<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 26, 1998
Commission file number 0-14140
First Albany Companies Inc.
(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 South Pearl St., Albany, NY 12207
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(518) 447-8500
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding months (or for such shorter
period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes X (1) No
------- --------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
6,192,331 Shares of Common Stock were outstanding as of the close of
business on July 20, 1998.
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
PAGE
Part I - Financial Information
Item 1. Financial Statements
Condensed Consolidated Statements of Financial
Condition at June 26, 1998 and December 31, 1997..... 3
Condensed Consolidated Statements of Operations
for the Three Months and Six Months Ended
June 26, 1998 and June 27, 1997..................... 4
Condensed Consolidated Statements of Cash Flows
for the Six Months Ended June 26, 1998
and June 27, 1997................................... 5
Notes to Condensed Consolidated Financial
Statements........................................... 6-11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations....... 12-18
Part II - Other Information
Item 1. Legal Proceedings................................... 19
Item 4. Submission of matters to a vote of security holders.. 19-20
Item 6. Exhibits and Reports on Form 8-K..................... 21-23
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
June 26, December 31,
1998 1997
(In thousands of dollars) (Unaudited)
<S> <C> <C>
- -----------------------------------------------------------------------------
Assets
Cash $1,717 $ 951
Securities purchased under agreement to resell 804 5,299
Securities borrowed 502,062 468,786
Receivables from:
Brokers, dealers and clearing agencies 4,375 4,421
Customers 219,816 182,976
Others 7,261 7,760
Securities owned 183,654 121,116
Investments 8,324 7,026
Office equipment and leasehold 12,695 14,057
improvements, net
Other assets 15,950 19,529
- -----------------------------------------------------------------------------
Total assets $956,658 $831,921
=============================================================================
Liabilities and Stockholders' Equity
Liabilities
Short-term bank loans $179,752 $99,702
Securities sold under agreement to
repurchase 891
Securities loaned 597,036 547,847
Payables to:
Brokers, dealers and clearing agencies 5,976 2,955
Customers 46,834 49,181
Others 26,796 37,201
Securities sold but not yet purchased 13,432 8,440
Accounts payable 5,367 4,196
Accrued compensation 11,242 13,025
Accrued expenses 6,232 6,076
Notes payable 5,958 7,271
Obligations under capitalized leases 3,389 3,088
- -----------------------------------------------------------------------------
Total liabilities 902,014 779,873
- -----------------------------------------------------------------------------
Commitments and Contingencies
Subordinated debt 7,500 7,500
- -----------------------------------------------------------------------------
Stockholders' Equity
Common stock 62 59
Additional paid-in-capital 37,572 33,024
Retained earnings 9,743 12,070
Less treasury stock at cost (233) (605)
- -----------------------------------------------------------------------------
Total stockholders' equity 47,114 44,548
Total liabilities and stockholders' equity $ 957,658 $ 831,921
=============================================================================
</TABLE>
See notes to the condensed consolidated financial statements.
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
Three Months Ended Six Months Ended
(In thousands of dollars June 26, June 27, June 26, June 27,
except for per share 1998 1997 1998 1997
and outstanding share
amounts)
<S>
- -----------------------------------------------------------------------------
Revenues <C> <C> <C> <C>
Commissions $ 14,661 $ 12,088 $ 29,368 $ 23,668
Principal transactions 16,456 16,513 38,501 31,080
Investment banking 9,079 3,638 15,203 6,834
Interest 11,969 10,891 23,182 20,942
Fees and other 3,292 2,640 6,301 5,304
- -----------------------------------------------------------------------------
Total revenues 55,457 45,770 112,555 87,828
Interest expense 9,871 9,516 18,976 17,940
- -----------------------------------------------------------------------------
Net revenues 45,586 36,254 93,579 69,888
- -----------------------------------------------------------------------------
Expenses (excluding interest)
Compensation and benefits 31,726 24,079 66,230 46,968
Clearing, settlement and 1,034 815 1,902 1,553
brokerage costs
Communications and data
processing 3,482 3,173 6,706 6,302
Occupancy and depreciation 3,312 3,341 6,537 6,448
Selling 1,928 1,959 3,755 3,714
Other 2,216 2,566 4,295 4,553
- -----------------------------------------------------------------------------
Total expenses (excluding
interest) 43,698 35,933 89,425 69,538
- -----------------------------------------------------------------------------
Income before income taxes 1,888 321 4,154 350
Income tax expense 801 130 1,660 94
- -----------------------------------------------------------------------------
Income before extraordinary items 1,087 191 2,494 256
- -----------------------------------------------------------------------------
Extraordinary gain, net of taxes 305
- -----------------------------------------------------------------------------
Net income $1,087 $ 191 $2,494 $ 561
=============================================================================
Basic Earnings Per Share:
Income before extraordinary
gain $ 0.18 $ 0.03 $ 0.40 $ 0.04
Extraordinary gain 0.00 0.00 0.00 0.05
- -----------------------------------------------------------------------------
Net income $ 0.18 $ 0.03 $ 0.40 $ 0.09
=============================================================================
Dilutive Earnings Per Share:
Income before extraordinary
gain $ 0.16 $ 0.03 $ 0.36 $ 0.04
Extraordinary gain 0.00 0.00 0.00 0.05
- -----------------------------------------------------------------------------
Net Income $ 0.16 $ 0.03 $ 0.36 $ 0.09
=============================================================================
Weighted average common
and common equivalent
shares outstanding:
Basic 6,194,260 5,986,230 6,185,375 5,969,753
Dilutive 6,887,183 6,470,496 6,863,835 6,411,410
=============================================================================
Dividend per common share
outstanding $ 0.05 $ 0.05 $ 0.10 $ 0.10
=============================================================================
</TABLE>
See notes to the condensed consolidated financial statements.
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE> Six Months Ended
<S> <C> <C>
June 26, June 27,
(In thousands of dollars) 1998 1997
- -----------------------------------------------------------------------------
Cash flows from operating activities:
Net income $2,494 $ 561
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization 2,236 2,180
Deferred income taxes (134) 1,620
Undistributed (earnings) loss of affiliate 490 (655)
Unrealized investment (gain) loss (1,837) (332)
Realized (gain) loss on sale of investments (54)
Services provided in exchange for
common stock 147 30
(Increase) decrease in operating assets:
Cash and securities segregated under
federal regs. (5,600)
Securities purchased under agreement
to resell 4,495 (1,013)
Net receivables from customers (39,187) (26,201)
Securities owned, net (57,547) (32,281)
Other assets 3,579 (6,495)
Increase (decrease) in operating
liabilities:
Securities loaned, net 15,913 15,253
Net payables to brokers, dealers, and
clearing agencies 3,067 (166)
Net payables to others (9,668) (20,441)
Accounts payable and accrued expenses (322) (6,131)
- -----------------------------------------------------------------------------
Net cash used in operating activities (76,328) (79,671)
- -----------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of furniture, equipment,
and leaseholds (89) (3,204)
(Increase) decrease in investments 16
Proceeds from sale of investments 66
- -----------------------------------------------------------------------------
Net cash used in investing activities (23) (3,188)
- -----------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds (payments) of short-term
bank loans 80,050 69,300
Proceeds of notes payable 5,894
Payments on notes payable (1,313) (1,000)
Payments of obligations under
capitalized leases (447) (180)
Securities sold under agreement
to repurchase (891) 5,132
Proceeds from issuance of common
stock from treasury 544 478
Net increase/(decrease) from borrowing
under line-of-credit agreements (238) 1,063
Dividends paid (588) (519)
- -----------------------------------------------------------------------------
Net cash provided by financing activities 77,117 80,168
- -----------------------------------------------------------------------------
Increase (Decrease) in cash 767 (2,691)
Cash at beginning of the year 951 4,005
- -----------------------------------------------------------------------------
Cash at end of period $ 1,717 1,314
=============================================================================
</TABLE>
See notes to the condensed consolidated financial statements.
In 1998, the Company entered into capital leases for office and
computer equipment totaling approximately $748,000.
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all normal, recurring adjustments necessary
for a fair presentation of results for such periods. The results for any
interim period are not necessarily indicative of those for the full year.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted. These consolidated financial statements
should be read in conjunction with the financial statements and notes for
the year ended December 31, 1997.
Certain amounts in the 1997 financial statements have been reclassified
to conform with the 1998 presentation.
2. Earnings Per Common Share
Basic earnings per share has been computed based upon the weighted average
number of common shares outstanding. Dilutive earnings per share has been
computed based upon the weighted average common shares outstanding for all
potentially dilutive common stock outstanding during the reporting period.
The weighted average number of common shares and dilutive common equivalent
shares were:
<TABLE>
Three Months Ended Six Months Ended
<S> <C> <C> <C> <C>
June 26, June 27, June 26, June 27,
(In thousands of dollars, 1998 1997 1998 1997
except per share amounts)
- -----------------------------------------------------------------------------
Net income $1,087 $ 191 $2,494 $ 561
- -----------------------------------------------------------------------------
Weighted average shares
for basic earnings per share 6,194 5,986 6,185 5,970
Effect of dilutive common
equivalent shares (options) 693 484 679 441
- -----------------------------------------------------------------------------
Weighted average shares and
dilutive common equivalent
shares for dilutive earnings
per share 6,887 6,470 6,864 6,411
=============================================================================
Basic earnings per share $ 0.18 $ 0.03 $ 0.40 $ 0.09
Dilutive earnings per share $ 0.16 $ 0.03 $ 0.36 $ 0.09
</TABLE>
3. Investments
At June 26, 1998 the Company owned approximately 2,037,000 common shares
(35% of the shares outstanding) of Mechanical Technology Incorporated (MTI).
The Company's investment in MTI is recorded under the equity method and
approximated $3,089,000, which included goodwill of approximately $744,000
which is being amortized over 10 years. The Company's equity in MTI's net
income, recorded on a one-quarter delay basis, was $89,000 for the three months
ended June 26, 1998.
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Continued)
The following presents unaudited summarized financial information of MTI
for the three months ended March 31, 1998:
<TABLE>
(in thousands of dollars) <C>
<S>
=================================================================
Assets $12,594
Liabilities 5,795
-----------------------------------------------------------------
Shareholder's equity $ 6,799
=================================================================
Revenues $ 6,999
Operating income 1,238
Income before loss on discontinued operations
items and income taxes 1,051
Loss from discontinued operations, net of taxes (792)
Net Income $259
=================================================================
</TABLE>
At June 26, 1998 the aggregate market value of the Company's shares of
MTI stock was $14,257,000. Under the equity method, the market value of
MTI's stock is not included in the calculation of the Company's investment.
At June 26, 1998, the Company owned 229,500 shares of META Group, Inc.
The fair market value of this investment was $5,235,000. During the three
months ended June 26, 1998 the Company has recorded unrealized gains of
$263,000 with respect to this investment. The shares at June 26, 1998
reflect a three for two stock split with a record date of May 22, 1998 and
payment date of June 11, 1998 resulted in an additional issuance of 76,500
shares.
4. Payables to Others
Amounts payable to others as of:
<TABLE> <C> <C>
<S> June 26, December 31,
(In thousands of dollars) 1998 1997
============================================================================
Adjustment to record securities owned
on a trade date basis, net $11,971 $23,737
Borrowing under line-of-credit
agreements 10,555 10,793
Others 4,270 2,671
----------------------------------------------------------------------------
Total $26,796 $37,201
============================================================================
</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.
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Continued)
5. Notes Payable
Notes payable consists of a note for $2,520,833, which is collateralized
by fixed assets and is payable in monthly principal payments of $114,583
plus interest. The interest rate is 2.5% over the 90-day United States
Treasury Securities Rate (4.99% plus 2.5% on June 26, 1998). This note
matures April 1, 2000.
Notes payable also consists of a note for $3,437,500, which is
collateralized by fixed assets and is payable in monthly principal payments
of $104,167 plus interest. The interest rate is 2% over the 30-day London
InterBank Offered Rate ("LIBOR") (5.65625% plus 2% on June 26, 1998). One
of the more significant covenants requires First Albany Corporation to
maintain a minimum net capital (as defined by Rule 15c3-1 of the Securities
and Exchange Commission) equal to three times the required minimum net
capital. The required minimum net capital as of June 26, 1998 was $4,606,000.
The amount of net capital as of June 26, 1998 was $16,165,000. This note
matures on March 27, 2001.
6. Obligations under Capitalized Leases
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 June 26, 1998:
(In thousands of dollars)
<TABLE> ------------------------------------------------
<C> <C>
<S> 1998 $ 569
1999 1,140
2000 1,119
2001 756
2002 271
2003 24
------------------------------------------------
Total Minimum Lease Payments 3,879
Less: Amount Representing Interest 490
------------------------------------------------
Present Value of Minimum Lease Payments $ 3,389
================================================
</TABLE>
7. Subordinated Debt
The Company has a subordinated debt of $2,500,000. This debt bears
interest at 8.75%. Interest is paid monthly with the principal amount due
at maturity on December 31, 2002. The lender has the right to exercise
stock options on 28,236 shares of the Company's stock at $17.71 per share.
This right expires December 31, 2002.
The Company also has an additional subordinated debt of $5,000,000
which bears interest at 9.25%. Interest is paid monthly with the principal
amount due at maturity on December 31, 2002. The lender has the right to
exercise stock options on 92,610 shares of the Company's stock at $10.80
per share. This right expires December 31, 2002.
</PAGE>
FIRST ALBANY COMPANIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Continued)
Both loan agreements include restrictive financial covenants. One of
the more significant covenants requires the Company to maintain a minimum
net capital (as defined by Rule 15c3-1 of the Securities and Exchange
Commission) equal to three times the required net capital. The amount of
required net capital as of June 26, 1998 was $4,606,000. The amount of net
capital as of June 26, 1998 was $16,165,000.
8. Commitments and Contingencies
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's broker-dealer subsidiary, First Albany Corporation (the
Corporation), has been named in a lawsuit relating to certain real estate
investments (in which the provider of these investments was also named) for
which the Corporation acted as placement agent. Plaintiff claims damages
of approximately $16 million and the right to treble damages under the
Indiana RICO statute. The Corporation intends to vigorously defend this
action. Management believes that the risk of any possible liability to the
Corporation cannot be currently estimated. At this time, based on advice
of counsel, management believes that resolution of this matter will not
have a material effect on the financial position of the Corporation,
although it may have a material effect on the results of operations in the
period in which it is resolved. The case is currently scheduled for trial
in 1999.
9. Stockholders' Equity
In January 1998, the Board of Directors declared the regular quarterly
cash dividend of $0.05 per share paid on February 26, 1998, to shareholders
of record on February 12, 1998.
In April 1998, the Board of Directors declared the regular quarterly
dividend of $0.05 per share for the first quarter, ended March 27, 1998,
along with a 5% stock dividend. Both are payable on May 26, 1998 to
shareholders of record on May 12, 1998.
In July 1998, the Board of Directors declared the regular quarterly
dividend of $0.05 per share for the second quarter, ended June 26, 1998,
payable on August 25, 1998 to shareholders of record on August 11, 1998.
On March 27, 1998, the Board of Directors adopted a Shareholder Rights
Plan. The rights will be distributed as a dividend of one right for each
share of First Albany Companies Inc. common stock outstanding, with a
record date of March 30, 1998. The Shareholder Rights Plan is intended to
deter coercive takeover tactics and strengthen the Company's ability to
deal with an unsolicited takeover proposal.
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Continued)
The rights will expire on March 30, 2008. Each right will entitle the
holder to buy one one-hundredth of a newly-issued share of preferred stock
at an exercise price of $56.00. The rights will become exercisable at such
time as any person or group acquires more than 15% of the outstanding shares
of common stock of the Company (subject to certain exceptions) or within 10
days following the commencement of a tender offer that will result in any
person or group owning such percentage of the outstanding voting shares.
Upon any person or group acquiring 15% of the outstanding shares of voting
stock, each right will entitle its holder to buy shares of First Albany
Companies Inc. common stock (or of the stock of the acquiring company if it
is the surviving entity in a business combination) having a market value
equal to twice the exercise price of each right. The rights will be
redeemable at any time prior to their becoming exercisable.
10. Net Capital Requirements
The Company's broker-dealer subsidiary, First Albany Corporation, is
subject to the Securities and Exchange Commission's Uniform Net Capital
Rule which requires the maintenance of a minimum net capital as calculated
and defined by the Rule. As of June 26, 1998, the broker-dealer
subsidiary had aggregate net capital, as defined, of $16,165,000-exceeding
the required net capital by $11,559,000.
11. 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
certain securities positions in the Company's inventory. Gains and losses
are included as revenues from principal transactions.
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 or losses 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.
12. New Accounting Standards
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131"). SFAS 131 is effective for
fiscal years beginning after December 15, 1997. SFAS 131 establishes
standards for reporting financial and descriptive information about an
enterprise's operating segments in its annual financial statements and
selected segment information in interim financial reports. SFAS 131 does not
need to be applied to interim financial statements in the year adopted.
Reclassification or restatement of comparative financial statements or
financial information for earlier periods is required upon adoption of
SFAS 131. Application of SFAS 131 is not expected to have an impact on the
Company's consolidated financial position, results of operations or earnings
per share data as currently reported.
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Continued)
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 is
effective for all fiscal quarters of fiscal years beginning after
June 15, 1999. SFAS 133 establishes accounting and reporting standards
for derivative instruments including certain derivative instruments embedded
in other contracts and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value.
Reclassification or restatement of comparative financial statements or
financial information is not permitted under this statement. Management has
not yet determined the impact, if any, that adaption of SFAS 133 would have
on the financial statements.
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
<TABLE>
<S> <C> <C> <C> <C>
1998 vs.
Three Months Ended 1997 Percentage
June 26, June 27, Increase Increase
(In thousands of dollars) 1998 1997 (Decrease) (Decrease)
----------------------------------------------------------------------------
Revenues
Commissions $14,661 $12,088 $ 2,573 21%
Principal transactions 16,456 16,513 (57) 0%
Investment banking 9,079 3,638 5,441 150%
Interest income 11,969 10,891 1,078 10%
Fees and others 3,292 2,640 652 25%
----------------------------------------------------------------------------
Total revenues 55,457 45,770 9,687 21%
Interest expense 9,871 9,516 355 4%
----------------------------------------------------------------------------
Net revenues 45,586 36,254 9,332 26%
----------------------------------------------------------------------------
Expenses (excluding interest)
Compensation and benefits 31,726 24,079 7,647 32%
Clearing, settlement and
brokerage costs 1,034 815 219 27%
Communications and
data processing 3,482 3,173 309 10%
Occupancy and depreciation 3,312 3,341 (29) (1%)
Selling 1,928 1,959 (31) (2%)
Other 2,216 2,566 (350) (14%)
----------------------------------------------------------------------------
Total expenses (excluding
interest) 43,698 35,933 7,765 22%
----------------------------------------------------------------------------
Income before income taxes 1,888 321 1,567 488%
Income tax expense 801 130 671 516%
----------------------------------------------------------------------------
Net Income $1,087 $ 191 $ 896 469%
============================================================================
Net interest income
Interest income $11,969 $10,891 $1,078 10%
Interest expense 9,871 9,516 355 4%
----------------------------------------------------------------------------
Net Interest Income $2,098 $1,375 $ 723 53%
============================================================================
</TABLE>
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Continued)
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial position
and results of operations during the periods included in the accompanying
condensed consolidated financial statements.
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.
Results of Operations
Three Month Periods Ended June 26, 1998 and June 27, 1997
- ---------------------------------------------------------
Net Income
Net income for the quarter ended June 26, 1998 was $1.1 million or $0.18
basic earnings per share ($0.16 dilutive earnings per share), compared to
$0.2 million or $0.03 basic earnings per share ($0.03 dilutive earnings per
share) in the comparable 1997 period. All of the Company's business units
showed significant net revenue gains in the second quarter of 1998 compared
to the second quarter of 1997. Net revenue gains reflect an increase in each
of the Company's divisions. Compared to the same period last year, net
revenues in the Equities Division and the Taxable Fixed Income Division
increased over 40%; net revenues in the Private Client Group increased over
25%, and net revenues in the Municipal Division were up approximately 10%.
The Company's margins continue to show significant improvement in comparison
to 1997's results, as we maintain our focus on controlling expenses.
Commissions
Commission revenues for this year's second quarter increased $2.6 million
or 21% compared to the comparable 1997 period, reflecting active trading in
all major markets. Revenues from mutual fund commissions increased $1.3
million while revenues from listed and over-the-counter commissions increased
$1.3 million.
Investment Banking
Investment banking revenues for this year's second quarter increased
$5.4 million or 150% compared to the comparable 1997 period, primarily due
to favorable market conditions and an increase in equity offerings, in
which the Company participated as manager or co-manager. Revenues from
selling concessions increased $3.4 million (equities increased $1.4 million,
municipals increased $1.3 million and taxable fixed income increased
$0.7 million), underwriting fees remained constant, and investment banking
fees increased $2.0 million (equities increased $1.1 million and municipals
increased $0.9 million).
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Continued)
Fees and Others
Fees and other revenues for this year's second quarter increased $0.7
million or 25% compared to the same period of 1997, reflecting increased
revenues from investment advisory services and service charges.
Net Interest Income
Net interest income for this year's second quarter increased $0.7
million compared to the same period of 1997, due primarily to higher levels
of margin borrowings by the Company's clients.
Compensation and Benefits
Compensation and benefits for this year's second quarter increased
$7.6 million or 32% compared to the same period of 1997, due primarily to the
higher levels of revenues and profitability.
Clearance, Settlement and Brokerage Costs
Clearance, settlement and brokerage costs for this year's second quarter
increased $0.2 million or 27% compared to the same period of 1997,
due primarily to increases in listed agency transactions and customer related
activity.
Other
Other expenses for this year's second quarter decreased $0.4 million or
14% due mainly to a decrease in consulting costs, and a decrease in costs
related to the production of our customer statements.
Income Taxes
Income taxes increased $0.7 million compared to the same period of 1997,
due to an increase in pre-tax earnings.
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS COMPARISON OF 1998 VS. 1997
<TABLE>
<S> <C> <C> <C> <C>
1998
vs.
Six Months Ended 1997 Percentage
June 26, June 27, Increase Increase
(In thousands of dollars) 1998 1997 (Decrease) (Decrease)
- -----------------------------------------------------------------------------
Revenues
Commissions $29,368 $23,668 $5,700 24%
Principal transactions 38,501 31,080 7,421 24%
Investment banking 15,203 6,834 8,369 122%
Interest income 23,182 20,942 2,240 11%
Fees and others 6,301 5,304 997 19%
- -----------------------------------------------------------------------------
Total revenues 112,555 87,828 24,727 28%
Interest expense 18,976 17,940 1,036 6%
- -----------------------------------------------------------------------------
Net revenues 93,579 69,888 23,691 34%
=============================================================================
Expenses (excluding interest)
Compensation and benefits 66,230 46,968 19,262 41%
Clearing, settlement and
brokerage cost 1,902 1,553 349 22%
Communications and
data processing 6,706 6,302 404 6%
Occupancy and depreciation 6,537 6,448 89 1%
Selling 3,755 3,714 41 1%
Other 4,295 4,553 (258) (6%)
- -----------------------------------------------------------------------------
Total expenses (excluding
interest) 89,425 69,538 19,887 29%
- -----------------------------------------------------------------------------
Income before income taxes 4,154 350 3,804 1087%
Income tax expense 1,660 94 1,566 1666%
- -----------------------------------------------------------------------------
Income before extraordinary items 2,494 256 2,238 874%
Extraordinary gain, net of taxes 305 (305) (100%)
- -----------------------------------------------------------------------------
Net income $2,494 $ 561 $1,933 345%
=============================================================================
Net interest income
Interest income $23,182 $20,942 $2,240 11%
Interest expense 18,976 17,940 1,036 6%
- -----------------------------------------------------------------------------
Net interest income $ 4,206 $ 3,002 $1,204 40%
=============================================================================
</TABLE>
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Six Months Periods Ended June 26, 1998 and June 27, 1997
- --------------------------------------------------------
Net Income
Net income for the six months ended June 26, 1998, was $2.5 million or
$0.40 basic earnings per share ($0.36 dilutive earnings per share),
compared to $0.6 million or $0.09 basic earnings per share ($0.09 dilutive
earnings per share) in the comparable 1997 period.
Commissions
Commission revenues increased $5.7 million or 24% in this year's six-
month period reflecting active trading in all major markets. Revenues from
listed and over-the-counter agency commissions increased $2.8 million or
19% while mutual fund commission revenues increased $2.7 million or 37%.
Principal Transactions
Principal transactions increased $7.4 million or 24% in this year's
first six-months. This was comprised of an increase in equity securities
of $0.5 million, an increase in taxable fixed income of $7.4 million,
partially due to increased opportunity in international markets, an increase
in investment income of $1.2 million and a decrease in municipal bonds of
$1.7 million.
Investment Banking
Investment banking revenues increased $8.4 million or 122% in this year's
first six-months, primarily due to favorable market conditions and an
increase in equity offerings in which the Company participated as manager or
co-manager. Revenues from selling concessions increased $4.8 million
(equities increased $1.6 million, municipals increased $2.0 million and
taxable fixed income increased $1.2 million), underwriting fees increased $0.1
million, and investment banking fees increased $3.5 million (equities
increased $2.4 and municipals increased $1.1 million).
Net Interest Income
Net interest income for this year's first six-months increased $1.2
million compared to the same period of 1997, due primarily to higher levels
of margin borrowings by the Company's clients.
Compensation and Benefits
Compensation and benefits increased $19.2 million or 41%, due primarily
to higher levels of revenues and profitability.
Clearance, Settlement and Brokerage Costs
Clearance, settlement and brokerage costs for this year's second quarter
increased $0.3 million or 22% compared to the same period of 1997, due primarily
to increases in listed agency transactions and customer related activity.
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Income Taxes
Income taxes increased $1.6 million due to an increase in pre-tax
earnings. The Company's effective tax rate increased as a result of a
decreased proportion of tax-exempt interest income to "income before
taxes".
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 along with
receivables from customers and payable to customers will fluctuate primarily
due to the current level of business activity in these areas. Securities
owned will fluctuate as a result of the changes in the level of positions
held to facilitate customer transactions and changes in market conditions.
Short-term bank loans and securities loaned, net, increased primarily due to
an increase in net customer receivables and an increase in securities owned.
Receivables from others and payables to others will fluctuate primarily due
to the change in the adjustment to record securities owned on a trade date
basis.
At June 26, 1998, First Albany Corporation, a registered broker-dealer
subsidiary of First Albany Companies Inc., was 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 $250,000,000 of
which approximately $70,248,000 were unused as of June 26, 1998-will provide
sufficient resources to meet present and reasonably foreseeable short-term
financing needs.
In January 1998, the Board of Directors declared the regular quarterly
cash dividend of $0.05 per share paid on February 26, 1998, to shareholders
of record on February 12, 1998.
In April 1998, the Board of Directors declared the regular quarterly
dividend of $0.05 per share for the first quarter ended March 27, 1998,
along with a 5% stock dividend. Both were paid on May 26, 1998 to
shareholders of record on May 12, 1998.
In July 1998, the Board of Directors declared the regular quarterly
dividend of $0.05 per share for the second quarter ended June 26, 1998,
payable on August 25, 1998 to shareholders of record on August 11, 1998.
The Company believes that funds provided by operations will also
provide sufficient resources for the acquisition of office equipment and
leasehold improvements, current long-term loan repayment requirements, and
other long-term requirements.
</PAGE>
<PAGE>
FIRST ALBANY COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Continued)
New Accounting Standards
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131"). SFAS 131 is effective for
fiscal years beginning after December 15, 1997. SFAS 131 establishes
standards for reporting financial and descriptive information about an
enterprise's operating segments in its annual financial statements and
selected segment information in interim financial reports. SFAS 131 does not
need to be applied to interim financial statements in the year adopted.
Reclassification or restatement of comparative financial statements or
financial information for earlier periods is required upon adoption of
SFAS 131. Application of SFAS 131 is not expected to have an impact on the
Company's consolidated financial position, results of operations or earnings
per share data as currently reported.
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 is effective for
all fiscal quarters of fiscal years beginning after June 15, 1999. SFAS 133
establishes accounting and reporting standards for derivative instruments
including certain derivative instruments embedded in other contracts and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position and
measure those instruments at fair value. Reclassification or restatement of
comparative financial statements or financial information is not permitted
under this statement. Management has not yet determined the impact, if any,
that adaption of SFAS 133 would have on the financial statements.
Year 2000
The Company relies on both internal systems and systems of other
parties in regard to its business, accounting and operational software. As
the millennium approaches, the Company is working toward becoming year 2000
compliant. Many of our internal systems are already year 2000 compliant.
The Company currently has plans that if successful will have all internal
systems year 2000 compliant during 1998.
The Company has contacted its outside vendor software providers
regarding the year 2000 which have indicated they have developed specific
plans to address this issue. These vendors are in the process of
implementing these plans with an expected completion date of late 1998. If
any vendor is not successful, the Company will evaluate selecting alternative
vendors at that time.
The incremental costs of this project are estimated to be approximately
$1.1 million. Most of these costs are attributable to software/hardware
upgrades. The Company presently believes that with modifications to existing
software or conversion to new software, year 2000 problems can be effectively
avoided. However, if such modifications and conversions are not made, or are
not completed timely, year 2000 problems could have a material impact on the
operations of the Company.
</PAGE>
<PAGE>
Part II-Other Information
Item 1. 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
most 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.
A. Annual meeting was held on May 14, 1998
B. Elected as Directors: (There were no broker non-votes with respect
to the election of Directors).
<TABLE> <C> <C> <C>
Votes For Withheld Authority
George C. McNamee 5,113,125 6,260
Alan P. Goldberg 5,114,162 4,902
Hugh A. Johnson, Jr. 5,114,483 5,223
Peter Barton 5,114,483 4,902
Anthony Boeckh 5,114,483 4,902
Walter M. Fiederowicz 5,114,483 4,902
Daniel V. McNamee, III 5,114,483 4,902
Charles L. Schwager 5,114,483 4,902
Benaree P. Wiley 5,114,483 4,902
</TABLE>
C. Other matters voted on at Annual Meeting
1. To act upon a series of proposed amendments to the Company's
Certificate of Incorporation and Bylaws to:
(a) Classify the Board of Directors into three classes,
each of which, after a transitional arrangement, will
serve for three years, with one class being elected
each year;
For: 3,835,459
Against: 186,300
Abstain: 106,444
Broker Non-Votes: 991,182
(b) Provide that the number of directors of the Company
shall be fixed from time to time by the Board of
Directors within the range provided in the Bylaws of
the Company;
For: 3,596,780
Against: 421,449
Abstain: 108,837
Broker Non-Votes: 992,319
</PAGE>
<PAGE>
(c) Provide that directors may be removed for any reason
by a majority vote of the Board of Directors or may
be removed for any reason by the affirmative vote of
the holders of at least 80% of the voting power of
the Company entitled to vote generally in the election
of directors;
For: 3,550,986
Against: 512,780
Abstain: 63,300
Broker Non-Votes: 992,319
(d) Require that advance notice of shareholder proposals
and nominations and certain related information be
given in the manner provided for in the Bylaws;
For: 3,896,999
Against: 222,193
Abstain: 7,875
Broker Non-Votes: 992,318
(e) Provide that the shareholder vote required to amend
or repeal the foregoing provisions of the Certificate
of Incorporation and certain related provisions of
the Bylaws, or to adopt any provision inconsistent
therewith, shall be 80% of the voting power of the
Company entitled to vote generally in the election of
directors;
For: 3,601,093
Against: 269,292
Abstain: 257,818
Broker Non-Votes: 991,182
2. Ratified the selection of Coopers & Lybrand L.L.P. as
independent auditors of the Company for the fiscal year
ending December 31, 1998.
For: 5,109,703
Against: 7,359
Abstain: 2,323
Broker Non-Votes: 0
3. Other business coming before the meeting:
For: 4,878,064
Against: 165,155
Abstain: 76,166
Broker Non-Votes: 0
</PAGE>
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(3) (i) Articles of Incorporation
(ii) By-Laws
(11) Statement Re: Computation of Per Share Earnings.
(27) Selected Financial Data Schedule BD
(b) Reports on Form 8-K
No Form 8K was filed during the quarter ended June 26, 1998.
</PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
First Albany Companies Inc.
(Registrant)
Date: July 28, 1998 /s/ ALAN P. GOLDBERG
-----------------------------
Alan P. Goldberg
President/Director
Date: July 28, 1998 /S/ TIMOTHY R. WELLES
-----------------------------
Timothy R. Welles
Chief Financial Officer
(Principal Accounting Officer)
</PAGE>
<TABLE> <S> <C>
<ARTICLE> BD
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-26-1998
<CASH> $1,717
<RECEIVABLES> 231,452
<SECURITIES-RESALE> 804
<SECURITIES-BORROWED> 502,062
<INSTRUMENTS-OWNED> 183,654
<PP&E> 12,956
<TOTAL-ASSETS> 957,658
<SHORT-TERM> 179,752
<PAYABLES> 79,606
<REPOS-SOLD> 0
<SECURITIES-LOANED> 597,036
<INSTRUMENTS-SOLD> 13,432
<LONG-TERM> 7,500
0
0
<COMMON> 62
<OTHER-SE> 47,144
<TOTAL-LIABILITY-AND-EQUITY> 957,658
<TRADING-REVENUE> 38,501
<INTEREST-DIVIDENDS> 23182
<COMMISSIONS> 29,368
<INVESTMENT-BANKING-REVENUES> 15,203
<FEE-REVENUE> 6,301
<INTEREST-EXPENSE> 18,976
<COMPENSATION> 66,230
<INCOME-PRETAX> 4,154
<INCOME-PRE-EXTRAORDINARY> 2,494
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,494
<EPS-PRIMARY> $0.40
<EPS-DILUTED> $0.36
</TABLE>
FIRST ALBANY COMPANIES INC. (Exhibit 11)
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
June 26, June 27, June 26, June 27,
1998 1997 1998 1997
---------------------------------------------------------------------------
Basic:
Net income $1,087 $ 191 $2,494 $ 561
Weighted average number of
shares outstanding during
the period 6,194 5,986 6,185 5,970
----------------------------------------------------------------------------
Net income per share $ 0.18 $0.03 $ 0.40 $ 0.09
============================================================================
Dilutive:
Net income $1,087 $ 191 $2,494 $ 561
Weighted average number of
shares outstanding during
the period 6,194 5,986 6,185 5,970
Effective of dilutive common
equivalent shares 693 484 679 441
----------------------------------------------------------------------------
Weighted average shares and
common equivalent shares
outstanding 6,887 6,470 6,864 6,411
============================================================================
Net income per share $ 0.16 $ 0.03 $ 0.36 $ 0.09
============================================================================
</TABLE>
**Per share figures and shares outstanding have been restated for all
dividends declared.
<PAGE>
(EXHIBIT 3i)
CERTIFICATE OF AMENDMENT
OF THE CERTIFICATE OF INCORPORATION
OF FIRST ALBANY COMPANIES INC.
UNDER SECTION 805 OF THE NEW YORK BUSINESS CORPORATION LAW
__________________________________________
WE, THE UNDERSIGNED, George C. McNamee and Stephen P. Wink, being
respectively the Chairman of the Board and Secretary of First Albany
Companies, Inc., (the "Corporation") hereby certify:
1. The name of the Corporation is First Albany Companies Inc.
2. The certificate of incorporation of the Corporation was filed
by the department of State on November 4, 1985.
3. The certificate of incorporation is hereby amended by adding
an Article SEVENTH as follows:
SEVENTH (A) The Board of Directors shall have the power to adopt,
amend and repeal Bylaws of the Corporation. Any Bylaws made by the Board of
Directors under the powers hereby conferred may be amended or repealed by the
Board of Directors or by the shareholders having voting power with respect
thereto. Notwithstanding the previous sentence and anything contained in
this Certificate of Incorporation to the contrary, Sections 1.02 and 1.13 of
Article I, Sections 2.02, 2.03, 2.05 and 2.06 of Article II and Section 6.10
of Article VI of the Bylaws of the Corporation shall not be amended or
repealed, and no provision inconsistent therewith shall be adopted, by the
shareholders without the affirmative vote of the holders of at least
80 percent of the voting power of the then outstanding Voting Stock (as
defined below), voting together as a single class. For purposes of this
Certificate of Incorporation, "Voting Stock" shall mean the outstanding
shares of capital stock of the Corporation entitled to vote generally in the
election of directors.
(B) Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of at least 80 percent
of the voting power of the then outstanding Voting Stock, voting together as
a single class, shall be required to amend or repeal, or adopt any provision
inconsistent with, this Article SEVENTH.
4. The certificate of incorporation is hereby further
amended by adding an Article EIGHTH as follows:
EIGHTH, (A) Subject to the rights of the holders of shares of any
series of Preferred Stock or any other series or class of stock as set forth
in the Certificate of Incorporation to elect additional directors under
specified circumstances, the number of directors of the Corporation shall be
fixed by the Bylaws of the Corporation and may be increased or decreased from
time to time in such manner as may be prescribed in the Bylaws.
(B) Unless and except to the extent that the Bylaws of the
Corporation shall so require, the election of directors of the Corporation
need not be by written ballot.
(C) The directors, other than those who may be elected by the
holders of shares of any series of Preferred Stock or any other series or
class of stock as set forth in this Certificate of Incorporation, shall be
divided into three classes, and designated as Class I, Class II and
</PAGE>
<PAGE>
Class III. Class I directors shall be initially elected at the 1998 annual
meeting of shareholders for a term expiring at the 1999 annual meeting of
shareholders, Class II directors shall be initially elected at the 1998
annual meeting of shareholders for a term expiring at the 2000 annual
meeting of shareholders, and Class III directors shall be initially elected
at the 1998 annual meeting of shareholders for a term expiring at the 2001
annual meeting of shareholders. At each succeeding annual meeting of
shareholders of the Corporation, the successors of the class of directors
whose term expires at that meeting shall be elected for a term expiring at
the annual meeting of shareholders held in the third year following the year
of their election, and until their successors are elected and qualified.
(D) Advance notice of shareholder nominations for the election of
directors shall be given in the manner provided in the Bylaws of the
Corporation.
(E) Subject to the rights of the holders of shares of any series
of Preferred Stock or any other series or class of stock as set forth in this
Certificate of Incorporation to elect additional directors under specified
circumstances, any director may be removed from office at any time, for any
reason by a majority vote of the Board of Directors or for any reason by the
affirmative vote of the holders of at least 80% of the voting power of the
then outstanding Voting Stock, voting together as a single class.
(F) Subject to the rights of the holders of shares of any series
of Preferred Stock or any other series or class of stock as set forth in this
Certificate of Incorporation to elect additional directors under specified
circumstances, vacancies resulting from death, resignation, retirement,
disqualification, removal from office or other cause, and newly created
directorships resulting from any increase in the authorized number of
directors in accordance with the Bylaws, may be filled only by the
affirmative vote of a majority of the remaining directors, though less than
a quorum of the Board of Directors, and directors so chosen shall hold
office for a term expiring at the next meeting of shareholders at which the
election of directors is in the regular order of business and until such
director's successor shall have been duly elected and qualified. No decrease
in the number of authorized directors shall shorten the term of any incumbent
director.
(G) Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of the holders of at
least 80 percent of the voting power of the then outstanding Voting Stock,
voting together as a single class, shall be required to amend or repeal, or
adopt any provision inconsistent with, this Article EIGHTH.
5. The amendment is authorized pursuant to the provisions of
Sections 703, 704(a), and 801 of the New York Business Corporation Law and
recommended by the Board of Directors of the Corporation at a meeting duly
held on March 27-28, 1998.
6. The above and foregoing amendments to the Certificate
of Incorporation were adopted by a vote of the holders of the majority of
all outstanding shares entitled to vote at a meeting of shareholders held on
the 14th day of May, 1998.
IN WITNESS WHEREOF, we have signed this certificate on June 5, 1998 and
we affirm the statements contained therein as true under penalties of perjury.
/s/ GEORGE C. MCNAMEE
__________________________
George C. McNamee
Chairman of the Board
/s/ STEPHEN P. WINK
__________________________
Stephen P. Wink
Secretary
</PAGE>
<PAGE>
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
FIRST ALBANY COMPANIES, INC.
FIRST, The name of the corporation shall be First Albany Companies, Inc.
SECOND, The purpose for which the Corporation is formed is to engage in
any act or activity for which corporations may be organized under the Business
Corporation Law of the State of New York, provided that the Corporation is not
formed to engage in any act or activity requiring the consent or approval
of any state official, department, board, agency or other body without such
consent or approval first being obtained.
THIRD, The office of the Corporation is to be located in the City of
Albany, County of Albany.
FOURTH, The aggregate number of shares which the Corporation shall have
the authority to issue is 10,000,000 shares of Common Stock, par value $.01
per share and 500,000 shares of Preferred Stock, par value $1.00 per share.
FIFTH, The designations, relative rights, preferences and limitations
of the shares of each class are as follows:
(A) Preferred Stock
Shares of Preferred Stock may be issued from time to time in one or
more series, as may from time to time be determined by the Board of Directors,
each of said series to be distinctly designated. All shares of any one series
of Preferred Stock shall be alike in every particular, except that there may
be different dates from which dividends, if any, thereon shall be cumulative,
if made cumulative. The voting powers and the preferences and relative,
participating, optional and other special rights of each such series, and the
qualifications, limitations or restrictions thereof, if any, may differ from
those of any and all other series at any time outstanding; and, subject to
the provisions of Paragraph C of this Article FIFTH, the Board of Directors
of the Corporation is hereby expressly granted authority to fix by resolution
or resolutions adopted prior to the issuance of any shares of a particular
series of Preferred Stock, the voting powers and the designations, preferences
and relative, optional and other special rights and the qualifications,
limitations and restrictions of such series,including, but without limiting
the generality of the foregoing, the following:
</PAGE>
<PAGE>
(a) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number may be
increased (except where otherwise provided by the Board of Directors) or
decreased (but not below the number of shares thereof then outstanding) from
time to time by like action of the Board of Directors;
(b) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall be paid,
the extent of the preference or relation, if any, of such dividends to the
dividends payable on any other class or classes, or series of the same or
other classes of stock and whether such dividends shall be cumulative or
noncumulative;
(c) The right, if any, of the holders of Preferred Stock of such
series to convert the same into, or exchange the same for, shares of any other
class or classes or of any series of the same or any other class or classes
of stock of the Corporation and the terms and conditions of such conversion or
exchange;
(d) Whether or not Preferred Stock of such series shall be subject to
redemption, and the redemption price or prices and the time or times at which,
and the terms and conditions on which, Preferred Stock of such series may be
redeemed;
(e) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger, consolidation,
distribution or sale of assets, dissolution or winding-up, of the Corporation;
(f) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Preferred Stock of such series; and
(g) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the foregoing,
include the right, voting as a series by itself or together with other series
of Preferred Stock or all series of Preferred Stock as a class, to elect one
or more directors of the Corporation if there shall have been a default in
the payment of dividends on any one or more series of Preferred Stock or under
such other circumstances and on such conditions as the Board of Directors may
determine; provided, however, that each holder of Preferred Stock shall have no
more than one vote in respect of each share of Preferred Stock held by him on
any matter voted upon by the shareholders.
</PAGE>
<PAGE>
(B) Common Stock
(a) Each holder is entitled to one vote for each share held with
respect to all matters upon which Stockholders have a right to vote.
(b) In the event of liquidation of the Corporation, the holders of
Common Stock will be entitled to share ratably in any proceeds available for
distribution after payment of all claims to creditors.
(C) No Preemptive Rights
No holder of Preferred Stock or of Common Stock shall have any pre-
emptive or other right, as such holder, to purchase or subscribe for any stock
of any class or any obligations convertible into, or any right or option to
purchase, stock (whether now or hereafter authorized) of any class which the
Corporation may at any time issue or sell, but any and all such stock,
obligations, rights and/or options may be issued and disposed of by the Board
of Directors to such persons, firms or corporations, and for such lawful
consideration and on such term as the Board of Directors, in its discretion,
may determine, without first offering the same or any thereof to the holders
of the Preferred Stock or of the Common Stock.
(D) Series A Junior Participating Preferred Stock
Section 1. Designation and Amount. The shares of this series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the numbers of shares constituting the Series A Preferred
Stock shall be 100,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock (or any other stock) ranking prior and superior to the Series
A Preferred Stock with respect to dividends, the holders of shares of Series
A Preferred Stock, in preference to the holders of Common Stock, par value $.01
per share (the "Common Stock"), of the Corporation, and of any other junior
stock, shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the first day of March, June, September and December in each
year (each such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment after the first
</PAGE>
<PAGE>
issuance of a share or fraction of a share of Series A Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a) $1
or (b) subject to the provision for adjustment hereinafter set forth, 100 times
the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount to which holders
of shares of Series A Preferred Stock were entitled immediately prior to such
event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in
the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of $1 per share
on the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceeding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the
date of issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Preferred Stock in an
amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may
</PAGE>
<PAGE>
fix a record date of the determination of holders of shares of Series A
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 100 votes
on all matters submitted to a vote of the shareholders of the Corporation. In
the event the Corporation shall at any time declare or pay any dividend on the
Common Stock, payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the number of votes per share to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event shall
be adjusted by multiplying such number by a fraction, the numerator of which
is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate
Amendment creating a series of Preferred Stock or any similar stock, in the
restated Certificate of Incorporation of the Corporation or by law, the
holders of shares of Series A Preferred Stock and the holders of shares of
Common Stock and any other capital stock of the Corporation having general
voting rights shall vote together as one class on all matter submitted to a
vote of shareholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Series A Preferred Stock outstanding shall
have been paid in full, the Corporation shall not:
</PAGE>
<PAGE>
(i) declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends, or make any other distributions, on
any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with Series A Preferred
Stock, except dividends paid ratably on the Series A Preferred Stock
and all such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior (as to dividends
and upon dissolution, liquidation or winding up) to the Series A
Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on
a parity with the Series A Preferred Stock, except in accordance with
a purchase offer made in writing or by publication (as determined by
the Board of Directors) to all holders of such shares upon such terms
as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
</PAGE>
<PAGE>
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Restated Certificate of Incorporation, or in any other Certificate of Amendment
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made
(1) to the holders of shares of stock ranking junior (upon liquidation,
dissolution or winding up) to the Series A Preferred Stock unless, prior
thereto, the holders of shares of Series A Preferred Stock shall have received
$100 per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment,
provided that the holders of shares of Series A Preferred Stock shall be
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregated amount to be
distributed per share to holders of shares of Common Stock, or (2) to the
holders of shares of stock ranking on a parity (upon liquidation, dissolution
or winding up) with the Series A Preferred Stock, except distributions made
ratably on the Series A Preferred Stock and all such parity stock in proportion
to the total amounts to which the holders of all such shares are entitled upon
such liquidation, dissolution or winding up. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the aggregate amount
to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
</PAGE>
<PAGE>
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the amount set forth in the preceding sentence with respect
to the exchange or change of shares of Series A Preferred Stocks shall be
adjusted by multiplying such amount by fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred Stock shall
not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with respect
to the payment of dividends and the distribution of assets, junior to all series
of any other class of Preferred Stock.
Section 10. Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of
at least two-thirds of the outstanding shares of Series A Preferred Stock voting
together as a single class.
SIXTH, The Secretary of State of the State of New York is designated as
the agent of the Corporation upon whom process against it may be served, and
the post-office address to which the Secretary of State shall mail a copy of
such process served upon him is 41 State Street, Albany, New York 12207.
SEVENTH, The Board of Directors shall have the power to adopt, amend and
repeal Bylaws of the Corporation. Any Bylaws made by the Board of Directors
under the powers hereby conferred may be amended or repealed by the Board of
Directors or by the shareholders having voting power with respect thereto.
Notwithstanding the previous sentence and anything contained in this Certificate
of Incorporation to the contrary, Sections 1.02 and 1.13 of Article I, Sections
2.02, 2.03, 2.05 and 2.06 of Article II and Section 6.10 of Article VI of the
Bylaws of the Corporation shall not be amended or repealed, and no provision
inconsistent therewith shall be adopted, by the shareholders without the
affirmative vote of the holders of as least 80 percent of the voting power of
the then outstanding Voting Stock (as defined below), voting together as a
single class. For purposes of this Certificate of Incorporation, "Voting
Stock" shall mean the outstanding shares of capital stock of the Corporation
</PAGE>
<PAGE>
entitled to vote generally in the election of directors.
(B) Notwithstanding anything contained in this Certificate of Incorporation
to the contrary, the affirmative vote of at least 80 percent of the voting power
of the then outstanding Voting Stock, voting together as a single class, shall
be required to amend or repeal, or adopt any provision inconsistent with, this
Article SEVENTH.
EIGHTH, (A) Subject to the rights of the holders of shares of any series
of Preferred Stock or any other series or class of stock as set forth in the
Certificate of Incorporation to elect additional directors under specified
circumstances, the number of directors of the Corporation shall be fixed by the
Bylaws of the Corporation and may be increased or decreased from time to time
in such as manner as may be prescribed in the Bylaws.
(B) Unless and except to the extent that the Bylaws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
(C) The directors, other than those who may be elected by the holders of
shares of any series of Preferred Stock or any other series or class of stock
as set forth in this Certificate of Incorporation, shall be divided into three
classes, and designated as Class I, Class II and Class III. Class I directors
shall be initially elected at the 1998 annual meeting of shareholders for a term
expiring at the 1999 annual meeting of shareholders, Class II directors shall be
initially elected at the 1998 annual meeting of shareholders for a term expiring
at the 2000 annual meeting of shareholders, and Class III directors shall be
initially elected at the 1998 annual meeting of shareholders for a term expiring
at the 2001 annual meeting of shareholders. At each succeeding annual meeting
of shareholders of the Corporation, the successors of the class of directors
whose term expries at that meeting shall be elected for a term expiring at the
annual meeting of shareholders held in the third year following the year of
their election, and until their successors are elected and qualified.
(D) Advance notice of shareholder nominations for the election of
directors shall be given in the manner provided in the Bylaws of the
Corporation.
(E) Subject to the rights of the holders of shares of any series of
Preferred Stock or any other series or class of stock as set forth in this
Certificate of Incorporation to elect additional directors under specified
circumstances, any director may be removed from office at any time, for any
reason by a majority vote of the Board of Directors or for any reason by the
affirmative vote of the holders of at least 80% of the voting power of the
then outstanding Voting Stock, voting together as a single class.
</PAGE>
<PAGE>
(F) Subject to the rights of the holders of shares of any series of
Preferred Stock or any other series or class of stock as set forth in this
Certificate of Incorporation to elect additional directors under specified
circumstances, vacancies resulting from death, resignation, retirement,
disqualification, removal from office or other cause, and newly created
directorships resulting from any increase in the authorized number of directors
in accordance with the Bylaws, may be filled only by the affirmative vote of a
majority of the remaining directors, though less than a quorum of the Board of
Directors, and directors so chosen shall hold office for a term expiring at the
next meeting of shareholders at which the election of directors is in the
regular order of business and until such director's successor shall have been
duly elected and qualified. No decrease in the number of authorized directors
shall shorten the term of any incumbent director.
(G) Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of the holders of at least
80 percent of the voting power of the then outstanding Voting Stock, voting
together as a single class, shall be required to amend or repeal, or adopt any
provision inconsistent with, this Article EIGHTH.
</PAGE>
40
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 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.
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.
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;
(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. 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. 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 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
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.
Section 1.13 Notice of Shareholder Business and Nominations.
(A) Annual Meetings of Shareholders.
(1) Nominations of persons for election to the Board of Directors
of the Corporation and the proposal of business to be considered by the
shareholders may be made at an annual meeting of shareholders (a) by or
at the direction of the Board of Directors or (b) by any shareholder of the
Corporation who is entitled to vote at the meeting, who complies with the
notice procedures set forth in clauses (2) and (3) of paragraph (A) of
this Section 1.13 and who is a shareholder of record at the time such notice
is delivered to the Secretary of the Corporation.
(2) For nominations or other business to be properly brought before
an annual meeting by a shareholder pursuant to clause (b) of paragraph
(A)(1) of this Section 1.13, the shareholder must have given timely notice
thereof in writing to the Secretary of the Corporation and such business
must be a proper subject for shareholder action under the New York
Business Corporation Law. To be timely, a shareholder's notice shall be
delivered to the Secretary at the principal executive offices of the
Corporation not less than seventy (70) days nor more than ninety (90) days
prior to the first anniversary of the preceding year's annual meeting;
provided, however, that in the event that the date of the annual meeting
is advanced by more than twenty (20) days, or delayed by more than seventy
(70) days, from such anniversary date, notice by the shareholder to be timely
must be so delivered not earlier than the ninetieth (90th) day prior to
such annual meeting and not later than the close of business on the later of
the seventieth (70th) day prior to such annual meeting or the tenth (10th)
day following the day on which public announcement of the date of such
meeting is first made. Such shareholder's notice shall set forth (a)
as to each person whom the shareholder proposes to nominate for election
or reelection as a director all information relating to such person that
is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), including such person's written consent to being named
in the proxy statement as a nominee and to serving as a director if elected;
(b) as to any other business that the shareholder proposes to bring before
the meeting, a brief description of the business desired to be brought
before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such shareholder and
the beneficial owner, if any, on whose behalf the proposal is made; and
(c) as to the shareholder giving the notice and the beneficial owner, if any,
on whose behalf the nomination or proposal is made (i) the name and address
of such shareholder, as they appear on the Corporation's books, and of such
beneficial owner and (ii) the class and number of shares of the Corporation
which are owned beneficially and of record by such shareholder and such
beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph
(A)(2) of this Section 1.13 to the contrary, in the event that the number
of directors to be elected to the Board of Directors is increased and
there is no public announcement naming all of the nominees for director or
specifying the size of the increased Board of Directors made by the
Corporation at least eighty (80) days prior to the first anniversary of the
preceding year's annual meeting, a shareholder's notice required by this
paragraph (A)(2) of this Section 1.13 shall also be considered timely,
but only with respect to nominees for any new positions created by such
increase, if it shall be delivered to the Secretary at the principal
executive offices of the Corporation not later than the close of business
on the tenth (10th) day following the day on which such public announcement
is first made by the Corporation.
(B) Special Meeting of Shareholders. Nominations of persons for
election to the Board of Directors may be made at a special meeting of
shareholders at which directors are to be elected (i) by or at the direction
of the Board of Directors or (ii) by any shareholder of the Corporation who
is entitled to vote at the meeting, who complies with the notice procedures
set forth in this paragraph (B) and who is a shareholder of record at the
time such notice is delivered to the Secretary of the Corporation.
Nominations by shareholders of persons for election to the Board of
Directors may be made at such a special meeting of shareholders if the
shareholder's notice as required by paragraph (A)(2) of this Section 1.13 shall
be delivered to the Secretary at the principal executive offices of the
Corporation not earlier than the ninetieth (90th) day prior to such special
meeting and not later than the close of business on the later of the
seventieth (70th) day prior to such special meeting or the tenth (10th) day
following the day on which public announcement is first made of the date of
the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting.
(C) General. (1) Only persons who are nominated in accordance with
the procedures set forth in this Section 1.13 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of
shareholders as shall have been brought before the meeting in accordance
with the procedures set forth in this Section 1.13.
(2) Except as otherwise provided by law, the Certificate of
Incorporation or this Section 1.13, the chairman of the meeting shall have
the power and duty to determine whether a nomination or any business
proposed to be brought before the meeting was made in accordance with the
procedures set forth in this Section 1.13 and, if any proposed
nomination or business is not in compliance with this Section 1.13,
to declare that such defective proposal or nomination shall be disregarded.
(3) For purposes of this Section 1.13, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document
publicly filed by the Corporation with the Securities and Exchange Commission
pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(4) Notwithstanding the foregoing provisions of this Section 1.13,
a shareholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Section 1.13. Nothing in this Section 1.13 shall
be deemed to affect any rights (i) of shareholders to request inclusion of
proposals in the Corporation's proxy statement pursuant to Rule 14a-8
under the Exchange Act or (ii) of the holders of any series of Preferred
Stock or any other series or class of stock as set forth in the Certificate
of Incorporation to elect directors under specified circumstances or to
consent to specific actions taken by the Corporation.
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. 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. Subject to the rights of the holders of
shares of any series of Preferred Stock or any other series or class of
stock as set forth in the Certificate of Incorporation to elect
directors under specified circumstances, the number of directors shall be
fixed from time to time exclusively pursuant to a resolution adopted by a
majority of the entire Board of Directors, but shall consist of not more
than fifteen (15) nor less than the minimum number required by law.
Section 2.03. Election and Term. The directors, other than those
who may be elected by the holders of shares of any series of Preferred Stock
or any other series or class of stock as set forth in the Certificate
of Incorporation, shall be divided into three classes, and designated as
Class I, Class II and Class III. Class I Directors shall be initially
elected at the 1998 annual meeting of shareholders for a term expiring at
the 1999 annual meeting of shareholders, Class II Directors shall be
initially elected at the 1998 annual meeting of shareholders for a term
expiring at the 2000 annual meeting of shareholders, and Class III Directors
shall be initially elected at the 1998 annual meeting of shareholders
for a term expiring at the 2001 annual meeting of shareholders. At each
succeeding annual meeting of shareholders of the Corporation, the successors
of the class of directors whose term expires at that meeting shall be
elected for a term expiring at the annual meeting of shareholders held in the
third year following the year of their election, and until their successors
are 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. Subject to the rights of the
holders of shares of any series of Preferred Stock or any other series
or class of stock as set forth in the Certificate of Incorporation to
elect additional directors under specified circumstances, any director
may be removed from office at any time, for any reason by a majority vote
of the Board of Directors or for any reason by the affirmative vote of
the holders of at least 80% of the then outstanding Voting Stock (as
defined below), voting together as a single class. For purposes of these
Bylaws, "Voting Stock" shall mean the outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of
directors.
Section 2.06. Newly Created Directorships and Vacancies.
Subject to the rights of the holders of shares of any series of Preferred
Stock or any other series or class of stock as set forth in the Certificate
of Incorporation to elect additional directors under specified circumstances,
vacancies resulting from death, resignation, retirement, disqualification,
removal from office or other cause, and newly created directorships resulting
from any increase in the authorized number of directors in accordance with
these Bylaws, may be filled only by the affirmative vote of a majority of
the remaining directors, though less than a quorum of the Board of
Directors, and directors so chosen shall hold office for a term expiring at
the next meeting of shareholders at which the election of directors is in
the regular order of business and until such director's successor shall
have been duly elected and qualified. No decrease in the number of
authorized directors shall shorten the term of any incumbent director.
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.
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 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.
(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 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
(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 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.
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 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 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 to all its shareholders within six months of
the date of the reduction of capital.
Section 5.04. Reduction of Stated Capital. When
reduction of stated capital has been effected under
direction 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 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.
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.
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.
(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 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.
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. (A) By the
Shareholders. Subject to the provisions of the Certificate of
Incorporation and these Bylaws, these Bylaws may be altered,
amended or repealed, or new Bylaws adopted, at any special
meeting of the shareholders if duly called for that purpose,
or at any annual meeting, by the affirmative vote of a majority
of the votes of the shares entitled to vote in the election of
any directors.
(B) By the Board of Directors. Subject to the
Business Corporation Law of the State of New York, the Certificate
of Incorporation and these Bylaws, these Bylaws may also be
amended or repealed, or new Bylaws adopted, by the Board of
Directors.
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.
<PAGE>
Exhibit 3ii
AMENDMENTS TO THE BYLAWS OF
FIRST ALBANY COMPANIES INC.
1. A new Section 1.13 of ARTICLE I of the Bylaws shall be added and
read as follows:
"Section 1.13 Notice of Shareholder Business and
Nominations.
(A) Annual Meetings of Shareholders.
(1) Nominations of persons for election to the Board
of Directors of the Corporation and the proposal
of business to be considered by the shareholders
may be made at an annual meeting of shareholders
(a) by or at the direction of the Board of Directors
or (b) by any shareholder of the Corporation who is
entitled to vote at the meeting, who complies
with the notice procedures set forth in clauses
(2) and (3) of paragraph (A) of this Section 1.13
and who is a shareholder of record at the time such
notice is delivered to the Secretary of the
Corporation.
(2) For nominations or other business to be properly
brought before an annual meeting by a shareholder
pursuant to clause (b) of paragraph (A)(1) of this
Section 1.13, the shareholder must have given timely
notice thereof in writing to the Secretary of the
Corporation and such business must be a proper subject
for shareholder action under the New York Business
Corporation Law. To be timely, a shareholder's notice
shall be delivered to the Secretary at the principal
executive offices of the Corporation not less than
seventy (70) days nor more than ninety (90) days prior
to the first anniversary of the preceding year's annual
meeting; provided, however, that in the event that the
date of the annual meeting is advanced by more than
twenty (20) days, or delayed by more than seventy (70)
days, from such anniversary date, notice by the
shareholder to be timely must be so delivered not
earlier than the ninetieth (90th) day prior to such
annual meeting and not later than the close of business
on the later of the seventieth (70th) day prior to
such annual meeting or the tenth (10th) day following
the day on which public announcement of the date of
such meeting is first made. Such shareholder's notice
shall set forth (a) as to each person whom the
shareholder proposes to nominate for election or
reelection as a director all information relating to
such person that is required to be disclosed in
solicitations of proxies for election of directors,
or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), including such
person's written consent to being named in the proxy
statement as a nominee and to serving as a director
if elected; (b) as to any other business that the
shareholder proposes to bring before the meeting, a
brief description of the business desired to be
brought before the meeting, the reasons for conducting
such business at the meeting and any material interest
in such business of such shareholder and the beneficial
owner, if any, on whose behalf the proposal is made;
and (c) as to the shareholder giving the notice and
the beneficial owner, if any, on whose behalf the
nomination or proposal is made (i) the name and
address of such shareholder, as they appear on the
Corporation's books, and of such beneficial owner and
(ii) the class and number of shares of the Corporation
which are owned beneficially and of record by such
shareholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of
paragraph (A)(2) of this Section 1.13 to the contrary,
in the event that the number of directors to be
elected to the Board of Directors is increased and
there is no public announcement naming all of the
nominees for director or specifying the size of the
increased Board of Directors made by the Corporation
at least eighty (80) days prior to the first
</PAGE>
<PAGE>
anniversary of the preceding year's annual meeting,
a shareholder's notice required by this paragraph
(A)(2) of this Section 1.13 shall also be considered
timely, but only with respect to nominees for any new
positions created by such increase, if it shall be
delivered to the Secretary at the principal executive
offices of the Corporation not later than the close of
business on the tenth (10th) day following the day on
which such public announcement is first made
by the Corporation.
(B) Special Meeting of Shareholders.
Nominations of persons for election to the Board of
Directors may be made at a special meeting of
shareholders at which directors are to be elected (i)
by or at the direction of the Board of Directors or
(ii) by any shareholder of the Corporation who is
entitled to vote at the meeting, who complies with
the notice procedures set forth in this paragraph (B)
and who is a shareholder of record at the time
such notice is delivered to the Secretary of the
Corporation. Nominations by shareholders of persons
for election to the Board of Directors may be made at
such a special meeting of shareholders if the
shareholder's notice as required by paragraph
(A)(2) of this Section 1.13 shall be delivered to
the Secretary at the principal executive offices of
the Corporation not earlier than the ninetieth
(90th) day prior to such special meeting and not
later than the close of business on the later of
the seventieth (70th) day prior to such special
meeting or the tenth (10th) day following the day
on which public announcement is first made of the
date of the special meeting and of the nominees
proposed by the Board of Directors to be elected at
such meeting.
(C) General. (1) Only persons who are nominated in
accordance with the procedures set forth in this
Section 1.13 shall be eligible to serve as directors
and only such business shall be conducted at a meeting
of shareholders as shall have been brought before the
meeting in accordance with the procedures set forth in
this Section 1.13.
(2) Except as otherwise provided by law, the
Certificate of Incorporation or this Section 1.13,
the chairman of the meeting shall have the power
and duty to determine whether a nomination or any
business proposed to be brought before the meeting
was made in accordance with the procedures
set forth in this Section 1.13 and, if any proposed
nomination or business is not in compliance with
this Section 1.13, to declare that such defective
proposal or nomination shall be disregarded.
(3) For purposes of this Section 1.13, "public
announcement" shall mean disclosure in a press release
reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a
document publicly filed by the Corporation with the
Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
(4) Notwithstanding the foregoing provisions of this
Section 1.13, a shareholder shall also comply with all
applicable requirements of the Exchange Act and the
rules and regulations thereunder with respect to the
matters set forth in this Section 1.13. Nothing in
this Section 1.13 shall be deemed to affect any rights
(i) of shareholders to request inclusion of proposals
in the Corporation's proxy statement pursuant to Rule
14a-8 under the Exchange Act or (ii) of the holders
of any series of Preferred Stock or any other series
or class of stock as set forth in the Certificate
of Incorporation to elect directors under specified
circumstances or to consent to specific actions taken
by the Corporation."
2. Section 2.02 of ARTICLE II of the Bylaws shall be amended in its
entirety to read as follows:
"Section 2.02 Number. Subject to the rights of the holders
of shares of any series of Preferred Stock or any other series or class of
stock as set forth in the Certificate of Incorporation to elect directors
under specified circumstances, the number of directors shall be fixed from
time to time exclusively pursuant to a resolution adopted by a majority of
the entire Board of Directors, but shall consist of not more than
fifteen (15) nor less than the minimum number required by law."
3. Section 2.03 of ARTICLE II of the Bylaws shall be amended
in its entirety to read as follows:
"Section 2.03 Election and Term. The directors, other than
those who may be elected by the holders of shares of any series of Preferred
Stock or any other series or class of stock as set forth in the Certificate
of Incorporation, shall be divided into three classes, and designated as
Class I, Class II and Class III. Class I Directors shall be initially
elected at the 1998 annual meeting of shareholders for a term expiring at the
1999 annual meeting of shareholders, Class II Directors shall be initially
</PAGE>
<PAGE>
elected at the 1998 annual meeting of shareholders for a term expiring at
the 2000 annual meeting of shareholders, and Class III Directors shall be
initially elected at the 1998 annual meeting of shareholders for a term
expiring at the 2001 annual meeting of shareholders. At each succeeding
annual meeting of shareholders of the Corporation, the successors of the
class of directors whose term expires at that meeting shall be elected for
a term expiring at the annual meeting of shareholders held in the third
year following the year of their election, and until their successors are
elected and qualified."
4. Section 2.05 of ARTICLE II of the Bylaws shall be amended in its
entirety to read as follows:
"Section 2.05 Removal of Directors. Subject to the rights
of the holders of shares of any series of Preferred Stock or any other
series or class of stock as set forth in the Certificate of Incorporation
to elect additional directors under specified circumstances, any director
may be removed from office at any time, for any reason by a majority vote
of the Board of Directors or for any reason by the affirmative vote of the
holders of at least 80% of the then outstanding Voting Stock (as defined
below), voting together as a single class. For purposes of these Bylaws,
"Voting Stock" shall mean the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors."
5. Section 2.06 of ARTICLE II of the Bylaws shall be amended in its
entirety to read as follows:
"Section 2.06 Newly Created Directorship and Vacancies.
Subject to the rights of the holders of shares of any series of Preferred
Stock or any other series or class of stock as set forth in the Certificate
of Incorporation to elect additional directors under specified circumstances,
vacancies resulting from death, resignation, retirement, disqualification,
removal from office or other cause, and newly created directorships resulting
from any increase in the authorized number of directors in accordance with
these Bylaws, may be filled only by the affirmative vote of a majority of
the remaining directors, though less than a quorum of the Board of Directors,
and directors so chosen shall hold office for a term expiring at the next
meeting of shareholders at which the election of directors is in the regular
order of business and until such director's successor shall have been duly
elected and qualified. No decrease in the number of authorized directors
shall shorten the term of any incumbent director."
6. Section 6.10 of ARTICLE VI of the Bylaws shall be amended in
its entirety to read as follows:
"Section 6.10 Amendment of Bylaws.
(A) By the Shareholders. Subject to the provisions
of the Certificate of Incorporation and these
Bylaws, these Bylaws may be altered, amended or
repealed, or new Bylaws adopted, at any special
meeting of the shareholders if duly called for
that purpose, or at any annual meeting, by the
affirmative vote of a majority of the votes of
the shares entitled to vote in the election of
any directors.
(B) By the Board of Directors. Subject to the
Business Corporation Law of the State of New
York, the Certificate of Incorporation and these
Bylaws, these Bylaws may also be amended or
repealed, or new Bylaws adopted, by the Board of
Directors."
</PAGE>
