by Landlord
or the appraiser specified by Tenant and render a written decision
fixing such value as the fair and reasonable annual market rental value
for the demised premises, which written decision shall be binding and
conclusive on the parties.
If, after notice of the appointment of an appraiser, the other
party shall fail, within the above specified period of thirty (30)
days, to appoint an appraiser, such appointment of a similarly
qualified appraiser may be made, upon application without notice by the
person who shall have been appointed an appraiser, by the American
Arbitration Association in New York City, (or if the American
Arbitration Association in New York City will not so act, then such
appointment shall be made by the Justice of the Supreme Court, New York
County, then presiding in Special Term, Part II thereof, or the
equivalent of said Part II). If the two appraisers aforesaid shall be
unable to agree, within thirty (30) days following the appointment of
the latter of said appraisers, upon such value and shall fail to
appoint in writing a third appraiser within fifteen (15) days
thereafter, the necessary
</PAGE>
<PAGE>
-88-
appraiser shall be appointed by said American Arbitration Association
in New York City (or by said Justice). If any appraiser appointed as
aforesaid by either of the parties, by said American Arbitration
Association, by said Justice, or by the two appraisers so appointed,
shall die, be disqualified or incapacitated or shall fail or refuse to
act, before such value shall have been determined, the necessary
appraiser shall be promptly appointed by the person or persons who
appointed the appraiser who shall have died, become disqualified or
incapacitated, or who shall have failed or refused to act, as
aforesaid.
Landlord and Tenant shall each pay the fees of the person acting
as appraiser hereunder for Landlord and Tenant, respectively, and
Landlord and Tenant shall each pay one-half (1/2) of the fees of any
third appraiser appointed pursuant to the provisions of the preceding
paragraph
</PAGE>
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Article 50
Expansion Space
If, at any time during the initial term only (and not during any
renewal term) of this Lease, Tenant notifies Landlord that Tenant needs
and wants additional expansion space, and such space of up to 15,000
rentable square feet on any floor in the same elevator bank as the
premises originally demised hereunder is then vacant and available for
leasing by Landlord (i.e., not currently under offer to a proposed
tenant or subject to the option of another tenant; and subject to the
right of any existing tenant to renew and extend its occupancy of such
space), then, provided Tenant is not then in default beyond any grace
period under any of the material terms, covenants or conditions of this
Lease, Tenant shall have the option(s) to add to the premises demised
hereunder all but not part of such space (hereinafter call the
"Expansion Space(s)"), but only upon strict compliance with the terms
and conditions set forth herein.
Tenant shall give Landlord written notice by certified or
registered mail, return receipt requested, of its election so to add
all but not part of the Expansion Space(s) to the demised premises,
which notice shall be given no later than ten (10) days after written
notice from Landlord of the availability of such Expansion Space.
Time shall be of the essence in connection with the exercise by
Tenant of any option hereunder.
The term of the leasing of such Expansion Space(s) shall commence
on the first day of the month following the month in which Tenant
exercises the within option, and shall end on the expiration or sooner
termination date of the initial term of this Lease, or, if the Tenant
exercises its renewal option as in Article 49 provided, the expiration
or sooner termination date of the renewal term, but in no event shall
the commencement date of the term of the leasing of any Expansion Space
be later than the last day of the seventh Lease Year, so that the term
of the leasing of any Expansion Space shall in no event be less than
five (5) years.
For the Expansion Space(s), the fixed annual rental rate (without
electricity) shall be a sum equal to the then fair and reasonable
annual market rental value of the Expansion Space(s), taking into
account the rentals at which leases are being concluded for comparable
space in the Building and in comparable buildings in the same rental
area as the Building.
In the event Tenant exercises the within option, Landlord and
Tenant shall promptly seek to agree as to the amount
</PAGE>
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of such fair and reasonable annual market rental value for the
Expansion Space(s). If they shall not agree as to such value within
thirty (30) days after the exercise of such option, then and in such
event said fair and reasonable annual market rental value shall be
determined in accordance with he provisions of paragraph 5 of Article
49 (Renewal Option).
Notwithstanding the foregoing, and any appraisal as in Article 49
provided, the parties understand and agree that in no event shall the
fixed annual rental rate (without electricity) for the Expansion
Space(s) be less than the aggregate of the fixed annual rental rate
(without electricity) payable for the within demised premises
(proportionately adjusted for the size of the Expansion Space(s)) as of
the month during which Tenant exercises the within option(s) (the
"Option Month"), plus the sum of the operating expense escalation and
real estate tax escalation additional rents payable for the within
demised premises (proportionately adjusted for the size of the Option
Space(s)) under Article 45 for the twelve (12) month period ending with
such Option Month.
If at the commencement date of the term of the leasing of the
Expansion Space(s), the amount of the fixed annual rental rate payable
during said term in accordance with the foregoing paragraphs of this
Article shall not have been determined, then, pending such
determination, Tenant shall pay fixed annual rent for the Expansion
Space(s) at a rate equal 120% of the fixed annual rental rate payable
for the within demised premises (proportionately adjusted for the size
of the Expansion Space(s)) as of the Option Month (the "Temporary
Option Rate"). After the determination by appraisal of the fair and
reasonable annual market rental value of the Expansion Space(s), if the
fixed annual rental rate payable pursuant to this Article is greater
than the Temporary Option Rate, Tenant shall promptly pay to Landlord
the difference between the rent theretofore paid at the Temporary
Option Rate and the greater rental rate determined after the appraisal;
and the greater fixed annual rate so determined after the appraisal
shall be payable with respect to the Expansion Space; if said rental
rate is lower than the Temporary Option Rate, Landlord shall promptly
remit any overpayment made by Tenant; and the fixed annual rental rate
so determined hereunder shall be payable with respect to the Expansion
Space.
Tenant agrees to accept the Expansion Space(s) in its then "as
is" condition, with no obligation in Landlord to do any work therein or
thereto, and Landlord need not demolish or erect demising walls, to
make the Expansion Space suitable and ready for Tenant's occupancy and
use.
The base year for expense escalation and the base tax year for
tax escalation under Article 46 hereof shall be the calendar year
during which the commencement date of the term of
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the leasing of the Expansion Space occurs. "The Percentage(s)" for the
Expansion Space(s) shall be determined in accordance with Article 45
and Landlord's then standard practice for measuring space in the
Building. Otherwise, the Expansion Space(s) shall be added to the
demised premises pursuant to all of the applicable terms, covenants and
conditions of this Lease, including, without limitation, an ERIF
computed in accordance with the provisions of Section 27.04
</PAGE>
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Article 51
Miscellaneous
A. Supplementing Section 5.01 hereof, Tenant agrees that it shall
be responsible for compliance with all New York City and State and
Federal disability laws, rules and regulations with respect to the
entire demised premises.
B. Landlord represents that the demised premises are presently in
compliance with all applicable Environmental Laws (as hereinafter
defined) affecting the demised premises.
For purposes of this Lease, the term "Environmental Laws" shall
mean all applicable statutes, approvals, plans, authorizations,
concessions, franchises, agreements and similar items, of or with any
and all governmental agencies, departments, commissions, boards,
bureaus or instrumentalities of the United States of America, states
and political subdivisions thereof and all applicable judicial and
administrative and regulatory decrees, judgments and orders relating to
the protection of human health or the environment, including, without
limitation, (i) all requirements, including, but not limited to, those
pertaining to reporting, licensing, permitting, investigation and
remediation of emissions, discharges, releases or threatened releases
of hazardous materials, chemicals, hazardous substances, toxic
substances, or hazardous wastes, including, but not limited to,
asbestos and PCBs (collectively, "Hazardous Materials"), into the air,
surface water, groundwater or land, or relating to the manufacture,
distribution, processing, use, treatment, storage, disposal, transport
or handling of Hazardous Materials; and (ii) all requirements
pertaining to the protection of the health and safety of employees or
the public.
C. Landlord represents that the Building is presently in
compliance with New York City Local Law 5.
D. Supplementing Section 27.01, Tenant may use the freight
elevators in the Building, on a nonexclusive basis, during such
elevators' normal hours of operation, without any charge to Tenant but
subject to Landlord's rules and regulations regarding such use, as same
may be modified and amended from time to time. Tenant may also use such
freight elevators, on a nonexclusive basis, outside of such normal
hours of operation, provided that Tenant shall first schedule an
appointment with the Building management office for such use; and
provided, further, that Tenant shall pay Landlord in accordance with
Landlord's then existing rate schedule for such after-hours use of the
freight elevators, which rate schedule shall be subject to increase
(proportionate to Landlord's increase in costs for providing such
service) from time to time during the term of this Lease; but in no
event shall
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Tenant be charged a rate which is in excess of the then Building rate
charged for such service. Any such use of the freight elevators
outside of their normal hours of operation shall also be subject to
Landlord's rules and regulations regarding such use, as same may be
modified and amended from time to time.
E. Supplementing Section 27.03 hereof, Tenant may install,
maintain and operate, at Tenant's sole cost and expense, a supplemental
air-conditioning unit(s) in and for the demised premises, which
installation shall be made in one of the notch areas of the Building
(in a location designated by Landlord), and otherwise in accordance
with plans and specifications first approved by Landlord and in
compliance with all applicable provisions of this Lease regarding
alterations and installations. The number of such supplemental units
shall also be subject to Landlord's prior approval.
Upon the expiration or sooner termination of the term of this
Lease, Tenant, at its sole cost and expense, and unless Landlord elects
otherwise in writing, shall remove any such supplemental unit from the
demised premises, as the case may be, and shall repair any damage
caused by such removal.
Tenant agrees that all charges for the electricity consumed by
the operation of such supplemental unit(s) shall be computed in
accordance with the provisions of Section 27.04 hereof.
F. Supplementing Article 40 hereof, Landlord represents and
warrants that it neither consulted nor negotiated with any broker or
finder with regard to the demised premises other than Helmsley-Spear,
Inc. and The Galbreath Company, L.P. Landlord agrees to indemnify and
save Tenant harmless from and against any claims for fees or
commissions from anyone other than Helmsley-Spear, Inc. and The
Galbreath Company, L.P. with whom Landlord has dealt in connection with
the demised premises or this Lease.
G. Landlord shall provide Tenant with access to the demised
premises on a 24 hour basis, 7 days a week, 365 days a year, subject to
emergencies and requirements of law.
H. Landlord represents that Landlord is currently in the process
of renovating the lobby of the Building. As part of such lobby
renovation, Landlord intends to install a computer operated directory
of the tenants in the Building. Landlord agrees that, at no charge to
Tenant, Landlord shall provide Tenant with up to 25 listings on any
such computer operated tenant directory installed in the lobby of the
Building by Landlord.
I. Supplementing Section 27.12 of this Lease, Landlord represents
that it is currently the policy of the Building that the cleaning
services for lavatories in the core, as set forth in
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Exhibit C hereto, are not provided, without charge, to tenants
occupying a full floor. Accordingly, Tenant agrees that, upon the
execution and delivery of this Lease, it shall enter into a service
contract directly with the cleaning contractor for the Building for the
furnishing to such lavatories of the applicable cleaning, maintenance
and supplies described in said Exhibit C. Landlord agrees that the
rates in such service contract shall not exceed the reasonable and
customary charges for such services, and that Tenant shall be entitled
to a rent credit in the amount of 50% of all charges paid by Tenant
under said contract (except for additional items not described in said
Exhibit C). Such rent credit shall be applied, until fully depleted,
to the first rents and additional rents due under this Lease after such
charges have been paid by Tenant- Tenant shall promptly pay when due
all sums which are due and payable under said service contract, and
shall provide Landlord with paid invoices for all such charges.
J. Supplementing Section 27.12 of this Lease, Landlord agrees
that, in connection with Tenant's move into the Building, Tenant shall
not be charged for the removal from the demised premises of any
cardboard boxes and other packing materials customarily used by a
normal office tenant for moving into a Building, provided such boxes
and packing materials are broken down and neatly stacked by Tenant.
K. In the event of any inconsistency between the provisions of
this Rider and the provisions of the printed form of this Lease, the
provisions of this Rider shall prevail.
L. Tenant shall have the option to occupy, on a temporary basis,
Room 2434, consisting of 8,563 rentable square feet on the 24th floor
of the Building (the "Temporary Space"). Tenant may exercise such
option by notifying Landlord thereof at any time prior to the date
which is thirty (30) days after the date of this Lease. The term of
such temporary occupancy shall commence on date Landlord receives such
notice and shall end (unless it shall sooner terminate as in this Lease
provided) on the date (the "Temporary Space Expiration Date") which
shall be the earlier to occur of (i) the Rent Commencement Date or (ii)
the effective date of any cancellation of this Lease by Tenant under
Subdivision C of Article 45; provided, however, that Tenant shall have
the right to terminate the term of its occupancy of the Temporary Space
upon three (3) days' prior notice to Landlord. Tenant agrees to take
possession of the Temporary Space in its "as is" condition with no
obligation in Landlord to do any work therein or thereto to make such
space suitable and ready for Tenant's occupancy and use. Tenant shall
surrender broom-clean possession to Landlord of the Temporary Space on
or before the Temporary Space Expiration Date (or such sooner date that
Tenant cancels its occupancy of the Temporary Space, as above
provided). For the Temporary Space, Tenant shall not be required to
pay any fixed annual rent or escalation additional rent, but Tenant
shall be required to pay an
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ERIF at the rate of $3.00 per rentable square foot per annum, under
Section 27.04, for electricity. Otherwise, Tenant's occupancy and use
of the Temporary Space shall be pursuant to all of the applicable
provisions of this Lease.
In the event that Tenant shall fail timely to vacate and
surrender the Temporary Space, then Tenant shall pay to Landlord, as
liquidated damages, for each day during which Tenant continues to
occupy the Temporary Space after the Temporary Space Expiration Date
(or such sooner date that Tenant cancels the term of its occupancy of
the Temporary Space, as above provided), $587, it being agreed that the
damage to Landlord resulting from the failure by Tenant to timely
vacate and surrender the Temporary Space will be substantial and will
be impossible of accurate measurement.
M. Landlord agrees that, at Tenant's request within a reasonable
period of time after the date of this Lease, Landlord will enter into a
license with Tenant for the use of a portion of the roof of the
building, to be designated by Landlord, for the installation,
maintenance and operation of up to nine (9) VSAT satellite dish
antennas, each with radius of not more than three and one-half (3 1/2)
feet. Such license shall include the right to install the necessary
wiring and conduit between the demised Premises and such antennas.
Such license shall be on Landlord's then standard form of antenna
license agreement for the Building, at the reasonable and customary
license fees then being charged by this Landlord and similar landlords
for such antenna installation and use of the roof of the Building.
Tenant shall be responsible for complying with all applicable laws,
rules and regulations relating to such antenna installation and use.
The installation of all antennas permitted hereunder shall be effected
as part of Tenant's Initial Alteration work under this Lease and Tenant
shall be responsible for all costs and expenses relating to the
maintenance and use of such antennas.
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Article 52
Security Deposit/Letter of Credit
A. Supplementing Article 39 of this Lease, if and so long as
Tenant is not in default under any of the material terms, covenants or
conditions of this Lease, beyond any grace period, the amount of the
security deposit required under Article 39 of this Lease shall be
reduced from $180,128 to $90,064 on the last day of the fourth Lease
Year.
B. Anything hereinabove to the contrary notwithstanding, and
supplementing Article 39 hereof, Tenant, instead of depositing cash
with Landlord as security deposit hereunder, may elect to substitute
therefor and deliver to Landlord, as and for a security deposit, an
unconditional, irrevocable commercial Letter of Credit, negotiable
(hereinafter called .'the Credit"), to be held and used under the
security deposit provisions of this Lease, which Credit shall be issued
by a bank (i) which is a member of the New York Clearing House
Association or a successor thereto or
(ii) which is reasonably acceptable to Landlord, in the amount of
$180,128 (which may be reduced as in Subdivision A above provided),
naming Landlord (or its successor as Landlord) as beneficiary and
authorizing the beneficiary to draw on the bank in said amount, or any
portion thereof, available by the beneficiary's sight draft, without
presentation of any other documents, statements or authorizations. The
Credit shall have a term of at least twelve (12) months, and it shall
by its terms be renewed, automatically, each year, by the bank, unless
the bank gives written notice to the beneficiary, at least forty-five
(45) days prior to the expiration date of the then existing Credit that
the bank elects that it not be renewed The Credit shall be
transferable. Tenant agrees that it shall pay to Landlord any transfer
fees imposed by the bank. The bank shall further agree with drawers,
endorsers, and all bona fide holders that drafts drawn under and in
compliance with the terms of the Credit will be duly honored upon
presentation to the bank at an office located in Manhattan The Credit
shall be subject to the Uniform Customs and Practice for Documentary
Credits (1993 Revision} International Chamber of Commerce Publication
No. 500.
If during the term of this Lease the Credit and/or the proceeds
of all or part of said Credit become less than the full amount of the
security deposit hereinabove required, then and in such event Tenant
shall, upon demand, deposit with Landlord the amount of any security
deposit/credit theretofore used or applied by Landlord pursuant to the
terms hereof in order that Landlord shall have the full security
deposit on hand at all times during the term of this Lease. If at the
expiration of the term of this Lease, Landlord holds all or part of
said Credit, and Tenant is not in default beyond any applicable notice
and/or grace period
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under any of the material terms, covenants and conditions of this
Lease, then Landlord will turn over said Credit to Tenant or assign it
to the designee of Tenant (except, however, that, before turning over
the Credit, Landlord may draw on it and retain such amount as Landlord
reasonably deems necessary to satisfy any then existing default under
any nonmaterial provision of this Lease).
It shall be the obligation of Tenant during the term of this
Lease to deliver to Landlord at least thirty (30) days prior to the
expiration date of the then existing Credit, a renewal or extension of
said Credit or a substitute Credit (each fully complying with the
foregoing). If for any reason Landlord has not received such renewal
or extension or substitute Credit within twenty (20) days prior to the
expiration date of the then existing Credit, then and in such event
Landlord shall be free to draw on the Credit and hold and use and apply
the proceeds thereof in accordance with the security deposit provisions
of this Lease. In the event Landlord so draws upon the Credit it
shall be entitled to reimbursement for any reasonable attorneys' fees
incurred in connection therewith.
LEASE MODIFICATION AGREEMENT
AGREEMENT, made as of this 17th day of June, 1996 between
MID-CITY ASSOCIATES, a New York general partnership with an office at 60
East 42nd Street, New York, New York 10165 (hereinafter called
"Landlord"), and FIRST ALBANY COMPANIES INC., a New York corporation with
an office at 30 South Pearl Street, Albany, New York 12207 (hereinafter
called "Tenant")
W I T N E S S E T H:
WHEREAS, Landlord is the landlord and Tenant is the tenant under
that certain lease, dated as of March 21, 1996, covering the entire
rentable area of the 42nd floor (the "42nd Floor Space") of the building
("the 'Building") known as One Penn Plaza, New York, New York (which
lease, as same may have been modified through the date hereof, is
hereinafter called the "Lease") ; and
WHEREAS, the parties wish to modify the Lease so as to add to the
premises demised thereunder approximately 19,826 rentable square feet
of space on the 41st floor of the Building, approximately as
shown on the space diagram annexed hereto as Exhibit A and made a part
hereof (the "41st Floor Space"), in accordance with the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree that the Lease be, and
the Lease hereby is, modified as follows:
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1. The 41st Floor Space is hereby added to the demised premises
for a term commencing as provided in Article 45A of the Lease and ending
on the last day of the twelfth Lease Year of the Lease (unless said term
is sooner terminated as in the Lease provided). Tenant shall
receive a rent credit of $803.90 a day for each day beyond the Commencement
Date of the leasing of the 42nd Floor Space during which Landlord has
not yet made available to Tenant possession of the 41st Floor Space.
2. The 41st Floor Space is leased pursuant to all of the
applicable terms, covenants and conditions of the Lease, including the same
Lease Years as for the 42nd Floor Space, except as modified herein
and except as hereinafter provided.
3. For the 41st Floor Space:
(a) The fixed annual rental rates (without electricity, and
subject to increase by the Escalated Amount as in Article 46B on page 68
of the Lease defined and described) shall be as follows:
$293,425 a year for the first Lease Year;
$440,335 a year for the second Lease Year;
$557,705 a year for the third Lease Year;
$594,780 a year for each of the fourth and fifth Lease Years;
$614,606 a year for each of the sixth, seventh, eighth and ninth
Lease Years; and
$634,432 a year for each of the tenth, eleventh and twelfth Lease
Years.
Accordingly, for the combined 42nd Floor Space and 41st Floor
Space, the fixed annual rental rates (without
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<PAGE>
electricity, and subject to increase by the Escalated Amount as in Article
46B on page 68 of the Lease defined and described) shall be as follows:
$793,425 a year for first Lease Year;
$1,190,335 a year for the second Lease Year;
$1,507,705 a year for the third Lease Year;
$1,608,000 a year for each of the fourth and fifth Lease Years;
$1,661,600 a year for each of the sixth, seventh, eighth and
ninth Lease Years; and
$1,715,200 a year for each of the tenth, eleventh, and twelfth
Lease Years.
(b) (i) The Percentage shall mean .9568% for real
estate tax escalation which, when added to The Percentage for the 42nd
Floor Space, becomes a total of 2.5868% for the combined 42nd Floor Space
and 41st Floor Space.
(ii) The Percentage shall mean 1.028% for expense
escalation which, when added to The Percentage for the 42nd Floor Space,
becomes a total of 2.779% for the combined 42nd Floor Space and 41st Floor
Space.
(c) Supplementing Article 45F and 45G of the Lease,
Landlord will reimburse Tenant for up to the first $396,520 of the costs of
labor and materials for Tenant's Initial Alteration Work as on page 71
of the Lease described and provided, so that Landlord's total
reimbursement to Tenant, subject to the provisions of Article 4SF
and 45G, in connection with its Initial Alteration Work, shall be
$1,747,480.
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<PAGE>
Notwithstanding anything to the contrary contained in said
Articles 45F and 45G, if such costs are lower than $1,747,480,
then Tenant shall be entitled to an additional rent credit in an amount
equal to the difference between such costs and $1,747,480, which rent
credit shall be applied, until fully depleted, against the first
fixed annual rent (without electricity) due under the Lease (as
modified hereby), subject to the application of the rent credits
described in Subdivision (d) of this Paragraph 3 and Article 45H of the
Lease. Any such costs in excess of $1,747,480 shall be paid promptly by
Tenant.
(d) Supplementing Article 45H of the Lease, for the 41st
Floor Space Tenant shall be entitled to the following rent credits if
and so long as Tenant is not then in default under any of the material
terms, covenants or conditions of the Lease beyond any grace period: (i)
a credit in the amount of $19,516, to be applied against the second
month's rent due under the Lease, and (ii) a credit in the amount of
$396,520, to be applied in equal installments of $24,782.50 per month
against the 3rd through the 18th month's rent due under the Lease.
(e) Supplementing Articles 39 and 52 of the Lease, Tenant
shall deposit with Landlord an additional security deposit (or letter of
credit) in the amount of $105,738.66, which when added to the security
deposit (or letter of credit) for the 42nd Floor Space, shall make for a
total of $285,866.66. Said amount, if and so long as Tenant is not then in
default under any of the material terms, covenants or conditions of
the Lease beyond any
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<PAGE>
grace period, shall be reduced from $285,866.66 to $142,933.33 on the last
day of the fourth Lease Year.
4. The following language shall be deemed to be and hereby is
substituted in place and instead of the language of the third paragraph
on page 80B through page 80C of the Lease:
"For purposes of this cap or limitation on escalation
additional rents, the "Expense Factor" shall mean
an amount equal to (x) The Percentage for expense
escalation (2.779%) multiplied by (y) the Expenses for the
base year; and The "Tax Factor" shall mean an amount equal
to (x) The Percentage for real estate tax escalation
(2.5868%) multiplied by (y) the real estate taxes
payable for the base tax year.
The following illustrates the manner in which the above
is intended to operate:
For example only: If the Expenses for the base year
are $13,500,000 and the real estate taxes payable for
the base tax year are $12,500,000, then the Expense
Factor would be:
2.779% x $13,500,000 or $375,165
and the Tax Factor would be:
2.5868% x $12,500,000 or $323,350
accordingly, the total of Expense Payment and real estate
tax escalation additional rent payable hereunder for
the 1998 comparative year shall not be more than an
amount equal to:
10% x ($375,165 + $323,350) or $69,851.50
the total Expense Payment and real estate tax escalation
additional rent payable hereunder for the 1999
comparative year shall not be more than an amount equal
to:
20% x ($375,165 + $323,350) or $139,703
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<PAGE>
It is understood and agreed that there shall be no
limitation or so-called cap on any increase in the amount
of real estate tax or operation expense
escalation additional rent due hereunder for the
comparative year 2000 or for any comparative year
thereafter during the term of this Lease."
5. Subdivision (b) of Article 45E on page 70 of the Lease (as to
removal of internal stairway) shall be deemed to be and hereby is
deleted from the Lease. Tenant has advised it will keep and use said
internal stairway. Landlord confirms that Tenant's removal obligations
under Article 47A(i) on page 82 of the Lease shall not include the existing
internal stairway between the 42nd Floor Space and the 41st Floor Space.
6. The provisions of the cleaning schedule on page 65 of the
Lease and Article 51I on page 94 of the Lease are hereby clarified
so as to confirm that Landlord's cleaning obligation, without charge,
applies to the public lavatories on the 41st floor and not to any
lavatory within the demised premises on a multi-tenanted floor such
as the 41st floor. Such cleaning obligation of Landlord shall
include supplying the public lavatories on the 41st floor with Building
standard quantities of Building standard soap, toilet paper and paper hand
towels.
7. The words "the expense" shall be deemed added to the language
in Article 46 (a) (v) in the margin at the bottom of page 73 of the Lease,
so that it reads " (v) the term "comparative year" for tax escalation and
the expense escalation "comparative year" shall mean..., etc.".
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<PAGE>
8. The parties confirm and agree that the provisions of Article 51F
on page 93 of the Lease, respecting the Galbreath Company, L.P. and
Helmsley-Spear, Inc. are and shall be applicable to the leasing hereunder
of the 41st Floor Space.
9. In Article 50 on page 89 of the Lease, the word "originally"
shall be deemed to be and hereby is deleted from the fifth line thereof.
10. Article 45E(a) on page 70 of the Lease shall be deemed to be and
hereby is modified so that Landlord, in connection with Tenant's Initial
Alteration Work, in addition to described obligations as to asbestos, shall
also, at Landlord's expense for the 41st Floor Space, erect a demising wall
and create a public corridor.
11. Supplementing Subdivision D of Article 45 of the Lease, Tenant
agrees that, as part of its Initial Alteration Work, it shall effect all
work necessary (i) to upgrade the existing common area bathrooms on the
41st Floor so that they shall be equal to or better than Building standard
for such bathrooms; and (ii) to cause the 41st Floor to comply with all
requirements of the American with Disabilities Act of 1990 and New York
City Local Law No. 58/87 (including any rules and regulations issued
pursuant thereto) with respect to bathrooms. Such work shall be effected
in accordance with the provisions of Subdivision D of Article 45 and all
other applicable provisions of the Lease regarding alterations and
installations, including, without limitation, Articles 3 and 47. In
consideration of Tenant effecting such
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work, Landlord agrees that Tenant shall be entitled to a rent credit
in an amount equal to the 41st Floor Bathroom Credit Amount (as hereinafter
defined), which rent credit shall be applied, until fully depleted,
against the first fixed annual rent due under the Lease for the 41st
Floor Space, from and after the application of the rent credits
described in Subdivisions (d) and (c) of Paragraph B of this Agreement.
For purposes of this Agreement, the "41st Floor Bathroom Credit Amount"
shall mean the first $20,000 of the costs of labor and materials in
effecting the work described in this Paragraph 11. Tenant agrees that it
shall provide Landlord with copies of paid bills showing the cost of
such work. If such bills total less than $20,000, then the 41st Floor
Bathroom Credit shall be such lesser amount.
12. Except as herein modified, all of the other terms, covenants
and conditions of the Lease are and shall remain in full force and effect,
and are hereby ratified and confirmed.
13. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective legal representatives,
successors and permitted assigns.
IN WITNESS WHEREOF, the parties hereto have executed this
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Agreement as of the day and year first above written.
WITNESS: (As to Landlord) MID CITY ASSOCIATES
By: Helmsley Spear, Inc., Agent
/s/ Jerome D. Cirillo By: /s/Daniel E. Nerta
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WITNESS: (As to Tenant) FIRST ALBANY COMPANIES INC.
/s/ Katherine R. Shaw By: /s/ Edwin T. Brondo
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</PAGE>
<PAGE>
SECOND LEASE MODIFICATION AGREEMENT
AGREEMENT, made as of this 12th day of July 1996, between MID-CITY
ASSOCIATES, a New York general partnership with an office at 60 East 42nd
Street, New
York, New York 10165 (hereinafter called "Landlords"), and FIRST ALBANY
COMPANIES
INC., a New York corporation with an office at 30 South Pearl Street,
Albany, New York
12207 (hereinafter called "Tenant").
WITNESSETH
WHEREAS, Landlord is the landlord and Tenant is the tenant under that
certain lease, dated as of March 21, 1996, covering the entire rentable
area of the 42nd floor (the "42nd Floor Space) of the building (the
'tBuilding") known as One Penn Plaza, New York, New York, which lease was
modified by a certain Lease Modification Agreement, dated as of June 17,
1996 (which lease, as so modified, and as same may have otherwise been
modified through the date hereof, is hereinafter called the "Lease") ; and
WHEREAS, approximately 19,826 rentable square feet of space on the
41st floor of the Building (the "41st Floor Space") was added to the
premises demised under the Lease pursuant to said June 17, 1996 Lease
Modification Agreement; and
WHEREAS, the parties wish to further modify the Lease so as to add to
the premises demised thereunder approximately 8,079 rentable square feet of
space on the 40th floor of the Building, approximately as shown on the
space diagram annexed hereto as Exhibit A and made a part hereof (the "40th
Floor Space"), in accordance with the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree that the Lease be, and the Lease hereby is, modified as
follows:
1. The 40th Floor Space is hereby added to the demised premises for
a term commencing as provided in Article 45A of the Lease and ending on the
last day of the twelfth Lease Year of the Lease (unless said term is sooner
terminated as in the Lease provided).
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2. The 40th Floor space is leased pursuant to all of the applicable
terms, covenants of the Lease, including the same Lease Years as for the
41st and 42nd Floor Space, except as modified herein and except as
hereinafter provided:
3. For the 40th Floor Space:
(a) The fixed annual rental rates (without electricity, and
subject to increase by the Escalated Amount as in Article 46B on page 68 of
the Lease defined and described) shall be as follows:
$179,760 a year for each of the first and second Lease Years;
$220,800 a year for the third Lease Year;
$242,370 a year for each of the fourth and fifth Lease Years;
$250,449 a year for each of the sixth, seventh, eighth and ninth
Lease Years; and
$258,528 a year for each of the tenth, eleventh and twelfth Lease
Years.
Accordingly, for the combined 40th Floor Space, 41st Floor Space and
42nd Floor Space, the fixed annual rental rates (without electricity, and
subject to increase by the Escalated Amount as in Article 46B on page 68 of
the Lease defined and described) shall be as follows:
$973,185 a year for first Lease Year;
$1,370,095 a year for the second Lease Year;
$1,728,505 a year for the third Lease Year;
$1,850,370 a year for each of the fourth and fifth Lease Years;
$1,912,049 a year for each of the sixth, seventh, eighth and ninth Lease
Years; and
$1,973,728 a year for each of the tenth, eleventh, and twelfth Lease Years.
(b) (i) The Percentage shall mean .3899% for real estate tax
escalation which, when added to The Percentage for the 41st Floor Space and
42nd Floor Space, becomes a total of 2.9767% for the combined 40th Floor
Space, 41st Floor Space and 42nd Floor Space.
(ii) The Percentage shall mean .4189% for expense escalation which,
when added to The Percentage for the 41st Floor Space and 42nd Floor Space,
becomes a total of 3.1979% for the combined 40th Floor Space, 41st Floor
Space and 42nd Floor Space.
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(c) Supplementing Article 45F and 45G of the Lease, Landlord will
reimburse Tenant for up to the first $43,788 of the costs of labor and
materials for Tenant's Initial Alteration Work as on page 71 of the Lease
described and provided, so that Landlord's total reimbursement to Tenant,
subject to the provisions of Article 4SF and 45G, in connection with its
Initial Alteration Work, shall be $1,791,268.
Notwithstanding anything to the contrary contained in said Articles
45F and 45G, if such costs are lower than $1,791,268, then Tenant shall be
entitled to an additional rent credit in an amount equal to the difference
between such costs and $1,791,268, which rent credit shall be applied,
until fully depleted, against the first fixed annual rent (without
electricity) due under the Lease (as modified hereby), subject to the
application of the rent credits described in subdivision (d) of this
Paragraph 3 and Article 45H of the Lease. Any such costs in excess of
$1,791,268 shall be paid promptly by Tenant.
(d) Supplementing Article 45H of the Lease, for the 40th Floor Space
Tenant shall be entitled to the following rent credits if and so long as
Tenant is not then in default under any of the material terms, covenants or
conditions of the Lease beyond any grace period: (i) a credit in the amount
of $299,600, to be applied in equal installments of $14,980 per month
against the 1st through the 20th month's rent due under the Lease; and (ii)
a rent credit in the amount of $8,269.45, to be applied against the 20th
month's rent due under the Lease.
(e) Supplementing Articles 39 and 52 of the Lease, Tenant Shall
deposit with Landlord an additional security deposit (or letter of credit)
in the amount of $43,088, which when added to the security deposit (or
letter of credit) for the 41st Floor Space and 42nd Floor Space, shall make
for a total of $328,954.66. Said amount, if and so long as Tenant is not
then in default under any of the material terms, covenants or conditions of
the Lease beyond any grace period, shall be reduced from $328,954.66 to
$164,477.33 on the last day of the fourth Lease Year.
4. The following language shall be deemed to be and hereby is
substituted in place and instead of the language of the third paragraph on
page 80B through page 80C of the Lease:
"For purposes of this cap or limitation on escalation additional
rents, the "Expense Factor" shall mean an amount equal to (x)
The Percentage for expense escalation (3.1979%) multiplied by
(y) the expenses for the base year; and The "Tax Factor" shall
-3-
</PAGE>
<PAGE>
mean an amount equal to (x) The Percentage for real estate tax
escalation (2.9767%) multiplied by (y) the real estate taxes
payable for the base tax year.
The following illustrates the manner in which the above is
intended to operate:
For example only: If the Expenses for the base year are
$13,500,000 and the real estate taxes payable for the base tax
year are $12,500,000, then
the Expense Factor would be:
3.1979% x $13,500,000 or $431,716.50
and the Tax Factor would be:
2.9767% x $12,500,000 or $372,087.50
accordingly, the total of Expense Payment and real estate tax
escalation additional rent payable hereunder for the 1998
comparative year shall not be more than an amount equal to:
10% x ($431,716.50 + $372,087.50) or $80,380.40
the total Expense Payment and real estate tax escalation
additional rent payable hereunder for the 1999 comparative year
shall not be more than an amount equal to:
20% x ($431,716.50 + $372,087.50) or $160,760.80
It in understood and agreed that there shall be no limitation or
so-called cap on any increase in the amount of real estate tax or
operation expense escalation additional rent due hereunder for
the comparative year 2000 or for any comparative year thereafter
during the term of this Lease.
5. Tenant has advised it will keep and use the existing internal
stairway between the 40th Floor Space and the 41st Floor Space. Landlord
confirms that Tenant's removal obligations under Article 47A(i) on page 82
of the Lease shall not include said internal stairway.
- 4 -
</PAGE>
<PAGE>
6. The provisions of the cleaning schedule on page 65 of the Lease and
Article 51I on page 94 of the Lease are hereby clarified so as to confirm
that Landlord's cleaning obligation, without charge, applies to the public
lavatories on the 40th floor and not to any lavatory within the demised
premises on a multi-tenanted floor such as the 40th floor. Such cleaning
obligation of Landlord shall include supplying the public lavatories on the
40th floor with Building standard quantities of Building standard soap,
toilet paper and paper hand towels.
7. The parties confirm and agree that the provisions of Article 51F on
page 93 of the Lease, respecting the Galbreath Company, L.P. and Helmsley-
Spear, Inc., are and shall be applicable to the leasing hereunder of the
40th Floor Space.
8. Article 45E(a) on page 70 of the Lease shall be deemed to be and
hereby is modified so that Landlord, in connection with Tenant's Initial
Alteration Work, in addition to described obligations as to asbestos, shall
also, at landlord's expense, for the 40th Floor Space, erect a demising
wall and create a public corridor.
9. Except as herein modified, all of the other terms, covenants and
conditions of the Lease are and shall remain in full force and effect, and
are hereby ratified and confirmed.
10. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective legal representatives, successors
and permitted designs.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
WITNESS: (As to Landlord) MID CITY ASSOCIATES
By: Helmsley Spear, Inc., Agent
/s/ Jerome D. Cirillo By: /s/Daniel E. Nerta
- --------------------- -----------------------
WITNESS: (As to Tenant) FIRST ALBANY COMPANIES INC.
/s/ Katherine R. Shaw By: /s/ Edwin T. Brondo
- --------------------- -----------------------
-5-
</PAGE>
EXHIBIT 11
FIRST ALBANY COMPANIES INC. AND SUBSIDIARIES
Computation of Per Share Earnings *
(In thousands, except per share amounts)
(unaudited)
<TABLE>
Three Months Ended
December 31, December 31, September 29, September 30,
1996 1995 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Primary:
Net income $5,500 $1,553 $3,350 $4,492
================================================================================
Weighted average number
of shares outstanding
during the period 4,996 4,993 4,955 4,922
Incremental shares under
stock options computed
under the treasury stock
method using the average
market price of the issuer's
stock during the period 380 344 233 235
- --------------------------------------------------------------------------------
Weighted average shares and
common equivalent shares
outstanding 5,376 5,337 5,188 5,157
================================================================================
Net income per share $ 1.02 $ 0.29 $ 0.65 $ 0.87
================================================================================
Fully diluted:
Net income $5,500 $1,553 $3,350 $4,492
================================================================================
Weighted average number
of shares outstanding
during the period 4,996 4,993 4,955 4,922
Incremental shares under
stock options computed
under the treasury stock
method using the higher
of the average or ending
market price of the
issuer's stock at the end
of the period 380 412 268 235
- --------------------------------------------------------------------------------
Weighted average shares and
common equivalent shares
outstanding 5,376 5,405 5,223 5,157
================================================================================
Net income per share $ 1.02 $ 0.29 $ 0.64 $ 0.87
================================================================================
</TABLE>
* All per share figures have been restated for all common stock dividends
paid.
EXHIBIT 22
SUBSIDIARIES OF FIRST ALBANY COMPANIES INC.
COMPANY NAME STATE OF INCORPORATION
- ------------ ----------------------
FIRST ALBANY CORPORATION NEW YORK
FIRST ALBANY ASSET MANAGEMENT CORPORATION NEW YORK
NORTHEAST BROKERAGE SERVICES CORPORATION NEW YORK
EXHIBIT 24
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
of First Albany Companies Inc. on Form S-8 related to the First Albany
Companies Inc. Stock Bonus Plan (File No. 014140) of our report dated February
7, 1997, on our audits of the consolidated financial statements and financial
statement schedule of First Albany Companies Inc. as of December 31, 1996,
and the year ended September 29, 1995 and, for the year ended December 31, 1996,
the three months ended December 31, 1995, and the years ended September 29,
1995, and September 30, 1994, which report is included in this Annual Report
on Form 10-K.
COOPERS & LYBRAND L. L. P.
Albany, New York
March 24, 1997
<TABLE> <S> <C>
<ARTICLE> BD
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> $4,005
<RECEIVABLES> $138,167
<SECURITIES-RESALE> $2,869
<SECURITIES-BORROWED> $344,904
<INSTRUMENTS-OWNED> $162,311
<PP&E> $12,584
<TOTAL-ASSETS> $675,785
<SHORT-TERM> $134,712
<PAYABLES> $107,939
<REPOS-SOLD> $0
<SECURITIES-LOANED> $350,577
<INSTRUMENTS-SOLD> $10,075
<LONG-TERM> $6,009
$0
$0
<COMMON> $54
<OTHER-SE> $42,220
<TOTAL-LIABILITY-AND-EQUITY> $675,785
<TRADING-REVENUE> $0
<INTEREST-DIVIDENDS> $32,240
<COMMISSIONS> $42,711
<INVESTMENT-BANKING-REVENUES> $19,558
<FEE-REVENUE> $10,244
<INTEREST-EXPENSE> $26,030
<COMPENSATION> $95,691
<INCOME-PRETAX> $9,092
<INCOME-PRE-EXTRAORDINARY> $5,500
<EXTRAORDINARY> $0
<CHANGES> $0
<NET-INCOME> $5,500
<EPS-PRIMARY> $1.02
<EPS-DILUTED> $1.02
</TABLE>
