EXHIBIT 10.20
SUBORDINATED LOAN AGREEMENT
Subordinated Loan Agreement dated as of September 16, 1996 between
First Albany Corporation, a New York corporation (the "Company"), and
Sharon M. Duker (the "Lender").
WITNESSETH:
1. CERTAIN DEFINITIONS. All terms not specifically defined in
this Agreement shall be construed in accordance with the Act, the
Rules and Regulations promulgated thereunder, and the Constitution,
Rules and Regulations of the Exchange. As used in this Agreement:
"Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"Aggregate Debit Items" means aggregate debit items of the
Company as defined in Exhibit A to Rule 15c3-3 as in effect as of the
date any determination is made thereunder.
"Aggregate Indebtedness" means aggregate indebtedness of the
Company as defined in subparagraph (c) (1) of Rule 15c3-1 as in effect
as of the date any determination is made thereunder.
"CEA" means the Commodity Exchange Act.
"CFTC" means the Commodities Futures Trading Commission.
"Change of Control" has the meaning ascribed to it in Section 8
hereof.
"Commission" means the Securities and Exchange Commission or any
agency of the United States succeeding to its authority.
"FOCUS Report" means Form X-17A-5 promulgated under Section 17 of
the Act and Rule 17a-5.
"Effective Date" means the date an executed copy of this
Agreement is approved by the Exchange.
"Event of Acceleration" means any event described in Section 7.B
of this Agreement.
"Event of Default" means any event described in Section 7.A of
this Agreement.
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"Examining Authority" means the Exchange, provided, however,
that, upon termination of the Company as a member firm of the
Exchange, the term Examining Authority shall refer to such regulatory
body having responsibility for inspecting or examining the Company for
compliance with financial responsibility requirements under Section
13(c) of SIPA and Section 17(d) of the Act.
"Exchange" means the New York Stock Exchange, Inc. and other
exchanges.
"Net Capital" means net capital of the Company as defined in
subparagraph (c) (2) of Rule 15c3-1 as in effect as of the date any
determination is made thereunder.
"Note" means the Note as defined in Section 3.A of this Agreement
in the amount of $5,000,000.00.
"Rule" means the respective rule promulgated pursuant to the Act
and any successor rule thereto.
"SIPA" means the Securities Investor Protection Act of 1970, as
amended from time to time.
"Subordinated Agreement" means subordinated loan agreements
and secured demand note agreements as defined in subparagraph (a) (2)
of Appendix D to Rule 15c3-1.
"Tangible Net Worth" means the excess of total assets over total
liabilities, total assets and total liabilities each to be determined
in accordance with generally accepted accounting principles consistent
with those applied in the preparation of the financial statements
referred to in Section 2.C hereof, excluding, however, from the
determination of total assets all assets which would be classified as
intangible assets including, without limitation, goodwill (whether
representing the excess of cost over equity or any premium paid in
excess of assets acquired or otherwise) and any write-up of the book
value of assets resulting from a revaluation thereof after the date of
such financial statements all as determined under generally accepted
accounting principles.
2. REPRESENTATIONS AND WARRANTIES. The Company represents,
covenants and warrants that as of the closing date hereunder:
A. Corporate Existence and Power. The Company is a
corporation duly formed and validly existing under the laws of the
State of New York, and has the corporate power to make this Agreement
and to borrow and perform the obligations
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hereunder. The Company is duly licensed or qualified in all states
wherein the character of the property owned or the nature of the
business transacted by it, in the opinion of management of the
Company, makes licensing or qualification necessary and is in good
standing, and will remain in good standing, as a member of the
Exchange.
B. Corporate Authority. The making and performance by the
Company of this Agreement have been duly authorized by all necessary
action on the part of the Company and will not violate any provision
of federal, state or local law or its Articles of Incorporation or
Certificate of Incorporation or result in a breach of, or constitute a
default under, or require any consent under, any material indenture or
loan or credit or other agreement to which the Company is a party or
by which the Company or its property may be bound or affected.
C. Financial Condition. The balance sheet of the Company as at
September 30, 1995, the statements of profit and loss and surplus of
the Company for the audit year ending on that date, the FOCUS Report
of the Company dated September 30, 1995, heretofore furnished to the
Lender are complete and correct and fairly present the financial
condition of the Company as at the dates of said balance sheet, FOCUS
Report and the results of the Company's operations for the audit year
ended on the date of said balance sheet. Such financial statements
were prepared in accordance with generally accepted principles and
practices of accounting consistently applied. To the best of the
Company's knowledge and belief, it has no contingent obligations, or
unusual forward or long term commitments not disclosed by or reserved
against in said balance sheet as of September 30, 1995, or in said
FOCUS Report dated September 30, 1995, and, to the best of the
Company's knowledge and belief, at the present time there are no
unrealized or anticipated losses from any unfavorable commitments of
the Company which have not been disclosed to the Lender.
Since September 30, 1995, there has been no material adverse
change in the financial condition of the Company from that set forth
in said balance sheet as at September 30, 1995, or in said FOCUS
Report dated September 30,1995.
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D. Titles; Liens. Other than as described in Schedule I
hereto, the Company has good and marketable title to all of the
properties and assets reflected in the latest financial statement
(except such as have been disposed of in the ordinary course of
business for a fair consideration), free and clear of all mortgages,
liens, encumbrances, except such minor irregularities in title which
will not interfere with the occupation, use and enjoyment by the
Company of such properties and assets in the normal course of business
of the Company.
E. Taxes. The Company has filed all tax returns required to be
filed and has paid all taxes shown thereon to be due, including
interest and penalties, if any, or has provided adequate reserves for
the payment thereof. The Company is not a party to any material action
or proceeding by any governmental authority for the assessment or
collection of taxes nor has any material claim for assessment or
collection of taxes been asserted against the Company.
F. Licenses, etc. The Company possesses all licenses, permits
and approvals necessary for the conduct of its business as now
conducted and presently proposed to be conducted as, in the opinion of
the management of the Company, is required by law or the rules of the
Commission, the Exchange, the National Association of Securities
Dealers, Inc. and each other association, corporation or governmental
agency or body having appropriate authority (except such licenses,
permits or approvals by authorities outside the United States the
failure to possess which will not, individually or in the aggregate,
result in a material liability on the part of the Company or
materially impair the right or ability of the Company to carry on its
business substantially as now conducted and proposed to be conducted).
G. Governmental Consent. All consents, approvals or
authorizations of, or filings, registrations or qualifications with,
any governmental authority (including, without limitation, any State
securities commission) required by any statute, rule of regulation now
in effect on the part of the Company as a condition to the valid
execution and delivery of this Agreement, the valid offer of the Note
to the Lender, the valid payment of the Note in accordance with the
terms thereof and of this Agreement have been duly obtained and
performed.
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H. Stock Exchange Approvals. The Company has obtained all
consents, approvals or authorizations of the Exchange and of other
securities exchanges of which the Company is a member that are
required on the part of the Company in connection with the due
execution, delivery and performance of this Agreement, the offer,
issue and delivery of the Note and the consummation of the
transactions contemplated by such instruments.
I. Broker-Dealer Registration. The Company is registered as a
broker-dealer under the Act and is also registered where necessary in
the opinion of the management of the Company as a broker-dealer with
the proper authorities of every State of the United States.
J. NASD and Exchange Memberships. The Company is a member
organization in good standing of the National Association of
Securities Dealers, Inc.
("NASD"), and the following securities exchanges: the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the Boston Stock
Exchange.
K. SIPA Agreement. The Company is not in arrears with respect
to any assessment made upon the Company by the Securities Investor
Protection Corporation.
3. TERMS OF THE LOAN.
A. The Note. The obligation of the Company to repay the
aggregate unpaid principal amount of the loan made to it pursuant
hereto shall be evidenced by a promissory note of the Company in
substantially the form of Exhibit A hereto. The Note shall bear
interest on the unpaid principal amount thereof, from the date thereof
at a rate of 9.25%. The entire unpaid balance of principal together
with accrued interest shall be due and payable July 31,2001.
B. Permissive Prepayment on Note. On or after December 31,
1997, with the prior written permission of the Exchange, the Company,
may, at its option, prepay to the Lender all or any portion of the
aggregate principal amount of the Note prior to the final scheduled
maturity date of the Note (a "Voluntary Prepayment").
No prepayment of the Note shall be made, however, if, after
giving effect thereto and to all other payments of principal of
outstanding subordinated loan agreements of the
Company, including the return of any secured demand note and the collateral
therefor held by the Company, the maturity or accelerated maturity of which
are scheduled to occur within 6 months after the date of such Voluntary
Prepayment or other prepayment, without reference to any projected profit
or loss of the Company:
(i) in the event that the Company is not operating pursuant to
the alternative net capital requirement provided for in paragraph
(f) of the Rule (as defined in paragraph D(i) below), the
aggregate indebtedness of the Company would exceed 1,000
percentum of its net capital as those terms are defined in the
Rule or any successor rule as in effect at the time such
Voluntary Prepayment is to be made (or such other percentum as
may be made applicable at such time to the Company by the
Exchange or the Commission), or
(ii) in the event that the Company is operating pursuant to such
alternative net capital requirement, the net capital of the
Company would be less than 5 percentum (or such other percentum
as may be applicable to the Company at the time of such Voluntary
Prepayment by the Exchange or the Commission) of aggregate debit
items computed in accordance with Exhibit A to Rule 15c3-3 under
the Act or any. successor rule as in effect at such time, or
(iii) in the event that the Company is registered as a future
commission merchant under the CEA, the net capital of the Company
(as defined in the CEA or the regulations thereunder less the
market value of commodity options purchased by option customers
on or subject to the rules of a contract market, provided,
however, the deduction for each option customer shall be limited
to the amount of customer funds in such option customer's account
as in effect at the time of such Voluntary Prepayment) would be
less than 7 percentum (or such other percentum as may be made
applicable to the Company at the time of such Voluntary
Prepayment by the CFTC) of the funds required to be segregated
pursuant to the CEA and the regulations thereunder, or
(iv) the Company's net capital, as defined in the Rule or any
successor rule as in effect at the time of such Voluntary
Prepayment, would be less than 120 percentum (or such other
percentum as may be made applicable to the Company at the
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 (0 of Rule 15c3-1 (the "Rule") under the Securities
Exchange Act of 1934, as amended, the aggregate indebtedness of
the Company would exceed 1200 percentum of its net capital as
those terms are defined in the Rule or any successor rule as in
effect at the time payment is to be made (or such other
percenturn as may be made applicable to the Company at the time
of such payment by the Exchange or the Commission), or
(ii) in the event that the Company is operating pursuant to
such alternative net capital requirement, the net capital of the
Company would be less than 5 percentum (or such other percentum
as may be made applicable to the Company at the time of such
payment by the Exchange or the Commission) of aggregated debit
items computed in accordance with Exhibit A to Rule 15c3-3 under
the Act or any successor rule as in effect at such time, or
(iii) in the event that the Company is registered as a
futures commission merchant under the CEA, the net capital of the
Company (as defined in the CEA or the regulations thereunder as
in effect at the time of such payment) would be less than 6
percentum (or such other percentum as may be made applicable to
the Company at the time of such payment by the CFTC) of the funds
required to be segregated pursuant to the CEA and the regulations
thereunder, or
(iv) the Company's net capital, as defined in the Rule or
any successor rule as in effect at the time of such payment,
would be less than 120 percentum (or such other percentum as may
be made applicable to the Company at the time of such payment by
the Exchange or the Commission) of the minimum dollar amount
required by the Rule as in effect at such time (or such other
dollar amount as may be made applicable to the Company at the
time of such Voluntary Prepayment by the Exchange or the
Commission), or
(v) in the event that the Company is registered as a
futures commission merchant under the CEA, and if its net
capital, as defined in the CEA or the regulations thereunder as
in effect at the time of such payment, would be less than 120
percentum (or such other percentum as may be made applicable to
the Company at the time of such payment by the CFTC) of the
minimum dollar amount required by the CEA or the regulations
thereunder as in effect at such time (or such other dollar amount
as may be made applicable to the Company at the time of such
payment by the CFTC), or
(vi) in the event that the Company is subject to the
provisions of paragraph (a) (6) (v) or (a) (7) (iv) or (c) (2)
(x) ~) (1) of the Rule, the net capital of the Company would be
less than the amount required to satisfy the 1000% test (or such
other percentum test as may be made applicable to the Company at
the time of such payment by the Exchange or the Commission)
stated in such applicable paragraph (the net capital necessary to
enable the Company to avoid such suspension of its obligation to
pay the principal amount hereof being hereafter referred to as
the "Applicable Minimum Capital").
During any such suspension, the Company shall, as promptly as
is consistent with the protection of its customers, reduce its
business to a condition whereby the Amount Due, with accrued
interest thereon, together with any other obligation of the
Company under subordinated loan agreements payable at or prior to
the payment of the Amount Due can be repaid and any secured demand
note and the collateral therefore held by the Company and
returnable at or prior to the payment of the Amount Due can be
returned, all without Net Capital being below the Applicable
Minimum Capital, at which time the obligation to pay
the Amount Due shall mature and the Company shall repay the Amount
Due, plus accrued interest, not later than upon 5 days' prior written
notice to the Exchange. Upon any such suspension, the Company and the
Lender recognize and agree that the Company may be summarily suspended
by the Exchange.
The Company agrees that, if its obligations to pay the Amount Due
is ever suspended for a period of six months, it will promptly take
whatever steps are necessary to effect a rapid and orderly complete
liquidation of its business. The date on which such liquidation
commences shall be deemed, for purposes of the Lender's claims
hereunder, to constitute the maturity date for each Subordination
Agreement of the Company then outstanding but the right of the
respective lenders to receive payment under this and such other
Subordination Agreements shall remain subordinated, and have priority
rank, in accordance with the terms hereof and thereof, respectively.
If payment of aggregate principal under the Note is made to the
Lender on a scheduled maturity date and, immediately after any such
payment, Net Capital is less than the Applicable Minimum Capital, the
Lender irrevocably agrees to repay to the Company the sum so paid, to
be held by the Company pursuant to the provisions of this Agreement as
if such payment had never been made; provided, however, that any suit
for the recovery of any such payment must be commenced within two
years of the date of such payment.
E. Subordination of this Agreement. The Lender. irrevocably
agrees that the obligations of the Company with respect to the payment
of principal and interest on the Note are and shall be subordinate in
right of payment and subject to the prior payment or provision for
payment in full of (i) all claims of all other present and future
creditors of the Company whose claims are not similarly subordinated
(claims under the Note shall rank pari passu with claims similarly
subordinate) or are not junior in right of payment to claims under
such Note and (ii) claims which are now or hereafter expressly stated
in the instruments creating such claims to be senior in right of
payment to the claims of the class of claims under the Note, arising
out of any matter occurring prior to the maturity date of the Note. In
the event of appointment of a receiver or trustee of the Company or in
the event of its insolvency or liquidation pursuant to SPA or
otherwise, its bankruptcy, assignment for the benefit of creditors,
reorganization whether or not pursuant to bankruptcy laws, or any
other
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 hot
have a material adverse effect on the financial condition of the
Company.
6. NEGATIVE COVENANTS. The Company agrees that until payment in full
of the Note, unless the Lender shall otherwise agree in writing, it will
not:
A. Limitation of Liens. Create or suffer to exist any security
interest, mortgage, pledge, lien, charge, encumbrance, assignment or
transfer upon or of any of its property or assets now owned and
hereafter acquired, excluding, however, from the operation of this
covenant:
(i) liens that exist on the date hereof;
(ii) securities and commodities now owned or hereafter
acquired by the Company in the ordinary course of its business as
a broker and dealer in securities;
(iii) deposits or pledges to secure payment of worker's
compensation, unemployment insurance, old age pensions or other
social security;
(iv) deposits or pledges to secure performance of bids,
tenders, contracts (other than contracts for the payment of
money), or leases, public or statutory obligations, surety or
appeal bonds, or other deposits or pledges for purposes of like
general nature in the ordinary course of business;
(v) liens for property taxes not delinquent and liens for
taxes or other governmental charges which in good faith are being
contested or litigated;
(vi) mechanics', carriers', workmen's, repairmen's or other
like liens arising in the ordinary course of business securing
obligations which are not overdue for a period of sixty (60)
days, or which are in good faith being contested or litigated;
(vii) liens in favor of the Company or any wholly-owned
subsidiary of the Company;
(viii) purchase money liens on property or equipment; and
(ix) liens for the sole purpose of extending, renewing or
replacing in whole or in part any of the foregoing.
B. Total Liabilities Permit, at any time, the ratio of
aggregate indebtedness to Tangible Net Worth to exceed 20.0 to 1.0.
C. Sell. Lease. etc. Sell, lease, transfer or otherwise dispose
of all or substantially all of its assets.
D. Dissolution, etc. Dissolve or liquidate.
E. Net Capital Provision. Permit, at any time:
(i) Net Capital to be less than $7,500,000.00, which shall
include funds advanced pursuant to this Agreement; or
(ii) Net Capital to be less than 3.5 times the amount of
two percent (2%) of total debits as determined per Exhibit A of
Rule 15c3-3, and
(iii) Net Capital in excess of five percent (5%) of
total debits as determined per Exhibit A of Rule 15c3-3 to be
less than 50% of the amount of Net Capital attributable to the
Note.
F. Total Capitalization. Permit, at any time, total capital as
shown in the audited financial statements of the Company (excluding
therefrom, however, all indebtedness of the Company to the Lender
hereunder), to be less than $9,500,000.
7. A. Events of Default. Upon the occurrence of any one of
the events described below in subparagraphs (i) through (v) the
Lender by written notice to the Company, with a copy to the
Exchange, may declare the unpaid principal amount of and all
accrued interest on the Note to be immediately due and payable
whereupon the same shall become due and payable without
presentment, demand, protest or further notice of any kind. The
Lender may rescind and annul any such declaration of acceleration
upon written notice to the Company and to the Exchange, but no
such rescission or annulment shall impair the Lender's right to
declare subsequent accelerations. If on the date such Event of
Default occurs, liquidation of the Company has not already
commenced, all unpaid principal and accrued interest with respect
to all other subordination agreements of the Company then
outstanding shall be due and payable, but the rights of the
respective lenders thereunder shall remain subordinate as
provided in Section 3 of the Cash Subordination Agreement.
(i) The making of an application by the Securities
Investor Protection Corporation for a decree adjudicating
that customers of the Company are in need of protection
under SPA and the failure of the Company to obtain the
dismissal of such application within 30 days; or
(ii) (a) If the Company is not operating pursuant
to the alternative net capital requirements provided for in
Paragraph (f) of Rule 15c3-1, Aggregate Indebtedness being
in excess of 1500 percentum of Net Capital, or (1') if the
Company is operating pursuant to such alternative net
capital requirements, Net Capital being less than that
percentum of Aggregate Debit Items which is required to be
maintained by the Company by said Paragraph (f) as from time
to time in effect or, if the Company is registered as a futures
commission merchant, 4% of the funds required to be segregated
under the Commodities Exchange Act and the regulations
promulgated thereunder, if greater, in either case throughout a
period of 15 consecutive Business Days commencing on the day the
Company first determines and notifies the Exchange or the Company
first received notice from the Commission of such fact; or
(iii) Revocation by the Commission of the broker-dealer
registration of the Company; or
(iv) Suspension or revocation for at least ten (10) days by
the Exchange of the Company's status as a member organization of
the Exchange; or
(v) Any receivership, insolvency, liquidation pursuant to
SPA or otherwise, bankruptcy, assignment for benefit of
creditors, reorganization, whether or not pursuant to bankruptcy
laws, or any other marshaling of the assets and liabilities of
the Company.
B. Events of Acceleration. Upon the occurrence of any one of
the events described below in subparagraphs (i) through (v) and after
six months from the Effective Date, the Lender by written notice to
the Company, with a copy to the Exchange, may acceleration the date on
which the unpaid principal amount and all accrued interest on the Note
is scheduled to mature, to the last business day of a calendar month
which is not less than six months after notice of acceleration is
received by the Company and the Exchange.
(i) Failure to make payment of (a) interest on the Note
when due, or (b) principal of the Note when due, on a scheduled
maturity date, and any such failure continuing for more than ten
(10) business days after the giving of written notice to the
Company of such failure; or
(ii) Any material representation or warranty of the Company
set forth in Section 2 of this Agreement is determined to have
been inaccurate in a material respect at the time made; or
(iii) Default in the performance of any covenant
set forth in Section 5 of this Agreement, and such default
continuing for more than ten (10) business days after
written notice thereof; or
(iv) Default in the compliance with any covenant set
forth in Section 6 of this Agreement, and such default
continuing for more than ten (10) business days after
written notice thereof; or
(v) Action against the Company is taken by any
governmental regulatory authority which specifically affects
the Company and which, in the reasonable opinion of the
Lender, will materially and adverse affect the Company's
ability to pay the principal of, and interest on, the Note.
8. CHANGE OF CONTROL.
A. Upon the occurrence of a Change of Control (as defined
below), the Lender shall have the right to require the Company to
repurchase the Note, in whole but not in part, pursuant to the
offer described in paragraph ~) below (the "Change of Control
Offer") at a purchase price (the "Repurchase Price") in cash
equal to the aggregate principal amount thereof plus accrued and
unpaid interest thereon, if any, to the Change of Control Payment
Date (as defined below).
B. Within 30 calendar days subsequent to the date of any
Change of Control but no earlier than six months following the
Effective Date, the Company shall mail a notice to the Lender
stating: (i) that a Change of Control has occurred and that a
Change of Control Offer is being made pursuant to this Section 8;
and (ii) the Repurchase Price and the date by which the Note
shall be tendered for repurchase, which date shall be a date
occurring no earlier than six (6) months and no later than seven
(7) months subsequent to the date on which such notice is mailed
(the "Change of Control Payment Date");
C. On the Change of Control Payment Date the Lender shall
surrender the Note to the Company, the Company shall pay to the
Lender the Repurchase Price and the Note shall be canceled. If
the Note is not so tendered, then, the Note shall continue to
accrue interest and the principal will be due at maturity in the
same manner as if such Change of Control had not occurred.
D. A "Change of Control" means an event or series of
events by which (i) any "person" or "group" becomes the
"beneficial owner" (each as defined under Section 13d of the
Act), directly or indirectly, of 50% or more of the total voting
power of all classes of voting stock of the Company or First
Albany Companies Inc. ("FACI") or (ii) the Company or FACI
consolidates with or merges into any other entity, other than a
wholly-owned subsidiary of the Company or FACI, or any other
entity merges into the Company or FACI or conveys, transfers or
leases all or substantially all of its assets to any entity or
group of entities as a result of which the existing shareholders
of the Company or FACI immediately prior thereto hold less than
50% of the combined voting power of the voting stock of the
surviving entity.
9. MISCELLANEOUS.
A. No Waiver; Remedies Cumulative. No failure on the part
of the Lender to exercise, and no delay in exercising, any right
hereunder shall preclude any other or further exercise thereof or
the exercise of any other right. The remedies herein provided
are cumulative and not exclusive of any remedies provided by law.
B. Survival of Representations. All representations and
warranties made herein shall survive the making of the loan
hereunder and delivery of the Note.
C. Construction. This Agreement and the Note shall be
deemed to have been made under the laws of the State of New York,
without regard to its principals of conflicts of law, and shall
be construed in accordance with the laws of said state.
D. Successors and Assigns. This Agreement shall be binding
upon, and shall inure to the benefit of, the Company, the Lender
and their respective successors and assigns.
E. Notices. Notices shall be given to the Lender and the
Company by personal delivery or by registered or certified mail,
return receipt requested, addressed as follows:
If to the Company, to:
Chief Financial Officer
First Albany Corporation
30 South Pearl Street
Albany, New York 12207
If to the Lender, to:
Sharon M. Duker
c/o William F. Duker
Duker & Barrett
100 State Street
Albany, New York 12207
If to the New York Stock Exchange, to:
Finance Coordinator
New York Stock Exchange
20 Broad Street
New York, New York 10005
F. Accredited Investor/Limitations on Transfer The
Lender acknowledges and represents that (i) it is an accredited
investor, as that term is defined in Rule 501 promulgated under the
Securities Act of 1933, as amended (the "Act") by virtue of Lender
having a net worth, either individually or with Lender's spouse, of at
least $1,000,000, (ii) it is acquiring the Note for investment
purposes only and not with a view to, or for sale in connection with,
any distribution of the Note, or with any present intention of selling
the Note, or any part thereof, and (iii) it will not transfer the
Note, or any part thereof, unless such transfer complies with the
registration requirements of the Act or an exemption from such
registration requirements is applicable to such transfer.
G. Disclaimer. The Lender, by accepting the Note, irrevocably
agrees that its making of the loans evidenced by the Note is not being
made in reliance upon the standing of the Company as a member
organization of the Exchange or upon the Exchange's surveillance of
the Company's financial position or its compliance with the
constitution, rules and practices of the Exchange. The Lender has
made such investigation of the Company and its Officers and employees
as the Lender deems necessary and appropriate under the circumstances.
The Lender is not relying upon the Exchange to provide any information
concerning or relating to the Company and agrees that the Exchange has
no responsibility to disclose to the Lender any
information concerning or relating to the Company which it may now or
in the future have. The Lender agrees that neither the Exchange, its
special trust fund, nor any director, officer, trustee or employee of
the Exchange, shall be liable to the Lender with respect to this
Agreement or the Note or the repayment thereof of any interest
thereon.
H. Assignment. The Note may not be transferred, sold, assigned,
pledged or otherwise encumbered or otherwise disposed of, and no lien,
charge or other encumbrance may be created or permitted to be created
hereon without the prior written consent of the Exchange and the
Company, except that the Company shall not without its consent to such
transfer to a member of Lender's immediate family. Any transfer not
permitted by the foregoing shall be void.
I. Exchange Approval. This Agreement shall not be modified or
amended without the prior written approval of the Exchange.
J. Entire Agreement. This Agreement and the Note embody the
entire agreement as to the subject matter hereof between the Company
and the Lender and no other evidence of such agreement has been or
will be executed without the prior written consent of the Exchange.
K. Cancellation. Neither this Agreement nor the Note shall be
subject to cancellation by either party except as may be permitted
hereunder.
L. Notice to CFTC. So long as the Company is a futures
commission merchant as that term is defined in the Commodity Exchange
Act, the Company agrees, consistent with the requirements of Section
1.17Q) of the regulations of the CFTC, that:
(i) whenever prior written notice by the Company to the
Exchange is required pursuant to the provisions of this
Agreement, the same prior written notice shall be given by the
Company to (a) the CFTC at its principal office in Washington,
D.C., Attention: Chief Accountant of Division of Trading and
Markets, and/or (1,) the commodity exchange of which the Company
is a member and which is then designated by the CFTC as the
Company's designated self-regulatory organization (the ("DSRO"),
and
(ii) whenever prior written consent, permission or approval
of the Exchange is required pursuant to the provisions of this
Agreement, the Company shall also obtain the prior written
consent, permission or approval of the CFTC and/or of the DSRO,
and
(iii) whenever the Company receives written notice of
acceleration of maturity pursuant to the provisions of this
Agreement, the Company shall promptly give written notice thereof
to the CFTC at the address above stated and/or the DSRO.
M. Status of Proceeds The proceeds of the loan evidenced hereby
shall be dealt with in all respects as capital of the Company, shall
be subject to the risks of its business, and may be deposited in an
account or accounts in the Company's name in any bank or trust
company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day of the year first written above.
FIRST ALBANY CORPORATION LENDER:
By:_________________________ __________________________
Name: Sharon M. Duker
Title:
NOTE
$5,000,000.00 Albany, New York
September 16, 1996
FOR VALUE RECEIVED, the undersigned FIRST ALBANY CORPORATION, a New York
corporation with offices at 30 South Pearl Street, Albany, New York 12207,
promises to pay to the order of Sharon M. Duker, (herein called the
"Lender"), at the office of the Lender in Albany, New York or at such other
place in New York as may be designated from time to time by the Lender, the
sum of Five Million ($5,000,000.00) Dollars and to pay interest on the
disbursed, unpaid principal, from the date hereof, at the rate of nine and
one-quarter (9.25%) percent per annum.
The undersigned promises to pay the principal and interest as follows:
(a) Accrued interest to be paid on the 31st day of September, 1996,
and on the last day of each succeeding month thereafter during
the term hereof.
(b) The entire unpaid balance of principal together with accrued
interest to be paid to the Lender on the 31st day of July, 2001.
All amounts paid pursuant to this paragraph shall be applied first to the
payment of accrued interest to the date of payment and then to the
reduction of principal.
The undersigned agrees to pay accrued interest and/or principal when due.
This Note is subject to the terms, covenants and conditions set forth in a
Subordinated Loan Agreement by and between the undersigned and the Lender,
dated the date hereof (the "Loan Agreement"), and all such terms, covenants
and conditions of such Loan Agreement are all hereby incorporated in this
Note, with the same force and effect as though said terms, covenants and
conditions were fully set forth herein. The prepayment of any portion of
the principal or interest due under this Note shall be allowed in
accordance with the terms of the Loan Agreement.
DEFAULT. Upon the occurrence of certain Events of Default, specified in
the loan Agreement, the principal of and interest on this Note may be
declared due and payable either immediately or as set forth therein. The
payment of principal of the Note may be suspended upon the occurrence of
certain events specified in the Loan Agreement, and such suspension will
not constitute a default hereunder.
The undersigned agrees to pay all costs and expenses incurred by the holder
hereof in enforcing this Note, including, without limitation, reasonable
attorneys' fees and legal expenses.
FIRST ALBANY CORPORATION
(CORPORATE SEAL)
By:_________________________
ATTEST: Alan P. Goldberg
President
_______________________