<PAGE>
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[XX] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1997
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from --------- to ----------
Commission File Number 1-9137
ATALANTA/SOSNOFF CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-3339071
- ----------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 Park Avenue, New York, New York 10178
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(Address of principal executive officers) (zip code)
(Registrant's telephone number, including area code) (212) 867-5000
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Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
Common Stock, par value $.01 per share New York Stock Exchange
- -------------------------------------- -----------------------
Securities registered pursuant to Section 12 (g) of the Act:
NONE
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(Title of Class)
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Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Number of shares of common stock *
outstanding at March 20, 1998: 9,587,401
* (voting; only class outstanding)
Aggregate market value of voting and
non-voting common equity held by non-
affiliates, as of March 20, 1998: $12,835,701
Documents incorporated by reference: Proxy Statement for the 1998 Annual Meeting
of Stockholders (incorporated in part in Form 10-K, Part III)
Exhibit Index is located on page 25.
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SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements in this Annual Report on Form 10-K under the captions
"Business" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations", and elsewhere in this Report constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following
general economic and business conditions: the loss of, or the failure to
replace, any significant clients; changes in the relative investment performance
of client or firm accounts and changes in the financial marketplace,
particularly in the securities markets. These forward-looking statements speak
only as of the date of this Annual Report. The Company expressly disclaims any
obligation or undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change in the
Company's expectations with regard thereto or any change in events, conditions
or circumstances on which any such statement is based.
2
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PART I
Item 1. Business
General
Atalanta/Sosnoff Capital Corporation, a New York Stock Exchange listed
company, through its operating subsidiaries, Atalanta/Sosnoff Capital
Corporation (Delaware) ("Capital") and Atalanta/Sosnoff Management Corporation
("Management"), provides discretionary investment management, brokerage and
other related services. The term "Company" as used herein refers to
Atalanta/Sosnoff Capital Corporation and its subsidiaries. Capital and
Management are both registered investment advisors. Management is also
registered as a broker-dealer.
Client Relationships
General. Investment management clients include corporate and public
retirement plans, endowments, charitable and religious organizations, and
individuals in both taxable and tax-exempt accounts. The Company manages
accounts of its clients under investment advisory agreements. These agreements
are generally terminable upon short notice and provide for compensation based on
the market value of the client assets under management. Generally, annual
institutional account fees are 1% of assets under management, and, for larger
accounts, may include performance fees or reductions in fees on incremental
assets to as low as 0.2%. Individual and smaller institutional account fees are
generally 1% of assets under management. Many institutional account clients have
consented to the use of the Management as broker for certain portfolio
transactions. The Company generally requires that individual and smaller
institutional account clients use Management as broker.
The largest single client generated approximately 3.8% of the Company's
total revenues for the year ended December 31, 1997. The Company's ten largest
clients, as of December 31, 1997, accounted for approximately 23% of total
revenues for the year then ended.
Assets under management decreased 3%, from $2.76 billion at December 31,
1996 to $2.68 billion at December 31, 1997. This decline is primarily the result
of net cash outflows in client accounts totaling $707 million in 1997, partially
offset by strong absolute performance results. See "Institutional Clients" on
page 4 for further discussion. For a discussion of this development, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Financial Summary and Assets under Management."
The following table depicts assets under management at the last three
yearends by type of client:
($ millions)
1997 1996 1995
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Institutional $2,355 $2,421 $3,277
Individual and smaller
institutional 255 292 285
Partnerships 72 50 49
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Totals $2,682 $2,763 $3,611
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3
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Institutional Clients. Capital manages accounts of institutional clients
with assets under management of approximately $2.36 billion as of December 31,
1997, compared with $2.42 billion at the end of 1996, and $3.28 billion at the
end of 1995. Investment performance for equity clients improved in 1997 compared
with 1996, but was still somewhat below the performance of relevant benchmarks.
Underperformance and style - drift concerns on the part of consultants that our
investment management style does not clearly fall within recognized industry
categories caused some large institutional clients to close their accounts in
both 1996 and 1997, while others took cash away. The following table shows the
types of institutional clients whose assets are managed by Capital and, for each
type, the assets under management as of December 31, 1997:
Number Dollars in
Type of Account of Relationships % of Total Millions % of Total
- --------------- ---------------- ---------- -------- ----------
Corporate employee
benefit plans 15 24% $ 507 22%
Not-for-profit
organizations 21 34 310 13
Jointly-trusteed
collective bargaining
employee plans 8 13 634 27
Governmental employee
benefit plans 10 16 695 29
Other 8 13 209 9
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Total 62 100% $2,355 100%
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Individual and Smaller Institutional Clients. Since 1984, Management has
managed assets of individual and smaller institutional accounts. Assets under
management in the individual and smaller account business decreased 13% during
1997, from $292 million at December 31, 1996 to $255 million at December 31,
1997. Approximately $105 million represents assets of taxable accounts; the
remaining $150 million represents assets of non-taxable accounts.
The foregoing analysis excludes the accounts serviced by an officer of
Management, Mr. William M. Knobler, who manages the excluded accounts directly.
The officer servicing the excluded accounts receives substantially all the net
revenue therefrom, pursuant to an arrangement with Management. Approximately
$101 million in client assets were subject to this arrangement at December 31,
1997.
4
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Company-Sponsored Investment Partnerships. Capital is the general partner of
three investment limited partnerships and the investment manager of an offshore
investment fund, all with different investment objectives and client profiles,
with total aggregate assets of $72 million at December 31, 1997. Capital
receives a basic management fee from each entity at an annual rate of 1% of
total assets. The agreements contain various provisions regarding the bearing of
expenses by each of the entities. The third partnership and the offshore fund
were formed in 1997 and are charged by Capital a 20% incentive fee of net
profits earned.
Investment Management and Research
The Company currently manages over $2.6 billion in equity, balanced and
fixed income accounts for corporations, public funds, Taft-Hartley clients,
foundations, charitable organizations and individuals. Institutional clients are
the source of 90% of total managed assets. The Company's subsidiaries have been
registered as investment advisors since 1982 (Capital) and 1984 (Management).
The Company's investment philosophy seeks to identify companies that are
entering into a cycle of accelerating earnings momentum. Clients retain the
Company primarily as a domestic equity manager to invest in mid to large
capitalization stocks.
The Company's equity methodology focuses on two levels: thematics and stock
selection. Through its Investment Policy Committee, composed of Martin T.
Sosnoff, Craig B. Steinberg and Paul P. Tanico, the Company seeks to identify
change at the margin. Major themes unfold during economic cycles, geopolitical
realignments and changes in government regulation and Federal Reserve Board
policy emphasis. The process seeks to identify and overweight "event-driven"
companies with benevolent product profile cycles and accelerating earnings. The
Company believes that the vision and motivation of management are common
critical variables in outperformance. The Company's methodology is biased toward
management with meaningful equity participation.
The three members of the Investment Policy Committee have a total of 66
years of investment experience. The two principals, Martin T. Sosnoff and Craig
B. Steinberg, have worked together in the investment arena for more than 12
years. The continuity of the team and its years of experience are critical
elements in the success of the Company. The portfolio managers are all
experienced research analysts. Portfolio decisions are implemented on behalf of
all the Company's clients, subject to individual client guidelines, restrictions
and cash flows.
In August, 1997 the Company terminated without cause the employment of its
former President, Mr. Robert J. Kobel. Mr. Kobel was a principal in the firm and
also a member of the Investment Policy Committee. In September, 1997, Mr. Paul
P. Tanico rejoined the Company as Executive Vice President, Portfolio Manager,
and a member of the Investment Policy Committee. Mr. Tanico has worked for the
Company for a total of five years, the last time being in 1991.
The Company's Investment Policy Committee, headed by Mr. Sosnoff as Chief
Investment Officer, is responsible for managing the portfolios of the Company's
clients. All members of the Committee participate in the management of all
accounts, except the accounts managed directly by Mr. Knobler.
5
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When requested, Mr. Knobler participates in the Investment Policy Committee
process on an ad hoc basis. Each client portfolio is comprised of securities
selected by the Committee, subject to risk tolerances, concentration limits,
leverage policies and other restrictions determined by each client with, in
certain cases, the assistance of the Company.
The Company believes that, in addition to performance, client service is
paramount in the money management business. Portfolio managers are particularly
attuned to the needs of the Company's clients. The Company believes that its
consistent investment style since inception and continued emphasis on frequent
communication with clients distinguishes it from other managers.
The Company's mission is to maintain a top quartile performance ranking
year over year, cycle over cycle and decade over decade. However, due to
performance results for clients significantly below relevant benchmarks over the
last two years, the Company's current peer group rankings are very low for time
periods up to and including the last three years.
Marketing and Business Development
Institutional Account Marketing. The Company's institutional clients
generally allocate their assets among several investment managers and may change
the allocation from time to time. In addition, clients allocate their assets
among various market sectors and types of investments, and may change these
allocations in response to prevailing market conditions or changes in the
client's investment objectives. Management believes that the Company is
perceived primarily as an active equity manager by the marketplace.
Net withdrawals from client accounts totaled $624 million in 1997, compared
with net withdrawals of $1,166 million in 1996 and net withdrawals of $51
million in 1995. The Company believes that the 1997 and 1996 net withdrawals are
primarily the result of performance concerns.
Individual and Smaller Institutional Account Marketing. Individual and
smaller institutional client portfolios are managed on the same basis as the
management of the accounts of institutional clients. Account service
representatives assist new clients in determining appropriate risk tolerances,
concentration limits, leverage policies and other restrictions, and provide
ongoing account servicing to existing clients. Net withdrawals from client
accounts totaled $93 million in 1997, compared with net withdrawals of $26
million in 1996 and net withdrawals of $34 million in 1995.
The Company began to focus some of its marketing efforts in 1993 on the
managed account ("Wrap") programs offered by certain large financial services
firms. As of December 31, 1997, $57 million was under management from such
programs compared with $92 million at the end of 1996. The Company believes this
reduction is due to performance concerns over the last two years. The Company
believes this business represents an efficient means to gather assets, and is
optimistic about its future growth, subject to performance considerations.
6
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Competition
The investment management business is highly competitive. The Company
competes with numerous investment management firms having varying investment
methods and philosophies. In addition to competition from other discretionary
investment managers, the Company, particularly in its individual and smaller
institutional account business, competes with investment alternatives offered by
mutual funds, insurance companies, banks, securities dealers and other financial
institutions. Also, the allocation by many clients of assets away from active
equity investment has enhanced the ability of firms offering non-equity products
and passive equity management which the Company does not offer, including much
larger firms with diversified product lines, to compete with the Company.
The Company's performance results since inception rank above the median
among peer group money managers. However, due to the recent underperformance in
client accounts previously discussed, the Company's current peer group rankings
are very low for periods up to and including the last three years. The Company
believes that the most important factors affecting its capacity to compete for
new business will be a return to sustained top quartile investment performance
results, perceived quality and productivity of investment professionals, as well
as a continued commitment to a strong marketing effort and an exemplary level of
client service.
Most prospective clients perform a thorough review of the investment
manager's background, investment policies and performance before committing
assets to that manager. In many cases, prospective clients invite a number of
competing firms to make presentations. The process of obtaining a new
institutional client typically takes from 12 to 18 months from the time of the
initial contact.
The Company believes it has the capacity to continue to increase the number
of client accounts under management without significant increases in fixed costs
or personnel and without adversely affecting the quality of service to existing
clients. The Company has continued to implement enhancements to its proprietary
computerized portfolio accounting, allocation and monitoring systems to enable
it to more efficiently manage client accounts.
Brokerage
Many of the Company's clients use Management as broker for their account
transactions, to the extent consistent with the client's best interests and as
permitted by applicable law. As of December 31, 1997, 40% of Capital's
institutional clients, accounting for approximately $700 million (28%) in assets
under management, have consented to the use of Management as broker. The use of
Management as broker is an integral part of the services offered to
substantially all of Management's individual and smaller institutional account
clients (except for those accounts obtained through Wrap programs). Management
also provides brokerage services to its officers and employees.
7
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Management clears and carries all accounts on a fully-disclosed basis
through Bear, Stearns Securities Corp. ("Bear Stearns"). Under these
arrangements, Bear Stearns performs administrative functions, such as record
keeping, confirmation of transactions and preparation and transmission of
monthly statements. Bear Stearns also extends margin credit to Management's
brokerage customers.
As a member firm of both the New York Stock Exchange, Inc. ("NYSE") and the
Chicago Board Options Exchange, Inc. ("CBOE"), Management owns a seat on each
Exchange. These seats are leased at market rates to others, and lease rentals
for 1997 totaled $233,000.
Employees
At December 31, 1997, the Company employed 40 persons on a full-time basis,
comprised of 3 senior executives, 6 research, 5 sales, 10 client service, 9
operations, accounting and systems, 2 trading and 5 administrative or
secretarial positions. The Company considers its employee relations to be good.
Sales personnel receive additional compensation based upon the advisory
fees of clients which they were responsible for successfully soliciting on
behalf of the Company. In addition, the Company has entered into agreements with
various sales personnel which, among other things, limit the extent to which
such personnel may solicit clients of the Company if their employment is
terminated. Some of these agreements provide that, in certain circumstances, an
employee, in the event of termination, may continue to receive a percentage of
fees received by the Company from clients solicited by that employee. The
amounts payable with respect to these salespersons' agreements are not expected
to be material.
Regulation
The securities industry in the United States is subject to extensive
regulation under both Federal and state laws. Management is registered as a
broker-dealer and investment advisor with the Securities and Exchange Commission
("SEC"), and Capital is registered as an investment advisor with the SEC.
Management's brokerage operations are also subject to regulation by
self-regulatory organizations, including the National Association of Securities
Dealers, Inc., the NYSE, and the CBOE. Securities firms are also subject to
regulation by state securities administrators in the states in which they
conduct business. The Company's subsidiaries are registered as a broker-dealer
and/or investment advisor in all 50 states.
Broker-dealers and investment advisors are subject to regulation covering
virtually all aspects of their business. Additional legislation, changes in
rules promulgated by the SEC and self-regulatory organizations, or changes in
the interpretation or enforcement of existing laws and rules, may directly
affect the mode of operation and profitability of the Company. The SEC,
self-regulatory organizations and state securities commissions conduct routine
inspections of the Company's businesses and may conduct administrative
proceedings which can result in censure, fine, suspension or expulsion of a
broker-dealer or an investment advisor, and/or their officers or employees in
the event of violations of the laws and regulations they administer.
8
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The Company's investment advisory agreements with its clients provide that
they may not be assigned without the consent of the client. "Assignment" is
defined in the Investment Advisers Act of 1940 to include the direct or indirect
transfer or hypothecation of a controlling block of the Company's voting
securities. Martin T. Sosnoff, Chairman of the Board of the Company, owns 73.2%
of the NYSE listed company, Atalanta/Sosnoff Capital Corporation (the "Holding
Company"), which directly or indirectly owns Capital and Management, both of
which are registered investment advisors. Accordingly, the voluntary transfer
(by sale, merger or other disposition) or involuntary transfer (by death or
disability) by him of a controlling block of the Holding Company's securities
would result in such an "assignment" requiring client consent. Although no
assurance can be given in these circumstances, the Company believes it would be
able to retain its existing client base. The Company's Certificate of
Incorporation contains provisions intended to preclude the possibility that the
accumulation by third parties of a substantial position in the Company's Common
Stock would be deemed an "assignment" of the Company's advisory agreements.
Many of the Company's clients are subject to the Employee Retirement Income
Security Act of 1974 ("ERISA"). The accounts of these clients are subject to a
number of ERISA provisions governing, among other things, fiduciary obligations
and permissible investments and investment methods.
As a member firm of the NYSE, Management is required under the rules of the
NYSE to maintain minimum net capital at all times equal to at least $250,000. In
addition, Management's ratio of aggregate indebtedness to net capital may not
exceed 15 to 1, and equity capital may not be withdrawn, or dividends paid, from
Management if the resulting ratio of aggregate indebtedness to net capital would
exceed 10 to 1. Management's minimum net capital requirement as of December 31,
1997 was $250,000; it had net capital at such date of $8.9 million, and a ratio
of aggregate indebtedness to net capital of 0.07 to 1.
Item 2. Properties.
The Company occupies office space at 101 Park Avenue, New York, New York
under a lease which term expires on August 29, 2002.
Item 3. Legal Proceedings.
There are no legal proceedings to which the Company or any of its property
is subject which, in the opinion of the Company's management, would have a
material adverse effect upon the Company's business or operations.
Item 4. Submission of Matters to a Vote of Security Holders.
There were no matters submitted to a vote of security holders during the
fourth quarter of 1997.
9
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PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholders
Matters.
The Company's common stock is listed on the NYSE under the trading symbol
"ATL." The following table sets forth for the quarters indicated, the high and
low sales prices of the common stock, as reported on the New York Stock Exchange
Composite Transactions Tape, together with special dividends declared.
<TABLE>
<CAPTION>
1997 1996 1995
Quarter Ended High Low High Low High Low
- ------------- ---- --- ---- --- ---- ---
<S> <C> <C> <C> <C> <C> <C>
March 31 $8.88 $8.25 $13.88 $9.00 $7.25 $5.63
June 30 11.38 8.75 10.50 9.38 7.50 6.63
September 30 13.13 11.13 10.00 7.50 8.25 6.50
December 31 12.06 11.38 9.63 8.00 14.88 7.75
Special Dividends
Declared $.20 $.15 $.15
</TABLE>
The approximate number of record holders of common stock was 65 on December
31, 1997.
The Company's Board of Directors will periodically review the Company's
earnings, liquidity and anticipated cash needs and, subject to these
considerations, it may consider the payment of dividends in the future.
For information with respect to stock awards made during 1997, see
"Executive Compensation" and "Stock Option and Long Term Incentive Plans" in the
Company's Proxy Statement for its 1998 Annual Meeting of Stockholders,
incorporated by reference in Item 11 of Part III of this Annual Report on Form
10-K. Shares of common stock awarded under the Long Term Incentive Plan were
issued to senior executives of the Company without registration under the
Securities Act of 1933 in reliance on the exemption therefrom in Section 4(2)
thereof for transactions not involving a public offering.
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Item 6. Selected Financial Data
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
FIVE YEAR REVIEW
(dollars and shares in thousands,
except per share amounts) 1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Summary of Operations:
Net income $ 9,849 $ 8,802 $10,048 $ 5,775 $ 8,239
Per share - diluted $ 1.08 $ 1.00 $ 1.14 $ .65 $ .91
- basic $ 1.09 $ 1.00 $ 1.14 $ .65 $ .91
Operating revenues $18,829 $20,759 $20,049 $17,433 $16,107
Operating expenses $13,707 $12,022 $12,381 $11,583 $11,618
Operating income $ 5,123 $ 8,737 $ 7,668 $ 5,850 $ 4,490
Operating margin 27% 42% 38% 34% 28%
Per employee:
Operating revenues $ 471 $ 472 $ 477 $ 371 $ 393
Operating expenses $ 343 $ 273 $ 295 $ 247 $ 283
Operating income $ 128 $ 199 $ 183 $ 124 $ 110
Net interest and dividend income $ 2,997 $ 1,843 $ 1,881 $ 1,330 $ 980
Net realized and unrealized
gains from investments $ 9,854 $ 4,783 $ 7,985 $ 3,391 $ 7,918
Return on average assets 14% 14% 19% 13% 20%
Return on average equity 15% 15% 20% 13% 21%
Yearend Position:
Total assets $75,413 $64,696 $58,497 $47,329 $44,198
Shareholders' equity $70,556 $61,628 $54,517 $44,340 $42,523
Book value per share $ 7.36 $ 6.99 $ 6.19 $ 5.03 $ 4.75
Cash dividends declared per share $ .20 $ .15 $ .15 $ .15 $ --
Common stock, shares outstanding 9,587 8,812 8,812 8,812 8,949
Number of employees 40 44 42 47 41
Assets under management (millions) $ 2,682 $ 2,763 $ 3,611 $ 2,754 $ 2,649
Average assets under management
(millions) $ 2,804 $ 3,219 $ 3,267 $ 2,703 $ 2,339
Percentage of average assets:
Operating revenues .67% .64% .61% .65% .69%
Operating expenses .49% .37% .38% .43% .50%
Operating income .18% .27% .23% .22% .19%
</TABLE>
11
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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Financial Summary
Investment performance, over 27% for equity clients, was strong on an
absolute basis and much improved over 1996, but trailed the S&P 500 in 1997. Our
peer group ranking improved from the 90th percentile in 1996 to above median in
1997. Underperformance concerns led to net client outflows of $707 million in
1997. However, managed assets declined by only 3% in 1997 due to the strong
performance results, while average managed assets declined by 13% in 1997.
Income before taxes grew 12% in 1997, based on a significant increase in other
income, partially offset by weaker operating results. Atalanta's net other
income increased to $12.9 million from $6.6 million in 1996.
Earnings per share totaled $1.08 in 1997, compared with $1.00 in 1996 and
$1.14 in 1995 (all earnings per share amounts represent diluted earnings per
share). Net income was $9.8 million in 1997, compared with $8.8 million in 1996
and $10.0 million in 1995. Operating income was $5.1 million in 1997, compared
with $8.7 million in 1996 and $7.7 million in 1995, owing to growth in managed
assets prior to 1996 and the subsequent decline. The operating margin was 27% in
1997, compared with 42% in 1996 and 38% in 1995. Operating income per employee
and as a percentage of average managed assets totaled $128,000 and .18%,
respectively, in 1997, compared with $199,000 and .27% in 1996, and $183,000 and
.23% in 1995.
During 1997, special charges (classified in both separation costs and
general and administrative expenses) totaling $1.9 million ($.12 per share after
taxes) were debited to operations owing to the termination without cause of the
Company's former president ($1.4 million) and the costs incurred by the Company
associated with an abandoned effort to take the Company private. Net income
before special charges totaled $10.9 million, or $1.20 per share, in 1997.
Excluding special charges, operating income totaled $7.0 million (37% margin) in
1997, or a 20% decline from 1996.
Assets under management declined $81 million (3%) in 1997 to $2.68 billion
at year end. Average assets under management totaled $2.80 billion in 1997,
compared with $3.22 billion in 1996, and $3.27 billion in 1995.
Operating revenues totaled $18.8 million in 1997, compared with $20.8
million in 1996 and $20.0 million in 1995, reflecting changing levels of managed
assets over those periods. Operating expenses totaled $13.7 million in 1997,
compared with $12.0 million in 1996 and $12.4 million in 1995. The 1997 expense
increase reflects $1.9 million in special charges. Before special charges,
operating expenses declined 2% to total $11.8 million in 1997.
Cash, cash equivalents and marketable securities totaled $67 million at
December 31, 1997, compared with $56 million a year ago. Book value per share
was $7.36 at December 31, 1997, compared with $6.99 at the end of 1996.
12
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Assets Under Management
Managed assets totaled $2.68 billion at the end of 1997, compared with
$2.76 billion at the end of 1996 and $3.61 billion at the end of 1995. Managed
assets aggregated 244 client relationships at the end of 1997, compared with 350
relationships a year ago and 376 relationships at yearend 1995. The 1997 decline
in relationships is primarily due to the loss of accounts in two "wrap" programs
the Company participates in.
The $81 million net decrease in managed assets during 1997 is comprised of
$19 million in new client accounts and $626 million in positive performance
results, reduced by (i) $414 million in closed client accounts; and (ii) $312
million in net withdrawals from existing accounts. The closed accounts are
primarily the result of performance concerns.
In the two years ended December 31, 1997, managed assets decreased by $929
million, comprised of new accounts of $123 million and $974 million in positive
performance results, reduced by (i) $1,554 million in closed client accounts;
and (ii) $472 million in net withdrawals from existing accounts.
The Company has posted weak relative investment performance results over
the last two years and its marketing efforts are not expected to meet with
significant success until performance tracks the relevant benchmarks over an
extended period. Based on the managed asset level at the end of 1997, operating
revenues are expected to be lower in 1998 than 1997.
In February, 1998 the Company was informed that its second largest account
($277 million - 10.3% of managed assets at December 31, 1997) would be
terminating the Company's services by June, 1998. This account generated 3.8% of
the Company's operating revenues in 1997.
Earnings
Operating revenues declined 9% in 1997 to $18.8 million, compared with
$20.8 million in 1996 and $20.0 million in 1995. Average assets under management
declined 13% in 1997, and 1% in 1996.
In 1997 operating revenues were .67% of average managed assets, compared
with .64% in 1996 and .61% in 1995. This reflects the growth in managed assets
through 1995, and the subsequent decline offset by an increase in the weighted
advisory fee yield because the accounts lost over the last two years were
generally larger accounts with lower fee structures.
Advisory fees, which are earned based on the value of assets under
management, are the Company'sprimary source of operating revenues. Advisory fees
decreased 10% to $17.3 million in 1997, compared with $19.2 million in 1996 and
$18.3 million in 1995. Advisory fees were 92% of operating revenues in both 1997
and 1996, compared with 91% in 1995.
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Transaction fees (commissions) earned by Management are the primary source
of the Company's other operating revenues. They are derived from Management's
individual and smaller institutional accounts, investment partnerships and
specific institutional accounts that have given Management the authority to
execute trades. Commissions decreased 6% to $1.16 million in 1997, compared with
$1.23 million in 1996 and $1.34 million in 1995. The 1997 decline reflects the
decrease in managed assets during 1997.
Reported operating expenses increased 14% to $13.7 million in 1997,
compared with $12.0 million in 1996 and $12.4 million in 1995. Excluding special
charges and non-cash compensation charges, operating expenses declined 6%
compared with 1996. Adjusted operating expenses were 60% of operating revenues
and .40% of average managed assets in 1997, compared with 58% and .37% in 1996,
and 62% and .38% in 1995, reflecting cost containment and changing asset levels.
Compensation expense decreased 3% to $8.1 million in 1997, compared with
$8.3 million in 1996 and $8.8 million in 1995. Compensation was 43% of operating
revenues and .29% of average managed assets in 1997, compared with 40% and .26%
in 1996, and 44% and .27% in 1995. The 1997 decline is primarily the result of
no bonus payments to senior executives under the Company's Management Incentive
Plan based on 1997's decline in managed assets and operating earnings, partially
offset by $563,000 in non-cash compensation charges recorded in 1997 as the
result of the issuance of 775,000 shares of restricted stock in September, 1997.
Such restricted stock awards vest over four years, and the difference of $9.0
million between market value ($11.625 per share) on the date of grant and the
purchase price was recorded as unearned compensation in shareholders' equity and
will be amortized over a four-year period commencing with the fourth quarter of
1997.
The Company has a Management Incentive Plan ("MIP") which covers bonus
payments to certain executives. Under the MIP, the payment of bonuses to these
executives is based on the annual growth in operating income, after adjusting
for non-cash compensation charges. In 1997, participating executives were
awarded no bonuses under the MIP, compared with $860,000 awarded in 1996, and
$1.82 million awarded in 1995.
Excluding MIP charges and non-cash charges, compensation expense increased
$71,000 (1%) from a year ago, reflecting salary and bonus increases to the
general staff.
Reported non-compensation expenses rose by 51% to $5.6 million in 1997,
compared with $3.7 million in 1996 and $3.6 million in 1995. This increase is
the result of the $1.9 million in special charges recorded in 1997. Excluding
special charges, non-compensation expenses were flat at $3.7 million in both
1997 and 1996. These expenses are primarily fixed in nature and, as a result,
they are not directly related to changes in managed asset levels. Adjusted
non-compensation expenses totaled 20% of operating revenues and .13% of average
managed assets in 1997, compared with 18% and .12% in 1996, and 18% and .11% in
1995.
14
<PAGE>
Other income, which comprises interest, dividends, and realized
gains/losses from sales of marketable securities, totaled $12.9 million in 1997,
compared with $6.6 million in 1996 and $9.9 million in 1995. Net interest and
dividend income was $3.0 million in 1997, compared with $1.8 million in 1996 and
$1.9 million in 1995, primarily due to a special dividend received in 1997 from
a company whose securities were held in the Company's investment portfolio. Net
gains from investments totaled $9.9 million in 1997, compared with $4.8 million
in 1996 and $8.0 million in 1995, reflecting the varying strength of the
domestic financial markets in those years.
Liquidity and Capital Resources
At December 31, 1997 the Company had cash and cash equivalents totaling
$3.8 million, compared with $5.6 million at the end of 1996. Operating
activities provided net cash inflows of $2.4 million in 1997, compared with $3.7
million in the same period in 1996. This reflects the changing levels of
operating income and net income over those periods. Net cash used in investing
activities totaled $2.3 million in 1997, compared with a net use of $24.6
million in 1996. This reflects the Company's increased investment in marketable
securities during 1996, and subsequent small net purchases in 1997.
Investments in marketable securities aggregated $63.0 million at December
31, 1997, compared with $50.8 million at the end of 1996. Shareholders' equity
totaled $70.6 million at December 31, 1997, compared with $61.6 million at the
end of 1996, primarily due to net income of $9.8 million recorded in 1997. The
Company has adopted SFAS No. 115, and it resulted in a net unrealized gain of
$1.3 million in shareholders' equity at December 31, 1997, compared with
$861,000 at the end of 1996. At December 31, 1997, the Company had no
liabilities for borrowed money.
As of September 17, 1997, the Company awarded 775,000 shares of restricted
stock at the issue price of $.01 per share to two senior executives under the
terms of the Long Term Incentive Plan ("LTIP"). Mr. Craig B. Steinberg,
President, received 600,000 shares and Mr. Anthony G. Miller, Executive Vice
President and Chief Operating Officer, received 175,000 shares. Such awards vest
over four years. The difference of $9.0 million between the market value
($11.625 per share) of the shares awarded on the date of grant and the purchase
price of $.01 per share was recorded as unearned compensation in shareholders'
equity and will be amortized over a four-year period commencing with the fourth
quarter of 1997 (approximately $563,000 per quarter and $2.25 million annually).
The Company believes that the foreseeable capital and liquidity
requirements of its existing businesses will continue to be met with funds
generated from operations.
15
<PAGE>
Item 8. Financial Statements and Supplementary Data
See Index to Consolidated Financial Statements, and Consolidated Financial
Statement Schedules on page F-1 in Item 14.
Item 9. Changes in or Disagreements with Accountants on Accounting and Financial
Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
(a) Directors -
Information concerning directors of the Company is contained under the
caption "Election of Directors" in the Proxy Statement for the 1998 Annual
Meeting of Stockholders to be filed with the Securities and Exchange
Commission and is incorporated herein by reference.
(b) Executive Officers of the Registrant -
MARTIN T. SOSNOFF*, 66, was a founder of the Company and has been Chairman of
the Board, Chief Executive Officer and Chief Investment Officer of the
Company and its subsidiaries since their inceptions. He was a co-founder of
Atalanta Capital Corporation (investment management) and served as its
Chairman and Chief Executive Officer until 1983.
CRAIG B. STEINBERG**, 36, has been President, Director of Research, and held
other offices, with the Company and its subsidiaries since 1985. Mr.
Steinberg is a Portfolio Manager, and he was a securities analyst at
Prudential Equity Management from 1983 to 1985.
ANTHONY G. MILLER, 39, has been Executive Vice President, Chief Operating
Officer, Chief Financial Officer, and Secretary, and held other offices, with
the Company and its subsidiaries since 1986. From 1983 to 1986 he was
Manager, Foreign Exchange and Money Market Operations, and held other
positions, with the Royal Bank of Canada and, from 1980 to 1983 was a Senior
Accountant, and held other positions, with Arthur Andersen & Co.
16
<PAGE>
PAUL P. TANICO, 42, has been Executive Vice President, Portfolio Manager with
Capital and Management since 1997. Previously, Mr. Tanico was a Portfolio
Manager at Atalanta/Sosnoff from 1983 to 1987, and in 1991. Mr. Tanico began
his investment career with David J. Greene in 1981, and in 1992 was one of
the original partners at Omega Advisors. Since 1994, he has served as
Managing Partner of Castlerock Partners. From 1987 through 1990 Mr. Tanico
was a Portfolio Manager with Neuberger & Berman.
WILLIAM M. KNOBLER, 64, has been Senior Vice President of Management since 1985.
Mr. Knobler is a Portfolio Manager, and he was a securities analyst and
voting shareholder of Sanford C. Bernstein & Co. from 1979 to 1985.
HENRY E. PARKER, 70, has been Senior Vice President of Capital since 1986. Mr.
Parker was responsible for Public Fund Marketing, and he was Treasurer of the
State of Connecticut from 1975 to 1986. Mr. Parker retired from
Atalanta/Sosnoff on January 1, 1998.
JAMES D. STAUB, 65, has been Senior Vice President, and held other offices, with
Capital and Management since 1984. Mr. Staub is responsible for West Coast
Marketing, and he was a corporate officer of Alexander & Baldwin, Inc. from
1961 to 1984.
JOHN P. O'BRIEN, 59, has been Vice President, and held other offices, with the
Company and its subsidiaries since their inceptions. Mr. O'Brien serves as
the Controller for the Company and its subsidiaries.
Officers of the Registrant are elected at the meeting of the Board of
Directors held each year immediately after the Annual Meeting of Stockholders
and serve for the ensuing year and until their successors are elected and
qualified.
- ----------
* Also a director and member of the Executive, Compensation and Stock Option
Committees.
** Also a director and member of the Executive Committee.
17
<PAGE>
Item 11. Executive Compensation.
Information concerning executive compensation is contained under the
captions "Election of Directors", "Executive Compensation", "Stock Option and
Long Term Incentive Plans", "Profit-Sharing Plan" and "Management Incentive
Plan" in the Proxy Statement for the 1998 Annual Meeting of Stockholders to be
filed with the Securities and Exchange Commission and is incorporated herein by
reference.
Item 12. Beneficial Ownership of the Company's Securities.
Information concerning security ownership of certain beneficial owners and
management is contained under the caption "Beneficial Ownership of Securities of
the Company" in the Proxy Statement for the 1998 Annual Meeting of Stockholders
to be filed with Securities and Exchange Commission and is incorporated herein
by reference.
Item 13. Certain Relationships and Related Transactions.
Information concerning certain relationships and related transactions is
contained under the caption "Agreements and Transactions with Directors and
Executive Officers" in the Proxy Statement for the 1998 Annual Meeting of
Stockholders to be filed with the Securities and Exchange Commission and is
incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. FINANCIAL STATEMENTS
See Index to Consolidated Financial Statements and Consolidated Financial
Statement Schedules on Page F-1 of Item 14.
2. FINANCIAL STATEMENT SCHEDULES
See Index to Consolidated Financial Statements and Consolidated Financial
Statement Schedules on Page F-1 of Item 14.
(b) None.
18
<PAGE>
ATALANTA/SOSNOFF CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997 AND 1996
TOGETHER WITH AUDITORS' REPORT
<PAGE>
ATALANTA/SOSNOFF CAPITAL CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
----
I. FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION:
Financial Statements
Report of Independent Public Accountants F-2
Consolidated Statements of Financial Condition - December 31,
1997 and 1996 F-3
Consolidated Statements of Income for the Years Ended
December 31, 1997, 1996 and 1995 F-4
Consolidated Statements of Changes in Shareholders' Equity
for the Years Ended December 31, 997, 1996 and 1995 F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995 F-6
Notes to Consolidated Financial Statements F-7 to F-15
Supplementary Financial Information
Selected Quarterly Financial Data (Unaudited) F-16
Financial statement schedules not included in this report have been omitted
because they are not applicable or the required information is given in the
consolidated financial statements or the notes thereto.
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Atalanta/Sosnoff Capital Corporation:
We have audited the accompanying consolidated statements of financial condition
of Atalanta/Sosnoff Capital Corporation (a Delaware corporation) and
subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of income, changes in shareholders' equity and cash flows for each of
the three years in the period ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Atalanta/Sosnoff Capital
Corporation and subsidiaries as of December 31, 1997 and 1996, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1997, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
New York, New York
February 10, 1998
F-2
<PAGE>
ATALANTA/SOSNOFF CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
ASSETS 1997 1996
--------------- ---------------
<S> <C> <C>
Assets:
Cash and cash equivalents $ 3,805,243 $ 5,585,953
Accounts receivable 3,355,399 3,782,098
Receivable from clearing broker 1,323,473 2,437,821
Investments, at market 63,039,613 50,789,141
Investments in limited partnerships 1,928,454 573,044
Fixed assets, net of accumulated depreciation and amortization of
$238,279 and $88,094, respectively 789,361 610,231
Exchange memberships, at cost (market value
$2,475,000 and $1,830,000, respectively) 402,000 402,000
Other assets 769,281 516,038
--------------- ---------------
Total assets $ 75,412,824 $ 64,696,326
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and other liabilities $ 854,039 $ 647,096
Accrued compensation payable 839,424 1,397,099
Income taxes payable 1,763,574 1,024,210
Separation costs payable 1,400,000 -
--------------- ---------------
Total liabilities 4,857,037 3,068,405
--------------- ---------------
Commitments and contingencies (Note 9)
Shareholders' equity:
Preferred stock, par value $1.00 per share; 5,000,000 shares authorized;
none issued - -
Common stock, par value $.01 per share; 30,000,000 shares authorized;
9,587,401 and 8,812,401 shares issued and outstanding, respectively 95,874 88,124
Additional paid-in capital 24,648,499 15,646,874
Retained earnings 52,963,643 45,031,750
Unrealized gains from investments, net of deferred tax liabilities of
$858,156 and $574,409, respectively 1,286,794 861,173
Unearned compensation (8,439,023) -
-------------- ---------------
Total shareholders' equity 70,555,787 61,627,921
--------------- ---------------
Total liabilities and shareholders' equity $ 75,412,824 $ 64,696,326
=============== ===============
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
ATALANTA/SOSNOFF CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
Revenues:
Advisory fees $ 17,286,815 $ 19,159,433 $ 18,325,129
Commissions and other 1,542,657 1,599,735 1,723,847
--------------- --------------- ---------------
Total revenues 18,829,472 20,759,168 20,048,976
--------------- --------------- ---------------
Costs and expenses:
Employees' compensation 8,069,548 8,295,815 8,814,487
Clearing and execution costs 526,964 541,596 620,605
Selling expenses 429,077 466,484 452,519
General and administrative expenses 4,681,383 2,718,038 2,492,899
--------------- --------------- ---------------
Total costs and expenses 13,706,972 12,021,933 12,380,510
--------------- --------------- ---------------
Operating income 5,122,500 8,737,235 7,668,466
--------------- --------------- ---------------
Other income (expense):
Interest and dividend income 3,030,836 1,858,166 1,897,505
Interest expense (34,087) (15,702) (16,306)
Realized and unrealized gains from investments, net 9,854,124 4,783,217 7,985,266
--------------- --------------- ---------------
Other income, net 12,850,873 6,625,681 9,866,465
--------------- --------------- ---------------
Income before provision for income taxes 17,973,373 15,362,916 17,534,931
Provision for income taxes 8,124,000 6,561,000 7,487,000
--------------- --------------- ---------------
Net income $ 9,849,373 $ 8,801,916 $ 10,047,931
=============== =============== ===============
Earnings per common share - basic $ 1.09 $ 1.00 $ 1.14
================ ============== ==============
Earnings per common share - diluted $ 1.08 $ 1.00 $ 1.14
=============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
ATALANTA/SOSNOFF CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
Unrealized
Gains
Additional From Unearned
Common Paid-in Retained Investments, Compen-
Stock Capital Earnings Net sation Total
---------- ------------- ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1994 $ 88,124 $ 15,646,874 $ 28,825,623 $(220,656) $ - $ 44,339,965
Unrealized gains from
investments, net of
deferred taxes 1,451,395 1,451,395
Net income 10,047,931 10,047,931
Dividends ($.15 per share) (1,321,860) (1,321,860)
---------- ------------- ------------ ---------- ----------- ------------
BALANCE, December 31, 1995 88,124 15,646,874 37,551,694 1,230,739 - 54,517,431
Unrealized losses from
investments, net of
deferred taxes (369,566) (369,566)
Net income 8,801,916 8,801,916
Dividends ($.15 per share) (1,321,860) (1,321,860)
---------- ------------- ------------ ---------- ----------- ------------
BALANCE, December 31, 1996 88,124 15,646,874 45,031,750 861,173 - 61,627,921
Issuance of 775,000
restricted shares 7,750 9,001,625 (9,001,625) 7,750
Amortization of unearned
compensation 562,602 562,602
Unrealized gains from
investments, net of
deferred taxes 425,621 425,621
Net income 9,849,373 9,849,373
Dividends ($.20 per share) (1,917,480) (1,917,480)
---------- ------------- ------------ ---------- ----------- ------------
BALANCE, December 31, 1997 $ 95,874 $ 24,648,499 $ 52,963,643 $1,286,794 $(8,439,023) $70,555,787
========== ============= ============ ========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
ATALANTA/SOSNOFF CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
--------------- --------------- --------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 9,849,373 $ 8,801,916 $ 10,047,931
Adjustments to reconcile net income to net cash provided
by operating activities-
Depreciation and amortization 712,787 121,987 138,450
Realized and unrealized gains from
investments, net (9,854,124) (4,783,217) (7,985,266)
Deferred taxes (522,264) (103,000) 32,000
(Increase) /decrease from changes in-
Accounts receivable 426,699 576,872 (1,032,573)
Other assets (253,243) (388,368) 239,558
Accounts payable and other liabilities 206,943 98,672 277,691
Accrued compensation payable (557,675) (935,214) 1,048,621
Income taxes payable 977,880 274,885 (13,401)
Separation costs payable 1,400,000 - -
--------------- --------------- --------------
Net cash provided by operating activities 2,386,376 3,664,533 2,753,011
--------------- --------------- ---------------
Cash flows from investing activities:
Payments to clearing broker, net 1,114,348 (113,169) (533,584)
Purchases of fixed assets (329,314) (622,017) (13,616)
Purchases of investments (117,715,145) (128,128,495) (116,007,833)
Proceeds from sales of investments 114,672,755 104,216,117 140,928,212
--------------- --------------- ---------------
Net cash provided by (used in) investing
activities (2,257,356) (24,647,564) 24,373,179
---------------- --------------- ---------------
Cash flows from financing activities:
Proceeds received for issuance of
restricted shares 7,750 - -
Dividends paid (1,917,480) (1,321,860) (2,643,720)
---------------- --------------- ---------------
Net cash used in financing activities (1,909,730) (1,321,860) (2,643,720)
---------------- --------------- ---------------
Net increase (decrease) in cash and cash
equivalents (1,780,710) (22,304,891) 24,482,470
Cash and cash equivalents, beginning of year 5,585,953 27,890,844 3,408,374
--------------- --------------- ---------------
Cash and cash equivalents, end of year $ 3,805,243 $ 5,585,953 $ 27,890,844
=============== =============== ===============
Supplemental disclosure of cash flow information:
Cash paid during the year for-
Interest $ 34,087 $ 15,702 $ 16,306
Taxes 7,668,384 6,389,115 7,468,401
Noncash financing activity-
Increase in additional paid-in capital
related to the issuance of restricted shares 9,001,625 - -
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE>
ATALANTA/SOSNOFF CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Atalanta/Sosnoff Capital Corporation (the "Holding Company") and its direct and
indirect wholly-owned subsidiaries, Atalanta/Sosnoff Capital Corporation
(Delaware) ("Capital") and Atalanta/Sosnoff Management Corporation
("Management"). Capital is a registered investment advisor. It provides
investment advisory and management services to institutional clients and certain
investment partnerships. Management is a registered investment advisor and a
broker-dealer in securities, with memberships on the New York Stock Exchange,
Inc. and the Chicago Board Options Exchange, Inc. It provides investment
advisory and management services to individual and smaller institutional clients
and brokerage services to its clients and some of the clients of Capital.
Certain prior year balances have been reclassified in the accompanying
consolidated financial statements to conform to the 1997 presentation.
The Holding Company and its subsidiaries are referred to collectively herein as
the "Company." All intercompany accounts and transactions have been eliminated
in consolidation.
Revenue Recognition
Advisory fee income is recognized in the period in which services are performed
based on a percentage of assets under management. Commission income and expenses
arising from customers' securities transactions are recognized on a settlement
date basis. The effect of using the settlement date instead of the trade date
for recognition has been immaterial.
Investments, at Market
The Company records its investments in accordance with the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 115, with the exception
of investments held by Management. The Company has designated those investments
held by the Holding Company and Capital in equity and debt securities as
"available for sale," for which unrealized gains and losses are reported as a
separate component of shareholders' equity. Investments held by Management are
recorded at market value, with the related unrealized gains and losses reflected
in the consolidated statements of income.
F-7
<PAGE>
ATALANTA/SOSNOFF CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Investments are recorded on trade date. The cost of investments sold is
determined on the first-in first-out method. Dividends and interest are accrued
as earned.
Capital serves as a general partner for three Company-sponsored investment
partnerships (the "Partnerships") and as the investment manager for a
Company-sponsored offshore investment fund (the "Offshore Fund"). Investments in
limited partnerships are carried in the accompanying financial statements at the
Company's share of the net asset values as reported by the respective
Partnerships. Limited partners whose capital accounts in the aggregate are
two-thirds of the total capital accounts of all limited partners in each
Partnership may, at any time, require Capital to withdraw as the general partner
of such Partnership. Therefore, the Company is not deemed to have control of the
Partnerships, and accordingly, the accounts of the Partnerships are not included
in these consolidated financial statements.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments with a maturity of
three months or less to be cash equivalents.
Depreciation and Amortization
Furniture, equipment, computer software and leasehold improvements are stated at
cost, net of accumulated depreciation and amortization computed using the
straight-line method. Depreciation of furniture, equipment and computer software
is provided over estimated useful lives ranging from five to seven years.
Leasehold improvements are amortized over the shorter of their useful lives or
the remainder of the term of the related lease. Accumulated depreciation for
fully depreciated fixed assets are removed from the related accounts for those
assets which have been retired.
Income Taxes
The Company records income taxes in accordance with the provisions of SFAS No.
109. Accordingly, deferred taxes are provided to reflect temporary differences
between the recognition of income and expense for financial reporting and tax
purposes.
Estimates by Management
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the reported amounts
of revenues and expenses. Actual results could differ from those estimates.
F-8
<PAGE>
ATALANTA/SOSNOFF CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. EARNINGS PER COMMON SHARE
Basic earnings per common share amounts were computed based on 9,037,469,
8,812,401 and 8,812,401 weighted average common shares outstanding in 1997, 1996
and 1995, respectively.
In accordance with the provisions of SFAS No. 128, dilutive earnings per share
for the three years ended December 31, 1997, were computed based on the weighted
average common shares outstanding provided in the table below. Antidilutive
options were not included in the computation of dilutive earnings per share as
the options ` exercise prices were greater than the average market price of the
common shares for each of those respective years.
1997 1996 1995
--------- --------- ---------
Weighted average common
shares outstanding 9,037,469 8,812,401 8,812,401
Common stock equivalents-options 50,936 30,350 6,660
--------- --------- ---------
Dilutive weighted average
common shares outstanding 9,088,405 8,842,751 8,819,061
========= ========= =========
Antidilutive options - 35,000 836,724
========= ========= =========
3. INVESTMENTS AND CASH
Investments at December 31, 1997 and 1996, consisted of the following:
<TABLE>
<CAPTION>
Unrealized
Cost Market Value Gain (Loss)
---------------- ---------------- ----------------
<S> <C> <C> <C>
1997:
Available for Sale:
-------------------
Common stock $ 32,022,237 $ 34,107,433 $ 2,085,196
U.S. government obligations 20,176,377 20,278,120 101,743
Corporate debt 1,183,078 1,152,875 (30,203)
---------------- ---------------- ----------------
53,381,692 55,538,428 2,156,736
---------------- ---------------- ----------------
Trading:
--------
Common stock 1,231,512 1,674,000 442,488
U.S. government obligations 5,793,864 5,827,185 33,321
---------------- ---------------- ----------------
7,025,376 7,501,185 475,809
---------------- ---------------- ----------------
$ 60,407,068 $ 63,039,613 $ 2,632,545
============== ============== =============
</TABLE>
F-9
<PAGE>
ATALANTA/SOSNOFF CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Unrealized
Cost Market Value Gain (Loss)
---------------- ---------------- ----------------
<S> <C> <C> <C>
1996:
Available for Sale:
-------------------
Common stock $ 25,613,018 $ 26,866,000 $ 1,252,982
U.S. government obligations 13,033,571 12,995,931 (37,640)
Preferred stock 3,685,000 3,917,025 232,025
---------------- ---------------- ----------------
42,331,589 43,778,956 1,447,367
---------------- ---------------- ----------------
Trading:
--------
Common stock 1,231,512 1,212,000 (19,512)
U.S. government obligations 5,790,458 5,798,185 7,727
---------------- ---------------- ----------------
7,021,970 7,010,185 (11,785)
---------------- ---------------- -----------------
$ 49,353,559 $ 50,789,141 $ 1,435,582
================ ================ ================
</TABLE>
The Company had interest-bearing free credit balances with its clearing broker
of $690,870 and $2,368,733 at December 31, 1997 and 1996, respectively.
4. RECEIVABLE FROM CLEARING BROKER
Receivable from clearing broker represents net amounts due for securities
transactions executed on or prior to year-end but settling thereafter.
5. SEPARATION COSTS PAYABLE
The separation costs relate to the Company's termination without cause of its
former president on August 15, 1997. Such termination is governed by the terms
of the former president's Employment Agreement, whereby he receives over the
next two years severance at his base salary level at the time of termination.
6. RELATED PARTY TRANSACTIONS
As the General Partner for the Partnerships and the investment manager for the
Offshore Fund, Capital earned approximately $1,258,000, $1,099,000 and $989,000
in 1997, 1996 and 1995, respectively, for advisory and management services
(charged at 1% and 1% - 2% of net assets, respectively). Management earned
commissions of approximately $59,000, $12,000 and $18,000 in 1997, 1996 and
1995, respectively, for brokerage services provided to the Partnerships.
Advisory fees and brokerage commissions are based on terms comparable to those
in agreements with unrelated parties. Balances receivable from the Partnerships
were approximately $110,000, $92,000 and $91,000 at December 31, 1997, 1996 and
1995, respectively.
F-10
<PAGE>
ATALANTA/SOSNOFF CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. PROVISION FOR INCOME TAXES
The provision for income taxes consists of:
<TABLE>
<CAPTION>
1997 1996 1995
-------------- -------------- --------------
<S> <C> <C> <C>
Current income taxes:
Federal $ 2,982,961 $ 4,197,000 $ 5,308,000
State and local 5,663,303 2,467,000 2,147,000
-------------- -------------- --------------
Total current 8,646,264 6,664,000 7,455,000
-------------- -------------- --------------
Deferred income taxes provision:
Federal (180,180) (56,000) 30,000
State and local (342,084) (47,000) 2,000
-------------- -------------- --------------
Total deferred (522,264) (103,000) 32,000
-------------- -------------- --------------
$ 8,124,000 $ 6,561,000 $ 7,487,000
============== ============== ==============
</TABLE>
A reconciliation of the statutory federal income tax rate and the effective rate
based on consolidated income before income taxes in 1997, 1996, 1995, is set
forth below:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Statutory federal income tax rate 34.5% 34.5% 34.5%
Increase resulting from:
State and local income taxes, net of federal 10.6 8.0 8.0
tax benefit
Other 0.1 0.2 0.2
------ ------ ------
Effective rate 45.2% 42.7% 42.7%
====== ====== ======
</TABLE>
At December 31, 1997 and 1996, income taxes payable included deferred tax
liabilities of $289,424 and of $492,584, respectively. The components of the
deferred tax assets and liabilities include the following:
<TABLE>
<CAPTION>
1997 1996
------------- --------------
<S> <C> <C>
Unrealized gain on investments $ 1,053,000 $ 574,409
Separation costs payable (490,000) -
Restricted stock award (224,800) -
Other (48,776) (81,825)
------------- --------------
$ 289,424 $ 492,584
============ ==============
</TABLE>
F-11
<PAGE>
ATALANTA/SOSNOFF CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. NET CAPITAL REQUIREMENTS
Management is subject to the Securities and Exchange Commission Uniform Net
Capital Rule 15c3-1, which requires the maintenance of minimum net capital and
requires that the ratio of aggregate indebtedness to net capital, both as
defined, not exceed 15 to 1. The net capital rule of the New York Stock Exchange
also provides that equity capital may not be withdrawn or cash dividends paid if
the resulting net capital ratio would exceed 10 to 1. At December 31, 1997,
Management had net capital of $8,887,315, which was $8,637,315 in excess of its
required net capital of $250,000, and had a ratio of aggregate indebtedness to
net capital of .07 to 1.
9. COMMITMENTS AND CONTINGENCIES
Leases
The Company leases office facilities and equipment under various noncancellable
operating leases expiring through 2002. Rent expense was approximately $661,000,
$475,000 and $537,000 in 1997, 1996 and 1995, respectively.
Approximate minimum rental commitments under noncancellable operating leases for
the years 1998 through 2001 are equal to $626,000 per year, and $417,000 for the
year of 2002.
Clearance of Securities
Bear, Stearns Securities Corporation, Inc. ("Bear Stearns") has an agreement
with Management to clear securities transactions and carry customers' accounts
on a fully disclosed basis. The agreement states that Management will assume
customer obligations should a customer of Management default. Bear Stearns
controls credit risk of customers by requiring maintenance margin collateral in
compliance with various regulatory and internal guidelines.
10. STOCK OPTION, STOCK PURCHASE,
INCENTIVE AND PROFIT-SHARING PLANS
During 1996, the Company adopted the Long-Term Incentive Plan ("LTIP") under
which awards of stock, restricted stock, options and other stock-based awards
totaling 880,000 shares of common stock may be granted to all full-time
employees, officers and directors of the Company and its subsidiaries. No awards
under the LTIP were granted during 1996.
During 1997, the company awarded 775,000 shares of restricted stock at the issue
price of $.01 per share to two officers of the Company under the terms of the
LTIP. Such awards vest over four years. The difference of $9,001,625 between
market value ($11.625 per share) on the date of grant and the purchase price was
recorded as unearned compensation in shareholders' equity and will be amortized
over a four-year period commencing with the fourth quarter of 1997.
F-12
<PAGE>
ATALANTA/SOSNOFF CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Options may be granted as either "Qualified Options," "Nonqualified Options" or
"Incentive Options." Generally, Qualified Options and Incentive Options may not
be granted at a per share price that is less than 100% of fair market value on
the date of grant. Nonqualified Options may be granted at prices determined by a
committee comprised of certain members of the Board of Directors.
The Company's previous stock option plan, as amended (the "SOP") was terminated
by the Company in connection with the approval by stockholders of the LTIP. The
SOP provided for options to purchase 900,000 shares of common stock. The
termination of the SOP does not affect options outstanding.
A summary of SOP option transactions for the three years ended December 31,
1997, is presented below. Each option becomes exercisable as to 20% of the total
number of shares subject to the option six months after the date of grant, and
as to an additional 20% each year thereafter. Generally, options may not expire
more than ten years from the date of grant. All Incentive Stock Options were
granted at an exercise price of $6.125 per share, all Qualified Options were
granted at an exercise price of $14.50 per share, and all Nonqualified Options
were granted at exercise prices equal to market price per share at the date of
grant. Only the LTIP has options available for grant at the end of 1997.
<TABLE>
<CAPTION>
SOP
-------------------------------------------
Incentive Qualified Nonqualified
Stock Stock Stock
Options Options Options Total
----------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
Outstanding, beginning of 1995 50,000 3,448 35,000 88,448
Canceled during 1995 - (1,724) - (1,724)
Granted during 1995 - - 800,000 800,000
----------- ---------- ------------ ----------
Outstanding, end of 1995 50,000 1,724 835,000 886,724
Expired during 1996 - (1,724) - (1,724)
----------- ---------- ------------ ----------
Outstanding, end of 1996 50,000 - 835,000 885,000
Canceled during 1997 - - (650,000) (650,000)
Expired during 1997 - - (35,000) (35,000)
----------- ---------- ------------ ----------
Outstanding, end of 1997 50,000 - 150,000 200,000
=========== ========== ============ ==========
Exercisable, end of 1995 66,724
==========
Exercisable, end of 1996 235,000
==========
Exercisable, end of 1997 110,000
==========
Available for grant, end of 1997 105,000
==========
</TABLE>
F-13
<PAGE>
ATALANTA/SOSNOFF CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company accounts for these options under APB Opinion No. 25, under which no
compensation cost has been recognized in the accompanying consolidated
statements of income. Had compensation cost for these options been determined
consistent with the fair value method required by FASB Statement No. 123, the
Company's net income and earnings per share would have been the following pro
forma amounts in each of the three years ending December 31, 1997:
<TABLE>
<CAPTION>
1997 1996 1995
--------------- --------------- -------------
<S> <C> <C> <C>
Net income:
As reported $ 9,849,373 $ 8,801,916 $ 10,047,931
Pro forma 9,626,832 8,322,122 10,007,948
Basic EPS:
As reported $ 1.09 $ 1.00 $ 1.14
Pro forma 1.07 .94 1.14
Dilutive EPS:
As reported 1.08 1.00 1.14
Pro forma 1.06 .94 1.14
</TABLE>
For purposes of the FASB No. 123 calculations, the fair value of the options to
purchase 800,000 shares granted in 1995 was $4.71 per share, and was estimated
on the date of grant using the Block-Scholes option pricing model with the
following assumptions used: risk free interest rate of 5.7%; expected dividend
yield of 1.6%, expected option life of 10 years and expected volatility of
40.0%.
Because the Statement 123 method of accounting has not been applied to options
granted prior to January 1, 1995, the resulting pro forma compensation cost and
related impact on net income and earnings per share may not be representative of
that to be expected in future years.
In January 1998, the Company granted 50,000 Incentive Options at an exercise
price of $9.00 per share under the LTIP to an executive officer of the Company.
Effective January 1, 1993, the Company adopted the Management Incentive Plan
(the "MIP") for senior executives. Under the MIP, each participant is entitled
to receive his assigned share of the annual award pool, which is computed based
on operating income performance goals, as defined in the MIP. Included in
employees' compensation on the consolidated statements of income in 1997, 1996
and 1995 is $ 0, $860,000, and $1,818,000, respectively, related to the MIP.
The Company also has a profit-sharing plan covering substantially all full-time
employees. Contributions to this plan, which in any fiscal year are at the
discretion of the Board of Directors, were approximately $ 135,000, $138,000,
and $151,000 in 1997, 1996 and 1995, respectively.
F-14
<PAGE>
ATALANTA/SOSNOFF CAPITAL CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY FINANCIAL INFORMATION
SELECTED QUARTERLY FINANCIAL DATA
(Unaudited)
<TABLE>
<CAPTION>
Quarter
-----------------------------------------------------------------
First Second Third Fourth
--------- --------- --------- --------
(000's omitted, except per share
amounts)
<S> <C> <C> <C> <C>
1997:
Operating revenues $ 4,775 $ 4,494 $ 4,789 $ 4,771
Operating expenses 2,767 2,805 4,623 3,511
Operating income 2,007 1,690 166 1,259
Other income, net 2,047 4,910 3,036 2,858
Income before income taxes 4,054 6,599 3,202 4,118
Net income 2,249 3,588 1,746 2,267
Per common share -
Basic .26 .41 .20 .24
Diluted .26 .41 .19 .23
1996:
Operating revenues $ 5,477 $ 5,375 $ 4,983 $ 4,924
Operating expenses 3,308 2,915 2,968 2,829
Operating income 2,169 2,460 2,015 2,095
Other income, net 1,848 1,282 1,440 2,056
Income before income taxes 4,017 3,742 3,445 4,151
Net income 2,300 2,131 1,988 2,385
Per common share -
Basic .26 .24 .23 .27
Diluted .26 .24 .23 .27
1995:
Operating revenues $ 4,546 $ 4,766 $ 5,229 $ 5,508
Operating expenses 2,973 3,173 3,179 3,056
Operating income 1,573 1,593 2,050 2,452
Other income, net 2,068 2,562 3,613 1,624
Income before income taxes 3,641 4,155 5,663 4,076
Net income 2,082 2,382 3,250 2,333
Per common share -
Basic .24 .27 .37 .26
Diluted .24 .27 .37 .26
</TABLE>
F-15
<PAGE>
(c) Exhibits -
3.1 Certificate of Incorporation (Exhibit 3.1) (1)
3.2 Amendment, dated September 11, 1987 to Certificate of
Incorporation(2)
3.3 By-Laws (Exhibit 3.2) (3)
4. Indenture, dated as of June 15, 1986, between Atalanta/Sosnoff
Capital Corporation and Morgan Guaranty Trust Company of New York
relating to $33,000,000 of 7 1/8% Convertible Senior Debentures due
June 15, 2001. (4)
10.1 Termination and Purchase Agreement, dated as of December 21, 1987,
among Martin T. Sosnoff, Shepard D. Osherow, the Company and its
subsidiaries (Exhibit 10.1)(6).
10.2 Lease Agreement dated as of July 15, 1980 between Martin T. Sosnoff
and Park Tower Associates. (Exhibit 10.2) (1)
10.3 First Lease Modification Agreement dated as of May 20, 1982 between
Martin T. Sosnoff and Park Tower Associates. (Exhibit 10.3)(1)
10.4 Second Lease Modification Agreement dated as of January 1985 between
Martin T. Sosnoff and Park Tower Associates. (Exhibit 10.4)(1)
10.5 Form of Sublease between Martin T. Sosnoff and the Company. (Exhibit
10.5) (3)
10.6 Assignment of Lease between the Company and North American
Consortium, Inc. (Exhibit 10.7)(7)
10.7 Sublease dated October 18, 1988 between the Company and First City
Capital Corporation (8)
10.8 Employment Agreement between Martin T. Sosnoff and the Company dated
as of March 31, 1986 (Exhibit 10.6.) (1), (13)
10.9 Consulting Agreement between Shepard D. Osherow and the Company
dated December 21, 1987. (Exhibit 10.2) (6), (13)
10.10 Form of Employment Agreement, as executed May 19, 1988 by each of
Robert J. Kobel, Eric A. Stiefel and Brian P. Hull (8), (13)
19
<PAGE>
10.11 Letter Agreement between Martin T.Sosnoff and L. Mark Newman dated
February 14, 1985 and exhibits thereto. (Exhibit 10.20) (1)
10.12 Agreement between Martin T. Sosnoff and Shepard D. Osherow dated
February 25, 1985 regarding the Letter Agreement between Martin T.
Sosnoff and L. Mark Newman. (Exhibit 10.21) (1)
10.13 1987 Stock Option Plan. (Exhibit 4.1) (5), (13)
10.14 1987 Incentive Stock Purchase Plan. (Exhibit 4.4) (5), (13)
10.15 Restricted Stock Bonus Plan (8), (13)
10.16 Form of Stock Bonus Award Agreements, as executed May 19, 1988 by
each of Robert J. Kobel, Eric A. Stiefel and Brian P. Hull (8), (13)
10.17 Profit Sharing Trust Agreement and Plan dated May 21, 1985 between
Atalanta/Sosnoff Capital Corporation and the plan trustees. (Exhibit
10.24) (1), (13)
10.18 Sub-sublease dated June 23, 1989 between the Company and Ehrlich
Bober & Co., Inc. (9)
10.19 Management Incentive Plan as adopted by the Board of Directors of
the Company on December 9, 1992 (10), (13)
10.20 Executive Employment Agreement dated as of December 9, 1992 between
Robert J. Kobel and the Company (10), (13)
10.21 Employment Agreement dated January 1, 1986 between Henry E. Parker
and the Company (10), (13)
10.22 Amended and Restated Management Incentive Plan as adopted by the
Board Directors of the Company on December 9, 1993 and March 8, 1994
(11), (13)
10.23 Executive Employment Agreement dated July 8, 1993 between Craig B.
Steinberg and the Company (11), (13)
10.24 Executive Employment Agreement dated December 7, 1995 between Robert
J. Kobel and the Company (12), (13)
10.25 Employment Agreement dated July 1, 1986 between James D. Staub and
the Company (12), (13)
20
<PAGE>
10.26 Modification Agreement of Sub-Lease dated February 27, 1996 between
the Company and Foote, Cone & Belding Advertising, Inc. (12)
10.27 1996 Long-Term Incentive Plan - FILED HEREWITH (13)
10.28 Restricted Stock Award Agreements dated as of September 17, 1997
executed by each of Craig B. Steinberg and Anthony G. Miller - FILED
HEREWITH (13)
10.29 Employment Agreement dated December 22, 1997 between James D. Staub
and the Company - FILED HEREWITH (13)
11. Computation of Earnings per Share - FILED HEREWITH
22. Subsidiaries of the Registrant. (Exhibit 22) (1)
25. Power of Attorney (included as part of the "Signatures" page).
27. Financial Data Schedule - FILED HEREWITH
- ----------
(1) Incorporated by reference to the exhibit number indicated to the Company's
Registration Statement on Form S-1 filed April 21, 1986 (Registration No.
33-5028) (the "S-1")
(2) Incorporated by reference to Exhibit 3.2 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1987.
(3) Incorporated by reference to the exhibit number indicated to Amendment No.
2 to the S-1 filed June 10, 1986.
(4) Incorporated by reference to Exhibit 4 to the Company's Form 10-Q for the
quarter ended June 30, 1986.
(5) Incorporated by reference to the exhibit number indicated to the Company's
Registration Statement on Form S-8 filed March 31, 1987 (Registration
No.33-13063)
(6) Incorporated by reference to the exhibit numbers indicated to the Company's
Form 8-K filed December 22, 1987.
(7) Incorporated by reference to the exhibit numbers indicated to the Company's
Form 10-K for the year ended December 31, 1986.
(8) Incorporated by reference to the exhibit numbers indicated to the Company's
Form 10-K for the year ended December 31, 1988.
21
<PAGE>
(9) Incorporated by reference to the exhibit numbers indicated to the Company's
Form 10-K for the year ended December 31, 1989.
(10) Incorporated by reference to the exhibit numbers indicated to the Company's
Form 10-K for the year ended December 31, 1992.
(11) Incorporated by reference to the exhibit numbers indicated to the Company's
Form 10-K for the year ended December 31, 1993.
(12) Incorporated by reference to the exhibit numbers indicated to the Company's
Form 10-K for the year ended December 31, 1995.
(13) Required to be filed pursuant to the instructions to Item 14(c) of Form
10-K.
22
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned whose
signature appears below constitutes and appoints Martin T. Sosnoff, Craig B.
Steinberg, and Anthony G. Miller, and each of them (with full power of each of
them to act alone), his true and lawful attorneys-in-fact and agents, for him
and on his behalf, and in his name, place and stead, to execute and sign all
amendments or supplements to this Annual Report on Form 10-K, and to file the
same with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do himself, and the registrant hereby confers like authority on its
behalf.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
issuer has duly caused this Annual Report on Form 10-K to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York
and State of New York, on this 12th day of March, 1998.
ATALANTA/SOSNOFF CAPITAL CORPORATION
By: s/ Martin T. Sosnoff
Martin T. Sosnoff
Chairman of the Board and
Chief Executive Officer
23
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities and on
the dates indicated.
Signature Title Date
--------- ----- ----
s/ Kenneth H. Iscol
Kenneth H. Iscol Director March 12, 1998
s/ Robert J. Kobel
Robert J. Kobel Director March 12, 1998
s/ Anthony G. Miller
Anthony G. Miller Executive Vice President, March 12, 1998
Chief Operating Officer,
Chief Financial Officer
(Principal Financial
and Accounting Officer)
s/ Martin T. Sosnoff
Martin T. Sosnoff Chairman, Chief March 12, 1998
Executive Officer,
Director (Principal
Executive Officer)
s/ Craig B. Steinberg
Craig B. Steinberg President and March 12, 1998
Director of Research,
Director
s/ Thurston Twigg-Smith
Thurston Twigg-Smith Director March 12, 1998
24
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION PAGE
- -------------- ----------- ----
10.27 1996 Long-Term Incentive Plan
10.28 Restricted Stock Award Agreements
10.29 Employment Agreement with James D. Staub
11 Computation of Earnings per Share
27 Financial Data Schedule
25
<PAGE>
Exhibit 10.27
ATALANTA/SOSNOFF CAPITAL CORPORATION
(and Subsidiaries)
1996 LONG TERM
INCENTIVE PLAN
I. Purpose
The purpose of the Atalanta/Sosnoff 1996 Long-Term Incentive Plan (the
"Plan") is to attract and retain and provide incentives to employees, officers
and directors and consultants of the Corporation and its subsidiaries and to
thereby increase stockholder value. The Plan generally provides for the granting
of stock, restricted stocks, stock options, stock appreciation rights, or other
stock based awards, or any combination of the foregoing to the eligible
participants.
II. Definitions
(a) "Award" includes, without limitation, stock options (including
incentive stock options within the meaning of Section 422(b) of the Code) with
or without stock appreciation rights, dividend equivalent rights, stock awards,
restricted stock awards, or other awards that are valued in whole or in part by
reference to, or are other wise based on, the Common Stock ("other Common
Stock-based Awards"), all on a stand alone, combination or tandem basis, as
described in or granted under this Plan.
(b) "Award Agreement" means a written agreement setting forth the terms and
conditions of each Award made under this Plan.
(c) "Board" means the Board of Directors of the Corporation.
<PAGE>
(d) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(e) "Committee" means the Compensation and Stock Option Committee of the
Board or such other committee of the Board as may be designated by the Board
from time to time to administer this Plan. In those instances involving
Committee consideration, including approval, of transactions that involve a
grant, award or acquisition from the Company under the Plan, where in order to
secure the benefit of the exemption granted by Rule 16-b-3 promulgated under the
Exchange Act it is required that Committee action only be taken by "Non-Employee
Directors", as that term is defined under such Rule, or where in order to have
compensation treated as "qualified performance-based compensation" pursuant to
Section 162(m) of the Code, Committee action may only be taken by "Outside
Directors", only the Non-Employee Directors or Outside Directors, as the case
may be, shall participate in such consideration or approval and all other
Committee members shall not be deemed members of the Committee in such
instances.
(f) "Common Stock" means the Common Stock, par value $.O1 per share, of the
Corporation.
(g) "Corporation" means Atalanta/Sosnoff Capital Corporation, a Delaware
corporation.
(h) `Employee" means an employee of the Corporation or a Subsidiary.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(j) "Fair Market Value" means the closing sale price for the Common Stock
as quoted on The New York Stock Exchange, Inc. on the relevant valuation date
or, if there were no sales on the valuation date, on the next preceding date on
which such closing sales price was recorded; provided, however, that the
Committee may specify some other definition of Fair Market Value with respect to
any particular Award.
2
<PAGE>
(k) "Participant" means an Employee, officer or director who has been
granted an Award under the Plan.
(l) "Plan Year" means a twelve-month period beginning with July 1 of each
year.
(m) "Subsidiary" means any corporation or other entity, whether domestic or
foreign, in which the Corporation has or obtains, directly or indirectly, a
proprietary interest of more than 50% by reason of stock ownership or otherwise.
III. Eligibility
Any Employee, officer or director of the Corporation or Subsidiary selected
by the Committee is eligible to receive an Award.
IV. Plan Administration
(a) Except as otherwise determined by the Board, the Plan shall be
administered by the Committee. The Board, or the Committee to the extent
determined by the Board, shall periodically make determinations with respect to
the participation of Employees, officers and directors in the Plan and, except
as otherwise required by law or this Plan, the grant terms of Awards, including
vesting schedules, price, restriction or option period, dividend rights,
post-retirement and termination rights, payment alternatives such as cash,
stock, contingent awards or other means of payment,
3
<PAGE>
consistent with the purposes of this Plan, and such other terms and conditions
as the Board or the Committee deems appropriate which shall be contained in an
Award Agreement with respect to a Participant.
(b) The Committee shall have authority to interpret and construe the
provisions of the Plan and any Award Agreement and make determinations pursuant
to any Plan provision or Award Agreement which shall be final and binding on all
persons. No member of the Committee shall be liable for any action or
determination made in good faith, and the members shall be entitled to
indemnification and reimbursement in the manner provided in the Corporation's
Certificate of Incorporation, as it may be amended from time to time.
(c) The Committee shall have the authority at any time to provide for the
conditions and circumstances under which Awards shall be forfeited.
V. Capital Stock Subject to the Provisions of this Plan
(a) The capital stock subject to the provisions of this Plan shall be
shares of authorized but unissued Common Stock and shares of Common Stock held
as treasury stock. Subject to adjustment in accordance with the provisions of
Section X, and subject to Section V(c) below, the total number of shares of
Common Stock available for grants of Awards shall not exceed 880,000.
(b) Any shares ceasing to be subject to an option because of the surrender
of such option in lieu of exercise shall become again available for Awards under
the Plan.
4
<PAGE>
The grant of a restricted stock Award shall be deemed to be equal to the maximum
number of shares which are issued under the Award. Awards payable only in cash
will not reduce the number of shares available for Awards granted, under the
Plan.
(c) There shall be carried forward and be available for Awards under the
Plan, in addition to shares available for grant under paragraph (a) of this
Section V, all of the following: (i) any unused portion of the limit set forth
in paragraph (a) of this Section V; (ii) shares represented by Awards which are
cancelled, forfeited, surrendered, terminated, paid in cash or expire
unexercised; and (iii) the excess amount of variable Awards which become fixed
at less than their maximum limitations.
VI. Awards Under This Plan
As the Board or Committee may determine, the following types of Awards and
other Common Stock-based Awards may be granted under this Plan on a stand alone,
combination or tandem basis:
(i) Stock option. A right to buy a specified number of shares of
Common Stock at a fixed exercise price during a specified time, all as the
Committee may determine; provided that the exercise price of any option
shall not be less than 100% of the Fair Market Value of the Common Stock on
the date of grant of the Award.
(ii) Incentive Stock option. An Award in the form of a stock option
which shall comply with the requirements of Section 422 of the Code or any
successor section as it may be amended from time to time. Subject to
adjustment in accordance with the provisions of Section X, the aggregate
number of shares which may be subject to
5
<PAGE>
incentive stock option Awards under this Plan shall not exceed 880,000 shares,
subject to Section V above. To the extent that Section 422 of the Code requires
certain provisions to the set forth in a written plan, said provisions are
incorporated herein by this reference.
(iii) Stock Appreciation Right. A right contained in the grant of a
stock option or incentive stock option to receive the excess of the Fair
Market Value of a share of Common Stock on the date the option is
surrendered over the option exercise price contained in the Award
Agreement.
(iv) Restricted Stock. A transfer of Common Stock to a Participant
subject to forfeiture until such restrictions, terms and conditions as the
Committee may determine are fulfilled.
(v) Dividend or Equivalent. A right to receive dividends or their
equivalent in value in Common Stock, cash or in a combination of both with
respect to any new or previously existing Award.
(vi) Stock Award. An unrestricted transfer of ownership of Common
Stock which may only be made to Employees other than Employees who are
officers or directors of the Corporation for purposes of Section 16 of the
Exchange Act.
(vii) Other Stock-Based Awards. Other Common Stock based Awards which
are related to or serve a similar function to those Awards set forth in
this Section VI.
6
<PAGE>
VII. Award Agreements
Each Award under the Plan shall be evidenced by an Award Agreement setting
forth the terms and conditions of the Award and executed by the Corporation and
Participant.
VIII. Other Terms and Conditions
(a) Assignability. Unless provided to the contrary in any Award, no Award
shall be assignable or transferable except by will, by the laws of descent and
distribution and during the lifetime of a Participant, the Award shall be
exercisable only by such Participant.
(b) Termination of Employment. The Committee shall determine the
disposition of the grant of each Award in the event of the retirement,
disability, death or other termination of a Participant's employment or other
relationship with the Corporation or a Subsidiary.
(c) Rights as a Stockholder. A Participant shall have no rights as a
stockholder with respect to shares covered by an Award until the date the
Participant is the holder of record. No adjustment will be made for dividends or
other rights for which the record date is prior to such date.
(d) No Obligation to Exercise. The grant of an Award shall impose no
obligation upon the Participant to exercise the Award.
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(e) Payments by Participants. The Committee may determine that Awards for
which a payment is due from a Participant may be payable: (i) in U.S. dollars by
personal check, bank draft or money order payable to the order of the
Corporation, by money transfers or direct account debits; (ii) through the
delivery or deemed delivery based on attestation to the ownership of shares of
Common Stock with a Fair Market Value equal to the total payment due from the
Participant; (iii) pursuant to a broker-assisted "cashless exercise" program if
established by the Corporation; (iv) by a combination of the methods described
in (i) through (iii) above; or (v) by such other methods as the Committee may
deem appropriate.
(f) Withholding. Except as otherwise provided by the Committee, (i) the
deduction of withholding and any other taxes required by law will be made from
all amounts paid in cash and (ii) in the case of payments of Awards in shares of
Common Stock, the Participant shall be required to pay the amount of any taxes
required to be withheld prior to receipt of such stock, or alternatively, a
number of shares the Fair Market Value of which equals the amount required to be
withheld may be deducted from the payment.
(g) Restrictions on Sale and Exercise. With respect to officers and
directors for purposes of Section 16 of the Exchange Act, and if required to
comply with rules promulgated thereunder, (i) no Award providing for exercise, a
vesting period, a restriction period or the attainment of performance standards
shall permit unrestricted ownership of Common Stock by the Participant for at
least six months from the date of grant, and (ii) Common Stock acquired pursuant
to this Plan (other than Common Stock
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<PAGE>
acquired as a result of the granting of a "derivative security") may not be sold
for at least six months after acquisition.
(h) Maximum Awards. The maximum number of shares of Common Stock that may
be issued to any single Participant pursuant to options under this Plan is
880,000.
IX. Termination, Modification and Amendments
(a) The Plan may from time to time be terminated, modified or amended by
the affirmative vote of the holders of a majority of the outstanding shares of
Common Stock of the Corporation present or represented and entitled to vote at a
duly held stockholders meeting or pursuant to a written consent of stockholders
in lieu of any such meeting.
(b) The Committee may at any time terminate the Plan or from time to time
make such modifications or amendments of the Plan as it may deem advisable;
provided, however, that the Committee shall not make any material amendments to
the Plan without the approval of at least the affirmative vote of the holders of
a majority of the outstanding shares of the Common Stock of the Corporation
present or represented and entitled to vote at a duly held stockholders meeting.
(c) No termination, modification or amendment of the Plan may adversely
affect the rights conferred by an Award without the consent of the recipient
thereof.
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X. Recapitalization
The aggregate number of shares of Common Stock as to which Awards may be
granted to Participants, the number of shares thereof covered by each
outstanding Award and by each option award granted, and the price per share
thereof in each such Award, shall all be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a subdivision or consolidation of shares or other capital adjustment, or
the payment of a stock dividend or other increase or decrease in such shares,
effected without receipt of consideration by the Corporation, or other change in
corporate or capital structure; provided, however, that any fractional shares
resulting from any such adjustment shall be eliminated. The Committee may also
make the foregoing changes and any other changes, including changes in the
classes of securities available, to the extent it is deemed necessary or
desirable to preserve the intended benefits of the Plan for the Corporation and
the Participants in the event of any other reorganization, recapitalization,
merger, consolidation, spin-off, extraordinary dividend or other distribution or
similar transaction and shall make such changes as it shall determine in its
sole discretion are necessary, appropriate or desirable to assure that the
receipt of an Award pursuant hereto shall continue to enjoin the benefits
thereof upon the happening of any such transactions subject to such limitations
and conditions as it shall in its sole discretion determine.
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Xl. No Right to Employment
No person shall have any claim or right to be granted an Award and the
grant of an Award shall not be construed a giving a Participant the right to be
retained in the employ of the Corporation or a Subsidiary. The Corporation and
each Subsidiary expressly reserve the right to dismiss a Participant free from
any liability or any claim under the Plan, except as provided herein or in any
Award Agreement issued hereunder.
XII. Governing Law
To the extent that federal laws do not otherwise control, the Plan shall be
construed in accordance with and governed by the laws of the State of Delaware.
XIII. Savings Clause
This Plan is intended to comply in all aspects with applicable laws and
regulations, including, with respect to those Employees who are officers or
directors for purposes of Section 16 of the Exchange Act, Rule 16b-3 under the
Exchange Act in case any one or more of the Provisions of this Plan shall be
held invalid, illegal or unenforceable in any respect under applicable law and
regulation (including Rule 16b-3), the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby
and the invalid, illegal or unenforceable provision shall be deemed null and
void; however, to the extent permissible by law, any provision which could be
deemed null and void shall first be construed, interpreted or revised
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retroactively to permit this Plan to be construed in compliance with all
applicable laws (including Rule 16b-3) so as to foster the intent of this Plan.
XIV. Effective Date and Term The effective date of this Plan is July 29, 1996,
subject to its approval by the stockholders of the Corporation at the annual
meeting to be held on September 12,1996. The Plan shall terminate on July 28,
2006. No awards shall be granted after the termination of the Plan.
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Exhibit 10.28(a)
ATALANTA/SOSNOFF CAPITAL CORPORATION
1996 LONG TERM INCENTIVE PLAN
RESTRICTED STOCK AWARD AGREEMENT
AWARD AGREEMENT made as of this 17th day of September 1997 by and between
Atalanta/Sosnoff Capital Corporation, a Delaware corporation (the
"Corporation"), and Craig B. Steinberg, President of the Corporation (the
"Participant").
RECITALS
WHEREAS, the Compensation and Stock Option Committee (the "Committee") of
the Board of Directors on September 17, 1997, granted to the Participant a
Restricted Stock Award (the "Award') of 600,000 shares (the "Restricted Shares")
of Common Stock, par value $0.01 per share, of the Corporation under the terms
and conditions of the Corporation's 1996 Long Term Incentive Plan (the "Plan")
and
WHEREAS, the Committee instructed the Corporation to embody the Restricted
Stock Award in an Award Agreement containing the terms and conditions determined
by the Committee consistent with the Plan and such other terms not inconsistent
therewith as determined by the Chairman of the Board of the Corporation.
NOW THEREFORE, this Agreement
<PAGE>
WITNESSETH:
Section 1. Acceptance of the Award; Payment of Purchase Price.
The Participant hereby accepts the Award and agrees to be bound in all
respects by this Agreement and the Plan. In payment for the Award the
Participant hereby tenders payment in the amount of $6,000 in full payment of
the purchase price for the Award, the receipt whereof is hereby acknowledged by
the Corporation.
Section 2. Definitions
All terms not otherwise defined herein shall have the meanings ascribed to
them in the Plan. The following terms shall have the meanings set forth herein
for purposes of this Agreement:
A. "Award" shall mean the Award of Restricted Stock granted by the
Committee under the provisions of this Agreement.
B. "Cause" shall mean, in the context of termination of the employment of
the Participant, any person for any of the following events or
conditions as determined by the Board of Directors of the Corporation:
(i) such persons failure to perform, or negligence in the performance
of, his duties and responsibilities to the Corporation as a director
or officer or employee (other than by reason of death or disability),
(ii) fraud, embezzlement, the commission of a felony or other material
dishonesty with respect to the Corporation or any of its affiliates,
(iii) in the written opinion of counsel to
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<PAGE>
the Corporation, the Participant's conduct shall require that the
Corporation answer "yes" to any of the "Disciplinary Questions" set
forth in Part I, Question 11 of Form ADV promulgated under the
Investment Advisers Act of 1940, as currently in effect or as
hereafter amended, and (iv) other conduct that is materially harmful
to the business, interests or reputation of the Corporation.
C. "Disability" shall mean with respect to the Participant the failure to
perform his duties as an employee of the Corporation or any subsidiary
or affiliate by reason of physical or emotional illness for a
consecutive period of six months or a non-consecutive period totalling
six months in any twelve month period. A Disability determination
shall be made by the Board of Directors of the Corporation on the
basis of competent medical advice from a physician or physicians
consulted by the Board.
D. "Change in Control" shall mean a Change in Control of a nature that
would be required to be reported in response to item I of a Current
Report on Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Exchange Act; provided that, without
limitation, such a Change in Control shall be deemed to have occurred
at such time as (a) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13D-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing twenty-five
(25%) percent or more of the
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combined voting power of the Corporation's outstanding securities
ordinarily having the right to vote at elections of directors other
than any such person that is an affiliate (as such term is defined in
Rule 12b-2 under the Exchange Act) on the effective date of the Award;
or (b) individuals who constitute the Board of Directors of the
Corporation on the date hereof (the "Incumbent Board") cease for any
reason to constitute at least one half of the members thereof,
provided that any person becoming a director subsequent to the date
hereof whose election or nomination for election by the Corporation's
stockholders was approved by a vote of a majority of the directors
comprising the Incumbent Board, shall be, for purposes of this clause
(b), considered as though he were a member of the Incumbent Board; or
(c) a sale by the Corporation of all or substantially all of its
assets or the liquidation of the Corporation. Notwithstanding anything
in the foregoing to the contrary, no Change in Control shall be deemed
to have occurred for purposes of this Agreement by virtue of any
transaction which results in the ownership by the Participant, or by a
group of persons, including the holders of a majority of the
outstanding Common Stock of the Corporation, directly or indirectly,
of a majority of the voting securities of any corporation which
acquires all or substantially all of the assets of the Corporation,
whether by way of merger, consolidation, sale of such assets or
otherwise.
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<PAGE>
E. "Effective Date" shall mean with respect to any Award, the date on which
the Award is approved by the Committee.
F. "Involuntary Termination" shall mean termination of the Participant's
employment by reason of a Change in Control, death, Disability or termination
without cause or the death of Martin T. Sosnoff.
G. "Voluntary Termination" shall mean the termination of the Participant's
employment by reason of resignation or termination for Cause.
3. Rights as a Shareholder
3.1 Upon the Award of Restricted Stock to a Participant and from and after
the date of issuance of certificate(s) representing such Restricted Stock, such
Participant shall, subject to the restrictions set forth in Sections 3.2, 4 and
8 hereof(or in any promissory note and/or pledge agreement entered into pursuant
to this Agreement) have all of the rights of a shareholder with respect to such
Restricted Stock, including but not limited to: (a) the right to vote the
Restricted Shares and the right; (b) to receive all dividends paid thereon, if
any; and (c) subject to Section 3.2 hereof, to sell, transfer or otherwise
dispose of such Restricted Stock.
3.2 Subject to Sections 3.2(c), 4 and 8 hereof:
(a) If at any time on or after the Effective Date of this Award the
Participant, shall wish to transfer or otherwise dispose of (other than in a
transaction contemplated under Section 3.2(c) hereof) all or any portion of such
Participant's
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<PAGE>
shares of Restricted Stock as to which the Corporation's right of repurchase
shall have lapsed pursuant to Sections 4 and 5 hereof, he shall deliver written
notice (the "Offer Notice") to the Corporation stating his wish to make such
transfer and the number of Restricted Shares he wishes to be transferred (the
"Offered Shares"), and certifying that such transfer which he wishes to make is
pursuant to a bona fide third party offer to acquire the Offered Shares for
consideration (a "Bona Fide Third-Party Offers"). The Offer Notice shall further
state the name of the person who made the Bona Fide Third-Party Offer and the
terms thereof, including a description and a statement of the aggregate cash
value of all consideration, including any consideration other than cash (the
"Offered Price"). The Corporation shall have the irrevocable and exclusive right
of first refusal, as hereinafter provided, to purchase all (but not less than
all) of the Offered Shares at the Offered Price. Any exercise of the right of
first refusal to purchase the Offered Shares pursuant to this Section 3.2(a)
shall be by a written notice (the "Acceptance Notice") delivered by the
Corporation to the Participant within 15 days after delivery by the Participant
of an Offer Notice. An Acceptance Notice shall fix a date for the closing of
such purchase (the "Closing Date"), which date shall be not less than 10 and not
more than 20 business days after the date on which the Acceptance Notice is
given.
(b) Failure to furnish the Acceptance Notice within the 15 day period set
forth in Section 3.2(a) shall constitute a waiver of the Corporation's right of
first refusal with respect to the Bona Fide Third-Party Offer which may be
accepted by the Participant provided that the sale of the Offered Shares
pursuant thereto is
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<PAGE>
consummated in accordance with its terms within 30 days after the expiration of
such 15 day period.
(c) Notwithstanding the foregoing, the right of first refusal set forth in
Section 3.2(a) shall not apply to open-market transactions effected on a
national securities exchange or in the over-the-counter market in Broker's
Transactions as defined in Rule 144 under the Securities Act of 1933, as
amended, whether or not such Rule would otherwise be applicable to such sale.
Section 4. Repurchase Option Upon Voluntary Termination
At any time prior to a Change in Control of the Corporation or in the case
of a Change in Control where the Participant does not agree to remain an
employee of the Corporation or its successor for a period of 18 months from the
effective date of such Change in Control under a binding agreement with the
Corporation or its successor in the same capacity at the same compensation level
as then in effect, the Corporation shall have the right to repurchase from a
Participant, upon written notice to such Participant, all or a part of the
following percentages of the number of Restricted Shares issued pursuant to this
Award made to the Participant upon Voluntary Termination of the Participant's
employment.
(i) 100%, provided such Voluntary Termination occurs prior to the
first anniversary of the Effective Date of the Award.
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<PAGE>
(ii) 75%, provided such Voluntary Termination occurs on or after the
first anniversary but prior to the second anniversary of the Effective Date
of the Award.
(iii) 50%, provided such Voluntary Termination occurs on or after the
second anniversary but prior to the third anniversary of the Effective Date
of the Award.
(iv) 25%, provided such Voluntary Termination occurs on or after the
third anniversary but prior to the fourth anniversary of the Effective Date
of the Award.
In the event the Corporation elects to exercise its right, pursuant to the
preceding paragraph, to repurchase a percentage of the Restricted Shares issued
pursuant to this Award made to the Participant, the purchase price shall be the
aggregate price paid by the Participant for such Restricted Shares pursuant to
Section 1 of this Agreement. During such time Restricted Shares are subject to
the option to repurchase pursuant to this Section 4, such Restricted Shares may
not be sold, transferred or otherwise disposed of by the Participant.
Section 5. No Repurchase Option Upon Involuntary Termination
The Corporation shall not have the right to repurchase from a Participant
any Restricted Stock issued pursuant to this Award Agreement made to the
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Participant upon Involuntary Termination of the Participant's employment
provided, however, that
(a) in the event the Involuntary Termination arises as a result of a Change
in Control, Participant shall have agreed with the Corporation or its successor
under a binding agreement to remain in the same capacity at the same
compensation level for a period of 18 months from the effective date of the
Change in Control, and
(b) in the event the Involuntary Termination arises as a result of the
death of Martin T. Sosnoff, Participant shall agree to serve the Corporation
under a binding agreement for a period from the date of such death to the
earliest to occur of (i) Participant's death, (ii) Participant's Disability or
(iii) a Change in Control.
Section 6. Payment of Taxes; Loan Agreement
The Participant shall be required to discharge any and all federal, state
and local taxes, if any, incurred as a result of his receipt of the Award and
any such taxes related to the lapse of the Corporation's right to purchase
Restricted Shares issued pursuant to the Award. The Corporation shall lend the
Participant, at his request, funds to defray such taxes on the following basis:
(a) If, and to the extent, that the earnings distributed to a
Participant attributable to the Restricted Shares (whether in the form of
dividends or other distributions to the Participant) after the payment of his
personal income taxes thereon (as determined by the Participant's personal
federal, state and local tax returns for the tax year in question) are not
sufficient to defray such Participant's personal tax liability
<PAGE>
as set forth in the Participant's returns arising solely from the taxable
compensation, if any, attributable to the grant of the Award of Restricted
Shares to the Participant or to the lapse of the Corporation's right to
repurchase the Restricted Shares of the Participant at such Participant's cost
in the applicable tax year, any such deficiency shall be loaned by the
Corporation to the Participant. Such loans shall be made at the Participant's
request at any time within 90 days from the date the Corporation is required to
withhold and deposit funds from the Participant's cash compensation in respect
of the tax liability associated with Restricted Shares, and shall be adjusted,
if necessary, based upon the Participant's returns. Each such loan shall be
evidenced by a note (in the form annexed hereto as Exhibit A) maturing in four
years from the date of issue and shall bear simple interest, which shall accrue
to maturity, at the "applicable federal rate" as defined in Section 1274(d) of
the Code. Any such note shall be secured by a pledge of the portion of the
Restricted Shares to which such tax liability is attributable equal at the date
of the loan to the Fair Market Value of the Restricted Shares to the value
thereof under a pledge agreement (in the form annexed hereto as Exhibit B).
(b) The payment period for any such notes will be adjusted in the following
events.
(i) In the event the Participant's employment by the Corporation
terminates as a result of the death or Disability of such Participant, no
outstanding note shall have a payment period ending sooner than one year
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<PAGE>
from the date of such Participant's death or the determination of his
Disability, as applicable.
(ii) In the event Participant's employment by the Corporation
terminates as a result of Participant's voluntary resignation such note
shall have a payment period ending no sooner than (i) two years from such
voluntary resignation, if the Participant's Restricted Shares are not
subject to repurchase by the Corporation at such date or (ii) the later of
(A) two years from the date of such voluntary resignation and (B) the date
upon which the Participant's Restricted Shares would have been no longer
subject to the Corporation's right of repurchase had such resigned
Participant remained an employee of the Corporation until the date upon
which such Restricted Shares would have been no longer subject to
repurchase by the Corporation hereunder.
(iii) In no event shall the payment period be longer than a period
ending on the date upon which the Participant sells his Restricted Shares
for cash.
(iv) The Participant may, at his option, apply Restricted Shares at
their fair market value to the repayment of principal or interest on all or
any part of a note, if such Restricted Shares, at the time of such
application, are not subject to repurchase by the Corporation.
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<PAGE>
Section 7. Adjustment Upon Changes in Common Stock
In the event that there is any change in the Common Stock, through merger,
consolidation, reorganization, recapitalization or otherwise, or if there shall
be any dividend on the Common Stock payable in such Common Stock or if there
shall be a stock split, combination of shares or other changes in
Atalanta/Sosnoff Capital Corporation's capital structure, the number of shares
in the Award shall be appropriately adjusted by the Committee to reflect any
such changes. Neither the issuance of Common Stock for adequate consideration,
nor the issuance of rights or options with respect to the Common Stock or any
other stock based awards to employees of the Corporation under the Plan or a
comparable benefit plan shall be considered a change in Atalanta/Sosnoff Capital
Corporation's capital structure. No adjustment provided for in this Section 7
shall require the issuance of any fractional share.
Section 8. Compliance with Securities and Exchange Commission Requirements
No certificate for Restricted Shares awarded under this Agreement shall be
issued until the Corporation shall have taken such action, if any, as is then
required, in its opinion, in order to comply with the provisions of the
Securities Act of 1933, as amended, the Exchange Act, as amended, and any other
applicable laws, as well as with the requirements of any exchange on which the
Common Stock may, at the time, be listed. Such action may include, but is not
limited to, the registration of the Restricted Shares or the delivery to the
Corporation with respect to the Restricted
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<PAGE>
Shares awarded to a Participant of a written representation by the Participant,
in form satisfactory to the Corporation, that it is the Participant's intention
to acquire the Restricted Shares for investment and not for resale. If such a
written representation is requested, the Corporation shall not be required to
transfer any shares to the Participant until the representation is received in
form satisfactory to the Corporation, and any certificate for Restricted Shares
issued upon receipt of such a representation shall bear a legend to the effect
that such shares have been acquired for investment and have not been registered
under the Securities Act of 1933, as amended, and may not be disposed of except
in compliance therewith.
Section 9. Conflicting Terms.
To the extent that there may be any conflict between any term or condition
of the Plan and term or condition of this Award Agreement, the term or condition
of this Award Agreement shall control.
Section 10. Legend.
Each certificate representing Restricted Shares awarded pursuant to this
Agreement shall bear a legend referring hereto and to the Plan and to the
restrictions on disposition contained herein and therein.
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Section 11. Shares Acquired for Investment.
The Participant hereby acknowledges that the Restricted Shares constituting
the Award have not been registered under the Securities Act of 1933, as amended,
or any applicable state securities law, and represent that he is acquiring the
Restricted Shares for his own account and not with a view to the distribution
thereof. He further acknowledges that he has been informed by the Corporation
that the certificate representing the Restricted Shares will bear a restrictive
legend to the following effect:
"The Shares represented by this Certificate have not been registered under
the Securities Act of 1933, as amended (the "Act"), and no disposition
thereof may be made in violation of the Act and the rules and regulations
promulgated thereunder and unless the Corporation shall have received an
opinion of counsel reasonably satisfactory to it that such disposition may
be effected without violating the Act."
Section 12. Continued Validity.
Participant agrees that in the event of invalidity of any part or provision
of the Plan, or this Award Agreement, such invalidity shall not affect the
validity of any other part or provision of the Plan, of this Agreement.
Section 13. Choice of Law.
This Award Agreement shall be construed and enforced in accordance with the
laws of the State of New York.
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<PAGE>
Section 14. Notices and Deliveries
All notices hereunder shall be in writing. Any notices, payments, or
deliveries to the Corporation or the Committee shall be directed to the
Corporation or the Committee, as the case may be, at the following address:
Atalanta/Sosnoff Capital Corporation
101 Park Avenue
New York, New York 10178
Attention: Martin T. Sosnoff, Chairman
Any notices, payments or deliveries (other than to the Corporation or the Board)
shall be directed to the addressee at the address designated by said addressee
by notice to the Committee. The Corporation may designate a new address for
purposes of this Agreement by notice to the Participant. Any Participant or
beneficiary may designate a new address for the purposes of this Agreement by
notice to the Committee. If no address is designated by the Participant or
beneficiary, all notices may be sent to his last known address. Unless otherwise
specified herein, notices shall be delivered by hand or sent by registered or
certified mail, return receipt requested.
Section 14. Binding Upon Heirs; Etc.
This Agreement shall be binding upon, and shall inure to the benefit of,
the Corporation, its successors and assigns, and each Participant, his heirs,
executors, administrators and legal representatives.
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IN WITNESS WHEREOF, the Corporation and the Participant have executed this
Award Agreement as of the day first above written.
Atalanta/Sosnoff Capital Corporation
by: /s/ MARTIN T. SOSNOFF
----------------------------------
Martin T. Sosnoff
Chairman of the Board
/s/ CRAIG B. STEINBERG
----------------------------------
Craig B. Steinberg
<PAGE>
Exhibit 10.28(b)
ATALANTA/SOSNOFF CAPITAL CORPORATION
1996 LONG TERM INCENTIVE PLAN
RESTRICTED STOCK AWARD AGREEMENT
AWARD AGREEMENT made as of this 17th day of September 1997 by and between
Atalanta/Sosnoff Capital Corporation, a Delaware corporation (the
"Corporation"), and Anthony G. Miller, Executive Vice President of the
Corporation (the "Participant").
RECITALS
WHEREAS, the Compensation and Stock Option Committee (the "Committee') of
the Board of Directors on September 17, 1997, granted to the Participant a
Restricted Stock Award (the "Award") of 175,000 shares (the "Restricted Shares")
of Common Stock, par value $0.01 per share, of the Corporation under the terms
and conditions of the Corporation's 1996 Long Term Incentive Plan (the "Plan")
and
WHEREAS, the Committee instructed the Corporation to embody the Restricted
Stock Award in an Award Agreement containing the terms and conditions determined
by the Committee consistent with the Plan and such other terms not inconsistent
therewith as determined by the Chairman of the Board of the Corporation.
NOW THEREFORE, this Agreement
<PAGE>
WITNESSETH:
Section 1. Acceptance of the Award, Payment of Purchase Price.
The Participant hereby accepts the Award and agrees to be bound in all
respects by this Agreement and the Plan. In payment for the Award the
Participant hereby tenders payment in the amount of $1,750 in full payment of
the purchase price for the Award, the receipt whereof is hereby acknowledged by
the Corporation.
Section 2. Definitions
All terms not otherwise defined herein shall have the meanings ascribed to
them in the Plan. The following terms shall have the meanings set forth herein
for purposes of this Agreement:
A. "Award" shall mean the Award of Restricted Stock granted by the
Committee under the provisions of this Agreement.
B. "Cause" shall mean, in the context of termination of the employment of
the Participant, any person for any of the following events or
conditions as determined by the Board of Directors of the Corporation:
(i) such person's failure to perform, or negligence in the performance
of, his duties and responsibilities to the Corporation as a director
or officer or employee (other than by reason of death or disability),
(ii) fraud, embezzlement, the commission of a felony or other material
dishonesty with respect to the Corporation or any of its affiliates,
(iii) in the written opinion of counsel to
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<PAGE>
the Corporation, the Participant's conduct shall require that the
Corporation answer "yes" to any of the "Disciplinary Questions" set
forth in Part I, Question 11 of Form ADV promulgated under the
Investment Advisers Act of 1940, as currently in effect or as
hereafter amended, and (iv) other conduct that is materially harmful
to the business, interests or reputation of the Corporation.
C. "Disability" shall mean with respect to the Participant the failure to
perform his duties as an employee of the Corporation or any subsidiary
or affiliate by reason of physical or emotional illness for a
consecutive period of six months or a non-consecutive period totalling
six months in any twelve month period. A Disability determination
shall be made by the Board of Directors of the Corporation on the
basis of competent medical advice from a physician or physicians
consulted by the Board.
D. "Change in Control" shall mean a Change in Control of a nature that
would be required to be reported in response to item I of a Current
Report on Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Exchange Act; provided that, without
limitation, such a Change in Control shall be deemed to have occurred
at such time as (a) any person (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner"
(as defined in Rule 13D-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing twenty-five
(25%) percent or more of the
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combined voting power of the Corporation's outstanding securities
ordinarily having the right to vote at elections of directors other
than any such person that is an affiliate (as such term is defined in
Rule 12b-2 under the Exchange Act) on the effective date of the Award;
or (b) individuals who constitute the Board of Directors of the
Corporation on the date hereof (the "Incumbent Board") cease for any
reason to constitute at least one half of the members thereof,
provided that any person becoming a director subsequent to the date
hereof whose election or nomination for election by the Corporation's
stockholders was approved by a vote of a majority of the directors
comprising the Incumbent Board, shall be, for purposes of this clause
(b), considered as though he were a member of the Incumbent Board; or
(c) a sale by the Corporation of all or substantially all of its
assets or the liquidation of the Corporation. Notwithstanding anything
in the foregoing to the contrary, no Change in Control shall be deemed
to have occurred for purposes of this Agreement by virtue of any
transaction which results in the ownership by the Participant, or by a
group of persons, including the holders of a majority of the
outstanding Common Stock of the Corporation, directly or indirectly,
of a majority of the voting securities of any corporation which
acquires all or substantially all of the assets of the Corporation,
whether by way of merger, consolidation, sale of such assets or
otherwise.
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E. "Effective Date" shall mean with respect to any Award, the date on which
the Award is approved by the Committee.
F. "Involuntary Termination" shall mean termination of the Participant's
employment by reason of a Change in Control, death, Disability, termination
without cause or the death of Martin T. Sosnoff.
G. "Voluntary Termination" shall mean the termination of the Participant's
employment by reason of resignation or termination for Cause.
3. Rights as a Shareholder
3.1 Upon the Award of Restricted Stock to a Participant and from and after
the date of issuance of certificate(s) representing such Restricted Stock, such
Participant shall, subject to the restrictions set forth in Sections 3.2, 4 and
8 hereof (or in any promissory note and/or pledge agreement entered into
pursuant to this Agreement) have all of the rights of a shareholder with respect
to such Restricted Stock, including but not limited to: (a) the right to vote
the Restricted Shares and the right; (b) to receive all dividends paid thereon,
if any; and (c) subject to Section 3.2 hereof, to sell, transfer or otherwise
dispose of such Restricted Stock.
3.2 Subject to Sections 3.2(c), 4 and 8 hereof:
(a) If at any time on or after the Effective Date of this Award the
Participant, shall wish to transfer or otherwise dispose of (other than in
a transaction contemplated under Section 3.2(c) hereof) all or any portion
of such Participant's
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shares of Restricted Stock as to which the Corporation's right of
repurchase shall have lapsed pursuant to Sections 4 and 5 hereof, he shall
deliver written notice (the "Offer Notice") to the Corporation stating his
wish to make such transfer and the number of Restricted Shares he wishes to
be transferred (the "Offered Shares"), and certifying that such transfer
which he wishes to make is pursuant to a bona fide third party offer to
acquire the Offered Shares for consideration (a "Bona Fide Third-Party
Offer"). The Offer Notice shall further state the name of the person who
made the Bona Fide Third-Party Offer and the terms thereof, including a
description and a statement of the aggregate cash value of all
consideration, including any consideration other than cash (the "Offered
Price"). The Corporation shall have the irrevocable and exclusive right of
first refusal, as hereinafter provided, to purchase all (but not less than
all) of the Offered Shares at the Offered Price. Any exercise of the right
of first refusal to purchase the Offered Shares pursuant to this Section
3.2(a) shall be by a written notice (the "Acceptance Notice") delivered by
the Corporation to the Participant within 15 days after delivery by the
Participant of an Offer Notice. An Acceptance Notice shall fix a date for
the closing of such purchase (the "Closing Date"), which date shall be not
less than 10 and not more than 20 business days after the date on which the
Acceptance Notice is given.
(b) Failure to furnish the Acceptance Notice within the 15 day period
set forth in Section 3.2(a) shall constitute a waiver of the Corporation's
right of first refusal with respect to the Bona Fide Third-Party Offer
which may be accepted by the Participant provided that the sale of the
Offered Shares pursuant thereto is
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consummated in accordance with its terms within 30 days after the
expiration of such 15 day period.
(c) Notwithstanding the foregoing, the right of first refusal set
forth in Section 3.2(a) shall not apply to open-market transactions
effected on a national securities exchange or in the over-the-counter
market in Broker's Transactions as defined in Rule 144 under the Securities
Act of 1933, as amended, whether or not such Rule would otherwise be
applicable to such sale.
Section 4. Repurchase Option Upon Voluntary Termination
At any time prior to a Change in Control of the Corporation or in the case
of a Change in Control where the Participant does not agree to remain an
employee of the Corporation or its successor for a period of 18 months from the
effective date of such Change in Control under a binding agreement with the
Corporation or its successor in the same capacity at the same compensation level
as then in effect, the Corporation shall have the right to repurchase from a
Participant, upon written notice to such Participant, all or a part of the
following percentages of the number of Restricted Shares issued pursuant to this
Award made to the Participant upon Voluntary Termination of the Participant's
employment.
(i) 100%, provided such Voluntary Termination occurs prior to the
first anniversary of the Effective Date of the Award.
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(ii) 75%, provided such Voluntary Termination occurs on or after the
first anniversary but prior to the second anniversary of the Effective Date
of the Award.
(iii) 50%, provided such Voluntary Termination occurs on or after the
second anniversary but prior to the third anniversary of the Effective Date
of the Award.
(iv) 25%, provided such Voluntary Termination occurs on or after the
third anniversary but prior to the fourth anniversary of the Effective Date
of the Award.
In the event the Corporation elects to exercise its right, pursuant to the
preceding paragraph, to repurchase a percentage of the Restricted Shares issued
pursuant to this Award made to the Participant, the purchase price shall be the
aggregate price paid by the Participant for such Restricted Shares pursuant to
Section 1 of this Agreement. During such time Restricted Shares are subject to
the option to repurchase pursuant to this Section 4, such Restricted Shares may
not be sold, transferred or otherwise disposed of by the Participant.
Section 5. No Repurchase Option Upon Involuntary Termination
The Corporation shall not have the right to repurchase from a Participant
any Restricted Stock issued pursuant to this Award Agreement made to the
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Participant upon Involuntary Termination of the Participant's employment,
provided, however, that
(a) in the event the Involuntary Termination arises as a result of a
Change in Control, Participant shall have agreed with the Corporation or
its successor under a binding agreement to remain in the same capacity at
the same compensation level for a period of 18 months from the effective
date of the Change in Control, and
(b) in the event the Involuntary Termination arises as a result of the
death of Martin T. Sosnoff, Participant shall agree to serve the
Corporation under a binding agreement for a period from the date of such
death to the earliest to occur of (i) Participant's death, (ii)
Participant's Disability or (iii) a Change in Control.
Section 6. Payment of Taxes; Loan Agreement
The Participant shall be required to discharge any and all federal, state
and local taxes, if any, incurred as a result of his receipt of the Award and
any such taxes related to the lapse of the Corporation's right to purchase
Restricted Shares issued pursuant to the Award. The Corporation shall lend the
Participant, at his request, funds to defray such taxes on the following basis:
(a) If, and to the extent, that the earnings distributed to a
Participant attributable to the Restricted Shares (whether in the form of
dividends or other distributions to the Participant) after the payment of
his personal income taxes thereon (as determined by the Participant's
personal federal, state and local tax returns for the tax year in question)
are not sufficient to defray such Participant's personal tax liability
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as set forth in the Participant's returns arising solely from the taxable
compensation, if any, attributable to the grant of the Award of Restricted
Shares to the Participant or to the lapse of the Corporation's right to
repurchase the Restricted Shares of the Participant at such Participant's
cost in the applicable tax year, any such deficiency shall be loaned by the
Corporation to the Participant. Such loans shall be made at the
Participant's request at any time within 90 days from the date the
Corporation is required to withhold and deposit funds from the
Participant's cash compensation in respect of the tax liability associated
with Restricted Shares, and shall be adjusted, if necessary, based upon the
Participant's returns. Each such loan shall be evidenced by a note (in the
form annexed hereto as Exhibit A) maturing in four years from the date of
issue and shall bear simple interest, which shall accrue to maturity, at
the "applicable federal rate" as defined in Section 1274(d) of the Code.
Any such note shall be secured by a pledge of the portion of the Restricted
Shares to which such tax liability is attributable equal at the date of the
loan to the Fair Market Value of the Restricted Shares to the value thereof
under a pledge agreement (in the form annexed hereto as Exhibit B).
(b) The payment period for any such notes will be adjusted in the
following events.
(i) In the event the Participant's employment by the Corporation
terminates as a result of the death or Disability of such Participant,
no outstanding note shall have a payment period ending sooner than one
year
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<PAGE>
from the date of such Participant's death or the determination of his
Disability, as applicable.
(ii) In the event Participant's employment by the Corporation
terminates as a result of Participant's voluntary resignation such
note shall have a payment period ending no sooner than (i) two years
from such voluntary resignation, if the Participant's Restricted
Shares are not subject to repurchase by the Corporation at such date
or (ii) the later of (A) two years from the date of such voluntary
resignation and (B) the date upon which the Participant's Restricted
Shares would have been no longer subject to the Corporation's right of
repurchase had such resigned Participant remained an employee of the
Corporation until the date upon which such Restricted Shares would
have been no longer subject to repurchase by the Corporation
hereunder.
(iii) In no event shall the payment period be longer than a
period ending on the date upon which the Participant sells his
Restricted Shares for cash.
(iv) The Participant may, at his option, apply Restricted Shares
at their fair market value to the repayment of principal or interest
on all or any part of a note, if such Restricted Shares, at the time
of such application, are not subject to repurchase by the Corporation.
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Section 7. Adjustment Upon Changes in Common Stock
In the event that there is any change in the Common Stock, through merger,
consolidation, reorganization, recapitalization or otherwise, or if there shall
be any dividend on the Common Stock payable in such Common Stock or if there
shall be a stock split, combination of shares or other changes in
Atalanta/Sosnoff Capital Corporation's capital structure, the number of shares
in the Award shall be appropriately adjusted by the Committee to reflect any
such changes. Neither the issuance of Common Stock for adequate consideration,
nor the issuance of rights or options with respect to the Common Stock or any
other stock based awards to employees of the Corporation under the Plan or a
comparable benefit plan shall be considered a change in Atalanta/Sosnoff Capital
Corporation's capital structure. No adjustment provided for in this Section 7
shall require the issuance of any fractional share.
Section 8. Compliance with Securities and Exchange Commission Requirements
No certificate for Restricted Shares awarded under this Agreement shall be
issued until the Corporation shall have taken such action, if any, as is then
required, in its opinion, in order to comply with the provisions of the
Securities Act of 1933, as amended, the Exchange Act, as amended, and any other
applicable laws, as well as with the requirements of any exchange on which the
Common Stock may, at the time, be listed. Such action may include, but is not
limited to, the registration of the Restricted Shares or the delivery to the
Corporation with respect to the Restricted
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Shares awarded to a Participant of a written representation by the Participant,
in form satisfactory to the Corporation, that it is the Participant's intention
to acquire the Restricted Shares for investment and not for resale. If such a
written representation is requested, the Corporation shall not be required to
transfer any shares to the Participant until the representation is received in
form satisfactory to the Corporation, and any certificate for Restricted Shares
issued upon receipt of such a representation shall bear a legend to the effect
that such shares have been acquired for investment and have not been registered
under the Securities Act of 1933, as amended, and may not be disposed of except
in compliance therewith.
Section 9. Conflicting Terms.
To the extent that there may be any conflict between any term or condition
of the Plan and term or condition of this Award Agreement, the term or condition
of this Award Agreement shall control.
Section 10. Legend.
Each certificate representing Restricted Shares awarded pursuant to this
Agreement shall bear a legend referring hereto and to the Plan and to the
restrictions on disposition contained herein and therein.
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Section 11. Shares Acquired for Investment.
The Participant hereby acknowledges that the Restricted Shares constituting
the Award have not been registered under the Securities Act of 1933, as amended,
or any applicable state securities law, and represent that he is acquiring the
Restricted Shares for his own account and not with a view to the distribution
thereof. He further acknowledges that he has been informed by the Corporation
that the certificate representing the Restricted Shares will bear a restrictive
legend to the following effect:
"The Shares represented by this Certificate have not been registered under
the Securities Act of 1933, as amended (the "Act"), and no disposition
thereof may be made in violation of the Act and the rules and regulations
promulgated thereunder and unless the Corporation shall have received an
opinion of counsel reasonably satisfactory to it that such disposition may
be effected without violating the Act."
Section 12. Continued Validity.
Participant agrees that in the event of invalidity of any part or provision
of the Plan, or this Award Agreement, such invalidity shall not affect the
validity of any other part or provision of the Plan, of this Agreement.
Section 13. Choice of Law.
This Award Agreement shall be construed and enforced in accordance with the
laws of the State of New York.
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Section 14. Notices and Deliveries
All notices hereunder shall be in writing. Any notices, payments, or
deliveries to the Corporation or the Committee shall be directed to the
Corporation or the Committee, as the case may be, at the following address:
Atalanta/Sosnoff Capital Corporation
101 Park Avenue
New York, New York 10178
Attention: Martin T. Sosnoff, Chairman
Any notices, payments or deliveries (other than to the Corporation or the Board)
shall be directed to the addressee at the address designated by said addressee
by notice to the Committee. The Corporation may designate a new address for
purposes of this Agreement by notice to the Participant. Any Participant or
beneficiary may designate a new address for the purposes of this Agreement by
notice to the Committee. If no address is designated by the Participant or
beneficiary, all notices may be sent to his last known address. Unless otherwise
specified herein, notices shall be delivered by hand or sent by registered or
certified mail, return receipt requested.
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Section 14. Binding Upon Heirs, Etc.
This Agreement shall be binding upon, and shall inure to the benefit of,
the Corporation, its successors and assigns, and each Participant, his heirs,
executors, administrators and legal representatives.
IN WITNESS WHEREOF, the Corporation and the Participant have executed this
Award Agreement as of the day first above written.
Atalanta/Sosnoff Capital Corporation
by: /s/ Martin T. Sosnoff
---------------------------------------
Martin T. Sosnoff
Chairman of the Board
/s/ Anthony G. Miller
---------------------------------------
Anthony G. Miller
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Exhibit 10.29
EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") made as of the 22 day of
December 1997 between Atalanta/Sosnoff Capital Corporation (Delaware)
("Capital") and Atalanta/Sosnoff Management Corporation ("Management"), on the
one hand, and James D. Staub (the "Executive"), on the other hand. Capital and
Management are sometimes referred to collectively herein as the "Company.'
WHEREAS, the Executive is currently an officer of Capital and Management,
entities comprising the Company, and
WHEREAS, the Company believes it is in the best interests of the Company to
retain the Executive as an executive of the Company on the terms herein
provided; and
WHEREAS, the Executive is desirous of committing himself to serve the
Company on the terms herein provided;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein contained, the parties hereto
agree as follows.
1. Effectiveness. This Agreement shall be effective July 1,1997 (the
"Effective Date") upon the execution of this Agreement by the Company and the
Executive.
<PAGE>
2. Employment. The Company hereby agrees to employ the Executive, and the
Executive hereby accepts such employment, on the terms and conditions set forth
herein for the period commencing on the Effective Date and expiring on December
31, 1999, unless such employment is sooner terminated as hereinafter set forth
(such period is hereinafter sometimes referred to as the "Term of Executive's
Employment").
3. Position and Duties.
(a) During the Term of Executive's Employment hereunder, the Executive
shall serve as Senior Vice-President West Coast Marketing reporting to the
Executive Vice President and Chief Operating Officer and, if the Company employs
a Director of Marketing, to such Director of Marketing and to the Executive Vice
President and Chief Operating Officer jointly, and to the Board of Directors of
the Company, and subject to such reporting shall have supervision and control
over, and responsibility for the marketing of investment management services
offered by the Company and its subsidiaries and affiliates, including Capital
and Management, on the West Coast of the United States and the Pacific Rim and
shall have such other powers and duties as may from time to time be prescribed
by the Company. The Executive shall devote his entire working time and efforts
to the business and affairs of the Company.
2
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4. Compensation.
(a) Executive Base Compensation. During the Term of Executive's Employment
hereunder, the Executive shall receive a base salary at the annual rate of not
less than $175,000 (including deferred amounts) (the "Executive Base
Compensation"), commencing upon the Effective Date or such amount in excess of
Executive Base Compensation as the Company shall from time to time determine in
its discretion, payable at such intervals or times as shall accord with the
Company's normal procedure for similarly situated executives of the Company.
(b) Sales Payout with respect to clients of the Company who become such
clients during the Term of Executive's Employment as a direct result of the
Executive's efforts shall be computed and paid as follows:
(i) Executive shall receive a sales payout with respect to investment
advisory fees received by the Company from such clients in an amount equal
to twenty percent (20%) of the investment advisory fees received by the
Company from each such client in respect of the first twelve (12) months
during which such client is a client.
(ii) Executive shall receive continuing payments after such first
twelve month period in an annual amount equal to ten percent (10%) of the
investment advisory fees received by the Company from such clients.
(iii) With respect to Investment Accounts (as hereinafter defined), in
lieu of the payments set forth in subparagraphs (i) and (ii) hereof,
Executive shall
3
<PAGE>
receive a sales payout with respect to investment advisory fees received by
the Company from each such client who opens a limited partners account,
shareholders account, or other equity owners account (an "Investment
Account") as a limited partner in partnerships, or as a shareholder in
foreign or domestic corporations, or as an equity owner in other entities,
respectively, organized as private investment companies sponsored by the
Company, under which the client participates with others as a limited
partner, shareholder or equity owner, as applicable, in the investment
returns of any such partnership, corporation or other entity and of which
the Company is a general partner or investment manager, in the amount of
fifteen percent (15%) of the investment advisory fees received by the
Company wits respect to the first twelve (12) months in which such
Investment Account is open at any such partnership, corporation or other
entity and five percent (5%) with respect to any subsequent period during
the Term of Executives' Employment hereunder. For the purposes hereof any
performance allocation or profit participation to the general partner or
investment manager of any such partnership, corporation or other entity if
the recipient is the Company, shall be considered, together with any
investment management fee, as advisory fees. Notwithstanding the foregoing,
with respect to any Investment Account opened in (A) Sabre Capital
International, Ltd., a British Virgin Island Investment Fund (Sabre
Capital), as a direct result of Executive's efforts, if Executive has
employed an independent solicitor, after consultation with and with the
approval of the Company, unless the parties shall otherwise agree, the
Executive shall receive the
4
<PAGE>
difference between the amount paid such solicitor and 20% of the investment
advisory fees received by the Company during the Term of Executive's
Employment hereunder and (B) Sabre Partners, L.P., a Delaware limited
partnership, or in Sabre Capital, without the use of Company approved
independent solicitor, as a direct result of Executive's efforts, Executive
shall receive ten percent (10%) of the investment advisory fees received by
the Company during the Term of Executives Employment hereunder.
(iv) Payments shall be made within seventy-five (75) days after the
end of the quarter in which the Company receives the fees upon which such
payments are based. Notwithstanding subparagraphs (i), (ii) and (iii)
hereof, no sales payout shall be made by the Company with respect to any
advisory fees received by the Company on any client account if such account
at the time the computation is made upon which such advisory fee payment is
based is less than the following minimum with respect to the indicated
types of accounts:
Minimum Type of Account
------------------ ------------------------------
(A) $500,000 Investment Account
(B) $1 Million Non-Investment Account
custodied at Bear, Stearns
(C) $5 Million Non-Investment Account
not custodied at Bear, Stearns
(D) $250,000 "Wrap Account"
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All of the foregoing minimums shall be based on net capital contributions to the
account and not on increases in the value thereof attributable to the market
performance of the account. Notwithstanding the foregoing, Executive shall
receive sales payouts with respect to any account which did not equal or exceed
the foregoing minimums when it was opened commencing with respect to the fifth
consecutive quarter in which the account did exceed the applicable minimum and
thereafter.
All determinations as to whether a client has become a client of the
Company as a direct result of Executive's efforts shall be made by the Company
in the exercise of its reasonable discretion.
(v) In addition to the foregoing sales payouts, Executive shall
receive sales payouts during the Term of Executive's Employment with
respect to each client account and Investment Account existing as of the
Effective Date the name of which is set forth on the annexed Schedule A, in
the percentage set forth after each such account's name.
(vi) The Company has advised Executive that it may from time to time
require Executive to service certain accounts which he was not responsible
for opening and that he will be compensated at the rate of 5% of the
investment advisory fees received by the Company in accordance with the
Company's normal practices for
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its sales personnel. Any such accounts shall be identified in written
memoranda and shall be signed by the Executive and the Company.
(c) Expenses. During the Term of Executive's Employment hereunder, the
Executive shall be entitled to receive reimbursement for all reasonable expenses
incurred by him (in accordance with the policies and procedures currently in
effect for the executive officers of the Company) in performing services
hereunder, provided that the Executive properly accounts therefor in accordance
with Company policy.
(d) Fringe Benefits. The Executive shall be eligible to participate in or
receive benefits under any profit-sharing or pension plan, savings plan, stock
option plan, stock purchase plan, life insurance and/or death benefits plan,
health-and-accident plan, or arrangement currently made available by the Company
or made available in the future to its executives and key management employees,
subject to and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements. Nothing paid to the Executive
under any plan or arrangement presently in effect or made available in the
future shall be deemed to be in lieu of compensation to the Executive hereunder.
(e) Perquisites. The Executive shall be entitled to receive perquisites
appertaining to, and consistent with, his office in accordance with such
practices as may be adopted by the Company from time to time.
7
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5. Offices; Directorships. The Executive agrees to serve without additional
compensation, when elected or appointed thereto, in one or more offices in, the
Company or any subsidiary or affiliate of the Company.
6. Termination.
(a) Disability. If, based on independent medical advice, from a physician
selected by the Company, from a teaching hospital with expertise in the apparent
disability, the Board of Directors determines that, due to physical or mental
illness, the Executive has been unable to effectively perform his duties as a
sales, marketing and client service officer hereunder for three consecutive
months or four non-consecutive months in any twelve month period, the Company
may terminate the employment of the Executive by delivering a Notice of
Termination specifying a termination date not less than three months subsequent
to such Notice of Termination. The return of the Executive to the performance of
his duties in accordance with Section 3 hereof prior to the specified
termination date shall not render such notice ineffective for the purpose of
terminating Executive's employment hereunder.
(b) Termination by the Executive. The Executive may terminate his
employment hereunder voluntarily, provided that the Executive delivers to the
Company a Notice of Termination specifying a termination date not less than
ninety (90) days subsequent to the date of such Notice of Termination.
(c) Termination by the Company. The Company may terminate the employment of
the Executive, with or without cause, by delivering a Notice of
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Termination specifying a termination date not less than ninety (90) days
subsequent to such Notice of Termination, except that, in the case of a
Termination for Cause (as herein defined), a Notice of Termination shall be
effective immediately. A `Termination Without Cause" shall mean a termination of
the Executive's employment hereunder, other than a `Termination for Cause" as
defined herein and other than pursuant to subsections (a), (b) or (d) hereof. A
`Termination for Cause" shall mean a termination based upon the determination by
the Board of Directors in the exercise of its reasonable discretion that one of
the following events has occurred: (1) the Executive has been convicted of any
crime involving moral turpitude, any felony, or any fraud or misrepresentation
(whether or not involving a sentence of incarceration or fine); (2) Executive
shall have become a subject of a proceeding before a judicial or administrative
body of competent jurisdiction in which violation of federal or state law
relating to securities is alleged; (3) Executive shall have become the subject
of publicity or notoriety reasonably related to the Company's business, which in
the judgment of the Chairman of the Board is inconsistent with the maintenance
of the Company's good reputation; (4) Executive shall have failed after written
notice from the Company to have preserved and enhanced client relationships with
the Company, or to have professionally represented the Company's interests in
marketing its services or to have otherwise acted in the Company's best
interests; or (4) Executive shall have breached a material provision of this
Agreement.
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(d) The Executive's employment hereunder shall terminate upon his death.
(e) Any termination (i) by the Company pursuant to subsections 6(a) or (c)
above or (ii) by the Executive pursuant to subsection 6(b) above shall be
communicated by written Notice of Termination ("Notice of Termination") to the
other party hereto. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision
relied upon, and shall set forth the facts and circumstances claimed to provide
a basis for termination of the Executive's employment hereunder.
(f) "Date of Termination" shall mean (i) if the Executive's employment is
terminated by his death, the date of his death, (ii) if the Executive's
employment is terminated under Section 6(a), on the date the Executive's
employment is terminated by the Company in accordance with a Notice of
Termination under Section 6(a), (iii) if the Executive's employment is
terminated pursuant to a Notice of Termination under Section 6(c) the date upon
which such termination becomes effective pursuant to this Agreement and such
Notice of Termination, and (iv) December 31, 1999, if the Executive is employed
by the Company at such date.
(g) Except in the case of a Termination Without Cause, pursuant to Sections
6(c) the Executive shall be paid his Base Compensation earned to the Date of
Termination. In the case of Termination Without Cause during the Executive's
employment under this Agreement pursuant to Section 6(c) the Executive
10
<PAGE>
shall be paid by the Company his Base Compensation for a period commencing on
the day following the Date of Termination and ending six months from the Date of
Termination.
(h) Notwithstanding the provisions of Paragraph (g) of this Section 6,
except in the case of a Termination for Cause, in addition to the payments of
Base Compensation as set forth in paragraph (g), the Executive shall be entitled
to the additional continuing payments after the Term of Executive's Employment
hereunder as follows:
(i) For the purposes of computing Executive's continuing payments
pursuant to this Section 6(h), the assets under management by the Company
in each of the accounts with respect to which Executive receives
compensation pursuant to Sections 4(b) hereof (the "Compensable Accounts")
shall be determined as of the date of the end of the Term of Executive's
Employment under this Agreement (such assets determined as of such date,
with net additions after such date attributable to net capital
contributions resulting from the direct efforts of the Executive, as
determined by the Company in the exercise of its reasonable discretion, are
referred to herein as the "Base Amount" for each Compensable Account). All
continuing payments payable to Executive pursuant to this Section 6(h)
hereof shall be computed hereunder as if for the purposes hereof the
advisory fees received by the Company were computed on assets in each
Compensable Account equal to the lesser of the (A) Base Amount for each
Compensable Account or (B) 100% of the actual amount of assets in each
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Compensable Account as of the advisory fee computation date for such
Compensable Account. Continuing payments pursuant to this paragraph 6(h)
shall be made with respect to advisory fees received allocable to the two
consecutive annual periods of twelve months each (each of which is referred
to herein as an "Annual Period"), the first of which shall commence as of
the beginning of the month in which the Date of Termination as defined
herein shall have occurred, and shall be payable quarterly in arrears, no
later than seventy-five (75) days following the end of each quarter.
(ii) Executive or his legal representative shall have the right, prior
to the date on which he is entitled to payment with respect to each Annual
Period pursuant to the Company's obligation to make continuing payments
computed and payable under paragraph (h), subparagraph (i) of this Section
6, but not later than thirty (30) days prior to the beginning of each such
Annual Period, to elect to defer the receipt of the amount (the "Deferral
Amount") otherwise payable under such subparagraph (i) by delivery of a
written notice (the "Deferral Notice") to the Company specifying his
decision to defer payment of the Deferral Amount and instructing the
Company to pay the Deferral Amount to the Executive in equal quarterly
installments of principal and interest over a period to be specified by the
Executive, but not exceeding ten years (the "Deferral Period"). Interest on
the principal amount of the Deferral Amount shall be computed on the unpaid
balance thereof at the "applicable federal rate" as defined in Section
1274(d) of the Internal Revenue Code of I 986, as amended,
12
<PAGE>
(the "Code") (or applicable successor section of the Code) for the Deferral
Period selected by the Executive.
(iii) Upon receipt of the Deferral Notice by the Company instructing
the Company to defer the Deferral Amount pursuant to subparagraph (ii) of
paragraph (h) of this Section 6, and the execution of the instructions
contained therein by the Company, the Company shall be discharged from any
further obligation to make continuing payments to the Executive of the
amounts otherwise payable to him pursuant to subparagraph (i) of paragraph
(h) of this Section 6, except as provided in such subparagraph (ii).
(iv) The Company makes no representation with respect to the federal,
state or local tax consequences to Executive of the deferral of amounts
otherwise payable under subparagraph (i) of paragraph (h) of this Section
6, or of payments made under subparagraph (ii) of paragraph (h) of this
Section 6 by the Company pursuant to his instructions in the Deferral
Notice, and Executive acknowledges that, in the event that it shall be
determined by any tax authority that all or any part of the Deferral Amount
is required to be currently recognized by him for federal, state or local
income tax purposes at any time prior to receipt of payment thereof under
such subparagraph (ii) or otherwise, any such tax consequences shall be
solely Executive's responsibility and borne by him for his account, and
Executive hereby agrees to indemnify the Company with respect thereto and
hold it harmless.
13
<PAGE>
(v) Except in the case of a Termination for Cause, if after the Term
of Executive's Employment as provided herein, the Executive shall request,
at a time when he is no longer employed by the Company, that he become a
soliciting agent exclusively on behalf of the Company, the Company shall
offer the Executive compensation therefor on the same basis as provided in
Section 4(b) hereof with respect to each new client account which becomes a
client account as a direct result of Executive's efforts, as determined by
the Company in the exercise of its reasonable discretion, from the date of
Executive's acceptance of the Company's offer to the date of the
termination of the Executive's retention as a soliciting agent (the "Period
of Soliciting Activities"). The Period of Soliciting Activities shall end
upon ninety (90) days written notice by either party to the other. The
Agreement between the Executive and the Company governing Executive's
activities during the Period of Soliciting Activities, shall, in addition
to the compensation and termination provisions set forth herein, include
the terms and conditions of the Company's standard form of Solicitors
Agreement annexed hereto as Exhibit A and such other terms and conditions
as the Executive and the Company shall agree.
7. Post-Termination Responsibilities.
(a) Records and Files: Upon termination of his employment for any reason,
whether during the period set forth in Section 2 hereof or thereafter, the
Executive shall immediately turn over to the Company all records and files
maintained by the Executive relating to the business of the Company or its
affiliates and to their
14
<PAGE>
clients, including, but not limited to, originals and all copies of all
correspondence, soliciting materials, contracts, proposals, analyses,
performance data and other written or computer software, data bases, programs
and disks.
(b) No Relationship with Clients or Prospective Clients:
(i) From and after the termination of the Executive's employment for
whatever reason, whether during the period set forth in Section 2 hereof or
thereafter, neither the Executive nor any entity in which he has an
interest, directly or indirectly, whether as an officer, director, partner,
stockholder, employee or otherwise (hereinafter referred to as a "related
entity") shall approach or solicit, directly or indirectly, any client or
prospective client of the Company or its affiliates to become a client of
the Executive or a related entity, and the Executive will not authorize or
approve the taking of such action by any related entity. Neither the
Executive nor any such related entity shall take any action for the
purposes of, or which would result in, the termination of any investment
management or related relationship between the Company and its affiliates
and any of their clients or the creation of such a relationship with the
Executive or a related entity, and the Executive will not authorize or
approve the taking of such action by any related entity. The restrictions
contained in this subsection 7(b)(i) shall continue in effect for a period
of two years after the termination of the Executive's employment. For
purposes of this Agreement, a "prospective client" is any person or entity
with whom the Company was in active negotiation with a view to such person
or entity becoming a client of the Company at any time within one year
preceding the
15
<PAGE>
termination of the Executive's employment. Upon the termination of
Executive's employment hereunder, the Company shall provide Executive with
a written list of its "prospective clients" as defined herein certifying
that it is time accurate and complete and Executive shall provide the
Company with a comparable similarly certified list reflecting all
"prospective clients" as defined herein with whom he has had contact.
(ii) From and after the termination of the Executive's employment with
the Company for whatever reason, whether during the period set forth in
Section 2 hereof or thereafter, the Executive will not accept or serve any
client or prospective client of the Company as a client or customer of the
Executive or of any related entity even though the Executive has not
solicited or approached such client or prospective client, and the
Executive will not authorize or approve the taking of such action by any
related entity. The restrictions contained in this Section 7(b)(ii) shall
continue in effect for a period of two years after termination of the
Executive's employment with the Company.
(iii) After the termination of the Executive's employment for whatever
reason, whether during the period set forth in Section 2 hereof or
thereafter, the Executive shall refer to the Company all inquiries from
prospective clients on the written lists provided pursuant to Section
7(b)(i) hereof with respect to the services of the Company or the
Executive's status with the Company. Any press release issued by the
Company or the Executive shall be subject to the Company's and the
Executive's
16
<PAGE>
approval which shall not be unreasonably withheld and shall form the basis
for any reference to Executive's status.
(iv) The Executive agrees that in addition to any other rights and
remedies available to the Company in the event the Executive breaches the
provisions of this Section 7(b), the Company shall be entitled to receive
from the Executive any and all revenues or other consideration received by
the Executive or a related entity from or in respect of any client, or
prospective client of the Company in connection with the provision by the
Executive or a related entity of investment management or related services.
(v) The Executive shall notify in writing, and shall furnish a copy of
such notice to the Company, any related entity, immediately upon his
association therewith, of the restrictions contained in this Section 7.
(vi) The obligations set forth in Section 7(b) hereof shall cease upon
the expiration of the restriction periods contained in subsection (b) of
this Section 7.
(c) Related Entity: Notwithstanding the foregoing, an entity will not
constitute a related entity pursuant to this Section 7 solely by virtue of the
Executive having an interest in such entity as a stockholder if the Executive's
ownership of shares of any class of securities (or options, warrants or rights
to acquire such securities, or any securities convertible into such securities)
of such entity represents (together with any securities which would be acquired
upon the exercise of any such options, warrants or rights or upon the conversion
of any other security convertible into such
17
<PAGE>
securities) 2% or less of the outstanding shares of any such class of securities
of an entity whose securities are traded on a national securities exchange or in
the over-the-counter market.
(d) Non-Solicitation, Non-Hiring of Employees: The Executive agrees that
for two years from and after the termination of his employment, whether during
the period set forth in Section 2 hereof or thereafter, neither he nor any
related entity shall induce any employee of the Company or its affiliates to
terminate his employment with the Company and shall not hire any employee of the
Company or its affiliates even though not solicited by him or any such related
entity.
(e) Family and Related Accounts: Notwithstanding the foregoing, an account
shall not be considered the account of a client or prospective client as defined
herein, and Executive's activities shall not be proscribed as provided herein,
if the client or prospective client is a "Member of the Immediate Family" of the
Executive. For the purposes hereof a "Member of the Immediate Family" shall mean
with respect to the Executive, his spouse, (or former spouse), parent, or child,
each spouse of any such person, each child of any of the aforementioned persons,
each trust or comparable entity created solely for the benefit of one or more of
the aforementioned persons and each custodian or guardian of any property of one
or more of the aforementioned persons in his capacity as such custodian or
guardian.
8. Enforcement. The Executive recognizes that his agreement to the terms
and conditions of Sections 7, 8 and 9 of this Agreement represents a material
18
<PAGE>
inducement to the Company to continue the Executive's employment. The Executive
acknowledges that irreparable injury may result to the Company and that the
Company will have no adequate remedy at law in the event that the Executive
breaches any of the provisions of Section 7 hereof. Accordingly, the Executive
agrees that in the event of a breach by the Executive of any of the provisions
of Section 7, the Company shall, in addition to all other rights and remedies,
be entitled to injunctive relief with respect to such breach and/or to a decree
for specific performance of the terms of such Section, in each instance without
the necessity of showing any irreparable injury or special damages.
9. Successors.
(a) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which executes and delivers
the Agreement provided for in this Section 9 or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law.
(b) In the event Executive's employment under this Agreement shall
terminate for any reason while any amounts have been earned but not paid as of
19
<PAGE>
the applicable Date of Termination as defined herein or are otherwise due the
Executive under the terms of Section 6 hereof or by reference thereto, then the
right to receive such amount shall survive and be enforceable after the
termination of Executive's employment hereunder by the Executive, his
successors, assigns, executors, administrators, heirs, legatees, devisees or
legal representatives.
10. Chance In Control. A "Change in Control" shall mean that either of the
following events shall have occurred: (i) a person as defined in Sections 13(d)
or 14(d) of the Securities Exchange Act of 1934 other than Martin T. Sosnoff,
Craig B. Steinberg or Anthony G. Miller or members of their respective immediate
families, their respective estates, heirs or legatees, is or becomes the
"beneficial owner' (as defined in Rule I 3d-3 of the Exchange Act) of 25% or
more of the combined voting power of the then outstanding securities of Employer
or any successor thereto, or (ii) one half of the directors of the Company
currently in office shall cease to be a majority of directors of Employer other
than as a result of death, disability, termination with or without cause or
resignation of Martin T. Sosnoff or Craig B. Steinberg, from the Company or its
Board of Directors. In the event of a Change in Control during the term of
Executive's employment under this Agreement, Executive agrees that,
notwithstanding anything to the contrary contained in this Agreement, Executive
shall be entitled to receive continuing payments if, and only if, Employee
remains in the employ of the Company, or its successor resulting from such
Change in Control, for a period of two years from the date thereof, unless
Employee is terminated without cause by the Company or such successor during
such period. Upon the earlier of such termination without cause or
20
<PAGE>
Executive's resignation at or after the second anniversary of the Change in
Control, the continuing payments shall commence to be paid to Executive pursuant
to the terms hereof.
11. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when mailed by United States registered or
certified mail, return receipt requested, postage prepaid, transmitted by
facsimile transmission or delivered by messenger addressed as follows:
If to the Executive:
James D. Staub
49 Knickerbocker Lane
Orinda, California 94563
If to the Company:
Atalanta/Sosnoff Capital Corporation (Delaware)
101 Park Avenue
New York, New York 10178
or to such other address as any such person may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
12. Amendment and Waiver. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and duly authorized officer of the Company.
No
21
<PAGE>
waiver by either party hereto at any time of any breach by the other party
hereto of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.
13. Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of New
York without reference to conflicts of laws.
14. Severability: Survivability. It is the intent of the parties hereto
that in case any one or more of the provisions contained in this Agreement
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect the
other provisions of this Agreement, and this Agreement shall be construed as if
such invalid, illegal or unenforceable provision had never been contained
herein. The provisions of Sections 6(g), 6(h), 7, 8 and 9(b) of this Agreement
shall survive the expiration or termination of Executive's employment hereunder,
whether during the period set forth in Section 2 of this Agreement or
thereafter, and the termination of this Agreement.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
22
<PAGE>
16. Only Employment Agreement. From and after the Effective Date this
Agreement shall supersede any and all prior employment agreements between the
parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
ATALANTA/SOSNOFF CAPITAL CORPORATION
(DELAWARE)
By: /s/ MARTIN T. SOSNOFF
------------------------------
Martin T. Sosnoff
Chairman of the Board
ATALANTA/SOSNOFF MANAGEMENT
CORPORATION
By: /s/ MARTIN T. SOSNOFF
------------------------------
Martin T. Sosnoff
Chairman of the Board
/s/ JAMES D. STAUB
------------------------------
James D. Staub
23
<PAGE>
<TABLE>
<CAPTION>
JAMES D. STAUB
INSTITUTIONAL ACCOUNTS
SCHEDULE A PAYOUT SCHEDULES
QUARTERLY FEES QUARTERLY FEES
TOTAL BILLING PERIOD
ACCOUNT EFFECTIVE THROUGH
NAME DATE 12-31-96 12-32-96 3-31-97 6-30-97 9-30-97
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
GUAM 4-04-86 1.299.212 76.524 81.864 83.746 96.976
ST. FRANCIS HOSP 9-22-86 400.032 43.102 45.376 46.428 51.681
MPLT MEM PARK 4-20-88 63.915 3.469 N/A N/A N/A
MNS 9-07-88 405.250 42.916 44.562 45.088 50.492
HONOLULU MEDICAL RET 4-01-90 126.388 11.203 11.501 11.337 12.587
HONOLULU MEDICAL 401(K) 4-01-90 67.802 6.901 7.237 7.327 8.236
NO MARIANA ISL RET 4-01-90 1.056.282 102.518 104.246 105.022 113.870
MPLT GENERAL FUND 6-01-90 389.309 25.102 N/A N/A N/A
HAWAIIAN ELECTRIC FND. 1-01-91 53.291 4.383 4.543 5.304 5.635
MNS AGENCY 5-15-91 293.079 41.789 43.267 42.860 46.084
SIU 7-01-91 559.884 50.113 37.670 22.115 25.917
HAWAII TRUCKERS 7-01-91 463.030 46.815 47.373 51.541 53.284
PRIOR SERVICES 8-01-91 83.382 5.776 5.647 5.434 5.535
REPUBLIC OF PALAU SOC SEC 10-01-91 265.388 25.068 25.570 25.588 27.375
SAIPAN TRUST FUND 1-01-92 8.013 1.306 N/A N/A N/A
HOTEL UNION 11-01-91 830.265 82.189 84.251 84.945 90.864
UNITY HOUSE 12-02-91 347.969 41.665 44.306 7.585 8.515
BOILERMAKERS (CANADA) 5-11-92 653.189 66.145 68.704 70.081 77.528
MEDICAL FOUNDATION 4-01-92 80.431 7.146 7.146 7.046 2.784
REPUBLIC OF PALAU CVI SVC 11-16-92 285.215 34.555 35.542 35.879 38.417
HAWAIIAN ELECTRIC HI YIELD 7-01-92 407.713 42.098 34.231 N/A N/A
CONSUELO ALGER FON. 4-22-93 800.284 68.011 10.122 71.348 78.448
ISEMOT0 CORP. ACCT 8-31-93 32.785 2.162 2.264 2.324 2.667
ISEMOTO CONTRACTING DBPP 8-31-93 32.079 3.109 3.387 3.333 3.848
RUSSELL LAU 8-31-92 3.628 409 445 488 543
CONSTANCE LAU 8-31-92 3.628 409 445 488 543
ROBERT F. CLARKE 1-01-93 25.444 1.843 2.003 2.200 2.443
FSM F/B/O YAP STATE 12/17/93 129.201 45.138 46.264 46.697 50.523
FSM COMPACT FUND 12/17/93 138.255 15.653 15.971 16.181 17.915
EAGLE DISTRIBUTORS 1-13-94 31.295 3.573 2.690 N/A N/A
ALLAN J. HOWARD IRA 2-01-94 13.298 1.610 1.737 1.924 2.130
TOM R. CONSOLI 3-01-94 18.025 2,177 2.348 2.602 2.880
ADVANCED MICRO DEVICES 4-01-94 336.216 51,806 53.600 44.264 N/A
JOSEPH DACEY IRA 4-30-94 9.085 1.091 1.145 1.269 1.338
JOHN MUIR MEDICAL 5-24-94 427.903 74.764 76.258 76.916 81.181
QUEENS HEALTH SYSTEMS 10-10-94 301.257 41.409 19.353 N/A N/A
RICHARD L. HANSEN IRA 11-30-94 9.589 1.573 1.697 1.881 2.361
QUEENS HEALTH SYSTEMS 01-09-95 171.834 26.335 34.325 35.089 39.586
PALAU TRUST FUND 02-01-95 153.936 26.389 27.384 27.498 32.235
HEI VEBA HI YIELD 09-07-95 5.305 2.154 1.755 N/A N/A
HEI OPEB EQUITY 09-07-95 1.416 289 300 368 483
HEI VEBA EQUITY 09-07-95 13.198 5.069 5.144 6.311 6,885
LINFIELD COLLEGE 0 N/A 44.356 46.717 50.635
GEORGE FOX 0 N/A 3.439 3.519 3.745
ARCHDIOCESE- PORTLAND 0 N/A 22.048 22.501 24.339
CALLAN FAMILY TRUST 01-01-96 1.632 659 N/A N/A N/A
MNS -ABC STORES 01-01-96 264 106 115 127 142
ROBERT N. MILLAWAY IRA 01-01-96 3.341 1.594 1.719 1.905 2.108
PHILIP B. RUPPRECHT IRA 01-01-96 1.312 531 573 634 702
STEPHEN K. WHITTEMORE IRA 01-01-96 6.394 1.877 2.959 3.278 3.628
CHARLES J. HURST IRA 02-01-96 2.045 950 1.025 1.136 1.25X
HARRY J. LARSEN IRA 02-01-96 3.559 1.105 N/A N/A N/A
-------------------------------------------------------------------------
TOTAL 10.815.247 1.142.578 1.177.907 1.078,324 1.128.06X
=========================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JAMES D. STAUB
INSTITUTIONAL ACCOUNTS
PAYOUT SCHEDULES
QUARTERLY SHARE @ 5% QUARTERLY SHARE @ 5%
TOTAL COLLECTION PERIOD
ACCOUNT EFFECTIVE THROUGH
NAME DATE 12-31-96 12-32-96 3-31-97 6-30-97 9-30-97
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
GUAM (1) 4-04-86 35.058 7.652 8.186 8.375 9.698
ST. FRANCIS HOSP 9-22-86 8.282 2.155 2.269 2.321 2.584
MPLT MEM PARK (1) 4-20-88 888 347 0 0 0
MNS 9-07-88 7.865 2.146 2.228 2.254 2.525
HONOLULU MEDICAL RET 4-01-90 2.278 560 575 567 629
HONOLULU MEDICAL 4OlCK) 4-01-90 1.327 345 362 366 412
NO MARIANA ISL RET (1) 4-01-90 39.797 10.252 10.425 10.502 11.387
MPLT GENERAL FUND U) 6-01-90 6.432 2.510 0 0 0
HAWAIIAN ELECTRIC FND.C2) 1-01-91 3.260 877 909 1,061 1.127
MNS AGENCY 5-15-91 7.141 2.089 2.163 2.143 2.304
SIU 7-01-91 9.495 2.506 1.884 1.106 1.296
HAWAII TRUCKERS 7-01-91 8.822 2.341 2.369 2.577 2.664
PRIOR SERVICES Cl) 8-01-91 2.630 578 565 543 554
REPUBLIC OF PALAU SOC (1) 10-01-91 9.877 2.507 2.557 2.559 2.738
SAIPANN TRUST FUND (1) 1-01-92 335 131 0 0 0
HOTEL UNION 11-01-91 16.295 4.109 4.213 4.247 4.543
UNITY HOUSE 12-02-91 6.842 3.083 2.215 379 426
BOILERMAKERS(CANADA) 5-11-92 12.762 3.307 3.435 3.504 3.876
MEDICAL FOUNDATION 4-01-92 1.438 357 357 352 . 139
REPUBLIC OF PALAU CVL (1) 11-16-92 12.566 3.456 3.554 3.588 3.842
HAWAIIAN ELECTRIC HI YIELD 7-01-92 8.071 2.105 1.712 0 0
CONSUELO ALGER FDN. 4-22-93 14.285 3.401 3.506 3.567 3.922
ISEMOTO CORP. ACCT 8-31-93 414 108 113 116 133
ISEMOTO CONTRACTING DBPP 8-31-93 623 155 169 167 192
RUSSELL LAU 8-31-92 0 RJK RJK 24 27
CONSTANCE LAU 8-31-92 0 RJK RJK 24 27
ROBERT F. CLARKE 1-01-93 344 92 100 110 122
FSM F/B/O YAP STATE (1) 12/17/93 6.414 4.514 4.626 4.670 5.052
FSM COMPACT FUND (1) 12/17/93 6.114 1.565 1.597 1.618 1.792
EAGLE DISTRIBUTORS 1-13-94 673 179 135 0 0
ALLAN J. HOWARD IRA 2-01-94 297 161 174 192 213
TOM R. CONSOLI 3-01-94 805 218 235 260 288
ADVANCED MICRO DEVICES 4-01-94 19.180 2.590 2.680 2.213 0
JOSEPH DACEY IRA 4-30-94 426 109 115 127 134
JOHN MUIR MEDICAL 5-24-94 12.819 3.738 3.813 3.846 4.O59
QUEENS HEALTH SYSTEMS 10-10-94 8.056 2.070 968 0 0
RICHARD L. HANSEN IRA 11-30-94 581 157 170 188 208
QUEENS HEALTH SYSTEMS 01-09-95 7.737 1.317 1.716 1.754 1.979
PALAU TRUST FUND (1) 02-01-95 10.012 2.639 5.477 5.500 6.447
HEI VEBA HI YIELD 09-07-95 0 AGM AGM N/A N/A
HEI OPEB EQUITY 09-07-95 0 AGM AGM N/A N/A
HEI VEBA EQUITY 09-07-95 0 AGM AGM N/A N/A
LINFIELD COLLEGE 0 N/A 4.436 4.672 5.064
GEORGE FOX 0 N/A 344 352 375
ARCHDIOCESE-PORTLAND 0 N/A 2.205 2.250 2.434
CALLAN FAMILY TRUST 01-01-96 164 66 N/A N/A N/A
MNS -ABC STORES 01-01-96 0 AGM AGM AGM AGM
ROBERT N. MILLAWAY IRA 01-01-96 335 159 172 191 211
PHILIP B. RUPPRECHT IRA 01-01-96 0 AGM AGM AGM AGM
STEPHEN K. WHITTEMORE IRA 01-01-96 640 188 296 328 363
CHARLES J. HURST IRA 02-01~96 205 95 103 114 26
HARRY J. LARSEN IRA 02-01-96 357 111 N/A N/A N/A
---------------------------------------------------------------------
TOTAL 291.942 76.045 83.128 78.727 33.912
=====================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ATALANTA/ SOSNOFF MANAGEMENT PAYOUT
IMA FEES
RR # ASSET PERIOD 503
AND VALUE ENDED
NAME A/C # CODE 06-30-97 09-30-97 STAUB
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aloha Council-Boy Scouts 10915 JDS 820.431 1.880.OO 188.00
The Cades Foundation 14500 JDS 1.315.279 2.870.00 143.50
Walter Y. M. Chang. M.D. 14690 JDS 1.317.433 2.853.00 142.65
Commercial Sheetmetal 15200 JDS 1.350.401 2.957.0Q 147.85
Vinc & Mild DeDomenico 16377 JDS 2.678725 6.696.00 1.339.20
Vinc & Mild DeDomenico #3 16382 JDS 3.268,684 8.171.00 l.634.20
Finance Factors 20511 JDS 4.339.250 9,656.00 482.80
Hawaii Pacific University 26075 JDS 1.219.851 2,735.00 136.75
Hawaii Residency Programs 26100 JDS 3.045.110 6,925.00 346.25
Sheridan C. F. Ing Irrev 27750 JDS 1.252.934 2,887.00 AGM
King & Neel, Inc. 30385 JDS 1.509.425 3.389.00 169.45
Minnie Kosasa Rev Tr 30404 JDS 3.236.755 6.189.00 1,237.80
M. Kosasa & Sons 30406 JDS 1.286.383 2.407.00 120.35
Kosasa Revocable Trust 30408 JDS 1.915.197 3.577.00 178.85
Kosasa Foundation 30410 JDS 2.399.653 4,636.00 231.80
Maui Publishimg Co. 34050 JDS 1.296.276 2,996.00 149.80
Jeffrey W. Meyer 34375 JOS 2.754.746 6.886.00 1,377.20
College of Micronesia 34670 JDS 1.310.851 2.896.00 579.20
Nancy Newsom Trust 36600 JDS 611.594 1.528.00 305.60
Sally Newsom Trust 36601 JDS 627.930 1.569.00 313.80
Newsom Family Trust 36602 JDS 944.191 2.360.00 472.00
Nittaku Investment Ret 36700 JDS 4.695.342 14.582.O0 1,458.20
Pacific International 40050 JDS 585.770 1.270.00 RJK
Anne Pearl 40375 JDS 1.420.512 3.551.00 710.20
Rehab. Hosp. of Pac. 44375 JDS 3.430.152 7.410.00 1,482.00
Reinwald.O'Connor 401(K) 45346 JDS 158.306 395.00 AGM
Reinwald.0'Connor 401(K) 45348 JDS 848.154 2.120.00 AGM
Reinwald.O'Connor 401(K) 45350 JDS 451.061 1,127.00 225.40
Gilbert Butson 401(K) 45353 JDS 732.577 1,831.00 366.20
John Hoskins 401(K) 45355 JDS 789.641 1,974.00 394.80
Arthur Reinwald 401(K) 45357 JDS 1.148.994 2.872.00 574.40
A & J Reinwald 45375 JDS 723.895 1.809.00 361.80
Wong Sugihara psp 47600 JDS 826.762 1.803.00 360.60
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ATALANTA/ SOSNOFF MANAGEMENT PAYOUT
IMA FEES
RR # ASSET PERIOD 503
AND VALUE ENDED
NAME A/C # CODE 06-30-97 09-30-97 STAUB
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
H & G Trainor 47800 JDS 3.833.261 9.583.00 1.916.60
Geetu Watumull 54303 JDS 373.102 821.00 AGH
Gulab Waturnull 54305 JDS 451.201 996.00 RJK
Wayne Basket Co 56075 JDS 4.411.771 10.276.00 2.055.20
National Mortgage & Finance 65425 JDS 4.760.484 8.925.00 446.25
Marc E. Arnold 66035 JDS 1.244.589 1.096.00 54.80
Barry H. Beracha Rev Tr 66055 JDS 1.277.690 1.120.00 56.00
S & C Howlett Family 66390 JDS 1.246.802 1.099.00 54.95
Richard J. Mahoney 66500 JDS 1.281.837 1.120.00 56.00
Assoc Ret Empls P R 66590 JDS 314.819 359.00 17.95
Gerald Rosenbaum IRA 66740 JDS 792.138 880.00 44.00
Sicash Builders PSP 66755 JDS 1.205.00 60.25
James & Randy Barnhart LIT 66790 JDS 491.569 538.00 26.90
Suiza Dairy & Affil. 66795 JDS 402.898 437.00 21.85
T & I Mulcahy 84780 JDS 854.206 2.135.00 427.00
A.H. Hansen-IRA 95000 JDS 496.834 1.242.00 248.40
Franklin M. Moses 95012 JDS 1.776.013 4.440.00 888.00
Jeffery W. Meyer 95125 JDS 2.908,135 7.270.00 1.454.00
Barry H. Pass Rev Tr 66575 JDS 96 304.723 334.00 50.10
Pioneer Oil Company. Inc. 66580 JDS 96 1.159.888 1.273.00 190.95
----------------------------------------------
TOTAL 82.694.285 181.956.00 23.699.85
====================================
QUARTERLY DRAW / PAYMENTS 0.00
CURRENT DUE TO (DUE FROM) 23.699.85
PREVIOUS BALANCE 0.00
---------
NET AMOUNT DUE (RECOVERABLE) 23.699.85
=========
</TABLE>
<PAGE>
EXHIBIT A
[Letterhead of Adviser]
_________, 199_
Mr. James Staub
49 Knickerbocker Lane
Orinda, CA 94563
Re: Client Solicitation Activities on behalf of
Atalanta/Sosnoff Capital Corporation (Delaware)
and Atalanta/Sosnoff Management Corporation
(collectively, "Atalanta")
Dear Mr. Staub:
Atalanta (the "Advisor'), as an investment advisor registered under the
Federal Investment Advisors Act of 1940 (the "Act"), is precluded from paying
you a cash fee directly or indirectly in connection with your solicitation
activities on its behalf except under the limited conditions set forth in Rule
206(4)-3 (the "Rule") of the Act.
The purpose of this letter is to confirm our understanding with respect to
the terms and conditions upon which you shall serve as an independent contractor
to the Advisor and effect compliance with the Rule. (A copy of the Rule is
attached hereto as Exhibit A.)
This letter shall supersede any oral or prior written understandings we may
have or have had with respect to the subject matter. If the terms and conditions
set forth below are satisfactory to you, please sign one copy of this letter and
return it to the Advisor, at which time we shall have a binding agreement.
Our agreement is as follows:
1. As an independent contractor and not as an employee, you have expressed
an interest in soliciting as clients for the Advisor those individuals and
entities which you in your best judgment believe to be suitable. The Advisor
will have no responsibility to accept any proposed client, and you will have no
authority to accept any client on behalf of the Advisor.
1
<PAGE>
2. The services to be performed hereunder shall be performed by you or by
such other person as the Advisor shall expressly approve.
3. With respect to any client, which the Advisor has concluded in the
exercise of its reasonable discretion, has become a client as a direct result of
your solicitation efforts (a "Solicited Client"), you will, to the extent
reasonably requested by the Advisor, provide continuing service to assist the
Solicited Client in maintaining the most effective possible relationship with
the Advisor. These services may include regular telephone and in person contact
for portfolio reviews and such other services as will assist the Solicited
Client in its understanding of the Advisors services.
4. For your services hereunder, with respect to any Solicited Client, you
will receive, for so long as this Agreement remains in effect, compensation as
described on Exhibit B-I annexed hereto, you will be reimbursed for your
reasonable expenses incurred by you in the solicitation or maintenance of the
accounts of Solicited Clients.
5. You undertake to perform your duties hereunder in a manner consistent
with the instructions of the Advisor and the provisions of the Act and the rules
thereunder, including the Rule. You confirm that you have read and understand
the Rule and will abide by it in your solicitation activities. In accordance
with the Rule, you will, at the time of the solicitation activities referred to
in paragraph I hereof, provide the Solicited Client with a current copy of the
Advisors written disclosure statement, as provided to you by the Advisor, and of
a separate written disclosure statement substantially in the form attached
hereto as Exhibit C-I. You will obtain from the client a written acknowledgment
of the receipt of such disclosure statements, and provide a copy of that
acknowledgment to the Advisor.
6. In performing services hereunder, you will make only such
representations, and use only such materials, regarding the Advisor as have been
approved or authorized by the Advisor.
7. This Agreement shall be terminable at any time by you or by the Advisor,
with or without cause, effective ninety (90) days after written notice of
termination and otherwise shall terminate upon your death or the death of such
other person as shall been approved by the Advisor as provided in paragraph 2
above. Your share of compensation in respect of advisory fees of Solicited
Clients shall continue until the end of the calendar year of the termination of
this Agreement. Upon such termination, each party will keep confidential all
proprietary information about the other obtained during the term of this
Agreement, including customer lists and sales material, and each shall upon
request return to the other any files, customer lists, sales material or other
material relating to the business of the other in its possession. Nothing in
this paragraph 7 shall require Advisor to cease to serve as Advisor to a
Solicited Client upon termination of the Agreement.
2
<PAGE>
8. The Rule requires that the solicitor not be a person (a) subject to an
order of the Securities and Exchange Commission ("SEC") as referenced in the
Rule, (b) convicted within the previous ten years of certain felonies or
misdemeanors referred in the Rule, (c) found by the SEC to have engaged in
conduct referenced in the Rule, or (d) subject to an order, judgment or decree
referenced in the Rule. You hereby confirm to us that you have never been the
subject of any such order, so convicted or the subject of any such finding or
order, judgment or decree.
9. This Agreement will be governed by, and interpreted in accordance with,
the laws of the State of New York.
Atalanta/Sosnoff Capital Corporation (Delaware)
Atalanta/Sosnoff Management Corporation
By:
----------------------------------------------
Accepted and agreed to,
including attached Exhibits:
/s/ JAMES D. STAUB
- --------------------------------
James D. Staub
3
<PAGE>
EXHIBIT A-I
Fraudulent Practices -- ss.206 44,177
[P 56,383A] Cash Payments for Client Solicitations
Reg. ss. 275.206(4)-3. (a) It shall be unlawful for any investment adviser
required to be registered pursuant to Section 203 of the Act to pay a cash fee,
directly or indirectly, to a solicitor with respect to solicitation activities
unless:
(l)(i) the investment adviser is registered under the Act;
(ii) the solicitor is not a person (A) subject to a Commission order issued
under Section 203(0 of the Act, or (B) convicted within the previous ten years
of any felony or misdemeanor involving conduct described in Section
203(e)(2)(A)-(D) of the Act, or (C) who has been found by the Commission to have
engaged, or has been convicted of engaging, in any of the conduct specified in
paragraphs (1), (5) or (6) of Section 203(e) of the Act, or (D) is subject to an
order, judgment or decree described in Section 203(e)(3) of the Act; and
(iii) such cash fee is paid pursuant to a written agreement to which the
adviser is a party; and
NOTE: The investment adviser shall retain a copy of each written agreement
required by this paragraph as part of the records required to be kept under ss.
275.204-2(a)(10) of this chapter.
(2) such cash fee is paid to a solicitor;
(i) with respect to solicitation activities for the provision of impersonal
advisory services only; or
(ii) who is (A) a partner, officer, director or employee of such investment
adviser or (B) a partner, officer, director or employee of a person which
controls, is controlled by, or is under common control with such investment
adviser provided that the status of such solicitor as a partner, officer, direct
or employee of such investment adviser or other person, and any affiliation
between the investment adviser and such other person, is disclosed to the client
at the time of the solicitation or referral; or
(iii) other than a solicitor specified in paragraph (a)(2)(i) or (ii) above
if all of the following conditions are met;
(A) The written agreement required by paragraph (a)(l)(iii) of this
section: (1) describes the solicitation activities to be engaged in by the
solicitor on behalf of the investment adviser and the compensation to be
received therefor; (2) contains an undertaking by the solicitor to perform his
duties under the agreement in a manner consistent with the instructions of the
investment adviser and the provisions of the Act and the rules thereunder; (3)
requires that the solicitor, at the time of any solicitation activities for
which compensation is paid or to be paid by the investment adviser, provide the
client with a current copy of the investment advisers written disclosure
statement required by ss. 275.204-3 of this chapter ("brochure rule') and a
separate written disclosure document described in paragraph (b) of this rule.
(B) The investment adviser receives from the client, prior to, or at the
time of, entering into any written or oral investment advisory contract with
such client, a signed and dated acknowledgment of receipt of the investment
adviser's written disclosure statement and the solicitor's written disclosure
document.
NOTE: The investment adviser shall retain a copy of each such
acknowledgment and solicitor disclosure document as part of the records required
to be kept under ss. 275.204-2(a)(15) of this chapter.
(C) The investment adviser makes a bona tide effort to ascertain whether
the solicitor has complied with the agreement, and has a reasonable basis for
believing that the solicitor has so complied.
(b) The separate written disclosure document required to be furnished by
the solicitor to the client pursuant to this section shall contain the following
information:
Federal Securities Law Reports Reg. ss. 275.206(4)-3 P.56,383A
<PAGE>
44,178 Investment Advisers Act
(1) The name of the solicitor:
(2) The name of the investment adviser'.
(3) The nature of the relationship, including any affiliation, between the
solicitor and the investment adviser,
(4) A statement that the solicitor will be compensated for his solicitation
services by the investment adviser;
(5) The terms of such compensation arrangement, including a description of
the compensation paid or to be paid to the solicitor; and
(6) The amount, if any, for the cost of obtaining his account the client
will be charged in addition to the advisory fee, and the differential, if any,
among clients with respect to the amount or level of advisory fees charged by
the investment adviser if such differential is attributable to the existence of
any arrangement pursuant to which the investment adviser has agreed to
compensate the solicitor for soliciting clients for, or referring clients to,
the investment adviser.
(c) Nothing in this section shall be deemed to relieve any person of any
fiduciary or other obligation to which such person may be subject under any law.
(d) For purposes of this section,
(1) "Solicitor" means any person who, directly or indirectly, solicits any
client for, or refers any client to, an investment adviser.
(2) "Client" includes any prospective client.
(3) "Impersonal advisory services" means investment advisory services
provided solely by means of (i) written materials or oral statements which do
not purport to meet the objectives or needs of the specific client, (ii)
statistical information containing no expressions of opinions as to the
investment merits of particular securities, or (iii) any combination of the
foregoing services.
[Adopted in Release No. IA-688 (182,128), effective September 30, 1979,44
FR. 42130; Release No. IC-17085 (P.84,434), effective September 25, 1989. 54
F.R. 32048; and Release No. IA-1633 (P.85,940), effective July 8, 1997, 62 F.R.
28112.]
<PAGE>
EXHIBIT B-I
Compensation - [name]
Percentage of advisory fees commencing on the later of establishment of
Solicited Client relationship or receipt of written Solicited Client
acknowledgment of your compensation arrangement with [___________], in
accordance with Section 4(b) of a certain Executive Employment Agreement by and
between Atalanta and James D. Staub dated December __, 1997.
<PAGE>
EXHIBIT C-I
[Addressee shall be the person
or body which makes investment
manager selection or delegate]
Dear ________:
I have previously caused to be furnished to you the Form ADV, Part II for
Atalanta (the "Advisor"). The information in the form required disclosure prior
to your establishing a manager-client relationship with the Advisor.
As I previously advised you, for so long as you employ the Advisor as your
investment manager and my agreement with the Advisor remains in effect, the
Advisor will pay me as compensation on an ongoing basis an annual referral fee
equal to ____ percent (_____%) of its advisory fees which fees will be deducted
directly from your account. This compensation will cover all expenses involved
in assisting you in maintaining the most effective possible relationship with
the Advisor. These services may include regular telephone and in person contact
for portfolio reviews and such services as will assist you in your understanding
of the Advisor's services.
The Advisor charges varying fees for its advisory services. The fee being
paid by you for the Advisor's services has not been increased as result of
amounts being paid by the Advisor to me.
Except as described in this disclosure statement, the Advisor and 1 are not
otherwise affiliated and each is an independent contractor.
Sincerely,
I hereby acknowledge receipt
of the above-referenced Form ADV
and of this letter:
________________________________
[print name and title below line]
<PAGE>
EXHIBIT 11
ATALANTA/SOSNOFF CAPITAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
FOR THE YEARS ENDED DECEMBER 31,1997,1996 AND 1995
1997 1996 1995
---------- ---------- -----------
Net income $9,849,373 $8,801,916 $10,047,931
========== ========== ===========
Basic Earnings Per Share:
Shares - weighted average number of
common shares outstanding 9,037,469 8,812,401 8,812,401
Basic earning per share $ 1.09 $ 1.00 $ 1.14
========== ========== ===========
Dilutive Earnings Per Share:
Common stock equivalents - options
Shares - weighted average number of
common and common equivalent shares
outstanding 9,088,405 8,842,751 8,819,061
========== ========== ===========
Dilutive earnings per share $ 1.08 $ 1.00 $ 1.14
========== ========== ===========
S-I
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM REGISTRANTS
ANNUAL REPORT ON FORM 10K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
THE FINANCIAL STATEMENTS IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 3,805
<SECURITIES> 63,040
<RECEIVABLES> 4,679
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 71,524
<PP&E> 1,028
<DEPRECIATION> (238)
<TOTAL-ASSETS> 75,413
<CURRENT-LIABILITIES> 4,857
<BONDS> 0
0
0
<COMMON> 96
<OTHER-SE> 70,460
<TOTAL-LIABILITY-AND-EQUITY> 75,413
<SALES> 18,829
<TOTAL-REVENUES> 31,714
<CGS> 0
<TOTAL-COSTS> 13,707
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34
<INCOME-PRETAX> 17,973
<INCOME-TAX> 8,124
<INCOME-CONTINUING> 9,849
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,849
<EPS-PRIMARY> 1.09
<EPS-DILUTED> 1.08
</TABLE>
