SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT
TO SECTIONS
13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
(Mark One)
( X ) ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
____________________to____________________
Commission file number 0-14684
Ryan, Beck & Co., Inc.
(exact name of issuer as specified in its charter)
NEW JERSEY
(State or other jurisdiction of incorporation or organization)
22-1773796
(I.R.S. Employer Identification No.)
80 Main Street, West Orange, N.J. 07052-5414
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 325-
3000
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class Name of each exchange on which
registered
___________________________________
________________
___________________
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, par value $.10 per share
Title of Class
Voting Cumulative Preferred Stock, Series A, par value per
share
Title of Class
Indicate by check mark whether the issuer (1) filed all reports
required to be
filed by Section 13 or 15(d) of the Exchange Act during the
past 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_____
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
the 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 ]
The aggregate market value of the voting stock held by non-
affiliates computed
by reference to the last sale price of such stock as of March 21,
1997:
$12,388,871
Number of shares of Common Stock outstanding as of March
21, 1997:
3,235,165
DOCUMENTS INCORPORATED BY REFERENCE
1. Part II - The Registrant's Annual Report to Stockholders for
the Fiscal Year
Ended December 31, 1996.
2. Part III - Proxy Statement for the Registrant's 1997 Annual
Meeting of
Stockholders.
Item 1. DESCRIPTION OF BUSINESS
General
Ryan, Beck & Co., Inc. (the "Company" or "Ryan, Beck") is
principally
engaged in the underwriting, distribution and trading of tax-
exempt, bank
equity and debt securities. The Company provides consulting,
research and
brokerage services primarily to community-oriented financial
services
companies with a focus on corporate finance and merger-related
services. The
Company offers a general securities brokerage business with
investment
products for retail and institutional clients, as well as life
insurance and annuity
products. The Company's clients consist primarily of high net
worth
individuals (primarily residents of New Jersey, other Mid-
Atlantic and
Northeastern states and Florida), banking and thrift institutions
(primarily
located in New Jersey, Pennsylvania and Florida) and, to a
much lesser extent,
insurance companies and specialty finance companies. The
Company's plan is
to continue to operate as a high quality firm serving its market
niche in the
financial services industry.
The Company was organized in New Jersey in 1965, under the
name of John J.
Ryan & Co., Incorporated, as a successor to various entities
dating from 1946.
The Company changed its name to Ryan, Beck & Co., Inc. in
1981. Unless the
context otherwise requires, all references herein to the
"Company" include
Ryan, Beck & Co., Inc. and its predecessors and subsidiaries.
The principal executive office of the Company is located at 80
Main Street,
West Orange, New Jersey 07052-5414 and its telephone
number is 201-325-
3000. The Company is registered as a broker-dealer with the
Securities and
Exchange Commission ("SEC") and is a member of the
National Association of
Securities Dealers, Inc. ("NASD") and the Securities Investor
Protection
Corporation ("SIPC") which insures customer funds and
securities deposited
with a broker-dealer up to $500,000 per customer, with a
limitation of
$100,000 on claims for cash balances. The Company is not a
member of any
securities exchange.
Brokerage services to retail and institutional customers are
provided through
Ryan, Beck's sales force of approximately 76 sales account
executives located
in the West Orange, New Jersey, Bala Cynwyd, Pennsylvania,
and West Palm
Beach, Florida offices. The Company believes that its account
executives are a
key factor to the success of its business. Over the last five
years, the number of
full-time account executives has increased from approximately
65 to 76, some
of whom joined Ryan, Beck after previous associations with
other brokerage
firms.
The securities business is, by its nature, subject to various risks,
particularly in
volatile or illiquid markets, including the risk of losses resulting
from the
underwriting or ownership of securities, customer fraud,
employee errors and
misconduct, failures in connection with the processing of
securities transactions
and litigation. The Company's business and its profitability are
affected by
many factors, including the volatility and price level of the
securities markets,
the volume, size and timing of securities transactions, the
demand for
investment banking services, the level and volatility of interest
rates, the
availability of credit, legislation affecting the business and
financial
communities, and the economy in general. Markets
characterized by low
trading volumes and depressed prices generally result in
reduced commissions
and investment banking revenues as well as losses from declines
in the market
value of securities positions. Moreover, Ryan, Beck is likely to
be adversely
affected by negative economic developments in New Jersey, the
mid-Atlantic
region or the financial services industry in general.
Reduced volume and prices generally result in lower investment
banking
revenues and commissions and may result in losses from
declines in the market
value of securities held in trading, investment and underwriting
positions. In
periods of relatively low business activity for the Company,
profitability will
likely be adversely affected because a significant portion of the
Company's
expenses are fixed.
On the other hand, as in the past, heavy trading volume has
caused clearance
and processing problems for many securities firms, and this
could occur in the
future. In addition, there is a risk of loss from errors which can
occur in the
execution and settlement process. See "Accounting,
Administration and
Operations."
The following table sets forth certain information regarding the
revenues of the
Company by source:
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
Amount Percent Amount Percent Amount Percent
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Principal transactions:
Tax-Exempt debt securities $ 2,829 9.9% $
4,940 19.8% $ 5,046 17.3%
Taxable debt securities 775 2.7 2,302 9.2
1,729 5.9
Equity securities 6,242 21.9 5,982 23.9
4,995 17.2
Total 9,846 34.5 13,224 52.9 11,770 40.4
Investment banking<F1>
Tax-Exempt debt securities 1,047 3.7 913 3.7
1,258 4.3
Taxable debt securities 1,540 5.4 456 1.8
309 1.2
Equity securities 2,811 9.9 1,977 7.9 623
2.1
Consulting, placement and valuation fees 7,424
26.0 4,494 18.0 11,902 40.9
Total 12,822 45.0 7,840 31.4 14,092 48.5
Commissions:
Equity securities 2,514 8.8 1,395 5.6
1,281 4.4
Mutual funds 1,777 6.2 1,407 5.6 1,081 3.7
Total 4,291 15.0 2,802 11.2 2,362 8.1
Interest and dividends 1,329 4.7 894 3.6 641
2.2
Other 222 0.8 228 .9
235 0.8
Total $28,510 100.0% $24,988
100.0% $29,100 100.0%
<FN>
<F1>Investment banking revenue includes management fees
and underwriting
fees earned in connection with all underwriting participations
and selling
concessions earned in connection with the Company's
participation in tax-
exempt debt, corporate debt and equity underwritings.
</FN>
</TABLE>
In executing customers' orders to buy or sell listed securities
and securities in
which it does not make a market, Ryan, Beck generally acts as
an agent and
charges a commission.
FIXED INCOME DIVISION
Tax-Exempt Bond Department
The Company maintains primary and secondary markets in tax-
exempt
securities issued primarily by the State of New Jersey and its
political
subdivisions. To a lesser extent, the Company also maintains
primary and
secondary markets for tax-exempt securities issued by
municipalities located
outside of New Jersey. Principal transactions in tax-exempt
securities
accounted for 9.9% of the Company's revenues during 1996,
19.8% of the
Company's revenues during 1995 and 17.3% during 1994.
The Company provides investment banking advice to, and raises
capital for,
many types of issuers of tax-exempt securities, including
counties, cities,
transportation authorities, sewer and water authorities and
housing, health and
higher education agencies. Most of these issuers are located in
New Jersey.
The Company arranges public offerings of municipal securities
and distributes
these securities to individual and institutional investors. In
addition, the
Company is often included in national and regional syndications
which
underwrite tax-exempt issues. Increasingly, underwritings of
tax-exempt issues
are being conducted on a competitive, rather than negotiated,
basis. The
impact of this trend on future revenue is unclear.
The following tables set forth, for the periods indicated, (i) the
total number
and dollar amount of municipal bond offerings managed or co-
managed by the
Company and (ii) the total number and dollar amount of the
Company's
underwriting participations in those offerings and in offerings
managed by
others.
<TABLE>
Managed or Co-Managed Offerings
<CAPTION>
Number of Municipal
Issues Amount of Offerings
(In Thousands)
<S> <C> <C>
1994 59 $ 1,276,391
1995 59 1,556,210
1996 75 923,943
</TABLE>
<TABLE>
Underwriting Participations <F1>
<CAPTION>
Number of Municipal
Issues Amount of Participation
(In Thousands)
<S> <C> <C>
1994 131 $ 221,429
1995 161 166,951
1996 248 269,984
<FN>
<F1>Does not include those issues in which the Company
participated as a
selling group member.
</FN>
</TABLE>
Revenues from all municipal bond transactions were
$2,829,000, $4,940,000
and $5,046,000 for 1996, 1995 and 1994, respectively. The
decrease from
1995 to 1996 primarily reflects an extraordinarily volatile bond
market and the
continued compression of underwriting spreads in municipal
securities. In
addition, trading revenues were adversely affected by costs
associated with
implementing an interest rate risk management strategy. The
decrease from
1994 to 1995 reflected reduced product availability and lower
yields.
Taxable Bond Department
The Company maintains secondary markets in corporate bonds,
mortgage
backed securities and unit investment trusts. Ryan, Beck also
executes trades in
Treasury Bonds, Treasury Notes, Treasury Bills and makes
markets in U.S.
Government Guaranteed Securities. Revenues relating to such
transactions
decreased in 1996 to $775,000 from $2,302,000 in 1995. The
decrease in
trading revenues attributable to taxable debt securities reflected
an
extraordinarily volatile bond market. In addition, trading
revenues were
adversely affected by costs associated with implementing an
interest rate risk
management strategy. Revenues in 1994 were $1,729,000.
Principal
transactions in taxable securities accounted for 2.7% of the
Company's
revenues during 1996, 9.2% of revenues during 1995 and 5.9%
of revenues
during 1994.
FINANCIAL INSTITUTIONS DIVISION
Corporate Finance Department
The Company's Corporate Finance Department consists of 17
professionals
located primarily in West Orange, New Jersey with a satellite
office in Bala
Cynwyd, Pennsylvania. Developments in the banking and thrift
industries,
including the trend toward consolidation of banking institutions,
have led an
increasing number of banks and thrift institutions to seek advice
from
investment banking firms such as the Company. The Corporate
Finance
Department provides financial advisory services to small to
medium-sized
financial services companies in connection with capital
formation, strategic
planning, branch sales, mergers and acquisitions (including
appraisals and
fairness opinions), shareholder/investor issues and financial
management
issues. Consulting, valuations and placement fees increased to
$7,424,000 in
1996 from $4,494,000 in 1995 and accounted for 26% of the
Company's
revenues during 1996 and 18.0% during 1995. Consulting,
valuation and
placement fees amounted to $11,902,000 in 1994, or 40.9% of
the Company's
revenues.
Ryan, Beck serves the capital needs of community-oriented
financial
institutions by managing "best-efforts" public offerings
including thrift
conversions, mutual holding company formations (a partial
conversion of a
thrift) and secondary offerings by banks and thrifts. The
Company has played
a significant role in the development of thrift mutual holding
companies and
raised $9,768,000 in 1996, $75,282,000 in 1995 and
$422,215,000 in 1994 in
equity for thrifts in mutual holding company-related
transactions. The
Company also provides financial advice, on-site administrative
support and
subscription enhancement for public offerings conducted by
banks and thrifts.
This has been, and is anticipated to be, a significant source of
revenue for the
Company. Future revenue, however, is subject to political and
regulatory
developments related to the thrift industry, especially as they
impact thrift
conversions and mutual holding formations. The Company
expects there to be
greater uncertainty in the future with respect to revenues
resulting from thrift
conversions and mutual holding company formations because of
increased
competition and a smaller universe of mutual institutions.
These activities
generated gross revenues of $3,969,000 in 1996 as compared to
$3,369,000 in
1995 and $8,586,000 in 1994. Such revenue is reflected in
investment banking
revenue as consulting, placement and valuation fees.
Syndicate Department
The Syndicate Department coordinates the distribution of newly
issued
securities to institutional and retail investors. The Syndicate
Department
handles public offerings that are managed or co-managed by
Ryan, Beck as
well as selling group and syndicate participations managed by
other firms.
This department primarily deals with equity underwritings.
Underwritings
The Company has participated as an underwriter in public
offerings of bank
and thrift equity and debt issues as a sole underwriter without a
syndicate, as a
manager or co-manager of underwriting syndicates, as a
member of
underwriting syndicates managed by others and as a selling
group member in
issues of others. Revenues from underwriting bank and thrift
securities for
1996 were $3,328,000, revenues for 1995 were $1,988,000 and
revenues for
1994 were $809,000.
The following tables set forth, for the periods indicated, (i) the
total number
and dollar amount of bank/thrift related equity and debt
offerings managed or
co-managed by the Company and (ii) the total number and
dollar amount of the
Company's underwriting participations in those offerings and in
offerings
managed by others. The table below also includes offerings,
including thrift
conversion and mutual holding Company formations whereby
the Company
acted as selling agent.
<TABLE>
Managed or Co-Managed Offerings
<CAPTION>
Number of Bank/Thrift
Issues Amount of Offerings
(In Thousands)
<S> <C> <C>
1994 15 $ 566,286
1995 13 221,114
1996 12 340,594
</TABLE>
<TABLE>
Underwriting Participations<F1>
<CAPTION>
Number of Bank/Thrift
Issues Amount of Participation<F2>
(In Thousands)
<S> <C> <C>
1994 15 $ 561,129
1995 16 211,021
1996 13 326,569
<FN>
<F1>Does not include those issues in which the Company
participated as a
selling group member and non-bank issues in which the
Company participated
as an underwriter or selling group member.
<F2>Includes standby commitments.
</FN>
</TABLE>
Participation in an underwriting syndicate or selling group
involves both
economic and regulatory risks. An underwriter or selling group
member may
incur losses if it is unable to resell the securities it is committed
to purchase, or
if it is forced to liquidate its commitments at less than the
agreed purchase
price. In addition, under the federal securities laws, other
statutes, and court
decisions with respect to underwriters' liabilities and limitations
on
indemnification of underwriters by issuers, an underwriter is
subject to
substantial potential liability for material misstatements or
omissions in
prospectuses and other communications with respect to
underwritten offerings.
In the last several years, investment banking firms, including the
Company,
have increasingly participated in underwritten offerings with
fewer syndicate
participants or without a syndicate. In such cases, the
underwriter assumes a
larger part, or all, of the risk of an underwriting transaction.
Furthermore,
because underwriting commitments constitute a charge against
net capital, the
Company, as a broker-dealer, could find it necessary to limit its
underwriting
activities to remain in compliance with net capital requirements.
See
"Regulation."
Research Department
The Company's Research Department, consisting of four equity
analysts and
one research assistant, is dedicated primarily to bank and thrift
securities. To a
lesser degree, the Research Department also provides reports
and analyses on
the insurance and real estate industries. Its publications include
Bank Stock
Annuals for New Jersey, Florida, New York, Massachusetts,
Maryland,
Delaware and Pennsylvania, periodic updates on the outlook for
financial
equities, reports on specific financial institutions, and reports
and analyses on
general banking developments. In addition, Ryan, Beck
purchases outside
research services including economic reports, charts, and data
bases.
Sales and Trading Department
Sales and trading activities are conducted both as principal and
as agent on
behalf of individual and institutional investor clients.
Transactions as principal
involve making markets in securities which are held in inventory
to facilitate
sales to and purchases from customers in an attempt to realize
trading gains.
When over-the-counter ("OTC") transactions are executed by
the Company as a
dealer, the Company receives, in lieu of commissions, mark-ups
or mark-downs
which are included in revenues as principal transactions. As
agent, the
Company effects brokerage transactions which generate
commission revenues.
These commissions are charged on both exchange and OTC
transactions in
accordance with a schedule which the Company has formulated
and may
change from time to time. Discounts from the schedule may be
granted in
certain cases. Total principal transactions accounted for 34.5%
of the
Company's revenues during 1996, 52.9% during 1995 and
40.4% during 1994,
while total commissions accounted for 15.0% of revenues
during 1996, 11.2%
of revenues during 1995 and 8.1% of revenues during 1994.
The NASDAQ market has come under scrutiny in the media
and political
arenas during the past few years and has been the subject of
SEC investigations
into its operations. Concerns have been raised with respect to
the size of the
spreads between the price paid by investors purchasing
NASDAQ-listed
securities with respect to whether NASDAQ's listing
requirements are
sufficiently stringent and whether the NASD carefully monitors
NASDAQ-
listed companies. More specifically, the NASD has been hiring
numerous
enforcement aides to better monitor trading activities among
dealers and to
scrutinize companies' compliance with applicable listing
standards. The effects
of current and proposed NASDAQ reforms on the operations of
brokerage
firms, especially those specializing in the securities of small
capitalization
companies, cannot be fully anticipated. The cost of compliance
with any new
rules, regulations and procedures instituted by the NASDAQ
could be
significant. Additionally, the implementation of stricter
standards for initial
and continued inclusion of companies on the NASDAQ
could adversely
affect the prospects of smaller capitalization companies, the
stock performance
of such companies, and the liquidity of investors' investments in
such
companies. Increased compliance costs or the inability to attain
or maintain
the listing of underwriting clients on the NASDAQ system, or a
combination
thereof, could adversely affect the financial performance of the
Company.
The Company is an active market maker and distributor of
equity securities
issued by financial institutions throughout the country and tax-
exempt bonds,
particularly bonds issued by entities located in the Mid-Atlantic
region. As of
December 31, 1996, the Company made markets in 218 bank
and thrift stocks
quoted on the NASDAQ system. Many of these are companies
with whom
Ryan, Beck has an investment banking relationship or
companies whose
securities are followed by Ryan, Beck's Research Department.
The Company
also maintains quotations in 398 additional bank and thrift
stocks and
distributes and makes markets in certain issues of bank debt
securities.
Recently, the Securities and Exchange Commission and NASD
agreed to
changes which could impact the way stocks are traded. A new
order display
system will be implemented which would allow investors to
place limit orders
to buy or sell a NASDAQ stock at a certain price and be
matched with another
order. The proposed system is designed to ensure that no
market maker would
be able to execute trades at better prices before a specific limit
order was filled.
This proposed system may produce a new source of
competition but could also
lead to the Company making markets in fewer NASDAQ
stocks, particularly
smaller ones, because of a perceived lack of liquidity.
Consequently, there is
potential for delisting of companies which trade infrequently
due to lack of
market maker support. The Company, therefore, may reduce
the number of
companies that it makes markets in and also realize lower
trading spreads,
which could adversely affect the Company.
In making markets in equity and debt securities, the Company
maintains
positions in such securities to service its customers and,
accordingly, has its
own capital at risk in the event of a decline in the market price
of such
securities or of a decrease in the liquidity of markets (especially
in the area of
risk arbitrage, as described below), which can limit the
Company's ability to
sell securities purchased or to purchase securities sold in such
transactions.
Trading and investing in corporate and municipal securities as
principal and
underwriting the issuance of such securities represent an
important part of the
Company's business and subjects the Company's capital to
significant risk.
While the Company seeks to avoid market risk, it may,
nonetheless, realize
profits and losses from market fluctuations. Trading profits (or
losses) depend
upon the skills of the employees engaged in market making, the
amount of
capital allocated to positions in securities and the general level
of activity and
trend of prices in the securities markets.
The Company also offers other financial instruments to its
clients which
include U.S. Government and Agency obligations, zero coupon
bonds,
collateralized mortgage obligations, utility and industrial bonds,
mutual funds,
trust preferred securities and unit investment trusts.
Although the Company presently maintains no discretionary
accounts for
customers, it may do so in the future. The Company introduced
margin
accounts during early 1991. Margin transactions are subject to
credit risks. To
the extent that funds are advanced in a securities transaction,
payment may not
be received. If the securities decline in value, the Company may
not recover
the amounts advanced. As of December 31, 1996, the
Company had
approximately $24.9 million in customer margin debits with its
clearing broker.
During 1996, the Company continued to maintain its salesforce
by recruiting
and training both new and experienced sales personnel to
replace those who left
during the period. The Company had 76 sales account
executives as of
December 31, 1996.
The following table shows, (i) for the year ended December 31,
1996, the
highest, lowest and average month-end inventories by type of
securities in
which the Company trades as principal and (ii) the inventories
for these types
of securities as of December 31, 1996.
<TABLE>
<CAPTION>
Year Ended December 31, 1996
Highest Inventory Lowest Inventory Average
Inventory
Long Short Long Short Long Short
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Type of Security:
Tax-Exempt Debt $ 21,606 $ 422 $
2,944 $ 20 $10,793 $ 105
Taxable Debt 22,296 30,433 2,061 160 8,820
4,092
Equity 14,461 6,771 8,198 2,915 10,789 4,005
</TABLE>
<TABLE>
<CAPTION>
As of December 31, 1996
Long Short
(In Thousands)
<S> <C> <C>
Type of Security:
Tax-Exempt debt $ 17,962 $ 128
Taxable Debt 7,255 408
Equity 8,572 4,888
Total $ 33,789 $ 5,424
</TABLE>
Other Services
The Company offers IRA and other retirement plans to its
customers. In 1987,
the Company began functioning as custodian and trustee for
newly opened
IRA's and effective January 1, 1991 transferred these accounts
to its
independent clearing broker as successor custodian and trustee.
Clients retain
control over their own funds and may direct the purchase and
sale of a variety
of investment instruments.
The Company has an arrangement with an independent
investment manager
pursuant to which it offers various money market funds to its
customers. On a
periodic basis, the Company's clearing broker sweeps
participating customers'
free credit balances into a designated fund and also withdraws
funds to satisfy
debit balances.
Accounting, Administration and Operations
Accounting, administration and operations personnel are
responsible for
internal financial control, accounting functions, office services,
personnel
services, and compliance with regulatory and legal
requirements. The
Company clears all securities transactions through another
broker/dealer on a
fully-disclosed basis.
There is a considerable fluctuation in the volume of transactions
which a
securities firm must process. In the past, when the volume of
trading in
securities reached record levels, the securities industry has
experienced
operating problems. The Company has not experienced any
material operating
difficulties during periods of heavy volume.
The Company believes that its internal controls and safeguards
against
securities theft are adequate. The Company carries fidelity
bonds covering any
loss or theft of securities, employee dishonesty, forgery and
alteration of checks
and similar items, and securities forgery. The amounts of
coverage provided by
the bonds are believed to be adequate.
The Company generally posts its books and records daily.
Periodic reviews of
certain controls are conducted to assure compliance with
applicable laws, rules
and regulations.
Competition
The Company is engaged in an extremely competitive business.
Competitors
include, with respect to one or more aspects of its business, all
of the member
organizations of the New York Stock Exchange and other
registered securities
exchanges, all members of the NASD, commercial banks, thrift
institutions and
financial consultants. With respect to the Company's
investment banking and
consulting merger-related services, the Company also competes
with many of
the larger Wall Street investment banking firms. Many of these
organizations
have substantially more employees and greater financial
resources than the
Company. The Company also competes for investment funds
with banks,
insurance companies and investment companies. Discount
brokerage firms
oriented to the retail market, including firms affiliated with
commercial banks
and thrift institutions, are devoting substantial funds to
advertising and direct
solicitation of customers in order to increase their share of
commission dollars
and other securities-related income. The Company typically has
not engaged in
extensive advertising programs for this type of business. The
Company
believes that the principal competitive factors relating to the
Company's
business are the quality of advice and service provided to
investors and
financial institutions and the competitive pricing of their
products.
The securities industry has become considerably more
concentrated and more
competitive in recent years as numerous securities firms have
either ceased
operation or have been acquired by or merged into other firms.
In addition,
companies not engaging primarily in the securities business, but
having
substantial financial resources, have acquired leading securities
firms. These
developments have increased competition from firms with
greater capital
resources than those of the Company. Furthermore, many
commercial banks
offer various securities related activities and investment
vehicles. While it is
presently not possible to predict the type and extent of
competitive services
which other financial institutions may offer or the extent to
which
administrative or legal barriers are repealed or modified,
ultimately these
developments may lead to the creation of integrated financial
services firms
that may be able to compete more effectively than the Company
for investment
funds by offering a greater range of financial services.
Fixed minimum commissions for securities transactions were
eliminated in
1975. The elimination of fixed minimum commission rates has
resulted in
substantial commission discounting by broker-dealers
competing for
institutional and individual brokerage business. The Company
believes its
commission structure compares favorably with firms with which
it competes.
Nevertheless, the anticipated continuation of such discounting
and an increase
in the number of new and existing firms offering discounts
could adversely
affect the Company.
The SEC's Rule 415 permits the registration of certain securities
that are to be
offered on a delayed or continuous basis in the future. This
procedure provides
a competitive advantage to securities firms with substantial
capital and large in-
house distribution networks and may reduce opportunities for
brokerage firms
such as the Company to participate in major underwritings.
Regulation
The securities industry in the United States is subject to
extensive regulation
under both federal and state laws. The SEC is the federal
agency charged with
administration of the federal securities laws. Much of the
regulation of broker-
dealers has been delegated to self-regulatory authorities,
principally the NASD
and, in the case of broker-dealers that are members of a
securities exchange, the
securities exchanges. These self-regulatory organizations
conduct periodic
examinations of member broker-dealers in accordance with
rules they have
adopted and amended from time to time, subject to approval by
the SEC.
Securities firms are also subject to regulation by state securities
commissions in
those states in which they do business. As of December 31,
1996, the Company
was registered as a broker-dealer in 49 states and the District of
Columbia.
Broker-dealers are subject to regulations which cover all
aspects of the
securities business, including sales methods, trade practices
among broker-
dealers, uses and safekeeping of customers funds and securities,
capital
structure of securities firms, record- keeping and the conduct of
directors,
officers and employees. Additional legislation, changes in rules
promulgated
by the SEC and self-regulatory authorities, or changes in the
interpretation or
enforcement of existing laws and rules, may directly affect the
mode of
operation and profitability of broker-dealers. The SEC, self-
regulatory
authorities and state securities commissions may conduct
administrative
proceedings which can result in censure, fine, suspension or
expulsion of a
broker-dealer, its officers or employees. Such administrative
proceedings,
whether or not resulting in adverse findings, can require
substantial
expenditures. The principal purpose of regulation and discipline
of
broker/dealers is the protection of customers and the securities
market, rather
than protection of creditors and shareholders of broker-dealers.
As a broker-dealer, the Company is required by federal law to
belong to the
Securities Investors Protection Corp. ("SIPC"). Currently, all
members,
including the Company, pay a fixed annual assessment of $150.
However,
should the SIPC fund falls below a certain minimum amount, as
it did in 1983,
members are required to pay annual assessments in amounts
(based upon
adjusted gross revenues) necessary to restore the fund.
Accounts are insured up
to $75,000,000. The first $500,000 of protection is provided
by SIPC and the
balance is provided by a separate policy from a private insurer.
There is a
limitation of $100,000 on claims for cash balances.
Net Capital Requirements
As a registered broker-dealer, the Company is also subject to
the SEC's
Uniform Net Capital Rule (the "Rule"). The Rule specifies
minimum net
capital requirements for registered brokers and dealers and is
designed to
maintain the general financial integrity and liquidity of a broker-
dealer.
Therefore, it imposes a minimum net capital requirement
deemed necessary to
meet the broker-dealer's continuing commitments to its
customers.
The Rule provides that a broker-dealer doing business with the
public shall not
permit its aggregate indebtedness to exceed 15 times its net
capital or,
alternatively, that it not permit its net capital to be less than 2%
of its aggregate
debit balances (primarily receivables from customers and
broker-dealers)
computed in accordance with Rule 15c3-3. As of December
31, 1996, the
Company had aggregate net capital of $3,534,000, which
exceeded its
minimum net capital requirements by $2,534,000.
Compliance with the Rule could limit the Company's
operations, such as
underwriting and trading activities which require the use of
significant amounts
of capital. A significant operating loss or an extraordinary
charge against net
capital could adversely affect the ability of the Company to
expand or even
maintain its present levels of business.
Employees
At December 31, 1996, the Company had 178 full-time
employees. None of the
Company's employees are covered by a collective bargaining
agreement. The
Company considers its relations with its employees to be
satisfactory. However,
competition for experienced financial services personnel,
especially account
executives, is intense in the securities industry. Accordingly,
from time to time
the Company may experience the loss of valuable personnel
which could
adversely impact revenues.
Item 2. DESCRIPTION OF PROPERTIES
The Company's offices, including its trading operations, occupy
an aggregate
of approximately 22,000 square feet in West Orange, New
Jersey. Such space
is leased pursuant to a seven-year lease term which commenced
January 19,
1992. The Company has notified its current landlord of its
cancellation of the
lease. The termination fee of approximately $250,000 was
recorded in the
consolidated financial statements for the year ended December
31, 1996.
During the second half of 1997, the Company plans to relocate
its corporate
headquarters to Livingston, New Jersey and occupy
approximately 35,000
square feet. Such space is leased pursuant to a ten-year lease
term, which will
commence on or about July 1, 1997. The Company has two
five-year renewal
options at the conclusion of the original term.
The Company is also opening a satellite office of approximately
4,800 square
feet in Shrewsbury, New Jersey. The lease term is for five
years, commencing
on April 1, 1997. The Company has a five-year renewal option
at the
conclusion of the original term. In addition, the Company
occupies
approximately 3,600 square feet of office space in Bala
Cynwyd, Pennsylvania
under a five-year lease which commenced April 12, 1994. The
Company has a
five-year renewal option at the conclusion of the original term.
The Company
also occupies approximately 8,500 square feet of office space in
West Palm
Beach, Florida under a four-year lease which commenced May
1, 1995.
While such space is suitable and sufficient for the Company's
present needs,
the Company anticipates that, based on its present operations
and its
anticipated future growth, additional space may be required in
the foreseeable
future. The Company believes that its current fire and casualty
insurance
policies provide sufficient coverage to allow it to replace any of
its properties
that might be damaged or destroyed.
Item 3. LEGAL PROCEEDINGS
From time to time, in the ordinary course of its business, the
Company is
involved in disputes, litigation or arbitration with its customers.
In addition,
the securities industry has experienced an increased incidence of
litigation,
including class action suits that generally seek substantial
damages.
Underwriters are subject to substantial potential liability for
material
misstatements and omissions in prospectuses and other
communications with
respect to underwritten offerings of securities. The Company
has also been
involved, from time to time, in proceedings with, and
investigations by,
governmental and self-regulatory agencies. Both the SEC and
the NASD have
broad investigative powers and the authority to impose
significant sanctions
upon broker-dealers. See "Description of Business -
Regulation."
Set forth below is information concerning certain litigation
matters to which
the Company is a party and in which there have been
developments of a
material nature during the year ended December 31, 1996.
On or about December 13, 1994, a complaint under the caption
Robert J.
Buckley, et al. v. Northwest Savings Bank ("Northwest"), et.
al., C.A. No. 94-
340-E (U.S.D.C. W.D. Pa.), was filed in the United States
District Court of the
Western District of Pennsylvania. The complaint alleged
violations of the
Securities Act of 1933, the Securities Act of 1934, as well as
various state law
securities and common law claims in connection with
Northwest Savings
Bank's reorganization from a mutual state savings bank to a
stock mutual
holding company.
The complaint alleged that the Company was retained as a
consultant and
advisor to Northwest in connection with such transaction and
engaged in the
promotion and sale of Northwest stock. The complaint further
alleged that the
Offering Circular prepared in connection with the initial public
offering
contained misstatements of material facts and omitted to state
material facts
necessary to make the statements contained within the Offering
Circular not
misleading, including false statements representing the
appraised valuation and
number of shares to be issued in the initial offering would be
increased only if
market and economic conditions warranted such increase. The
complaint
alleged that after the offering was concluded, the appraised
value of Northwest
was increased and the offering was diluted by the sale of
additional shares and
that such increase in appraised value was not warranted by
market or economic
conditions.
The complaint seeks unspecified monetary damages against the
defendants,
including the Company, on behalf of all persons who subscribed
for and
purchased shares of common stock in Northwest's initial public
offering. In
connection with the offering, Northwest executed an agency
agreement with the
Company whereby Northwest agreed among other things to
indemnify and
contribute sums to the Company for losses and legal fees in
connection with the
offerings. Pursuant to the Agency Agreement, Northwest has
agreed to
indemnify the Company and to advance reasonable expenses
incurred by the
Company in connection with the lawsuit.
On March 13, 1995, the plaintiffs filed a Motion for Class
Certification. On
March 24, 1995, the Company, as well as all other defendants,
filed a Motion
to Dismiss the plaintiff's complaint. By order dated November
17, 1995, the
Court dismissed all federal law claims in the complaint with
prejudice against
all defendants on the ground that plaintiff failed to identify
affirmative
misrepresentations and material omissions of fact in the Offering
Circular. The
court relinquished jurisdiction over the remaining state law
claims. On
December 14, 1995, plaintiff filed an appeal with the United
States Court of
Appeals for the Third Circuit (the "Court of Appeals"). Oral
arguments were
conducted on January 21, 1997. On February 2, 1997, the
Court of Appeals
affirmed the decision of the District Court. However, on
February 26, 1997, the
plaintiff filed a motion for rehearing.
On January 11, 1996, the Company gave notice to Municipal
Square Associates
("Municipal Square"), its landlord at 80 Main Street, West
Orange, New Jersey
that it had been constructively evicted as a result of Municipal
Square's
breaches of the lease in failing to provide adequate heating, air
conditioning,
security, janitorial and other services. On February 29, 1996,
Municipal
Square filed an action in which Municipal Square seeks a
declaratory judgment
that the lease is not terminated and alternatively, that the
Company's January
11th notice had terminated the lease and triggered an early
termination penalty
of $375,000. The Company filed a counterclaim alleging that
Municipal
Square breached the lease by failing to provide services which
Municipal
Square was required to provide under the lease and alleging that
Municipal
Square's conduct constituted a constructive eviction of the
Company.
The parties have entered into a tentative settlement agreement
subject to
resolution of certain procedural matters which settlement would
not have a
material adverse effect on the Company, and the Company's
liability under the
lease would be terminated. If the settlement is not finalized, the
outcome of this
litigation is inherently uncertain and no assurances regarding the
final outcome
of this matter can be given.
The Company, Ryan Beck Financial Corp., a wholly-owned
subsidiary of the
Company, and a former account executive of the Company have
been named as
third-party defendants in Inrevco Associates v. BDO Seidman,
et al., v. Ryan,
Beck & Co., et al., Superior Court of New Jersey, Law
Division, No. MRS-L-
2961-94. Inrevco is a New Jersey limited partnership. Ryan,
Beck Financial
Corp. ("RBFC") is a special limited partner in the partnership
and such former
account executive is a limited partner. The third-party
complaint alleges that
certain duties were owed to the partnership by the Company
and RBFC. The
third-party plaintiffs allege that the Company and RBFC
breached these duties
and are liable to the third-party plaintiffs for contribution in the
event the
plaintiff prevails at trial.
On February 17, 1995, a motion to dismiss filed by the
defendants was granted
in favor of RBFC and the former account executive. On March
9, 1995, RBFC
and the Company's former account executive were dismissed by
order of the
Court. On September 5, 1995, certain defendants filed a new
third-party
complaint seeking contribution from the Company, RBFC and
certain present
and former employees and officers of the Company as
additional third-party
defendants. All of the claims asserted against the Company are
for
contribution. On October 15, 1995, the Company, RBFC and
all individual
defendants named as third-party defendants in the litigation
entered into a
settlement agreement with Inrevco. The terms of the settlement
agreement
include a provision for an automatic judgment reduction in the
event any
liability is apportioned against the Company, RBFC or any
individual third-
party defendant on the contribution claims. Pursuant to the
settlement
agreement, Inrevco has released the Company and RBFC from
any liability in
the suit. Subsequently, the third-party defendants filed a motion
to dismiss on
the grounds that the claims against the third-party defendants
were moot as a
result of entering into the settlement agreement. On January
19, 1996 the
Court heard argument on the motion to dismiss and denied such
motion. The
third-party defendants filed a motion for permission to file an
interlocutory
appeal with respect to the motion to dismiss with the Superior
Court of New
Jersey, Appellate Division, which motion was subsequently
denied. The
Company is still named a third-party defendant in this action
and, as such, will
be required to participate in discovery and other pre-trial
procedures with
respect to the ongoing litigation. Discovery in this case is
proceeding.
Item 4. SUBMISSION OF MATTERS TO A VOTE
OF SHAREHOLDERS
None.
PART II
Item 5. MARKET FOR THE REGISTRANT'S
COMMON EQUITY AND
RELATED SHAREHOLDER MATTERS
The Company's Common Stock is traded in the OTC market
and quoted on the
National Market segment of the NASDAQ Stock Market under
the symbol
"RBCO." The following table sets forth the high and low
closing sales prices
of the common stock, as quoted by the NASDAQ Stock
Market, and dividends
declared by the Company during the quarterly periods indicated.
<TABLE>
<CAPTION>
Closing Sales Price<F1> Dividends Declared<F2>
Year Ended December 31, High Low Regular
Special
<S> <C> <C> <C> <C>
1996
First Quarter $7.625 $6.750 $ .05 -
Second Quarter 7.500 6.625 .05 -
Third Quarter 7.000 5.375 .05 -
Fourth Quarter 5.625 3.750 .05 -
1995:
First Quarter $7.375 $6.250 $.048 $.305
Second Quarter 7.000 5.625 .048 .000
Third Quarter 8.000 5.625 .048 .124
Fourth Quarter 7.375 6.500 .048 .067
<FN>
<F1>The closing market prices are rounded to the nearest 1/8.
<F2>All share and per share data have been adjusted for a 5%
stock dividend
declared on January 26, 1996 and paid on February 13, 1996.
</FN>
Due to the volatile nature of the Company's business, it is the
policy of the
Board of Directors to determine dividends individually for each
quarter. In the
future, the Board of Directors will determine on an annual basis
if a dividend
will be paid and the amount of the dividend. In evaluating the
possible
distribution of dividends, the Board considers, among other
things, the level of
the Company's earnings, its operating capital requirements, the
current and
prospective business and operating environment and alternative
uses of any
excess operating capital. This policy is subject to change at any
time.
The number of common shareholders of record as of March 21,
1997, was 469.
The number of preferred shareholders of record as of March 21,
1997, was 43.
Item 6. SELECTED FINANCIAL DATA
The information contained under the caption "Five Year
Financial
Comparison" on page 4 of the Annual Report is incorporated
herein by
reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The information contained under the caption "Management's
Discussion and
Analysis of Financial Condition and Results of Operations" on
pages 5
through 8 of the Annual Report is incorporated herein by
reference.
Item 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA
The Company's Consolidated Financial Statements and Notes to
Consolidated
Financial Statements and Independent Auditors' report on
pages 9 through 17
of the Annual Report is incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF
THE
REGISTRANT
The information required herein is incorporated by reference to
the Company's
Proxy Statement ("Proxy Statement") to be filed with the
Securities and
Exchange Commission in connection with the Company's 1997
Annual
Meeting of Shareholders.
On January 15, 1997, Allen S. Greene resigned as President and
Chief
Executive Officer. Following Mr. Greene's resignation, the
Company
established a Senior Management Committee to function as an
Office of the
Chief Executive Officer. The Senior Management Committee
consists of Ben
A. Plotkin, Leonard J. Stanley, Jay Suskind and Matthew R.
Naula. Mr.
Plotkin serves as Chairman of the Senior Management
Committee and, as such,
Chief Executive Officer of the Company.
Information with respect the members of the Senior
Management Committee is
incorporated by reference to the Company's definitive proxy
statement.
Item 11. EXECUTIVE COMPENSATION
The information required herein is incorporated by reference to
the Company's
Proxy Statement.
Item 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS
AND MANAGEMENT
The information required herein is incorporated by reference to
the Company's
Proxy Statement.
Item 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
The information required herein is incorporated by reference to
the Company's
Proxy Statement.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES AND
REPORTS ON FORM 8-K
</TABLE>
<TABLE>
FINANCIAL STATEMENTS
<CAPTION>
Page
All Consolidated Financial Statements<F1>
<S> <C> <C>
(a) Independent Auditors' Report 18
(b) Consolidated Statements of Financial Condition
at December 31, 1996 and 1995 9
(c) Consolidated Statements of Income for the
years ended December 31, 1996, 1995 and 1994 10
(d) Consolidated Statements of Changes in Stockholders'
Equity for the years ended December 31, 1996,
1995 and 1994 11
(e) Consolidated Statements of Cash Flows for the
years ended December 31, 1996, 1995 and 1994 12
(f) Notes to the Consolidated Financial Statements 13-
17
All schedules have been omitted as the required information is
either
inapplicable, immaterial or included in the Notes to the
Consolidated Financial
Statements.
<FN>
<F1>Incorporated by reference to the Annual Report.
</FN>
</TABLE>
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended
December 31,
1996
(c) EXHIBITS
3.1 Restated Certificate of Incorporation, as amended
(incorporated
by reference to Exhibit 3.1 of the Registrant's Annual Report on
Form
10-K for the year ended December 31, 1994 (the "1994 Form
10-K")).
3.2 Bylaws, as amended (incorporated herein by reference
to
Exhibit 3.2 of the Registrant's Registration Statement on Form
S-1 (No.
33-5543) filed with the SEC on June 27, 1986).
10.1 1996 Stock Option Plan.
10.2 Employee Stock Ownership Plan dated May 15, 1994
(incorporated by reference to Exhibit 10.2 of the 1994 Form
10-K).
10.3 Term Loan Agreement by and among the Company, the
Ryan,
Beck & Co., Inc. Employee Stock Ownership Plan and
Northwest as of
June 23, 1995 (incorporated by reference to Exhibit 10.3 of the
1995
Form 10-K).
10.4 Employee Stock Ownership Plan Trust Agreement by
and
between the Company and Matthew Naula as Trustee dated
May 15,
1994 (incorporated by reference to Exhibit 10.3 of the 1994
Form 10-K).
10.5 Lease pertaining to the Company's West Orange, New
Jersey
offices effective as of January 1, 1992, (incorporated by
reference to
Exhibit 10.2 to the Company's Annual Report on Form 10-KSB
for the
year ended December 31, 1992).
10.6 Lease pertaining to the Company's Bala Cynwyd,
Pennsylvania
offices effective as of April 12, 1994 (incorporated by reference
to
Exhibit 10.6 of the 1995 Form 10-K).
10.7 Lease pertaining to the Company's West Palm Beach,
Florida
offices effective as of February 28, 1995 (incorporated by
reference to
Exhibit 10.7 of the 1995 Form 10-K).
10.8 Lease pertaining to the Company's Shrewsbury, New
Jersey
offices effective as of April 1, 1997.
10.9 Lease pertaining to the Company's Livingston, New
Jersey
offices effective as of June 1, 1997.
10.10 Employment Agreement, dated November 14, 1990, by
and
between Jack R. Rosenthal and Ryan, Beck & Co., Inc.
(incorporated by
reference to Exhibit 10.7 to the Company's Annual Report on
Form 10-
K for the year ended December 31, 1990).
10.11 Employment Agreement dated September 26, 1994 by
and
between Fenwick H. Garvey and Ryan, Beck & Co., Inc. (the
"Garvey
Employment Agreement") (incorporated by reference to Exhibit
10.8 of
the 1994 Form 10-K).
10.12 Amendment to the Garvey Employment Agreement,
dated
December 14, 1995 (incorporated by reference to Exhibit 10.11
of the
1995 Form 10-K).
10.13 Employment Agreement dated September 25, 1996, by
and
between Matthew R. Naula and Ryan, Beck & Co., Inc.
10.16 Amended and Restated Employment Agreement, dated
December 14, 1995 by and between Ben A. Plotkin and Ryan,
Beck &
Co., Inc. (incorporated by reference to Exhibit 10.16 of the
1995 Form
10-K).
10.17 Amended and Restated Restricted Stock Grant Plan
dated July
16, 1993 (incorporated by reference to Exhibit 10.12 of the
1994 Form
10-K).
11. Statement regarding computation of per share earnings is
omitted
pursuant to SEC regulations.
12. Statement re: computation of ratios.
13. Annual Report for the fiscal year ended December 31,
1996.
21. Subsidiaries (incorporated by reference to Exhibit 21 of the
1994
Form 10-K).
23. Consent of Deloitte & Touche LLP
24. Consent of Trien, Rosenberg, Felix, Rosenberg, Barr &
Weinberg
27. Financial Data Schedule
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its
behalf by the undersigned, thereunto duly authorized.
RYAN, BECK & CO., INC.
By: /s/_Fenwick H. Garvey, March 21, 1997
Fenwick H. Garvey
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of
1934, this
report has been signed below by the following persons on behalf
of the
Registrant in the capacities indicated on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Fenwick H. Garvey Chairman of the Board March 21,
1997
Fenwick H. Garvey
/s/Ben A. Plotkin President March 21, 1997
Ben A. Plotkin Director
/s/Michael M. Horn Director March 21, 1997
Michael M. Horn
/s/Matthew R. Naula Executive Vice President March 21,
1997
Matthew R. Naula Director
/s/Richard B. Neff Director March 21, 1997
Richard B. Neff
/s/Peter W. Rodino, Jr. Director March 21, 1997
Peter W. Rodino, Jr.
/s/Jack R. Rosenthal Vice Chairman March 21, 1997
Jack R. Rosenthal Director
/s/Leonard J. Stanley Senior Vice President, Chief
Leonard J. Stanley Financial and Administrative
Officer
(Principal Financial and
Accounting Officer) March 21, 1997
</TABLE>
EXHIBIT 10.1
RYAN, BECK & CO. 1996 STOCK OPTION PLAN
Purpose of the Plan. The purpose of this Stock Option Plan
("Plan") of Ryan,
Beck & Co., Inc. (the "Company"), is to promote the interests
of the Company
by providing incentives to (i) designated officers and other key
employees of the
Company or a Subsidiary Corporation (as such term is defined
under Section
424(f) of the Internal Revenue Code of 1986 as amended (the
"Code")) and (ii)
non-employee members of the Company's Board of Directors,
to attract and
retain such persons and to encourage them to acquire or
increase their
proprietary interest in the Company and to maximize the
Company's
performance during the term of their employment or period of
service with the
Company..
Definitions. As used in the Plan, unless the context requires
otherwise, the
following terms shall have the following meanings:
"Board" shall mean the Board of Directors of the Company.
The "Committee" shall mean a committee composed of two or
more members
of the Board each of whom shall be a "Disinterested Person" (as
such term is
defined in Rule 16-3 under the Exchange Act of 1934, as
amended (the
"Exchange Act")).
"Common Stock" shall mean the common stock, par value $.10
per share of the
Company, or if, pursuant to the adjustment provisions set forth
in Section 12
hereof, another security is substituted for the Common Stock,
such other
security.
"Fair Market Value" shall mean the fair market value of the
Common Stock on
the Grant Date (as hereinafter defined) or other relevant date.
If on such date
the Common Stock is listed on a stock exchange or is quoted
on the the
National Market segment of the Nasdaq Stock Market (the
"National Market"),
the Fair Market Value shall be the closing sale price (or if such
price is
unavailable, the average of the high bid price and the low asked
price) on such
date. If on such date the Common Stock is traded in the over-
the counter
market (but not on the National Market), the Fair Market Value
shall be the
average of the high bid and the low asked price onsuch date (or
if there are no
reported bid and asked prices on the Grant Date, then the
average between the
high bid price and the low asked price on the next preceeding
day for which
such quotations exist). If the Common Stock is neither listed
or admitted to
trading on any stock exchange, quoted on the National Market
or traded in the
over-the -counter market, the Fair Market Value shall be
determined in good
faith by the Committee in accordance with generally accepted
valuation
principles and such other factors as the Committee reasonably
deems relevant.
"Grant Date" shall mean the date on which an Option is
granted.
"Option" shall mean the right, granted pursuant to the Plan, to
purchase one or
more shares of Common Stock. "Incentive Stock Option" shall
mean an
Option granted pursuant to Section 6 hereof. "Nonqualified
Stock Option"
shall mean an Option granted pursuant to Section 7 hereof.
"Optionee" shall mean a person to whom an Option has been
granted under the
Plan.
Stock Subject to the Plan. There will be reserved for issuance
upon the exercise
of Options granted from time to time under the Plan an
aggregate of 200,000
shares of Common Stock (subject to adjustment as set forth in
Section 11
hereof.) The Board shall determine from time to time whether
all or part of
such 200,000 shares shall be authorized but unissued shares of
Common Stock
or issued shares of Common Stock which shall have been
reacquired by the
Company and which are held in its treasury. If any Option
granted under the
Plan should expire or terminate for any reason without having
been exercised
in full, the shares subject to such Option shall again become
available for the
grant of Options under the Plan.
Administration of the Plan. The Plan shall be administered by
the Committee.
Subject to the provisions of the Plan, the Committee shall have
full Discretion
and sole authority:
(i) To designate the employees of the Company to whom
Options shall be
granted, to determine whether individual Optionees shall be
granted Incentive
Stock Options or Nonqualified Stock Options, to designate the
number of
shares to be covered by each of the Options, and to determine
the time or times
at which Options shall be granted;
(ii) To determine the exercise price of Options granted
hereunder, subject
to Sections 6(a) and 7(a) hereof;
(iii) To interpret the Plan;
(iv) To promulgate, amend and rescind rules, regulations,
agreements and
instruments relating to the Plan, provided, however, that no
such rules or
regulations shall be inconsistent with any of the terms of the
Plan;
(v) To subject any Option to such additional terms and
conditions (not
inconsistent with the Plan) as may be specified when granting
the Option,
including without limitation additional restrictions or conditions
on the
exercise of an Option;
(vi) To determine circumstances upon which Options shall
become
immediately exercisable and to accelerate the exercisability of
any Option; and
(vii) To make all other determinations in connection with the
administration of the Plan.
The Committee's interpretations of the Plan and all
determinations made by the
Committee pursuant to the powers vested in it hereunder shall
be conclusive
and binding on all persons having interests in the Plan or in any
Option
granted under the Plan.
Each member of the Committee shall be indemnified and held
harmless by the
Company against any cost or expense (including counsel fees)
reasonably
incurred by him or her, or liability (including any sum paid in
settlement of a
claim with the approval of the Company) arising out of any act
or omission to
act in connection with the Plan, unless arising out of such
member's own fraud
or bad faith, to the extent permitted by applicable law. Such
indemnification
shall be in addition to any rights of indemnification the members
may have as
directors or otherwise under the Certificate of Incorporation or
By-Laws of the
Company, any agreement of shareholders or disinterested
directors or
otherwise.
Eligibility. Optionees shall be selected by the Committee from
among the
officers and key full-time employees of the Company or a
Subsidiary
Corporation.
Incentive Stock Options. The following provisions shall apply
solely with
respect to Options which are designated by the Committee as
"Incentive Stock
Options" at the time of grant:
Option Exercise Price. The price at which shares of Common
Stock shall be
purchased upon exercise of any Incentive Stock Option shall be
not less than
the Fair Market Value of such shares on the Grant Date, except
that if on the
Grant Date an Optionee owns Common Stock (as determined
under section
424(d) of the Code) possessing more than 10% of the total
combined voting
power of all classes of stock of the Company or of the
Company's Parent
Corporation (as such term is defined under Section 424(e) of
the Code), if any,
or any Subsidiary Corporations, then the price at which shares
of Common
Stock shall be purchased upon exercise of an Incentive Stock
Option granted to
such Optionee shall not be less than 110% of the Fair Market
Value of such
shares on the Grant Date and, notwithstanding Section 6(b)
hereof, such
Incentive Stock Option shall cease to be exercisable five (5)
years after the
Grant Date.
Expiration. Except as otherwise provided in Sections 6(a) and
11 hereof, each
Incentive Stock Option granted hereunder shall cease to be
exercisable ten
years after the date on which it is granted.
Restriction on Exercise. The Fair Market Value (as determined
on the Grant
Date) of Common Stock with respect to which Incentive Stock
Options are
exercisable for the first time by any person during any calendar
year (under this
Plan and all other plans of the Company and its Parent
Corporation, if any, and
its Subsidiary Corporations) cannot be greater than $100,000.
Nonqualified Stock Options. The following provision shall
apply with respect
to Options which are designated by the Committee as
"Nonqualified Stock
Options" at the time of grant:
Option Exercise Price. The price at which shares of Common
Stock shall be
purchased upon exercise of a Nonqualified Stock Option shall
be not less than
the Fair Market Value of such shares on the Grant Date.
Expiration. Except as otherwise provided in Section 11 hereof,
each
Nonqualified Stock Option granted hereunder shall cease to be
exercisable ten
years after the Grant Date.
Designation. Any Option which is not designated by the
Committee as an
Incentive Stock Option shall automatically be deemed to be a
Nonqualified
Stock Option.
Vesting of Option. The vesting period, if any, for all Options
granted
hereunder shall commence on the Grant Date and shall end on
the date or
dates, determined by the Committee.
Method of Exercise. Optionees may exercise their Options
from time to time
by giving written notice to the Company. The date of exercise
shall be the date
on which the Company receives such notice. Such notice shall
be on a form
furnished by the Company and shall state the number of shares
to be purchased
and the desired closing date, which date shall be at least fifteen
days after the
giving of such notice, unless an earlier date shall have been
mutually agreed
upon. At the closing, the Company shall deliver to the
Optionee (or other
person entitled to exercise the Option) at the principal office of
the Company,
or such other place as shall be mutually acceptable, a certificate
or certificates
for such shares against payment in full of the Option price for
the number of
shares to be delivered, such payment to be by a certified or bank
cashier's check
and/or, if permitted by the Committee in its discretion, by
transfer to the
Company of capital stock of the Company having a Fair Market
Value on the
date of exercise equal to the excess of the purchase price for the
shares
purchased over the amount of any such certified or bank
cashier's check. If the
Optionee (or other person entitled to exercise the Option) shall
fail to accept
delivery of and pay for all or any part of the shares specified in
his notice when
the Company shall tender such shares to him, his right to
exercise the Option
with respect to such unpurchased shares may be terminated.
Termination of Employment. Except as set forth below, in the
event that an
Optionee's employment terminates for any reason, any Options
then
exercisable shall automatically terminate sixty days after the
date on which
such employment terminates.
In the event that an Optionee's employment terminates by
reason of retirement,
the Committee shall have the right to extend such Optionee's
Options until the
earlier of (x) three months after the date of retirement or (y) the
date on which
such Options would terminate pursuant to Sections 6(a), 6(b)
and 7(b) hereof.
In the event that an Optionee's employment terminates by
reason of disability,
an Option exercisable by him shall terminate one year after the
date of
disability of the Optionee, but in any event not later than the
date on which
such Options would terminate pursuant to Sections 6(a), 6(b)
and 7(d) hereof.
In the event that an Optionee's employment terminates by
reason of death, an
Option exercisable by him shall terminate one year after the date
of death, but
in any event not later than the date on which such Options
would terminate
pursuant to Sections 6(a), 6(b) and 7(b) hereof. During such
time after death,
an Option may only be exercised by the Optionee's personal
representative,
executor or administrator, as the case may be. No exercise
permitted by this
Section 11 shall entitle an Optionee or his personal
representative, executor or
administrator to exercise any Option which is not (on the date
of exercise) then
exercisable.
Changes in Capital Structure. In the event that, by reason of a
stock dividend,
recapitalization, reorganization, merger, consolidation,
reclassification, stock
split-up, combination of shares, exchange of shares, or the like,
the outstanding
shares of Common Stock of the Company are hereafter
increased or decreased,
or changed into or exchanged for a different number or kind of
shares or other
securities of the Company or of any other corporation, then
appropriate
adjustments shall be made by the Board to the number and kind
of shares
reserved for issuance under the Plan upon the grant and
exercise of Options. In
addition, the Board shall make appropriate adjustments to the
number and kind
of shares subject to outstanding Options, and the purchase price
per share
thereunder shall be appropriately adjusted consistent with such
change. In no
event shall fractional shares be issued or issuable pursuant to
any adjustment
made under this Section 11. The determination of the Board as
to any
adjustment shall be final and conclusive.
Mandatory Exercise. Notwithstanding anything to the contrary
set forth in the
Plan, in the event that:
the Company should adopt a plan of reorganization pursuant to
which it shall
merger into, consolidate with, or sell its assets to, any other
corporation or
entity (an "Acquiring Entity"), the Company may give an
Optionee written
notice thereof :
(i) requiring such Optionee to exercise his or her Options
within thirty
days after receipt of such notice, (including any unvested
Options which would,
except for this Section 12, otherwise be unexercisable at that
date); or
(ii) requiring such Optionee to consent to the conversion of
such Options
into an option to purchase the same number of shares of the
Acquiring Entity's
common stock as would have been received by the Optionee if
the Optionee had
exercised such Option; or
(iii) deeming such Options to have been exercised, in which
case the
Optionee shall be entitled to receive the same consideration per
share as
received by other holders of the Company's stock but reduced
by an amount
equal to the the Fair Market Value on the Grant Date.
the Company should adopt a plan of complete liquidation, the
Company shall
give an Optionee written notice thereof requiring such Optionee
to exercise his
or her Options within thirty days after receipt of such notice,
(including any
invested Options which would, except for this Section 12,
otherwise be
unexercisable at that date).
Those Options which the Company requests to be exercised and
which shall not
have been exercised in accordance with the provisions of the
Plan by the end of
such 30 day period shall automatically lapse irrevocably and the
Optionee shall
have no further rights with respect to such Options.
Option Grant. Each grant of an Option under the Plan will be
evidenced by a
document in such form as the Committee may from time to time
approve. Such
document will contain such provisions as the Committee may in
its discretion
deem advisable, including without limitation additional
restrictions or
conditions upon the exercise of an Option. The Committee may
require an
Optionee, as a condition to the grant or exercise of an Option
or the issuance or
delivery of shares upon the exercise of an Option or the
payment therefor, to
make such representations and warranties and to execute and
deliver such
notices of exercise and other documents as the Committee may
deem consistent
with the Plan or the terms and conditions of the Option
Agreement. Not in
limitation of any of the foregoing, in any such case referred to in
the preceding
sentence the Committee may also require the Optionee to
execute and deliver
documents (including the investment letter described in Section
14), containing
such representations, warranties and agreements as the
Committee or counsel
to the Company shall deem necessary or advisable to comply
with any
exemption from registration under the Securities Act of 1933,
as amended, the
(the "Securities Act") any applicable State securities laws, and
any other
applicable law, regulation or rule.
Investment Letter. If required by the Committee, each
Optionee shall agree to
execute a statement directed to the Company, upon each and
every exercise by
such Optionee of any Options, that shares issued thereby are
being acquired for
investment purposes only and not with a view to the
redistribution thereof, and
containing an agreement that such shares will not be sold or
transferred unless
either (1) registered under the Securities Act, or (2) exempt
from such
registration in the opinion of Company counsel. If required by
the Committee,
certificates representing shares of Common Stock issued upon
exercise of
Options shall bear a restrictive legend summarizing the
restrictions on
transferability applicable thereof.
Requirement of Law. The granting of Options, the issuance of
shares upon the
exercise of an Option, and the delivery of shares upon the
payment therefore
shall be subject to compliance with all applicable laws, rules,
and regulations.
Without limiting the generality of the foregoing, the Company
shall not be
obligated to sell, issue or deliver any shares unless all required
approvals from
governmental authorities and stock exchanges shall have been
obtained and all
applicable requirements of governmental authorities and stock
exchanges shall
have been complied with.
Tax Withholding. The Company, as and when appropriate,
shall have the right
to require each Optionee purchasing or receiving shares of
Common Stock
under the Plan to pay any federal, state, or local taxes required
by law to be
withheld or to take whatever action it deems necessary to
protect the interests of
the Company in respect to such tax obligations.
Nonassignability. Only an Optionee (or his or her authorized
legal
representative) may exercise the rights granted hereunder. No
Optionee may
transfer those rights except by will or by the laws of descent and
distribution or,
if permitted under Rule 16b-3 of the Exchange Act and by the
Committee in its
sole discretion, pursuant to a qualified domestic relations order
as defined
under the Code or Title I of ERISA or the rules thereunder.
Upon the death of
an Optionee, the personal representative or other person
entitled to succeed to
the rights of the Optionee ("Successor Optionee") may exercise
such rights. A
Successor Optionee shall furnish proof satisfactory to the
Company of such
person's right to receive the Option under the Optionee's will or
under the
applicable laws of descent and distribution.
Optionee's Rights as Shareholder and Employee. An Optionee
shall have no
rights as a shareholder of the Company with respect to any
shares subject to an
Option until the Option has been exercised and the certificate
with respect to
the shares purchased upon exercise of the Option has been duly
issued and
registered in the name of the Optionee. Nothing in the Plan
shall be deemed to
give an employee any right to continued employment nor shall it
be deemed to
give any employee any other right not specifically and expressly
provided in the
Plan.
Termination and Amendment.
(a) Amendment. The Board may amend or terminate the
Plan at any
time, subject to the following limitations:
(1) the approval by the shareholders of the Company shall
be required in
respect of any amendment that (A) materially increases the
benefits accruing to
participants under the Plan, (B) increases the aggregate number
of shares of
Common Stock that may be issued or transferred under the Plan
(other than by
operation of Section 11 above), (C) increases the maximum
number of shares of
Common Stock for which any Optionee may be granted options
under this Plan
or (D) materially modifies the requirements as to eligibility for
participation in
the Plan; (E) modifies the provisions for determining the Fair
Market Value;
and
(2) the Board shall not amend the Plan if such amendment
would cause
the Plan, any Option or the exercise of any right under the Plan
to fail to
comply with the requirements of Rule 16b-3 under the
Exchange Act, or if such
amendment would cause the Plan or an Incentive Stock Option
or exercise of
an Incentive Stock Option to fail to comply with the
requirements of Section
422 of the Code including, without limitation, a reduction of the
option price or
an extension of the period during which an Incentive Stock
Option may be
exercised.
(b) Termination of Plan. The Plan shall terminate on the
tenth
anniversary of its effective date (as set forth in Section 20
below) unless earlier
terminated by the Board or unless extended by the Board with
approval of the
stockholders.
(c) Termination and Amendment of Outstanding Grants.
Except as
otherwise provided in Section 12 hereof or in any document
evidencing the
grant of an Option hereunder, a termination or amendment of
the Plan that
occurs after an Option has been granted shall not result in the
termination or
amendment of the Option unless the Optionee consents or
unless the
Committee acts under Section 21(b) below. The termination of
the Plan shall
not impair the power and authority of the Committee with
respect to an
outstanding Option. Whether or not the Plan has terminated, an
outstanding
Option may be terminated or amended under Section 21(b)
below or may be
amended by agreement of the Company and the Optionee which
is consistent
with the Plan.
Shareholder Approval. This Plan is subject to and no Options
granted
hereunder shall be exercisable until the approval of this Plan by
the holders of a
majority of the shares of stock of the Company present or
represented in proxy
in a vote at a duly held meeting of the shareholders of the
Company within
twelve months after the date of the adoption of the Plan by the
Board. If the
Plan is not so approved by shareholders, the Plan and all
Options granted
hereunder shall automatically terminate and be of no force and
effect.
Subsequent to such approval, the effective date of the Plan shall
be
_____________, 1996.
Miscellaneous.
(a) Substitute Grants. The Committee may grant an Option
to an
employee or a non-employee director of another corporation, if
such person
shall become an employee or non-employee director of the
Company, or a
Subsidiary Corporation, by reason of a corporate merger,
consolidation,
acquisition of stock or property, reorganization or liquidation
involving the
Company or a Subsidiary Corporation and such other
corporation. Any Option
so granted shall be made in substitution for a stock option
granted by the other
corporation, but the terms and conditions of the Option so
granted may vary
from the terms and conditions required by the Plan and from
those of the
Option granted by the other corporation. The Committee shall
prescribe the
provisions of the Option so granted.
(b) Compliance with Law. The Plan, the exercise of Option
and the
obligations of the Company to issue shares of Common Stock
upon exercise of
Options shall be subject to all applicable laws and required
approvals by any
governmental or regulatory agencies. With respect to persons
subject to
Section 16 of the Exchange Act, it is the intent of the Company
that the Plan
and all transactions under the Plan shall comply with all
applicable conditions
of Rule 16b-3 or any successor provisions under the Exchange
Act. The
Committee may revoke the grant of any Option if it is contrary
to law or modify
any Option to bring it into compliance with any valid and
mandatory
government regulations. The Committee may also adopt rules
regarding the
withholding of taxes on payments to Optionees. The
Committee may, in its
sole discretion, agree to limit its authority under this section.
(c) Sunday or Holiday. In the event, that the time for the
performance of
any action or the giving of any notice is called for under the
Plan within a
period of time which ends or falls on a Sunday or legal holiday,
such period
shall be deemed to end or fall on the next date following such
Sunday or legal
holiday which is not a Sunday or legal holiday.
L E A S E
THIS Lease, dated October 8, 1996,
Between Vincent J. Russo Realty Company, (hereinafter
referred to as the
"Landlord")
and
Ryan Beck & Co., Inc. (hereinafter referred to as the "Tenant"),
WITNESSETH: That the Landlord hereby demises and leases
unto the Tenant,
and the Tenant hereby hires and takes from the Landlord for the
term and upon
the rentals hereinafter specified, the premises described as
follows, situated in
the Borough of Shrewsbury, County of Monmouth and State of
New Jersey.
Premises: 4,774 square feet, located on the ground floor at
Lincoln Center,
746 Broad Street, Shrewsbury, New Jersey 07702.
Term: The term of this demise shall be for five (5) years,
beginning January
1, 1997* (*OR SUCH DATE 14 DAYS AFTER LANDLORD
GIVES
WRITTEN NOTICE THAT THE "BUILD-OUT WORK" TO
BE DONE BY
THE LANDLORD AS SET FORTH ON PAGE 2 HAS BEEN
COMPLETED.
TENANT SHALL NOT BE OBLIGATED TO PAY RENT
UNTIL THE
COMMENCEMENT OF SAID TERM AS PROVIDED
HEREIN), and ending
December 31, 2001. The Tenant shall have the option to renew
the Lease for an
additional five (5) years. The Tenant must notify the Landlord,
in writing, of its
intention to renew the Lease at least ninety (90) days prior to
the end of the
Term herein. If the Tenant does not so notify the Landlord of its
intention by
this date and after thirty (30) days from the date of written
notice by the
Landlord terminating the option, the Landlord shall have no
obligation to
accept the exercise of the option. The payment terms of the
option shall be
described below. The Tenant shall be given access to the
premises forty-five
(45) days prior to the commencement date for purpose of
installing wire, cables
and the like.
Rent: The base rent will be S15.00 per square foot. The base
rent will be
fixed for the first two (2) years of the term. The rent will then
be increased,
commencing with the third (3rd) year of the Lease, and
continuing through the
fifth (5th) year of the initial Lease term, based upon the formula
set forth in
Paragraphs 29 and 30 herein. If the Tenant shall exercise its
option and renew
the Lease, the sixth (6th) and seventh (7th) years of the Lease
would be fixed at
the rent charged in the fifth (5th) year of the Lease. Thereafter,
the eighth
(8th), ninth (9th) and tenth (10th ) years' rent would be
increased pursuant to
the formula set forth in Paragraphs 29 and 30 herein.
The Landlord will provide a "build-out" allowance of $15.00
per square foot for
"build-out" prior to the commencement of the initial Lease, and
$5.00 per
square foot on or before the commencement of the sixth (6th)
year of the Lease
if the Tenant exercises its option to renew the Lease. All "build-
out" work to be
done is to be mutually agreed upon by the parties prior to
commencement of
same. All "build-out" work will be done by the Landlord.
Furthermore, any allowances to be provided by the Landlord to
the Tenant for
design and/or fit-up items, shall be agreed to by the Landlord
and Tenant.
Additionally, with respect to this "build-out" allowance
Landlord will "match"
any bid made for the work submitted by a bona fide third party
builder/contractor retained by the Tenant for the purpose of
providing a bid.
However, since the Landlord will match that bid, the Landlord
will be the only
contractor/builder to do the allowance work. The work
contemplated by the '
build-out/fit-up" allowance is general, customary contracting
work, such as the
installation of lights, ceilings, HVAC, carpet, and the like. It
will not include
any specialized or ultra-custom wiring for computers,
communications systems,
or otherwise, which is requested and/or required by the Tenant.
If the parties
cannot agree on what should be part of the "build-out"
allowance, or cannot
agree that the bid submitted by the bona fide third party
builder/contractor
retained by the Tenant is correct, reasonable and/or consistent
with this Lease,
the parties shall agree on a neutral third party to resolve the
dispute. If that
third party must be utilized, the parties agree to equally bear the
costs of same.
In such event, the commencement date of* (*THE LEASE
TERM SHALL BE
45 DAYS AFTER A DETERMINATION BY SAID
NEUTRAL 3RD PARTY
IS RENDERED OR FROM THE DATE OCCUPANCY IS
TAKEN BY THE
TENANT, WHICHEVER IS EARLIER. CONSEQUENTLY,
TENANT'S
OBLIGATIONS HEREUNDER, INCLUDING THE
PAYMENT OF RENT,
SHALL NOT COMMENCE UNTIL THE FIRST DAY OF
SAID ADJUSTED
LEASE TERM, OR UPON THE DATE OF OCCUPANCY,
WHICHEVER IS
EARLIER).
The said rent is to be payable monthly in advance on the first
day of each
calendar month for the term hereof.
Payment of Rent: At the office of Vincent J. Russo Realty
Company,
17 0 Avenue at the Common, Shrewsbury, New Jersey 07702,
or as may be
otherwise directed by the Landlord in writing, sent by certified
mail.
Late Fee: The said rent is to be payable on the first day of
the month but
no later than the tenth day of the month. In the event the Tenant
fails to pay his
rent on or before the tenth day of the month, the Tenant agrees
to pay a late fee
of five (5%) percent of the overdue payment. This late charge
will be collectible
and/or assessed as additional rent. The late fee will be assessed
only to the
second late payment of each calendar year, and for any other
late payments
thereafter in that calendar year.
THE ABOVE LETTING IS UPON THE FOLLOWING
CONDITIONS:
Peaceful Possession
First - The Landlord covenants that the Tenant, on paying the
said rental and
performing the covenants and conditions in this Lease
contained, shall and may
peaceable and quietly have, hold and enjoy the demised
promises for the term
aforesaid.
Purpose
Second - The Tenant agrees to use the demised premises as a
professional
office, and any permitted use, and agrees not to use or permit
the premises to be
used for any other purpose without the prior written consent of
the Landlord
endorsed hereon. The Landlord hereby agrees that it will not
rent other space in
the two (2) buildings of the Lincoln Center to any other
stock/brokerage and/or
investment firm during the term of the Tenant's Lease. The
Landlord is
responsible for obtaining a Certificate of Occupancy or other
approvals required
by the municipality at the commencement of the Lease, and
represents that the
Tenant's use does not violate municipal ordinances.
Default in Payment of Rent - Abandonment of Premises
Re-entry and Reletting by Landlord - Tenant Liable for
Deficiency
Lien of Landlord to Secure - Performance Attorney's Fees
Third - The Tenant shall, without any previous demand
therefore, pay to the
Landlord, or its agent, the said rent at the times and in the
manner provided
above, and if the same shall remain in default for ten days after
becoming due,
or if the Tenant shall be dispossessed for non-payment of rent,
or if the leased
premises shall be deserted or vacated without payment of rent,
the Landlord or
its agents shall have the right by lawful process to enter the said
premises.
Except for the above conditions, the landlord agrees that it will
only re-enter
the premises in the event of an emergency, e.g. a fire, major
leak, etc., and that
any repair personnel will be accompanied by a member of the
Landlord. Such
re-entry by the Landlord shall not operate to release the Tenant
from any
damages as set forth in the next sentence, and/or as provided
and allowed by
law. For the purpose of reletting, the Landlord shall be
authorized to make such
repairs and alterations in or to the leased premises as may be
reasonably
necessary to place the same in good order and condition. The
Tenant shall be
liable to the landlord for the reasonable costs of such repairs or
alterations, and
all expenses of such reletting. If the sum realized or to be
realized from the
reletting is insufficient to satisfy the monthly or term rent
provided in this
Lease, the Landlord may accelerate the entire amount due under
the Lease.
Tenant shall not be entitled to any surplus accruing as a result
of the reletting.
The Tenant agrees to pay, as additional rent, all reasonable
attorney's fees,
court costs and other expenses incurred by the Landlord in
enforcing any of the
obligations under this Lease.
Sub-letting and Assignment
Fourth - The Tenant shall not sub-let the demised premises nor
any portion
thereof, nor shall this Lease be assigned by the Tenant without
the prior written
consent of the Landlord, which consent shall not be
unreasonably withheld,
conditioned or delayed.
Fifth - The tenant has examined the demised premises, and
accepts them in
their present condition* (*THE PARTIES ACKNOWLEDGE
THE
BUILDING WITHIN WHICH THE DEMISES PREMISES IS
LOCATED IS
CURRENTLY UNDER CONSTRUCTION. THUS,
NOTWITHSTANDING
THE AFORESAID, PRIOR TO THE COMMENCEMENT OF
THE LEASE
TERM, TENANT SHALL HAVE THE RIGHT TO INSPECT
SAID
BUILDING TO CONFIRM THAT IT (THE BUILDING
ITSELF, NOT THE
"BUILDOUT" DESIGN) HAS BEEN CONSTRUCTED IN
ACCORDANCE
WITH THE PLANS AND PICTURES PROVIDED AND
REPRESENTATIONS MADE BY THE LANDLORD (THE
PARTIES
RIGHTS REGARDING THE "BUILDOUT' SHALL BE SET
FORTH IN A
SEPARATE AGREEMENT.) (except as otherwise expressly
provided herein or
as modified by the "build-out" to be performed hereunder) and
without any
representations on the part of the Landlord or its agent as to the
present or
future condition of the said premises. The Tenant shall keep the
demised
premises in good condition, as may be necessary to keep it in
good appearance,
excepting normal wear and tear. The Tenant shall quit and
surrender the
premises at the end of the demised term in as good condition as
the reasonable
use thereof will permit. The Tenant shall not make any
alterations, additions,
or improvements to said premises without the prior written
consent of the
Landlord, which consent shall not be unreasonably withheld,
except as noted
herein. It is hereby agreed that the Tenant shall have the right to
make all non-
structural changes with regard to the Tenant's internal premises,
without
obtaining the consent of the Landlord. It is hereby understood
that, if
modifications and/or alterations to the premises are done by the
Tenant,
pursuant to the Lease, the Tenant shall be responsible to ensure
that such
changes comply with all governmental al requirements, which
include! but are
not limited to, the Americans With Disabilities Act ("ADA").
The Landlord
shall be responsible for said compliance for the building,
exclusive of any work
done by the Tenant. All erections, alterations, additions and
improvements,
whether temporary or permanent in character, which may be
made upon the
premises either by the Landlord or the Tenant, except furniture
or movable
trade fixtures installed at the expense of the Tenant, shall be the
property of the
Landlord and shall remain upon and be surrendered with the
premises as part
thereof at the termination of this Lease, without compensation
to the Tenant.
The Tenant further agrees to keep said premises and all parts
thereof in a clean
and sanitary condition and free from trash and inflammable
material.
Additionally, the Tenant is permitted to install phone lines,
phones, security
systems and/or computer lines/wires so long as said installations
and operations
do not materially affect the structure of the demised premises.
Furthermore, the Landlord will agree that, if modifications need
to be made to
the premises prior to occupancy to comply with any federal,
state and/or local
law, same shall be made at Landlord's sole cost and expense,
other than for
modifications necessitated by the use of the Tenant.
Any modifications, alterations, additions and/or improvements
to be made to
the premises prior to occupancy shall be agreed upon by the
Landlord and
Tenant. After the Tenant has occupied the premises, any other
modifications,
alterations, additions and/or improvements requested by the
Tenant shall be
done at the Tenant's sole cost and expense.
Mechanics' Liens
Sixth - In the event that any mechanics' lien is filed against the
premises as a
result of alterations, additions, improvements and/or
modifications made by the
Tenant, the Landlord after thirty (30) days' notice to the Tenant,
may require
the Tenant to bond the lien, in the full amount of the lien
amount claimed, and
the Tenant shall diligently proceed to contest the validity and/or
merits of the
lien. The Tenant shall forthwith reimburse the Landlord for the
total reasonable
expenses incurred by the Landlord in discharging and/or dealing
with said
mechanics' lien, as additional rent under the Lease.
GLASS
Seventh - The Landlord agrees to replace any and all glass
which may become
broken-in and on the demised premises, except for glass which
is broken as a
result of the negligence of the Tenants, its agents, servants
and/or invites.
Liability of Landlord
Eighth - The Landlord shall not be responsible for the loss of or
damage to
property, or injury to persons, occurring in or about the
demised premises,
except as caused by the acts of its agents, contractors, servants,
employees and
invitees. The Tenant shall be responsible for all loss, claims
and/or damage, to
persons or property, on the demised premises which are caused
by the Tenant,
its agents, servants, invitees and/or employees.
Services and Utilities
Ninth - Utilities and services furnished to the demised premises
for the benefit
of the Tenant shall be provided and paid for as follows: water
by the Landlord;
electricity by the Tenant; Landlord will install and supply the
light bulbs; heat
by the Tenant; refrigeration by the Tenant; air conditioning by
the Tenant.
Landlord is responsible for maintenance and upkeep of all
systems.
The Landlord shall not be liable for any interruption or delay in
any of the
above services for any reason caused by events or occurrences
which are beyond
the control of the Landlord.
Rights to Inspect and Exhibit
Tenth - On reasonable notice, the Landlord, or its agents, shall
have the right to
enter the demised premises at reasonable hours with reasonable
advance notice
and subject to U.S. government security restrictions and in the
day, or at night,
in emergency situations, to examine the same, or to run
telephone or other
wires, or to make such repairs, additions or alterations as shall
reasonably be
necessary for the safety or convenience of the occupants or
users thereof (there
being no obligation, however, on the part of the Landlord to
make any such
repairs, additions or alterations), or to exhibit the same to
prospective tenants,
and may place the usual "To Let" signs thereon during the last
ninety (90) days
of the term herein. The Landlord agrees to exercise its rights
hereunder in a
manner so as to cause as little inconvenience and disturbance to
Tenant's daily
business as possible.
Damage by Fire, Explosion, the Elements or Otherwise
Eleventh - In the event of the destruction, in whole or part of
the demised
premises or the building containing the said premises by fire,
explosion, the
elements or otherwise during the term hereby created, or
previous thereto, or
such partial destruction thereof as to the render the premises
untenantable or
unfit for occupancy, or should the demised premises be so badly
injured that '~
the same cannot be repaired within ninety days from the
happening of such
injury, then and in such case the term hereby created shall cease
and become
null and void from the date of such damage or destruction, and
the Tenant shall
immediately surrender said premises and all the Tenant's interest
therein to the
Landlord, and shall pay rent only to the time of such casualty, in
which event
the Landlord may re-enter and possess the premises thus
discharged from this
Lease and may remove all parties therefrom. Should the
demised premises be
rendered untenantable and unfit for occupancy, but yet be
repairable within
ninety days from the happening of said injury, the Landlord may
enter and
repair the same with reasonable speed, and the rent shall not
accrue after said
injury or while repairs are being made, but shall commence
immediately after
said repairs are completed. If the premises shall be so slightly
injured as not to
be rendered in whole or in any part untenantable and unfit for
occupancy, then
the Landlord agrees to repair the same with reasonable
promptness and in that
case the rent accrued and accruing shall not cease or determine.
The Tenant
shall immediately notify the Landlord in case of fire or other
damage to the
premises. The Tenant shall have the option to accept or reject
re-occupation of
the premises only if the damage to the premises affects the
Tenant's ability to
conduct business on the premises. For example, if a small part
of the premises
is damaged, but that part makes the telephone and/or computer
systems
inoperable for the time periods set forth above, the Tenant shall
have the right
to reject the premises.
Observations of Laws, Ordinances, Rules and Regulations
Twelfth - The Tenant agrees to observe and comply with all
laws, ordinances,
rules and regulations of the Federal, State, County and
Municipal authorities
applicable to the Tenant's use of premises. The Landlord agrees
to observe and
comply with all laws, ordinances, rules and regulations of the
federal, state,
county and municipal authorities applicable to the demised
premises (except to
the extent that they are the Tenant's responsibility) and to the
building in which
the demised premises are located. The Tenant agrees not to do
or permit
anything to be done in said premises, or keep anything therein,
which will
increase the rate of fire insurance premiums on the
improvements or any part
thereof, or on property kept therein, or which will obstruct or
interfere with the
rights of other tenants, or conflict with the regulations or the
Fire Department
OL' with any insurance policy upon said improvements or any
part thereof. In
the event of any increase in insurance premiums resulting from
any wrongful
act or omission on the part of the Tenant, the Tenant agrees to
pay said
increase in insurance premiums on the improvements or
contents thereof as
additional rent.
Signs
Thirteenth - No sign, advertisement or notice shall be affixed to
or placed upon
any part of the demised premises by the Tenant, except in such
manner, and of
such size, design and color as shall be approved in advance in
writing by the
Landlord, which approval shall not be unreasonably withheld,
conditioned or
delayed. Signs will conform to all existing signs. Tenant will be
responsible for
the cost of all signs and Landlord shall be responsible for
erecting signs. The
Landlord agrees that, if the municipality allows an exterior sign
to be affixed to
the building, the Tenant shall have the exclusive right to have its
sign erected
thereon, subject to the approval of the municipality.
Subordination to Mortgages and Deeds of Trust
Fourteenth - This Lease is subject and is hereby subordinated to
all present and
future mortgages, deeds of trust and other encumbrances
affecting the demised
premises or the property of which said premises are a part. The
Tenant agrees
to execute, at no expense to the Landlord, a reasonable
instrument which may
be deemed necessary or desirable by the Landlord to further
effect the
subordination of this Lease to any such mortgage, deed of trust
or
encumbrance, provided that same also provides for non-
disturbance of Tenant
by the other party thereto. The Landlord will provide a non-
disturbance letter
from present lenders, and will use best efforts to obtain a non-
disturbance letter
from future lenders.
Rules and Regulations of Landlord
Fifteenth - The rules and regulations regarding the demised
premises, affixed
and/or provided by this Lease, if any, as well as any other and
further
reasonable rules and regulations which shall be made by the
Landlord, shall be
observed by the Tenant and by the Tenant's employee, agents
and customers.
The Landlord reserves the right to rescind any presently existing
rules
applicable to the demised premises, and to make such other and
further
reasonable rules and regulations as in its judgment, may from
time to time be
desirable for the safety, care and cleanliness of the premises,
and for the
preservation of good order therein, which rules, when so made
and ten (10)
days' notice thereof given to the Tenant, shall have the same
force and effect as
if originally made a part of this Lease. Such other and further
rules shall not,
however, be inconsistent with the proper and rightful enjoyment
by the Tenant
of the demised premises. The Landlord understands and is
aware of the
Tenant's desire that any adoption, modification and/or rescission
of any rules
and/or regulations not adversely affect its rights as a Tenant.
The Landlord will
use it; best efforts to ensure that this does not arbitrarily occur
and/or happen.
Violations of Covenants, Forfeiture of Lease, Re-entry by
Landlord- Non-
Waiver of Breach
Sixteenth - In case of violation by the Tenant of any of the
covenants
agreements and conditions of this Lease r or of the rules and
regulations now or
hereafter to be reasonably established by the Landlord, and
upon failure to
discontinue such violation within thirty (30) calendar days after
written notice
thereof given to the Tenant, this Lease shall thenceforth, at the
option of the
Landlord, become null and void. The Landlord shall have the
right to re-enter
the premises pursuant to an order and/or Judgment of a court of
competent
jurisdiction. The rent in such case which shall become due will
be apportioned
and paid on and up to the day of such re-entry, and the Tenant
shall be liable
for all loss or damage resulting from such violation as aforesaid.
No waiver by
the Landlord of any violation or breach of condition by the
Tenant shall
constitute or be construed as a waiver of any other violation or
breach of
condition, nor shall lapse of time after breach of condition by
the Tenant before
the Landlord shall exercise its option under this paragraph
operate to defeat the
right of the Landlord to declare this Lease null and void and to
re-enter upon
the demised premises where the said breach or violation
continues.
Notices
Seventeenth - All notices and demands, legal and otherwise,
incidental to this
Lease, or the occupation of the demised premises, shall be in
writing. If the
Landlord or its agent desires to give or serve upon the Tenant
any notice or
demand, it shall be sufficient to send a copy thereof by
registered mail,
addressed to the Tenant at the demised premises or to post a
copy thereof upon
the door to said premises, together with a copy sent to the
President of the
Tenant at 80 Main Street, South ^ Orange, New Jersey 07052,
or such other
address as designated by the Tenant in writing to the Landlord
at a later date.
Notices from the Tenant to the Landlord shall be sent by
registered mail or
delivered to the Landlord at the place hereinbefore designated
for the payment
of rent, or to such party or place as the Landlord may from time
to time
designate in writing.
Bankruptcy, Insolvency, Assignment for Benefit of Creditors
Eighteenth - It is further agreed that if at any time during the
term of this Lease
the Tenant shall make any assignment for the benefit of
creditors, or be decreed
insolvent or bankrupt according to law, or if a receiver shall be
appointed for
the Tenant, then the Landlord may, at its option, terminate this
Lease, exercise
of such option to be evidenced by notice to that effect served
upon the assignee,
receiver, trustee or other person in charge of the liquidation of
property of the
Tenant or the Tenant's estate, but such termination shall not
release or
discharge any payment of rent payable hereunder and then
accrued, or any
liability then accrued by reason of any agreement or covenant
herein contained
on the part of the Tenant, or the Tenant's legal representatives.
Holding Over by Tenant
Nineteenth - In the event that the Tenant shall remain in the
demised premises
after the expiration of the term of this Lease or extension of
same without
having executed a new written Lease or extension with the
Landlord, said
holding over shall not constitute a renewal or extension of this
Lease. The
Landlord may, at its option, elect to treat the Tenant as one
who has not
removed at the end of his term, and thereupon be entitled to all
the remedies
against the Tenant provided by law in that situation, or the
Landlord may elect,
at its option, to construe such holding over as a tenancy from
month to month,
subject to all the terms and conditions of this Lease, except as
to duration
thereof, and in that-event the Tenant shall pay monthly rent in
advance at the
rate provided herein as effective during the last month of the
demised term.
Eminent Domain, Condemnation
Twentieth - If the property wherein the demised premises are
located shall be
taken by public or quasi-public authority under any power of
eminent domain
or condemnation, this Lease, at the option of either party, by
notice given in
writing to the other party, shall terminate. As of the date of this
Lease, the
Landlord represents that it has no knowledge, nor has it
received any notice,
regarding eminent domain proceedings affecting the subject
premises.
Security Deposit
Twenty-first - DELETED.
Delivery of Lease
Twenty-second - No rights are to be conferred upon the Tenant
until this Lease
has been signed by the Landlord, and an executed copy of the
Lease has been
delivered to the Tenant.
Lease Provisions Not Exclusive
Twenty-third - The foregoing rights and remedies are not
intended to be
exclusive but as additional to all rights and remedies the
Landlord would
otherwise have by law.
Lease Binding on Heirs, Successors, Etc.
Twenty-fourth - All of the terms, covenants and conditions of
this Lease shall
inure to the benefit of and be binding upon the respective
successors and
assigns of the parties thereto. However, in the event of the
death of the Tenant,
if an individual, the Landlord may, at its option, terminate this
Lease by
notifying the executor or administrator of the Tenant at the
demised premises.
Twenty-fifth - This Lease and the obligation of Tenant to pay
rent hereunder
and perform all of the other covenants and agreements
hereunder on part of
Tenant to be performed shall in no way be affected, impaired or
excused
because Landlord is unable to supply or is delayed in supplying
any service
expressly or implied to be supplied or is unable to make, or is
delayed in
making any repairs, additions, alterations or decorations or is
unable to supply
or is delayed in supplying any equipment or fixtures if Landlord
is prevented or
delayed from so doing by reason of governmental preemption in
connection
with a National Emergency declared by the President of the
United States or in
connection with any rule, order or regulation of any department
or subdivision
thereof of any governmental agency or by reason of the
conditions of supply
and demand which have been or are affected by the war. The
provisions of this
Paragraph are to be read in conjunction with Paragraph
Eleventh above.
Twenty-sixth - This instrument may not be changed orally.
Indemnification
Twenty-seventh - (a) Tenant agrees that the use of the demised
premises by
itself its agents, contractors, employees and servants, is at its
own risk and
hereby releases Landlord and its agents, servants, contractors,
and employees
from any and all claims and demands of every kind resulting
from any
accident, damage or injury occurring therein, except as due to
Landlord's
negligence or willful act.
(b) Landlord shall not be responsible or liable to Tenant or any
other party for
any loss or damage that may be occasioned by or through the
acts or omissions
of persons occupying any part of the demised premises or any
premises adjacent
to or connected directly or indirectly with the demised premises,
including but
not limited to premises above or below the demised premises or
any part of the
building of which the demised premises are a part or any
persons transacting
any business in and/or on the building for any other purpose, or
for any loss or
damage resulting to Tenant or its property from any burst,
stopped or leaking
water, gas, sewer sprinkler or steam pipes or plumbing fixtures
or by operation
or construction of any private, public or quasi-public work,
unless same is
occasioned by the Landlord's own negligence or willful or
intentional act.
Landlord shall be liable for any latent defect in the building of
which the
demised premises are a part or from any failure of or defect in
any electric line,
plumbing, roof leak, circuit or facility, with the exception of the
Tenant's
individual electric system. All property kept, stored or
maintained in the
demised premises or elsewhere in the building shall be so kept,
stored or
maintained at the sole risk of Tenant.
(c) Tenant shall hold Landlord, its officers, directors, agents and
employees
harmless from and defend Landlord against and from any and all
claims,
liability, damage or loss, and from and against all costs and
expenses, including
reasonable attorneys' fees in connection therewith, arising out of
any injury to
or death of any person or damage to or destruction of the
demised premises and
any other portion of the building, as caused by the Tenant, and
except for any
cause resulting solely from the negligence or willful act of
Landlord, its
authorized agents or employees and, if occurring on or about
the building,
when such injury or damage shall be caused in whole or in part
by the act.
neglect, default or omission of Tenant, its agents, employees or
invitees or
otherwise by any conduct or transactions or any of said persons
in or about or
concerning the premises, including any failure of Tenant to
observe or perform
any of its obligations hereunder. The provisions of this
paragraph shall survive
the termination of this Lease with respect to any damage, injury
or death
occurring prior to such termination. The Tenant shall not have
any obligation
to indemnify the Landlord for any injuries, damages and/or
claims which arise
as a result of the negligence, acts and/or omissions of the
Landlord.
Furthermore, the Tenant will not have to indemnify the landlord
for any
damages and/or loss as a result of any injury or damage
occurring on or about
any portion of the common area or elsewhere on or about the
building, except
when such injury loss and/or damage shall be caused by the
acts, omissions to
act, negligence, gross negligence and/or willful act of the
Tenant, its agents,
employees or invitees.
Insurance
Twenty-eighth - Tenant covenants to provide, at Tenant's sole
cost and
expense, on or before the earlier of: (1) the commencement of
the date of the
term hereof; or (2) Tenant's entering upon the Demised
Premised for the
purpose of doing all or any part of Tenant's work, and to keep
in full force and
effect during the entire term and so long thereafter as Tenant, or
anyone
claiming by, through or under Tenant, shall occupy the Demised
Premises, insurance coverage, written by an insurer rated A-1
or better,
licensed to do business 1n the State of New Jersey, as follows:
(A) A policy or policies (and Certificate(s) evidencing same) of
Comprehensive
Public Liability insurance with broad form contractual and
personal injury
liability endorsements with respect to the Demised Premises or
any
appurtenances thereto, and the business carried on therein, on
terms approved
in writing by Landlord, in which insurance both Tenant and
Landlord shall be
covered by limits of liability in amounts (not less than
$1,000,000.00 for injury
or death to any one person and $3,000,000.00 for injury or
death to more than
one person and $1,000,000.00 with respect to property damage,
by water or
otherwise for each occurrence) as shall be reasonable
satisfactory to Landlord,
from time to time. Tenant Sheller prior to occupancy or
commencement of
Tenant's work, provide the Landlord Certificates of Insurance
evidencing the
coverage specified in this paragraph, which certificates shall
name as
additional insured: Landlord its affiliate and its authorized
agent.
(b) All Risk Property Coverage Insurance in an amount
adequate to cover both
Landlord and Tenant as to their respective interests therein, for
the full cost of
replacement of all improvements and betterments, personal
property
declarations, trade fixtures, furnishings, equipment in the
Demised Premises
and all contents therein.
(c) All of the aforesaid insurance and any other insurance and
any other
insurance policies of Tenants shall be considered primary
insurance and, except
for workers' compensation, shall be issued in the name of
Tenant and name as
additional insurers and loss payees Landlord and any designees
and/or
mortgagees of Landlord, and shall be written by one or more
reasonable,
licensed insurance companies satisfactory to Landlord and in a
form
satisfactory to Landlord; all such insurance shall contain
endorsements
providing for at Lease thirty (30) days prior written notice to
Landlord of any
material change in or cancellation of such policy or coverage; all
such
insurance policies shall contain a waiver of subrogation in
respect of Landlord.
(d) With respect to the Demised Premises and the contents,
improvements, and
betterments therein, Landlord shall not be liable for any damage
by fire or other
peril includable in the coverage afforded by the standard form of
all risk
property coverage insurance (whether or not such coverage is
in effect), no
matter how caused, it being understood that the Tenant will
look solely to
Tenant's insurer for reimbursement.
(e) Upon failure at any time on the part of Tenant to procure
and deliver to
Landlord the policy(ies) and certificate(s) of insurance, as
hereinabove
provided, Landlord may, in its sole discretion, as often as such
failure shall
occur, procure such insurance and pay the premium therefore,
and for any sums
paid by Landlord for insurance Landlord shall have all the
remedies provided
for in this Lease or by Law for the collection of rent. Payment
by Landlord of
such premium or the carrying by Landlord of any such policy
shall not be
deemed to waive or release the default of Tenant with respect
thereto. Tenant's
failure to provide and keep in force the aforementioned
insurance shall be
regarded as a Default hereunder entitling Landlord to exercise
any or all of the
remedies as provided in this Lease.
Twenty-nine - The rent will be increased by the lesser of 5% or
the Consumer
Price Index (CPI), published by the Bureau of Labor Statistics,
U.S.
Department of Labor, for Northern New Jersey, at the end of
each year for the
term of the Lease, except as modified herein. The above
increase is not
computed on the aggregate of the increases but on the rent
charged the previous
year.
Thirty - The rent shall be increased by the Tenant's pro rata
share of any
increase in municipal taxes, using the calendar year 1997 as the
base year
provided that the building is fully assessed by the municipality.
If the building
is not fully assessed by the municipality, the Tenant shall be
responsible for its
Pro rata share of any increase in the municipal taxes, based
upon the
assessment given by the municipality, whether it is fully or
partially assessed.
The Tenant's "pro rata share" is defined as the percentage of the
Tenant's
square footage relative to the entire square footage of the
building.
Thirty-one - Landlord shall be responsible for the maintenance
of all common
hallways, stairs, landscaping and parking areas, and shall keep
same in a clean
condition, free from debris, trash refuse, snow and ice.
IN WITNESS WHEREOF, the said Parties have hereunto set
their hands and
seals the day and year first above written.
Witness: VINCENT J. RUSSO REALTY
COMPANY,
LANDLORD
/s/ Mason By: /s/ Vincent J. Russo
Witness: RYAN, BECK & CO., INC.,
TENANT
/s/ Leonard J. Stanley By: /s/ Allen S. Greene, President
LEASE AGREEMENT
This Agreement is made on the 18th day of September, 1996,
B E T W E E N : LIVINGSTON CORPORATE PARK
ASSOCIATES, L.L.C.
A Limited Liability Company of the State
of New
Jersey
820 Morris Turnpike, Suite 301, Short
Hills, New
Jersey 07078
(hereinafter referred to as "Landlord"),
A N D : RYAN, BECK & COMPANY, INC.
80 Main Street, West Orange, New Jersey
07052
(hereinafter referred to as "Tenant").
W I T N E S S E T H :
1. PREMISES, TERM AND USE.
(a) The Landlord does hereby lease to the Tenant, and the
Tenant does
hereby rent from the Landlord the following described premises:
approximately
34,948 rentable square feet of space as shown on the floor plan
attached hereto
as Exhibit A (consisting of 24,246 rentable square feet on the
third floor, and
approximately 10,702 rentable square feet on the second floor,
hereinafter
referred to as the "Demised Premises") in the office building
located at 220
South Livingston Avenue, Livingston, New Jersey (the
"Building"), for a term
of ten (10) years, commencing on the date set forth in
Paragraph l(b) herein,
(the "Commencement Date") and ending ten (10) years later, to
be used and
occupied only and for no other purpose than general,
administrative and
executive offices, and any lawfully permitted use.
(b) The Commencement Date shall be defined as follows:
(1) In the event that Landlord shall not perform the Tenant
Improvements
(as defined in Paragraph 39 herein), the Commencement Date
shall be that date
which is one hundred eighty (180) days from the date that
Landlord notifies
Tenant that the Demised Premises will be available. However,
despite the date
of said notice from Landlord to Tenant, the notice shall be
effective as of the
first day of the calendar month following the month in which
said notice was
provided to Tenant.
(2) In the event that Landlord shall perform the Tenant
Improvements (as
defined in Paragraph 39 herein), then upon completion of
Tenant's plans,
Landlord and Tenant shall create a construction schedule, and
the
Commencement Date shall be the date of substantial completion
of the Tenant
Improvements and issuance of a Certificate of Occupancy
(Temporary,
Conditional or Permanent) for the Demised Premises. In the
event that
Landlord is unable to deliver the Demised Premises within
fourteen (14) days
after the Commencement Date as set forth in the construction
schedule, Tenant
shall be entitled to a two (2) day rent abatement for each day or
part thereof
that Landlord is delayed in delivering the Demised Premises,
beginning on the
fifteenth (15th) day after the Commencement Date as set forth
in the
construction schedule.
(c) It is understood and agreed by and between the parties
hereto that the
Landlord is providing Tenant with six (6) months notice of the
anticipated
occupancy of the Demised Premises in order that Tenant may
provide notice to
its current Landlord. However, it is intended that the actual
time for completion
of the Tenant Improvements (whether performed by Landlord
or Tenant) shall
be ninety (90) days from the date that the Demised Premises
become vacant.
(d) In the event that Landlord shall perform the Tenant
Improvements,
Tenant shall be entitled to enter the Demised Premises
commencing sixty (60)
days prior to the Commencement Date (as set forth on the
construction
schedule referred to in subparagraph (b)(ii) above), for the
purpose of
installation of telephone and computer wiring/cabling.
However, Tenant shall
not interfere with Landlord's construction during such early
entry.
2. PAYMENT OF RENT.
Commencing on the Commencement Date, Tenant covenants
and agrees to pay
to the Landlord, as rent for and during the term hereof, the sum
of Five Million
Eight Hundred Seventy-One Thousand Two Hundred Sixty-
Four and 00/100
($5,871,264.00) Dollars, payable as follows:
(a) During the first, through, to and including the second
year of the
initial term of this Lease, the sum of Five Hundred Twenty-Four
Thousand Two
Hundred Twenty and 00/100 ($524,220.00) Dollars Per
Annum; Forty-Three
Thousand Six Hundred Eighty-Five and 00/100 ($43,685.00)
Dollars Per
Month, due and payable on the first day of each calendar
month.
(b) During the third, through, to and including the fifth year
of the initial
term of this Lease, the sum of five Hundred Fifty-Nine
Thousand One Hundred
Sixty-Eight and 00/100 ($559,168.00) Dollars Per Annum;
Forty-Six Thousand
Five Hundred Ninety-Seven and 33/100 ($46,597.33) Dollars
Per Month, due
and payable on the first day of each calendar month.
(c) During the sixth, through, to and including the tenth
year of the initial
term of this Lease, the sum of Six Hundred Twenty-Nine
Thoustand Sixty-Four
and 00/100 ($629,064.00) Dollars Per Annum; Fifty-Two
Thousand Four
Hundred Twenty-Two and 00/100 ($52,422.00) Dollars Per
Month, due and
payable on the first day of each calendar month.
Notwithstanding anything to the contrary contained herein,
basic rent for the
first month of the initial term of this Lease shall be due and
payable upon
execution of this Lease. Said rent shall accrue interest from the
date same is
provided to Landlord until the Commencement Date, and all
accrued interest
shall be equally divided between Landlord and Tenant.
3. LATE PAYMENTS.
In the event that payment of rent is not received by Landlord by
the fifteenth
(15th) day of each month, Tenant shall pay, as additional rent, a
late charge
equal to five (5) percent of the late payment. Landlord shall be
entitled to the
same remedies for non-payment of late charges as for non-
payment of rent.
Notwithstanding anything to the contrary contained herein,
however, said late
charge shall not be effective until the second late payment
during any twelve
(12) month period.
4. REPAIRS AND CARE.
(a) The Demised Premises shall be delivered to Tenant on
the
Commencement Date in "as is" condition, subject to the terms
of Paragraph 41
herein. The Tenant has examined the Demised Premises and has
entered into
this Lease without any representation on the part of the
Landlord as to the
condition thereof. The Tenant shall take good care of the
Demised Premises
and shall, at the Tenant's own cost and expense, make all
nonstructural repairs,
including painting and decorating, and shall maintain the
Demised Premises in
good condition and state of repair. The Tenant shall neither
encumber nor
obstruct the sidewalks, driveways, yards, entrances, hallways
and stairs. The
Tenant shall not place a load upon any floor of the Demised
Premises
exceeding the floor load per square foot area which it was
designed to carry and
which is allowed by law. Landlord reserves the right to
prescribe the weight
and position of all safes.
(b) Not later than the last day of the term, Tenant shall, at
Tenant's
expense, remove all Tenant's personal property and those
improvements made
by Tenant which have not become the property of Landlord,
including, but not
limited to trade fixtures, moveable paneling and the like; repair
all injury done
by or in connection with the installation or removal of said
property and
improvements; and surrender the Demised Premises in as good
condition as
they were at the beginning of the term, excepting reasonable
wear and damage
by fire, the elements, casualty, or other cause not due to the
misuse or neglect
by Tenant, Tenant's agents, servants, visitors or licensees. All
other property of
Tenant remaining on the Demised Premises after the last day of
the term or
earlier termination of this Lease shall be conclusively deemed
abandoned and
may be removed by Landlord, and Tenant shall reimburse
Landlord for the cost
of such removal. Landlord may have any such property stored
at Tenant's risk
and expense. It is intended that any improvements made to the
Demised
Premises which become affixed to the Demised Premises shall
become the
property of Landlord, and any improvements which are
moveable shall remain
the property of Tenant. It is hereby agreed between the parties
hereto that, in
the event Tenant installs an interior staircase within the
Demised Premises,
said staircase shall remain at the conclusion or earlier expiration
of the Lease,
and Tenant shall not be required to remove the staircase.
5. COMPLIANCE WITH LAWS.
The Tenant shall promptly comply with all laws, ordinances,
rules, regulations,
requirements and directives of the Federal, State and Municipal
Governments
or Public Authorities and of all their departments, bureaus and
subdivisions,
applicable to and affecting the said Demised Premises, their use
and occupancy,
for the correction, prevention and abatement of nuisances,
violations or other
grievances in, upon or connected with the said Demised
Premises, during the
term hereof; and shall promptly comply with all orders,
regulations,
requirements and directives of the Board of Fire Underwriters
or similar
authority and of any insurance companies which have issued or
are about to
issue policies of insurance covering the said Demised Premises
and its contents,
for the prevention of fire or other casualty, damage or injury, at
the Tenant's
own cost and expense. Tenant shall observe and comply with
the rules and
regulations hereinafter set forth in Exhibit B, attached hereto
and made a part
hereof by this reference, and with such further reasonable rules
and regulations
as Landlord may prescribe, upon written notice to Tenant, for
the safety, care
and cleanliness of the Building and the comfort, quiet and
convenience of other
occupants of the Building. Landlord represents that, to the best
of its
knowledge, as of the Commencement Date the Demised
Premises and Building
are in compliance with all Federal, State and local laws and
regulations
including, but not limited to, the Americans with Disabilities
Act. Landlord
shall be responsible for maintaining compliance with the
Americans with
Disabilities Act for the Building and the Demised Premises
during the term of
this Lease, provided that Tenant does not make any alterations
which take the
Demised Premises out of compliance. In such case, Tenant shall
be responsible
for bringing the Demised Premises into compliance with the
Americans with
Disabilities Act.
6. ALTERATIONS AND IMPROVEMENTS.
No alterations, additions or improvements shall be made, and
no climate
regulating, air conditioning, cooling, heating or sprinkler
systems, television or
radio antennas, heavy equipment, apparatus and fixtures, shall
be installed in
or attached to the Demised Premises, without the prior written
consent of the
Landlord. Notwithstanding the foregoing, however, during any
twelve (12)
month period, Tenant shall be entitled to make non-structural
alterations within
the Demised Premises up to the amount of $100,000.00, upon
at least ten (10)
business days prior written notice to Landlord. Any alterations
proposed by
Tenant in excess of the foregoing amount shall be subject to
Landlord's prior
written consent, which consent shall not be unreasonably
withheld or delayed.
In addition, Tenant shall be entitled to install additional HVAC
equipment
and/or communication devices on the roof of the Building,
subject to Landlord's
prior written consent, which shall not be unreasonably withheld
or delayed.
However, Landlord's failure to consent due to aesthetic reasons
shall not be
considered unreasonable. Any alterations or improvements to be
performed by
Tenant pursuant to this Paragraph shall be at Tenant's sole cost
and expense,
and Tenant shall obtain all necessary approvals and/or permits
from all
governmental authorities having jurisdiction over the premises.
Unless
otherwise provided herein, all such alterations, additions or
improvements and
systems, when made, installed in or attached to the said
Demised Premises,
shall belong to and become the property of the Landlord and
shall be
surrendered with the Demised Premises and as part thereof
upon the expiration
or sooner termination of this Lease, without hindrance,
molestation, injury or
charge to Landlord. At the conclusion of the Lease term or
earlier expiration of
this Lease, Tenant shall be responsible for all restoration costs
for alterations,
additions and improvements which have not been permanently
affixed to the
Demised Premises, including, but not limited to movable
furniture, equipment
and/or roof top telecommunications equipment.
7. TENANT'S LIABILITY INSURANCE.
Tenant shall provide, at Fits own expense, and keep in force
during the term of
this Lease and any renewal terms, general comprehensive
liability insurance
with an insurance company licensed to do business in the State
of New Jersey,
selected by Tenant and reasonably acceptable to Landlord, and
in an amount
reasonably required by Landlord, but in any event not less than
$1,000,000.00
with respect to injury or death to any one person and
$3,000,000.00 with
respect to injury or death to more than one person in any one
accident or other
occurrence, and $1,000,000.00 with respect to damage to
property. Such policy
or policies shall include Landlord, as additional insured. Tenant
agrees to
deliver certificates evidencing such insurance to Landlord within
thirty (30)
days of the date of execution of this Lease and within thirty (30)
days after the
date of renewal of the policies. Such insurance shall not be
cancelable without
thirty (30) days prior written notice to Landlord.
8. TENANT'S CASUALTY INSURANCE.
During the term of this Lease, and any renewal terms, Tenant
shall cause its
improvements to the Demised Premises to be insured for the
benefit of Tenant,
against loss or damage by fire and customary extended
coverage in an amount
equal to the replacement value thereof, if insurance in such
amount is available.
Tenant agrees to deliver a certificate evidencing such insurance
to Landlord
within thirty (30) days of the date of execution of this Lease.
9. DAMAGE OR DESTRUCTION BY FIRE OR OTHER
CASUALTY.
(a) If the Building is damaged by fire or other casualty to
such extent that
the cost of restoration, as determined by an insurance adjustor
licensed in the
State of New Jersey, will equal or exceed fifty (50) percent of
the replacement
value of the Building (exclusive of foundations) just prior to the
occurrence of
the damage, then either Landlord or Tenant may, within sixty
(60) days from
the date of the damage, give the other party a written notice of
election to
terminate this Lease, effective thirty (30) days from the date of
such notice.
However, in the event that neither party terminates this Lease in
such
circumstance, then the basic rent and additional rent shall be
abated in direct
proportion to that amount of square footage in the Demised
Premises which
cannot be used by Tenant for the purposes set forth in
Paragraph 1 herein,
which abatement shall be effective as of the date of the casualty.
In addition,
Landlord shall be responsible for making restoration within one
hundred eighty
(180) days after the date of the damage, subject to Force
Majeure. In the event
that restoration is not made within said time period, Tenant
shall have the right
to terminate this Lease, upon thirty (30) days written notice to
Landlord.
Notwithstanding anything to the contrary contained herein, if
the casualty
occurs in a manner that affects telephones, computers,
electronic equipment
and the like such that Tenant is unable to conduct its business,
then the entire
rent shall be abated as of the date of the casualty until such time
as these
essential services have been restored.
(b) If the Building is damaged by fire or other casualty to
such extent that
the cost of restoration, as determined by an insurance adjustor
licensed in the
State of New Jersey, will be less than (50) percent of the
replacement value of
the Building (exclusive of foundations) just prior to the
occurrence of the
damage, then the basic rent and additional rent shall be abated
in direct
proportion to that amount of square footage in the Demised
Premises which
cannot be used by Tenant for the purposes set forth in
Paragraph 1 herein. In
addition, Landlord shall be responsible for making restoration
within one
hundred eighty (180) days after the date of the damage, subject
to Force
Majeure. In the event that restoration is not made within said
time period,
Tenant shall have the right to terminate this Lease, upon thirty
(30) days
written notice to Landlord. Notwithstanding anything to the
contrary contained
herein, if the casualty occurs in a manner that affects
telephones, computers,
electronic equipment and the like such that Tenant is unable to
conduct its
business, then the entire rent shall be abated as of the date of
the casualty until
such time as these essential services have been restored.
10. WAIVER OF SUBROGATION.
Landlord and Tenant shall obtain, for each policy of insurance
secured by them
regarding the Demised Premises, or any Property located
therein, whether
required by this Lease or in addition to that which is required by
this Lease, an
appropriate clause therein or endorsement thereon, pursuant to
which such
insurance company waives subrogation or consents to the
waiver of the right of
one party to recover against the other.
11. INCREASE OF INSURANCE RATES.
If by reason of the use to which the Demised Premises are put
by the Tenant or
character of or the manner in which the Tenant's business is
carried on, the
insurance rates for fire and other hazards shall be increased, the
Tenant shall
upon demand, pay to the Landlord, as rent, the amounts by
which the
premiums for such insurance are increased. Such payment shall
be paid with
the next installment of rent but in no case later than thirty (30)
days after such
demand, whichever occurs sooner.
12. ASSIGNMENT AND SUBLEASE.
Tenant may assign or sublease the within Lease to any party
subject to the
following:
(a) In the event that the Tenant desires to sublease the
whole or any
portion of the Demised Premises or assign the within Lease to
any other party,
the Tenant's intentions shall be communicated to the Landlord
in writing.
Landlord shall have the option, exercisable in writing to Tenant
within sixty
(60) days after receipt of such notice from Tenant, to recapture
the within
Lease, or alternatively, to recapture the Demised Premises, or
the portion
thereof Tenant sought to sublet, and this Tenant shall then be
fully released
from any and all obligations hereunder.
(b) In the event that the Landlord elects not to recapture
either the Lease
or the Demised Premises as hereinabove provided, Tenant may
assign this
Lease or sublet the whole or any portion of the Demised
Premises (but not less
than 2,500 square feet), subject to Landlord's prior written
consent, which
consent shall not be unreasonably withheld or delayed, and
subject to the
consent of any mortgagee, trust deed holder or ground lessor,
on the basis of the
following terms and conditions:
(1) The Tenant shall provide to Landlord the name and
address of the
proposed assignee or sublessee.
(2) The assignee or sublessee shall assume, by written
instrument, all of
the obligations of this Lease, and a copy of such assumption
agreement shall be
furnished to Landlord within ten (10) days of its execution. Any
sublease shall
expressly acknowledge that said sublessee's rights against the
Landlord shall be
no greater than those of the Tenant.
(3) The Tenant and each assignee shall be and remain liable
for the
observance of all the covenants and provisions of this Lease,
including, but not
limited to the payment of rent and additional rent reserved
herein, through the
entire term of this Lease, as the same may be renewed, extended
or otherwise
modified.
(4) The Tenant and any assignee shall promptly pay to
Landlord: (i) one-
half of any consideration received by Tenant for any
assignment; or (ii) one-
half of the rent, as and when received by Tenant, in excess of
the rent required
to be paid by Tenant to Landlord for the area sublet, computed
on the basis of
an average square foot rent for the gross square footage Tenant
has leased.
However, Tenant shall be entitled to deduct the reasonable
costs incurred by
Tenant in connection with the assignment (i.e. construction
costs, broker
commissions).
(5) In any event, acceptance by Landlord of any rent from
the assignee, or
from any of the subtenants, or the failure of Landlord to insist
upon a strict
performance of any of the terms, conditions and covenants
herein shall not
release Tenant herein, nor any assignee assuming this Lease,
from any and all
of the obligations herein during and for the entire term of this
Lease, as the
same may be renewed, extended or otherwise modified.
(6) Tenant shall be responsible for payment to Landlord of
Landlord's
reasonable attorneys' fees and handling costs incurred for each
request for
consent to any sublet or assignment, with such payment to be
made within ten
(10) business days of written notice from Landlord, but in no
event beyond the
effective date of assignment.
(c) Notwithstanding anything to the contrary contained
herein, Tenant
shall have the right to assign this Lease or sublet the Demised
Premises, in
whole or in part, to any parent, affiliate or subsidiary of Tenant
or in
connection with a merger of Tenant provided that the surviving
entity in a
merger shall have a tangible net worth (determined in
accordance with
generally accepted accounting principles) not less than the net
worth of Tenant
and its guarantors, if any, as of the date of commencement of
this Lease.
(d) Without limiting any of the provisions of this Lease, if,
pursuant to the
Federal bankruptcy Code (hereinafter referred to as the
"Code"), or any similar
law hereinafter enacted having the same general purpose,
Tenant is permitted
to assign this Lease notwithstanding the restrictions contained
in this Lease,
then adequate assurance of future performance by an assignee
expressly
permitted under such Code shall be deemed to mean the deposit
of cash security
in an amount equal to the sum of one (1) year's basic rent plus
an amount equal
to the additional rent for the calendar year preceding the year in
which such
assignment is intended to become effective, which deposit shall
be held by
Landlord for the balance of the term of the Lease, without
interest, as security
for the full performance of all of Tenant's obligations under this
Lease, to be
held and applied in the manner specified for security in
Paragraph 18.
(e) Except as specifically set forth above, no portion of the
Demised
Premises or of Tenant' 8 interest in this Lease may be acquired
by any other
person or entity, whether by assignment, mortgage, sublease,
transfer, operation
of law or act of the Tenant, nor shall Tenant pledge its interest
in this Lease or
in any security deposit required hereunder.
13. INSPECTION AND REPAIR.
The Tenant agrees that the Landlord and the Landlord's agents,
employees or
other representatives, shall have the right to enter into and upon
the said
Demised Premises or any part thereof, at all reasonable hours,
accompanied by
a member of Tenant's staff, for the purpose of examining the
same or making
such repairs or alterations therein as may be necessary for the
safety and
preservation thereof. This clause shall not be deemed to be a
covenant by the
Landlord nor be construed to create an obligation on the part of
the Landlord to
make such inspection or repairs. In the event that Landlord shall
enter the
Demised Premises on an emergency basis, Landlord shall
attempt to notify
Tenant's staff prior to such entry; if Landlord is unable to notify
Tenant' 8 staff,
Landlord shall make such entry with a member of Landlord's
executive
management staff.
14. GLASS AND OTHER DAMAGE REPAIRS.
In case of the destruction of or any damage to the interior glass
in the Demised
Premises, or the destruction of or damage of any kind
whatsoever to the
Demised Premises, caused by the carelessness, negligence or
improper conduct
on the part of the Tenant or the Tenant's agents, employees,
subtenants,
assignees or successors, the Tenant shall repair the said damage
or replace or
restore any destroyed parts of the Demised Premises, as
speedily as possible, at
the Tenant's own cost and expense.
15. SIGNS.
The Tenant shall not place nor allow to be placed any signs of
any kind
whatsoever, upon, in or about the Demised Premises or any part
thereof, except
of a design and structure and in or at such places as may be
indicated and
consented to by the Landlord in writing. Landlord shall place
Tenant's name:
(i) on the directory in the lobby; and (ii) the outside directory, if
any. Tenant
shall not have the right to have additional names placed on the
directories
without Landlord's prior written consent. However, Tenant
shall have the right,
at Tenant's sole cost and expense, to place a sign containing its
company name
on the two upper corners of the Building closest to the corner
of South Orange
Avenue and Eisenhower Parkway. In addition, subject to
discussions between
Landlord and Saint Barnabas Medical Center, the neighboring
property owner,
Landlord shall use its best efforts to obtain signage rights on
South Orange
Avenue for the benefit of Tenant, in order that Tenant may
place a "V-shaped"
monument sign on the corner of South Orange Avenue and
Eisenhower
Parkway, subject to Landlord's prior written consent, which
consent shall not be
unreasonably withheld. In addition to the foregoing, Tenant
shall have the right
to place a "V-shaped" monument sign on property owned by
Landlord on the
corner of South Orange Avenue and Passaic Avenue, subject to
Landlord's prior
written consent, which consent shall not be unreasonably
withheld. All such
signs shall be subject to all laws, rules, regulations, orders and
the like of any
governmental authorities having jurisdiction over the Building.
In case the
Landlord or the Landlord's agents, employees or representatives
shall deem it
necessary to remove any such signs in order to paint or make
any repairs,
alterations or improvements in or upon the Demised Premises
or any part
thereof, they may be so removed, but shall be replaced at the
Landlord's
expense when the said repairs, alterations or improvements shall
have been
completed. Any signs permitted by the Landlord shall at all
times conform with
all municipal ordinances or other laws, ordinances and
regulations applicable
thereto. At the conclusion of the Lease term, or earlier
termination of this
Lease, Tenant, at Tenant's sole cost and expense, shall remove
its signs from
the Building and the property surrounding the Building.
16. MORTGAGE PRIORITY.
This Lease shall not be a lien against the Demised Premises in
respect to any
mortgages that may herebefore or hereafter be placed upon said
premises. The
recording of such mortgage or mortgages shall have preference
and precedence
and be superior and prior in lien to this Lease, irrespective of
the date of
recording and the Tenant agrees to execute any instruments,
without cost,
which may be deemed necessary or desirable, to further effect
the subordination
of this Lease to any such mortgage or mortgages. However,
Tenant's obligation
to execute any instruments to evidence subordination of this
Lease is
conditioned upon Tenant being provided with a non-disturbance
agreement
from the mortgagee. A refusal by the Tenant to execute such
instruments shall
entitle the Landlord to the option of canceling this Lease, and
the term hereof is
hereby expressly limited accordingly.
Tenant shall promptly comply with all reasonable requests of
Landlord's
mortgagee.
17. UTILITIES.
(a) Tenant shall have access to the Demised Premises 24
hours per day, 7
days per week. Landlord shall provide Tenant with HVAC
during the Building
Hours (Monday through Friday, 7:00 a.m. to 7:00 p.m. and
Saturdays, 7:00
a.m. to 1:00 p.m., with the following holidays excepted: New
Years Day,
Presidents Day, Good Friday, Memorial Day, Independence
Day, Labor Day,
Thanksgiving Day and Christmas Day). If Tenant requests any
or all of the
above services outside of Building Hours, the same shall be
provided upon
advance notice at a cost as follows: (i) during the first, through,
to and
including the fifth year of the initial term of this Lease, the sum
of $30.00 per
zone per hour; and (ii) during the sixth, through, to and
including the tenth
year of the initial term of this Lease, the sum of $34.50 per zone
per hour.
Notwithstanding anything to the contrary contained herein,
however, the
parties hereto hereby acknowledge that the foregoing fees are
based upon
current utility charges. In the event of a material increase in
utility charges,
said increase shall be paid by Tenant.
(b) In the event that the Demised Premises are separately
metered, Tenant
shall be responsible for payment for its electrical usage directly
to the utility
company. In the event the Demised Premises are not separately
metered,
Tenant shall reimburse Landlord for its electrical usage pursuant
to an energy
survey, to be performed (no more than once per Lease year) by
an energy survey
company chosen by Landlord, at Tenant's sole cost and
expense. However, the
cost of said energy survey shall be reasonable and standard in
the industry. The
parties hereto hereby agree that, until the energy survey has
been conducted,
Tenant shall reimburse Landlord for its electrical usage at the
rate of $1.25 per
rentable square foot per annum, payable monthly.
(c) Landlord shall provide (i) janitorial services five (5)
nights per week;
(ii) elevator service; and (iii) snow removal.
18. EVENTS OF DEFAULT: REMEDIES.
(a) If Tenant does not: (a) within fifteen (15) days after the
due date
thereof pay any installment of basic annual rent, additional rent
or any other
monetary obligation; or (b) within thirty (30) days after written
notice from
Landlord cure a default other than a default in the payment of
basic annual rent
or additional rent (provided, however, that such thirty (30) day
period shall be
extended if the default is of such a nature that it could not
reasonably be cured
within such period of thirty (30) days and Tenant promptly
commences and
thereafter diligently pursues the curing of such default), then, in
any such
event, Tenant shall be deemed in default under this Lease.
(b) If there should occur any default on the part of the
Tenant as set forth
in this Lease, or if during the term hereof the Demised Premises
or any part
thereof shall be or become abandoned or deserted, vacated or
vacant, or should
the Tenant be evicted by summary proceedings or otherwise,
the Landlord, in
addition to any other remedies herein contained or as may be
permitted by law,
may, without being liable for prosecution therefor, or for
damages, re-enter the
Demised Premises and the same have and again possess and
enjoy, so long as
such re-entry is in accordance with all applicable laws, orders,
rules,
regulations and the like of all governmental authorities having
jurisdiction over
the Demised Premises.
(c) At any time or from time to time after any such
expiration or
termination, the Landlord may, as agent for the Tenant or
otherwise, re-let the
Demised Premises, for such term or terms (which may be
greater or less than
the period which would otherwise have constituted the balance
of the term of
this Lease) and on such conditions (which may include
concessions or free rent)
as the Landlord, in its reasonable discretion, may determine, and
receive the
rents therefor, applying the same: (i) to the payment of such
expenses,
reasonable attorney fees and costs, as the Landlord may have
been put to in -e-
entering and repossessions the same and in making such repairs
and alterations
as may be necessary; and (ii) to the payment of the rents due
hereunder. The
Tenant shall remain liable for such rents as may be in arrears
and also the rents
as may accrue subsequent to the re-entry by the Landlord, to
the extent of the
difference between the rents reserved hereunder and the rents, if
any, received
by the Landlord during the remainder of the unexpired term
hereof, after
deducting the aforementioned expenses, fees and costs; the
same to be paid as
such deficiencies arise and are ascertained each month.
Landlord shall in no
way be responsible or liable for any failure to relet the Demised
Premises or any
part thereof, or for any failure to collect any rent due upon any
such reletting.
(d) Upon the occurrence of an event of default as set forth
in this Lease, or
should the Tenant be adjudicated a bankrupt, insolvent or
placed in
receivership, or should proceedings be instituted by or against
the Tenant for
bankruptcy, insolvency, receivership, agreement of composition
or assignment
for the benefit of creditors, or if this Lease or the estate of the
Tenant hereunder
shall pass to another by virtue of any court proceedings, writ of
execution, levy,
sale, or by operation of law, the Landlord may, if the Landlord
so elects, at any
time thereafter, terminate this Lease and the term hereof, upon
giving to the
Tenant or to any trustee, receiver, assignee or other person in
charge of or
acting as custodian of the assets or property of the Tenant, five
(5) days written
notice of the Landlord's intention so to do. Upon the giving of
such notice, this
Lease and the term hereof shall end on the date fixed in such
notice as if the
said date was the date originally fixed in this Lease for the
expiration hereof;
and the Landlord shall have the right to remove all persons,
goods, fixtures and
chattels therefrom, by force or otherwise, without liability for
damages.
19. SURVIVAL OF COVENANTS.
No expiration or termination of this Lease shall relieve the
Tenant of its
liability and obligations under this Lease, and all liability and
obligations shall
survive any expiration or termination. In the event of an
expiration or
termination, whether or not the Demised Premises, or a portion
thereof, shall
have been relet, Tenant shall pay to Landlord the rent up to the
time of such
expiration or termination, and thereafter, Tenant, until the
expiration date as
stated in Paragraph 1 herein, shall be liable to Landlord for, and
shall pay to
Landlord, as and for liquidated and agreed current damages, the
difference, if
any, between: (1) the basic annual rental and additional rent as
stated in this
Lease; and (2) any rent and additional rent received by Landlord
from any new
tenant in the Demised Premises, or a portion thereof.
20. REMOVAL OF TENANT'S PROPERTY.
Any equipment, fixtures, goods or other property of the Tenant,
not removed by
the Tenant upon the termination of this Lease, or upon any
quitting, vacating or
abandonment of the Demised Premises by the Tenant, or upon
the Tenant's
eviction, shall be considered as abandoned and the Landlord
shall have the
right, without any notice to Tenant, to sell or otherwise dispose
of the same, at
the expense of Tenant, and shall not be accountable to the
Tenant for any part
of the proceeds of such sale, if any. In addition, Tenant shall be
responsible for
all restoration costs for removal of signs, movable furniture,
equipment and/or
roof top telecommunications equipment. It is intended that any
improvements
made to the Demised Premises which become affixed to the
Demised Premises
shall become the property of Landlord, and any improvements
which are
moveable shall remain the property of Tenant.
21. REIMBURSEMENT OF LANDLORD.
If the Tenant shall fail or refuse to comply with or perform any
conditions and
covenants of the within Lease, the Landlord may, if the
Landlord so elects,
carry out and perform such conditions and covenants, at the
cost and expense of
the Tenant, and the said cost and expense shall be payable on
demand, At the
option of the Landlord the costs and expenses shall be added to
the installment
of rent due immediately thereafter but in no case later than
thirty (30) days after
such demand, whichever occurs sooner, and shall be due and
payable as such.
This remedy shall be in addition to such other remedies as the
Landlord may
have hereunder by reason of the breach by the Tenant of any of
the covenants
and conditions in this Lease.
22. NON-PERFORMANCE BY LANDLORD.
This Lease and the obligation of the Tenant to pay the rent
hereunder and to
comply with the covenants and conditions hereof, shall not be
affected,
curtailed, impaired or excused because of the Landlord's
inability to supply any
service or material called for herein, by reason of any act of
God, riot, civil
commotion, strikes, lock-out, acts, orders or regulations of
governmental
authority, acts or failure to act of the other party, fire, tornado,
windstorm,
adverse weather conditions, rule, order, regulation or
preemption by any
governmental entity, authority, department, agency or
subdivision or for any
delay which may arise by reason of negotiations for the
adjustment of any fire
or other casualty loss or for any cause beyond the control of
Landlord.
23. NON-LIABILITY OF LANDLORD.
Unless due to the negligence of Landlord, its agents or
employees, the Landlord
shall not be liable for any damage or injury which may be
sustained by the
Tenant or any other person, as a consequence of the failure,
breakage, leakage
or obstruction of the water, plumbing, steam, sewer, waste or
soil pipes, roof,
drains, leaders, gutters, valleys, downspouts or the like or of the
electrical, gas,
power, conveyor, refrigeration, sprinkler, air-conditioning or
heating systems,
elevators or hoisting equipment; or by reason of the elements;
or resulting from
the carelessness, negligence or improper conduct on the part of
any other
Tenant or this Tenant or any other Tenant's agents, employees,
guests,
licensees, invitees, subtenants, assignees or successors; or
attributable to any
interference with, interruption of or failure, beyond the control
of the Landlord,
of any services to be furnished or supplied by the Landlord.
24. NON-WAIVER BY LANDLORD.
The various rights, remedies, options and elections of the
Landlord, expressed
herein, are cumulative, and the failure of the Landlord to
enforce strict
performance by the Tenant of the conditions and covenants of
this Lease or to
exercise any election or option or to resort or have recourse to
any remedy
herein conferred or the acceptance by the Landlord of any
installment of rent
after any breach by the Tenant, in any one or more instances,
shall not be
construed or deemed to be a waiver or a relinquishment for the
future by the
Landlord of any such conditions and covenants, options,
elections or remedies,
but the same shall continue in full force and effect.
25. HAZARDOUS SUBSTANCES.
(a) Tenant agrees not to generate, store, manufacture,
refine, transport,
treat, dispose of, or otherwise permit to be present on or about
the Demised
Premises any Hazardous Substances. As used herein,
Hazardous Substances
shall be defined as any "hazardous chemical," "hazardous
substance" or similar
term as defined in the Comprehensive Environmental
Responsibility
Compensation and Liability Act, as amended (42 U.S.C. 9601,
et seq.), the
New Jersey Industrial Site Recovery Act, as amended (N.J.S.A.
13 : 1K- 6 et
sea ), the New Jersey Spill Compensation and Control Act, as
amended
(N.J.S.A. 58:10-23.11b et sec.), any rules or regulations
promulgated
thereunder, or in any other applicable federal, state or local law,
rule or
regulation dealing with environmental protection. It is
understood and agreed
that the provisions contained in this Paragraph shall be
applicable
notwithstanding the fact that any substance shall not be deemed
to be a
Hazardous Substance at the time of its use by the Tenant but
shall thereafter be
deemed to be a Hazardous Substance. Tenant agrees to
indemnify and hold
harmless the Landlord and each mortgagee of the Demised
Premises from and
against any and all liabilities, damages, claims, losses,
judgments, causes of
action, costs and expenses (including reasonable attorneys' fees)
which may be
incurred by Landlord or any such mortgagee or threatened
against the Landlord
or such mortgagee, relating to or arising out of any breach by
Tenant of the
terms of this Paragraph, said indemnity to survive the expiration
or earlier
termination of this Lease.
(b) Within thirty (30) days of request therefor by Landlord,
Tenant shall
provide Landlord with: (i) its Standard Industrial Classification
Number (said
Standard Industrial Classification number to be obtained by
reference to the
then current Standard Industrial Classification Manual prepared
and published
by the Executive Office of the President, Office of Management
and Budget or
the successor or such publications); and (ii) an opinion letter
from the DEP (or
such other agency or body as shall then have jurisdiction over
ISRA matters) in
a form satisfactory to Landlord's counsel, stating the ISRA does
not then apply
to Tenant, Tenant's use and occupancy of the Demised
Premises.
(c) Landlord hereby represents that, to the best of its
knowledge, the
Demised Premises and the Building comply with all applicable
health and
safety standards, including, but not limited to, environmental
requirements of
all Federal, State and local authorities having jurisdiction over
the premises.
26. REAL ESTATE TAXES.
Commencing no earlier than the second year of the term hereof,
upon receipt of
written notification, Tenant shall pay, as additional rent, its
proportionate share
of the increased real estate taxes assessed or imposed on the
property over the
base year (base year shall be defined as the first twelve (12)
months of Tenant's
occupancy, adjusted to reflect a 100% assessed and occupied
building). Such
additional rent shall be paid monthly or quarterly, as designated
by Landlord.
Landlord shall be entitled to the same remedies for non-payment
of additional
real estate taxes as for non-payment of rent. Tenant's liability
for such increase
in real estate taxes shall be imposed whether the increase is due
to an increase
in the tax rate or valuation or both, but not for a tax increase
which arises as a
result of the sale of the Building. Tenant's proportionate share
shall be
determined by dividing the area of the Demised Premises by the
total amount of
leasable floor area in the Building. Tenant' 9 proportionate
share is hereby
defined as 41.15k. Notwithstanding anything to the contrary
contained herein,
Tenant hereby acknowledges that the property is currently the
subject of a tax
appeal. Upon resolution of the appeal, the amount of the taxes
for base year
purposes shall be adjusted accordingly.
(*However, in the event that Landlord shall enter into a
settlement of the tax
appeal, then such additional rent required to be paid by Tenant
pursuant to this
Paragraph shall be limited to an amount that will not be
increased by more than
ten (10) percent per year during the life of the settlement. For
example, in the
event that the tax appeal is settled such that, within the
settlement period taxes
for the Base Year shall be $200,000 and taxes for the first year
following the
Base Year are increased by fifteen (15) percent to $230,000.00,
Tenant shall
only be required to pay its proportionate share (41.158) of
$20,000.00 rather
than $30,000.00 representing a ten (10) percent increase in the
taxes on the
property over the base year. To illustrate further, in the second
year following
the Base Year, if taxes on the property are increased by an
additional ten (10)
percent to a total of $253,000.00, Tenant shall be required to
pay its
proportionate share (41.15%) of $22,000.00 which represents a
ten (10) percent
increase over the previous year in Tenant's obligation to pay
such additional
rent as set forth in this Paragraph. The foregoing applies only in
the event of a
settlement of a tax appeal and only during the life of the
settlement.
Further, in the event that Landlord shall file an appeal of the
1997 taxes on the
property, Tenant shall not be responsible for the payment of
such additional
rent representing its proportionate share of tax increases over
the Base Year for
a period of two years following said appeal, unless the
increase(s) is due to
either a general rate increase by the Township or an added
assessment due to
improvements to the building.)
27. MAINTENANCE.
Commencing no earlier than the second year of the term hereof,
upon receipt of
written notification, Tenant shall pay, as additional rent, its
proportionate share
of the increase in operating expenses incurred by Landlord over
the base year
(base year shall be defined as the first twelve (12) months of
Tenant's
occupancy, adjusted to reflect a 95W occupied building). Such
additional rent is
to be paid quarterly, and shall be determined by dividing the
area of the
Demised Premises by the total amount of area in the Building.
Tenant's
proportionate share is hereby defined as 41.15%. For purposes
of this Lease,
expenses for maintaining and operating the Building shall mean
and include
those expenses incurred in respect to the operation and
maintenance of the
Building (excluding real estate taxes) in accordance with
accepted principles of
sound management and accounting practices as applied to the
operation and
maintenance of non-institutional, first class office buildings,
including, but not
limited to, expenses for heat, water, snow removal, landscaping,
insurance and
janitorial services. However, all capital repairs, replacements
and
improvements shall be the sole responsibility of Landlord and
the costs thereof
shall not be included in the operating expenses referred to
herein.
28. CONDEMNATION AND EMINENT DOMAIN.
(a) In the event of a taking for any public or quasi-public
use or purpose,
by any lawful power or authority, by exercise of the right of
condemnation or
eminent domain, or by agreement between Landlord and those
having the
authority to exercise such right (hereinafter called a "Taking")
of the entire
Demised Premises or such substantial portion thereof so that
the balance of the
Demised Premises is not suitable for the conduct of Tenant's
normal business
operations therein, then this Lease and the terms hereof shall
cease and expire
on the date of transfer of possession in connection with the
Taking.
(b) In the event of a Taking of any portion of the Demised
Premises as a
result of which this Lease is not terminated as provided above,
or a Taking of
more than forty (40W) percent of the leasable space at the
Building (whether or
not any portion of Demised Premises is included in the Taking),
or a permanent
denial or substantial impairment of adequate access to the
Building and
Demised Premises, then, in such event, Landlord or Tenant
may, at its option,
terminate this Lease by giving notice of termination to the other
within sixty
(60) days after receipt by Tenant of notice that the Taking will
occur, such
notice of termination to be effective as of the date of transfer of
possession in
connection with the Taking.
(c) In the event this Lease i8 not terminated pursuant to the
terms of this
Paragraph, then Landlord shall promptly commence and with
due diligence
continue to restore the portion of the Building and the Demised
Premises
remaining after the Taking to substantially the same condition
and tenantability
as existed immediately preceding the Taking, to the extent such
restoration may
be accomplished with the available net proceeds of the award or
payment to
Landlord in connection with the Taking. During the period of
restoration by
Landlord, if the Taking or such restoration shall cause a
material adverse
impact on Tenant's business at Demised Premises, basic annual
rent and
additional rent shall be abated and adjusted in an equitable
fashion. Upon
completion of the restoration, basic annual rent and additional
rent shall also be
abated and adjusted in such manner as shall be just and
equitable. In the event
that Landlord shall fail to commence such restoration as
hereinabove required,
or if such restoration shall not be completed within twelve (12)
months from
and after the date of transfer of possession in connection with
Taking, then, in
either such event, Tenant shall have the right, as its exclusive
remedy, to
terminate this Lease by notice to Landlord, such notice to
specify the effective
date of termination.
(d) Whether or not this Lease shall be terminated pursuant
to the terms of
this Paragraph, Tenant shall have the right in connection with
any Taking to
assert all claims available to it for loss of leasehold interest, loss
of leasehold
improvements, trade fixtures and equipment, and such other
items of loss or
damage as Tenant shall suffer as a result of the Taking with
respect to which
Tenant shall, from time to time under applicable law, be
permitted to make an
independent claim, provided that such claim by Tenant will not
reduce the
award or payment to Landlord in connection with the Taking.
(e) Notwithstanding any provision of this Paragraph, in no
event shall
Landlord be obligated to expend, in connection with the repair
or restoration of
the Demised Premises pursuant to this Paragraph, any amount
in excess of the
award or payment in connection with the Taking. In the event
that such award
or payment shall be insufficient for the repair or restoration or
in the event that
Landlord's mortgagee shall apply all or any portion of such
award of payment
to the reduction of the indebtedness secured by such mortgage,
then to the
extent of such unavailable award or payment, Landlord shall be
excused from
the performance of repair or restoration work hereunder.
29. HOLDING OVER BY TENANT.
If Tenant shall remain in possession of the Demised Premises
after the
conclusion of the term of this Lease (and any renewal terms),
Tenant shall
become a month-to-month tenant under the provisions herein
provided, but at a
monthly basic annual rental as follows: (a) if Landlord has
entered into a bona
fide lease with a new tenant for the Demised Premises, then (i)
during the first
thirty (30) days of the holdover, Tenant shall pay monthly basic
rental equal to
1.5 times the basic rental set forth in Paragraph 2; (ii) during the
second thirty
(30) days of the holdover, Tenant shall pay monthly basic rental
equal to 2
times the basic rental set forth in Paragraph 2; (iii) for any
holdover period
after sixty (60) days, Tenant shall pay monthly basic rental equal
to 2 times the
basic rental set forth in Paragraph 2, and Tenant shall be
responsible for any
actual damages incurred by Landlord as a result of said
holdover; or (b) if
Landlord has not entered into a bona fide lease with a new
tenant for the
Demised Premises, then during the first thirty (30) days of the
holdover, Tenant
shall pay basic rental equal to the basic rental set forth in
Paragraph 2; for any
holdover period beyond thirty (30) days, Tenant shall pay basic
rental equal to
1.5 times the basic rental set forth in Paragraph 2. However, the
amount due for
additional rental shall remain as set forth in this Lease. Such
month-to-month
tenancy shall then continue until terminated by either Landlord
or Tenant,
upon thirty (30) days prior written notice to the other party,
but, in any event,
such termination shall not occur on a date other than the last
day of a calendar
month.
30. RIGHT TO EXHIBIT.
The Tenant agrees to permit the Landlord and the Landlord's
agents, employees
or other representatives to show the Demised Premises to
persons wishing to
rent or purchase the same on and after six (6) months next
preceding the
expiration of the term hereof. Any such showings shall be at
reasonable times
and upon reasonable prior notice to Tenant.
31. BROKER'S COMMISSION.
The parties hereto hereby agree that Edward S. Gordon Co. of
New Jersey, Inc.
and Jacobson, Goldfarb & Tanzman Associates, L.L.C. acted as
the brokers in
this matter. Landlord shall be responsible for payment of the
brokers'
commissions to the above named brokers, pursuant to separate
agreement.
Landlord and Tenant hereby indemnify and hold each other
harmless for any
and all claims by other brokers in connection with this
transaction.
32. OPTIONAL RENEWAL PERIOD.
Tenant shall have the right to renew the within Lease for two
(2) terms of five
(5) years each, consecutive with the term herein provided, at
95k of the "fair
market rent". However, in no event shall the basic rent for each
renewal term
be less than the basic rent for the last year of the previous term.
Tenant shall
give the Landlord no less than six (6) months prior written
notice by Certified
Mail, Return Receipt Requested, of Tenant's intention to
exercise the option to
renew.
33. OPTIONAL RENEWAL PERIOD - RENT.
The "fair market rent" shall be determined as follows: Landlord
shall notify
Tenant of Landlord's opinion of the fair market rent for the
Renewal Period at
lease nine (9) months prior to the end of the then current term
hereof. If Tenant
disputes Landlord's opinion, Tenant shall, within sixty (60) days
after
Landlord's said notice, by written notice to Landlord, either
withdraw its
exercise of its renewal option or notify Landlord that Tenant
elects arbitration
in accordance with then prevailing Rules of Commercial
Arbitration of the
American Arbitration Association. The said Association shall
designate an
appraiser familiar with commercial buildings located in the
Essex County, New
Jersey area. The arbitrator shall, after hearing testimony
from the parties
and their expert witnesses, have the authority to fix and
determine the fair
market rent for the Renewal Period. Each party shall pay the
cost and expenses
of its own expert witnesses and attorneys fees, and the cost of
the
arbitration shall be shared equally by the parties.
Notwithstanding anything
to the contrary contained herein, however, the computation of
fair market rent
shall include a refurbishment allowance equal to fifty (50)
percent of the
buildout which is standard for commercial buildings in the area
at that time.
34. TENANT'S ESTOPPEL.
If, at any time after the commencement of the term hereof,
Landlord or Tenant
shall make written request therefor, Landlord or Tenant shall,
within ten (10)
days after such request, deliver to the other a written
instrument, duly executed
by Landlord or Tenant, certifying, if such be the case: (i) that
this Lease is in
force and effect; (ii) that this Lease has not been modified,
amended or
supplemented or specifying the modification, amendment or
supplement; (iii)
that Tenant or Landlord, as the case may be, is not in default
hereunder, or if it
is then in default, specifying the nature of the default and
whether or not
the time period for curing same has expired; the date or dates
through which
basic annual rent and additional rent have been paid; and
(v) that there are
no offsets or deductions against basic annual rent or additional
rent, or if any
are claimed, specifying the amount thereof and the basis
therefor.
35. GOVERNING LAW.
This Lease, and the rights and obligations of the parties thereto,
shall be
interpreted and construed in accordance with the laws of the
State of New
Jersey.
36. RIGHT OF FIRST NOTIFICATION.
During the term of this Lease, Tenant shall have the right of
first notification to
lease any space which may become available within the
Building, subject to any
previously granted rights to other tenants of the Building. Any
other tenants in
the Building who may have prior rights of first refusal are listed
in the attached
Exhibit D.
37. PARKING.
Landlord shall provide four (4) parking spaces per 1,000
rentable square feet.
This shall include fifteen (15) parking spaces reserved for
Tenant's exclusive
use. In the event that any other tenant in the Building receives
an increase in
reserved parking, then Tenant shall receive a proportionate
increase as well.
38. EXCLUSIVE USE.
Landlord hereby grants to Tenant the exclusive right to provide
retail brokerage
services in the Building, with the exception of Schild Asset
Management,
another tenant in the Building. Landlord shall not lease space
within the
Building to any other Tenant providing retail brokerage services
without
Tenant's prior written consent.
39. TENANT INPROVEMENTS/ALLOWANCES.
Tenant shall improve the Demised Premises in accordance with
a plan, which
plan shall be subject to Landlord's prior written consent, which
consent shall
not be unreasonably withheld. Upon completion of the plan and
acceptance by
Landlord, said plan shall be attached hereto as Exhibit C.
Landlord shall
provide Tenant with the following:
(a) An allowance of $25.00 per rentable square foot for
Tenant's
improvements of any kind, including, but not limited to cabling,
furnishings,
decorating and the like, constructions plans and permits, as well
as an
additional allowance of $0.15 per rentable square foot for space
planning costs.
Tenant shall have the right to bid the Tenant improvements, and
Landlord shall
be entitled to bid for same. In the event that Landlord shall not
construct the
Tenant's improvements, Landlord shall be entitled to a
supervisory fee, but said
fee shall not exceed the sum of $10,000.00.
(b) Landlord shall expand the men's and women's restrooms
on the third
floor of the Building in accordance with the plan to be attached
hereto as
Exhibit C, at Landlord's sole cost and expense.
(c) Landlord shall provide sufficient electrical service for
Tenant's
requirements as per the plan to be attached hereto as Exhibit C.
40. PARTIAL INVALIDITY.
If any provision of this Lease shall be determined by a court of
competent
jurisdiction to be invalid, such determination shall not affect any
of the other
provisions of this Lease and such other provisions shall remain
in full force and
effect. If any provision of this Lease shall be capable of two
constructions, one
of which would render the provision valid and the other of
which would render
it invalid, then such provision shall have the construction and
meaning which
would render it valid.
41. NOTICES.
All notices required under the terms of this Lease shall be given
and shall be
complete by mailing such notices by certified or registered mail,
return receipt
requested, to the address of the parties as shown at the head of
this Lease, or to
such other address as may be designated in writing, which
notice of change of
address shall be given in the same manner. However, effective
as of the
Commencement Date, Tenant's address for purposes of this
Paragraph shall be
220 South Livingston Avenue, Livingston, New Jersey 07039.
42. TITLE AND OUIET ENJOYMENT.
The Landlord covenants and represents that the Landlord is the
owner of the
Demised Premises herein leased and has the right and authority
to enter into,
execute and deliver this Lease; and does further covenant that
the Tenant on
paying the rent and performing the conditions and covenants
herein contained,
shall and may peaceably and quietly have, hold and enjoy the
Demised
Premises for the term aforementioned.
43. ENTIRE CONTRACT.
This Lease contains the entire contract between the parties. No
representative,
agent or employee of the Landlord has been authorized to make
any
representations or promises with reference to the within letting
or to vary, alter
or modify the terms hereof. No additions, changes or
modifications, renewals or
extensions hereof, shall be binding unless reduced to writing
and signed by the
Landlord and the Tenant.
The Landlord may pursue the relief or remedy sought in any
invalid clause, by
conforming the said clause with the provisions of the statutes or
the regulations
of any governmental agency in such case made and provided as
if the particular
provisions of the applicable statutes or regulations were set
forth herein at
length.
In all references herein to any parties, persons, entities or
corporations the use
of any particular gender or the plural or singular number is
intended to include
the appropriate gender or number as the text of the within
instrument may
require. All the terms, covenants and conditions herein
contained shall be for
and shall inure to the benefit of and shall bind the respective
parties hereto, and
their heirs, executors, administrators, personal or legal
representatives,
successors and assigns.
IN WITNESS WHEREOF, the parties hereto have set their
hands and seals the
day and year first above written.
WITNESS: LIVINGSTON CORPORATE PARK
ASSOCIATES, L.L.C. -
LANDLORD
By: /s/ Steven Fisch, Managing Member
RYAN, BECK & CO., INC. - TENANT
By: /s/ Allen S. Greene, President
RULES AND REGULATIONS
1. Obstruction of Passageways. The sidewalks, entrances,
passages, courts,
elevators, vestibules, stairways, corridors and public parts of the
Building shall
not be obstructed or encumbered by Tenant or used by Tenant
for any purpose
other than the purpose for which they were intended.
2. Projections from Building. No equipment or other
fixtures shall be
attached to the outside walls or the windowsills of the Building
or otherwise
affixed so as to project from the Building without the prior
written consent of
the Landlord.
3. Signs. Except as otherwise provided in this Lease, no
sign or lettering
shall be affixed by Tenant to any part of the outside of the
Demised Premises,
or any part of the inside of the Demised Premises so as to be
clearly visible
from the outside of the Demised Premises without the prior
written consent of
the Landlord.
4. Windows. Windows in the Demised Premises shall not
be covered or
obstructed by Tenant. No bottles, parcels or other articles shall
be placed on the
windowsills, in the halls, or in any other part of the Building
other than the
Demised Premises. *
5. Floor Covering. Tenant shall not lay linoleum or other
similar floor
covering so that the same shall come in direct contact with the
floor of the
Demised Premises. If linoleum or other similar floor covering is
desired to be
used, an interlining of builder's deadening felt first shall be fixed
to the floor by
a paste or other material that may be easily removed with water,
with the use of
cement or other similar material being expressly prohibited.
6. Interference with Occupants of Building. Tenant shall
not make, or
permit to be made, any unseemly or disturbing noises or odors
and shall not
interfere with the other tenants or those having business with
them.
7. Locks and Keys. No additional locks or bolts of any
kind shall be placed
on any of the doors by Tenant. Tenant shall, upon termination
of Tenant's
tenancy, deliver to Landlord all keys to any space within the
Building, either
furnished to or procured by Tenant, and in the event of the loss
of any keys
furnished, Tenant shall pay to Landlord the cost of replacement
thereof.
8. Movement of Furniture. Freight or Bulky Matter. The
carrying in or out
of freight, furniture or bulky matter of any description must take
place during
such hours as Landlord may, from time to time, reasonably
determine and only
after advance notice to Landlord. Tenant shall use its best
efforts not to disturb
any other tenants in the Building. The persons employed by
Tenant for such
work must be reasonably acceptable to Landlord. Tenant may,
subject to such
provisions, move freight, furniture, bulky matter, and other
material into or out
of the Demised Premises on Saturdays between the hours of
9:00 a.m. and 1:00
p.m., provided that Tenant shall pay for any additional costs
incurred by
Landlord for elevator operators or security guards, and for
other expenses
occasioned by such activity of Tenant. If, at least five (5) days
prior to such
activity, Landlord requests that Tenant deposit with Landlord,
as security for
Tenant's obligation to pay such additional costs, a sum which
Landlord
reasonably estimates to be the amount of such additional cost,
the Tenant shall
deposit such amount with Landlord as security for such cost.
9. Safes and Other Heavy Equipment. Landlord reserves
the right to
prescribe the weight and position of all safes and other heavy
equipment so as
to distribute properly the weight thereof and to prevent any
unsafe condition
from arising. Business machines and other equipment shall be
placed and
maintained by Tenant at Tenant's expense in settings sufficient
in Landlord's
reasonable judgment to absorb and prevent unreasonable
vibration, noise and
annoyance.
10. Non-Observance or Violation of Rules by Other
Tenants. Landlord shall
not be responsible to Tenant for the non-observance or
violation of any of these
rules and regulations by any other tenant.
11. After Hours Use. Landlord reserves the right to exclude
from the
Building, between the hours of 6:00 p.m. and 8:00 a.m. and at
all hours on
Saturdays, Sundays and Building holidays, all persons who do
not present a
pass to the Building signed by the Tenant. Each Tenant shall be
responsible for
all persons for whom such a pass is issued and shall be liable to
the Landlord
for the acts of such person.
12. Plumbing Facilities Use. Tenant shall not use the
Building's plumbing
facilities for any purpose other than that for which they were
constructed and
will not permit any foreign substance of any kind to be thrown
therein and the
expense of repairing any breakage, seepage or damage, no
matter where
occurring, resulting from a violation of this provision by Tenant
or its agents,
servants, employees, invitees or licensees shall be borne by
Tenant. Wasteful
and excessive or unusual use or misuse of Building standard
office electrical
service, water, sewer or other utilities is hereby expressly
prohibited.
13. Vehicles. No bicycles, mopeds, motorcycles or other
vehicles of any kind
shall be brought into or kept in, on or about the Demised
Premises, Building or
Building area, except in those locations specifically designated
by Landlord for
same.
14. Animals. No animal of any kind shall be brought into,
kept in, on or
about the Demised Premises, Building or Building area, other
than seeing eye
dogs.
15. Landlord's Rights. Landlord hereby reserves to itself any
and all rights not
granted to Tenant hereunder, including, but not limited to the
following rights
which are reserved to Landlord for its purposes in operating the
Building:
(a) the exclusive right to the use of the name of the Building for
all purposes,
except that Tenant may use the name as its business address and
for no other
purpose;
(b) the right to change the name of the Building at any time and
from time to
time, without incurring any liability to Tenant for so doing;
(c) the right to install and maintain a sign or signs on the
exterior of the
Building and/or anywhere in the Building area; and
(d) the right to grant anyone the right to conduct any particular
business or
undertaking in the Building or Building area.
16. Moving. Moving in and out of the Building must be
coordinated with the
Landlord. At the discretion of the Landlord, moving may be
required to be done
under the supervision of the management personnel. No
furniture will be
moved in the Building's elevators without the permission of the
Landlord and
until necessary pads have been installed.
17. All Rules and Regulations set forth above, and any rules
or regulations
which may be promulgated by Landlord following execution of
this Lease, are
intended to be supplemental and not in derogation of the Lease.
Where the
Rules and Regulations may conflict with the terms of the Lease,
the Lease shall
control.
EMPLOYMENT AGREEMENT
This AGREEMENT, made as of _____, 1996, by and between
RYAN, BECK
& CO., INC., a corporation organized under the laws of the
State of New
Jersey, with its principal office at 80 Main Street, West Orange,
New Jersey
07052 (hereinafter the "Company"), and MATTHEW R.
NAULA whose
address is 42 Glenview Drive, West Orange, New Jersey
07052 (hereinafter
the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive is currently serving as an Executive
Vice President
of the Company; and
WHEREAS, the Company desires that the Executive continue
his employment
with the Company, and the Executive desires to continue his
employment
relationship in such a position;
NOW, THEREFORE, in consideration of the premises and the
mutual
covenants herein set forth, the parties agree as follows:
Employment and Duties.
(a) The Company shall continue to employ the Executive,
during the term of
this Agreement and subject to the terms and conditions
contained herein, as an
Executive Vice President. The Executive shall perform such
duties and services
as may from time to time be determined and assigned to the
Executive by the
Chief Executive Officer or the Board of Directors of the
Company.
(b) If elected or appointed as a corporate officer and/or director
of the
Company, the Executive shall also perform such duties and
services as are
prescribed for such position in the By-Laws of the Company
and such
additional related duties and services as may from time to time
be determined
and assigned to him by the Board of Directors.
(c) The Executive shall devote sufficient time, attention, and
energies to
properly perform his duties and services under this Agreement
(allowing for
reasonable vacation periods as established by the personnel
policies of the
Board of Directors) and shall not during the term of this
Agreement be engaged
in any other business activity which will impair his ability to
properly perform
his duties and services hereunder.
(d) The Executive agrees that he will not, without the prior
approval of the
Board of Directors, undertake any activity or position of
responsibility (i) which
conflicts with or competes with the business of Company; or (ii)
whether or not
it is related to the business of the Company, which will
materially inhibit the
performance of his duties hereunder.
1. Term.
The Executive's employment under this Agreement shall
commence as of
January 1, 1997 and, subject to the provisions herein regarding
resignation,
termination with or without cause, death, disability, and
liquidation (the
"Termination Provisions"), shall continue for an indefinite term.
2. Compensation.
(a) During the term of this Agreement, subject to the
Termination Provisions,
the Executive shall be entitled to receive, in equal bi-weekly
installments, an
amount equal to $187,500 per annum as advance payments (a
"Draw") against
the aggregate commissions payable to the Executive with
respect to the sale of
securities and other financial products by the Executive,
calculated based on
sales by the Executive within a twelve (12) month period
commencing
December 31 and ending November 30 (the "Commission
Year"). The
aggregate commissions payable during any Commission Year
are hereinafter
referred to as the "Commissions".
(b) Notwithstanding the actual amount of any such
Commissions, $120,000 of
such Draw shall be guaranteed to the Executive and the
Company shall not be
entitled to any reimbursement with respect thereto. To the
extent that the
Commissions payable to the Executive with respect to any
Commission Year
exceed $90,000 (the "Excess Commissions"), any such Excess
Commissions up
to an amount equal to $67,500 shall be credited against the
Draw. To the
extent that the credit with respect to such Excess Commissions
is less than
$67,500, the difference between $67,500 and the amount of
such credit shall be
payable to the Company on or before December 31 following
the close of a
Commission Year (the "Settlement Date"); provided, however,
that the
Company may, but is not obligated to, permit such difference to
deducted from
any future Draw. To the extent that any such Excess
Commissions exceed the
amount of $67,500, the difference between the amount of such
Excess
Commissions and $67,500 shall be payable to the Executive on
or before the
Settlement Date.
3. Death of the Executive.
(a) In the event of the Executive's death during the term of this
Agreement, the
Company shall pay to the Executive's designated beneficiary, or
if no
beneficiary has been designated then to the Executive's estate, in
addition to the
salary earned by the Executive but unpaid as of the date of
death, the amount of
$150,000. Said amount shall be paid in a lump sum, within
thirty (30) days
after the date of death.
(b) The Executive's entitlement to the accrual of profit-sharing
under the
Company's profit-sharing plan shall terminate upon his death.
Any unpaid
profit-sharing benefits to which the Executive is entitled at the
time of his death
shall be paid to the Executive's designated beneficiary or estate
no later than
one (1) month following the Executive's death.
4. Disability of the Executive.
(a) If the Executive is unable to perform his regular duties and
services by
reason of illness or incapacity for a period of up to six (6)
months, the
Company shall continue to pay his salary at his then current rate
during such
period of illness or incapacity, less the amount of any disability
insurance
benefits paid directly to the Executive from any policy or
policies the premiums
for which have been paid by the Company.
(b) If the Executive's disability continues for more than six (6)
months, the
Executive's employment under this Agreement shall terminate,
and the
Company shall assign to the Executive at no cost to him all
rights which the
Company may then have in any disability income insurance
policies on the
Executive, which shall become the property of the disabled
Executive.
(i) If such termination occurs and the Executive is receiving
disability income
from such insurance policies, then the Company shall pay
severance pay to the
Executive in the amount of $150,000, provided he executes a
notice of
resignation from any position(s) he holds with the Company, a
confidentiality
agreement, and a mutual release with the Company (concerning
its subsidiaries
and affiliates, and its present and former officers, directors, and
employees), in
the form attached hereto with blanks appropriately completed.
Such severance
pay shall be paid in a lump sum, within thirty (30) days after the
effective date
of termination.
(ii) If such termination occurs but the Executive shall not be
receiving, or shall
not be eligible to receive, disability income from insurance
policies provided by
or through the Company, then the Company shall continue to
pay
compensation to the Executive at a per annum rate of $75,000,
for an
additional period of six (6) months. Following the end of such
additional six
(6) month period, the Company shall pay severance pay to the
Executive in the
amount of $150,000, provided he executes a notice of
resignation from any
position(s) he holds with the Company, a confidentiality
agreement, and a
mutual release with the Company (concerning its subsidiaries
and affiliates,
and its present and former officers, directors and employees), in
the form
attached hereto with blanks appropriately completed. Such
severance pay shall
be paid in a lump sum, within thirty (30) days after the date of
the end of the
term of the Agreement.
(c) If within three (3) months after returning to full-time
employment from a
period of disability of less than six (6) months' duration, the
Executive again
becomes disabled, the subsequent disability shall be considered
as part of the
original disability for the purpose of calculating the maximum
six (6) month
period during which the Executive's employment shall be
continued while he is
disabled.
(d) The parties agree that the within provisions will serve as
general guidance
in situations not specifically contemplated hereby and the
Company reserves
the right to review each occurrence of disability on a case-by-
case basis to
determine in its discretion the applicability of the policy to
situations where, for
example, the Executive is partially disabled or has multiple
periods of
disability.
(e) If the Company and the Executive disagree as to the
Executive's status of
disability or fitness and there is in force a disability income
insurance policy on
Executive (whether paid for by the Executive or the Company),
then the
Executive shall be deemed to be disabled for purposes of this
Agreement if any
such policy pays benefits because of the Executive's disability.
If no such
insurance is in force and there is a disagreement, the Executive
shall be
examined by a physician appointed jointly by a physician for the
Company and
a physician for the Executive, and the decision of such physician
jointly chosen
shall be binding upon the Company and the Executive. The fees
and expenses
of the physician so jointly selected shall be paid by the
Company. In the event
that the physician for the Company and the Executive cannot
mutually agree on
an examining physician, then such physician shall be chosen by
the Essex
County (New Jersey) Medical Society. The fees and expenses
of the physician
so chosen shall be paid by the Company.
(f) The Executive agrees to submit annually, at the request of
the Company, to a
general physical examination to be conducted at the Company's
expense by a
physician acceptable to the Company and the Executive. The
Executive further
agrees to authorize said physician to release medical
information to the Board
of Directors if, in the opinion of the physician, the physical
examination reveals
a condition relevant to the performance by the Executive of his
duties under
this Agreement.
5. Termination and Severance Pay.
This Agreement may be terminated during its term as follows:
(a) Voluntary Resignation.
(i) The Executive may terminate this Agreement without cause
by voluntary
resignation upon thirty (30) days' written notice to the
Company.
(ii) In that event, the Company shall pay severance pay to the
Executive in the
amount of $150,000. Such severance pay shall be paid in a
lump sum, within
thirty (30) days after the effective date of termination of the
Executive's
employment.
(iii) In the event of such voluntary resignation, the Executive's
entitlement to
the accrual of profit-sharing under the Company's profit-sharing
plan shall
terminate upon the effective date of termination of the
Executive's employment.
Any unpaid profit-sharing benefits to which the Executive is
entitled as of such
date shall be paid to the Executive no later than one (1) month
thereafter.
(iv) Following such termination of the Executive's employment,
the Company
shall continue indefinitely to provide to the Executive all
medical benefits to
which he would be entitled if he were still an employee of the
Company, upon
the same terms and conditions as such benefits are provided to
other employees
of the Company and subject to any changes in the terms and
conditions of such
benefits as the Company may institute from time to time;
provided, however,
that the provision of such benefits shall cease upon the
occurrence of either (A)
the liquidation of the Company, or (B) the Executive's
employment by another
company or other business organization (not including,
however, self-
employment) which provides medical benefits for which the
Executive is
eligible.
(b) Involuntary Termination Without Cause.
(i) The Company may terminate this Agreement without cause
upon thirty (30)
days' written notice to the Executive.
(ii) In that event, the Company shall pay severance pay to the
Executive in the
amount of $150,000. Such severance pay shall be paid in a
lump sum, within
thirty (30) days after the effective date of termination.
(iii) In the event of such termination, the Executive's entitlement
to the accrual
of profit-sharing under the Company's profit-sharing plan shall
terminate upon
the effective date of termination. Any unpaid profit-sharing
benefits to which
the Executive is entitled as of such date shall be paid to the
Executive no later
than one (1) month thereafter.
(iv) Following such termination of the Executive's employment,
the Company
shall continue indefinitely to provide the Executive all medical
benefits to
which he would be entitled if he were still an employee of the
Company, upon
the same terms and conditions as such benefits are provided to
other employees
of the Company and subject to any changes in the terms and
conditions of such
benefits as the Company may institute from time to time;
provided, however,
that the provision of such benefits shall cease upon the
occurrence of either (A)
the liquidation of the Company, or (B) the Executive's
employment by another
company or other business organization (not including,
however, self-
employment) which provides medical benefits for which the
Executive is
eligible.
(c) Involuntary termination for cause.
(i) In the event that the Executive engages in willful misconduct
or gross
negligence in his performance of the services contemplated by
this Agreement,
or engages in conduct which is otherwise materially detrimental
to the
Company's interest, including but not limited to the commission
of a felony or
perpetration of a common law fraud, the Company may
terminate this
Agreement for cause by giving written notice to the Executive
stating that it is
the Company's intention to terminate the Agreement effective
immediately, and
the Agreement shall so terminate.
(ii) In that event, the Company shall pay severance pay to the
Executive in the
amount of $75,000. Such severance pay shall be paid in a lump
sum, within
thirty (30) days after the effective date of termination.
(iii) In the event of such termination, the Executive's entitlement
to the accrual
of profit-sharing under the Company's profit-sharing plan shall
terminate upon
the effective date of termination. Any unpaid profit-sharing
benefits to which
the Executive is entitled as of such date shall be paid to the
Executive no later
than one (1) month thereafter.
(iv) Following such termination of the Executive's employment,
the Company
shall continue to provide such medical and other benefits to
Executive as it is
required by law to provide and such other benefits as called for
pursuant to the
Company's then current plans and policies, if any.
(d) Liquidation of the Company.
(i) In the event that the Board of Directors votes to liquidate
the Company, the
Executive shall not be guaranteed employment with the
Company for more
than one (1) month from the date of the vote to liquidate the
Company, and his
employment and this Agreement shall terminate after said one
(1) month,
unless the Board of Directors decides that the Executive's
employment should
be continued to assist in the orderly liquidation of the Company,
in which case
the Executive's employment shall continue subject to
termination at any time
thereafter by the Board of Directors. In no event shall any such
continuation
extend for a period of more than four (4) months from the date
of the vote to
liquidate.
(ii) When the Executive's employment is terminated as a result
of the
liquidation of the Company, the Company shall pay severance
pay to the
Executive in the amount of $150,000. Such severance pay shall
be paid in a
lump sum on the effective date of termination.
(e) Notice of Resignation. Notwithstanding anything contained
herein to the
contrary, the right of the Executive to receive any payment or
benefit under this
Section 6 shall be conditioned upon the execution by the
Executive of (i) a
notice of resignation from any position(s) he holds with the
Company,
including, without limitation, as a member of the Board and (ii)
a
confidentiality agreement and a mutual release with the
Company (concerning
its subsidiaries and affiliates, and its present and former officers,
directors, and
employees), each in the form attached hereto with blanks
appropriately
completed,
6. Notice.
Any notice to be given by either party under this Agreement
shall be in writing,
mailed by certified mail with return receipt requested, and
addressed to the
other party at the address stated herein or such other address as
may
subsequently have been furnished by such other party in writing.
Any such
notice shall be deemed to have been given on the date of
mailing. Notices to
the Company shall be sent to its National
Headquarters/Northeast at:
80 Main Street
West Orange, New Jersey 07052;
and notices to the Executive shall be sent to him at:
42 Glenview Drive
West Orange, New Jersey 07052.
7. Governing Law.
This Agreement has been executed and delivered in the State of
New Jersey and
shall in all respects be governed by and construed and enforced
in accordance
with the laws of New Jersey, including all matters of
construction, validity, and
performance.
8. Entire Agreement.
This Agreement constitutes the entire agreement of the parties
with respect to
the Executive's employment and his compensation therefor,
specifically
superseding all prior employment agreements between the
Executive and the
Company and any modifications thereof prior to the date of this
Agreement;
provided, however, that this Agreement shall not limit or in any
way affect the
rights, duties, or obligations that the Executive may have under
any benefit
plan of the Company, including, but not limited to, any pension
plan, profit-
sharing plan, or medical or health plan, except as may
specifically be set forth
herein.
9. Modifications, etc.
No modification, amendment, or waiver of any of the provisions
of this
Agreement shall be effective unless in writing specifically
referring to this
Agreement and signed by both parties.
10. Enforcement of Agreement.
The failure of either party at any time to enforce any of the
provisions of this
Agreement or to require performance by the other party of any
of the provisions
hereof shall not operate as or be construed as a waiver of such
provisions or to
affect either the validity of this Agreement, or any part hereof,
or the right of
either party thereafter to enforce each and every provision in
accordance with
the terms of this Agreement.
11. Severability.
The invalidity or unenforceability of any particular provision of
this Agreement
shall not affect the other provisions hereof, and this Agreement
shall be
construed in all respects and to the fullest extent permitted by
law as if such
invalid or unenforceable provision were omitted.
12. Binding Agreement; Assignment.
This Agreement shall be binding upon and shall inure to the
benefit of the
Company and any legal successor to the Company shall be
deemed to be
substituted for the Company under the provisions hereof.
This Agreement shall also be binding upon and shall inure to the
benefit of the
Executive, his heirs, executors, legal representatives and
assigns.
Other than as set forth above in this Section 13, neither the
Company nor
Executive shall have the right to assign its or his obligations or
duties
hereunder. However, notwithstanding anything to the contrary
contained in
Section 6 hereof, in the event that the Company proposes to
Executive, in
connection with a sale of all or a substantial portion of the
assets of the
Company to an entity with tangible net equity equal to or
greater than that of
the Company as of such date, that the Executive consent to the
assignment of
the Company's obligations and duties hereunder (and the right
to Executive's
services hereunder) to such Purchaser, and Executive does not
give such
consent, then the Company shall have the right in its discretion,
effective upon
the consummation of the above-referenced sale, to terminate
this Agreement. If
the Company so terminates, the Executive shall have such rights
as provided
for in Section 6(d) above.
13. Arbitration.
Any claims, controversies, demands, disputes or differences
between or among
the parties hereto or any persons bound hereby arising out of,
or by virtue of, or
in connection with, or otherwise relating to this Agreement shall
be submitted
to and settled by arbitration conducted in Newark, New Jersey
before one or
three arbitrators, each of whom shall be knowledgeable in the
fields of
employment law and investment banking. Such arbitration shall
otherwise be
conducted in accordance with the rules then obtaining of the
American
Arbitration Association. The parties hereto agree to share
equally the
responsibility for all fees of the arbitrators (provided, however,
that the
successful party shall be entitled to reimbursement of fees and
expenses from
the losing party in an amount not to exceed $50,000), abide by
any decision
rendered as final and binding, and waive the right to appeal the
decision or
otherwise submit the dispute to a court of law for a jury or non-
jury trial. The
parties hereto specifically agree that neither party may appeal or
subject the
award or decision of any such arbitrator(s) to appeal or review
in any court of
law or in equity or by any other tribunal, arbitration system or
otherwise.
Judgement upon any award granted by such an arbitrator(s)
may be enforced in
any court having jurisdiction thereof.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be
executed by their duly authorized representatives on the day and
date first
above written.
ATTEST: RYAN,
BECK &
CO., INC.
By:/s/Allen S. Greene
ALLEN S. GREENE, President and Chief Executive Officer
WITNESS:
MATTHEW R. NAULA
DESIGNATION OF BENEFICIARY
For purposes of the payment of death benefits in accordance
with paragraph 4
of the within Amended and Restated Employment Agreement, I
hereby
designate __________________ as my beneficiary to receive
such payments,
subject to any conditions imposed by law.
WITNESS:
MATTHEW R. NAULA
DATED:
<TABLE>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO
COMBINED FIXED
CHARGES
<CAPTION>
Years Ended December 31,
Pro-Forma 1996 1995 1994 1993 1992
<S> <C> <C> <C>
<C> <C> <C>
Earnings:
Income (loss) before provision
(benefit) for income taxes $112 $357 $2,866
$7,880 $6,785 $5,586
Add:
Interest expense 1,332 1,096 473 200 127 107
Rental expense representative
of interest factor 225 214 196 172
193 197
Earnings for
computation purposes $1,669 $1,667 $3,535 $8,252
$7,105 $5,890
Fixed charges:
Interest expense - net $1,332 $1,096 $473 $200 $127
$107
Rental expense representative
of interest factor 225 214 196 172 193
197
Pretax effect of dividends on
preferred stock 79 317 299 435
- - -
Combined fixed charges $1,636 $1,627 $ 968 $ 807 $
320 $ 304
Ratio of earnings to combined
fixed charges 1.0 1.0 3.7 10.2 22.2 19.4
</TABLE>
ANNUAL REPORT
INDEPENDENT AUDITORS REPORT
To the Board of Directors and Stockholders of Ryan, Beck &
Co.,
Inc. and subsidiaries:
We have audited the accompanying consolidates statement of
financial condition of Ryan, Beck & Co., Inc. and subsidiaries
as
of December 31, 1996, and the related consolidated statements
of
income, stockholders' equity, and cash flows for the year then
ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial
statements
based on our audit.
We conducted our audit 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 our
audit
provides a reasonable basis for our opinion.
In our opinion, the 1996 consolidated financial statements
present
fairly, in all material respects, the financial position of Ryan,
Beck
& Co., Inc. and subsidiaries at December 31, 1996, and the
results
of their operations and their cash flows for the year then ended
in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche, LLP
February 14, 1997
New York, New York
Ryan, Beck & Co. and Subsidiaries
We hereby consent to the incorporation by reference of our
report
dated February 5, 1996, on our audits of the consolidated
statements of financial condition of the Company and its
Subsidiaries as of December 31, 1995 and 1994 and the related
consolidated statements of cash flows for the two years then
ended
listed in Item 14(a) of the Company's Annual Report on Form
10-
K for the fiscal year ended December 31, 1995.
Trien, Rosenberg, Rosenberg, Weinberg, Ciullo & Fazzari, LLP
Morristown, New Jersey
March 26, 1997
<TABLE>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION
(IN THOUSANDS EXCEPT SHARE AND PER SHARE
DATA)
<CAPTION>
December 31,
1996 1995
<S> <C> <C>
ASSETS
Cash $ 13 $ 71
Cash segregated under federal and other regulations 17
11
Receivable from:
Brokers and dealers 25 909
Accrued revenues 225 110
Other 371 302
Securities owned, at market value 33,789 34,698
Prepaid income taxes 950 228
Deferred income taxes 830 634
Property and equipment, at cost, less
accumulated depreciation and amortization 371 703
Other assets
356 460
Total assets $ 36,947 $ 38,126
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Payable to clearing broker $ 15,375 $ 16,180
Securities sold, but not yet purchased, at market value
5,424 5,809
Accrued employee compensation and benefits
2,249 1,698
Accounts payable and other accrued expenses
2,192 1,678
ESOP loan obligation 538 675
Total liabilities 25,778 26,040
Stockholders' equity
Preferred stock - $.10 par value
Authorized: 2,000,000 shares
Issued: 397,948 and 410,855 in 1996 and 1995, respectively
40 41
Common stock - $.10 par value
Authorized: 30,000,000 shares
Issued: 3,253,695 and 3,270,092 shares
in 1996 and 1995, respectively 325 327
Additional paid-in capital 11,875 12,049
Retained earnings 246 818
Treasury stock, at cost, 88,000 and 13,618 common shares
in 1996 and 1995, respectively (624)
(91)
Unearned compensation - restricted stock grants
(173) (401)
Unearned ESOP compensation
(520) (657)
Total stockholders' equity 11,169
12,086
Total liabilities and stockholders' equity $
36,947 $ 38,126
See notes to consolidated financial statements.
</TABLE>
<TABLE>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
Year Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Revenues
Principal transactions $ 9,846 $ 13,224 $
11,770
Investment banking 12,822 7,840 14,092
Commissions 4,291 2,802 2,362
Interest and dividends 1,329 894 641
Other 222 228
235
Total revenues 28,510 24,988
29,100
Operating expenses
Compensation and benefits 18,831 15,235 15,526
Floor brokerage, exchange and clearance fees
2,085 1,730 1,131
Communications 1,408 1,288 1,074
Occupancy, equipment rental and depreciation
1,316 991 822
Professional fees 1,098 774 1,020
Interest 1,096 473 200
Advertising and market development 907 615 437
Other 1,412 1,016 1,010
Total operating expenses 28,153 22,122
21,220
Income before provision for income taxes 357
2,866 7,880
Provision for income taxes 97 1,078
3,114
Net income $ 260 $ 1,788
$ 4,766
Earnings per common share:
Primary $ .02 $ .50 $ 1.37
Fully diluted $ .02 $ .50 $ 1.32
Weighted average number of shares:
Primary 3,202 3,250 3,296
Fully diluted 3,521 3,574 3,609
See notes to consolidated financial statements.
</TABLE>
<TABLE>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS'
EQUITY
(IN THOUSANDS EXCEPT SHARE DATA)
<CAPTION>
Unearned Unearned
Total
Additional Compensation
ESOP Stock-
Common Preferred Paid-in Retained
Restricted
Compen- Treasury holders'
Stock Stock Capital Earnings Stock
Grants sation Stock Equity
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
Balance at January 1, 1994
as previously reported $ 352 $ - $ 10,896 $
1,068 $ (122) $ - $ - $12,194
Conversion of common stock
to preferred stock (635,789 shares) (63) 63 - -
- - - -
Exchange offering costs - - - (110) -
- - (110)
Unearned compensation -
restricted stock grants - - - -
(466) - - (466)
Unearned compensation related to
preferred stock purchased by ESOP - - - -
- (994) - (994)
Amortization of restricted
stock grants - unearned compensation - - -
- 100 - - 100
Amortization of ESOP unearned
compensation - - 9 - - 157
- 166
Conversion of preferred stock
to common stock (191,609 shares) 19 (19) - -
- - - -
Issuance of 625 shares
through exercised stock options - - 2
- - - - - 2
Net income - - - 4,766 - - -
4,766
Cash dividends declared: common - - -
(2,916) - - - (2,916)
preferred - - - (261)
- - - (261)
Balance at December 31, 1994 308 44 10,907
2,547 (488) (837) -
12,481
Tax related benefit from stock
transactions with employees - - 16 - -
- - 16
Unearned compensation -
restricted stock grants - - - -
(167) - - (167)
Amortization of restricted
stock grants - unearned compensation - - -
- 254 - - 254
Amortization of ESOP unearned
compensation - - 30 - - 180
- 210
Conversion of preferred stock
to common stock (33,325 shares) 3 (3) - -
- - - -
Treasury stock purchases
(13,618 shares) - - - - - -
(91) (91)
Net income - - - 1,788 - - -
1,788
Cash dividends declared: common - - -
(2,226) - - - (2,226)
preferred - - - (179)
- - - (179)
5% stock dividend declared on
January 26, 1996 16 - 1,096 (1,112)
- - - -
Balance at December 31, 1995 327 41 12,049
818 (401) (657) (91)
12,086
Retirement of 19,393 shares of
common stock (2) - (127) - - -
129 -
Forfeiture of restricted stock grants
(10,347 shares) (1) - (58) - 59 -
- -
Unearned compensation -
restricted stock grants - - - -
(175) - - (175)
Amortization of restricted stock
grants - unearned compensation - - - -
344 - - 344
Amortization of ESOP
unearned compensation - - 11 - -
137 - 148
Conversion of preferred stock
to common stock (12,907 shares) 1 (1) - -
- - - -
Treasury stock purchases
(93,475 shares) - - - - - -
(662) (662)
Net Income - - - 260 - - -
260
Cash dividends declared: common - - -
(642) - - - (642)
preferred - - - (190)
- - - (190)
Balance at December 31, 1996 $ 325 $ 40 $ 11,875
$ 246 $ (173) $ (520) $ (624)
$11,169
See notes to consolidated financial statements.
</TABLE>
<TABLE>
RYAN, BECK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<CAPTION> Year Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 260 $ 1,788
$ 4,766
Noncash items included in net income:
Depreciation and amortization 575 289 165
Amortization of restricted stock grants 344 254 100
Amortization of ESOP unearned compensation 148 210
166
Deferred income taxes (196) (201) (433)
Increase (decrease) in allowance for doubtful accounts -
(10) 15
(Increase) decrease in operating assets:
Cash segregated under federal and other regulations (6)
- (1)
Receivables:
Brokers and dealers 884 (867) 33
Accrued revenues (115) (59) 38
Other (69) 66 (64)
Securities owned, at market value 909 (16,010)
(974)
Prepaid income taxes (722) (228) -
Other assets 104 (219) 72
Increase (decrease) in operating liabilities:
Payable to clearing broker (805) 14,896 (3,334)
Securities sold, but not yet purchased - at market value
(385) 4,918 (49)
Accrued employee compensation and benefits 551
(465) 1,153
Accounts payable and other accrued expenses 514 218
759
Income taxes payable - (1,271)
1,226
Net cash provided by operating activities $ 1,991 $
3,309 $ 3,638
Cash flows from investing activities -
Capital expenditures (243) (484) (206)
Cash flows from financing activities:
Common stock repurchased for restricted stock grants
(175) (167) (466)
Principal payments of ESOP obligation (137) (171)
(126)
Proceeds from the exercise of stock options - - 2
Exchange offering costs - - (110)
Purchase of Treasury Stock (662) (91) -
Tax related benefit from stock transactions with employees -
16 -
Dividends paid: Common (642) (2,226) (2,916)
Preferred (190) (179) (217)
Net cash used in financing activities (1,806) (2,818)
(3,833)
Net increase (decrease) in cash (58) 7 (401)
Cash at beginning of year 71 64
465
Cash at end of year $ 13 $ 71 $ 64
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 1,043 $ 462 $ 228
Income taxes 1,001 2,976 2,322
Supplemental disclosure of noncash financing activity:
During the year ended December 31, 1994, the Company's
Employee
Stock Ownership Plan borrowed $994,000. The Company
recorded
the ESOP obligation as a Company liability offset with an equal
value
contra-equity account (unearned ESOP compensation) in the
Company's consolidated statements of financial condition.
See notes to consolidated financial statements.
</TABLE>
Cautionary Statement Regarding Forward-Looking Statements
This report contains "forward-looking" statements. The
Company is including
this statement for the express purpose of availing itself of the
protections of the
safe harbor provided by the Private Securities Litigation Reform
Act of 1995
with respect to all such forward-looking statements. Examples
of forward-
looking statements include, but are not limited to (a) projections
of revenues,
income or loss, earnings or loss per share, capital expenditures,
growth
prospects, dividends, capital structure and other financial items,
(b) statements
of plans and objectives of the Company or its management or
Board of
Directors, (c) statements of future economic performance and
(d) statements of
assumptions underlying other statements and statements about
the Company or
its business.
The Company's ability to predict projected results or to predict
the effect of
certain events on the Company's operating results is inherently
uncertain.
Therefore, the Company wishes to caution each reader of this
report to carefully
consider certain factors, including competition for clients;
market conditions
regarding buyers and sellers of' securities; legal and regulatory
developments
and market and regulatory conditions relating to public
offerings,
underwritings, mergers and acquisitions and municipal bonds
and other factors
discussed herein, because such factors in some cases have
affected and in the
future (together with other factors) could affect, the ability of
the Company to
achieve its anticipated results and may cause actual results to
differ materially
from those expressed herein.
The following discussion and analysis should be read in
conjunction with the
Company's consolidated financial statements and the notes
related thereto
presented elsewhere herein. The discussion of results, causes
and trends should
not be construed to imply any conclusion that such results,
causes or trends will
necessarily continue in the future.
Ryan, Beck is principally engaged in the underwriting,
distribution and trading
of tax-exempt, bank equity and debt securities. The Company
provides
investment banking, research and financial advisory services to
the financial
services industry, with a focus on corporate finance and merger
related services.
The Company also offers a general securities brokerage
business with
investment and insurance products for retail and institutional
clients. All
aspects of the Company's business are highly competitive and
impacted by
regulatory, economic and other factors outside of its control,
including the
volatility and price levels of securities markets, the demand for
investment
banking services and interest rate changes. In addition, a
significant portion of
the Company's expenses, including salaries and benefits,
occupancy and
communications, are relatively fixed and do not vary with
market activity.
Consequently, operating results of the Company fluctuate, and
therefore the
results of any individual period should not be considered
representative of
future performance.
Results of Operations
The following table sets forth certain information regarding the
revenues of the
Company by source:
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
Amount Percent Amount Percent
Amount Percent
(Dollars In Thousands)
<S> <C> <C> <C>
<C> <C> <C>
Principal transactions:
Tax-Exempt debt securities $ 2,829 9.9% $
4,940 19.8% $ 5,046 17.3%
Taxable debt securities 775 2.7 2,302 9.2
1,729 5.9
Equity securities 6,242 21.9 5,982 23.9
4,995 17.2
Total 9,846 34.5 13,224 52.9 11,770 40.4
Investment banking <F1>
Tax-Exempt debt securities 1,047 3.7 913 3.7
1,258 4.3
Taxable debt securities 1,540 5.4 456 1.8
309 1.2
Equity securities 2,811 9.9 1,977 7.9 623
2.1
Consulting, placement and valuation fees 7,424 26.0
4,494 18.0 11,902 40.9
Total 12,822 45.0 7,840 31.4 14,092 48.5
Commissions:
Equity securities 2,514 8.8 1,395 5.6
1,281 4.4
Mutual funds 1,777 6.2 1,407 5.6 1,081 3.7
Total 4,291 15.0 2,802 11.2 2,362 8.1
Interest and dividends 1,329 4.7 894 3.6 641
2.2
Other 222 0.8 228 .9
235 0.8
Total $28,510 100.0% $24,988
100.0% $29,100 100.0%
<FN>
<F1>Investment banking revenue includes management fees
and underwriting
fees earned in connection with all underwriting participations
and selling
concessions earned in connection with the Company's
participation in tax-
exempt debt, corporate debt and equity underwritings.
</FN>
</TABLE>
Since the various activities of the Company are interdependent
and
substantially the same sales personnel and office facilities are
engaged
in the generation of the above revenues, the Company does not
believe
that a meaningful allocation of expenses can be made among
these
operations.
The following tables set forth, for the periods indicated, items in
the
Company's Consolidated Statements of Income as percentages
of total
revenue and the increase (or decrease) by item as a percentage
of the
amount for the previous period:
<TABLE>
<CAPTION>
Percentage of Total Revenues
Year Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Revenues
Principal transactions 34.5% 52.9% 40.4%
Investment banking 45.0 31.4 48.5
Commissions 15.0 11.2 8.1
Interest and dividends 4.7 3.6 2.2
Other .8 .9 .8
Total revenues 100.0 100.0 100.0
Operating expenses
Compensation and benefits 66.1 61.0 53.3
Floor brokerage, exchange and clearing fees 7.3 6.9
3.9
Communications 4.9 5.1 3.7
Occupancy, equipment rental and depreciation 4.6
4.0 2.8
Professional fees 3.8 3.1 3.5
Interest 3.8 1.9 .7
Advertising and market development 3.2 2.4 1.5
Other operating expenses 5.0 4.1 3.5
Total operating expenses 98.7 88.5 72.9
Income before provision for income taxes 1.3
11.5 27.1
Provision for income taxes .3 4.3 10.7
Net income 1.0% 7.2% 16.4%
</TABLE>
<TABLE>
<CAPTION> Period to Period Change
1996 1995
Compared with Compared with
1995 1994
<S> <C> <C>
Revenues:
Principal transactions (25.5)% 12.4%
Investment banking 63.5 (44.4)
Commissions 53.1 18.6
Interest and dividends 48.7 39.5
Other (2.6) (3.0)
Total revenues 14.1 (14.1)
Operating expenses:
Compensation and benefits 23.6 (1.9)
Communications 9.3 20.0
Occupancy and equipment rental and depreciation 32.8
20.6
Floor brokerage, exchange and clearing fees 20.5 53.0
Interest 131.7 136.5
Marketing and development expense 47.5 40.7
Professional fees 41.9 (24.1)
Other operating expenses 39.0 0.6
Total operating expenses 27.3 4.3
Income before provision for income taxes (87.5)
(63.6)
Provision for income taxes (91) (65.4)
Net income (85.5)% (62.5)%
</TABLE>
1996 Compared with 1995
Including one-time after-tax charges of $1,081,000, net income
for the year
ended December 31, 1996 was $260,000. On a fully diluted
basis, earnings per
common share decreased to $.02 per share in 1996 compared to
$.50 per share
in 1995. Net income for the year ended December 31, 1996,
exclusive of one-
time after-tax charges, was $1,341,000, or $.36 per share. This
compares to net
income of $1,788,000, or $.50 per share, during the same
period in 1995.
Total revenues during 1996 increased $3,522,000, or 14.1%, to
$28,510,000
from $24,988,000 in 1995, but were more than offset by an
increase in
operating expenses of $6,031,000 in 1996.
Revenues from principal transactions decreased $3,378,000, or
25.5%, to
$9,846,000 in 1996 from $13,224,000 in 1995. This decrease
can he attributed
to decreases of $2,111,000 from trading tax-exempt securities
and $1,527,000
from trading taxable debt securities, which were partially offset
by an increase
of $260,000 from trading equity securities. The decrease in
trading revenues
attributable to tax exempt and taxable debt securities reflected
an
extraordinarily volatile bond market and the continued
compression of
underwriting spreads in municipal securities. In addition, trading
revenues
were adversely affected by costs associated with implementing
an interest rate
risk management strategy.
Recently, the Securities and Exchange Commission and NASD
agreed to
changes which could impact the way stocks are traded. A new
order display
system is to be implemented, which will allow investors to place
limit orders to
buy or sell a NASDAQ stock at a certain price and be matched
with another
order. The proposed system is designed to ensure that no
market maker would
be able to execute trades at better prices before a specific limit
order was filled.
The proposed system may produce a new source of competition
but could also
lead to the Company making markets in fewer NASDAQ
stocks, particularly
smaller ones, because of a perceived lack of liquidity.
Consequently, there is
potential for delisting of companies which trade infrequently
due to lack of
market maker support. The Company, therefore, may reduce
the number of
companies that it makes markets in and also realize lower
trading spreads,
which could adversely affect the Company.
Revenues from investment banking services increased
$4,982,000, or 63.5%, to
$12,822,000 in 1996 from $7,840,000 in 1995. This was due to
a $2,930,000
increase in revenues related to consulting, placement and
valuation fees, an
increase in revenue from underwriting equity securities of
$834,000 and an
increase in revenue from underwriting taxable and tax-exempt
debt securities of
$1,084,000 and $134,000, respectively.
The increase in consulting, placement and valuation fees
resulted from an
increase in revenues related to thrift conversions and merger
and acquisition
advisory fees. The increase in revenues during 1996 from thrift
conversions,
including mutual holding company formations, is a result of the
greater size of
the transactions which closed during 1996 as compared to the
same period in
1995. Additionally, fee income from merger and acquisition
advisory services
was significantly higher during 1996 as compared to 1995. This
was a result of
a larger number of merger and acquisition transactions during
the 1996 period
and the greater size of the transactions versus 1995. The
Company expects
there to be a reduction in future revenues resulting from thrift
conversions and
mutual holding company formations because of increased
competition and a
smaller universe of mutual institutions. Although there can be
no assurances
that it will be successful, the Company is attempting to diversify
its revenue
sources into related financial services and expand its current
services in order
to offset the potential decline in future revenues from thrift
conversions. The
increase in revenue from underwriting equity securities is due to
the
consummation of two underwritings for financial institutions
seeking additional
capital for growth purposes, as well as the closing of the third
Ryan Beck
Banking Opportunity Trust. The increase in revenue from
underwriting tax-
exempt debt securities reflects increased levels of issuance of
new municipal
securities.
Commission revenue increased $1,489,000, or 53.1%, to
$4,291,000 in 1996
from $2,802,000 in 1995. The increase in revenues is primarily
due to an
increase in equity commissions of $1,119,000 and in mutual
fund commissions
of $370,000. These increases are mainly attributable to
increased retail trading
activity and higher mutual fund sales due to greater investor
demand and
selection of mutual funds.
Revenue from interest and dividends increased $435,000, or
48.7%, to
$1,329,000 in 1996 from $894,000 in 1995. The increase in
revenue from
interest and dividends is a result of higher average inventory
levels during 1996
as compared to 1995, partially offset by lower interest rates
during 1996.
Total operating expenses increased $6,031,000, or 27.3%, to
$28,153,000 in
1996 from $22,122,000 in 1995. This increase is primarily
attributed to an
increase in compensation and benefits of $3,596,000, an
increase in interest
expense of $623,000, an increase of $355,000 in floor
brokerage and clearing
fees and an increase of $325,000 in occupancy and equipment
expense. In
addition, increases in advertising and market development,
professional fees
and other expenses of $292,000, $324,000 and $396,000,
respectively,
contributed to the overall increase in total operating expenses.
The increase in
compensation and benefits is partially attributable to one-time
pre-tax charges
of $1,327,000 as a result of severance payments related to the
resignation of
two senior executives and Board members. In addition,
increases in
commission expense and salary and bonus expense are
consistent with higher
investment banking and commission revenues as well as an
increase in the
number of employees. The increase in advertising and market
development is
primarily due to an increase in printing and promotional
expenses. The
increase in professional fees is due to expenses associated with
a pre-tax charge
of $83,000 for an abandoned debt offering as well as additional
legal expenses
and consulting fees associated with the Company's relocation of
its
headquarters in 1997. The increase in other operating expenses
is primarily a
result of a one-time pre-tax charge of $200,000 for incidental
expenses related
to the relocation of the Company's headquarters and an increase
in other
expenses. The increase in interest expense is due to higher
average borrowing
levels, partially offset by lower interest rates. The increase in
floor brokerage,
exchange and clearance fees is a result of an increase in trade
volume. The
increase in occupancy and equipment expense is mainly
attributed to a pre-tax
charge of $192,000 to write off leasehold improvements and
equipment as part
of the Company's plan to relocate its headquarters.
1995 Compared with 1994
All share and per share data set forth in the following discussion
have been
adjusted to reflect a 5% stock dividend declared on January 26,
1996 and paid
on February 13,1996.
Net income for the year ended December 31,1995 was
$1,788,000, compared to
$4,766,000 during the same period in 1994. On a fully diluted
basis, earnings
per common share decreased 62.1% to $.50 per share in 1995,
compared to
$1.32 per share in 1994. Income tax expense and net income for
the year ended
December 31,1994 has been restated to reflect a $92,000
income tax refund
(equal to $.03 per share) resulting from amending that year's
income tax
return.
Total revenues during 1995 decreased $4,112,000, or 14.1%, to
$24,988,000
from $29,100,000 in 1994.
Revenues from principal transactions increased $1,454,000, or
12.4%, to
$13,224,000 in 1995 from $11,770,000 in 1994. This increase
can be attributed
to an increase of $987,000 from trading equity securities and an
increase of
$573,000 from trading taxable debt securities, which was
partially offset by a
decrease of $106,000 from trading tax exempt securities. The
increase in
trading revenues attributable to equity and taxable debt
securities reflected
greater demand during 1995 for exchanging securities in a
lower interest rate
environment as compared with 1994. The decrease in trading
revenues
attributable to trading tax-exempt securities primarily reflects
reduced product
availability and lower yields.
Revenues from investment banking services decreased
$6,252,000, or 44.4%, to
$7,840,000 in 1995 from $14,092,000 in the comparable 1994
period. This
decrease was due to decreases of $7,408,000 in revenues
related to consulting,
placement and valuation fees and $345,000 from underwriting
tax-exempt debt
securities, which were partially offset by an increase of
$1,354,000 in revenue
from underwriting equity securities and $147,000 in revenue
from underwriting
taxable debt securities.
The decrease in consulting, placement and valuation income
resulted from a
reduced number of mutual to stock thrift conversions, including
mutual holding
companies which closed in 1995 as compared to 1994, the
smaller size of the
transactions which closed in 1995, and decreased fee income
from merger and
acquisition advisory services. The reduced fee income from
merger and
acquisition advisory work is primarily due to the smaller size of
many of the
Company's merger and acquisition transactions in 1995. The
increase in
revenues from underwriting equity securities resulted primarily
from the
closing of several underwritings for financial institutions seeking
additional
capital for growth purposes as well as the closing of the Ryan
Beck Banking
Opportunity Trust, Series 2.
Commission revenue increased $440,000, or 18.6%, to
$2,802,000 in 1995
from $2,362,000 in 1994. The increase in revenues is primarily
due to an
increase in mutual fund commissions of $326,000 and in equity
commissions of
$114,000. which reflected increased activity in the general stock
market.
Revenue from interest and dividends increased $253,000, or
39.5%, to
$894,000 in 1995 from $641,000 in 1994. This increase is a
result of increased
levels of inventory carried during 1995, partially offset by a
lower interest rate
environment in 1995.
Total operating expenses increased $902,000, or 4.3%, to
$22,122,000 in 1995
from $21,220,000 in 1994. This increase is primarily attributed
to an increase
in floor brokerage, exchange and clearance fees of $599,000
and interest
expense of $273,000. The increase in floor brokerage, exchange
and clearance
fees reflects both increased activity and a rebate of certain
clearance costs
incurred in connection with transferring to a new clearing agent
in 1994. The
increase in interest expense reflects the cost of carrying higher
levels of
inventory during 1995.
Liquidity and Capital Funds
As of December 31,1996, the Company's Consolidated
Statement of Financial
Condition reflects an essentially liquid financial position, with
most of the
Company's assets consisting of assets readily convertible into
cash. The
Company s securities positions in its trading accounts (both
long and short) are,
in large part, readily marketable.
The Company finances its business through the use of available
capital and
short term secured borrowings. The Company maintains a
facility pursuant to
which it may borrow additional funds on a secured short-term
basis from its
clearing broker. The amount available for borrowing under this
facility is
related to the level of securities inventory at the clearing broker
which may be
pledged as collateral. At December 31,1996, the interest rate
for such funds was
7.625%.
The Company is subject to net capital requirements for brokers
and dealers
regulated under the Securities Exchange Act of 1934. The
Company's
regulatory net capital has consistently exceeded such minimum
net capital
requirements. As of December 31,1996, the Company had
aggregate net
capital, after required adjustments, of $3,535,000 which
exceeded the minimum
net capital requirements by $2,535,000. Management believes
that the funds
provided by operations and its borrowing capacity will provide
sufficient
resources to meet present and reasonably foreseeable short-term
financial
needs.
Effects of Inflation
Because the Company's assets are largely liquid, and securities
inventories are
carried at current market values, the impact of inflation is
reflected in its
consolidated financial statements. However, the rate of inflation
also affects
expenses such as employee compensation, rent and
communications, and such
effects may not be readily recoverable through increased
commission rates,
trading profits or fees. To the extent that inflation has other
adverse effects on
prices and activities in the securities markets and, in particular,
on interest rate
conditions in the credit markets, it may adversely affect the
Company s
financial position and results of operations.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies
Nature of Business
Ryan, Beck & Co., Inc. (the "Company") is a boutique
investment firm that is
principally engaged in the underwriting, distribution and trading
of tax-
exempt, bank equity and debt securities. The Company
provides investment
banking, research and financial advisory services to the financial
services
industry, with a focus on corporate finance and merger related
services. The
Company also offers a general securities brokerage business
with investment
and insurance products for retail and institutional clients. The
Company
operates on a fully-disclosed basis through a clearing broker.
The Company, like other securities firms, is affected by
economic and political
conditions. Additionally, a substantial portion of the operations
of the
Company is subject to developments affecting municipal finance
and financial
institutions.
Principles of Consolidation
The consolidated financial statements include the accounts of
the Company and
its wholly-owned subsidiaries. All intercompany transactions
and accounts
have been eliminated.
Recognition of Revenues
Securities transactions (and related revenues and expenses) are
recorded on a
trade date basis. Selling concessions, consulting fees,
management fees and
underwriting fees, less related expenses, are recorded in income
as earned. All
securities owned and sold, but not yet purchased by the
Company are valued at
market, which results in unrealized gains and losses being
reflected in current
earnings.
Investment banking revenues include gains, losses and fees, net
of syndicate
expense, arising from securities offerings in which the Company
acts as an
underwriter or agent. Investment banking revenues also include
fees earned
from providing merger and acquisition and financial
restructuring advisory
services.
Income Taxes
The Company uses the asset and liability method in providing
income taxes on
all transactions that have been recognized in the consolidated
financial
statements. The asset and liability method requires that
deferred taxes be
adjusted to reflect the tax rates at which future taxable amounts
will be settled
or realized.
Reclassifications
Certain reclassifications have been made to prior years' financial
statements to
conform with the current year's presentation.
Property and Equipment
Depreciation of office furniture and equipment is provided for
either on a
straight-line or declining balance basis using estimated useful
lives of three to
seven years for financial statement purposes. Accelerated
depreciation methods
are generally used for federal income tax purposes. Leasehold
improvements
are amortized over the lesser of the economic useful life of the
improvement or
the term of the lease.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted
accounting principles requires management to make estimates
and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of
contingent assets and liabilities at the date of the financial
statements and the
reported amounts of revenues and expenses during the
reporting period. Actual
results could differ from those estimates.
Note 2 - Securities Owned, at Market Value
Securities in the Company's trading account consist of the
following:
<TABLE>
<CAPTION>
December 31,
1996 1995
(In Thousands)
<S> <C> <C>
Debt obligations:
States and municipalities $ 17,962 $ 19,400
Corporations 5,195 1,833
U.S. Government and agencies 2,035 310
Corporate equity 8,572 13,130
Other 25 25
Total $ 33,789 $ 34,698
</TABLE>
Note 3 - Property and Equipment
Property and equipment, stated at cost, consist of the following:
<TABLE>
<CAPTION>
December 31,
1996 1995
(In Thousands)
<S> <C> <C>
Office furniture and equipment $ 2,543 $ 2,317
Leasehold improvements 938
912
3,481 3,229
Less: Accumulated depreciation
and amortization 3,110 2,526
$ 371 $ 703
</TABLE>
Note 4 - Payable to Clearing Broker
The Company has an agreement with its clearing broker that
enables the
Company to borrow by pledging securities owned. As of
December 31, 1996
and 1995 the balances due were approximately $15,375,000
and $16,180,000,
respectively. At December 31, 1996, the interest rate paid on
these borrowings
was 7.625%.
Note 5 - Securities Sold, But Not Yet Purchased
Securities sold, but not yet purchased consist of the following:
<TABLE>
<CAPTION>
December 31,
1996 1995
(In Thousands)
<S> <C> <C>
Debt obligations:
States and municipalities $ 128 $ 406
Corporations 274 347
U.S. Government and agencies 134 19
Corporate equity 4,888 5,037
Total $ 5,424 $ 5,809
</TABLE>
Securities sold, but not yet purchased are a part of the
Company's normal
activities as a broker and dealer in securities and are subject to
off-balance-
sheet market risk of loss should the Company be unable to
acquire the securities
for delivery to the purchaser at prices equal to or less than the
current recorded
amounts.
Note 6 - Income Taxes
The provision (benefit) for income taxes consists of:
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
(In Thousands)
<S> <C> <C> <C>
Current Provision:
Federal $ 193 $ 929 $ 2,588
State and local 100 350
959
293 1,279 3,547
Deferred Benefit:
Federal (152) (152) (329)
State and local (44) (49)
(104)
(196) (201) (433)
Total $ 97 $ 1,078 $ 3,114
</TABLE>
Provision (benefit) for income taxes is reconciled to amounts
computed by
applying the federal corporate tax rate of 34% to income before
income taxes as
follows:
<TABLE>
<CAPTION>
Year Ended
December 31,
1996 1995 1994
(In Thousands)
<S> <C> <C> <C>
Tax provision at federal statutory rate $ 121 $
974 $ 2,680
State and local income taxes,
net of federal income tax benefit 37 230 564
Net reduction relating to interest income on
state and municipal government obligations (118) (135)
(134)
Other, net 57 9 4
$ 97 $ 1,078 $ 3,114
</TABLE>
The tax effects of the principal temporary differences resulting
in a deferred tax
asset are as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995
(In Thousands)
<S> <C> <C>
Deferred compensation -
Restricted stock grants $ (204) $ (138)
Postemployment benefits (251) (123)
Accrued expenses (338) (335)
Other, net (37) (38)
$ (830) $ (634)
</TABLE>
Note 7 - Regulatory Requirements
The Company is subject to the net capital provision of Rule
15c3-1 under the
Securities Exchange Act of 1934 which requires that the
Company's aggregate
indebtedness shall not exceed 15 times net capital as defined
under such
provision. Additionally, the Company, as a market maker, is
subject to
supplemental requirements of Rule 15c3-1(a)4 which provides
for the
computation of net capital to be based on the number and price
of issues in
which markets are made by the Company, not to exceed
$1,000,000. At
December 31, 1996 and 1995, the Company's regulatory net
capital was
approximately $3,534,000 and $5,663,000, respectively, which
exceeded net
capital rule requirements by $2,534,000 and $4,663,000,
respectively.
The Company operates under the provisions of paragraph
(K)(2)(ii) of Rule
15c3-3 of the Securities and Exchange Commission as a fully-
disclosed broker
and, accordingly, customer accounts are carried on the books
of the clearing
broker. However, the Company safekeeps and redeems
municipal bond
coupons for the benefit of its customers. Accordingly, the
Company is subject
to the provision of SEC Rule 15c3-3 relating to possession or
control and
customer reserve requirements and was in compliance with such
provisions at
December 31, 1996.
Note 8 - Common Stock Dividend and Earnings per Common
Share
On January 26, 1996, the Company's Board of Directors
declared a 5% stock
dividend for shareholders of record as of February 5, 1996.
The stock dividend
was payable on February 13, 1996. Accordingly, all share and
per share
information in the consolidated financial statements have been
restated to
reflect this stock dividend.
Primary earnings per share are computed by deducting preferred
dividends
from net income in order to determine net income attributable
to common
stockholders. This amount is then divided by the weighted
average number of
common shares outstanding and common stock equivalents
arising from stock
options. The weighted average number of common shares
outstanding for
computation of primary earnings per share was 3,202,000,
3,250,000 and
3,296,000 shares for each of the years ended December 31,
1996, 1995 and
1994, respectively.
Fully diluted earnings per share are computed by dividing net
income by the
weighted average number of common shares outstanding during
the year after
giving effect for common stock equivalents arising from stock
options and
preferred stock assumed converted to common stock. The
weighted average
number of common shares outstanding for full dilution was
3,521,000,
3,574,000 and 3,609,000 shares for each of the years ended
December 31,
1996, 1995 and 1994, respectively.
Preferred stock shares of 99,263 and 125,851 in 1996 and
1995, respectively,
which are unallocated and unreleased issued shares held by the
ESOP trust (see
Note 9), were excluded in computing the fully diluted earnings
per share
amounts.
Note 9 - Employees Benefit Plans
Employee Stock Ownership Plan (ESOP)
Effective June 1, 1994 the Company established a leveraged
tax-qualified
Employee Stock Ownership Plan (ESOP) for all nonexcluded
employees who
meet the Company's eligibility and participation requirements.
The ESOP
purchased 150,000 shares of the Company's preferred stock at a
cost of
$994,000 using the proceeds of a loan utilizing the preferred
shares as
collateral. All dividends received by the ESOP in 1994, totaling
$82,000, were
used to pay debt service. None of the ESOP dividends received
were used to
pay debt service in the years ending December 31, 1996 and
1995. The
Company makes annual contributions to the ESOP equal to the
ESOP's debt
service, which totaled $137,000 and $171,000 for the years
ended December
31, 1996 and 1995, respectively. For each plan year during the
duration of the
loan, the number of shares committed to be released is based on
a
predetermined formula tied to the Company's debt service paid
during the year.
The debt of the ESOP is recorded as a liability and the shares
pledged as
collateral are reported as unearned ESOP shares in the
statement of financial
condition. As shares are committed to be released from
collateral, the
Company reports compensation expense equal to the current
market price of the
shares, and the shares become outstanding for earnings per
share computations
upon actual release and allocation to active employees.
Dividends on allocated
ESOP shares are recorded as a reduction of retained earnings.
ESOP related
compensation expense for the years ended December 31, 1996,
1995 and 1994
was $148,000, $210,000 and 166,000, respectively. The fair
value of the
99,263 unreleased shares at December 31, 1996 was $482,000.
In 1997, the
Company is committed to release 22,709 shares related to 1996
plan activity.
Stock Option Plan
On January 26, 1996, the Board of Directors approved a
nonqualified Stock
Option Plan under which 200,000 shares of common stock are
reserved for
issuance to officers and other key employees of the Company
and are
exercisable beginning one year from date of grant at various
percentages
expiring ten years from such date. The Plan replaced a
substantially similar
plan, which terminated on April 28, 1996. The Stock Option
Plan is
administered by a Board Committee.
Stock option activity is shown below for all plans:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Shares under options outstanding January 1 137,090
9,515 10,171
Stock options granted at $4.00 - $7.00 per share 103,500
- -
Stock options granted at $7.20 - $7.38 per share -
127,575 -
Options exercised at $3.02 per share - -
(656)
Forfeited or canceled options
at $7.00 - $7.20 per share (29,825) -
- -
Shares under options outstanding and
exercisable at $3.02 - $7.38 per share
at December 31 210,765 137,090 9,515
</TABLE>
At December 31, 1996, 109,000 shares were available
for future grants under
the Plan. The Company derives a tax deduction measured by
the excess of the
market value over the option price at the date nonqualified
options are
exercised. The related tax benefit is credited to additional paid-
in capital.
The Company applies the provisions of Accounting Principles
Board Opinion
No. 25, "Accounting for Stock Issued to Employees" (APB No.
25) in
accounting for its stock option plans. Accordingly, as the plans
provide fixed-
cost stock options at market value on the date of grant, under
APB No. 25 no
compensation cost has been recognized for the years ended
December 31, 1996,
1995 and 1994. On a pro-forma basis, if the fair value of
options granted had
been charged to earnings, net income as recorded would have
been reduced by
$33,000 and $5,000 in 1996 and 1995, respectively. Both
primary and fully
diluted earnings per common share, respectively, as reported
would have been
reduced by $.01 in both 1996 and 1995.
The fair value of each option grant was estimated on the date of
the grant using
a binomial option-pricing model with the following weighted
average
assumptions in 1996 and 1995: quarterly dividends of $.05;
expected volatility
of 10%; risk-free interest rate of 6.10% and 5.84%,
respectively; and expected
life of seven years.
Restricted Stock Grant Plan
The Company's Restricted Stock Grant Plan provides for the
award of up to
$1,000,000 of the Company's common stock to certain key
employees pursuant
to the Plan terms. Plan participants are entitled to receive
dividends and to
vote their respective shares. Additionally, the Plan was
amended on September
25, 1992 to include acceleration of vesting as determined by the
Plan's
committee. Upon issuance of restricted stock,
unearned compensation, equivalent to the market value of the
shares awarded
at the time of the grant, is charged to stockholders' equity and is
amortized to
expense over the periods until the restrictions lapse, generally
over three years.
The Company derives a tax deduction measured by the excess
of the market
value over the original cost of the grants at the time of vesting.
The related tax
benefit is credited to additional paid-in capital.
The Company awarded 23,000, 24,541 and 71,979 shares
during the years
ended December 31, 1996, 1995 and 1994, respectively.
Compensation
expense relating to this plan charged to operations totaled
$344,000 (which
includes a one-time pre-tax charge of $102,000 as a result of
accelerated
vesting upon the resignation of a former senior executive and
Board member),
$254,000 and $100,000 for the years ending December 31,
1996, 1995, and
1994, respectively.
Profit Sharing Plan/Savings Plan
Effective June 1, 1994, the Company amended its qualified
profit sharing plan
to include a 401(k) savings plan covering all eligible employees.
The Company
makes contributions at its discretion within the allowable limits
of the Plan.
The Company's discretionary profit sharing contributions were
$929,000,
$629,000 and $792,000 for the years ended December 31,
1996, 1995 and
1994, respectively.
Postemployment Benefits
The Company records the costs of postemployment
benefits paid before
retirement, principally severance benefits (including health care
coverage)
provided under the terms of certain employment contracts with
key officers,
over the service lives of such employees. Compensation
expense charged to
operations was $1,270,000, $47,000 and $366,000, for the
years ended
December 31, 1996, 1995 and 1994, respectively. Included in
the 1996
compensation expense are one-time pre-tax charges of
$1,225,000 resulting
primarily from the resignations of two former executives and
board members.
These contracts contain provisions that would entitle individual
officers to
receive a minimum of $75,000 to a maximum of $600,000 plus
certain benefits
(as applicable), depending on varying events such as, death,
disability,
voluntary or involuntary termination, change of control and
liquidation. The
largest potential liability would be in the event of a change of
control. In this
event the Company's contingent liability would not exceed
$1,338,000
($1,913,000 liability net of approximately $575,000 of accrued
postemployment
benefits, which were provided for in the Company's financial
statements at
December 31, 1996).
Note 10 - Commitments and Contingencies
Litigation
The Company is involved in various legal actions, some of
which involve
claims for substantial amounts, arising in the normal course of
its operations.
Although the ultimate outcome of these actions cannot be
ascertained at this
time and the results of legal proceedings cannot be predicted
with certainty, it
is the opinion of management that the resolution of these
matters will not have
a material adverse effect on the consolidated financial condition
of the
Company, but may be material to the Company's operating
results for any
particular period, depending upon the level of the Company's
income for such
period.
Leases
The Company leases office space in various locations under
noncancellable
operating leases. In 1996, the Company entered into a new
lease to relocate its
headquarters in 1997. In connection therewith, one-time pre-
tax charges of
$192,000 (included in occupancy expense) and $200,000
(included in other
expense), respectively, were recorded for the write-off of
property and
equipment and the incidental expenses related to abandonment
and relocation.
At December 31, 1996, the future minimum rental
commitments, including the
new lease agreement referred to above, were as follows:
<TABLE>
<CAPTION>
Amount
Year (In Thousands)
<S> <C>
1997 $ 675
1998 719
1999 658
2000 631
2001 631
Thereafter 3,145
$ 6,459
</TABLE>
Certain leases contain renewal or purchase options, or
escalation clauses
providing for increased rental payments based upon
maintenance, utility and
tax increases. Total office rental expenses charged to
operations were
approximately $642,000, $587,000 and $521,000, for the years
ended
December 31, 1996, 1995, and 1994, respectively.
Note 11 - Financial Instruments
Off-Balance-Sheet Risk and Concentration of Credit Risk
The Company's customers' securities transactions are
introduced on a fully-
disclosed basis to its clearing broker/dealer. The clearing
broker/dealer carries
all of the accounts of the customers of the Company and is
responsible for
execution, collection of and payment of funds and, receipt and
delivery of
securities relative to customer transactions. Customers'
securities activities are
transacted on a cash and margin basis. These transactions may
expose the
Company to off-balance-sheet-risk, wherein the clearing
broker/dealer may
charge the Company for any losses it incurs in the event that
customers may be
unable to fulfill their contractual commitments and margin
requirements are
not sufficient to fully cover losses. The Company seeks to
minimize this risk
through procedures designed to monitor the creditworthiness of
its customers
and that customer transactions are executed properly by the
clearing
broker/dealer.
A significant portion of the Company's securities owned at
market value are
state and municipal obligations issued by the State of New
Jersey or
municipalities within that state. Substantially all of the
corporate equity
securities owned are instruments issued by banking and thrift
institutions.
Fair Value
The financial instruments of the Company are reported in the
consolidated
statement of financial condition at market or fair value, or at
carrying amounts
that approximate fair value because of the short maturity of the
instruments.
Derivatives
Beginning in the third quarter of 1996, the Company began
implementing a
hedging strategy in its fixed-income trading activities as part of
its overall
interest rate risk management strategy. The Company uses
temporary positions
in U.S. Treasury futures as well as cash positions in U.S.
Treasury securities
sold, but not yet purchased in an effort to manage its interest
rate risk and
protect the profit margins associated with the trading of its
fixed-income
securities owned. These contracts and short positions expose
the Company to
off-balance sheet risk of accounting loss in the event that the
changes in
interest rates, and thus the value of the futures contracts and
short positions, do
not closely correlate with the changes in the
value of the Company's fixed-income securities owned. Gains
and losses on
the derivative futures contracts used in trading activities are
recognized
currently in principal transaction revenue. For the four months
of 1996 in
which the futures contracts were used, the average asset and
liability fair value
of such instruments was $13,000 and $37,000, respectively . At
December 31,
1996 the notional value of open commitments under financial
futures contracts
was $3,945,000 with a fair value of $34,000.
Note 12 - Preferred Stock
Pursuant to a stock offer consummated on April 29, 1994, there
were 485,789
shares of common stock exchanged for a new voting cumulative
convertible
preferred stock and 103,641 shares of common stock were
purchased at a price
of $6.75 per share. Subsequent to April 29, 1994, an additional
46,359 shares
of common stock were purchased in the open market. All the
common stock
shares acquired (totaling 150,000) were retired and an equal
number of shares
of new voting cumulative convertible preferred stock were
issued to a newly
formed Employee Stock Option Plan (ESOP) for cash equal to
the amount paid
by the Company for the common stock (see Note 9).
The preferred shares are convertible at any time at the option of
the holder into
1.05 shares (as adjusted for the 5% stock dividend) of common
stock. In the
event of liquidation, each preferred share will participate equally
with each
share of common stock, plus unpaid dividends. At any time
after three years
from the date of issuance, the Company may, upon 20 days
prior written notice,
in its sole discretion, redeem all preferred stock at a redemption
price equal to
the purchase price. Dividends, which commenced in May 1994,
are payable
quarterly at an annual rate of $.60 per share.
Additionally, 12,907 and 33,325 shares of preferred stock were
converted into
13,552 and 34,991 shares of common stock (as adjusted for the
5% stock
dividend) during the years ended December 31, 1996 and 1995,
respectively.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the December 31, 1996
10-K and is qualified in it's entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 30
<SECURITIES> 33789
<RECEIVABLES> 2401
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 356
<PP&E> 3481
<DEPRECIATION> 3110
<TOTAL-ASSETS> 36947
<CURRENT-LIABILITIES> 25778
<BONDS> 0
0
40
<COMMON> 325
<OTHER-SE> 10804
<TOTAL-LIABILITY-AND-EQUITY> 36947
<SALES> 28510
<TOTAL-REVENUES> 28510
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 27057
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1096
<INCOME-PRETAX> 357
<INCOME-TAX> 97
<INCOME-CONTINUING> 260
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 260
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
