EXHIBIT 10.23
NOTE
$2,500,000.00*** Albany, New York
December 23, 1997
FOR VALUE RECEIVED, the undersigned FIRST ALBANY CORPORATION, a New
York corporation with offices at 00 Xxxxx Xxxxx Xxxxxx, Xxxxxx, Xxx Xxxx
00000, promises to pay to the order of Xxxxxx X. Xxxxx, (herein called the
"Lender"), at the office of the Lender in Albany, New York or at such other
place as may be designated from time to time by the Lender, the sum of Two
Million Five Hundred Thousand ($2,500,000.00) Dollars and to pay interest
on the disbursed, unpaid principal, from the date hereof, at the rate of
eight and three-quarters (8.75%) percent per annum.
The undersigned promises to pay the principal and interest as follows:
a)Accrued interest to be paid on the 31st day of December, 1997, and
on the last business day of each succeeding month thereafter during
the term hereof.
b)The entire unpaid balance of principal together with accrued
interest to be paid to the Lender on the 31st day of December,
2002.
All amounts paid pursuant to this paragraph applied first to the
payment of accrued interest to the date of payment and then to the
reduction of principal.
The undersigned agrees to pay accrued interest and/or principal when
due.
This Note is subject to the terms, covenants and conditions Set forth
in a Subordinated Loan Agreement by and between the undersigned and the
Lender, dated as of December 23, 1997 (the "Loan Agreement"), and all such
terms, covenants and conditions of such Loan Agreement are all hereby
incorporated in this Note, with the same force and effect as though said
terms, covenants and conditions were fully set forth herein. The prepayment
of any portion of the principal or interest due under this Note shall be
allowed in accordance with the terms of the Loan Agreement.
DEFAULT. Upon the occurrence of certain Events of Default, specified
in the Loan Agreement, the principal of and interest on this Note may be
declared due and payable either immediately or as set forth therein. The
payment of principal of the Note may be suspended upon the occurrence of
certain events specified in the Loan Agreement, and such suspension will
not constitute a default hereunder.
The undersigned agrees to pay all costs and expenses incurred by the
holder hereof in enforcing this Note, including, without limitation,
reasonable attorneys' fees and legal expenses.
(CORPORATE SEAL) FIRST ALBANY CORPORATION
ATTEST By: /s/ XXXX X. XXXXXXXX
/s/ XXXXXXX X. XXXX Xxxx X. Xxxxxxxx, President
Xxxxxxx X. Xxxx, Secretary
SUBORDINATED LOAN AGREEMENT
---------------------------
Subordinated Loan Agreement dated as of December 23, 1997, between First
Albany Corporation, a New York corporation (the "Company"), and Xxxxxx X.
Xxxxx (the "Lender").
WITNESSETH:
-----------
1. CERTAIN DEFINITIONS. All terms not specifically defined in this
--------------------
Agreement shall be construed in accordance with the Act, the Rules
and Regulations promulgated thereunder, and the Constitution, Rules
and Regulations of the Exchange. As used in this Agreement:
"Act" means the Securities Exchange Act of 1934, as amended from
-----
time to time.
"Aggregate Debit Items" means aggregate debit items of the
------------------------
Company as defined in Exhibit A to Rule 15c3-3 as in effect as of
the date any determination is made thereunder.
"Aggregate Indebtedness" means aggregate indebtedness of the
------------------------
Company as defined in subparagraph (c) (1) of Rule 15c3-1 as in
effect as of the date any determination is made thereunder.
"CEA" means the Commodity Exchange Act.
-----
"CFTC" means the Commodities Futures Trading Commission.
-------
"Change of Control" has the meaning ascribed to it in Section 8
-------------------
hereof.
"Commission" means the Securities and Exchange Commission or any
------------
agency of the United States succeeding to its authority.
"FOCUS Report" means Form X-17A-5 promulgated under Section 17 of
--------------
the Act and Rule 17a-5.
"Effective Date" means the date an executed copy of this
-----------------
Agreement is approved by the Exchange.
"Event of Acceleration" means any event described in Section 7.B
-----------------------
of this Agreement.
"Event of Default" means any event described in Section 7.A of
------------------
this Agreement.
"Examining Authority" means the Exchange, provided, however,
---------------------
that, upon termination of the Company as a member firm of the
Exchange, the term Examining Authority shall refer to such
regulatory body having responsibility for inspecting or examining
the Company for compliance with financial responsibility
requirements under Section 13(c) of SIPA and Section 17(d) of the
Act.
"Exchange" means the New York Stock Exchange, Inc. and other
----------
exchanges.
"Net Capital" means net capital of the Company as defined in
-------------
subparagraph (c) (2) of Rule 15c3-1 as in effect as of the date
any determination is made thereunder.
"Note" means the Note as defined in Section 3.A of this Agreement
------
in the amount of $2,500,000.00.
"Rule" means the respective rule promulgated pursuant to the Act
and any successor rule thereto.
"SIPA" means the Securities Investor Protection Act of 1970, as
amended from time to time.
"Subordinated Agreement" means subordinated loan agreements and
------------------------
secured demand note agreements as defined in subparagraph (a)(2)
of Appendix D to Rule 15c3-1.
"Tangible Net Worth" means the excess of total assets over total
liabilities, total assets and total liabilities each to be
determined in accordance with generally accepted accounting
principles consistent with those applied in the preparation of
the financial statements referred to in Section 2.C hereof,
excluding, however, from the determination of total assets all
assets which would be classified as intangible assets including,
without limitation, goodwill (whether representing the excess of
cost over equity or any premium paid in excess of assets acquired
or otherwise) and any write-up of the book value of assets
resulting from a revaluation thereof after the date of such
financial statements all as determined under generally accepted
accounting principles.
2. REPRESENTATIONS AND WARRANTIES. The Company represents, covenants
-------------------------------
and warrants that as of the closing date hereunder:
A. Corporate Existence and Power. The Company is a corporation duly
------------------------------
formed and validly existing under the laws of the State of New
York, and has the corporate power to make this Agreement and to
borrow and perform the obligations hereunder. The Company is
duly licensed or qualified in all states wherein the character of
the property owned or the nature of the business transacted by
it, in the opinion of management of the Company, makes licensing
or qualification necessary and is in good standing, and will
remain in good standing, as a member of the Exchange.
B. Corporate Authority. The making and performance by the Company
of this Agreement have been duly authorized by all necessary
action on the part of the Company and will not violate any
provision of federal, state or local law or its Articles of
Incorporation or Certificate of Incorporation or result in a
breach of, or constitute a default under, or require any consent
under, any material indenture or loan or credit or other
agreement to which the Company is a party or by which the Company
or its property may be bound or affected.
C. Financial Condition. The balance sheet of the Company as of
--------------------
December 31, 1996, the statements of profit and loss and surplus
of the Company for the audit year ending on that date, the FOCUS
Report of the Company dated September 30, 1997, heretofore
furnished to the Lender are complete and correct and fairly
present the financial condition of the Company as at the dates of
said balance sheet, FOCUS Report and the results of the Company's
operations for the audit year ended on the date of said balance
sheet. Such financial statements were prepared in accordance
with generally accepted principles and practices of accounting
consistently applied. To the best of the Company's knowledge and
belief, it has no contingent obligations, or unusual forward or
long term commitments not disclosed by or reserved against in
said balance sheet as of December 31, 1996, or in said FOCUS
Report dated September 30, 1997, and, to the best of the
Company's knowledge and belief, at the present time there are no
unrealized or anticipated losses from any unfavorable commitments
of the Company which have not been disclosed to the Lender.
Since December 31, 1996, there has been no material adverse change
in the financial condition of the Company from that set forth in
said balance sheet as of December 31, 1996, or in said FOCUS
Report dated September 30, 1997.
D. Titles; Liens. Other than as described in Schedule I hereto, the
--------------
Company has good and marketable title to all of the properties
and assets reflected in the latest financial statement (except
such as have been disposed of in the ordinary course of business
for a fair consideration), free and clear of all mortgages,
liens, encumbrances, except such minor irregularities in title
which will not interfere with the occupation, use and enjoyment
by the Company of such properties and assets in the normal course
of business of the Company.
E. Taxes. The Company has filed all tax returns required to be
------
filed and has paid all taxes shown thereon to be due, including
interest and penalties, if any, or has provided adequate reserves
for the payment thereof. The Company is not a party to any
material action or proceeding by any governmental authority for
the assessment or collection of taxes nor has any material claim
for assessment or collection of taxes been asserted against the
Company.
F. Licenses, etc. The Company possesses all licenses, permits and
--------------
approvals necessary for the conduct of its business as now
conducted and presently proposed to be conducted as, in the
opinion of the management of the Company, is required by law or
the rules of the Commission, the Exchange, the National
Association of Securities Dealers, Inc. and each other
association, corporation or governmental agency or body having
appropriate authority (except such licenses, permits or approvals
by authorities outside the United States the failure to possess
which will not, individually or in the aggregate, result in a
material liability on the part of the Company or materially
impair the right or ability of the Company to carry on its
business substantially as now conducted and proposed to be
conducted).
G. Governmental Consent. All consents, approvals or authorizations
---------------------
of, or filings, registrations or qualifications with, any
governmental authority (including, without limitation, any State
securities commission) required by any statute, rule of
regulation now in effect on the part of the Company as a
condition to the valid execution and delivery of this Agreement,
the valid offer of the Note to the Lender, the valid payment of
the Note in accordance with the terms thereof and of this
Agreement have been duly obtained and performed.
H. Stock Exchange Approvals. The Company has obtained all consents,
approvals or authorizations of the Exchange and of other
securities exchanges of which the Company is a member that are
required on the part of the Company in connection with the due
execution, delivery and performance of this Agreement, the offer,
issue and delivery of the Note and the consummation of the
transactions contemplated by such instruments.
I. Broker-Dealer Registration. The Company is registered as a
---------------------------
broker-dealer under the Act and is also registered where
necessary in the opinion of the management of the Company
as a broker-dealer with the proper authorities of every State
of the United States.
X. XXXX and Exchange Memberships. The Company is a member
---------------------------------
organization in good standing of the National Association of
Securities Dealers, Inc. (_NASD_), and the following securities
exchanges: the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the Boston Stock Exchange.
K. SIPA Agreement. The Company is not in arrears with respect to
---------------
any assessment made upon the Company by the Securities Investor
Protection Corporation.
3. TERMS OF THE LOAN.
A. The Note. The obligation of the Company to repay the aggregate
---------
unpaid principal amount of the loan made to it pursuant hereto
shall be evidenced by a promissory note of the Company in
substantially the form of Exhibit A hereto. The Note shall bear
interest on the unpaid principal amount thereof, from the date
thereof at a rate of 8.75%. The entire unpaid balance of
principal together with accrued interest shall be due and payable
December 31, 2002.
B. Permissive Prepayment on Note. On or after December 31, 1998,
-------------------------------
with the prior written permission of the Exchange, the Company,
may, at its option, prepay to the Lender all or any portion of
the aggregate principal amount of the Note prior to the final
scheduled maturity date of the Note (a "Voluntary Prepayment").
No prepayment of the Note shall be made, however, if, after giving
effect thereto and to all other payments of principal of
outstanding subordinated loan agreements of the Company, including
the return of any secured demand note and the collateral therefor
held by the Company, the maturity or accelerated maturity of which
are scheduled to occur within 6 months after the date of such
Voluntary Prepayment or other prepayment, without reference to any
projected profit or loss of the Company:
i. in the event that the Company is not operating pursuant to the
alternative net capital requirement provided for in paragraph
(a) of the Rule (as defined in paragraph D(i) below), the
aggregate indebtedness of the Company would exceed 1,000
percentum of its net capital as those terms are defined in the
Rule or any successor rule as in effect at the time such
Voluntary Prepayment is to be made (or such other percentum as
may be made applicable at such time to the Company by the
Exchange or the Commission), or
ii. in the event that the Company is operating pursuant to such
alternative net capital requirement, the net capital of the
Company would be less than 5 percentum (or such other
percentum as may be applicable to the Company at the time of
such Voluntary Prepayment by the Exchange or the Commission)
of aggregate debit items computed in accordance with Exhibit A
to Rule 15c3-3 under the Act or any successor rule as in
effect at such time, or
iii. in the event that the Company is registered as a future
commission merchant under the CEA, the net capital of the
Company (as defined in the CEA or the regulations thereunder
less the market value of commodity options purchased by option
customers on or subject to the rules of a contract market,
provided, however, the deduction for each option customer
shall be limited to the amount of customer funds in such
option customer's account as in effect at the time of such
Voluntary Prepayment) would be less than 7 percentum (or such
other percentum as may be made applicable to the Company at
the time of such Voluntary Prepayment by the CFTC) of the
funds required to be segregated pursuant to the CEA and the
regulations thereunder, or
iv. the Company's net capital, as defined in the Rule or any
successor rule as in effect at the time of such Voluntary
Prepayment, would be less than 120 percentum (or such other
percentum as may be made applicable to the Company at the time
of such Voluntary Prepayment by the Exchange or the
Commission) of the minimum dollar amount required by the Rule
as in effect at such time (or such other dollar amount as may
be made applicable to the Company at the time of such
Voluntary Prepayment by the Exchange or the Commission), or
v. in the event that the Company is registered as a futures
commission merchant under the CEA, its net capital, as defined
in the CEA or the regulations thereunder as in effect at the
time of such Voluntary Prepayment would be less than 120
percentum (or such other percentum as may be made applicable
to the Company at the time of such Voluntary Prepayment by the
CFTC) of the minimum dollar amount required by the CEA or the
regulations thereunder as in effect at such time (or such
other dollar amount as may be made applicable to the Company
at the time of such Voluntary Prepayment by the CFTC), or
vi. in the event that the Company is subject to the provisions of
paragraph (a)(6)(v) or (a)(7)(iv) or (c) (2) (x) (b) (1) of
the Rule, the net capital of the Company would be less than
the amount required to satisfy the 100% test (or such other
percentum test as may be made applicable to the Company at the
time of such Voluntary Prepayment by the Exchange or the
Commission) stated in such applicable paragraph.
If any Voluntary Prepayment or other prepayment of aggregate
principal under the Note is made to the Lender prior to a scheduled
maturity date, and if the Company's Net Capital is less than the
amount required to permit such prepayment pursuant to this section
3.B, the Lender irrevocably agrees to repay the Company the sum so
paid to be held by the Company pursuant to the provisions of this
Agreement as if such prepayment had never been made; provided,
however, that any suit for the recovery of any such prepayment must
be commenced within two years of the date of such prepayment.
C. Payment. All payments of fees under this Agreement or of
--------
principal and interest on the Note shall be made in lawful money
of the United States of America and in immediately available
funds. Interest on the Note and any other charges to be made
hereunder shall be calculated on the basis of actual days elapsed
and a year of 360 days. If any principal of or interest on the
Note or other amount payable by the Company hereunder falls due
on a Saturday, Sunday or a legal holiday in the State of New
York, then such due date shall be extended to the next succeeding
full Business Day, and in the case of such an extension as to
principal, interest shall be payable in respect of such
extension.
D. Suspended Repayment. The Company's obligation to pay all or a
--------------------
portion of the principal amount of the loan hereunder on a
scheduled maturity date or any accelerated maturity date ("Amount
Due") shall be suspended, and the obligation shall not mature for
any period of time during which after giving effect to such
payment, together with the payment of any other obligation of the
Company under other subordinated loan agreements payable during
such period and the return of any secured demand note and the
collateral therefor held by the Company and returnable during
such period,
i. in the event that the Company is not operating pursuant to the
alternative net capital requirement provided for in paragraph
(a) of Rule 15c3-1 (the _Rule_) under the Securities Exchange
Act of 1934, as amended, the aggregate indebtedness of the
Company would exceed 1200 percentum of its net capital as
those terms are defined in the Rule or any successor rule as
in effect at the time payment is to be made (or such other
percentum as may be made applicable to the Company at the time
of such payment by the Exchange or the Commission), or
ii. in the event that the Company is operating pursuant to such
alternative net capital requirement, the net capital of the
Company would be less than 5 percentum (or such other
percentum as may be made applicable to the Company at the time
of such payment by the Exchange or the Commission) of
aggregated debit items computed in accordance with Exhibit A
to Rule 15c3-3 under the Act or any successor rule as in
effect at such time, or
iii. in the event that the Company is registered as a futures
commission merchant under the CEA, the net capital of the
Company (as defined in the CEA or the regulations thereunder
as in effect at the time of such payment) would be less than 6
percentum (or such other percentum as may be made applicable
to the Company at the time of such payment by the CFTC) of the
funds required to be segregated pursuant to the CEA and the
regulations thereunder, or
iv. the Company's net capital, as defined in the Rule or any
successor rule as in effect at the time of such payment, would
be less than 120 percentum (or such other percentum as may be
made applicable to the Company at the time of such payment by
the Exchange or the Commission) of the minimum dollar amount
required by the Rule as in effect at such time (or such other
dollar amount as may be made applicable to the Company at the
time of such Voluntary Prepayment by the Exchange or the
Commission), or
v. in the event that the Company is registered as a futures
commission merchant under the CEA, and if its net capital, as
defined in the CEA or the regulations thereunder as in effect
at the time of such payment, would be less than 120 percentum
(or such other percentum as may be made applicable to the
Company at the time of such payment by the CFTC) of the
minimum dollar amount required by the CEA or the regulations
thereunder as in effect at such time (or such other dollar
amount as may be made applicable to the Company at the time of
such payment by the CFTC), or
vi. in the event that the Company is subject to the provisions of
paragraph (a) (6) (v) or (a) (7) (iv) or (c) (2) (x) (B) (1)
of the Rule, the net capital of the Company would be less than
the amount required to satisfy the 1000% test (or such other
percentum test as may be made applicable to the Company at the
time of such payment by the Exchange or the Commission) stated
in such applicable paragraph (the net capital necessary to
enable the Company to avoid such suspension of its obligation
to pay the principal amount hereof being hereafter referred to
as the "Applicable Minimum Capital").
During any such suspension, the Company shall, as promptly as is
consistent with the protection of its customers, reduce its
business to a condition whereby the Amount Due, with accrued
interest thereon, together with any other obligation of the Company
under subordinated loan agreements payable at or prior to the
payment of the Amount Due can be repaid and any secured demand note
and the collateral therefore held by the Company and returnable at
or prior to the payment of the Amount Due can be returned, all
without Net Capital being below the Applicable Minimum Capital, at
which time the obligation to pay the Amount Due shall mature and
the Company shall repay the Amount Due, plus accrued interest, not
later than upon 5 days' prior written notice to the Exchange. Upon
any such suspension, the Company and the Lender recognize and agree
that the Company may be summarily suspended by the Exchange.
The Company agrees that, if its obligations to pay the Amount Due
is ever suspended for a period of six months, it will promptly take
whatever steps are necessary to effect a rapid and orderly complete
liquidation of its business. The date on which such liquidation
commences shall be deemed, for purposes of the Lender's claims
hereunder, to constitute the maturity date for each Subordination
Agreement of the Company then outstanding but the right of the
respective lenders to receive payment under this and such other
Subordination Agreements shall remain subordinated, and have
priority rank, in accordance with the terms hereof and thereof,
respectively.
If payment of aggregate principal under the Note is made to the
Lender on a scheduled maturity date and, immediately after any such
payment, Net Capital is less than the Applicable Minimum Capital,
the Lender irrevocably agrees to repay to the Company the sum so
paid, to be held by the Company pursuant to the provisions of this
Agreement as if such payment had never been made; provided,
however, that any suit for the recovery of any such payment must be
commenced within two years of the date of such payment.
E. Subordination of this Agreement. The Lender irrevocably agrees
--------------------------------
that the obligations of the Company with respect to the payment
of principal and interest on the Note are and shall be
subordinate in right of payment and subject to the prior payment
or provision for payment in full of (i) all claims of all other
present and future creditors of the Company whose claims are not
similarly subordinated (claims under the Note shall rank pari
passu with claims similarly subordinate) or are not junior in
right of payment to claims under such Note and (ii) claims which
are now or hereafter expressly stated in the instruments creating
such claims to be senior in right of payment to the claims of the
class of claims under the Note, arising out of any matter
occurring prior to the maturity date of the Note. In the event
of appointment of a receiver or trustee of the Company or in the
event of its insolvency or liquidation pursuant to SIPA or
otherwise, its bankruptcy, assignment for the benefit of
creditors, reorganization whether or not pursuant to bankruptcy
laws, or any other marshalling of the assets and liabilities of
the Company, the holder of the Note shall not be entitled to
participate or share, ratably or otherwise, in the distribution
of the assets of the Company until all claims of all other
present and future creditors of the Company, whose claims are
senior to the Note, have been fully satisfied, or provision has
been made therefor.
4. CONDITIONS OF LENDING. The obligation of the Lender to make the
-----------------------
loan hereunder is subject to the following conditions precedent:
A. Proof of Corporate Action. The Lender shall have received
----------------------------
certified copies of all corporate action taken by the Company to
authorize the execution and delivery of this Agreement and the
Note, and such other papers as the Lender or its counsel shall
reasonably require.
B. Delivery of the Note. As of the date of the initial borrowing
---------------------
the Lender shall have received from the Company a duly executed
Note.
5. AFFIRMATIVE COVENANTS. The Company agrees that until payment in
----------------------
full of the Note, unless the Lender shall otherwise consent in
writing it will:
A. Financial Statements, Reports, etc. Furnish the Lender:
-----------------------------------
i. within ninety (90) days after the end of each audit year of
the Company a balance sheet and statements of income, together
with supporting schedules, and the FOCUS Report of the Company
as at the end of such audit year, all audited and
unqualifiedly certified by independent certified public
accountants of recognized standing selected by the Company and
acceptable to the Lender showing the financial condition of
the Company at the close of such year and the results of
operations of the Company during such year, along with the
Company's computation of Net Capital and the Company's
computation of the ratio of Net Capital to Aggregate Debit
Items, which computations are to be as of the last day of the
audit year;
ii. within thirty (30) days after the end of each of the first
three audit quarters in each audit year, the FOCUS Report of
the Company, certified by a duly authorized officer of the
Company, along with the Company's computation of Net Capital
and the Company's computation of the ratio of Net Capital to
aggregate Debit Items, which computations are to be as of the
last day of the audit quarter;
iii. promptly as it may occur any amendment to its Articles of
Incorporation or Certificate of Incorporation;
iv. promptly, from time to time, such other information regarding
the operations, business, affairs and financial condition of
the Company as the Lender may reasonably request.
B. Taxes. Pay and discharge all taxes, assessments and governmental
------
charges or levies imposed on the Company or its income or profits
or any of its property prior to the date on which penalties
attached hereto, except any such tax, assessment, charge or levy
the payment of which may be or is being contested in good faith
and by proper proceedings and for which the Company is
maintaining adequate reserves.
C. Maintenance of Existence; Conduct of Business. Maintain its
--------------------------------------------------
existence as a Corporation and all of its rights, privileges and
franchises necessary or desirable in the normal conduct of its
business, and will conduct its business in an orderly, efficient
and regular manner.
D. Notices. Furnish the Lender, promptly after knowledge thereof
--------
shall have come to the attention of any executive officer of the
Company, written notice of (i) any threatened or pending
litigation or governmental or administrative proceeding against
the Company which would materially and adversely affect the
business and property of the Company, (ii) the occurrence of any
Event of Default hereunder or any event which with notice or the
passage of time or both would constitute such an Event of Default
and (iii) the occurrence of any default under any other material
agreement to which the Company is a party or any event which with
notice or the passage of time or both would constitute such a
default; and in the case of (i) , (ii) and (iii) except to the
extent such occurrence would not have a material adverse effect
on the financial condition of the Company.
6. NEGATIVE COVENANTS. The Company agrees that until payment in full
-------------------
of the Note, unless the Lender shall otherwise agree in writing, it
will not:
A. Limitation of Liens. Create or suffer to exist any security
---------------------
interest, mortgage, pledge, lien, charge, encumbrance, assignment
or transfer upon or of any of its property or assets now owned
and hereafter acquired, excluding, however, from the operation of
this covenant:
i. liens that exist on the date hereof;
ii. securities and commodities now owned or hereafter acquired by
the Company in the ordinary course of its business as a broker
and dealer in securities;
iii. deposits or pledges to secure payment of worker's
compensation, unemployment insurance, old age pensions or
other social security;
iv. deposits or pledges to secure performance of bids, tenders,
contracts (other than contracts for the payment of money), or
leases, public or statutory obligations, surety or appeal
bonds, or other deposits or pledges for purposes of like
general nature in the ordinary course of business;
v. liens for property taxes not delinquent and liens for taxes or
other governmental charges which in good faith are being
contested or litigated;
vi. mechanics', carriers', workmen's, repairmen's or other like
liens arising in the ordinary course of business securing
obligations which are not overdue for a period of sixty (60)
days, or which are in good faith being contested or litigated;
vii. liens in favor of the Company or any wholly-owned subsidiary
of the Company;
viii. purchase money liens on property or equipment; and
ix. liens for the sole purpose of extending, renewing or replacing
in whole or in part any of the foregoing.
B. Total Liabilities. Permit, at any time, the ratio of aggregate
------------------
indebtedness to Tangible Net Worth to exceed 20.0 to 1.0.
X. Xxxx, Lease, etc. Sell, lease, transfer or otherwise dispose of
-----------------
all or substantially all of its assets.
D. Dissolution, etc. Dissolve or liquidate.
-----------------
E. Net Capital Provision. Permit, at any time:
----------------------
i. Net Capital to be less than $7,500,000.00, which shall include
funds advanced pursuant to this Agreement; or
ii. Net Capital to be less than 3.0 times the amount of two
percent (2%) of total debits as determined per Exhibit A of
Rule 15c3-3, and
iii. Net Capital in excess of five percent (5%) of total debits as
determined per Exhibit A of Rule 15c3-3 to be less than 50% of
the amount of Net Capital attributable to the Note.
F. Total Capitalization. Permit, at any time, total capital as
---------------------
shown in the audited financial statements of the Company
(excluding therefrom, however, all indebtedness of the Company to
the Lender hereunder), to be less than $9,500,000.
7. A. Events of Default. Upon the occurrence of any one of the
----------------------
events described below in subparagraphs (i) through (v) the
Lender by written notice to the Company, with a copy to the
Exchange, may declare the unpaid principal amount of and all
accrued interest on the Note to be immediately due and payable
whereupon the same shall become due and payable without
presentment, demand, protest or further notice of any kind. The
Lender may rescind and annul any such declaration of
acceleration upon written notice to the Company and to the
Exchange, but no such rescission or annulment shall impair the
Xxxxxx's right to declare subsequent accelerations. If on the
date such Event of Default occurs, liquidation of the Company has
not already commenced, all unpaid principal and accrued
interest with respect to all other subordination agreements of the
Company then outstanding shall be due and payable, but the rights
of the respective lenders thereunder shall remain subordinate as
provided in Section 3 of the Subordinated Loan Agreement.
i. The making of an application by the Securities Investor
Protection Corporation for a decree adjudicating that
customers of the Company are in need of protection under SIPA
and the failure of the Company to obtain the dismissal of
such application within 30 days; or
ii. (a) If the Company is not operating pursuant to the
alternative net capital requirements provided for in
Paragraph (a) of Rule 15c3-1, Aggregate Indebtedness being in
excess of 1500 percentum of Net Capital, or (b) if the
Company is operating pursuant to such alternative net capital
requirements, Net Capital being less than that percentum of
Aggregate Debit Items which is required to be maintained by
the Company by said Paragraph (a) as from time to time in
effect or, if the Company is registered as a futures
commission merchant, 4% of the funds required to be
segregated under the Commodities Exchange Act and the
regulations promulgated thereunder, if greater, in either
case throughout a period of 15 consecutive Business Days
commencing on the day the Company first determines and
notifies the Exchange or the Company first received notice
from the Commission of such fact; or
iii. Revocation by the Commission of the broker-dealer
registration of the Company; or
iv. Suspension or revocation for at least ten (10) days by the
Exchange of the Company's status as a member organization of
the Exchange; or
v. Any receivership, insolvency, liquidation pursuant to SIPA or
otherwise, bankruptcy, assignment for benefit of creditors,
reorganization, whether or not pursuant to bankruptcy laws,
or any other marshaling of the assets and liabilities of the
Company.
B. Events of Acceleration. Upon the occurrence of any one of the
-----------------------
events described below in subparagraphs (i) through (v) and after
six months from the Effective Date, the Lender by written notice
to the Company, with a copy to the Exchange, may accelerate the
date on which the unpaid principal amount and all accrued
interest on the Note is scheduled to mature, to the last business
day of a calendar month which is not less than six months after
notice of acceleration is received by the Company and the
Exchange.
i. Failure to make payment of (a) interest on the Note when due,
or (b) principal of the Note when due, on a scheduled
maturity date, and any such failure continuing for more than
ten (10) business days after the giving of written notice to
the Company of such failure; or
ii. Any material representation or warranty of the Company set
forth in Section 2 of this Agreement is determined to have
been inaccurate in a material respect at the time made; or
iii. Default in the performance of any covenant set forth in
Section 5 of this Agreement, and such default continuing for
more than ten (10) business days after written notice
thereof; or
iv. Default in the compliance with any covenant set forth in
Section 6 of this Agreement, and such default continuing for
more than ten (10) business days after written notice
thereof; or
v. Action against the Company is taken by any governmental
regulatory authority which specifically affects the Company
and which, in the reasonable opinion of the Lender, will
materially and adversely affect the Company's ability to pay
the principal of, and interest on, the Note.
8. CHANGE OF CONTROL.
------------------
A. Upon the occurrence of a Change of Control (as defined below),
the Lender shall have the right to require the Company to
repurchase the Note, in whole but not in part, pursuant to the
offer described in paragraph (b) below (the "Change of Control
Offer") at a purchase price (the "Repurchase Price") in cash
equal to the aggregate principal amount thereof plus accrued and
unpaid interest thereon, if any, to the Change of Control Payment
Date (as defined below).
B. Within 30 calendar days subsequent to the date of any Change of
Control but no earlier than six months following the Effective
Date, the Company shall mail a notice to the Lender stating: (i)
that a Change of Control has occurred and that a Change of
Control Offer is being made pursuant to this Section 8; and (ii)
the Repurchase Price and the date by which the Note shall be
tendered for repurchase, which date shall be a date occurring no
earlier than six (6) months and no later than seven (7) months
subsequent to the date on which such notice is mailed (the
"Change of Control Payment Date");
C. On the Change of Control Payment Date the Lender shall surrender
the Note to the Company, the Company shall pay to the Lender the
Repurchase Price and the Note shall be canceled. If the Note is
not so tendered, then, the Note shall continue to accrue interest
and the principal will be due at maturity in the same manner as
if such Change of Control had not occurred.
D. A "Change of Control" means an event or series of events by which
(i) any "person" or "group" becomes the "beneficial owner" (each
as defined under Section 13d of the Act), directly or indirectly,
of 50% or more of the total voting power of all classes of voting
stock of the Company or First Albany Companies Inc. ("FACI") or
(ii) the Company or FACI consolidates with or merges into any
other entity, other than a wholly-owned subsidiary of the Company
or FACI, or any other entity merges into the Company or FACI or
conveys, transfers or leases all or substantially all of its
assets to any entity or group of entities as a result of which
the existing shareholders of the Company or FACI immediately
prior thereto hold less than 50% of the combined voting power of
the voting stock of the surviving entity.
9. MISCELLANEOUS.
--------------
A. No Waiver; Remedies Cumulative. No failure on the part of the
-------------------------------
Lender to exercise, and no delay in exercising, any right
hereunder shall preclude any other or further exercise thereof or
the exercise of any other right. The remedies herein provided
are cumulative and not exclusive of any remedies provided by law.
B. Survival of Representations. All representations and warranties
----------------------------
made herein shall survive the making of the loan hereunder and
delivery of the Note.
C. Construction. This Agreement and the Note shall be deemed to
-------------
have been made under the laws of the State of New York, without
regard to its principals of conflicts of law, and shall be
construed in accordance with the laws of said state.
D. Successors and Assigns. This Agreement shall be binding upon,
-----------------------
and shall inure to the benefit of, the Company, the Lender and
their respective successors and assigns.
E. Notices. Notices shall be given to the Lender and the Company by
--------
personal delivery or by registered or certified mail, return
receipt requested, addressed as follows:
If to the Company, to:
Chief Financial Officer
First Albany Corporation
00 Xxxxx Xxxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
If to the Lender, to:
Xxxxxx X. Xxxxx
0 Xxxxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
with a copy to: Xxxxx Xxxxxxx
Xxxxxx Xxxx & Xxxxxx
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
If to the New York Stock Exchange, to:
Finance Coordinator
New York Stock Exchange
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
F. Accredited Investor/Limitations on Transfer. The Lender
--------------------------------
acknowledges and represents that (i) it is an accredited
investor, as that term is defined in Rule 501 promulgated under
the Securities Act of 1933, as amended (the "Act") by virtue of
Xxxxxx having a net worth, either individually or with Xxxxxx's
spouse, of at least $1,000,000, (ii) it is acquiring the Note for
investment purposes only and not with a view to, or for sale in
connection with, any distribution of the Note, or with any
present intention of selling the Note, or any part thereof, and
(iii) it will not transfer the Note, or any part thereof, unless
such transfer complies with the registration requirements of the
Act or an exemption from such registration requirements is
applicable to such transfer.
G. Disclaimer. The Lender, by accepting the Note, irrevocably
-----------
agrees that its making of the loans evidenced by the Note is not
being made in reliance upon the standing of the Company as a
member organization of the Exchange or upon the Exchange's
surveillance of the Company's financial position or its
compliance with the constitution, rules and practices of the
Exchange. The Lender has made such investigation of the Company
and its Officers and employees as the Lender deems necessary and
appropriate under the circumstances. The Lender is not relying
upon the Exchange to provide any information concerning or
relating to the Company and agrees that the Exchange has no
responsibility to disclose to the Lender any information
concerning or relating to the Company which it may now or in the
future have. The Lender agrees that neither the Exchange, its
special trust fund, nor any director, officer, trustee or
employee of the Exchange, shall be liable to the Lender with
respect to this Agreement or the Note or the repayment thereof of
any interest thereon.
H. Assignment. The Note may not be transferred, sold, assigned,
-----------
pledged or otherwise encumbered or otherwise disposed of, and no
lien, charge or other encumbrance may be created or permitted to
be created hereon without the prior written consent of the
Exchange and the Company, except that the Company shall not
withhold its consent to such transfer to a member of Xxxxxx's
immediate family. Any transfer not permitted by the foregoing
shall be void.
I. Exchange Approval. This Agreement shall not be modified or
------------------
amended without the prior written approval of the Exchange.
J. Entire Agreement. This Agreement and the Note embody the entire
-----------------
agreement as to the subject matter hereof between the Company and
the Lender and no other evidence of such agreement has been or
will be executed without the prior written consent of the
Exchange.
K. Cancellation. Neither this Agreement nor the Note shall be
-------------
subject to cancellation by either party except as may be
permitted hereunder.
L. Notice to CFTC. So long as the Company is a futures commission
---------------
merchant as that term is defined in the Commodity Exchange Act,
the Company agrees, consistent with the requirements of Section
1.17(h) of the regulations of the CFTC, that:
i. whenever prior written notice by the Company to the Exchange
is required pursuant to the provisions of this Agreement, the
same prior written notice shall be given by the Company to (a)
the CFTC at its principal office in Washington, D.C.,
Attention: Chief Accountant of Division of Trading and
Markets, and/or (b) the commodity exchange of which the
Company is a member and which is then designated by the CFTC
as the Company's designated self-regulatory organization (the
("DSRO"), and
ii. whenever prior written consent, permission or approval of the
Exchange is required pursuant to the provisions of this
Agreement, the Company shall also obtain the prior written
consent, permission or approval of the CFTC and/or of the
DSRO, and
iii. whenever the Company receives written notice of acceleration
of maturity pursuant to the provisions of this Agreement, the
Company shall promptly give written notice thereof to the CFTC
at the address above stated and/or the DSRO.
iv. Status of Proceeds. The proceeds of the loan evidenced hereby
shall be dealt with in all respects as capital of the Company,
shall be subject to the risks of its business, and may be
deposited in an account or accounts in the Company's name in
any bank or trust company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day of the year first written above.
FIRST ALBANY CORPORATION LENDER:
By: /s/ XXXX X. XXXXXXXX /s/ XXXXXX X. XXXXX
------------------------- --------------------
Name: Xxxxxx X. Xxxxx
Title:
THIS OPTION HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND HAS BEEN TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A
VIEW TO THE DISTRIBUTION THEREOF, AND THIS OPTION MAY NOT BE SOLD OR
TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT COVERING IT
OR THE COMPANY RECEIVES AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL FOR THE
COMPANY) FROM THE TRANSFEROR REASONABLY ACCEPTABLE TO IT STATING THAT SUCH
SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT.
OPTION TO PURCHASE COMMON STOCK
OF
FIRST ALBANY COMPANIES INC.
1.a. This certifies that, subject to the terms set forth below,
in consideration of Xxxxxx X. Xxxxx, (the "Holder") making a loan of an
additional Two Million Five Hundred Thousand ($2,500,000) Dollars (the
Indebtedness") to a wholly-owned subsidiary, First Albany Corporation, of
FIRST ALBANY COMPANIES INC. (the "Company"), the Company grants to Holder
the option to purchase, at any time during the Exercise Period (as defined
below) 26,891 shares of its common stock, par value $.01 per share, (the
"Common Stock_) at a purchase price of $18.594 per share (the "Purchase
Price"). The Purchase Price shall be paid by the discharge of Five Hundred
Thousand ($500,000) Dollars of the Indebtedness.
b. The Exercise Period shall begin on the date hereof and end
at 5:00 p.m., New York time on the earlier of (i) 5:00 p.m., New York time,
on the final scheduled maturity date of the Note (as defined in the
Subordinated Loan Agreement between the Holder and the Company dated
December 23, 1997 (the "Agreement")), (ii) the Change of Control Payment
Date (as defined in the Agreement); and (iii) the date of any Voluntary
Prepayment (as defined in the Agreement). Notwithstanding anything
contained herein to the contrary, any exercise of this option during the
period beginning six months prior to the final scheduled maturity date
shall not be effective until the final scheduled maturity date.
c. This Option may be exercised by surrender to the Company, at
its principal executive offices, of the subscription form attached hereto
duly executed and the simultaneous delivery to the Company of a document,
in form and substance acceptable to the Company, evidencing the discharge
of Five Hundred Thousand ($500,000) Dollars of the Indebtedness.
d. The Company agrees to give the Holder thirty (30) days prior
written notice of any Voluntary Prepayment.
e. All notices sent to the Company and the Holder under this
Option shall be sent by certified mail, return receipt requested, or by
personal delivery addressed to the Company's General Counsel at its
principal executive offices, or addressed to the Holder at the address
provided in the Agreement or at such other address as the Holder may give
to the Company pursuant to the Agreement, respectively.
f. Certificates for shares of Common Stock purchased upon
exercise of this Option will be delivered by the Company to the Holder or
his designee within thirty (30) business days after the exercise of the
Option.
g. The Common Stock issuable upon the exercise of this Option
will be deemed to have been issued on the date (the "Exercise Date") the
Company receives satisfactory evidence of payment of the Purchase Price,
and the Holder will be deemed for all purposes to have become the record
holder of such Common Stock on the Exercise Date.
h. The issuance of certificates for shares of Common Stock upon
exercise of this Option shall be made subject to, and the Holder shall be
responsible for, any and all charges to the Holder for any issuance tax in
respect thereof or other cost incurred by the Company in connection with
such exercise and the related issuance of shares of Common Stock. Each
share of Common Stock issuable upon exercise of this Option will, upon
payment of the Purchase Price thereof, be fully paid and nonassessable and
free from all liens and charges with respect to the issuance thereof.
i. After the date hereof and prior to the exercise of this
Option, the aggregate number of shares subject to this Option and the
exercise price shall be adjusted to reflect any stock splits or stock
dividends declared with respect to the Common Stock.
2. The Holder shall have no rights as a shareholder in respect
of shares covered by the Option prior to exercise of this Option with
respect thereto and until the Holder has made payment therefor as herein
provided, and the Holder shall have no rights with respect to such shares
not expressly conferred by this Option.
3. The Company shall at all times during the term of this
Option reserve and keep available such number of shares of its Common Stock
as will be sufficient to satisfy the requirements of this Option.
4. This Option shall be binding upon the Company's successors
and assigns. This Option shall not be transferred by the Holder without
the prior written consent of the Company; any such transfer without the
consent of the Company will render this Option void.
5. This Option shall be construed and enforced in accordance
with and governed by the laws of New York without regard to its principles
of conflicts of laws. Any action or proceeding brought by the Holder or
the Company against the other arising out of or related to the Option shall
be brought in a State or Federal Court of competent jurisdiction located in
Albany, New York and the Holder and the Company hereby submit to the
jurisdiction of such courts for the purposes of any such action or
proceeding.
6. The Holder agrees that he will comply with all applicable
laws, rules and regulations of all Federal and State securities regulators,
including but not limited to the Securities and Exchange Commission, the
New York Stock Exchange, the National Association of Securities Dealers and
applicable state securities regulators with respect to disclosure, filings
and any other requirements resulting in any way from the issuance of this
Option other than those required to be made by the Company in accordance
with applicable Federal and State securities laws and regulations.
IN WITNESS WHEREOF, the parties have signed this Option intending to
be legally bound hereto.
DATED: December 23, 1997 FIRST ALBANY COMPANIES INC.
/s/ XXXX X. XXXXXXXX
--------------------
President
HOLDER:
/s/ XXXXXX X. XXXXX
---------------------
Xxxxxx X. Xxxxx
SUBSCRIPTION FORM
(to the executed only upon exercise of Option)
The undersigned Holder of the Option granted pursuant to the Option
Agreement dated December 23, 1997 the "Option Agreement"), irrevocably
exercises this Option to purchase all such shares of Common Stock of First
Albany Companies Inc. as are granted as of the date hereof pursuant to the
Option Agreement and herewith makes payment therefor, all at the price and
on the terms and conditions specified in this Option.
DATED:
Number of Shares: __________________
__________________________________
(Signature of Holder)
__________________________________
(Name of Holder)
__________________________________
Street Address
__________________________________
(City) (State) (Zip)
