<PAGE>
AS FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION ON MAY 22, 1996
SECURITIES ACT FILE NO. 333-1670
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM N-2
(CHECK APPROPRIATE BOX OR BOXES)
[X] REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[X]
PRE-EFFECTIVE AMENDMENT NO. 2
[_]
POST-EFFECTIVE AMENDMENT NO.
----------------
MEDALLION FINANCIAL CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
205 EAST 42ND STREET, SUITE 2020, NEW YORK, NEW YORK 10017
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(212) 682-3300
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
----------------
ALVIN MURSTEIN
CHIEF EXECUTIVE OFFICER
MEDALLION FINANCIAL CORP.
205 EAST 42ND STREET, SUITE 2020
NEW YORK, NEW YORK 10017
(NAME AND ADDRESS OF AGENT FOR SERVICE)
WITH COPIES TO:
STEVEN N. FARBER, ESQ. MARIO M. CUOMO, ESQ.
STANLEY KELLER, ESQ. CHRISTOPHER E. MANNO, ESQ.
PALMER & DODGE LLP WILLKIE FARR & GALLAGHER
ONE BEACON STREET 153 EAST 53RD STREET
BOSTON, MASSACHUSETTS 02108 NEW YORK, NEW YORK 10022
(617) 573-0100 (212) 821-8000
----------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
the effective date of this Registration Statement.
If any of the securities being registered on this form will be offered on a
delayed or continuous basis in reliance on Rule 415 under the Securities Act
of 1933, other than securities offered in connection with a dividend
reinvestment plan, check the following box [_]
It is proposed that this filing will become effective (check appropriate
box):
[_] when declared effective pursuant to Section 8(c) of the Securities Act of
1933.
[_] This form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933 and the
Securities Act registration statement number of the earlier effective
registration statement for the same offering is 333- .
[_] This Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933 and the Securities Act registration
statement number of the earlier effective registration statement for the
same offering is 333- .
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act of 1933, please check the following box: [_]
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF
SECURITIES BEING BEING OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par
value................. 5,750,000 $12.00 $69,000,000 $23,793.10(3)
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Includes 750,000 shares which may be sold by the Company pursuant to an
option granted to the Underwriters solely to cover over-allotments, if
any.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(a) under the Securities Act of 1933.
(3) This amount was paid in connection with the initial filing of the
Registration Statement on February 26, 1996.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE
COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
Medallion Financial Corp. incorporates by reference herein Parts A and B of
Amendment No. 1 to its Registration Statement (File No. 333-1670) as filed with
the Securities and Exchange Commission on April 30, 1996.
<PAGE>
PART C
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
1. Financial Statements.
The following financial statements are included in the Prospectus on
the identified pages.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
MEDALLION FINANCIAL CORP.
Introduction to Pro Forma Combined Financial Statements.................. F-3
Pro Forma Balance Sheet at December 31, 1995 (unaudited)................. F-4
Pro Forma Combined Statement of Operations for the year ended
December 31, 1995 (unaudited)........................................... F-5
Pro Forma Combined Statement of Operations for the three months ended
December 31, 1995 (unaudited)........................................... F-6
Pro Forma Combined Statement of Operations for the three months ended
September 30, 1995 (unaudited).......................................... F-7
Pro Forma Combined Statement of Operations for the three months ended
June 30, 1995 (unaudited)............................................... F-8
Pro Forma Combined Statement of Operations for the three months ended
March 31, 1995 (unaudited).............................................. F-9
Notes to the Unaudited Pro Forma Combined Financial Statements........... F-10
MEDALLION FINANCIAL CORP.
Report of Arthur Andersen LLP, Independent Public Accountants............ F-13
Balance Sheet as of December 31, 1995.................................... F-14
Notes to Balance Sheet................................................... F-15
TRI-MAGNA CORPORATION AND SUBSIDIARIES
Report of Arthur Andersen LLP, Independent Public Accountants............ F-18
Consolidated Balance Sheets as of December 31, 1995 and December 31,
1994.................................................................... F-19
Consolidated Statements of Operations for the years ended December 31,
1995, 1994 and 1993..................................................... F-20
Consolidated Statements of Shareholders' Equity for the years ended
December 31, 1995, 1994, 1993 and 1992.................................. F-21
Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993........................................ F-22
Notes to Consolidated Financial Statements............................... F-23
EDWARDS CAPITAL COMPANY (A LIMITED PARTNERSHIP)
Independent Auditors' Report of Friedman, Alpren & Green LLP............. F-33
Report of Arthur Andersen LLP, Independent Public Accountants............ F-34
Balance Sheets as of December 31, 1995 and 1994.......................... F-35
Statements of Operations for the years ended December 31, 1995, 1994 and
1993.................................................................... F-36
Statements of Changes in Partners' Capital for the years ended
December 31, 1995, 1994 and 1993........................................ F-37
Statements of Cash Flows for the years ended December 31, 1995, 1994 and
1993.................................................................... F-38
Notes to Financial Statements............................................ F-39
TRANSPORTATION CAPITAL CORP.
Report of Coopers & Lybrand LLP, Independent Public Accountants.......... F-46
Report of Arthur Andersen LLP, Independent Public Accountants............ F-47
Balance Sheets as of December 31, 1995 and 1994.......................... F-48
Statements of Operations for the years ended December 31, 1995, 1994 and
1993.................................................................... F-49
Statements of Changes in Shareholders' Equity for each year in the two
year period ended
December 31, 1994....................................................... F-50
Statements of Cash Flows for the years ended December 31, 1995, 1994 and
1993.................................................................... F-51
Notes to Financial Statements............................................ F-52
</TABLE>
II-1
<PAGE>
2. Exhibits.
a. --Form of Medallion Financial Corp. Restated Certificate of
Incorporation++
b. --Form of Medallion Financial Corp. Restated By-Laws++
e. --Form of Medallion Financial Corp. Dividend Reinvestment Plan++
f.1 --Debenture due September 1, 1996 in the amount of $1,200,000
issued by Edwards Capital Company and payable to the U.S.
Small Business Administration+
f.2 --Debenture due April 1, 1997 in the amount of $1,500,000
issued by Edwards Capital Company and payable to Chemical
Bank as Trustee under the Trust Agreement dated January 15,
1987 among the Trustee, the U.S. Small Business
Administration and SBIC Funding Corporation (the "Trust
Agreement")+
f.3 --Debenture due June 1, 1998 in the amount of $3,000,000
issued by Edwards Capital Company and payable to Chemical
Bank under the Trust Agreement+
f.4 --Debenture due September 1, 2002 in the amount of $3,500,000
issued by Edwards Capital Company and payable to Chemical
Bank as Trustee under the Amended and Restated Trust
Agreement dated March 1, 1990 among the Trustee, the U.S.
Small Business Administration and SBIC Funding Corporation
(the "Amended Trust Agreement")+
f.5 --Debenture due September 1, 2002 in the amount of $6,050,000
issued by Edwards Capital Company and payable to Chemical
Bank under the Amended Trust Agreement+
f.6 --Debenture due June 1, 2004 in the amount of $4,600,000
issued by Edwards Capital Company and payable to Chemical
Bank under the Amended Trust Agreement+
f.7 --Debenture due September 1, 2004 in the amount of $5,100,000
issued by Edwards Capital Company and payable to Chemical
Bank under the Amended Trust Agreement+
f.8 --Letter Agreement, dated September 8, 1992, between the U.S.
Small Business Administration and Edwards Capital Company
regarding limit on incurrence of senior indebtedness, as
amended on January 17, 1996+
f.9 --Subordinated Debenture due May 7, 1996 in the amount of
$1,090,000 issued by Transportation Capital Corp. and payable
to the U.S. Small Business Administration+
f.10 --Debenture due June 1, 2002 in the amount of $5,640,000
issued by Transportation Capital Corp. and payable to
Chemical Bank under the Amended Trust Agreement+
g. --Form of Sub-Advisory Agreement between Medallion Financial Corp.
and FMC Advisers, Inc.++
h.1 --Form of Underwriting Agreement++
h.2 --Form of Master Agreement Among Underwriters+
h.3 --Form of Master Selected Dealer Agreement+
i.1 --Form of Medallion Financial Corp. 1996 Stock Option Plan++
i.2 --Form of Medallion Financial Corp. 401(k) Investment Plan++
i.3 --Form of Medallion Financial Corp. 1996 Non-Employee Directors
Stock Option Plan++
j. --Custodial Services Agreement with The First National Bank of
Boston, dated April 25, 1996++
k.1 --Stock Purchase Agreement among Medallion Financial Corp.,
Transportation Capital Corp., LNC Investments, Inc., Leucadia,
Inc. and Leucadia National Corporation, dated February 12, 1996*
k.1(i) --Amendment Number 1 to Stock Purchase Agreement among Medallion
Financial Corp. Transportation Capital Corp., LNC Investments,
Inc., Leucadia, Inc. and Leucadia National Corporation dated April
30, 1996.++
k.2 --Asset Purchase Agreement between Medallion Financial Corp., and
Edwards Capital Company, dated February 21, 1996*
k.2(i) --Amendment Number 1 to Asset Purchase Agreement between Medallion
Financial Corp. and Edwards Capital Company dated April 30, 1996++
II-2
<PAGE>
k.3(i) --Agreement of Merger between Medallion Financial Corp. and Tri-
Magna Corporation, dated December 21, 1995, as amended on February
22, 1996*
k.3(ii)--Amendment Number 2 to Agreement of Merger between Medallion
Financial Corp. and Tri-Magna Corporation, dated April 26, 1996+
k.4 --Form of Promissory Note from Edwards Capital Company payable
to Israel Discount Bank of New York+
k.5 --Schedule of Promissory Notes from Edwards Capital Company
payable to Israel Discount Bank of New York++
k.6 --Form of Secured Note from Edwards Capital Company payable to
Sterling National Bank & Trust Company of New York+
k.7 --Schedule of Secured Notes from Edwards Capital Company
payable to Sterling National Bank & Trust Company of New
York++
k.8 --Promissory Note dated July 31, 1993 in the principal amount
of $5,000,000 from Edwards Capital Company payable to NatWest
Bank N.A. (formerly National Westminster Bank USA) as
endorsed by Endorsement No. 1 dated July 31, 1994 and
Endorsement No. 2 dated July 31, 1995++
k.9 --Committed Line of Credit Agreement in the principal amount
of $3,000,000 dated as of July 29, 1993, as amended May 31,
1994, October 31, 1994 and September 30, 1995 between Edwards
Capital Company and Bank Hapoalim B.M.+
k.10 --Inter-Creditor Agreement among and between Edwards Capital
Company and Bank Hapoalim B.M., Chemical Bank, Israel
Discount Bank of New York, NatWest Bank N.A. (formerly
National Westminster Bank USA), Marine Midland Bank and
Sterling National Bank & Trust Company of New York dated as
of May 14, 1991+
k.11 --Security Agreement between Bank Hapoalim B.M. and Edwards
Capital Company dated May 1, 1989+
k.12 --Continuing General Security Agreement between NatWest Bank
N.A. (formerly National Westminster Bank USA) and Edwards
Capital Company dated June 17, 1987+
k.13 --General Loan and Security Agreement between Sterling
National Bank & Trust of New York and Edwards Capital Company
dated May 1, 1991+
k.14 --General Security Agreement between Israel Discount Bank of
New York and Edwards Capital Company dated May 2, 1991+
k.15 --Promissory Note dated March 5, 1996 in the principal amount
of $275,000 from Medallion Taxi Media, Inc. payable to Israel
Discount Bank of New York+
k.16 --Promissory Note dated September 1, 1995 in the principal
amount of $2,000,000 from Tri-Magna Corporation payable to
NatWest Bank N.A. (formerly National Westminster Bank USA)+
k.17 --Term Note dated September 29, 1995 in the principal amount
of $3,231,900 from Tri-Magna Corporation payable to NatWest
Bank N.A. (formerly National Westminister Bank USA) as
amended March 30, 1996++
k.18 --Term Note in the principal amount of $2,000,000 dated July
16, 1990 as amended March 27, 1992, July 16, 1993 and
July 16, 1995 from Medallion Funding Corp. payable to NatWest
Bank N.A. (formerly National Westminster Bank USA)++
k.19 --Loan Agreement dated as of March 27, 1992 among Medallion
Funding Corp., the banks signatory thereto and NatWest Bank
N.A. (formerly National Westminster Bank USA), as amended
March 31, 1993, September 29, 1993, March 31, 1994, September
29, 1995 and March 28, 1996.+
II-3
<PAGE>
k.20 --Security Agreement between Medallion Funding Corp. and
NatWest Bank N.A. (formerly National Westminster Bank USA)
dated as of March 27, 1992 for the benefit of the banks
signatory to the Loan Agreement dated as of March 27, 1992,
among Medallion Funding Corp., the banks signatory thereto
and NatWest Bank N.A. (formerly National Westminster Bank
USA)+
k.21 --Revolving Credit Note dated September 29, 1995 in the amount
of $18,000,000 from Medallion Funding Corp. payable to
NatWest Bank N.A. (formerly National Westminster Bank USA)+
k.22 --Revolving Credit Note dated September 29, 1995 in the amount
of $17,500,000 from Medallion Funding Corp. payable to The
First National Bank of Boston+
k.23 --Revolving Credit Note dated September 29, 1995 in the amount
of $17,500,000 from Medallion Funding Corp. payable to Fleet
Bank of Massachusetts, N.A.+
k.24 --Revolving Credit Note dated September 29, 1995 in the amount
of $10,000,000 from Medallion Funding Corp. payable to The
Bank of Tokyo Trust Company+
k.25 --Revolving Credit Note dated September 29, 1995 in the amount
of $6,000,000 from Medallion Funding Corp. payable to Israel
Discount Bank of New York+
k.26 --Revolving Credit Note dated September 29, 1995 in the amount
of $6,000,000 from Medallion Funding Corp. payable to
European American Bank+
k.27 --Revolving Credit Note dated March 28, 1996 in the amount of
$3,000,000 from Medallion Funding Corp. payable to Harris
Trust and Savings Bank+
k.28 --Specialized Small Business Investment Company 3% Preferred
Stock Repurchase Agreement dated as of August 12, 1994
between Medallion Funding Corp. and the U.S. Small Business
Administration+
k.29 --Specialized Small Business Investment Company 3% Preferred
Stock Repurchase Agreement dated as March 22, 1995 between
Transportation Capital Corp. and the U.S. Small Business
Administration as amended by letter agreement dated June 1,
1995+
k.30 --Form of Employment Agreement between Medallion Financial
Corp and Alvin Murstein.++
k.31 --Form of Employment Agreement between Medallion Financial
Corp. and Andrew Murstein.++
l. --Opinion and consent of Palmer & Dodge LLP++
n.1 --Consent of Arthur Andersen LLP relating to its report dated
February 21, 1996++
n.2 --Consent of Arthur Andersen LLP relating to its report dated March
14, 1996++
n.3 --Consent of Arthur Andersen LLP relating to its report dated March
14, 1996++
n.4 --Consent of Arthur Andersen LLP relating to its report dated March
15, 1996++
n.5 --Consent of Coopers & Lybrand LLP relating to its report dated
October 24, 1995++
n.6 --Consent of Friedman, Alpren & Green LLP relating to its report
dated January 28, 1995++
p.1 --Subscription Agreement between the Alvin Murstein Second Family
Trust and Medallion Financial Corp.++
p.2 --Subscription Agreement between the Andrew Murstein Family Trust
and Medallion Financial Corp.++
r. --Medallion Financial Corp. Financial Data Schedule+
- ----------------
* Filed on February 26, 1996.
+ Filed on April 30, 1996.
++ Filed herewith.
II-4
<PAGE>
ITEM 25. MARKETING ARRANGEMENTS
See Section 12 of the Underwriting Agreement which is filed as Exhibit h.1
hereto, Sections 12 and 15 of the Master Agreement Among Underwriters which is
filed as Exhibit h.2 hereto and Section 3(c) of the Master Selected Dealer
Agreement which is filed as Exhibit h.3 hereto.
In connection with the Offering, the Underwriters may over-allot or effect
transactions which stabilize or maintain the market price of the Common Stock
at a level above that which might otherwise prevail in the open market. Such
stabilizing, if commenced, may be discontinued at any time.
Pursuant to Lock-up Agreements with the Company's directors and officers and
certain other stockholders, each party to a Lock-up Agreement has agreed that
he or she will not, directly or indirectly, offer for sale, sell, contract to
sell, grant an option to purchase or otherwise dispose of any shares of the
Company's Common Stock, except for shares escrowed by the Murstein Trusts for
the benefit of FMC or gifts to family members or charitable institutions,
provided that such family member or charitable institution agrees to be bound
by such Lock-up Agreement, for a period of two years from the date of this
Prospectus without the prior written consent of Furman Selz LLC. In addition,
the Company has agreed that for a period of 180 days from the date of this
Prospectus, the Company will not, without the prior written consent of Furman
Selz LLC, directly or indirectly, offer for sale, sell, contract to sell, or
grant any option to purchase or otherwise dispose of or transfer any shares of
Common Stock other than options granted under the 1996 Plan, the Director Plan
or shares issued pursuant to the exercise of outstanding options.
ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses expected to be
incurred in connection with the Offering:
<TABLE>
<S> <C>
SEC registration fee.......................................... $ 23,793.10
NASD fees..................................................... 7,400.00
Nasdaq initial listing fee.................................... 36,250.00
Blue Sky fees and expenses.................................... 15,000.00
Financial advisory fees....................................... 225,000.00
Accounting fees and expenses.................................. 670,000.00
Legal fees and expenses....................................... 675,000.00
Printing and engraving fees................................... 120,000.00
Registrar and transfer agent's fees........................... 10,000.00
Miscellaneous fees and expenses............................... 67,556.90
-------------
Total....................................................... $1,850,000.00
=============
</TABLE>
ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
MEDALLION FINANCIAL CORP.
---------------------------------------------------------------
Medallion Medallion Edwards Transportation
Funding Corp. Media, Inc. Capital Capital Corp.
Company
All of the subsidiaries are 100% owned by Medallion Financial and they are
Delaware corporations. The financial statements for Edwards Capital Company
and Transportation Capital Corp. are included in the Prospectus which forms a
part of this Registration Statement. The financial statements of Medallion
Funding Corp. are consolidated with the financial statements of Tri-Magna
Corporation included in the Prospectus. Summary financial statements of
Medallion Media, Inc. are included in the notes to the financial statements of
Tri-Magna Corporation and have not been consolidated because Medallion Media,
Inc. is not an investment company and its results of operations may not be
consolidated with the results of operations of Tri-Magna Corporation which is
an investment company.
II-5
<PAGE>
ITEM 28. NUMBER OF HOLDERS OF SECURITIES
The following table sets forth the number of record holders of the Company's
Common Stock as of April 26, 1996.
<TABLE>
<CAPTION>
NAME OF CLASS NUMBER OF RECORD HOLDERS
------------- ------------------------
<S> <C>
Common Stock, $.01 par value per
share 2
</TABLE>
ITEM 29. INDEMNIFICATION
Section 145 of the Delaware General Corporation Law grants the Company the
power to indemnify each person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative by reason
of the fact that he is or was a director, officer, employee or agent of the
Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys' fees),
judgements, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the Company, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful,
provided, however, no indemnification shall be made in connection with any
proceeding brought by or in the right of the Company where the person involved
is adjudged to be liable to the Company except to the extent approved by a
court. Article TENTH of the Company's Certificate of Incorporation as
currently in effect provides that the Company shall, to the fullest extent
permitted by the Delaware General Corporation Law, as amended from time to
time, indemnify each person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or proceeding by
reason of the fact that he is or was, or has agreed to become, a director or
officer of the Company, or is or was serving, or has agreed to serve, at the
request of the Company, as a director, officer or trustee of, or in a similar
capacity with, another corporation, partnership, joint venture, trust or other
enterprise. The indemnification provided for in Article TENTH is expressly not
exclusive of any other rights to which those seeking indemnification may be
entitled under any law, agreement or vote of stockholders or disinterested
directors or otherwise, and shall inure to the benefit of the heirs, executors
and administrators of such persons. Article TENTH permits the Board of
Directors to authorize the grant of indemnification rights to other employees
and agents of the Company and such rights may be equivalent to, or greater or
less than, those set forth in Article TENTH.
Article V, Section 2 of the Company's By-Laws provides that the Company
shall have the power to purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Company, or
is or was serving at the request of the Company, as a director, officer or
trustee of, or in a similar capacity with, another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted
against and incurred by such person in any such capacity.
Pursuant to Section 102(b)(7) of the Delaware General Corporation Law,
Article NINTH of the Company's Certificate of Incorporation eliminates a
director's personal liability for monetary damages to the Company and its
stockholders for breaches of fiduciary duty as a director, except to the
extent that the elimination or limitation of liability is not then permitted
under the Delaware General Corporation Law.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute
to payments that the Underwriters may be required to make in respect thereof.
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
Information as to the directors and officers of FMC Advisers, Inc. is
included in its Form ADV filed with the Commission (File No. 801-50981), as
amended as of the date hereof, and is incorporated herein by reference.
II-6
<PAGE>
ITEM 31. LOCATION OF ACCOUNTS AND RECORDS.
The Company maintains at its principal office physical possession of each
account, book or other document required to be maintained by Section 31(a) of
the 1940 Act as applicable, pursuant to Section 64 of the 1940 Act.
ITEM 32. MANAGEMENT SERVICES.
Not applicable.
ITEM 33. UNDERTAKINGS.
(1) The Company hereby undertakes:
(a) to suspend the Offering until the Prospectus is amended if (1)
subsequent to the effective date of this Registration Statement, its net
asset value declines more than ten percent from its net asset value as of
the effective date of this Registration Statement or (2) the net asset
value increases to an amount greater than its net proceeds as stated in the
Prospectus.
(b) that, for the purpose of determining any liability under the
Securities Act of 1933, the information omitted from the form of Prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of Prospectus filed by the Company under Rule 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective; and
(c) that, for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
Prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of the securities at that
time shall be deemed to be the initial bona fide offering thereof.
(2) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the provisions of the Certificate of Incorporation and
By-Laws, or otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication for such issue.
II-7
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED AMENDMENT NO. 2 TO THIS REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW
YORK, AND STATE OF NEW YORK, ON THE 22ND DAY OF MAY 1996.
Medallion Financial Corp.
By: /s/ Alvin Murstein
------------------------------------
Alvin Murstein
Chairman and Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AMENDMENT NO. 2
TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ Alvin Murstein Chairman and Chief Executive May 22, 1996
- ------------------------------------ Officer (Principal Executive
Alvin Murstein Officer)
* Andrew Murstein President and Director May 22, 1996
- ------------------------------------
Andrew Murstein
* Daniel Baker Treasurer and Chief May 22, 1996
- ------------------------------------ Financial Officer
Daniel Baker
* Mario M. Cuomo Director May 22, 1996
- ------------------------------------
Mario M. Cuomo
* Stanley Kreitman Director May 22, 1996
- ------------------------------------
Stanley Kreitman
* David L. Rudnick Director May 22, 1996
- ------------------------------------
David L. Rudnick
* Benjamin Ward Director May 22, 1996
- ------------------------------------
Benjamin Ward
*By: /s/ Alvin Murstein
---------------------------
Alvin Murstein
Attorney-in- fact May 22, 1996
</TABLE>
II-8
<PAGE>
EXHIBIT INDEX
PAGE
Exhibit Number and Description
a. --Form of Medallion Financial Corp. Restated Certificate of
Incorporation++
b. --Form of Medallion Financial Corp. Restated By-Laws++
e. --Form of Medallion Financial Corp. Dividend Reinvestment Plan++
f.1 --Debenture due September 1, 1996 in the amount of $1,200,000
issued by Edwards Capital Company and payable to the U.S.
Small Business Administration+
f.2 --Debenture due April 1, 1997 in the amount of $1,500,000
issued by Edwards Capital Company and payable to Chemical
Bank as Trustee under the Trust Agreement dated January 15,
1987 among the Trustee, the U.S. Small Business
Administration and SBIC Funding Corporation (the "Trust
Agreement")+
f.3 --Debenture due June 1, 1998 in the amount of $3,000,000
issued by Edwards Capital Company and payable to Chemical
Bank under the Trust Agreement+
f.4 --Debenture due September 1, 2002 in the amount of $3,500,000
issued by Edwards Capital Company and payable to Chemical
Bank as Trustee under the Amended and Restated Trust
Agreement dated March 1, 1990 among the Trustee, the U.S.
Small Business Administration and SBIC Funding Corporation
(the "Amended Trust Agreement")+
f.5 --Debenture due September 1, 2002 in the amount of $6,050,000
issued by Edwards Capital Company and payable to Chemical
Bank under the Amended Trust Agreement+
f.6 --Debenture due June 1, 2004 in the amount of $4,600,000
issued by Edwards Capital Company and payable to Chemical
Bank under the Amended Trust Agreement+
f.7 --Debenture due September 1, 2004 in the amount of $5,100,000
issued by Edwards Capital Company and payable to Chemical
Bank under the Amended Trust Agreement+
f.8 --Letter Agreement, dated September 8, 1992, between the U.S.
Small Business Administration and Edwards Capital Company
regarding limit on incurrence of senior indebtedness, as
amended on January 17, 1996+
f.9 --Subordinated Debenture due May 7, 1996 in the amount of
$1,090,000 issued by Transportation Capital Corp. and payable
to the U.S. Small Business Administration+
f.10 --Debenture due June 1, 2002 in the amount of $5,640,000
issued by Transportation Capital Corp. and payable to
Chemical Bank under the Amended Trust Agreement+
g. --Form of Sub-Advisory Agreement between Medallion Financial
Corp. and FMC Advisers, Inc.++
h.1 --Form of Underwriting Agreement++
h.2 --Form of Master Agreement Among Underwriters+
h.3 --Form of Master Selected Dealer Agreement+
i.1 --Form of Medallion Financial Corp. 1996 Stock Option Plan++
i.2 --Form of Medallion Financial Corp. 401(k) Investment Plan++
i.3 --Form of Medallion Financial Corp. 1996 Non-Employee
Directors Stock Option Plan++
j. --Custodial Services Agreement with The First National Bank of
Boston, dated April 25, 1996++
k.1 --Stock Purchase Agreement among Medallion Financial Corp.,
Transportation Capital Corp., LNC Investments, Inc.,
Leucadia, Inc. and Leucadia National Corporation, dated
February 12, 1996*
<PAGE>
PAGE
Exhibit Number and Description
k.1(i)
--Amendment Number 1 to Stock Purchase Agreement among
Medallion Financial Corp., Transportation Capital Corp., LNC
Investments, Inc., Leucadia, Inc. and Leucadia National
Corporation dated April 30, 1996.++
--Asset Purchase Agreement between Medallion Financial Corp.,
k.2 and Edwards Capital Company, dated February 21, 1996*
k.2(i)
--Amendment Number 1 to Asset Purchase Agreement between
Medallion Financial Corp. and Edwards Capital Company dated
April 30, 1996.++
k.3(i) --Agreement of Merger between Medallion Financial Corp. and
Tri-Magna Corporation, dated December 21, 1995, as amended on
February 22, 1996*
k.3(ii)--Amendment Number 2 to Agreement of Merger between Medallion
Financial Corp. and Tri-Magna Corporation, dated April 26,
1996+
k.4 --Form of Promissory Note from Edwards Capital Company payable
to Israel Discount Bank of New York+
k.5 --Schedule of Promissory Notes from Edwards Capital Company
payable to Israel Discount Bank of New York++
k.6 --Form of Secured Note from Edward Capital Company payable to
Sterling National Bank & Trust Company of New York+
k.7 --Schedule of Secured Notes from Edwards Capital Company
payable to Sterling National Bank & Trust Company of New
York++
k.8 --Promissory Note dated July 31, 1993 in the principal amount
of $5,000,000 from Edwards Capital Company payable to NatWest
Bank N.A. (formerly National Westminster Bank USA) as
endorsed by Endorsement No. 1 dated July 31, 1994 and
Endorsement No. 2 dated July 31, 1995++
k.9 --Committed Line of Credit Agreement in the principal amount
of $3,000,000 dated as of July 29, 1993, as amended May 31,
1994, October 31, 1994 and September 30, 1995 between Edwards
Capital Company and Bank Hapoalim B.M.+
k.10 --Inter-Creditor Agreement among and between Edwards Capital
Company and Bank Hapoalim B.M., Chemical Bank, Israel
Discount Bank of New York, NatWest Bank N.A. (formerly
National Westminster Bank USA), Marine Midland Bank and
Sterling National Bank & Trust Company of New York dated as
of May 14, 1991+
k.11 --Security Agreement between Bank Hapoalim B.M. and Edwards
Capital Company dated May 1, 1989+
k.12 --Continuing General Security Agreement between NatWest Bank
N.A. (formerly National Westminster Bank USA) and Edwards
Capital Company dated June 17, 1987+
k.13 --General Loan and Security Agreement between Sterling
National Bank & Trust of New York and Edwards Capital Company
dated May 1, 1991+
k.14 --General Security Agreement between Israel Discount Bank of
New York and Edwards Capital Company dated May 2, 1991+
k.15 --Promissory Note dated March 5, 1996 in the principal amount
of $275,000 from Medallion Taxi Media, Inc. payable to Israel
Discount Bank of New York+
k.16 --Promissory Note dated September 1, 1995 in the principal
amount of $2,000,000 from Tri-Magna Corporation payable to
NatWest Bank N.A. (formerly National Westminster Bank USA)+
2
<PAGE>
PAGE
Exhibit Number and Description
k.17
--Term Note dated September 29, 1995 in the principal amount
of $3,231,900 from Tri-Magna Corporation payable to NatWest
Bank N.A. (formerly National Westminister Bank USA) as
amended March 30, 1996++
k.18 --Term Note in the principal amount of $2,000,000 dated July
16, 1990 as amended March 27, 1992, July 16, 1993 and
July 16, 1995 from Medallion Funding Corp. payable to NatWest
Bank N.A. (formerly National Westminster Bank USA)++
k.19 --Loan Agreement dated as of March 27, 1992 among Medallion
Funding Corp., the banks signatory thereto and NatWest Bank
N.A. (formerly National Westminster Bank USA), as amended
March 31, 1993, September 29, 1993, March 31, 1994, September
29, 1995 and March 28, 1996+
k.20 --Security Agreement between Medallion Funding Corp. and
NatWest Bank N.A. (formerly National Westminster Bank USA)
dated as of March 27, 1992 for the benefit of the banks
signatory to the Loan Agreement dated as of March 27, 1992,
among Medallion Funding Corp., the banks signatory thereto
and NatWest Bank N.A. (formerly National Westminster Bank
USA)+
k.21 --Revolving Credit Note dated September 29, 1995 in the amount
of $18,000,000 from Medallion Funding Corp. payable to
NatWest Bank N.A. (formerly National Westminster Bank USA)+
k.22 --Revolving Credit Note dated September 29, 1995 in the amount
of $17,500,000 from Medallion Funding Corp. payable to The
First National Bank of Boston+
k.23 --Revolving Credit Note dated September 29, 1995 in the amount
of $17,500,000 from Medallion Funding Corp. payable to Fleet
Bank of Massachusetts, N.A.+
k.24 --Revolving Credit Note dated September 29, 1995 in the amount
of $10,000,000 from Medallion Funding Corp. payable to The
Bank of Tokyo Trust Company+
k.25 --Revolving Credit Note dated September 29, 1995 in the amount
of $6,000,000 from Medallion Funding Corp. payable to Israel
Discount Bank of New York+
k.26 --Revolving Credit Note dated September 29, 1995 in the amount
of $6,000,000 from Medallion Funding Corp. payable to
European American Bank+
k.27 --Revolving Credit Note dated March 28, 1996 in the amount of
$3,000,000 from Medallion Funding Corp. payable to Harris
Trust and Savings Bank+
k.28 --Specialized Small Business Investment Company 3% Preferred
Stock Repurchase Agreement dated as of August 12, 1994
between Medallion Funding Corp. and the U.S. Small Business
Administration+
k.29 --Specialized Small Business Investment Company 3% Preferred
Stock Repurchase Agreement dated as March 22, 1995 between
Transportation Capital Corp. and the U.S. Small Business
Administration as amended by letter agreement dated June 1,
1995+
k.30
--Form of Employment Agreement between Medallion Financial
Corp. and Alvin Murstein++
k.31
--Form of Employment Agreement between Medallion Financial
Corp. and Andrew Murstein++
l. --Opinion and consent of Palmer & Dodge LLP++
n.1
--Consent of Arthur Andersen LLP relating to its report dated
February 21, 1996++
n.2
--Consent of Arthur Andersen LLP relating to its report dated March
14, 1996++
n.3
--Consent of Arthur Andersen LLP relating to its report dated March
14, 1996++
3
<PAGE>
PAGE
Exhibit Number and Description
n.4 --Consent of Arthur Andersen LLP relating to its report dated March
14, 1996++
n.5 --Consent of Coopers & Lybrand LLP relating to its report dated
October 24, 1995++
n.6 --Consent of Friedman, Alpren & Green LLP relating to its
report dated January 28, 1995++
p.1 --Subscription Agreement between the Alvin Murstein Second
Family Trust and Medallion Financial Corp.++
p.2 --Subscription Agreement between the Andrew Murstein Family
Trust and Medallion Financial Corp.++
r. --Medallion Financial Corp. Financial Data Schedule+
- ----------------
* Filed on February 26, 1996.
+ Filed on April 30, 1996.
++ Filed herewith.
4
<PAGE>
RESTATED
CERTIFICATE OF INCORPORATION
OF
MEDALLION FINANCIAL CORP.
MEDALLION FINANCIAL CORP. (the "Corporation"), a corporation organized and
existing under and by virtue of the Delaware General Corporation Law, does
hereby certify that the Board of Directors of the Corporation, by a resolution
adopted at a meeting of the Board of Directors of the Corporation on May __,
1996, and by a written consent of the stockholders of the Corporation dated May
__, 1996, approved and adopted, pursuant to SECTION 242 of the Delaware General
Corporation Law, this Restated Certificate of Incorporation, which restates,
integrates and amends the Certificate of Incorporation in its entirety pursuant
to SECTION 245 of the Delaware General Corporation Law. The Certificate of
Incorporation of the Corporation was originally filed with the Secretary of
State of Delaware on October 20, 1995. The full text of the Restated
Certificate of Incorporation is set forth below:
FIRST: The name of the Corporation is Medallion Financial Corp.
SECOND: The registered office of the Corporation in the State of Delaware
is located at 32 Loockerman Square, Suite L-100, in the City of Dover, County of
Kent. The name of its registered agent at such address is The Prentice-Hall
Corporation System, Inc.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law.
FOURTH: The aggregate number of shares of all classes of stock which the
Corporation is authorized to issue is sixteen million (16,000,000) shares of
which one million (1,000,000) shall be shares of Preferred Stock, par value $.01
per share, (the "Preferred Stock") and fifteen million (15,000,000) shall be
shares of Common Stock, par value $.01 per share (the "Common Stock").
Any action required or permitted to be taken by the holders of any class or
series of stock of the Corporation may be taken by written consent or consents
but only if such consent or consents are signed by all holders of the class or
series of stock entitled to vote on such action.
SECTION 1. COMMON STOCK.
------------
The powers, preferences, rights, qualifications, limitations and
restrictions relating to the Common Stock are as follows:
<PAGE>
a. The Common Stock is junior to the Preferred Stock and is subject to all
the powers, rights, privileges, preferences and priorities of the Preferred
Stock designated herein or in any resolution or resolutions adopted by the Board
of Directors pursuant to authority expressly vested in it by the provisions of
SECTION 2 of this ARTICLE FOURTH.
b. The Common Stock shall have voting rights for the election of directors
and for all other purposes (subject to the powers, rights, privileges,
preferences and priorities of the Preferred Stock as provided above), each
holder of Common Stock being entitled to one vote for each share thereof held by
such holder, except as otherwise required by law.
SECTION 2. PREFERRED STOCK.
---------------
The Board of Directors is expressly authorized to provide for the issuance
of all or any part of the shares of the Preferred Stock in one or more classes
or series, and to fix for each such class or series such voting powers, full or
limited or fractional, or no voting powers, and such distinctive designations,
preferences and relative, participating, optional or other special rights and
such qualifications, limitations or restrictions thereof, as shall be stated and
expressed in the resolution or resolutions adopted by the Board of Directors in
its sole discretion providing for the issuance of such class or series and as
may be permitted by the Delaware General Corporation Law including, without
limitation, (i) whether such shares shall be redeemable, and, if so, the terms
and conditions of such redemption, whether for cash, property or rights,
including securities of any other corporation, and whether at the option of
either the Corporation or the holder or both, including the date or dates or the
event or events upon or after which they shall be redeemable, and the amount per
share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates; (ii) whether such shares shall be
entitled to receive dividends (which may be cumulative or noncumulative) at such
rates, on such conditions, and at such times, and payable in preference to, or
in such relation to, the dividends payable on any other class or classes or any
other series; (iii) the rights of such shares in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, and the
relative rights of priority, if any, of payment of such shares; (iv) whether
such shares shall be convertible into, or exchangeable for, shares of any other
class or classes of stock, or of any other series of the same or any other class
or classes of stock, whether at the option of either the Corporation or the
holder or both, and, if so, the terms and conditions of such conversion,
including provisions for adjustment of the conversion rate in such events as the
Board of Directors shall determine; (v) whether the class or series shall have a
sinking fund for the redemption or purchase of such shares, and, if so, the
terms and amount of such sinking fund; or (vi) provisions as to any other
voting, optional, and/or special or relative rights, preferences, limitations,
or restrictions; and (vii) the number of shares and designation of such class or
series.
SECTION 3. SHARES ENTITLED TO MORE OR LESS THAN ONE VOTE.
---------------------------------------------
If any class or series of the Corporation's capital stock shall be entitled
to more or less than one vote per share, on any matter, every reference in this
Restated Certificate of Incorporation or in any resolution or resolutions
adopted by the Board of Directors pursuant to authority expressly vested in it
by the provisions of SECTION 2 of this ARTICLE FOURTH
-2-
<PAGE>
with respect to the Preferred Stock or in any relevant provision of law or in
any rule or regulation, to a majority or other proportion of stock shall be
deemed to refer to such majority or other proportion of the votes of such stock.
FIFTH: In furtherance of, and not in limitation of, the powers conferred
by statute, the Board of Directors is expressly authorized and empowered
a. to manage, or direct the management of, the business and affairs of the
Corporation and to exercise all such powers and do all such acts and things as
may be exercised or done by the Corporation subject, nevertheless, to the
provisions of the Delaware General Corporation Law, this Restated Certificate of
Incorporation and the By-Laws of the Corporation, and
b. from time to time to determine to what extent, and at what times and
places, and under what conditions and regulations, the accounts and books of the
Corporation, or any of them, shall be open to inspection by stockholders, and no
stockholder shall have any right to inspect any account, book or document of the
Corporation except as conferred by applicable law.
The Corporation may in its By-Laws confer powers upon the Board of
Directors in addition to the foregoing and in addition to the powers and
authorities expressly conferred upon the Board of Directors by applicable law.
SIXTH: Subject to the rights of the holders of any class or series of
stock having a preference expressly vested in it by the provisions of SECTION 2
of ARTICLE FOURTH with respect to the Preferred Stock:
a. any action required or permitted to be taken by the stockholders of the
Corporation must be effected only at a duly called annual or special meeting of
stockholders of the Corporation and may not, after the effective date of this
Restated Certificate of Incorporation, be effected by any consent in writing of
such stockholders;
b. special meetings of the stockholders of the Corporation may be called
only (i) by the Chairman of the Board of Directors, (ii) pursuant to a
resolution approved by a majority of the Whole Board (as hereinafter defined),
or (iii) pursuant to a written request of the holders of not less than twenty
percent (20%) of the voting power of the Voting Stock; and
c. the business permitted to be conducted at any special meeting of the
stockholders is limited to the business brought before the meeting (i) by the
Chairman of the Board of Directors, or (ii) at the request of a majority of the
Whole Board, or (iii) as specified in the written request of the holders of not
less than twenty percent (20%) of the voting power of the Voting Stock.
Advance notice of the business to be brought by stockholders before an
annual meeting shall be given by such stockholders in the manner provided in the
By-Laws of the Corporation.
-3-
<PAGE>
SEVENTH: SECTION 1. NUMBER, ELECTION AND TERMS OF DIRECTORS.
---------------------------------------
Subject to the rights of the holders of any class or series of stock having
a preference expressly vested in it by the provisions of SECTION 2 of ARTICLE
FOURTH with respect to the Preferred Stock, the number of Directors of the
Corporation shall be fixed by the By-Laws of the Corporation and may be
increased or decreased from time to time in such a manner as may be prescribed
by the By-Laws, but in no case shall the number be less than three nor more than
fifteen.
The Directors shall be divided into three classes, as nearly equal in
number as possible. One class of Directors ("Class I") has been initially
elected for a term expiring at the annual meeting of stockholders to be held in
1996, another class ("Class II") has been initially elected for a term expiring
at the annual meeting of stockholders to be held in 1997, and another class
("Class III") has been initially elected for a term expiring at the annual
meeting of stockholders to be held in 1998 with members of each class to hold
office until their successors are elected and qualified. At each succeeding
annual meeting of the stockholders of the Corporation, the successors of the
class of Directors whose term expires at that meeting shall be elected by
plurality vote of all votes cast at such meeting to hold office for a term
expiring at the annual meeting of stockholders held in the third year following
the year of their election.
SECTION 2. STOCKHOLDER NOMINATION OF DIRECTOR CANDIDATES.
---------------------------------------------
Advance notice of stockholder nominations for the election of Directors
shall be given by such stockholders in the manner provided in the By-Laws of the
Corporation.
SECTION 3. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
-----------------------------------------
Subject to the rights of the holders of any class or series of stock having
a preference expressly vested in it by the provisions of SECTION 2 of ARTICLE
FOURTH with respect to the Preferred Stock, newly created directorships
resulting from any increase in the number of directors and any vacancy on the
Board of Directors resulting from death, resignation, disqualification, removal
or other cause shall be filled solely by the affirmative vote of a majority of
the remaining Directors then in office, even though less than a quorum of the
Board of Directors, or by a sole remaining Director. Any Director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the class of Directors in which the new directorship was
created or the vacancy occurred and until such Director's successor shall have
been elected and qualified. No decrease in the number of Directors constituting
the Board of Directors shall shorten the term of an incumbent Director.
SECTION 4. REMOVAL OF DIRECTORS.
--------------------
Subject to the rights of the holders of any class or series of stock having
a preference expressly vested in it by the provisions of SECTION 2 of ARTICLE
FOURTH with respect to the Preferred Stock, any Director may be removed from
office only by the stockholders in the manner provided in this SECTION 4 of
ARTICLE SEVENTH. At any annual meeting of the stockholders of the Corporation
or at any special meeting of the stockholders of the
-4-
<PAGE>
Corporation, the notice of which shall state that the removal of a Director or
Directors is among the purposes of the meeting, the affirmative vote of the
holders of at least seventy-five percent (75%) of the voting power of the Voting
Stock, voting together as a single class, may remove such Director or Directors.
In any vote required by or provided for in this ARTICLE SEVENTH, each share of
Voting Stock shall have the number of votes granted to it generally in the
election of Directors.
EIGHTH: A director shall not be personally liable to the corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except to the extent that the elimination or limitation of liability
is not permitted under the Delaware General Corporation Law as in effect when
such liability is determined. No amendment or repeal of this provision shall
deprive a director of the benefits hereof with respect to any act or omission
occurring prior to such amendment or repeal.
NINTH: The Board of Directors of the Corporation, in determining whether
the interests of the Corporation, its subsidiaries and its stockholders will be
served by any offer of another person to (i) make a tender or exchange offer for
any equity security of the Corporation or any subsidiary of the Corporation,
(ii) merge or consolidate the Corporation or any of its subsidiaries with or
into another corporation, or (iii) purchase or otherwise acquire all or
substantially all of the properties and assets of the Corporation or any of its
subsidiaries, may take into account factors in addition to potential economic
benefits to stockholders. Such factors may include, without limitation, (a)
comparison of the proposed consideration to be received by stockholders, in
relation to the then current market price of the capital stock, to the estimated
current value of the Corporation or any of its subsidiaries in a freely
negotiated transaction, and to the estimated future value of the Corporation or
any of its subsidiaries as an independent entity; (b) the impact of such a
transaction on the customers and employees of the Corporation or any of its
subsidiaries, and its effect on the communities in which the Corporation or any
of its subsidiaries operate; and (c) the ability of the Corporation or any of
its subsidiaries to fulfill its objectives and obligations under applicable
statutes and regulations.
The term "offer" as used in this ARTICLE TENTH includes every offer to buy
or acquire, solicitation of an offer to sell, tender offer for, or request or
invitation for tender of, a security or interest in a security for value.
TENTH: The Corporation may not purchase any shares of its stock from any
person, entity or group that beneficially owns five percent (5%) or more of the
voting power of the Voting Stock at a price exceeding the average closing price
for the twenty trading business days prior to the purchase date, unless a
majority of the Corporation's Disinterested Stockholders (as hereinafter
defined) approves the transaction. The restrictions on purchases by the
Corporation set forth in this ARTICLE TENTH do not apply (i) to any offer to
purchase shares of any class of the Corporation's stock which is made on the
same terms and conditions to all holders of that class of stock, or (ii) to any
purchase of stock owned by such a 5% stockholder occurring more than two years
after such stockholder's last acquisition of the Corporation's stock, or (iii)
to any purchase of the Corporation's stock in accordance with the terms of any
stock option or employee benefit plan, or (iv) to any purchase at prevailing
market prices pursuant to a stock purchase program.
-5-
<PAGE>
For purposes of this ARTICLE TENTH, the term "Disinterested Stockholders"
means those holders each of whom owns less than five percent (5%) of the voting
power of the Voting Stock.
ELEVENTH: Any vote or votes authorizing liquidation of the Corporation or
proceedings for its dissolution may provide, subject to the rights of creditors
and the rights expressly provided for particular classes or series of stock, for
the distribution pro rata among the stockholders of the Corporation of the
assets of the Corporation, wholly or in part in kind, whether such assets be in
cash or other property, and may authorize the Board of Directors of the
Corporation to determine the valuation of the different assets of the
Corporation for the purpose of such liquidation and may divide or authorize the
Board of Directors to divide such assets or any part thereof among the
stockholders of the Corporation, in such manner that every stockholder will
receive a proportionate amount in value (determined as aforesaid) of cash or
property of the Corporation upon such liquidation or dissolution even though
each stockholder may not receive a strictly proportionate part of each such
asset.
TWELFTH: BUSINESS COMBINATIONS.
---------------------
SECTION 1. HIGHER VOTE FOR BUSINESS COMBINATIONS.
-------------------------------------
In addition to any affirmative vote required by law or by this Restated
Certificate of Incorporation, unless a Business Combination (as defined below)
shall have been approved by the affirmative vote of not less than a majority of
the Whole Board, any Business Combination shall require the affirmative vote of
the holders of record of outstanding shares representing at least seventy-five
percent (75%) of the voting power of the Voting Stock, voting together as a
single class. Such affirmative vote shall be required notwithstanding the fact
that no vote may be required, or that a lesser percentage may be specified, by
law or in any agreement with any national securities exchange or otherwise.
SECTION 2. NO EFFECT ON FIDUCIARY OBLIGATIONS.
----------------------------------
Nothing contained in this provision shall be construed to relieve the
members of the Board of Directors from any fiduciary obligations imposed by law.
SECTION 3. DEFINITION.
----------
For purposes of this ARTICLE TWELFTH "Business Combination" means:
a. any merger or consolidation of the Corporation or any subsidiary;
or
b. any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) of all or more than
ten percent (10%) of the total assets of the Corporation or any subsidiary, as
of the end of such corporation's recent fiscal year ending prior to the time the
determination is made; or
-6-
<PAGE>
c. the issuance or transfer by the Corporation or any subsidiary (in one
transaction or a series of transactions) of any securities of the Corporation or
any subsidiary; or
d. the adoption of any plan or proposal for the liquidation or dissolution
of the Corporation, or any spin-off or split-up of any kind of the Corporation
or any subsidiary; or
e. any reclassification of securities (including any reverse stock split),
or recapitalization of the Corporation, or any merger or consolidation of the
Corporation with any subsidiary or any other transaction which has the effect,
directly or indirectly; of increasing the percentage of the outstanding shares
of (i) any class of equity securities of the Corporation or any subsidiary, or
(ii) any class of securities of the Corporation or any subsidiary convertible
into equity securities of the Corporation or any subsidiary; or
f. any agreement, contract or other arrangement providing for any one or
more of the actions specified in clauses (a) through (e) of SECTION 3 of this
ARTICLE TWELFTH.
SECTION 4. SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW.
---------------------------------------------------
Nothing in this ARTICLE TWELFTH or elsewhere in this Restated Certificate
of Incorporation shall be construed as a waiver of any rights of the Corporation
to the provisions of SECTION 203 of the Delaware General Corporation Law dealing
with business combinations with interested stockholders; and the Corporation
hereby claims the full benefit of all such provisions or any other similar
provisions heretofore or hereafter enacted as part of the Delaware General
Corporation Law to the fullest extent in addition to the provisions of this
ARTICLE TWELFTH.
THIRTEENTH: The By-Laws of the Corporation may be amended, altered,
changed or repealed, and a provision or provisions inconsistent with the
provisions of the By-Laws as they exist from time to time may be adopted, only
by the majority vote of the Whole Board or by the affirmative vote of the
holders of at least seventy-five percent (75%) of the Voting Stock, voting
together as a single class.
FOURTEENTH: The provisions of SECTION 2 of ARTICLE FOURTH and the
provisions of ARTICLES FIFTH, SIXTH, SEVENTH, EIGHTH, NINTH, TENTH, TWELFTH,
THIRTEENTH, and this ARTICLE FOURTEENTH shall not be amended, altered, changed
or repealed, and no provision inconsistent with any of them shall be adopted,
except by the affirmative vote of the holders of at least seventy-five percent
(75%) of the voting power of the Voting Stock, voting together as a single
class. The Corporation reserves the right to amend, alter, change, or repeal
any other provision contained in this Restated Certificate of Incorporation in
the manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders are granted subject to this reservation.
-7-
<PAGE>
For the purposes of this Restated Certificate of Incorporation, "Voting
Stock" shall mean the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors.
For the purposes of this Restated Certificate of Incorporation, "Whole
Board" shall mean the total number of Directors which the Corporation would have
if there were no vacancies.
This Restated Certificate of Incorporation was duly adopted in accordance
with the applicable provisions of SECTIONS 242, 245 AND 228 of the Delaware
General Corporation Law.
-8-
<PAGE>
IN WITNESS WHEREOF, Medallion Financial Corp. has caused this Certificate
to be signed by ________________________, its ________________ and attested by
_________________, its ____________ this _______ day of May, 1996.
MEDALLION FINANCIAL CORP.
By ______________________________
ATTEST
By: ___________________________________
-9-
<PAGE>
_______________________________________
RESTATED
BY-LAWS
of
MEDALLION FINANCIAL CORP.
(a Delaware corporation)
Adopted on ____________ __, 199_
_______________________________________
<PAGE>
MEDALLION FINANCIAL CORP.
(a Delaware corporation)
_______________________________________
BY-LAWS
_______________________________________
ARTICLE I. OFFICES
-------------------
SECTION 1. REGISTERED OFFICE. The registered office of the Corporation in
the State of Delaware is located at 32 Loockerman Square, Suite L-100, in the
City of Dover, County of Kent. The name of its registered agent at such address
is The Prentice-Hall Corporation System, Inc.
SECTION 2. OTHER OFFICES. The Corporation may also have offices at such
other places, within or without the State of Delaware, as the Board of Directors
may from time to time appoint or the business of the Corporation may require.
ARTICLE II. MEETINGS OF STOCKHOLDERS
-----------
SECTION 1. PLACE OF MEETING. Meetings of the stockholder shall be held
either within or without the State of Delaware at such place as the Board of
Directors may fix.
SECTION 2. ANNUAL MEETINGS. The annual meeting of stockholders shall be
held for the election of directors on such date and at such time as the Board of
Directors may fix. Any other business properly brought before the annual
meeting of stockholders as provided by applicable law and by these By-Laws may
be transacted at the annual meeting.
SECTION 3. SPECIAL MEETINGS. Special meetings of the stockholders for any
purpose or purposes may be called by the Chairman of the Board of Directors, or
pursuant to a resolution approved by a majority of the Whole Board (as defined
below), or upon receipt of a written request signed by stockholders owning at
least 20 percent of the stock entitled to vote at the meeting or when required
under the Investment Company Act of 1940, as amended (the "1940 Act"). Any such
resolution of the Board of Directors or any such request of stockholders shall
state the purpose or purposes of the proposed meeting. Business transacted at
any special meeting is limited to the purposes stated in the notice. For the
purposes of these By-Laws, the term "Whole Board" is defined as the total number
of Directors which the Corporation would have if there were no vacancies.
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SECTION 4. NOTICE. Written or printed notice of every meeting of
stockholders, annual or special, stating the hour, date and place thereof, and,
in the case of special meetings, the purpose or purposes for which the meeting
is called shall, not less than ten (10), or such longer period as shall be
provided by law, the Certificate of Incorporation, these By-Laws, or otherwise,
and not more than sixty (60) days before such meeting, be delivered or mailed
to each stockholder entitled to vote thereat, at his address as it appears upon
the stock records of the Corporation or, if such stockholder shall have filed
with the Secretary of the Corporation a written request that notices intended
for him be mailed to some other address, then to the address designated in such
request.
SECTION 5. QUORUM AND ADJOURNMENTS. Except as otherwise provided by law or
by the Certificate of Incorporation, the presence in person or by proxy at any
meeting of stockholders of the holders of a majority of the shares of the
capital stock of the Corporation issued and outstanding and entitled to vote
thereat, shall be requisite and shall constitute a quorum. If two or more
classes of stock are entitled to vote as separate classes upon any question,
then, in the case of each such class, a quorum for the consideration of such
question shall, except as otherwise provided by law or by the Certificate of
Incorporation, consist of a majority in interest of all stock of that class
issued, outstanding and entitled to vote. If a majority of the shares of
capital stock of the Corporation issued and outstanding and entitled to vote
thereat at, or, where a larger quorum is required, such larger quorum, shall not
be represented at any meeting of the stockholders, the holders of a majority of
the shares present or represented by proxy and entitled to vote thereat shall
have the power to adjourn the meeting to another time, or to another time and
place, without notice other than announcement of adjournment at the meeting, and
there may be successive adjournments for like cause and in like manner until the
requisite amount of shares entitled to vote at such meeting shall be
represented; provided, however, that if the adjournment is for more than thirty
(30) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, written notice of the hour, date and place of the adjourned
meeting shall be given to each stockholder entitled to vote thereat. At any
adjourned meeting any business may be transacted which might have been
transacted at the original meeting. Subject to the requirements of law and the
Certificate of Incorporation, on any issue on which two or more classes of stock
are entitled to vote separately, no adjournment shall be taken with respect to
any class for which a quorum is present unless the Chairman of the meeting
otherwise directs. At any meeting held to consider matters which were subject
to adjournment for want of a quorum at which the requisite amount of shares
entitled to vote thereat shall be represented, any business may be transacted
which might have been transacted at the meeting as originally noticed.
SECTION 6. NOTICE OF STOCKHOLDER BUSINESS. At an annual meeting of the
stockholders, only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before an annual meeting,
business must be (A) specified in the notice of meeting (or any supplement
thereto) given by or at the direction
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of the Chairman of the Board of Directors, (B) otherwise properly brought before
the meeting by or at the direction of a majority of the whole Board, or (C)
otherwise properly brought before the meeting by a stockholder as provided by
and in accordance with applicable law, rules and regulations, and these
By-Laws. For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary of the Corporation. To be timely, a stockholder's notice must be
delivered to or mailed to and received at the principal executive offices of the
Corporation in accordance with applicable law, rules and regulations and not
less than 120 days in advance of the date of the Corporation's notice of annual
meeting released to stockholders in connection with the previous year's annual
meeting of stockholders, except that if no annual meeting was held in the
previous year or the date of the annual meeting has been changed by more than 30
calendar days from the date contemplated at the time of the previous year's
notice of annual meeting of stockholders, then, in that event only, a
stockholders' notice hereunder must be delivered to and received at the
principal executive offices of the corporation at least 30 calendar days before
the notice of the date of the annual meeting is mailed to stockholders in the
current year.
A stockholder's notice to the Secretary shall set forth as to each matter
the stockholder proposes to bring before the annual meeting (A) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (B) the name and
address, as they appear on the Corporation's books, of the stockholder proposing
such business, (C) the class and number of shares of the Corporation which are
beneficially owned by the stockholder, and (D) any material interest of the
stockholder in such business. Notwithstanding anything in the By-Laws to the
contrary, no business shall be conducted at an annual meeting except in
accordance with applicable law, rules and regulations, and in accordance with
the procedures set forth in this SECTION 6 OF ARTICLE II.
The presiding officer of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that the business was not properly brought
before the meeting in accordance with this SECTION 6 of ARTICLE II, and if the
presiding officer should so determine, the presiding officer shall so declare to
the meeting and any such business not properly brought before the meeting shall
not be transacted.
SECTION 7. INSPECTORS. The Board of Directors shall appoint inspectors of
election to act as judges of the voting and to determine those entitled to vote
at any meeting of stockholders, or any adjournment thereof, in advance of such
meeting, but if the Board of Directors fails to make such appointments or if an
appointee fails to serve, the presiding officer of the meeting of stockholders
may appoint substitute inspectors.
SECTION 8. VOTING. Except as otherwise provided by law or by the
Certificate of Incorporation or by a resolution of the Board of Directors
adopted in accordance with SECTION
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2 of ARTICLE FOURTH of the Certificate of Incorporation, each stockholder shall
be entitled at every meeting of the stockholders to one vote for each share of
stock having voting power standing in the name of such stockholder on the books
of the Corporation on the record date for the meeting and such votes may be cast
either in person or by written proxy. Every proxy must be duly executed and
filed with the Secretary of the Corporation. A stockholder may revoke any proxy
which is not irrevocable by attending the meeting and voting in person or by
filing an instrument in writing revoking the proxy or another duly executed
proxy bearing a later date with the Secretary of the Corporation. Every vote
taken by written ballot shall be counted by the inspectors of election. When a
quorum is present at any meeting, the vote of the holders of a majority (or such
other percentage as may be specified or required by the Certificate of
Incorporation, or by a resolution of the Board of Directors adopted in
accordance with SECTION 2 of ARTICLE FOURTH of the Certificate of Incorporation,
by law, or these By-Laws) of the stock which has voting power present
in person or represented by proxy and which has actually voted shall decide any
question properly brought before such meeting, except the election or removal of
Directors or as otherwise provided by law, these By-Laws or the Certificate of
Incorporation. With respect to any election or questions required to be decided
by any class of stock voting as a class, the vote of the holders of a majority
(or such other percentage as may be specified or required by the Certificate of
Incorporation, or by a resolution of the Board of Directors adopted in
accordance with SECTION 2 of ARTICLE FOURTH of the Certificate of Incorporation,
or by law, or by these By-Laws) of such class of stock present in person or by
proxy and which actually voted shall decide any such election or question.
The vote, at the annual or a special meeting of the stockholders of the
Corporation duly called, (A) of 67% or more of the voting stock present at such
meeting, if the holders of more than 50% of the outstanding voting stock of the
Corporation are present or represented by proxy; or (B) of more than 50% of the
outstanding voting stock of the Corporation, whichever is less, is required to
approve any action requiring a vote of stockholders under Section 13(a) of the
1940 Act.
ARTICLE III. NOMINATION OF DIRECTOR CANDIDATES
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SECTION 1. NOTIFICATION OF NOMINEES. Subject to the rights of holders of
any class or series of stock having a preference over the Common Stock as to
dividends, upon liquidation, or to elect additional Directors under specified
circumstances, nominations for the election of Directors may be made by the
Board of Directors or a committee appointed by the Board of Directors or by any
stockholder entitled to vote in the election of Directors generally. However,
any stockholder entitled to vote in the election of Directors generally may
nominate one or more persons for election as Directors at a meeting only if
written notice of such stockholder's intent to make such nomination or
nominations has been given, either by personal delivery or by United States
mail, postage prepaid, to the Secretary of the Corporation not later than 120
days in advance of the date of the Corporation's notice of
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annual meeting released to stockholders in connection with the previous year's
annual meeting of stockholders, except that if no annual meeting was held in the
previous year or the date of the annual meeting has been changed by more than 30
calendar days from the date contemplated at the time of the previous year's
notice of annual meeting of stockholders, then, in that event only, a
stockholders' notice hereunder must be delivered to and received at the
principal executive offices of the corporation at least 30 calendar days before
the notice of the date of the annual meeting is mailed to stockholders in the
current year.
Each such notice shall set forth: (A) the name and address of the
stockholder who intends to make the nomination and of the person or persons to
be nominated; (B) a representation that the stockholder is a holder of record of
stock of the Corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to nominate the person or persons specified
in the notice; (C) a description of all arrangements or understandings between
the stockholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the stockholder; (D) such other information regarding each nominee
proposed by such stockholders as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission had the nominee been nominated, or intended to be nominated, by the
Board of Directors; and (E) the consent of each nominee to serve as a Director
of the Corporation if so elected.
SECTION 2. SUBSTITUTION OF NOMINEES. If a person is validly designated as a
nominee in accordance with Section 1 of this ARTICLE III, and shall thereafter
become unable or unwilling to stand for election to the Board of Directors, the
Board of Directors or the stockholder who proposed such nominee, as the case may
be, may designate a substitute nominee upon delivery, not fewer than five days
prior to the date of the meeting for the election of such nominee, of a written
notice to the Secretary setting forth such information regarding such substitute
nominee as would have been required to be delivered to the Secretary pursuant to
Section 1 of this ARTICLE III, had such substitute nominee been initially
proposed as a nominee. Such notice shall include a signed consent to serve as a
Director of the Corporation, if elected, of each such substitute nominee.
SECTION 3. COMPLIANCE WITH PROCEDURES. If the presiding officer of the
meeting for the election or Directors determines that a nomination for any
candidate for election as a Director at such meeting was not made in accordance
with the applicable provisions of these By-Laws, such person will not be
eligible for election as a Director and such nomination shall be void.
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ARTICLE IV. DIRECTORS
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SECTION 1. POWERS. The business and affairs of the Corporation shall be
managed by or under the direction of its Board of Directors, which may exercise
all such powers of the Corporation and do all such lawful acts and things as are
not by law or by the Certificate of Incorporation directed or required to be
exercised or done by the stockholders.
SECTION 2. NUMBER, QUALIFICATION, ELECTION AND TERMS. Except as otherwise
fixed by, or pursuant to, the provisions of SECTION 2 of ARTICLE FOURTH of the
Certificate of Incorporation relating to the rights of the holders of any class
or series of stock having a preference over the Common Stock, the number of
Directors shall be fixed from time to time by resolution of the Board of
Directors, but shall not be less than three nor more than fifteen persons. The
Directors shall be classified, with respect to the time for which they severally
hold office, into three classes, as nearly equal in number as possible, as
determined by the Board of Directors. One class ("Class I") shall hold office
initially for a term expiring at the annual meeting of stockholders to be held
in 1996, and another class ("Class II") shall hold office initially for a term
expiring at the annual meeting of stockholders to be held in 1997, and another
class ("Class III") shall hold office initially for a term expiring at the
annual meeting of stockholders to be held in 1998, with the members of each
class to hold office until their successors are elected and qualified. At each
succeeding annual meeting of the stockholders of the Corporation, the successors
of the class of Directors whose term expires at that meeting shall be elected by
plurality vote by written ballot to hold office for a term expiring at the
annual meeting for stockholders held in the third year following the year of
their election.
SECTION 3. REMOVAL. Subject to the rights of the holders of any class or
series of stock having a preference over the Common Stock, any Director may be
removed from office by the stockholders in the manner provided in this SECTION 3
OF ARTICLE IV. At any annual meeting of the stockholders of the Corporation or
at any special meeting of the stockholders of the Corporation, the notice of
which shall state that the removal of a Director or Directors is among the
purposes of the meeting, the affirmative vote of the holders of at least 75
percent of the combined voting power of the outstanding shares of Voting Stock
(as defined below), voting together as a single class, may remove such Director
or Directors. For the purposes of these By-Laws, "Voting Stock" shall mean the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of Directors.
SECTION 4. VACANCIES AND NEW DIRECTORSHIPS. Except as otherwise fixed by or
provided for or pursuant to the provisions of ARTICLE FOURTH of the Certificate
of Incorporation relating to the rights of the holders of any class or series of
stock having a preference over the Common Stock, vacancies and newly created
directorships resulting from any increase in the authorized number of Directors
shall be filled solely by the affirmative vote of a majority of the Directors
then in office though less than a quorum, or by a sole
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remaining Director, except as may be required by law. Any Director so chosen
shall hold office for the remainder of the full term of the class of Directors
in which the new directorship was created or the vacancy occurred and until such
Director's successor shall have been elected and qualified. No decrease in the
authorized number of Directors constituting the Board of Directors shall shorten
the term of any incumbent Director.
SECTION 5. MEETINGS. Meetings of the Board of Directors shall be held at
such place, within or without the State of Delaware, as may from time to time be
fixed by resolution of the Board of Directors or by the Chairman of the Board,
if there be one, or by the President and as may be specified in the notice or
waiver of notice of any meeting. Special meetings may be held at any time upon
the call of the Chairman of the Board, if there be one, or the President or any
two (2) of the Directors in office by oral, telegraphic, telex, telecopy or
other form of electronic transmission, or written notice, duly served or sent or
mailed to each Director not less than twenty-four (24) hours before such
meeting.
Meetings may be held at any time and place without notice if all the
Directors are present and do not object to the holding of such meeting for lack
of proper notice or if those not present shall, in writing or by telegram,
telex, telecopy or other form of electronic transmission, waive notice thereof.
A regular meeting of the Board may be held without notice immediately following
the annual meeting of stockholders at the place where such meeting is held.
Regular meetings of the Board may also be held without notice at such time and
place as shall from time to time be determined by resolution of the Board.
Members of the Board of Directors or any committee thereof may participate
in a meeting of such Board or committee by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other and participation in a meeting pursuant to the
foregoing provisions shall constitute presence in person at the meeting.
SECTION 6. VOTES. Except as otherwise provided by law, the Certificate of
Incorporation or otherwise, the vote of the majority of the directors present at
a meeting at which a quorum is present shall be the act of the Board of
Directors. A majority of the directors shall be present at any meeting of the
directors in order to constitute a quorum for the transaction of business at
such meeting, and except as otherwise expressly required by the Certificate of
Incorporation, these By-Laws, the 1940 Act, or other applicable statute, the act
of a majority of the directors present at any meeting at which a quorum is
present shall be the act of the directors; provided, however, that the approval
of any contract with an investment adviser or principal underwriter (as defined
in the 1940 Act) which the Corporation enters into or any renewal or amendment
thereof, the approval of the fidelity bond required by the 1940 Act, and the
selection of the Corporation's independent public accountants shall require the
affirmative votes of a majority of the directors who are not interested persons
(as defined in the 1940 Act) of the Corporation or, in the case of such
contract, any party to such contract.
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In the absence of a quorum at any meeting of the directors, a majority of the
directors present thereat may adjourn the meeting to another time and place
until a quorum shall be present thereat. Notice of the time and place of any
such adjourned meeting shall be given to the directors who were not present at
the time of the adjournment and, unless such time and place were announced at
the meeting at which adjournment was taken, to the other directors. At any
adjourned meeting at which a quorum is present, any business may be transacted
at the meeting as originally called.
SECTION 7. QUORUM AND ADJOURNMENT. Subject to SECTION 4 of this ARTICLE IV,
and except as otherwise provided by law, the Certificate of Incorporation or
otherwise, a majority of the Directors shall constitute a quorum for the
transaction of business. If at any meeting of the Board there shall be less than
a quorum present, a majority of those present may adjourn the meeting from time
to time without notice other than announcement of the adjournment at the
meeting, and at such adjourned meeting at which a quorum is present any business
may be transacted which might have been transacted at the meeting as originally
noticed.
SECTION 8. COMPENSATION. Directors shall receive compensation for their
services, as such, and for service on any committee of the Board of Directors,
as fixed by resolution of the Board of Directors and for expenses of attendance
at each regular or special meeting of the Board or any committee thereof.
Nothing in this Section shall be construed to preclude a Director from serving
the Corporation in any other capacity and receiving compensation therefor.
SECTION 9. ACTION BY CONSENT OF DIRECTORS. Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if all members of the Board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board, or committee. Such consent shall
be treated as a vote adopted at a meeting for all purposes. Such consents may be
executed in one or more counterparts and not every Director or committee member
need sign the same counterpart.
ARTICLE V. COMMITTEES OF DIRECTORS
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SECTION 1. EXECUTIVE COMMITTEE. The Board of Directors may, by resolution
passed by a majority of the Whole Board, appoint an Executive Committee of two
(2) or more members, to serve at the pleasure of the Board, to consist of such
directors as the Board may from time to time designate. The Board of Directors
shall designate the Chairman of the Executive Committee.
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(A) PROCEDURE. The Executive Committee shall, by a vote of a majority
of its members, fix its own times and places of meeting, determine the number of
its members constituting a quorum for the transaction of business, and prescribe
its own rules of procedure, no change in which shall be made save by a majority
vote of its members.
(B) RESPONSIBILITIES. During the intervals between the meetings of the
Board of Directors, except as otherwise provided by the Board of Directors in
establishing such Committee or otherwise, the Executive Committee shall possess
and may exercise all the powers of the Board in the management and direction of
the business and affairs of the Corporation which are legally delegable to a
committee; provided, however, that the Executive Committee shall not, except to
the extent the Certificate of Incorporation or the resolution providing for the
issuance of shares of stock adopted by the Board of Directors as provided in
SECTION 151(A) of the Delaware General Business Corporation Law, have the power:
(I) to amend or authorize the amendment of the Certificate of
Incorporation or these By-Laws;
(II) to authorize the issuance of stock;
(III) to authorize the payment of any dividend;
(IV) to adopt an agreement of merger or consolidation of the
Corporation or to recommend to the stockholders the sale, lease or exchange
of all or substantially all the property and business of the Corporation;
(V) to recommend to the stockholders a dissolution, or a
revocation of a dissolution, of the Corporation;
(VI) to adopt a certificate of ownership and merger pursuant to
SECTION 253 of the Delaware Business Corporation Law; or
(VII) to approve or terminate any contract with an investment
adviser or principal underwriter (as defined in the 1940 Act) or to take
any other action required by the 1940 Act to be taken by the Board of
Directors.
(C) REPORTS. The Executive Committee shall keep regular minutes of its
proceedings, and all action by the Executive Committee shall be reported
promptly to the Board of Directors. Such action shall be subject to review,
amendment and repeal by the Board, provided that no rights of third parties
shall be adversely affected by such review, amendment or repeal.
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(D) APPOINTMENT OF ADDITIONAL MEMBERS. In the absence or
disqualification of any member of the Executive Committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in place of any such absent or disqualified
member.
SECTION 2. AUDIT COMMITTEE. The Board of Directors may, by resolution
passed by a majority of the Whole Board, appoint an Audit Committee of two (2)
or more members who shall not be officers or employees of the Corporation to
serve at the pleasure of the Board. The Board of Directors shall designate the
Chairman of the Audit Committee.
(A) PROCEDURE. The Audit Committee, by a vote of a majority of its
members, shall fix its own times and places of meeting, shall determine the
number of its members constituting a quorum for the transaction of business, and
shall prescribe its own rules of procedure, no change in which shall be made
save by a majority vote of its members.
(B) RESPONSIBILITIES. The Audit Committee shall review the annual
financial statements of the Corporation prior to their submission to the Board
of Directors, shall consult with the Corporation's independent auditors, and may
examine and consider such other matters in relation to the internal and external
audit of the Corporation's accounts and in relation to the financial affairs of
the Corporation and its accounts, including the selection and retention of
independent auditors, as the Audit Committee may, in its discretion, determine
to be desirable.
(C) REPORTS. The Audit Committee shall keep regular minutes of its
proceedings, and all action by the Audit Committee shall, from time to time, be
reported to the Board of Directors as it shall direct. Such action shall be
subject to review, amendment and repeal by the Board, provided that no rights of
third parties shall be adversely affected by such review, amendment or repeal.
(D) APPOINTMENT OF ADDITIONAL MEMBERS. In the absence or
disqualification of any member of the Audit Committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in place of any such absent or disqualified
member.
SECTION 3. OTHER COMMITTEES. The Board of Directors may, by resolution
passed by a majority of the Whole Board, at any time appoint one or more other
committees, including a compensation committee, from and outside of its own
number. Every such committee must include at least one member of the Board of
Directors. The Board may from time to time designate or alter, within the
limits permitted by law, the Certificate of Incorporation and this ARTICLE V, if
applicable, the duties, powers and number of members of
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such other committees or change their membership, and may at any time abolish
such other committees or any of them.
(A) PROCEDURE. Each committee, appointed pursuant to this SECTION 3,
shall, by a vote of a majority of its members, fix its own times and places of
meeting, determine the number of its members constituting a quorum for the
transaction of business, and prescribe its own rules of procedure, no change in
which shall be made save by a majority vote of its members.
(B) RESPONSIBILITIES. Each committee, appointed pursuant to this
SECTION 3, shall exercise the powers assigned to it by the Board of Directors in
its discretion.
(C) REPORTS. Each committee appointed pursuant to this SECTION 3 shall
keep regular minutes of proceedings, and all action by each such committee
shall, from time to time, be reported to the Board of Directors as it shall
direct. Such action shall be subject to review, amendment and repeal by the
Board, provided that no rights of third parties shall be adversely affected by
such review, amendment or repeal.
(D) APPOINTMENT OF ADDITIONAL MEMBERS. In the absence or
disqualification of any member of each committee, appointed pursuant to this
SECTION 3, the member or members thereof present at any meeting and not
disqualified from voting, whether or not constituting a quorum, may unanimously
appoint another member of the Board of Directors (or, to the extent permitted,
another person) to act at the meeting in place of any such absent or
disqualified member.
SECTION 4. TERM OF OFFICE. Each member of a committee shall hold office
until the first meeting of the Board of Directors following the annual meeting
of stockholders (or until such other time as the Board of Directors may
determine, either in the vote establishing the committee or at the election of
such member or otherwise) and until his successor is elected and qualified, or
until he sooner dies, resigns, is removed, is replaced by change of membership
or becomes disqualified by ceasing to be a Director (where membership on the
Board is required), or until the committee is sooner abolished by the Board of
Directors.
ARTICLE VI. OFFICERS
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SECTION 1. OFFICERS. The Board of Directors shall elect a Chief Financial
Officer, President, a Secretary and a Treasurer, and, in their discretion, may
elect a Chairman of the Board, a Vice Chairman of the Board, a Controller, and
one or more Executive Vice Presidents, Senior Vice Presidents, Vice Presidents,
Assistant Secretaries, Assistant Treasurers and Assistant Controllers as they
deem necessary or appropriate. Such officers shall be elected annually by the
Board of Directors at its first meeting following the annual meeting of
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stockholders (or at such other meeting as the Board of Directors determines),
and each shall hold office for the term provided by the vote of the Board,
except that each will be subject to removal from office in the discretion of the
Board as provided herein. The powers and duties of more than one office may be
exercised and performed by the same person.
SECTION 2. VACANCIES. Any vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors, at any regular or
special meeting.
SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the Board of Directors,
if elected, shall be a member of the Board of Directors and shall preside at its
meetings. He shall advise and counsel with the Chief Executive Officer and the
President, and shall perform such duties as from time to time may be assigned to
him by the Board of Directors.
SECTION 4. CHIEF EXECUTIVE OFFICER. Subject to the direction of the Board
of Directors, the Chief Executive Officer shall preside at all meetings of the
stockholders and the Board of Directors unless a Chairman or Vice-Chairman of
the Board is elected by the Board, empowered to preside, and present at such
meeting, shall have general and active management of the business of the
Corporation and general supervision of its officers, agents and employees, and
shall see that all orders and resolutions of the Board of Directors are carried
into effect. The Chief Executive Officer may but need not be a member of the
Board of Directors.
SECTION 5. PRESIDENT. Subject to the direction of the Board of Directors
and the Chief Executive Officer, the President shall have and exercise direct
charge of and general supervision over the operations of the Corporation and
shall perform all duties incident to the office of the President of a
corporation and such other duties as from time to time may be assigned to him by
the Board of Directors. The President may but need not be a member of the Board
of Directors.
SECTION 6. EXECUTIVE VICE PRESIDENTS AND VICE PRESIDENTS. Each Executive
Vice President and Vice President shall have and exercise such powers and shall
perform such duties as from time to time may be assigned to him by the Board of
Directors, the Chief Executive Officer or the President.
SECTION 7. SECRETARY. The Secretary shall keep the minutes of all meetings
of the stockholders and of the Board of Directors in books provided for the
purpose; he shall see that all notices are duly given in accordance with the
provisions of law and these By-Laws; he may sign, with the President, an
Executive Vice President or a Vice President, certificates of stock of the
Corporation; and, in general, he shall perform all duties incident to the office
of secretary of a corporation, and such other duties as from time to time may be
assigned to him by the Board of Directors.
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<PAGE>
SECTION 8. ASSISTANT SECRETARIES. The Assistant Secretaries in order of
their seniority shall, in the absence or disability of the Secretary, perform
the duties and exercise the powers of the Secretary and shall perform such other
duties as the Board of Directors shall prescribe or as from time to time may be
assigned by the Secretary.
SECTION 9. TREASURER. The Treasurer shall have charge of and be responsible
for all funds, securities, receipts and disbursements of the Corporation, and
shall deposit, or cause to be deposited, in the name of the Corporation, all
monies or other valuable effects in such banks, trust companies or other
depositories as shall, from time to time, be selected by the Board of Directors;
he may endorse for collection on behalf of the Corporation checks, notes and
other obligations; he may sign receipts and vouchers for payments made to the
Corporation; he may sign checks of the Corporation, singly or jointly with
another person as the Board of Directors may authorize, and pay out and dispose
of the proceeds under the direction of the Board; he shall render to the
President and to the Board of Directors, whenever requested, an account of the
financial condition of the Corporation; he may sign, with the President, or an
Executive Vice President or a Vice President, certificates of stock of the
Corporation; and in general, shall perform all the duties incident to the office
of treasurer of a corporation, and such other duties as from time to time may be
assigned to him by the Board of Directors.
SECTION 10. ASSISTANT TREASURERS. The Assistant Treasurers in order of
their seniority shall, in the absence or disability of the Treasurer, perform
the duties and exercise the powers of the Treasurer and shall perform such other
duties as the Board of Directors shall prescribe or as from time to time may be
assigned by the Treasurer.
SECTION 11. CONTROLLER. The Controller, if elected, shall be the chief
accounting officer of the Corporation, in general, he shall perform all duties
incident to the office of a controller of a corporation, and, in the absence of
or disability of the Treasurer or any Assistant Treasurer, perform the duties
and exercise the powers of the Treasurer and shall perform such other duties as
the Board of Directors shall prescribe or as from time to time may be assigned
by the President or the Treasurer.
SECTION 12. ASSISTANT CONTROLLERS. The Assistant Controllers in order of
their seniority shall, in the absence or disability of the Controller, perform
the duties and exercise the powers of the Controller and shall perform such
other duties as the Board of Directors shall prescribe or as from time to time
may be assigned by the Controller.
SECTION 13. SUBORDINATE OFFICERS. The Board of Directors may appoint such
subordinate officers as it may deem desirable. Each such officer shall hold
office for such period, have such authority and perform such duties as the Board
of Directors may prescribe. The Board of Directors may, from time to time,
authorize any officer to appoint and remove subordinate officers and to
prescribe the powers and duties thereof.
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<PAGE>
SECTION 14. COMPENSATION. The Board of Directors, or a duly authorized
executive compensation committee of the Board of Directors, shall fix the
compensation of all officers of the Corporation. It may authorize any officer,
upon whom the power of appointing subordinate officers may have been conferred,
to fix the compensation of such subordinate officers.
SECTION 15. REMOVAL. Any officer of the Corporation may be removed, with
or without cause, by action of the Board of Directors.
SECTION 16. BONDS. The Board of Directors may require any officer of the
Corporation to give a bond to the Corporation, conditional upon the faithful
performance of his duties, with one or more sureties and in such amount as may
be satisfactory to the Board of Directors.
ARTICLE VII. INDEMNIFICATION
------------
SECTION 1. INDEMNIFICATION.
---------------
The Corporation shall, to the fullest extent permitted by the General
Corporation Law of the State of Delaware, as amended from time to time,
indemnify each person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
is or was, or has agreed to become, a director or officer of the Corporation, or
is or was serving, or has agreed to serve, at the request of the Corporation, as
a director, officer or trustee of, or in a similar capacity with, another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or on his behalf in
connection with such action, suit or proceeding and any appeal therefrom.
Indemnification may include payment by the Corporation of expenses in
defending an action or proceeding in advance of the final disposition of such
action or proceeding upon receipt of any undertaking by the person indemnified
to repay such payment if it is ultimately determined that such person is not
entitled to indemnification under this ARTICLE VII, which undertaking may be
accepted without reference to the financial ability of such person to make such
repayments.
The Corporation shall not indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person
unless the initiation thereof was approved by the Board of Directors of the
Corporation.
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<PAGE>
The indemnification rights provided in this ARTICLE VII (i) shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
under any law, agreement or vote of stockholders or disinterested directors or
otherwise, and (ii) shall inure to the benefit of the heirs, executors and
administrators of such persons. The Corporation may, to the extent authorized
from time to time by its Board of Directors, grant indemnification rights to
other employees or agents of the Corporation or other persons serving the
Corporation and such rights may be equivalent to, or greater or less than, those
set forth in this ARTICLE VII.
Any person seeking indemnification under this ARTICLE VII shall be deemed
to have met the standard of conduct required for such indemnification unless the
contrary shall be established.
Any amendment or repeal of the provisions of this ARTICLE VII shall not
adversely affect any right or protection of a director or officer of this
Corporation with respect to any act or omission of such director or officer
occurring prior to such amendment or repeal.
ARTICLE VIII. CERTIFICATES OF STOCK
-------------
SECTION 1. FORM AND EXECUTION OF CERTIFICATES. The interests of each
stockholder of the Corporation shall be evidenced by a certificate or
certificates for shares of stock in such form as the Board of Directors may from
time to time prescribe. The certificates of stock of each class shall be
consecutively numbered and signed by the Chairman or Vice Chairman of the Board,
if any, or the President, or an Executive Vice President or a Vice President and
by the Secretary, or an Assistant Secretary, or the Treasurer or an Assistant
Treasurer of the Corporation, and may be countersigned and registered in such
manner as the Board of Directors may by resolution prescribe, and shall bear the
corporate seal or a printed or engraved facsimile thereof. Where any such
certificate is signed by a transfer agent or transfer clerk acting on behalf of
the Corporation, the signatures of any such Chairman, Vice Chairman, President,
Executive Vice President, Vice President, Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary may be facsimiles, engraved or printed. In
case any officer or officers, who shall have signed, or whose facsimile
signature or signatures shall have been used on, any such certificate or
certificates, shall cease to be such officer or officers, whether because of
death, resignation or otherwise, before such certificate or certificates shall
have been delivered by the Corporation, such certificate or certificates may
nevertheless be issued and delivered by the Corporation as though the person or
persons who signed such certificate or certificates or whose facsimile signature
or signatures shall have been used thereon had not ceased to be such officer or
officers.
Every certificate for shares of stock which are subject to any restriction
on transfer pursuant to law, the Certificate of Incorporation, these By-Laws, or
any agreement to which
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<PAGE>
the Corporation is a party, shall have the restriction noted conspicuously on
the certificate, and shall also set forth, on the face or back, either the full
text of the restriction or a statement of the existence of such restriction and
(except if such restriction is imposed by law) a statement that the Corporation
will furnish a copy thereof to the holder of such certificate upon written
request and without charge.
Every certificate issued when the Corporation is authorized to issue more
than one class or series of stock shall set forth on its face or back either the
full text of the preferences, voting powers, qualifications, and special and
relative rights of the shares of each class and series authorized to be issued,
or a statement of the existence of such preferences, powers, qualifications and
rights, and a statement that the Corporation will furnish a copy thereof to the
holder of such certificate upon written request and without charge.
SECTION 2. TRANSFER OF SHARES. The shares of the stock of the Corporation
shall be transferred on the books of the Corporation by the holder thereof in
person or by his attorney lawfully constituted, upon surrender for cancellation
of certificates for the same number of shares, with an assignment and power of
transfer endorsed thereon or attached thereto, duly executed, with such proof or
guaranty of the authenticity of the signature as the Corporation or its agents
may reasonably require. The Corporation shall be entitled to treat the holder
of record of any share or shares of stock as the holder in fact thereof and
accordingly shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person whether or not
it shall have express or other notice thereof, save as expressly provided by law
or by the Certificate of Incorporation. It shall be the duty of each
stockholder to notify the Corporation of his post office address.
SECTION 3. CLOSING OF TRANSFER BOOKS. The stock transfer books of the
Corporation may, if deemed appropriate by the Board of Directors, be closed for
such length of time not exceeding fifty (50) days as the Board may determine,
preceding the date of any meeting of stockholders or the date for the payment of
any dividend or the date for the allotment of rights or the date when any
issuance, change, conversion or exchange of capital stock shall go into effect,
during which time no transfer of stock on the books of the Corporation may be
made.
SECTION 4. FIXING DATE FOR DETERMINATION OF STOCKHOLDER OF RECORD. In order
that the Corporation may determine the stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors and which record date: (A) in the case of determination of
stockholders entitled to vote at any meeting of stockholders or adjournment
thereof, shall, unless otherwise required by law, the
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<PAGE>
Certificate of Incorporation or otherwise, not be more than sixty (60) nor less
than ten (10) days before the date of such meeting; and (B) in the case of any
other action, shall not be more than sixty (60) days prior to such other action.
If no record date is fixed: (A) the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held; and (B) the record date for determining
stockholders for any other purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
SECTION 5. LOST OR DESTROYED CERTIFICATES. In case of the loss or
destruction of any certificate of stock, a new certificate may be issued under
the following conditions:
(A) The owner of said certificate shall file with the Secretary or any
Assistant Secretary of the Corporation an affidavit giving the facts in relation
to the ownership, and in relation to the loss or destruction of said
certificate, stating its number and the number of shares represented thereby;
such affidavit shall be in such form and contain such statements as shall
satisfy the Chief Executive Officer, the President, any Executive Vice
President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer, that said certificate has been
accidentally destroyed or lost, and that a new certificate ought to be issued in
lieu thereof. Upon being so satisfied, any such officer may require such owner
to furnish the Corporation a bond in such sum and in such form as he may deem
advisable, and with a surety or sureties approved by him, to indemnify and save
harmless the Corporation from any claim, loss, damage or liability which may be
occasioned by the issuance of a new certificate in lieu thereof. Upon such bond
being so filed, if so required, a new certificate for the same number of shares
shall be issued to the owner of the certificate so lost or destroyed; and the
transfer agent and registrar, if any, of stock shall countersign and register
such new certificate upon receipt of a written order signed by any such officer,
and thereupon the Corporation will save harmless said transfer agent and
registrar. In case of the surrender of the original certificate, in lieu of
which a new certificate has been issued, or the surrender of such new
certificate, for cancellation, the bond of indemnity given as a condition of the
issue of such new certificate may be surrendered; or
(B) The Board of Directors of the Corporation may by resolution
authorize and direct any transfer agent or registrar of stock of the Corporation
to issue and register respectively from time to time without further action or
approval by or on behalf of the Corporation new certificates of stock to replace
certificates reported lost, stolen or destroyed upon receipt of an affidavit of
loss and bond of indemnity in form and amount and with
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<PAGE>
surety satisfactory to such transfer agent or registrar in each instance or upon
such terms and conditions as the Board of Directors may determine.
SECTION 6. UNCERTIFICATED SHARES. The Board of Directors of the Corporation
may by resolution provide that one or more of any or all classes or series of
the stock of the Corporation shall be uncertificated shares, subject to the
provisions of SECTION 158 of the Delaware General Corporation Law.
ARTICLE IX. EXECUTION OF DOCUMENTS
-----------
SECTION 1. EXECUTION OF CHECKS, NOTES, ETC. All checks and drafts on the
Corporation's bank accounts and all bills of exchange and promissory notes, and
all acceptances, obligations and other instruments for the payment of money,
shall be signed by such officer or officers, or agent or agents, as shall be
thereunto authorized from time to time by the Board of Directors, which may in
its discretion authorize any such signatures to be by facsimile.
SECTION 2. EXECUTION OF CONTRACTS, ASSIGNMENTS, ETC. Unless the Board of
Directors shall have otherwise provided generally or in a specific instance, all
contracts, agreements, endorsements, assignments, transfers, stock powers, or
other instruments shall be signed by the Chairman of the Board of Directors, the
Chief Executive Officer, the President, any Executive Vice President, any Senior
Vice President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer. The Board of Directors may, however, in
its discretion, require any or all such instruments to be signed by any two or
more of such officers, or may permit any or all of such instruments to be signed
by such other officer or officers, agent or agents, as it shall thereunto
authorize from time to time.
SECTION 3. EXECUTION OF PROXIES. The Chairman of the Board of Directors,
the Chief Executive Officer, the President, any Executive Vice President, any
Senior Vice President, or any Vice President, and the Secretary, the Treasurer,
any Assistant Secretary or any Assistant Treasurer, or any other officer
designated by the Board of Directors, may sign on behalf of the Corporation
proxies to vote upon shares of stock of other companies standing in the name of
the Corporation.
ARTICLE X. INSPECTION OF BOOKS
----------
The Board of Directors shall determine from time to time whether, and if
allowed, to what extent and at what time and places and under what conditions
and regulations, the accounts and books of the Corporation (except such as may
by law be specifically open to inspection) or any of them, shall be open to the
inspection of the stockholders, and no
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<PAGE>
stockholder shall have any right to inspect any account or book or document of
the Corporation, except as conferred by law, unless and until authorized so to
do by resolution of the Board of Directors of the Corporation.
ARTICLE XI. FISCAL YEAR
-----------
The fiscal year of the Corporation shall be determined from time to time by
vote of the Board of Directors.
ARTICLE XII. INDEPENDENT PUBLIC ACCOUNTANTS
------------
The firm of independent public accountants which shall sign or certify the
financial statements of the Corporation filed with the Securities and Exchange
Commission shall be selected annually by the Board of Directors and ratified by
the stockholders in accordance with the provisions of the 1940 Act.
ARTICLE XIII. AMENDMENTS
-------------
Subject to the provisions of the Certificate of Incorporation, these By-
Laws may be amended, altered, changed or repealed, and a provision or provisions
inconsistent with the provisions of these By-Laws as they exist from time to
time may be adopted, only by the majority vote of the whole Board or by the
affirmative vote of the holders of at least 75% of the voting stock, voting
together as a single class.
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<PAGE>
MEDALLION FINANCIAL CORP.
DIVIDEND REINVESTMENT PLAN
MEDALLION FINANCIAL CORP.
205 EAST 42ND STREET
SUITE 2020
NEW YORK, NEW YORK 10017
(212) 682-3300
PLAN AGENT:
The First National Bank of Boston
160 Royall Street
Canton, MA 02021
(617) 575-2000
<PAGE>
The following is the Medallion Financial Corp. Dividend Reinvestment Plan (the
"Plan"). Further questions and correspondence should be directed to either of
the addresses listed on the front of the Plan:
1. WHAT IS THE PURPOSE OF THE PLAN?
The purpose of the Plan is to provide stockholders who choose to
participate ("Participants") with a simple and convenient method of
------------
investing cash dividends and distributions in additional shares of Common
Stock, $0.01 par value, of Medallion Financial Corp. (the "Company") at the
-------
current market price. Participants in the Plan may have cash dividends and
distributions automatically reinvested without charges for record keeping,
and may take advantage of the custodial and reporting services provided by
The First National Bank of Boston ("Bank of Boston") at no additional cost.
--------------
2. WHAT DOES THE PLAN AGENT DO?
The Bank of Boston administers the Plan for Participants, keeps records,
sends statement of accounts to Participants, and performs other duties
relating to the Plan.
3. HOW DOES A SHAREHOLDER ENROLL?
A shareholder whose shares are registered in his own name may join the Plan
by signing an Authorization Form and returning it to the Bank of Boston.
Authorization Forms may be obtained at any time by written request to The
First National Bank of Boston at 160 Royall Street, Canton, MA 02021 or by
telephoning (617 575-2000.
4. WHAT IF THE SHARES ARE HELD BY A BROKER, BANK OR NOMINEE?
If your shares are held on the books of the Bank of Boston in the name of a
broker, bank or other nominee (a "nominee"), you can participate in the
-------
Plan only to the extent that the nominee participates on your behalf. Many
nominees do not provide that service and routinely request dividends and
distributions to be paid in cash on all shares registered in their names.
Therefore, if your shares are held for your account by a nominee, you must
either make appropriate arrangements for your nominee to participate on
your behalf, or you must become stockholder of record by having a part or
all of your shares transferred to your own name.
5. WHAT IF A STOCKHOLDER WOULD RATHER RECEIVE CASH?
If you would rather receive cash, you may write a letter to the Bank of
Boston to communicate that you would like to terminate your participation
in the Plan. Any communication by you expressing a preference for cash in
lieu of shares must be received by the Bank of Boston not less than ten
days before the record date of the next dividend or distribution;
otherwise, it will be effective the day after the next dividend
2
<PAGE>
distribution date.
6. WHAT IF A STOCKHOLDER WISHES TO RECEIVE CASH ON A PORTION OF HIS OR HER
SHARES?
If you wish to receive dividends and distributions in cash on some of your
shares, and have the remaining dividends and distribution reinvested, you
must write to the Bank of Boston giving notice to that effect. As a
partial Participant, you will receive your dividends and distributions in
cash only with respect to the number of shares that you have specified.
With respect to any other shares registered in your name, and with respect
to the shares credited to your account on the books of the Bank of Boston,
the corresponding dividends and distributions will be paid in additional
shares.
Subject to the answer to question 5, the number of shares on which you
receive cash may be changed at any time simply by writing to the Bank of
Boston.
7. MAY A STOCKHOLDER ELECT TO RE-ENROLL ONCE HE HAS TERMINATED PARTICIPATION
IN THE PLAN?
Yes. If a stockholder has previously elected to receive dividends and
distributions in cash and thus terminated participation in the Plan, and
later wishes to participate in the Plan, the stockholder may re-enroll at
any time by completing an authorization form and delivering it to the Bank
of Boston. Any letter requesting enrollment must be received by the Bank
of Boston not less than ten days prior to the next dividend declaration
date in order for it to take effect as of the next dividend or
distribution.
8. HOW DOES THE DIVIDEND REINVESTMENT PLAN WORK?
When the Board of Directors declares a dividend or distribution, all non-
participants will receive it in cash. Participants will have credited to
their Plan Accounts the number of full and fractional shares (computed to
three decimal places) that could be obtained, at the price determined in
accordance with the answer to Question 11, with the cash, net of any
applicable withholding taxes, that would have been paid to them if they
were not Participants.
9. HOW WILL SHARES OF COMMON STOCK BE PURCHASED FOR PARTICIPANTS?
The Common Stock is traded on the Nasdaq National Market. The Bank of
Boston, as agent for Participants, will make purchases of Common Stock in
the over-the-counter market or elsewhere. However, in no event will shares
of Common Stock be purchased by the Bank of Boston from the Company, any of
its subsidiaries, or any director or officer of the Company or its
subsidiaries. The Bank of Boston will commingle each Participant's funds
in making purchases for the Participant's account.
3
<PAGE>
10. WHEN WILL SHARES OF COMMON STOCK BE PURCHASED UNDER THE PLAN?
In the months in which dividends are paid, dividends will be invested
beginning on the dividend payment date. The Bank of Boston will make every
effort to invest any dividends it receives promptly beginning on each
dividend payment date, and in no event later than 30 days from such date,
except where necessary under any applicable federal securities laws.
11. AT WHAT PRICE WILL SHARES OF COMMON STOCK BE PURCHASED FOR PARTICIPANTS?
The price at which the Bank of Boston will be deemed to have acquired
shares of Common Stock will be the weighted average price of all shares of
Common Stock purchased for Participants for that period plus brokerage
commissions. Neither the Company or any stockholder has the authority or
power to direct the time or price at which shares of Common Stock may be
purchased or the selection of the broker or dealer through or from whom
purchases are to be made. The Company will absorb all administrative
expenses connected with the operation of the Plan (except brokerage
commissions which shall be borne pro rata by the Participants). The Bank
of Boston will hold the total shares of Common Stock purchased for all
Participants in the name of its nominee and will have no responsibility for
the value of such shares after their purchase.
12. WHAT ACCOUNTS ARE MAINTAINED FOR PARTICIPANTS AND WHAT REPORTS ON THESE
ACCOUNTS DO PARTICIPANTS RECEIVE?
The Plan Agent will maintain a separate account for each Participant. All
shares issued to a Participant under the Plan will be credited to the
Participant's account. The Bank of Boston will mail to each Participant a
statement confirming the issuance of shares within fifteen days after the
allocation of shares is made. The statement will show the amount of the
dividend or distribution, the price at which shares were credited, the
number of full and fractional shares credited, the number of shares
previously credited and the cumulative total of shares credited. In
addition, each Participant will receive copies of the Company's annual and
quarterly reports to stockholders, proxy statements and dividend income
information for tax purposes. The proxy card received by each Participant
will represent shares held of record, including shares held in the Plan
Account.
13. WILL CERTIFICATES BE ISSUED FOR SHARES ISSUED UNDER THE PLAN?
No. Certificates for shares issued under the Plan will not be furnished to
you until your account is terminated or unless you request certificates in
writing for a specified number of shares credited to your Plan Account.
All written requests for certificates should be directed to the Bank of
Boston, allowing two weeks for processing. The issuance of certificates of
shares credited to a Plan Account will not terminate your participation in
the Plan. No certificate for a fractional share will be issued. If you
terminate your
4
<PAGE>
participation in the Plan (see Question 16), the Bank of Boston will sell
for your account any fractional share and send you a check for the
proceeds.
14. IN WHOSE NAME WILL CERTIFICATES BE REGISTERED WHEN ISSUED?
Accounts under the Plan are maintained in the name in which share
certificates of the Participant were registered at the time the
Participant entered the Plan. Certificates for whole shares issued at the
request of a Participant will be similarly registered.
15. WHAT HAPPENS IF THE COMPANY ISSUES A STOCK DIVIDEND OR DECLARES A STOCK
SPLIT?
Any stock dividends or split shares distributed by the Company on shares
held by the Plan Agent for the Participant will be credited to the
Participant's account.
16. WHAT HAPPENS IF A PARTICIPANT WISHES TO TERMINATE PARTICIPATION?
You may terminate your participation in the Plan at any time by notifying
the Bank of Boston in writing. To be effective on any given dividend
payment date, the notice to terminate must be received by the Bank of
Boston at least ten days before the record date for the dividend payment.
All other dividends with a record date after receipt of your notification
will be sent directly to you. Upon termination of your participation, you
will receive a certificate for the number of full shares of Common Stock
held for you by the Bank of Boston at no charge. At the same time, you
will receive a check in payment for any fractional shares in your account,
valued at the then current market price of the Company's Common Stock, less
any applicable brokerage commissions and any other costs of sale. If you
prefer, you can request that your full shares of Common Stock held by the
Bank of Boston be sold, and you will receive a check for the proceeds, less
any applicable brokerage commissions and any other costs of sale.
The Bank of Boston may terminate, for whatever reason at any time as it may
determine in its sole discretion, a Participant's enrollment in the Plan
upon mailing a notice of termination to the Participant at his or her
address as it appears on the Bank of Boston's records. The Company and the
Bank of Boston may suspend or terminate the Plan at any time upon notice in
writing mailed to each.
17. WHAT ARE THE BANK OF BOSTON'S RESPONSIBILITIES UNDER THE PLAN?
The Bank of Boston will not be liable under the Plan for any act done by
the Bank of Boston in good faith or for any good faith failure to act
including, without limitation, any claims for liability (a) arising out of
failure to terminate a Participant's participation in the Plan upon the
Participant's death prior to receipt of notice in writing of such death;
(b) with respect to the prices at which shares are purchased or sold for
the Participant's account and the time such purchases or sales are made;
and (c) relating to the value of the shares acquired for the Participant's
account.
5
<PAGE>
The Internal Revenue Code of 1986, as amended, imposes certain reporting
obligations upon brokers and other middlemen. As a result, the Bank of
Boston will be required to report to the Internal Revenue Service and the
Participant any sales of stock by the Bank of Boston on behalf of a
Participant.
6
<PAGE>
MEDALLION FINANCIAL CORP.
Dividend Reinvestment Plan Authorization Card
I wish to participate in the Medallion Financial Corp. Dividend Reinvestment
Plan (the "Plan") and authorize Medallion Financial Corp. to forward to The
----
First National Bank of Boston, as my agent, the dividends due to me with respect
to the shares of Medallion Financial Corp. common stock held in my name and
designated below. I authorize First National Bank of Boston, as my agent, to
reinvest my cash dividends and to purchase Medallion Financial Corp. common
stock under the terms and conditions set forth in the Plan as from time to time
in effect and to have such common stock held by a nominee.
DIVIDENDS TO BE REINVESTED:
- ---------------------------
I wish to have dividends automatically reinvested as follows:
[ ] Reinvest dividends for all shares of common stock held in my name.
[ ] Reinvest dividends for only _______ shares of common stock held in my
name and all shares held in the Plan. Continue to pay dividends in
cash for the remainder of my shares of common stock.
Name (print)___________________ SS#____________ Signature _____________________
Name (print)___________________ SS#____________ Signature _____________________
Date________________
7
<PAGE>
SUB-ADVISORY AGREEMENT
----------------------
THIS SUB-ADVISORY AGREEMENT (this "Agreement") is entered into as of
---------
________ ___, 1996, by MEDALLION FINANCIAL CORP., a Delaware corporation (the
"Company") and FMC ADVISERS, INC., a Delaware corporation (the "Sub-Adviser").
- -------- -----------
W I T N E S S E T H :
WHEREAS, the Company is engaged in business as a non-diversified closed-end
management investment company and has elected to be treated as a business
development company under the Investment Company Act of 1940, as amended (the
"1940 Act");
- ---------
WHEREAS, the Sub-Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, (the "Advisers Act") and hereby
------------
undertakes to provide investment advisory services to the Company on the terms
and conditions set forth in this Agreement; and
WHEREAS, the Company desires to retain the Sub-Adviser to furnish
investment advisory services on the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
ARTICLE 1. Duties of the Sub-Adviser. The Sub-Adviser, subject to the
-------------------------
control, direction and supervision of the Board of Directors and management of
the Company, shall provide the Company on an ongoing basis with its analysis of
the Company's operations and the medallion finance and commercial installment
finance industries with a view to assisting the Company in managing its loan
portfolio and originating loans. Specifically, but without limitation, senior
personnel of the Sub-Adviser shall regularly consult with management of the
Company with respect to strategic decisions concerning originations, credit
quality assurance, development of financial products, leverage, funding,
geographic and product diversification, the repurchase of participations,
acquisitions, regulatory compliance and marketing. In addition, the Sub-Adviser
will advise the Company on general market, economic, financial and political
matters. The Sub-Adviser shall, upon the Company's specific request, offer
personal consultation with senior personnel of the Sub-Adviser regarding any of
the foregoing matters identified by the Company, and shall provide any other
investment advisory services to the Company as may be mutually agreed to by the
Company and the Sub-Adviser.
ARTICLE 2. Expenses. The Company shall pay or reimburse the Sub-Adviser
--------
for reasonable travel expenses, if any, incurred by the Sub-Adviser in
connection with the Sub-Adviser's performance of services under this Agreement.
All other costs and expenses
<PAGE>
incurred by Sub-Adviser in connection with such services shall be the sole
responsibility of Sub-Adviser.
ARTICLE 3. Compensation of the Sub-Adviser. The Company shall pay the
-------------------------------
Sub-Adviser, in arrears, a monthly fee of $18,750.
ARTICLE 4. Limitation of Liability of the Sub-Adviser. The Sub-Adviser
------------------------------------------
shall not be liable for any error of judgment or mistake of law or for any loss
arising out of any loan or for any act or omission in the performance of its
duties hereunder, except for willful misfeasance, bad faith or gross negligence
in the performance of its duties, or by reason of reckless disregard of its
obligations and duties hereunder. As used in this Article 4, the term "Sub-
Adviser" shall include directors, officers and employees of the Sub-Adviser when
acting in such capacity as well as that corporation itself.
ARTICLE 5. Activities of the Sub-Adviser. The services provided by the
-----------------------------
Sub-Adviser to the Company hereunder are not exclusive; accordingly, the Sub-
Adviser is free to render such services to others.
ARTICLE 6. Records. The Sub-Adviser agrees to preserve the records
-------
required by Rule 204-2 under the Sub-Advisers Act, for the period specified
therein.
ARTICLE 7. Duration and Termination of this Agreement. This Agreement
------------------------------------------
shall become effective as of the date first above written and shall remain in
force until ________ __, 1998 and from year to year thereafter if approved
annually by (i) a majority of the non-interested directors of the Company and
(ii) the board of directors of the Company, or by a majority of the outstanding
voting securities of the Company.
This Agreement may be terminated without penalty on 60 days' written notice
by either party or by vote of a majority of the outstanding voting securities of
the Company and will terminate if assigned.
ARTICLE 8. Amendments of this Agreement. This Agreement may be amended by
----------------------------
the parties only if such amendment is specifically approved by the board of
directors of the Company including a majority of the non-interested directors of
the Company and by a majority of the outstanding voting securities of the
Company.
ARTICLE 9. Agency Relationship. Nothing herein shall be construed as
-------------------
constituting the Sub-Adviser as an agent of the Company.
ARTICLE 10. Severability. If any term or condition of this Agreement
------------
shall be found to be invalid or unenforceable to any extent or in any
application, then the remainder of this Agreement and such term or condition,
except to the extent or in such application such term or condition is held
invalid or unenforceable, shall not be affected thereby, and each and every term
and condition of this Agreement shall be valid and enforceable to the fullest
extent and in the broadest application permitted by law.
- 2 -
<PAGE>
ARTICLE 11. Captions. The captions of this Agreement are included for
--------
convenience only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
ARTICLE 12. Definitions of Certain Terms. For purposes of this Agreement,
----------------------------
the terms "majority of the outstanding voting securities," "assignment" and
"interested person" shall have the respective meanings specified in the 1940 Act
and the rules and regulations thereunder, subject, however, to such exemptions
as may be granted to either the Sub-Adviser or the Company by the Securities and
Exchange Commission or its staff, under the 1940 Act and the Advisers Act.
ARTICLE 13. Notices. All notices required or permitted to be sent under
-------
this Agreement shall be sent, if to the Company, to Medallion Financial Corp.,
Attention: Andrew Murstein, President, 205 East 42nd Street, Suite 2020, New
York, NY 10017 and if to the Sub-Adviser to FMC Advisers, Inc., Attention Myron
Cohen, Secretary, c/o Cohen, Pontani & Lieberman, 551 Fifth Avenue, New York, NY
10176, with a copy of notices to either party to Steven N. Farber, Esq., Palmer
& Dodge, One Beacon Street, Boston, MA 02108, or such other name or address as
may be given by any of the above in writing to the other party. Any notice
shall be deemed to be given or received on the fifth day after deposit in the
United States mail with certified postage prepaid or when actually received,
whichever is earlier.
ARTICLE 14. Entire Agreement. This Agreement contains the entire
----------------
agreement of the parties with respect to the matters referred to herein and
supersedes all prior agreements, negotiations, commitments or understandings.
ARTICLE 15. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which when so executed and delivered shall be taken to be
an original and together shall constitute one and the same document.
ARTICLE 16. Governing Law. This Agreement shall be construed in
-------------
accordance with the laws of the state of Delaware and the applicable provisions
of the 1940 Act.
- 3 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
MEDALLION FINANCIAL CORP.
By
------------------------------
Name:
Title:
FMC ADVISERS, INC.
By
------------------------------
Name:
Title:
- 4 -
<PAGE>
5,000,000 Shares
MEDALLION FINANCIAL CORP.
Common Stock
(Par Value $.01 Per Share)
UNDERWRITING AGREEMENT
----------------------
May __, 1996
FURMAN SELZ LLC
J.C. BRADFORD & CO.
EVEREN SECURITIES, INC.
As Representatives of the several Underwriters
named on Schedule I hereto
c/o Furman Selz LLC
230 Park Avenue
New York, New York 10169
Dear Sirs:
1. Introductory. Medallion Financial Corp., a Delaware corporation
------------
(the "Company"), proposes to sell, pursuant to the terms of this Agreement, to
the several underwriters named on Schedule I hereto (the "Underwriters," or
each, an "Underwriter", which term shall also include any underwriter
substituted as hereinafter provided in Section 12), an aggregate of 5,000,000
shares of the Company's common stock, par value $.01 per share (the "Common
Stock"). The 5,000,000 shares so proposed to be sold are hereinafter referred
to as the "Firm Shares." The Company also proposes to sell to the Underwriters,
upon the terms and conditions set forth in Section 3 hereof, up to an additional
750,000 shares of Common Stock (the "Option Shares"). The Firm Shares and the
Option Shares are hereinafter referred to collectively as the "Shares." Furman
Selz LLC ("Furman Selz"), J.C. Bradford & Co. ("Bradford") and EVEREN
Securities, Inc. ("Everen") are acting as representatives of the several
Underwriters and in such capacity are hereinafter referred to collectively as
the "Representatives." Capitalized terms used in this Agreement without
definition have the meanings specified in the Prospectus (as hereinafter
defined).
<PAGE>
2. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to, and agrees with, the several Underwriters that:
(a) A registration statement on Form N-2 (File No. 333-1670) with
respect to the Shares has been prepared in conformity in all material
respects with the requirements of the Securities Act of 1933, as amended
(the "Securities Act"), and the rules and regulations (the "Securities Act
Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder, and the Investment Company Act of 1940, as
amended (the "Investment Company Act" and, together with the Securities
Act, the "Acts"), and the rules and regulations thereunder (the "Investment
Company Act Rules and Regulations" and, together with the Securities Act
Rules and Regulations, the "Rules and Regulations"); such registration
statement has been filed with the Commission under the Securities Act and
has been declared effective by the Commission under the Securities Act and
no post-effective amendment to such registration statement has been filed
as of the date of this Agreement; one or more amendments to such
registration statement, including in each case an amended preliminary
prospectus, copies of which amendments have heretofore been delivered to
you, have been so prepared and filed. A notification of election to be
treated as a business development company on Form N-54A (the
"Notification") has been prepared in conformity in all material respects
with Section 54(a) of the Investment Company Act and has been filed by the
Company with the Commission under the Investment Company Act. The term
"Registration Statement" means such registration statement, as amended, at
the time it was declared effective by the Commission and shall be deemed to
include all information omitted therefrom in reliance upon Rule 430A and
contained in the Prospectus referred to below. If it is contemplated, at
the time this Agreement is executed, that a post-effective amendment to the
registration statement will be filed and must be declared effective before
the offering of the Shares may commence, the term "Registration Statement"
as used in this Agreement means the registration statement as amended by
said post-effective amendment. The term "Registration Statement" as used in
this Agreement shall also include any registration statement relating to
the Shares that is filed and declared effective pursuant to Rule 462(b)
under the Securities Act. The term "Prospectus" as used in this Agreement
means the prospectus as first filed pursuant to Rule 497(b), (c) or (h)
under the Securities Act, except that if any revised prospectus shall be
provided to the Underwriters by the Company in conformity with this
Agreement for use in connection with the offering of the Shares which
differs from the Prospectus on file at the Commission at the time the
Registration Statement becomes effective (whether or not such revised
prospectus is required to be filed by the Company pursuant to Rule 497(b),
(c) or (h) under the Securities Act), the term "Prospectus" shall refer to
such revised prospectus from and after the time it is first provided to the
Underwriters for such use. The term "Preliminary Prospectus" as used in
this Agreement means the prospectus subject to completion in the form
included in Amendment No. 1 to the Registration Statement at the time of
the initial filing of Amendment No. 1 to the Registration Statement with
the Commission, and as such prospectus shall have been amended from time to
time prior to the date of the Prospectus and any prospectus filed by the
Company with the consent of the Representatives pursuant to Rule 497(a)
under the Securities Act. No document has been or will be prepared or
distributed in reliance on Rule 434 under the Securities Act. For purposes
of the following
-2-
<PAGE>
representations and warranties, to the extent reference is made to the
Prospectus and at the relevant time the Prospectus is not yet in existence,
such reference shall be deemed to be to the most recent Preliminary
Prospectus.
(b) Neither the Commission nor any state regulatory authority has
issued or, to the Company's knowledge, threatened to issue any order
preventing or suspending the use of any Preliminary Prospectus, and, at its
date of issue, each Preliminary Prospectus conformed in all material
respects with the requirements of the Acts and did not include any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; the
Notification, on the date it was filed with the Commission, complied in all
material respects with the requirements of the Investment Company Act and
the Investment Company Act Rules and Regulations and did not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading and, when the Registration Statement became effective and at
all times subsequent thereto up to and including the Closing Dates (as
defined in Section 3 hereof) the Registration Statement and the Prospectus
at the time the Registration Statement became effective (unless the term
"Prospectus" refers to a prospectus which has been provided to the
Underwriters by the Company for use in connection with the offering of the
Shares which differs from the Prospectus on file at the Commission at the
time the Registration Statement became effective, in which case at the
time it is first provided to the Underwriters for such use) and at the
Closing Dates, conformed or will conform, as the case may be, in all
material respects to the requirements of the Acts and the Registration
Statement and the Prospectus at such times did not or will not, as the case
may be, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the foregoing
representations, warranties and agreements shall not apply to information
contained in or omitted from any Preliminary Prospectus or the Registration
Statement or the Prospectus or any amendment thereto in reliance upon, and
in conformity with, written information furnished to the Company by or on
behalf of any Underwriter, directly or through the Representatives,
specifically for use in the preparation thereof; there is no franchise,
lease, contract, agreement or other document required to be described in
the Registration Statement or Prospectus or to be filed as an exhibit to
the Registration Statement which is not described or filed therein as
required and the exhibits that have been filed are complete and correct
copies of the documents of which they purport to be copies; and all
descriptions of any such franchises, leases, contracts, agreements or other
documents contained in the Registration Statement are accurate and complete
descriptions of such documents in all material respects and fairly present
the information required to be shown with respect thereto by Form N-2 under
the Act.
(c) The Company has filed an exemptive application (as amended and
restated, the "Application") and the Commission has issued an order
permitting the Company to enter into certain transactions, as set forth in
the Application and as described in the Prospectus (the "Exemptive Order").
The Commission has not issued or, to the Company's knowledge, threatened to
issue an order rescinding or revoking the Exemptive Order. At the time the
Exemptive Order was issued and at all times subsequent thereto up
-3-
<PAGE>
to and including the Closing Date, the Application requested all exemptive
relief necessary under the Investment Company Act for the Company to
consummate the transactions described in the Prospectus. At the time the
Exemptive Order was issued and at all times subsequent thereto up to and
including the Closing Date, the Application did not include any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(d) Tri-Magna has filed a proxy statement (the "Proxy Statement")
under the Exchange Act with respect to the meeting of its stockholders in
connection with approval of the merger of Tri-Magna with and into the
Company. The Proxy Statement, as of the date it was first mailed to
stockholders and at all times subsequent thereto up to and including the
date of the meeting of its stockholders, complied as to form in all
material respects with the applicable provisions of the Exchange Act and
the rules and regulations thereunder, and did not include any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
(e) The Company and each of Tri-Magna Corporation, Medallion Funding
Corp., Medallion Media, Inc., Edwards Capital Corp. and Transportation
Capital Corp. (together, the "Founding Companies") have been duly organized
and are validly existing and in good standing as corporations under the
laws of their respective jurisdictions of organization, and after
consummation of the Acquisitions will have the corporate power and
authority to own or lease their properties and to conduct their respective
businesses as described in the Prospectus; the Company and each of the
Founding Companies are in possession of and operating in compliance in all
material respects with all franchises, grants, registrations,
qualifications, authorizations, licenses, permits, easements, consents,
certificates and orders required for the conduct of their respective
businesses as now being conducted and as described in the Registration
Statement and the Prospectus, or for the ownership, leasing and operation
of their respective properties, all of which are valid and in full force
and effect and no such franchise, grant, registration, consent, certificate
or order contains a materially burdensome restriction not adequately
disclosed in the Registration Statement or the Prospectus; and the Company
and each of the Founding Companies are duly qualified to do business and
are in good standing as foreign corporations in all jurisdictions where
their respective ownership or leasing of properties or the conduct of their
respective businesses requires such qualification and in which the failure
to so qualify would have a Material Adverse Effect (as defined in
subsection 2(m)).
(f) The Company had full corporate power and authority to enter into
each of the agreements relating to the Acquisitions (such agreements, as
amended, are hereinafter referred to collectively as the "Acquisition
Agreements") and has full power and authority to perform its obligations
thereunder; true and correct copies of the executed Acquisition Agreements
(including all exhibits and schedules thereto) have heretofore been
delivered to the Representatives and there have been no amendments,
alterations, modifications or waivers relating thereto or in the exhibits
or schedules thereto which have not been
-4-
<PAGE>
previously delivered to the Representatives; and each of the Acquisition
Agreements has been duly and validly authorized, executed and delivered by
the Company and constitutes the valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and similar laws of
general application affecting the rights and remedies of creditors or by
general principles of equity.
(g) Each of Tri-Magna Corporation, Transportation Capital Corp., and
Edwards Capital Company (together, the "Targets") had full power and
authority (corporate or other) to enter into the respective Acquisition
Agreement to which it is a party and has full power and authority to
perform its obligations thereunder; and each of the Acquisition Agreements
has been duly and validly authorized, executed and delivered by the
Target executing such agreement and constitutes the valid and binding
obligation of such Target, enforceable against such Target in accordance
with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and similar
laws of general application affecting the rights and remedies of creditors
or by general principles of equity.
(h) Subsequent to the respective dates as of which information is
given in the Registration Statement, Prospectus, Proxy Statement and the
Application, and except as set forth or contemplated therein or in the
Acquisition Agreements, (i) neither the Company nor any of the Founding
Companies has incurred any material liabilities or obligations, direct or
contingent, or entered into any other transactions not in the ordinary
course of business, (ii) there has not been any material adverse change or
development involving a material prospective change in the condition
(financial or otherwise), properties, business, management, prospects, net
worth, capital stock, investment objectives, investment policies or results
of operations of the Company and the Founding Companies taken as a whole,
or any change in the capital stock, or material change in the short-term or
long-term debt, of the Company and the Founding Companies taken as a whole
and (iii) there has been no dividend or distribution of any kind declared,
paid or made by the Company or the Founding Companies on any class of their
respective capital stock. For purposes of this Agreement to the extent
reference is made to "the Company and the Founding Companies taken as a
whole," such references shall be deemed to assume that the transactions
contemplated by each of the Acquisition Agreements have been consummated
prior to the date hereof.
(i) The financial statements, together with the related notes and
schedules, of the Company and the Targets set forth in the Prospectus and
elsewhere in the Registration Statement fairly present, on the basis stated
in the Registration Statement, the financial position and the results of
operations and changes in financial position of the Company and the Targets
at the respective dates or for the respective periods therein specified.
Such statements and related notes and schedules have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except as otherwise noted
therein). The selected financial and statistical data set forth in the
Prospectus under the captions "Summary Financial Data" and
-5-
<PAGE>
"Selected Financial Data" fairly present, on the basis stated in the
Prospectus, the information set forth therein and have been prepared in
conformity with the requirements of the Securities Act and the Securities
Act Rules and Regulations. The pro forma financial statements and other pro
forma financial information included in the Registration Statement and the
Prospectus present fairly the information shown therein, have been prepared
in accordance with the Commission's rules and guidelines with respect to
pro forma financial statements, have been properly compiled on the pro
forma bases described therein, and, in the opinion of the Company, the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
or circumstances referred to therein.
(j) Arthur Andersen LLP, Friedman Alpren & Green LLP and Coopers &
Lybrand LLP, who have expressed opinions on the audited financial
statements and related schedules included in the Registration Statement and
the Prospectus are independent certified public accountants as required by
the Securities Act and the Securities Act Rules and Regulations.
(k) The Company's capitalization, assuming that the 12,500 for 1 stock
split and amendment and restatement of the Certificate of Incorporation of
the Company (the "Founders Transactions") had occurred prior to December
31, 1995, is as set forth under the heading "Medallion Financial
Historical" in the section of the Prospectus entitled "Capitalization." The
Company's capitalization, assuming that the Founders Transactions had
occurred prior to December 31, 1995, and as adjusted to give effect to the
Offering, is as set forth under the heading "As Adjusted for Offering" in
the section of the Prospectus entitled "Capitalization." The Company's
capitalization, assuming that (i) the Founders Transactions had occurred
prior to December 31, 1995, and (ii) the Acquisitions had been consummated
prior to December 31, 1995, and as adjusted for the application of the
proceeds of the Offering and the cash acquired in connection with the
Acquisitions as described in the section of the Prospectus entitled "Use of
Proceeds," is as set forth under the heading "Pro Forma as Adjusted for
Application of Offering Proceeds" in the section of the Prospectus entitled
"Capitalization." The outstanding shares of Common Stock, including without
limitation those shares issued pursuant to the Pre-Offering Issuance,
conform to the description thereof in the Prospectus and have been duly
authorized and validly issued and are fully paid and nonassessable and have
been issued in compliance with all federal and state securities laws and
were not issued in violation of or subject to any preemptive rights or
similar rights to subscribe for or purchase securities. Except as disclosed
in or contemplated by the Prospectus and the financial statements of the
Company and related notes thereto included in the Prospectus, neither the
Company nor the Founding Companies has outstanding any options or warrants
to purchase, or any preemptive rights or other rights to subscribe for or
to purchase any securities or obligations convertible into, or any
contracts or commitments to issue or sell, shares of their respective
capital stock or any such options, rights, convertible securities or
obligations. The description of the Company's stock option and other stock
plans or arrangements, and the options or other rights granted thereunder,
as set forth in the Prospectus, accurately and fairly presents in all
material respects the information required to be shown with
-6-
<PAGE>
respect to such plans, arrangements, options and rights. All shares of
capital stock of each Founding Company issued or to be issued and
outstanding immediately after the consummation of the transactions
contemplated by the Acquisition Agreements, have been duly authorized and
validly issued, and are fully paid and nonassessable and, except as
disclosed in the Prospectus, will be owned, directly or indirectly, by the
Company free and clear of any liens, encumbrances, equities or claims.
(l) The Shares to be issued and sold by the Company to the
Underwriters hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be
duly and validly issued, fully paid and nonassessable, free of any
preemptive or similar rights and will conform to the description thereof in
the Prospectus, and good and marketable title to the Shares will pass to
the Underwriters on the Closing Dates free and clear of any lien,
encumbrance, security interest, claim or restriction whatsoever except for
(a) those restrictions imposed under the Company's credit agreements filed
as exhibits to the Registration Statement and (b) those restrictions
imposed generally under the Investment Company Act, the Investment Company
Act Rules and Regulations, the SBIA and the SBA Regulations.
(m) Subject to the transfer of the Targets' SBA licenses in accordance
with the approval of such transfer granted by the SBA, which transfer can
be effected solely by acts wholly within the Company's discretion and
ability, there are no legal or governmental proceedings pending to which
the Company or any of the Founding Companies or any of their affiliated
persons, as defined under the Investment Company Act, is a party or of
which any property of the Company or any Founding Company or any of their
affiliated persons is subject, which, if determined adversely to the
Company or any such Founding Company or affiliated person, might
individually or in the aggregate (i) prevent or materially and adversely
affect the transactions contemplated by this Agreement, (ii) suspend the
effectiveness of the Registration Statement, (iii) prevent or suspend the
use of the Preliminary Prospectus in any jurisdiction or (iv) result in a
Material Adverse Effect (as defined below); and to the Company's knowledge
no such proceedings are threatened or contemplated against the Company or
any Founding Company or any of their affiliated persons by governmental
authorities or others. Except as disclosed in the Prospectus, the Company
is not a party nor subject to the provisions of any material injunction,
judgment, decree or order of any court, regulatory body or other
governmental agency or body. "Material Adverse Effect" means, when used in
connection with the Company, the Founding Companies or the Targets, any
development, change or effect that could reasonably be expected to have a
material adverse effect on the condition (financial or otherwise),
properties, business, management, prospects, net worth or results of
operations of the Company and the Founding Companies taken as a whole
assuming the transactions contemplated by each of the Acquisition
Agreements had been consummated prior to the date hereof.
(n) Neither the Company nor any of the Founding Companies is in
violation of its respective charter, by-laws or other organizational
documents or in default in the performance of any note or other evidence of
indebtedness or any indenture, mortgage, deed of trust, note agreement or
other contract, lease or other instrument to which it is a party or by
which it is bound, or to which any of its property or assets is subject
other than defaults which would not, individually or in the aggregate,
result in a Material Adverse Effect and, as of the Closing Dates, no
condition or event shall have occurred which, with notice or a lapse of
time or both, would constitute a default under such instruments or
-7-
<PAGE>
agreements or result in the imposition of any penalty or acceleration of
any indebtedness other than such defaults, penalties or acceleration which
would not, individually or in the aggregate, result in a Material Adverse
Effect.
(o) The execution, delivery and performance of this Agreement and each
of the Acquisition Agreements and the consummation of the transactions
contemplated herein and therein will not result in a breach or violation of
any of the terms or provisions of or constitute a default under any note or
other evidence of indebtedness or any indenture, mortgage, deed of trust,
note agreement or other contract, lease or instrument to which the Company
or any of the Founding Companies is a party or by which any of them or any
of their properties is or may be bound, the certificate of incorporation,
by-laws or other organizational documents of the Company or any of the
Founding Companies, or any law, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of
the Founding Companies or any of their properties and will not result in
the creation of any lien, charge or encumbrance upon the assets of the
Company or the Founding Companies.
(p) Other than those obtained prior to the date hereof, no consent,
approval, authorization or order of any court or governmental agency or
body is required for the consummation by the Company of the transactions
contemplated by this Agreement or the Acquisition Agreements, except such
as may be required by the SBA, as described in subsection 2 (m) the
National Association of Securities Dealers, Inc. (the "NASD") or the
securities or "Blue Sky" laws of any jurisdiction in connection with the
purchase and distribution of the Shares by the Underwriters.
(q) The Company has duly elected to be treated by the Commission under
the Investment Company Act as a business development company and all
required action has been taken by the Company under Section 54 of the
Investment Company Act to qualify the Company as a business development
company and under the Acts to make the public offering and consummate the
sale of the Shares as provided in this Agreement.
(r) The Company intends to direct the investment of the proceeds of
the Offering (as defined in the Prospectus) in such a manner as to comply
with the requirements of Subchapter M of the Internal Revenue Code of 1986,
as amended (the "Code"), and, immediately after the First Closing Date, the
Company and the RIC Subsidiaries will each be eligible to qualify as a
regulated investment company under Subchapter M of the Code.
(s) The Company has the full corporate power and authority to enter
into this Agreement and to perform its obligations hereunder (including to
issue, sell and deliver the Shares), and this Agreement has been duly and
validly authorized, executed and delivered by the Company.
(t) The Company and the Founding Companies are in compliance with, and
conduct their respective businesses in conformity with, all applicable
federal, state, local and foreign laws, rules and regulations of any court
or governmental agency or body
-8-
<PAGE>
except non-compliance which would not result in a Material Adverse Effect;
to the knowledge of the Company, other than as set forth in the
Registration Statement and the Prospectus, no prospective change in any of
such federal, state, local or foreign laws, rules or regulations has been
adopted which, when made effective, would have a Material Adverse Effect.
(u) The Company and the Founding Companies have filed all necessary
federal, state, local and foreign income, payroll, franchise and other tax
returns and have paid all taxes shown as due thereon or with respect to any
of their properties, and there is no tax deficiency that has been, or to
the knowledge of the Company is likely to be, asserted against the Company
or any of the Founding Companies or any of their respective properties or
assets that would have a Material Adverse Effect.
(v) No person or entity has the right to require registration of
shares of Common Stock or other securities of the Company because of the
filing or effectiveness of the Registration Statement or otherwise.
(w) Neither the Company nor the Founding Companies nor any of their
respective officers, directors or any of their affiliated persons has taken
or will take, directly or indirectly, any action designed or intended to
stabilize or manipulate the price of any security of the Company, or which
caused or resulted in, or which might in the future reasonably be expected
to cause or result in, stabilization or manipulation of the price of any
security of the Company.
(x) The Company and the Founding Companies own or possess all patents,
trademarks, trademark registrations, service marks, service mark
registrations, tradenames, copyrights, licenses, inventions, trade secrets
and rights described in the Prospectus as being owned by them or any of
them or necessary for the conduct of their respective businesses, and the
Company is not aware of any claim to the contrary or any challenge by any
other person to the rights of the Company and the Founding Companies with
respect to the foregoing. The Company's and the Founding Companies'
businesses as now conducted and as proposed to be conducted do not and will
not infringe or conflict with in any material respect any patents,
trademarks, service marks, tradenames, copyrights, trade secrets, licenses
or any other intellectual property or franchise right of any person. No
claim has been made against the Company or any Founding Company alleging
the infringement by the Company or any Founding Company of any patent,
trademark, servicemark, tradename, copyright, trade secret, license in or
other intellectual property right or franchise right of any person.
(y) The Company and the Founding Companies have performed all material
obligations required to be performed by them under all contracts required
by Item 24 of Form N-2 under the Securities Act to be filed as exhibits to
the Registration Statement, and neither the Company, any of the Founding
Companies nor any other party to such contract is in default under or in
breach of any such obligations except such as would not
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<PAGE>
result in a Material Adverse Effect. Neither the Company nor any of the
Founding Companies has received any notice of such default or breach.
(z) Neither the Company or any of the Founding Companies is involved
in any labor dispute which would result in a Material Adverse Effect nor,
to the Company's knowledge, is any such dispute threatened. Neither the
Company nor any of the Founding Companies is aware that (i) any executive,
key employee or significant group of employees of the Company or any of the
Founding Companies plans to terminate employment with the Company or any of
the Founding Companies or (ii) any such executive or key employee is
subject to any noncompete, nondisclosure, confidentiality, employment,
consulting or similar agreement that would be violated by the present or
proposed business activities of the Company or the Founding Companies.
Neither the Company nor any Founding Company has or expects to have any
liability for any prohibited transaction or funding deficiency or any
complete or partial withdrawal liability with respect to any pension,
profit sharing or other plan which is subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), to which the Company or
any Founding Company makes or ever has made a contribution and in which any
employee of the Company or any Founding Company is or has ever been a
participant. With respect to such plans, the Company and each Founding
Company are in compliance in all material respects with all applicable
provisions of ERISA.
(aa) The Company has obtained the written agreement described in
Section 8(1) of this Agreement from each of its officers, directors and
holders of Common Stock listed on Schedule II hereto.
(bb) The Company and the Founding Companies have, and the Company and
the Founding Companies as of the Closing Dates will have, good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned or proposed to be owned by them, in
each case free and clear of all liens, charges, encumbrances and defects
except as disclosed in the Prospectus or such as would not have a Material
Adverse Effect, and any real property and buildings held under lease by the
Company and the Founding Companies or proposed to be held after giving
effect to the transactions described in the Prospectus are, or will be as
of the Closing Dates, held by them under valid, subsisting and enforceable
leases with such exceptions as would not have a Material Adverse Effect, in
each case except as described in or contemplated by the Prospectus .
(cc) The Company and the Founding Companies are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are customary in the businesses in which they are engaged
or propose to engage after giving effect to the transactions described in
the Prospectus; and neither the Company nor any Founding Company has any
reason to believe that it will not be able to renew such insurance coverage
as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue their business at a cost
that would not have a Material Adverse Effect.
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<PAGE>
(dd) Other than as contemplated by this Agreement or as disclosed in
the Prospectus, there is no broker, finder or other party that is entitled
to receive from the Company or the Founding Companies any brokerage or
finders' fee or other fee or commission as a result of any of the
transactions contemplated by this Agreement.
(ee) The Company has complied with all applicable provisions of Section
517.075 of the Florida Statutes (Chapter 92-198; Laws of Florida).
(ff) The summaries of the terms of each of the Acquisitions contained
in the Prospectus, to the extent such summaries purport to describe the
provisions of the terms of the Acquisition Agreements, constitute fair and
accurate summaries thereof. Each of the Acquisitions shall have been
consummated on or prior to the First Closing Date (as defined in Section 3
hereof).
(gg) Neither the Company or any of the Founding Companies, nor any
director, officer, agent or employee acting on behalf of the Company or the
Founding Companies has (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity, (ii) made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from corporate
funds, (iii) violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977 or (iv) made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(hh) The Company and each of the Targets maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's
general or specific authorization and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(ii) To the Company's knowledge, neither the Company, any of the
Founding Companies nor any employee or agent of the Company or any of the
Founding Companies has made any payment of funds of the Company or any of
the Founding Companies or received or retained any funds in violation of
any law, rule or regulation, which payment, receipt or retention of funds
is of a character required to be disclosed in the Prospectus.
(jj) Each certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters in connection
to this Agreement or the transactions contemplated hereby shall be deemed
to be a representation and warranty by the Company as to the matters
covered thereby.
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(kk) The Shares have been approved, subject to official notice of
issuance, for quotation on the Nasdaq National Market.
(ll) A registration statement on Form 8-A (the "Form 8-A") with respect
to the Shares has been prepared by the Company in conformity with Section
12(g) of the Exchange Act and the rules and regulations thereunder, and has
been filed with the Commission under the Exchange Act and the Form 8-A has
been declared effective by the Commission.
3. Purchase by, and Sale and Delivery to, the Underwriters - Closing
-----------------------------------------------------------------
Dates.
- -----
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to the Underwriters the Firm Shares, and the
Underwriters agree, severally and not jointly, to purchase the Firm Shares from
the Company, the number of Firm Shares to be purchased by each Underwriter being
set opposite its name on Schedule I, subject to adjustment in accordance with
Section 12 hereof.
(b) The purchase price per share to be paid by the Underwriters to the
Company will be $ ____ per share (the "Purchase Price").
(c) The Company will deliver the Firm Shares to the Representatives
for the respective accounts of the several Underwriters (in the form of
definitive certificates) issued in such names and in such denominations as the
Representatives may direct by notice in writing to the Company given at or prior
to 12:00 noon, New York City time, on the second full business day preceding the
First Closing Date or, if no such direction is received, in the names of the
respective Underwriters or in such other names as Furman Selz may designate
(solely for the purpose of administrative convenience) and in such denominations
as Furman Selz may determine, against payment of the aggregate Purchase Price
therefor by federal funds wire transfer (same day funds) to an account or
accounts previously designated in writing by the Company, all at the offices of
Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd Street, New York,
New York 10022. The time and date of the delivery and closing shall be at 10:00
a.m., New York City time, on [T + 3 business days, or if the pricing of the Firm
Shares occurs after 4:30 p.m., T + 4 business days], 1996, in accordance with
Rule 15c6-1 of the Exchange Act. The Company will bear the one-day cost of funds
of Furman Selz in providing the aggregate Purchase Price in same day funds,
rather than next day funds. The time and date of such payment and delivery are
herein referred to as the "First Closing Date." The First Closing Date and the
location of delivery of, and the form of payment for, the Firm Shares may be
varied by agreement between the Company and Furman Selz. The First Closing Date
may be postponed pursuant to the provisions of Section 12.
(d) The Company shall make the certificates for the Firm Shares
available to the Representatives for examination on behalf of the Underwriters
not later than 10:00 a.m., New York City time, on the business day preceding the
First Closing Date at the offices of Furman Selz LLC, 230 Park Avenue, New York,
New York 10169.
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(e) It is understood that Furman Selz, Bradford or Everen,
individually and not as Representatives of the several Underwriters, may (but
shall not be obligated to) make payment to the Company on behalf of any
Underwriter or Underwriters, for the Shares to be purchased by such Underwriter
or Underwriters. Any such payment by Furman Selz, Bradford or Everen shall not
relieve such Underwriter or Underwriters from any of its or their other
obligations hereunder.
(f) The several Underwriters propose to make an initial public
offering of the Firm Shares (other than to residents of or in any jurisdiction
in which qualification of the Firm Shares is required and has not become
effective) at the initial public offering price and upon the other terms set
forth in the Prospectus as soon after the effectiveness of the Registration
Statement as in their judgment is advisable. The Representatives shall promptly
advise the Company of the making of the initial public offering.
(g) For the purpose of covering any over-allotments in connection with
the distribution and sale of the Firm Shares as contemplated by the Prospectus,
the Company hereby grants to the Underwriters an option to purchase, severally
and not jointly, up to the aggregate number of shares of Option Shares. The
price per share to be paid for the Option Shares shall be the Purchase Price.
The option granted hereby may be exercised as to all or any part of the Option
Shares at any time, but only once, not more than 30 days subsequent to the
effective date of this Agreement. No Option Shares shall be sold and delivered
unless the Firm Shares previously have been, or simultaneously are, sold and
delivered. The right to purchase the Option Shares or any portion thereof may be
surrendered and terminated at any time prior to exercise upon notice by the
Underwriters to the Company. The option granted hereby may be exercised by the
Underwriters by giving written notice from Furman Selz to the Company setting
forth the number of Option Shares to be purchased by them and the date and time
for delivery of and payment for the Option Shares. Each date and time for
delivery of and payment for the Option Shares (which may be the First Closing
Date, but not earlier) is herein called the "Option Closing Date" and shall in
no event be earlier than two business days nor later than five business days
after written notice is given. The Option Closing Date and the First Closing
Date are herein collectively called the "Closing Dates." All purchases of Option
Shares from the Company shall be made on a pro rata basis. Option Shares shall
be purchased for the account of each Underwriter in the same proportion as the
number of Firm Shares set forth opposite such Underwriter's name on Schedule I
hereto bears to the total number of Firm Shares (subject to adjustment by the
Underwriters to eliminate odd lots). Upon exercise of the option by the
Underwriters, the Company agrees to sell to the Underwriters the number of
Option Shares set forth in the written notice of exercise and the Underwriters
agree, severally and not jointly and subject to the terms and conditions herein
set forth, to purchase the number of such shares determined as aforesaid. The
Company will deliver the Option Shares to the Underwriters (in the form of
definitive certificates, issued in such names and in such denominations as the
Representatives may direct by notice in writing to the Company given at or prior
to 12:00 noon, New York City time, on the second full business day preceding the
Option Closing Date or, if no such direction is received, in the names of the
respective Underwriters or in such other names as Furman Selz may designate
(solely for the purpose of administrative convenience) and in such denominations
as Furman Selz may determine, against payment of the aggregate Purchase Price
therefor by certified or official bank check or checks in New York Clearing
House funds (next day
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<PAGE>
funds), payable to the order of the Company all at the offices of Willkie Farr &
Gallagher, One Citicorp Center, 153 East 53rd Street, New York, New York 10022.
The Company shall make the certificates for the Option Shares available to the
Underwriters for examination not later than 10:00 a.m., New York City time, on
the business day preceding the Option Closing Date at the offices of Furman
Selz, 230 Park Avenue, New York, New York 10169. The Option Closing Date and the
location of delivery of, and the form of payment for, the Option Shares may be
varied by agreement between the Company and Furman Selz. The Option Closing Date
may be postponed pursuant to the provisions of Section 12.
4. Covenants and Agreements of the Company. The Company covenants and
---------------------------------------
agrees with the several Underwriters that:
(a) The Company will (i) if the Company and the Representatives have
determined not to proceed pursuant to Rule 430A, use its best efforts to
cause the Registration Statement to become effective, (ii) if the Company
and the Representatives have determined to proceed pursuant to Rule 430A,
use its best efforts to comply with the provisions of and make all
requisite filings with the Commission pursuant to Rule 430A and Rule 497 of
the Securities Act Rules and Regulations and (iii) if the Company and the
Representatives have determined to deliver Prospectuses pursuant to Rule
434 of the Securities Act Rules and Regulations, to use its best efforts to
comply with all the applicable provisions thereof. The Company will advise
the Representatives promptly as to the time at which the Registration
Statement becomes effective, will advise the Representatives promptly of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or an order rescinding or
revoking the Exemptive Order, or of the institution of any proceedings for
such purposes, and will use its best efforts to prevent the issuance of any
such stop order or order revoking or rescinding the Exemptive Order, and to
obtain as soon as possible the lifting thereof, if issued. The Company will
advise the Representatives promptly of the receipt of any comments of the
Commission or any request by the Commission for any amendment of or
supplement to the Registration Statement or the Prospectus or for
additional information and will not at any time file any amendment to the
Registration Statement or supplement to the Prospectus which shall not
previously have been submitted to the Representatives a reasonable time
prior to the proposed filing thereof or to which the Representatives shall
reasonably object in writing or which is not in compliance with the Acts.
The Company will advise the Representatives promptly of receipt by the
Company or any representative or attorney of the Company of any other
communication from the Commission relating to (i) the Company, if received
during the time a Prospectus relating to the Shares is required to be
delivered under the Securities Act, or (ii) the Registration Statement, the
Notification, the Exemptive Order, any Preliminary Prospectus, the
Prospectus or the transactions contemplated by this Agreement.
(b) The Company will promptly prepare and file with the Commission any
amendments or supplements to the Registration Statement or the Prospectus
which in the judgment of the Company or in the reasonable opinion of the
Representatives may be necessary to enable the several Underwriters to
continue the distribution of the Shares and will use its best efforts to
cause the same to become effective as promptly as possible.
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<PAGE>
(c) If at any time after the effective date of the Registration
Statement when a prospectus relating to the Shares is required to be
delivered under the Securities Act any event relating to or affecting the
Company or any of the Founding Companies occurs as a result of which the
Prospectus or any other prospectus as then in effect would include an
untrue statement of a material fact, or omit to state any material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, or if it is necessary at any
time to amend the Prospectus to comply with the Acts, the Company will
promptly notify the Representatives thereof and will prepare an amended or
supplemented prospectus which will correct such statement or omission; and
in case any Underwriter is required to deliver a prospectus relating to the
Shares nine months or more after the effective date of the Registration
Statement in connection with the initial sale of any Shares which such
Underwriter purchased from the Company pursuant to this Agreement, the
Company upon the request of the Representatives but at the expense of such
Underwriter will prepare promptly such prospectus or prospectuses as may be
necessary to permit compliance with the requirements of Section 10(a)(3) of
the Securities Act.
(d) The Company will deliver to the Representatives, at or before the
Closing Dates, signed copies of the Registration Statement, as originally
filed with the Commission, and all amendments thereto including all
financial statements and exhibits thereto, and will deliver to the
Representatives such number of copies of the Registration Statement,
including such financial statements but without exhibits, and all
amendments thereto, as the Representatives may reasonably request. The
Company will deliver or mail to or upon the order of the Representatives,
from time to time until the effective date of the Registration Statement,
as many copies of the Preliminary Prospectus as the Representatives may
reasonably request. The Company will deliver or mail to or upon the order
of the Representatives on the date of the initial public offering, and
thereafter from time to time during the period when delivery of a
prospectus relating to the Shares is required under the Securities Act, as
many copies of the Prospectus, in final form or as thereafter amended or
supplemented as the Representatives may reasonably request.
(e) The Company will deliver to the Representatives, at or before the
First Closing Date, a signed copy of the Notification and the Application
as originally filed, and each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith, and a copy of the
Exemptive Order.
(f) The Company will deliver to the Representatives, at or before the
First Closing Date, such number of conformed copies of the Notification and
the Application as originally filed, and each amendment thereto filed with
the Commission, including all consents and exhibits filed therewith, as the
Representatives may reasonably request.
(g) The Company will make generally available to its shareholders as
soon as practicable, but not later than 15 months after the effective date
of the Registration Statement, an earnings statement which will be in
reasonable detail (but which need not be audited) and which will comply
with Section 11(a) of the Securities Act, covering a period of at least 12
months beginning after the "effective date" (as defined in Rule 158 under
the
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<PAGE>
Securities Act) of the Registration Statement.
(h) The Company will cooperate with the Representatives to enable the
Shares to be registered or qualified for offering and sale by the
Underwriters and by dealers under the securities laws of such jurisdictions
as the Representatives may designate and at the request of the
Representatives will make such applications and furnish such consents to
service of process or other documents as may be required of it as the
issuer of the Shares for that purpose; provided, however, that the Company
shall not be required to qualify to do business or to file a general
consent (other than that arising out of the offering or sale of the Shares)
to service of process in any such jurisdiction where it is not now so
subject. The Company will, from time to time, prepare and file such
statements and reports as are or may be required of it as the issuer of the
Shares to continue such qualifications in effect for so long a period as
the Representatives may reasonably request for the distribution of the
Shares. The Company will advise the Representatives promptly after the
Company becomes aware of the suspension of the qualifications or
registration of (or any such exception relating to) the Common Stock of the
Company for offering, sale or trading in any jurisdiction or of any
initiation or threat of any proceeding for any such purpose, and in the
event of the issuance of any orders suspending such qualifications,
registration or exception, the Company will, with the cooperation of the
Representatives use its best efforts to obtain the withdrawal thereof.
(i) The Company will furnish to its shareholders annual reports
containing financial statements audited by independent certified public
accountants and with quarterly summary financial information in reasonable
detail which may be unaudited. During the period of five years from the
date hereof, the Company will deliver to the Representatives and, upon
request, to each of the other Underwriters, as soon as they are available,
copies of each annual report of the Company and each other report furnished
by the Company to its shareholders and will deliver to the Representatives,
(i) as soon as they are available, copies of any other reports (financial
or other) which the Company shall publish or otherwise make available to
its shareholders as such, (ii) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the Commission
or any national securities exchange or the Nasdaq National Market and (iii)
from time to time such other information concerning the Company as the
Representatives may reasonably request. So long as the Company has active
subsidiaries, such financial statements will be on a consolidated basis to
the extent the accounts of the Company and its subsidiaries are
consolidated in reports furnished to its shareholders generally. Separate
financial statements shall be furnished for all subsidiaries whose accounts
are not consolidated but which at the time are significant subsidiaries as
defined in the Securities Act Rules and Regulations.
(j) The Company will use its best efforts to cause the Shares to be
duly included for quotation on the Nasdaq National Market prior to the
First Closing Date.
(k) The Company will maintain a transfer agent and registrar for its
Common Stock.
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<PAGE>
(l) Prior to filing its first quarterly report on Form 10-Q, the
Company will have its independent certified public accountants perform a
limited quarterly review of its quarterly financial statements .
(m) The Company will not, without the prior written consent of Furman
Selz, offer, sell, assign, transfer, encumber, contract to sell, grant an
option to purchase or otherwise dispose of any shares of Common Stock or
securities convertible into or exercisable or exchangeable for Common Stock
(including, without limitation, Common Stock of the Company which may be
deemed to be beneficially owned by the Company in accordance with the
Securities Act Rules and Regulations) during the 180 days following the
date of the Prospectus first filed pursuant to Rule 497(b), (c) or
(h), other than (i) the Company's sale of Shares hereunder and the
Company's issuance of Common Stock upon the exercise of stock options
which are outstanding on the First Closing Date or described in
the Prospectus and (ii) the Companys issuance of stock options which are
described in the Prospectus.
(n) The Company will apply the net proceeds from the sale of the
Shares as set forth in the description under the caption "Use of Proceeds"
in the Prospectus. The Company will apply the cash acquired in connection
with the Acquisitions as set forth in the description under the caption
"Use of Proceeds" in the Prospectus.
(o) The Company will supply the Representatives with copies of all
correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Shares under the
Securities Act and the Nasdaq National Market.
(p) Prior to the Closing Dates, the Company will furnish to the
Representatives, as soon as they have been prepared, copies of any
unaudited interim consolidated financial statements of the Company and its
subsidiaries for any periods subsequent to the periods covered by the
financial statements appearing in the Registration Statement and the
Prospectus.
(q) Prior to the Closing Dates, unless required under the Acts or the
Rules and Regulations, the Company will issue no press release or other
communications directly or indirectly and hold no press conference with
respect to the Company or any of its subsidiaries, the financial condition,
results of operation, business, prospects, assets or liabilities of any of
them, or the offering of the Shares, without the prior written consent of
the Representatives, which shall not be unreasonably withheld. For a period
of 12 months following the Closing Date, the Company will use its best
efforts to provide to the Representatives copies of each press release or
other public communications with respect to the financial condition,
results of operations, business, prospects, assets or liabilities of the
Company at least 24 hours prior to the public issuance thereof or such
longer advance period as may reasonably be practicable.
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(r) During the period of five years hereafter, the Company will
furnish to the Representatives, and upon request of the Representatives, to
each of the Underwriters, (i) as soon as practicable after the end of each
fiscal year, copies of the annual report of the Company containing the
balance sheet of the Company as of the close of such fiscal year and
statements of income, shareholders' equity and cash flows for the year then
ended and the opinion thereon of the Company's independent certified public
accountants, (ii) as soon as practicable after the filing thereof, copies
of each proxy statement, Annual Report on Form 10-K, Quarterly Report on
Form 10-Q, Report on Form 8-K or other report filed by the Company with the
Commission, or the Nasdaq National Market or any national securities
exchange, (iii) as soon as available, copies of any report or communication
of the Company mailed generally to holders of its Common Stock and (iv) all
public reports and all reports and financial statements furnished by the
Company to the Commission pursuant to the Investment Company Act and the
Investment Company Act Rules and Regulations thereunder.
(s) The Company will file timely and accurate reports on Form SR with
the Commission in accordance with Rule 463 under the Securities Act or any
successor provision.
(t) Each of the RIC Subsidiaries has filed, or will file, a
Notification of Registration on Form N-8A (the "Forms N-8A") and a
Registration Statement on Form N-5 (the "Forms N-5") under the Investment
Company Act, as necessary for the election of regulated investment company
("RIC") status under Subchapter M of the Code. Each Form N-8A and Form N-5,
complied, or will comply, as to form in all material respects with the
applicable provisions of the Investment Company Act and the Investment
Company Act Rules and Regulations, and did not, or will not, include any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. The Company will, and will cause each of the RIC Subsidiaries
to, elect RIC status under Subchapter M of the Code, commencing with the
year ended December 31, 1996.
5. Payment of Expenses. The Company will pay or cause to be paid
-------------------
(directly or by reimbursement) all costs, fees and expenses incurred in
connection with and expenses incident to the performance of the obligations of
the Company under this Agreement, as follows: (i) all expenses and taxes
incident to the issuance and delivery of the Shares to the Representatives,
(ii) all expenses incident to the registration of the Shares under the
Securities Act, (iii) the costs of preparing stock certificates (including
printing and engraving costs), (iv) all fees and expenses of the registrar and
transfer agent of the Shares, (v) all necessary issue, transfer and other stamp
taxes in connection with the issuance and sale of the Shares to the
Underwriters, (vi) all fees and expenses of the Company's counsel and the
Company's independent certified public accountants, (vii) all costs and expenses
incurred in connection with the preparation, printing, filing, shipping and
distribution of the Registration Statement, the Notification, the Application,
the Exemptive Order, each Preliminary Prospectus and the Prospectus (including
all exhibits and financial statements) and all amendments and supplements
provided for herein, the
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Forms N-8A, the Forms N-5, the Master Agreement Among Underwriters between the
Representatives and the Underwriters, the Master Selected Dealer Agreement, the
Blue Sky memoranda and this Agreement, (viii) all filing fees, reasonable
attorneys' fees and expenses incurred by the Company or the Underwriters in
connection with exemptions from qualifying or registering (or obtaining
qualification or registration of) all or any part of the Shares for offer and
sale and determination of its eligibility for investment under the Blue Sky or
other securities laws of such jurisdictions as the Representatives may
designate, (ix) all fees and expenses paid or incurred in connection with
filings made with the NASD, (x) all fees and expenses paid or incurred in
connection with the listing of the Shares on the Nasdaq National Market and (xi)
all other costs, fees and expenses incident to the performance of the Company's
obligations hereunder which are not otherwise specifically provided for in this
Section; provided that, except as provided in Section 11, the Underwriters shall
pay their own costs and expenses, including the costs and expenses of their
counsel, any transfer taxes on the Shares which they may sell, and the expenses
of advertising any offering of the Shares made by the Underwriters.
6. Indemnification and Contribution.
--------------------------------
(a) The Company shall indemnify and hold harmless each Underwriter,
its officers and employees and each person, if any, who controls any Underwriter
within the meaning of the Securities Act, from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of the Shares), to which that Underwriter,
officer, employee or controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained (A) in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or supplement
thereto or (B) in any blue sky application or other document prepared or
executed by the Company (or based upon any written information furnished by the
Company) specifically for the purpose of qualifying any or all of the Shares
under the securities laws of any state or other jurisdiction (any such
application, document or information being hereinafter called a "Blue Sky
Application"), (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky Application any material fact required to
be stated therein or necessary to make the statements therein not misleading,
and shall reimburse each Underwriter and each such officer, employee or
controlling person promptly upon demand for any legal or other expenses
reasonably incurred by that Underwriter, officer, employee or controlling person
in connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company shall not be
- -------- -------
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liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any such
amendment or supplement, or in any Blue Sky Application, in reliance upon and in
conformity with written information furnished to the Company through the
Representatives by or on behalf of any Underwriter specifically for inclusion
therein. The foregoing indemnity agreement is in addition to any liability which
the Company may otherwise have to any Underwriter or to any officer, employee or
controlling person of that Underwriter.
The foregoing indemnity agreement with respect to any Preliminary
Prospectus, Prospectus or Registration Statement shall not inure to the benefit
of any Underwriter (its officers and employees or any person who controls such
Underwriter within the meaning of the Securities Act) from whom the person
asserting any such loss, claims, damages or liabilities purchased Shares if a
copy of the Prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person, at or prior to the written
confirmation of the sale of such Shares to such person and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage or liability; provided, that the Company has complied with
its obligation under subsection 4(d) of this Agreement to provide copies of the
Prospectus to the Representatives.
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company, each of its officers who signed the Registration
Statement, each of its directors, and each person, if any, who controls the
Company within the meaning of the Securities Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which the Company or any such director, officer or controlling person may
become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained (A) in
any Preliminary Prospectus, the Registration Statement or the Prospectus or in
any amendment or supplement thereto, or (B) in any Blue Sky Application or (ii)
the omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or in any amendment or supplement
thereto, or in any Blue Sky Application any material fact required to be stated
therein or necessary to make the statements therein not misleading, but in each
case only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company through the Representatives by or
on behalf of that Underwriter specifically for inclusion therein, and shall
promptly reimburse the Company and any such director, officer or controlling
person for any legal or other expenses reasonably incurred by the Company or any
such director, officer or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred. The foregoing indemnity agreement is in
addition to any liability which any Underwriter may otherwise have to the
Company or any such director, officer, employee or controlling person.
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(c) Promptly after receipt by an indemnified party under this Section
6 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 6, notify the indemnifying party in
writing of the claim or the commencement of that action, provided, however, that
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the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 6 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
-------- -------
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 6.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
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(x) the Representatives shall have the right to employ counsel to represent
jointly the Representatives and those other Underwriters and their respective
officers, employees and controlling persons who may be subject to liability
arising out of any claim in respect of which indemnity may be sought by the
Underwriters against the Company under this Section 6 if, in the reasonable
judgment of the Representatives, it is advisable for the Representatives and
those Underwriters, officers, employees and controlling persons to be jointly
represented by separate counsel, and in that event the fees and expenses of such
separate counsel shall be paid by the Company and (y) the Company shall have the
right to employ counsel to represent the Company, its officers, directors, and
controlling persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Company against the Underwriters
under this Section 6 if, in the reasonable judgment of the Company, it is
advisable for the Company, its officers, directors and controlling persons to be
represented by separate counsel, and in that event the fees and expenses of such
separate counsel shall be paid by the Underwriters. In no event shall the
Company or the Underwriters, as the case may be, be liable for the fees and
expenses of more than one such separate counsel in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. No indemnifying
party shall (i) without the prior written consent of the indemnified parties
(which consent shall not be unreasonably withheld), settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or proceeding,
or (ii) be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with the consent of the indemnifying party or if there be a final
judgment of the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 6 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 6(a) or 6(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand
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<PAGE>
and the Underwriters on the other with respect to the statements or omissions
which resulted in such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Underwriters on the
other with respect to such offering shall be deemed to be in the same proportion
as the total net proceeds from the offering of the Shares purchased under this
Agreement (after deducting expenses) received by the Company, on the one hand,
and the total underwriting discounts and commissions received by the
Underwriters with respect to the Shares purchased under this Agreement, on the
other hand, bear to the total net proceeds from the offering of the Shares under
this Agreement, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Company
or the Underwriters, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 6(d) were to be determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 6
shall be deemed to include, for purposes of this Section 6(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 6(d), no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public was offered to the public
exceeds the amount of any damages which such Underwriter has otherwise paid or
become liable to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 6(d) are several in proportion to their respective underwriting
obligations and not joint.
(e) The Underwriters severally confirm and the Company acknowledges
that the first sentence of the last paragraph on the cover page of the
Prospectus, concerning conditions of sale; the last three sentences of the
second paragraph under the caption "Underwriting" in the Prospectus, concerning
the terms of the offering by the Underwriters; and the eight paragraph under
the caption "Underwriting" in the Prospectus, concerning accounts over which the
Underwriters exercise discretionary authority constitute the only information
furnished in writing to the Company through the Representatives by or behalf of
any Underwriter specifically for inclusion in the Registration Statement and
Prospectus.
7. Survival of Indemnities, Representations, Warranties, etc. The
---------------------------------------------------------
respective indemnities, covenants, agreements, representations, warranties and
other statements of the Company and the several Underwriters, as set forth in
this Agreement or made by them respectively, pursuant to this Agreement, shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement or any investigation made by or on behalf of any Underwriter,
the Company or any of its officers or directors or any controlling person, and
shall survive delivery of and payment for the Shares.
8. Conditions of Underwriters' Obligations. The respective
---------------------------------------
obligations of the several Underwriters hereunder shall be subject to the
accuracy, at and (except as otherwise stated herein) as of the date hereof and
at and as of the Closing Dates, of the representations and warranties made
herein by the Company, to compliance at and as of the Closing Dates by the
Company with its covenants and agreements herein contained and other provisions
hereof to be satisfied at or prior to the Closing Dates, and to the following
additional conditions:
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<PAGE>
(a) The Registration Statement shall have become effective and no stop
order suspending the effectiveness thereof shall have been issued and no
proceedings for that purpose shall have been initiated or, to the knowledge of
the Company or the Representatives, shall be threatened by the Commission, and
any request for additional information on the part of the Commission (to be
included in the Registration Statement or the Prospectus or otherwise) shall
have been complied with to the reasonable satisfaction of the Representatives.
Any filings of the Prospectus, or any supplement thereto, required pursuant to
Rule 497 or Rule 434 of the Securities Act Rules and Regulations, shall have
been made in the manner and within the time period required by Rule 497 and Rule
434 of the Securities Act Rules and Regulations, as the case may be.
(b) The Commission shall have issued, and shall not have rescinded or
revoked at or before the Closing Dates, the Exemptive Order.
(c) There shall not have occurred any Material Adverse Effect or any
change in the investment objectives, investment policies, capital stock, short-
term or long-term debt of the Company and the Founding Companies taken as a
whole, such that (i) the Registration Statement or the Prospectus, or any
amendment or supplement thereto, contains an untrue statement of fact which, in
the opinion of the Representatives, is material, or omits to state a fact which,
in the opinion of the Representatives, is required to be stated therein or is
necessary to make the statements therein not misleading in any material respect
or (ii) it is unpracticable in the reasonable judgment of the Representatives
to proceed with the public offering or purchase the Shares as contemplated
hereby.
(d) No legal or governmental action, suit or proceeding affecting the
Company which is material and adverse to the Company or which affects or may
affect the Company's ability to perform its obligations under this Agreement
shall have been instituted or threatened and there shall have occurred no
material adverse development in any existing such action, suit or proceeding.
(e) On or prior to the Closing Date, (i) the Acquisitions and the
transactions contemplated thereby shall have been consummated, (ii) such
transactions described in the foregoing clause (i) shall continue to be in full
force and effect in accordance with the terms thereof and (iii) the Company
shall have provided to each of the Representatives and counsel to the
Underwriters copies of all material closing documents delivered to the parties
relating to the Acquisitions.
(f) At the time of execution of this Agreement, the Representatives
shall have received from Arthur Andersen LLP, independent certified public
accountants, a "cold comfort" letter, dated the date hereof, in form and
substance satisfactory to the Underwriters.
(g) The Representatives shall have received from Arthur Andersen LLP,
independent certified public accountants, letters, dated the Closing Dates, to
the effect that
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<PAGE>
such accountants reaffirm, as of the Closing Dates, and as though made on the
Closing Dates, the statements made in the letter furnished by such accountants
pursuant to paragraph (f) of this Section 8.
(h) The Representatives shall have received from Palmer & Dodge LLP,
counsel for the Company, an opinion, dated the Closing Dates, addressed to the
Underwriters (and stating that it may be relied upon by counsel to the
Underwriters) to the effect that:
(i) The Company and each of the Founding Companies has been duly
incorporated and are validly existing and in good standing as corporations
under the laws of their respective jurisdictions of incorporation, and
after consummation of the Acquisitions will have the corporate power and
authority to own or lease their properties and to conduct their respective
businesses as described in the Prospectus. To such counsel's knowledge, the
Company and each of the Founding Companies are duly qualified to do
business and are in good standing as foreign corporations in all
jurisdictions where their respective ownership or leasing of properties or
the conduct of their respective businesses requires such qualification,
except where the failure to be so qualified would not have a Material
Adverse Effect.
(ii) The Company has full corporate power and authority to enter
into this Agreement and to issue, sell and deliver to the Underwriters the
Shares to be issued and sold hereunder. The Company has full corporate
power and authority to execute, deliver and perform its obligations under
each of the Acquisition Agreements.
(iii) This Agreement has been duly authorized, executed and
delivered by the Company. Each of the Acquisition Agreements has been duly
authorized, executed and delivered by the Company and constitutes the valid
and binding obligation of the Company enforceable against the Company
in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
and similar laws of general application affecting the rights and remedies
of creditors or by general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(iv) All shares of capital stock of each of the Founding Companies
issued or to be issued and outstanding immediately after consummation of
the transactions contemplated by the Acquistion Agreements have been duly
authorized and validly issued and are fully paid and nonassessable and
except as disclosed in the Prospectus, will be owned by the Company,
directly or indirectly, free and clear of all liens, encumbrances, equities
or claims.
(v) The Company has authorized and outstanding capital stock as
set forth under the caption "Capitalization" in the Prospectus; the
authorized shares of
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<PAGE>
the Company's Common Stock have been duly authorized; the outstanding
shares of the Company's Common Stock have been duly authorized and validly
issued and are fully paid and nonassessable; all of the Shares conform to
the description thereof contained in the Prospectus; the certificates for
the Shares are in due and proper form; the Shares have been duly authorized
and will be validly issued, fully paid and nonassessable when issued and
paid for as contemplated by this Agreement; and no preemptive rights of
stockholders exist with respect to any of the Shares or the issue or sale
thereof.
(vi) To such counsel's knowledge, (a) there are no outstanding
securities of the Company or the Founding Companies convertible or
exchangeable into or evidencing the right to purchase or subscribe for any
shares of capital stock of the Company or the Founding Companies and except
as disclosed in the Prospectus, there are no outstanding or authorized
options, warrants or rights of any character obligating the Company or the
Founding Companies to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to
purchase or subscribe for any shares of such stock; and (b) there is no
holder of any securities of the Company or the Founding Companies or any
other person who has the right, contractual or otherwise, to cause the
Company to sell or otherwise issue to them, or to permit them to underwrite
the sale of, any of the Shares or the right to have any Common Stock or
other securities of the Company included in the Registration Statement or
the right, as a result of the filing of the Registration Statement, to
require registration under the Securities Act of any Common Stock or other
securities of the Company.
(vii) The Registration Statement and all post-effective amendments
thereto, if any, have become effective under the Securities Act; any and
all filings, if any, required by Rules 497, 434 and 430A of the Securities
Act Rules and Regulations have been made; and, to the knowledge of such
counsel, no stop order proceedings with respect thereto have been
instituted or are pending or threatened under the Securities Act; any
required filing of the Prospectus and any supplement thereto pursuant to
Rule 497 of the Securities Act Rules and Regulations has been made in the
manner and within the time period required by Rule 497.
(viii) The Exemptive Order is in full force and effect, and to the
knowledge of such counsel, the Commission has not issued or threatened to
issue an order rescinding or revoking the Exemptive Order.
(ix) The Registration Statement, the Notification and the Prospectus
and each amendment or supplement thereto comply as to form in all material
respects with the requirements of the Acts and the applicable rules and
regulations thereunder (except that such counsel need express no opinion as
to the financial statements and related schedules or financial and
statistical data included therein).
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<PAGE>
(x) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Company or any of the
Founding Companies.
(xi) The execution and delivery of this Agreement and the consummation
of the transactions herein contemplated do not and will not result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, the charter, by-laws or other organizational documents of
the Company or the Founding Companies, or any agreement or instrument filed
as an exhibit to the Registration Statement to which the Company or any of
the Founding Companies is a party or by which the Company or any of the
Founding Companies may be bound, or, to such counsel's knowledge, any order
of any court or governmental agency or body having jurisdiction over the
Company or any of the Founding Companies or any of their respective
properties except to the extent that any such conflict, breach, violation
or default would not have a Material Adverse Effect.
(xii) The execution and delivery of the Acquisition Agreements and the
consummation of the transactions therein contemplated did not and will not
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, the charter, by-laws or other organizational
documents of the Company or any of the Founding Companies, or any agreement
or instrument filed as an exhibit to the Registration Statement to which
the Company or any of the Founding Companies is a party or by which the
Company or any of the Founding Companies may be bound, or, to such
counsel's knowledge, any order of any court or governmental agency or body
having jurisdiction over the Company or any of the Founding Companies or
any of their respective properties except to the extent that any such
conflict, breach, violation or default would not have a Material Adverse
Effect.
(xiii) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and
delivery of this Agreement or the Acquisition Agreements and the
consummation of the transactions herein and therein contemplated (other
than as may be required by the SBA, as described in Subsection 3(m) the
NASD or as required by state securities and Blue Sky laws or regulations,
as to which such counsel need express no opinion) except such as have been
obtained or made.
(xiv) The Company has duly elected to be treated under the Investment
Company Act as a business development company and all required action has
been taken by the Company under the Acts to make the public offering and
consummate the sale of the Shares as provided in this Agreement; the
provisions of the
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<PAGE>
corporate charter and by-laws of the Company and the Founding Companies and
the investment policies and restrictions described in the Prospectus comply
with the requirements of the Investment Company Act.
(xv) The Shares are duly authorized, subject to official notice of
issuance, for quotation on the Nasdaq National Market and a registration
statement has been filed pursuant to Section 12 of the Exchange Act for the
Shares and has been declared effective.
In rendering such opinion Palmer & Dodge LLP may (i) as to matters governed
by the laws of states or jurisdictions other than the Commonwealth of
Massachusetts or the General Corporation Law of the State of Delaware, render
such opinion as if the laws of the Commonwealth of Massachusetts governed, (ii)
rely as to matters governed by the SBIA and the rules, regulations, policies and
procedures of the SBA, on the opinion of Reid & Priest LLP, and (iii) rely as to
matters of fact, upon certificates of officers of the Company, provided that
copies of such opinion and certificates are provided to the Representatives. In
addition to the matters set forth above, such opinion shall also include a
statement to the effect that nothing has come to the attention of such counsel
which leads them to believe that (i) the Registration Statement, or any
amendment thereto (except as to the financial statements and related schedules
or financial and statistical data included therein, with respect to which such
counsel need express no belief), as of the time it became effective under the
Securities Act, as of the First Closing Date or the Option Closing Date, as
applicable, contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) the Prospectus, or
any supplement thereto, on the date it was filed pursuant to the Securities Act
Rules and Regulations and as of the First Closing Date or the Option Closing
Date, as applicable, contained or contains, an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make the
statements, in the light of the circumstances under which they are made, not
misleading (except that such counsel need express no belief as to financial
statements and related schedules or financial and statistical data included
therein), and (iii) (A) the Application, as of the time the Exemptive Order was
issued and as of the First Closing Date or the Option Closing Date, as
applicable, and (B) the Proxy Statement, as of the time it was mailed to the
Tri-Magna stockholders, the date of the meeting of the Tri-Magna stockholders
and the First Closing Date or the Option Closing Date, as applicable, contained
or contains an untrue statement of a material fact or omitted or omits to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading (except that such counsel need express no belief as to financial
statements and related schedules or financial and statistical data included
therein). With respect to such statement, Palmer & Dodge LLP may state that
their belief is based upon the procedures set forth therein, but is without
independent check and verification.
(i) The Representatives shall have received from Willkie Farr &
Gallagher, counsel for the Underwriters, their opinion or opinions dated the
First Closing Date with
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respect to the incorporation of the Company, the validity of the Shares, the
Registration Statement and the Prospectus and such other related matters as they
may reasonably request, and the Company shall have furnished to such counsel
such documents as they may request for the purpose of enabling them to pass upon
such matters. In addition to the matters set forth above, such opinion shall
also include a statement to the effect that nothing has come to the attention of
such counsel which leads them to believe that (i) the Registration Statement, or
any amendment thereto (except as to the financial statements and related
schedules or financial data included therein, with respect to which such counsel
need express no belief), as of the time it became effective under the Securities
Act, as of the First Closing Date or the Option Closing Date, as applicable,
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) the Prospectus, or any supplement
thereto, on the date it was filed pursuant to the Securities Act Rules and
Regulations and as of the First Closing Date or the Option Closing Date, as
applicable, contained or contains, an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements, in the light of the circumstances under which they are made, not
misleading (except that such counsel need express no belief as to financial
statements and related schedules or financial data included therein). With
respect to such statement, Willkie Farr & Gallagher may state that their belief
is based upon the procedures set forth therein, but is without independent check
and verification.
(j) The Representatives shall have received a certificate, dated the
Closing Dates, of the chief executive officer or the President and the chief
financial or accounting officer of the Company to the effect that:
(i) No stop order suspending the effectiveness of the
Registration Statement has been issued, and, to the best of the
knowledge of the signers, no proceedings for that purpose have been
instituted or are pending or contemplated under the Securities Act;
(ii) The Commission has not issued or, to the best of the
knowledge of the signers, threatened to issue an order rescinding or
revoking the Exemptive Order;
(iii) Neither any Preliminary Prospectus, as of its date, nor the
Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, as of the respective times when the Registration
Statement became effective and at all times subsequent thereto up to
the delivery of such certificate, included any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading;
(iv) The representations and warranties of the Company in this
Agreement are true and correct at and as of the Closing Dates, and the
Company has complied with all the agreements and performed or satisfied
all the conditions on its part to be performed or satisfied at or prior
to the Closing Dates; and
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(v) Subsequent to the respective dates as of which information is
given in the Registration Statement, Prospectus, Proxy Statement and
the Application, and except as set forth or contemplated therein or in
the Acquisition Agreements, (i) neither the Company nor any of the
Founding Companies has incurred any material liabilities or
obligations, direct or contingent, or entered into any other
transactions not in the ordinary course of business, (ii) there has not
been any material adverse change in the condition (financial or
otherwise), properties, business, management, prospects, net worth,
capital stock, investment objectives, investment policies or results of
operations of the Company and the Founding Companies taken as a whole,
or any change in the capital stock, or material change in the short-
term or long-term debt, of the Company and the Founding Companies taken
as a whole and (iii) there has been no dividend or distribution of any
kind declared, paid or made by the Company or the Founding Companies on
any class of their respective capital stock. For purposes of this
certificate to the extent reference is made to "the Company and the
Founding Companies taken as a whole," such references shall be deemed
to assume that the transactions contemplated by each of the Acquisition
Agreements have been consummated prior to the date hereof.
(k) The Company shall have furnished to the Representatives such
additional certificates as the Representatives may have reasonably requested as
to the accuracy, at and as of the Closing Dates, of the representations and
warranties made herein by it and as to compliance at and as of the Closing Dates
by it with its covenants and agreements herein contained and other provisions
hereof to be satisfied at or prior to the Closing Dates, and as to satisfaction
of the other conditions to the obligations of the Underwriters hereunder.
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(1) The Representatives shall have received the written agreements of
the officers, directors and holders of Common Stock listed on Schedule II
that each will not, except as stated therein, offer, sell, assign,
transfer, encumber, contract to sell, grant an option to purchase or
otherwise dispose of any shares of Common Stock (including, without
limitation, Common Stock of the Company which may be deemed to be
beneficially owned by such persons in accordance with the Securities Act
Rules and Regulations) during the period of time specified in
Schedule II following the date of the Prospectus first filed pursuant to
Rule 497(b), (c) or (h), without the prior written consent of Furman Selz.
All opinions, certificates, letters and other documents will be in
compliance with the provisions hereunder only if they are reasonably
satisfactory in form and substance to the Representatives. The Company will
furnish to the Representatives conformed copies of such opinions, certificates,
letters and other documents as the Representatives shall reasonably request. If
any of the conditions hereinabove provided for in this Section shall not have
been satisfied when and as required by this Agreement, this Agreement may be
terminated by the Representatives by notifying the Company of such termination
in writing at or prior to the Closing Dates, but Furman Selz shall be entitled
to waive any of such conditions on behalf of the Underwriters.
9. Effective Date. This Agreement shall become effective immediately
---------------
as to Sections 5, 6, 7, 9, 10, 11, 13, 14, 15, 16 and 17 and, as to all other
provisions, at 11:00 a.m. New York City time on the first full business day
following the effectiveness of the Registration Statement or at such earlier
time after the Registration Statement becomes effective as the Representatives
may determine on and by notice to the Company or by release of any of the Shares
for sale to the public. For the purposes of this Section 9, the Shares shall be
deemed to have been so released upon the release for publication of any
newspaper advertisement relating to the Shares or upon written notice from the
Representatives (i) advising Underwriters that the Shares are released for
public offering or (ii) offering the Shares for sale to securities dealers,
whichever may occur first.
10. Termination. This Agreement (except for the provisions of
-----------
Section 5) may be terminated by the Company at any time before it becomes
effective in accordance with Section 9 by notice to the Representatives and may
be terminated by the Representatives at any time before it becomes effective in
accordance with Section 9 by notice to the Company. In the event of any
termination of this Agreement under this or any other provision of this
Agreement, there shall be no liability of any party to this Agreement to any
other party, other than as provided in Sections 5, 6 and 11 and other than as
provided in Section 12 as to the liability of defaulting Underwriters.
This Agreement may be terminated after it becomes effective by the
Representatives by notice to the Company (i) if at or prior to the First Closing
Date or, as relates to the Option Shares only, prior to any Option Closing Date
trading in securities generally or on the Nasdaq National Market shall have been
suspended or minimum prices shall have been established on such market, or a
banking moratorium shall have been declared by New York or United States
authorities, (ii) if at or prior to the First Closing Date or any Option Closing
Date there shall have been (A) a major outbreak or significant escalation of
hostilities between the United States and any foreign power or of any other
insurrection or armed conflict involving the United States or (B)
-30-
<PAGE>
a material change in general, poliitical or economic conditions which, in the
judgment of the Representatives, makes it impractical or inadvisable to offer or
sell the Firm Shares or Option Shares, as applicable, on the terms contemplated
by the Prospectus, (iii) if there shall be any litigation or proceeding, pending
or threatened to which the Company is a party, which in the reasonable judgment
of the Representatives, makes it impracticable to offer or deliver the Firm
Shares or Option Shares, as applicable, on the terms contemplated by the
Prospectus or (iv) if there shall have occurred any of the events specified in
the immediately preceding clauses (i) - (iii) together with any other such event
that makes it, in the judgment of the Representatives, impracticable to offer or
deliver the Firm Shares or Option Shares, as applicable, on the terms
contemplated by the Prospectus.
11. Reimbursement of Underwriters. Notwithstanding any other
-----------------------------
provisions hereof, if this Agreement shall not become effective by reason of any
election of the Company pursuant to the first paragraph of Section 10 or shall
be terminated by the Representatives under Section 8 or Section 10, the Company
will bear and pay the expenses specified in Section 5 hereof and, in addition to
its obligations pursuant to Section 6 hereof, the Company will reimburse the
reasonable out-of-pocket expenses of the several Underwriters (including
reasonable fees and disbursements of counsel for the Underwriters) incurred in
connection with this Agreement and the proposed purchase of the Shares, and
promptly upon demand the Company will pay such amounts to you as
Representatives.
12. Substitution of Underwriters. If any Underwriter or Underwriters
----------------------------
shall default in its or their obligations to purchase Shares hereunder and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed 10% of the total number of Shares
underwritten, the other Underwriters shall be obligated severally, in proportion
to their respective commitments hereunder, to purchase the Shares which such
defaulting Underwriter or Underwriters agreed but failed to purchase. If any
Underwriter or Underwriters shall so default and the aggregate number of Shares
with respect to which such default or defaults occur is more than 10% of the
total number of Shares underwritten and arrangements satisfactory to the
Representatives and the Company for the purchase of such Shares by other persons
are not made within 48 hours after such default, this Agreement shall terminate.
If the remaining Underwriters or substituted Underwriters are required
hereby or agree to take up all or part of the Shares of a defaulting Underwriter
or Underwriters as provided in this Section 12, (i) the Company shall have the
right to postpone the Closing Dates for a period of not more than five full
business days in order that the Company may effect whatever changes may thereby
be made necessary in the Registration Statement or the Prospectus, or in any
other documents or arrangements, and the Company agrees promptly to file any
amendments to the Registration Statement or supplements to the Prospectus which
may thereby be made necessary, and (ii) the respective numbers of Shares to be
purchased by the remaining Underwriters or substituted Underwriters shall be
taken as the basis of their underwriting obligation for all purposes of this
Agreement. Nothing herein contained shall relieve any defaulting Underwriter of
its liability to the Company or the other Underwriters for damages occasioned by
its default hereunder. Any termination of this Agreement pursuant to this
Section 12 shall be without
-31-
<PAGE>
liability on the part of any non-defaulting Underwriter or the Company, except
for expenses to be paid or reimbursed pursuant to Section 5 and except for the
provisions of Section 6.
13. Notices. All communications hereunder shall be in writing and, if
-------
sent to the Underwriters shall be mailed, delivered or telecopied and confirmed
to the Representatives c/o Furman Selz LLC at 230 Park Avenue, New York, New
York 10169 (telecopier no.: (212) 692-9608), Attention: Stuart B. Katz, except
that notices given to an Underwriter pursuant to Section 6 hereof shall be sent
to such Underwriter at the address furnished by the Representatives or, if sent
to the Company, shall be mailed, delivered or telecopied and confirmed at 205
East 42nd Street, Suite 2020, New York, New York 10017 (telecopier no.: (212)
983-0351), Attention: Alvin Murstein, with a copy to Palmer & Dodge LLP, One
Beacon Street, Boston, Massachusetts 02108 (telecopier no.: (617) 227-4420),
Attention: Stanley Keller, Esq.
14. Successors. This Agreement shall inure to the benefit of and be
----------
binding upon the several Underwriters, the Company and their respective
successors and legal representatives. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person other than the
persons mentioned in the preceding sentence any legal or equitable right, remedy
or claim under or in respect of this Agreement, or any provisions herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person; except that the representations, warranties,
covenants, agreements and indemnities of the Company contained in this Agreement
shall also be for the benefit of the person or persons, if any, who control any
Underwriter or Underwriters within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, and the indemnities of the several
Underwriters shall also be for the benefit of each director of the Company, each
of its officers who has signed the Registration Statement and the person or
persons, if any, who control the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act.
15. Applicable Law. This Agreement shall be governed by and construed
--------------
in accordance with the laws of the State of New York.
16. Authority of the Representatives. In connection with this
--------------------------------
Agreement, the Representatives will act for and on behalf of the several
Underwriters, and hereby represent that they are authorized so to act, and any
action taken under this Agreement by the Representatives, will be binding on all
the Underwriters.
17. Partial Unenforceability. The invalidity or unenforceability of any
------------------------
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
-32-
<PAGE>
18. General. This Agreement constitutes the entire agreement of the
-------
parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company and the Representatives.
19. Counterparts. This Agreement may be signed in two or more
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
-33-
<PAGE>
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter and your acceptance shall constitute a binding agreement
between us.
Very truly yours,
MEDALLION FINANCIAL CORP.
By:
------------------------------------
Name:
Title:
Accepted and delivered as of
the date first above written:
FURMAN SELZ LLC
J.C. BRADFORD & CO.
EVEREN SECURITIES, INC.
Acting on their own behalf
and as Representatives of the several
Underwriters referred to in the
foregoing Agreement.
By: Furman Selz LLC
By:
--------------------------------------
Name:
Title:
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Number Number of
of Firm Option
Shares Shares
to be to be
Name Purchased Purchased
- ---- --------- ---------
<S> <C> <C>
Furman Selz LLC......................
J.C. Bradford & Co. .................
EVEREN Securities, Inc. .............
---------
Total 5,000,000
=========
</TABLE>
-35-
<PAGE>
SCHEDULE II
Party to Lock-up Agreement Period
- -------------------------- ------
Alvin Murstein 2 years
Andrew Murstein 2 years
Marie Russo 180 days
Daniel F. Baker 180 days
Michael Fanger 180 days
Michael J. Kowalsky 180 days
Michael Leible 180 days
Mario M. Cuomo 180 days
Stanley Kreitman 180 days
David L. Rudnick 180 days
Benjamin Ward 180 days
Alvin Murstein Second Family Trust 2 years
Andrew Murstein Family Trust 2 years
<PAGE>
This Plan was approved by the Board of Directors on May __, 199__.
This Plan was approved by the Stockholders on May __, 199__.
MEDALLION FINANCIAL CORP.
1996 STOCK OPTION PLAN
The purpose of the 1996 Stock Option Plan (the "Plan") is to attract and
----
retain key employees of Medallion Financial Corp. (the "Company") and its
-------
affiliates, to provide an incentive for them to achieve long-range performance
goals, and to enable them to participate in the long-term growth of the Company
by the granting of Incentive Stock Options and Nonstatutory Stock Options
(individually referred to herein as an "Option" and collectively as "Options")
------ -------
to purchase the Company's common stock, $0.01 par value (the "Common Stock").
------------
1. Administration of the Plan.
--------------------------
The administration of the Plan shall be under the general supervision of
the Compensation Committee of the Board of Directors of the Company (the
"Compensation Committee"). Within the limits of the Plan, the Compensation
- -----------------------
Committee shall determine the individuals to whom, and the times at which,
Options shall be granted, the type of Option to be granted, the duration of each
Option, the price and method of payment for each Option, and the time or times
within which (during its term) all or portions of each Option may be exercised.
The Compensation Committee may establish such rules as it deems necessary for
the proper administration of the Plan, make such determinations and
interpretations with respect to the Plan and Options granted under it as may be
necessary or desirable and include such further provisions or conditions in
Options granted under the Plan as it deems advisable. To the extent permitted
by law, the Compensation Committee may delegate its authority under the Plan to
a sub-committee of the Compensation Committee. Whenever options are granted to
any person subject to Section 16 of the Securities Exchange Act of 1934 (the
"Exchange Act"), each member of the committee or sub-committee shall be a
- -------------
"disinterested person" within the meaning of Rule 16b-3 under the Exchange Act.
- ---------------------
2. Shares Subject to the Plan.
--------------------------
(a) Number of Shares. The aggregate number of shares of Common Stock of
----------------
the Company which may be optioned under the Plan is 750,000 shares. In the
event that the Compensation Committee in its discretion determines that any
stock dividend, split-up, combination or reclassification of shares,
recapitalization or other similar capital change affects the Common Stock such
that adjustment is required in order to preserve the benefits or potential
benefits of the Plan or any Option granted under the Plan, the maximum
<PAGE>
aggregate number and kind of shares or securities of the Company as to which
Options may be granted under the Plan and as to which Options then outstanding
shall be exercisable, and the option price of such Options, shall be
appropriately adjusted by the Compensation Committee (whose determination shall
be conclusive) so that the proportionate number of shares or other securities as
to which Options may be granted and the proportionate interest of holders of
outstanding Options shall be maintained as before the occurrence of such event.
(b) Effect of Certain Transactions. In order to preserve a Participant's
------------------------------
(as defined below) rights under an Option in the event of a change in control of
the Company, the Compensation Committee in its discretion may, at the time an
Option is made or at any time thereafter, take one or more of the following
actions: (i) provide for the acceleration of any time period relating to the
exercise or payment of the Option, (ii) provide for payment to the Participant
of cash or other property with a fair market value equal to the amount that
would have been received upon the exercise or payment of the Option had the
Option been exercised or paid upon the change in control, (iii) adjust the terms
of the Option in a manner determined by the Compensation Committee to reflect
the change in control, (iv) cause the Option to be assumed, or new rights
substituted therefor, by another entity, or (v) make such other provision as the
Compensation Committee may consider equitable to the Participant and in the best
interests of the Company.
(c) Restoration of Shares. If any Option expires or is terminated
---------------------
unexercised or is forfeited for any reason, the shares subject to such Option,
to the extent of such expiration, termination or forfeiture, shall again be
available for granting pursuant to Options under the Plan, subject, however, in
the case of Incentive Stock Options, to any requirements under the Code (as
defined below).
(d) Reservation of Shares. The Company shall at all times while the Plan
---------------------
is in force reserve such number of shares of Common Stock as will be sufficient
to satisfy the requirements of the Plan. Shares issued under the Plan may
consist in whole or in part of authorized but unissued shares or treasury
shares.
3. Grant of Options; Eligible Persons
----------------------------------
(a) Types of Options. Options shall be granted under the Plan either as
----------------
incentive stock options ("Incentive Stock Options"), as defined in Section 422
-----------------------
of the Internal Revenue Code of l986, as amended (the "Code"), or as Options
----
which do not meet the requirements of Section 422 ("Nonstatutory Stock
------------------
Options"). Options may be granted from time to time by the Compensation
Committee, within the limits set forth in Sections l and 2 of the Plan, to all
employees of the Company or of any parent corporation or subsidiary corporation
of the Company (as defined in Sections 424(e) and (f), respectively, of the
Code) (such individuals collectively referred to herein as "Participants").
------------
(b) Date of Grant. The date of grant for each Option shall be the date on
-------------
which it is approved by the Compensation Committee, or such later date as the
Compensation Committee may specify. No Incentive Stock Options shall be granted
hereunder after ten years from the date on which the Plan was approved by the
Board of Directors.
- 2 -
<PAGE>
4. Form of Options.
---------------
Options granted hereunder shall be evidenced by a writing delivered to the
optionee specifying the terms and conditions thereof and containing such other
terms and conditions not inconsistent with the provisions of the Plan as the
Compensation Committee considers necessary or advisable to achieve the purposes
of the Plan or comply with applicable tax and regulatory laws and accounting
principles. The form of such Options may vary among optionees.
5. Option Price.
------------
The price at which shares may from time to time be optioned shall be
determined by the Compensation Committee, provided that such price shall not be
less than the current market value of the Common Stock on the date of grant, or
if no such market value exists, then the current net asset value of the Common
Stock as determined in good faith by the Compensation Committee; and provided
further that no Incentive Stock Option shall be granted to any individual who is
ineligible to be granted an Incentive Stock Option because his ownership of
stock of the Company or its parent or subsidiary corporations exceeds the
limitations set forth in Section 422(b)(6) of the Code unless such option price
is at least 110% of the current market value of the Common Stock on the date of
grant.
To the extent permitted by law, the Compensation Committee may in its
discretion permit the option price to be paid in whole or in part by a note or
in installments or with shares of Common Stock of the Company or such other
lawful consideration as the Compensation Committee may determine.
6. Term of Option and Dates of Exercise.
------------------------------------
(a) Exercisability. The Compensation Committee shall determine the term
--------------
of all Options, the time or times that Options are exercisable and whether they
are exercisable in installments, provided that the term of each Option granted
under the Plan shall not exceed a period of ten years from the date of its
grant, and provided further that no Incentive Stock Option shall be granted to
any individual who is ineligible to be granted such Option because his ownership
of stock of the Company or its parent or subsidiary corporations exceeds the
limitations set forth in Section 422(b)(6) of the Code unless the term of his
Incentive Stock Option does not exceed a period of five years from the date of
its grant. In the absence of such determination, the Option shall be
exercisable at any time or from time to time, in whole or in part, during a
period of ten years from the date of its grant or, in the case of an Incentive
Stock Option, the maximum term of such Option.
(b) Effect of Disability, Death or Termination of Employment. The
--------------------------------------------------------
Compensation Committee shall determine the effect on an Option of the
disability, death, retirement or other termination of employment of an optionee
and the extent to which, and during the period which, the optionee's estate,
legal representative, guardian, or beneficiary on death may exercise rights
thereunder. Any beneficiary on death shall be designated by
- 3 -
<PAGE>
the optionee, in the manner determined by the Compensation Committee, to
exercise rights of the optionee in the case of the optionee's death.
(c) Other Conditions. The Compensation Committee may impose such
----------------
conditions with respect to the exercise of Options, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable.
(d) Withholding. The optionee shall pay to the Company, or make provision
-----------
satisfactory to the Compensation Committee for payment of, any taxes required by
law to be withheld in respect of any Options under the Plan no later than the
date of the event creating the tax liability. In the Compensation Committee's
discretion, such tax obligations may be paid in whole or in part in shares of
Common Stock, including shares retained from the exercise of the Option creating
the tax obligation, valued at the fair market value of the Common Stock on the
date of delivery to the Company as determined in good faith by the Compensation
Committee. The Company and any parent corporation or subsidiary corporation of
the Company (as defined in Sections 424(e) and (f), respectively, of the Code)
may, to the extent permitted by law, deduct any such tax obligations from any
payment of any kind otherwise due to the optionee.
(e) Amendment of Options. The Compensation Committee may amend, modify or
--------------------
terminate any outstanding Option, including substituting therefor another Option
of the same or different type, changing the date of exercise or realization and
converting an Incentive Stock Option to a Nonstatutory Stock Option, provided
that the optionee's consent to such action shall be required unless the
Compensation Committee determines that the action, taking into account any
related action, would not materially and adversely affect the optionee.
7. Non-transferability.
-------------------
Options granted under the Plan shall not be transferable by the holder
thereof otherwise than by will or the laws of descent and distribution or, in
the case of a Nonstatutory Stock Option, to the extent consistent with
qualifying for the exemption provided by Rule 16b-3 under the Exchange Act,
pursuant to a qualified domestic relations order, and shall be exercisable,
during the holder's lifetime, only by him or her or such permitted transferee.
8. No Right to Employment.
----------------------
No persons shall have any claim or right to be granted an Option, and the
grant of an Option shall not be construed as giving an optionee the right to
continued employment. The Company expressly reserves the right at any time to
dismiss an optionee free from any liability or claim under the Plan, except as
specifically provided in the applicable Option.
- 4 -
<PAGE>
9. No Rights as a Shareholder.
--------------------------
Subject to the provisions of the applicable Option, no optionee or any
person claiming through an optionee shall have any rights as a shareholder with
respect to any shares of Common Stock to be distributed under the Plan until he
or she becomes the holder thereof.
10. Amendment or Termination.
------------------------
The Board of Directors of the Company may amend, suspend or terminate the
Plan or any portion thereof at any time, subject to any shareholder approval
that the Board of Directors determines to be necessary or advisable, provided
that the Participant's consent will be required for any amendment, suspension or
termination that would adversely affect the rights of the Participant under any
outstanding Options.
11. Stockholder Approval.
--------------------
The Plan is subject to approval by the stockholders of the Company by the
affirmative vote of the holders of a majority of the shares of capital stock of
the Company entitled to vote thereon and present or represented at a meeting
duly held in accordance with the laws of the State of Delaware, or by any other
action that would be given the same effect under the laws of such jurisdiction,
which action in either case shall be taken within twelve (12) months from the
date the Plan was adopted by the Board of Directors. In the event such
approval is not obtained, all Options granted under the Plan shall be void and
without effect.
12. Governing Law.
-------------
The provisions of the Plan shall be governed by and interpreted in
accordance with the laws of the State of Delaware.
- 5 -
<PAGE>
REGIONAL PROTOTYPE
STANDARDIZED
401(k) PLAN
ADOPTION AGREEMENT #01-002
Sponsored By
COLEMAN CONSULTING CORPORATION
Adopted By
MEDALLION FUNDING CORP.
<PAGE>
Regional Prototype Standardized 401(k) Plan
Adoption Agreement #01-002
Table of Contents
<TABLE>
<CAPTION>
I. Basic Information Page 1
- --------------------------------------------------------------------------------
<C> <S> <C>
I.A. Plan Information........................................ Page 1
I.B. Information Relating to Plan Officials.................. Page 1
<CAPTION>
II. Plan Definitions Page 3
- --------------------------------------------------------------------------------
<C> <S> <C>
II.A. Compensation............................................ Page 3
II.B. Service Definitions..................................... Page 4
II.C. Retirement Dates........................................ Page 5
<CAPTION>
III. Operative Plan Provisions Page 6
- --------------------------------------------------------------------------------
<C> <S> <C>
III.A. Eligibility............................................. Page 6
III.B. Contributions........................................... Page 8
III.C. Allocation of Employer Contributions.................... Page 11
III.D. Investment of Accounts.................................. Page 15
III.E. Vesting Provisions for Employer Contributions:.......... Page 16
III.F. Benefits may be paid in the following forms:............ Page 18
III.G. Life Insurance.......................................... Page 18
III.H. Timing of Distributions................................. Page 19
III.I. Timing of Forfeiture Allocation......................... Page 20
<CAPTION>
IV. Miscellaneous Provisions Page 20
- --------------------------------------------------------------------------------
<C> <S> <C>
IV.A. Loans to Participants................................... Page 20
IV.B. Hardship Withdrawals.................................... Page 21
IV.C. In Service Withdrawals:................................. Page 22
IV.D. Controlling State Law:.................................. Page 22
V. Adoption Page 22
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
REGIONAL PROTOTYPE STANDARDIZED
401(k) PLAN
ADOPTION AGREEMENT #01-002
The Employer referred to in Section I.B hereof, hereby adopts this Plan and
Trust, a copy of which is attached hereto, as of the Effective Date specified
herein, to provide retirement and pre-retirement benefits for its Employees.
Note to Employer: Failure to complete the Adoption Agreement properly may result
in disqualification of the Plan.
I. Basic Information
I.A. Plan Information
1. This plan shall be known as the Medallion Funding Corp. 401(k)
--------------------------------
Savings Plan.
----------------------------------------------------------------
2. This Trust shall be known as the Medallion Funding Corp. 401(k)
-------------------------------
Savings Plan Trust.
----------------------------------------------------------------
3. This Plan is a:
[ ] a. Newly Adopted Plan
[X] b. An Amendment and restatement of the Medallion Funding
--------------------
Corporation Profit Sharing Retirement Plan and Trust
--------------------------------------------------------
which was effective on April 1, 1984.
---------------------------------
4. The Effective Date of this Plan is April 1, 1994.
-----------------------------
5. The Restatement Effective Date of the Plan is May 29, 1996.
------------------
6. The Plan number shall be 002.
---------------------------------------
7. The Plan Year shall be:
[X] a. the 12 consecutive month period ending on each March 31.
---------
[ ] b. initially the period commencing on _______________ and
ending on _________________, and thereafter the 12
consecutive month period ending on each _______________.
I.B. Information Relating to Plan Officials
1. The name of the Employer is Medallion Funding Corp..
------------------------------------
----------------------------------------------------------------
<PAGE>
a. Address 205 East 42nd Street
-----------------------------------------------------
street address
New York , New York , 10017
------------------- ------------------------- -------------
city state zip
b. Telephone No. (212) 682-3300
---------------------------
c. Business Code No. 6742
-----------------------
d. Date Business Started
--------------------------
e. Type of Entity: [X] Corporation [ ] Partnership
[ ] Sole Proprietorship [ ] S Corporation
[ ] other ____________________
2. The following additional Employers adopt the Plan as
Participating Employers:
a. Medallion Financial Corp.
---------------------------------------------------------------
b. Medallion Media Corp.
---------------------------------------------------------------
c. Edwards Capital Company
---------------------------------------------------------------
d. Transportation Capital Corp.
---------------------------------------------------------------
e.
---------------------------------------------------------------
f.
---------------------------------------------------------------
g.
---------------------------------------------------------------
h.
---------------------------------------------------------------
i.
---------------------------------------------------------------
j.
---------------------------------------------------------------
3. Employer is a member of:
[X] Controlled Group [ ] Affiliated Service Group
[ ] Not Applicable
4. Employer's Fiscal Year is 12 months ending: March 31
----------------------
month & day
5. Employer's I.D. No.: 11-2523716
-------------------------
6. The Employer hereby designates the following Trustee(s):
a. Alvin Murstein
--------------------------------------------------------------
b.
--------------------------------------------------------------
<PAGE>
c.
--------------------------------------------------------------
d.
--------------------------------------------------------------
e.
--------------------------------------------------------------
f.
--------------------------------------------------------------
g.
--------------------------------------------------------------
h.
--------------------------------------------------------------
i.
--------------------------------------------------------------
j.
--------------------------------------------------------------
7. The Employer hereby designates the following as Plan
Administrator:
[X] a. Employer
[ ] b. Name:
(If not completed, the Employer shall be designated)
Address 205 East 42nd Street
-----------------------------------------------------
street address
New York , New York , 10017
-------------------- -------------------------- -----------
city state zip
Telephone No.: (212) 682-3300
---------------------------------
8. The Employer hereby designates the following as the Retirement
Committee, to act on behalf of the Plan Administrator (leave
blank if no Retirement Committee is appointed):
a.
--------------------------------------------------------------
b.
--------------------------------------------------------------
c.
--------------------------------------------------------------
d.
--------------------------------------------------------------
e.
--------------------------------------------------------------
II. Plan Definitions
II.A. Compensation
1. a. Compensation shall include the items specified in Section
2.18 of the Plan. If indicated below, Compensation shall also
include the following additional items of remuneration paid
or accrued from the Employer: (the employer may include any
amount contributed pursuant to a salary
<PAGE>
reduction agreement which is not includable in the gross
income of the employee under Section 125, 402(a)(8), 402(h)
or 403(b) of the code):
[ ] (i)
---------------------------------------------------
[ ] (ii)
---------------------------------------------------
b. As this is a Standardized Plan, no items may be excluded
from Compensation.
2. Compensation shall mean all of each Participant's:
a. [X] (i) W-2 Earnings, or
[ ] (ii) "415" Compensation
which is actually paid to the Participant during:
b. [X] (i) the Plan Year.
[ ] (ii) the Employer's Fiscal Year ending with or within
the Plan Year.
[ ] (iii) the Limitation year ending with or within the
Plan Year.
[ ] (iv) the Calendar Year ending with or within the Plan
Year.
3. For Plan purposes, maximum Compensation shall be:
[ ] a. $ (not to exceed maximum allowed under Code Section
401(a)(17), i.e. $200,000 in 1989 and adjusted by the
Secretary of the Treasury for cost of living increases).
[X] b. Maximum allowed under Section 401(a)(17).
4. For the first year of a new Participant, for the purpose of
determining Employer Contributions (other than Salary Reduction
Contributions) to be made on behalf of such new Participant and
for testing under Sections 401(k) and 401(m), Compensation shall
include Compensation earned:
[ ] a. Only from the date of his entry into the Plan.
[X] b. During the entire Plan Year in which he becomes a
Participant.
II.B. Service Definitions
1. The Limitation Year of the Plan shall be:
[X] a. Plan Year
[ ] b.
--------------------------------------------------------
2. The Computation Period for vesting and breaks in service and
benefit accruals shall be:
[X] a. Plan Year
<PAGE>
[ ] b.
---------------------------------------------------------
(If no period is specified in either of the above two
categories, the Plan Year shall be selected).
3. If this option is selected then Section 2.17 of the Plan is
revised so that the Computation Period for eligibility purposes
shall be successive anniversaries of the Employee's Employment
Commencement Date.
[ ] This option is selected.
4. The Employer elects pursuant to Section 2.39(f) of the Plan to
count Hours of Service based on the following equivalencies:
[X] a. Actual hours of employment.
[ ] b. Forty-five (45) hours for weekly pay period.
[ ] c. Ninety (90) hours for each bi-weekly pay period.
[ ] d. One hundred ninety (190) hours for each monthly pay
period.
[ ] e. On the basis of the elapsed time method.
(If no option is selected actual hours of employment
shall be counted).
5. The Anniversary Date shall be: March 31
----------------------------------
(If not specified, the Anniversary Date shall be the last day of
Plan Year.)
6. Service for vesting and eligibility purposes with the following
predecessor Employers shall be:
[ ] a. Excluded.
[ ] b. Included from __________________________ (fill in date).
[ ] c. Included for such years a qualified retirement plan was
maintained by such Employer from _______________________
_________________ (fill in date).
Name of predecessor Employer(s):
(i)
------------------------------------------------------
(ii)
------------------------------------------------------
(iii)
------------------------------------------------------
II.C. Retirement Dates
1. The Normal Retirement Date shall be:
[X] a. Age 65
[ ] b. The later of Age __________ or the ____________ anniversary
of the Participant's:
<PAGE>
[ ] Entry Date;
[ ] Employment;
[ ] But in no event later than Age ____________________.
Instructions: Age may not exceed 65 in (b). Anniversary may not exceed
the fifth Anniversary of the Participant's Entry Date into the Plan.
[ ] c. Age _____________________ (may not exceed 65.)
2. The Early Retirement Date shall be:
[ ] a. _______ Years prior to Normal Retirement Date, but not prior
to the Participant's original Entry Date.
[ ] b. The later of: Age ___________________ ; or the completion of:
[ ] Years of Service;
[ ] Years of Participation.
[ ] c. Age ______________.
[X] d. There shall be no Early Retirement Date.
3. Normal Retirement Date Rounding. A Participant shall become eligible
to receive his normal retirement benefits on the:
[ ] a. PLAN ANNIVERSARY NEAREST the attainment of his Normal
Retirement Date.
[ ] b. FIRST DAY OF THE MONTH FOLLOWING the attainment of his
Normal Retirement Date.
[X] c. EXACT DATE the Participant actually attains his Normal
Retirement Date (e.g. his 65th birthday or exactly 5 years
from his employment).
[ ] d. PLAN ANNIVERSARY FOLLOWING the attainment of his Normal
Retirement Date.
[ ] e. FIRST DAY OF THE MONTH COINCIDENT WITH OR FOLLOWING the
attainment of his Normal Retirement Date.
III. Operative Plan Provisions
III.A. Eligibility
1. Classes of Employees eligible to participate shall be all employees of
an Affiliated Employer with the following exclusions:
[X] a. Employees whose employment is covered by a collective
bargaining agreement for which retirement benefits have been
the subject of good faith bargaining.
<PAGE>
[X] b. Non-Resident Aliens with no United States Income.
2. Employees shall be eligible to participate after attaining the
following Age:
[X] a. 21 (Not to exceed Age 21)
------
[ ] b. No minimum age requirement.
3. Service Requirements shall be:
[X] a. Completion of One Years of Service not to exceed (1) year.
-------
[ ] b. Completion of __________ Months of employment, not to exceed
twelve (12) months, regardless of number of hours worked and
computed from the Employee's Employment Commencement Date.
4. Entry Date(s) shall be:
[ ] a. SINGLE ENTRY FOLLOWING. The first day of the Plan Year
following satisfaction of the requirements of Section III.A
hereof (use only with six month service requirement and
minimum age requirement cannot exceed 20-1/2).
[ ] b. SINGLE ENTRY NEAREST. The first day of the Plan Year nearest
satisfaction of the requirements of III.A hereof.
[ ] c. SINGLE ENTRY RETROACTIVE. The first day of the Plan Year
coincident with or preceding the date on which an Employee
satisfies the requirements of Section III.A. hereof.
[X] d. DUAL ENTRY. The first day of the Plan Year and the six (6)
month anniversary thereof following the date on which an
Employee satisfies the requirements of Section III.A. hereof.
[ ] e. SIX MONTH ENTRY DATE. Exactly six (6) months following the
date on which an Employee satisfies the requirements of
Section III.A. hereof.
[ ] f. MONTHLY ENTRY. The first day of each calendar month following
the date on which an Employee satisfies the requirements of
Section III.A. hereof.
[ ] g. QUARTERLY ENTRY. The first day of the Plan Year and the
quarterly anniversaries thereof following the date on which an
Employee satisfies the requirements of Section III.A. hereof.
[ ] h. PAYROLL PERIOD ENTRY. The first day of the payroll period
following the date on which an Employee satisfies the
requirements of Section III.A. hereof.
5. Special Entry Rules (omit if inapplicable) - all persons who are:
[ ] a. Employees on ________________ shall commence participation
and/or may commence salary reductions, as the case may be,
hereunder on ______________________________________________.
[ ] b. Participants in the __________________________________________
<PAGE>
Plan on _______________________________________ shall commence
participation hereunder on _________________________________.
(This provision will not be used to exclude Employee otherwise
eligible to participate).
III.B. Contributions
1. The following Types of Contributions may be made to the Plan:
[ ] a. Non-matching Employer Contributions
[ ] b. Qualified Non-Elective Employer Contributions
[ ] c. Matching Employer Contributions
[ ] d. Qualified Matching Employer Contributions
[X] e. Salary Reduction Contributions
[ ] f. Other Employee Contributions
2. The Non-Matching Employer Contributions subject to the requirements of
Article IV. of the Plan each year shall be:
[ ] a. A discretionary amount as determined by the Employer.
[ ] b. An amount equal to
[ ] (i) _____________% of its net profits
[ ] (ii) __________% of its net profits in excess of $__________
[ ] (iii) ________% of covered payroll for the year in reference.
3. The Qualified Non-Elective Employer Contributions, subject to the
requirements of Article IV. of the Plan each year shall be:
[ ] a. A discretionary amount elected by the Employer.
[ ] b. An amount equal to
[ ] (i) _______% of its net profits
[ ] (ii) _______% of its net profits in excess of $__________
[ ] (iii) _______% of covered payroll for the year in reference.
[ ] (iv) _______% of covered payroll of non-highly compensated
employees for the year in reference.
<PAGE>
[ ] (v) in an amount sufficient to satisfy the discrimination
tests under Code Section 401(k)(3) and 401(m)(2) test for
the year in reference.
4. The Matching Employer Contributions subject to the requirements of
Article IV of the Plan each year shall be: (omit if inapplicable)
[ ] a. ________% of each Employee's "salary reduction" contribution.
[ ] b. ________% of the Employee's "salary reduction" contribution
up to the first ________% of salary deferral, plus ________% of
the excess "salary reduction." (e.g. 50% of salary reduction up
to the first 2% of salary deferral, plus 25% of salary reduction
in excess of the 2% salary deferral.)
[ ] c. For Employees whose Compensation is:
[ ] (i) not more than $_________, _________% of the Employee's
"salary reduction" contribution.
[ ] (ii) not more than $_________ but greater than $_________,
__________% of the Employee's "salary reduction"
contribution.
[ ] (iii) greater than $_________, _________% of the Employee's
"salary reduction" contribution.
[ ] d. Matching based on _______ years of service (maximum 2 years).
For employees with years of service less than specified
above, % of his "salary reduction."
For employees with years of service equal to or greater than
specified above, __________% of his "salary reduction."
[ ] e. A discretionary percentage of the employee's "salary
reduction" as elected by the Employer.
[ ] Matching Contribution Limit:
[ ] Only salary reductions up to ___________% of
compensation will be matched.
[ ] Contribution for each employee shall not exceed
$__________.
5. Qualified Matching Employer Contributions if the Plan provides full
and immediate vesting for employer matching contributions, the
Employer deems all matching Employer Contributions:
[ ] a. To Be Qualified Employer Matching Contributions.
[ ] b. Not To Be Qualified Employer Matching Contributions.
<PAGE>
6. Salary Reduction Contributions:
a. shall be permitted in the following percentages of compensation
(not to exceed $7,000 as adjusted):
[x] (i) 1%, 2%, 3%, 4%, 5%, 6%, 7%, 8%, 9%, 10%, 11%, 12%, 13%,
14%, 15%.
[ ] (ii) 2%, 4%, 6%, 8%, 10%, 12%, 14%, 15%.
[ ] (iii) _____%, _____%, _____%, _____%, _____%, _____%, _____%,
_____%, _____%, _____%, _____%, _____%.
[ ] (iv) in any percentage or flat dollar amount selected by each
participant, up to __________% (not to exceed 25%) of
the Participant's annual Compensation.
b. Employees may change their rate of contribution at the following
intervals:
[ ] (i) the first day of each payroll period.
[ ] (ii) the first day of each month.
[ ] (iii) the first day of each plan year.
[X] (iv) the first day of July (fill in month) and quarterly
----
anniversaries thereof.
[ ] (v) the first day of _____________ (fill in month) and six
month anniversaries thereof.
c. An Employee who terminates Salary Reduction Contributions, other
than for hardship, may not make another Salary Reduction
Contribution until:
[X] (i) the next change date specified above in
Section III.B.6.b.
[ ] (ii) one year from the termination of contributions.
[ ] (iii) the first day of the next Plan Year.
7. Other Employee Contributions:
a. "After Tax" Participant Contributions:
[ ] (i) Shall be permitted.
[X] (ii) Shall not be permitted.
b. Rollover Contributions:
[X] (i) Shall be permitted.
[ ] (ii) Shall not be permitted.
10
<PAGE>
c. Transfer Contributions from other tax-qualified plans:
[X] (i) Shall be permitted.
[ ] (ii) Shall not be permitted.
III.C. Allocation of Employer Contributions
1. The following Participants are eligible to share in the allocation
of Non-Matching Employer Contributions each year: (Check all that
applies.)
[ ] a. All participants who completed __________ (not to exceed
501) hours of service
[ ] b. For the 1989 plan year only:
[ ] (i) All Participants who completed one thousand (1000)
hours of service and who are employed on the last day
of the Plan Year.
[ ] (ii) All Participants who completed one thousand (1000)
hours of service.
[ ] c. All participants who:
[ ] (i) have died;
[ ] (ii) have retired after reaching their Normal Retirement
Date;
[ ] (iii) became disabled during the Plan Year regardless of
the number of hours worked.
2. Non-matching Employer Contributions shall be allocated among the
Participants specified in the Section III.C.I. hereof as follows:
[ ] a. NON-INTEGRATED ALLOCATION: In the proportion that the
Participant's Compensation bears to total Compensation of the
Participants eligible under Section III.C.I.
[ ] b. INTEGRATED ALLOCATION: The integrated allocation procedure
described in Section 6.2 of the Plan based on the following:
[ ] 1. Fixed Excess Allowance Percentage
[ ] (i) Excess Allowance Percentage: __________%
(not less than 3% and not greater than 5.7%)
The integration level is:
[ ] (a) Taxable Wage Base as of the beginning of
the plan year (e.g. $48,000 for 1989)
[ ] (b) _________% of Taxable Wage Base (not to
exceed 20%)
[ ] (c) $__________ (not to exceed $10,000)
[ ] (d) greater of $10,000 or 20% of Taxable Wage Base
11
<PAGE>
[ ] (ii) Excess Allowance Percentage: __________%
(not less than 3% and not greater than 5.4%)
Integration Level: ___________% of Taxable Wage Base
(must be greater than 80% and less than 100%)
[ ] (iii) Excess Allowance Percentage: __________%
(not less than 3% and not greater than 4.3%)
Integration Level: ____________% of Taxable Wage Base
(not to exceed 80%)
OR:
[ ] 2. Floating Excess Allowance Percentage
Excess Allowance Percentage equals one of the three
percentages depending on the ratio of the integration level
amount to the Taxable Wage Base as of the beginning of the
plan year.
<TABLE>
<CAPTION>
================================================================================
When integration level as a % of the TWB is Excess Allow. Percentage
- --------------------------------------------------------------------------------
<S> <C>
100% 5.7%
- --------------------------------------------------------------------------------
greater than 80% and less than 100% 5.4%
- --------------------------------------------------------------------------------
greater than 20% but not greater than 80% 4.3%
- --------------------------------------------------------------------------------
less than or equal to 20% (or $10,000 if greater) 5.7%
==============================================================================
</TABLE>
Integration Level: $_____________ (not to exceed the Taxable
Wage Base as of beginning of Plan Year e.g. $48,000 in 1989
and $51,300 in 1990).
3. Qualified Non-Elective Employer Contributions shall be allocated as
follows:
[ ] a. Among the Participants specified in III.C.1 hereof in the
proportion that each such Participant's Compensation bears to
the total Compensation of Participants eligible under
III.C.1.
[ ] b. Among those Participant's specified as III.C.1 hereof who are
Non-Highly Compensated for such year in the proportion that
each such Participant's Compensation bears to the total
Compensation of all such Non-Highly Compensated Participants
eligible under III.C.I.
[ ] c. Among all such Non-Highly Compensated Employees who
participated in the Plan during the year regardless of the
provisions of III.C.1. hereof, in the proportion such
Compensation bears to the total Compensation of all such
Participants.
[ ] d. Among all such Non-Highly Compensated Employees who are
Participants in the plan on the last day of the plan year, in
proportion such Compensation bears to the total Compensation
of all such Participants.
<PAGE>
4.a. Forfeitures from non-Matching Employer Contributions shall be
allocated in the following manner:
[ ] i. To reduce Non-Matching Employer Contributions.
[ ] ii. In the same manner as Non-Matching Employer Contributions.
[ ] iii. In the same manner as Non-Matching Employer Contributions;
except that only Participants who were employed on the
last day of the Plan Year shall share in its allocation.
[ ] iv. To reduce the Matching Contribution.
Note: Matching Contribution forfeitures always used to reduce
Matching Contributions.
b. Forfeitures of Excess of Aggregate Contributions shall be:
[ ] i. Applied to reduce employer contributions
[ ] ii. Allocated, after all other forfeitures under the plan, to
each participant's Matching Contribution account in the
ratio which each participant's Compensation for the Plan
Year bears to the total Compensation of all participants
for such Plan Year. Such forfeitures will not be allocated
to the account of any Highly Compensated Employee.
5. Valuation Date
[ ] a. For Allocation of Gains and Losses:
[ ] Monthly [X] Quarterly [ ] Semi-Annually [ ] Annually
[ ] b. For the purpose of determining whether the plan is Top-Heavy:
[X] (i) as of last day of the Plan Year
[ ] (ii) _________________________ (Fill in date)
6. In the event the Employer maintains a defined benefit pension plan, the
following shall apply with respect to Code Section 415 and shall
supersede any contrary provisions of the Plan or this Adoption Agreement:
[X] a. Contributions hereunder shall be reduced to the extent necessary
to prevent violation of Code Section 415.
[ ] b. Benefits under such other defined benefit plan shall be
restricted to the extent necessary to prevent a violation of
Code Section 415.
<PAGE>
[ ] c. The following language shall apply:
-----------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
7. In the event the Employer also maintains a defined benefit pension plan,
the following interest rate and mortality assumptions shall be used to
compute the top-heavy ratio:
Before After
Retirement Retirement
Interest Rate: __________% __________%
Mortality Table: [ ] none The following table:
[ ] same as table __________________
used after retirement __________________
8. In the event the Employer maintains a defined benefit pension plan the
following shall apply with respect to Code Section 416 and shall
supersede any contrary provisions of the Plan or this Adoption Agreement:
[ ] a. Top heavy minimum contributions shall be made under this Plan.
[ ] b. Top heavy minimum accruals shall be made under such other
defined benefit plan maintained by the employer.
[ ] c.
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
9. Matching Employer Contributions shall be contributed and allocated:
[ ] a. Immediately upon contributions by the Participant.
[ ] b. As of each plan valuation date.
[ ] c. Annually.
[ ] d. Annually among those Participants who are employed on the last
day of the plan year.
10. The Average Actual Contribution Percentage test shall be satisfied:
a. [X] 1. By distribution of Excess Aggregate Contributions in
accordance with Section 5.4(c) of the plan, or
[ ] 2. By additional contributions Qualified non-Elective
Contributions and Qualified Matching Contributions in
accordance with Section 5.4(f) of the plan.
and
<PAGE>
b. [X] 1. Shall take into account Salary Reduction Contributions or
[ ] 2. Shall not take into account Salary Reduction Contributions
11. Participants who claim Excess Elective Deferrals for the preceding
taxable year must submit their claims in writing to the plan
administrator by February 15
--------------------------------------------------------
(specify a date before April 15).
12. MINIMUM CONTRIBUTION UNDER TOP-HEAVY PLAN. Pursuant to Section 11.4 of
the Plan, Key Employees shall be:
[X] a. excluded from the top heavy minimum
[ ] b. included for the top heavy minimum
III.D. Investment of Accounts
1. Separate Investment Funds
[ ] a. Shall not be permitted.
[X] b. Shall be permitted.
2. A Self Directed Fund
[ ] a. Shall not be permitted.
[X] b. Shall be permitted.
3. In the event a Self Directed Fund is available the following
restrictions shall apply:
[ ] a. None.
[ ] b. A minimum investment of $__________ shall be required.
[ ] c. Other restrictions required by the Committee and applied
uniformly shall be: Self-direction only for salary reduction
-----------------------------------------
contributions
-------------------------------------------------------------
4.a. In the event separate investment funds are permitted hereunder,
Participants shall be permitted to change allocations among
investment funds at the following intervals:
New Existing
Contributions Accounts
(i) [ ] [ ] daily
(ii) [ ] [ ] the first day of each payroll period.
(iii) [ ] [ ] the first day of each month.
<PAGE>
(iv) [X] [ ] the first day of July (fill in month)
----
and each quarterly anniversary thereof.
(v) [ ] [ ] the first day of (fill in month)
----
and the six (6) month anniversary
thereof.
b. For Existing Accounts, transfers will be based upon the value of
their accounts at the close of business:
[X] a. on the previous day which shall be a Valuation Date for
the purposes of the Plan.
[ ] b. on the most recent Valuation Date hereunder.
5. In the event separate investment funds are permitted hereunder,
Participants may allocate their account between investment funds as
follows:
[X] a. In increments of 10%.
[ ] b. In increments of 25%.
[ ] c. In increments of 1%.
[ ] d. In increments of ____________%.
[ ] e. In increments of any amount chosen by the Participant.
III.E. Vesting Provisions for Employer Contributions:
1. Benefits under the Plan shall vest according to the following
schedule: NOTE: (If the Employer has elected in Section III.B.5.
of the Adoption Agreement that all Matching Contributions are
Qualified Matching Contributions, the Employer must choose 100%
vesting of Matching Contributions.)
<TABLE>
<CAPTION>
Employer Non-Matching
Matching Employer
Contributions Contributions
<C> <C> <S>
a. [ ] [ ] 100% immediate vesting
b. [ ] [ ] Completed Years Percentage
of Service Vested
less than three (3).....................0%
three (3) but less than four (4).......20%
four (4) but less than five (5)........40%
five (5) but less than six (6).........60%
six (6) but less than seven (7)........80%
after seven (7) years.................100%
c. [ ] [X] Completed Years Percentage
of Service Vested
less than two (2).......................0%
two (2) but less than three (3)........20%
</TABLE>
<PAGE>
<TABLE>
<C> <C> <S>
three (3) but less than four (4).......40%
four (4) but less than five (5)........60%
five (5) but less than six (6).........80%
after six (6) years...................100%
d. [ ] [ ] Completed Years Percentage*
of Service Vested
less than one (1).....................___%
one (1) but less than two (2).........___%
two (2) but less than three (3).......___%
three (3) but less than four (4)......___%
four (4) but less than five (5).......___%
five (5) but less than six (6)........___%
six (6) but less than seven (7).......___%
after seven (7) years.................___%
</TABLE>
* must be at least as rapid as a seven year graduated schedule as in III.E.b.
2. In years in which the Plan is a Top Heavy Plan, benefits shall vest according
to the following schedule:
<TABLE>
<C> <C> <S>
a. [ ] [ ] Completed Years Percentage
of Service Vested
less than three (3).....................0%
after three (3).......................100%
b. [ ] [X] Completed Years Percentage
of Service Vested
less than two (2).......................0%
two (2) but less than three (3)........20%
three (3) but less than four (4).......40%
four (4) but less than five (5)........60%
five (5) but less than six (6).........80%
after six (6) years...................100%
</TABLE>
3. Years of Service to be excluded for vesting purposes (leave blank
if no exclusions for vesting purposes):
[ ] a. Years of Service prior to age eighteen (18).
[ ] b. Years of Service prior to the Effective Date of the Plan
or a predecessor Plan.
[ ] c. Years of Service after a five (5) year Break in Service
(which exceeds the Participant's aggregate years of
service) in calculating vesting before such Break in
Service.
NOTE: If this is a plan of a predecessor employer, service must include
service with such predecessor employer.
<PAGE>
III.F. Benefits may be paid in the following forms:
[X] 1. Installments not to exceed:
[ ] a. five (5) years.
[ ] b. ten (10) years.
[ ] c. twenty (20) years.
[X] d. life expectancy of the Participant and/or designated
beneficiary.
[X] 2. A lump sum payment
[ ] 3. An annuity for the life of the Participant.
[ ] 4. An annuity for the life of the Participant with a term certain
guarantee.
[ ] 5. An annuity for the life of the Participant with survivorship
payments, i.e.:
[ ] a. Joint & 100% survivor annuity
[ ] b. Joint & 75% survivor annuity
[ ] c. Joint & 50% survivor annuity
[ ] d. Joint & 66-2/3% survivor annuity
Note: If 3, 4, or 5 is selected, the Plan will be subject to the
Joint & Survivor Annuity rules.
III.G. Life Insurance
1. Life insurance shall be purchased in the following amounts:
[X] a. None.
[ ] b. % (not to exceed 49.9% if whole life and 25% if a term or
universal life) of the annual Employer Contribution
hereunder.
[ ] c. % (not to exceed 99.9% if whole life and 50% if a term or
universal life) of the annual Employer Matching Contribution
(Use only with matching contributions of less than or equal
to 100% of employee "salary reduction").
[ ] d. In an amount selected by the Participant.
2. The following Participants shall be eligible to receive life
insurance, in the event Section III.G.l.b. or Section III.G.l.c. has
been selected:
a. Participants who have completed;
[ ] (i) __________ Years of Service.
[ ] (ii) __________ Years of Participation.
18
<PAGE>
b. Participants who have attained Age ___________, but who have not
attained Age ___________.
3. Insurance purchased hereunder shall contain the following additional
features:
[ ] a. Type:
[ ] (i) Term or universal life
[ ] (ii) Whole Life
[ ] b. Minimum policy size: $___________________.
[ ] c. Maximum policy size: $___________________.
[ ] d. Waiver of Premium.
[ ] e. Insurance purchase date:
4. The following contributions may be applied towards the purchase of
life insurance.
[ ] a. Employer matching contributions.
[ ] b. Employer non-matching contributions.
[ ] c. Salary reduction.
[ ] d. After tax participant contributions.
[ ] e. None.
III.H. Timing of Distributions
1. Subject to the requirements of Article XII of the Plan
distributions shall commence on:
[ ] a. As soon as practicable after the Participant's termination
of employment.
[ ] b. After the Participant has incurred a ___________ (not to
exceed 5) year Breaks-in-Service.
[ ] c. After the ____________________ month anniversary of the date
on which the Participant terminated employment.
[ ] d. As soon as practicable following the end of the Plan Year
in which the Participant terminated employment.
[X] e. Within 60 days (not to exceed 75) following the end of the
--
Plan Year in which the Participant terminated.
[ ] f. As soon as practicable after the Participant's termination
of employment, except that amounts in excess of $___________
shall be distributed upon attainment of Normal
Retirement Date.
<PAGE>
[ ] g. Within _______ days (not to exceed 75) after the valuation
date immediately following the Participant's termination of
employment.
2. In the event the Employer has selected either b, c or f of
Section H.l., distribution on behalf of Participants who have died
or become disabled shall:
[ ] a. Become payable immediately.
[ ] b. Become payable in the same manner as applied to terminated
employees.
III.I. Timing of Forfeiture Allocations.
After a distribution or deemed distribution, Forfeitures shall be
reallocated:
[ ] 1. Not applicable. (All employer contributions are fully vested
or are used to reduce contributions)
[X] 2. Immediately as of each anniversary date.
[ ] 3. As of the anniversary date following ________ (not to exceed 5)
consecutive one year Breaks-in-Service.
IV. Miscellaneous Provisions.
IV.A. Loans to Participants.
[ ] 1. Shall not be permitted.
2. [X] a. Shall be permitted up to the maximum specified in
Section 13.3(d)(iv) of the Plan.
[ ] b. Shall be permitted up to the following limit:
For a participant with a vested Account balance
[ ] (i) in excess of $20,000, up to _____________% (not
to exceed 50%) of his vested balance, and
[ ] (ii) of $20,000 or less, up to _____________% (not to
exceed 100%) of his vested balance.
Note: A Participant with a vested balance in excess of
$20,000 may NOT have an outstanding loan of more than $50,000
while a Participant with a vested balance of $20,000 or less
may NOT have an outstanding loan of more than $10,000.
3. As long as his total outstanding loan will not exceed the
limits specified in Section IV.C.2.a and b. above, the
minimum loan a Participant may apply for is $ 1,000 (not to
--------
exceed $1,000).
20
<PAGE>
4. In accordance with the requirements of Section 408(b)(1) of
ERISA that a loan bear a reasonable rate of interest
(providing a return equivalent to commercial rates), loan
interest rate shall be:
a. For loans with durations of 5 years or less:
[X] (i) based on commercial banks' prime rate.
[ ] (ii) based on commercial banks' prime rate plus
________% per year.
[ ] (iii) based on plan's rate of return on its fixed
income fund.
[ ] (iv) based on __________________________.
b. If checked, loans which will be used to acquire a
Participant's principal residence shall be allowed; and
the repayment period for this type of loan may exceed 5
years. Interest rates to be used in conjunction with
mortgages shall be:
[ ] (i) same as loans with durations of 5 years or
less.
[X] (ii) based on commercial banks' prime rate.
[ ] (iii) based on commercial banks' prime rate plus
_________% per year.
[ ] (iv) based on ____________________________________.
5. The loan interest shall be modified to reflect the current
economic conditions:
[ ] a. every quarter.
[ ] b. every month.
[X] c. every time a new loan is granted.
6. Loan repayments will be made:
[ ] a. every quarter.
[X] b. every month.
[ ] c. every pay period through salary reduction.
IV.B. Hardship Withdrawals.
In the event of a financial hardship the Plan Administrator:
[ ] 1. Shall not permit Hardship withdrawal.
[ ] 2. Shall permit Participant withdrawals up to ________% of
his vested Non Matching Employer Contribution account.
<PAGE>
[ ] 3. Shall permit Participant withdrawals up to ________% of
his Salary Reduction Contribution.
[X] 4. Shall permit a Participant to withdraw any portion of
his Non-Matching Employer Contribution Account or Salary
Reduction Account.
Note: Hardship withdrawals are limited based on a
Participant's immediate and heavy financial needs as
provided in Section 12.9 of the Plan.
IV.C. In Service Withdrawals:
[X] 1. Shall not be permitted.
[ ] 2. Distribution of vested Employer Contributions shall be
permitted provided that such contributions have been in
the Plan for at least two (2) years (per Revenue Ruling
71-295).
[ ] 3. Shall be permitted for a Participant who is 100% vested
and has attained age 59- 1/2.
IV.D. Controlling State Law:
The laws of the state of New York shall control this plan, except
--------
as preempted by Federal law.
V. Adoption
A. An Employer who has ever maintained or who later adopts any plan
(including a welfare benefit fund, as defined in section 419(e) of
the Code, which provides postretirement medical benefits allocated
to separate accounts for key employees, as defined in Section
419A(d)(3) of the Code, or an individual medical account, as defined
in section 415(1)(2) of the code in addition to this plan may not
rely on the notification letter issued by the National or District
Office of the Internal Revenue Service as evidence that this plan is
qualified under section 401 of the Internal Revenue Code. In
addition, the employer may not rely on the notification letter
issued by the National or District Office of the Internal Revenue
Service as evidence that the plan is qualified under section 401 of
the Code if the employer employs a leased employee who receives or
has ever received contributions, forfeitures, or benefits under a
plan maintained or ever maintained by a leasing organization, other
than a safe-harbor money purchase plan described in section
414(n)(5) of the Code, that are attributable to services performed
for the employer. If the employer who adopts or maintains multiple
plans or who may not rely on this notification letter pursuant to
the preceding sentence wishes to obtain reliance that his or her
plan(s) is/are qualified, application for a determination letter
should be made to the appropriate Key District Director of Internal
Revenue.
B. The Employer after consultation with his attorney hereby adopts this
Plan and Trust by its execution of this Adoption Agreement and
agrees to be bound by its terms. The Employer agrees to the adoption
of the Plan by the Participating Employers set forth in Section
I.B.2. hereof.
IN WITNESS WHEREOF, the parties have set their hands this day of ____ of
___________________, 19___.
Signed for the Employer By: Alvin Murstein
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Signature: , Title:
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a. Trustee's Signature:
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b. Trustee's Signature:
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c. Trustee's Signature:
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d. Trustee's Signature:
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e. Trustee's Signature:
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f. Trustee's Signature:
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e. Trustee's Signature:
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f. Trustee's Signature:
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g. Trustee's Signature:
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h. Trustee's Signature:
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i. Trustee's Signature:
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j. Trustee's Signature:
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Participating Employer(s):
a. Signature: , Title:
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b. Signature: , Title:
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c. Signature: , Title:
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d. Signature: , Title:
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e. Signature: , Title:
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f. Signature: , Title:
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g. Signature: , Title:
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h. Signature: , Title:
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i. Signature: , Title:
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j. Signature: , Title:
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This Adoption Agreement may only be used in conjunction with the Profit
Sharing/401(k) Basic Plan Document #01.
This plan is a Regional Prototype sponsored by:
COLEMAN CONSULTING CORPORATION (212)629-8940
Attn: CYRIL J. COLEMAN, III.
ONE PENN PLAZA
NEW YORK, NY 10119
<PAGE>
Use of this Prototype is subject to the Sponsor's approval who will notify the
Employer of any amendments or the termination of this Plan. The Employer agrees
to notify the Sponsor of any change in address.
Sponsor hereby approves Employer's use of this Regional Prototype.
Signed for the Sponsor By: CYRIL J. COLEMAN, III.
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Signature: , Title: EXECUTIVE
------------------------------- ------------------------------
Date:
----------------------------
<PAGE>
REGIONAL PROTOTYPE
PROFIT SHARING/401(k)
PLAN AND TRUST AGREEMENT
Basic Plan Document # 01
Sponsored By
COLEMAN CONSULTING CORPORATION
<PAGE>
Table of Contents
ARTICLE I - NATURE OF THE PLAN
1.1 Statement of Purpose
1.2 Intention to Conform to Statute
1.3 Effective Date
ARTICLE II - DEFINITIONS
2.1 "Account" or "Accrued Benefit"
2.2 "Administrator"
2.3 "Adoption Agreement"
2.4 "Affiliated Employer"
2.5 "Age"
2.6 "Aggregation Group"
2.7 "Alternate Payee"
2.8 "Anniversary Date"
2.9 "Annual Addition"
2.10 "Annuity Starting Date"
2.11 "Beneficiary"
2.12 "Board of Directors"
2.13 "Breaks-In-Service"
2.14 "Code" or "IRC"
2.15 "Collective Bargaining Agreement"
2.16 "Committee"
2.17 "Computation Period"
2.18 "Compensation"
2.19 "Defined Benefit Fraction"
2.20 "Defined Contribution Fraction"
2.21 "Determination Date"
2.22 "Determination Year"
2.23 "Early Retirement Date"
2.24 "Effective Date"
2.25 "Elective Deferrals"
2.26 "Eligible Employee"
2.27 "Employee"
2.28 "Employee Contributions"
2.29 "Employer"
2.30 "Employer Contribution Account"
2.31 "Employment Commencement Date"
2.32 "Entry Date"
2.33 "ERISA"
2.34 "Excess Aggregate Contributions"
2.35 "Excess Elective Deferrals"
2.36 "Family Member"
2.37 "415 Compensation"
2.38 "Highly Compensated Employee"
2.39 "Hour of Service"
2.40 "Insurer"
<PAGE>
2.41 "Investment Fund"
2.42 "Key Employee"
2.43 "Leased Employee"
2.44 "Limitation Year"
2.45 "Look-Back Year"
2.46 "Matching Contribution"
2.47 "Named Fiduciary"
2.48 "Net Profits"
2.49 "Non-Key Employee"
2.50 "Non-Matching Employer Contributions"
2.51 "Normal Retirement Age"
2.52 "Normal Retirement Date"
2.53 "Owner-Employee"
2.54 "Participant"
2.55 "Participant Contribution Account"
2.56 "Participating Employer"
2.57 "Period of Severance"
2.58 "Plan or Plan and Trust"
2.59 "Plan Administrator"
2.60 "Plan Year"
2.61 "Qualified Employer Matching Contribution"
2.62 "Qualified Domestic Relations Order"
2.63 "Qualified Joint and Survivor Annuity"
2.64 "Qualified Non-Elective Employer Contributions"
2.65 "Qualified Pre-Retirement Survivor Annuity"
2.66 "Required Beginning Date"
2.67 "Restatement Effective Date"
2.68 "Salary Reduction Account"
2.69 "Self Employed Person"
2.70 "Separate Investment Fund"
2.71 "Spouse"
2.72 "Super Top Heavy Plan"
2.73 "Top Heavy Plan"
2.74 "Total Disability"
2.75 "Trustees"
2.76 "Trust Fund"
2.77 "Valuation Date"
2.78 "Year(s) of Service"
ARTICLE III - ELIGIBILITY AND PARTICIPATION
3.1 Eligible Employee Status
3.2 Commencement of Participation
3.3 Administrative Requirements
3.4 Re-Employment of Participant
3.5 Change in Employment Status
3.6 Inactive Participants
ARTICLE IV - EMPLOYER CONTRIBUTIONS
4.1 Determination of Amount of Non-Matching Contributions
4.2 Determination of Amount of Matching Contributions
4.3 Determination of Amount of Qualified Non-Elective Contributions
4.4 Determination of Amount of Qualified Matching
<PAGE>
Employer Contributions
4.5 Payment of Contributions
4.6 Duty of the Trustees
4.7 Contingent Nature of Contributions
4.8 Refund of Company Contributions
ARTICLE V - EMPLOYEE & SALARY REDUCTION CONTRIBUTIONS, ADP & ACP TESTS
5.1 Employee Contributions Generally
5.2 Salary Reduction Contributions
5.3 Limitations Applicable to Salary Reduction Contribution
5.4 Limitation on Employee Contributions and Matching Contributions
5.5 Aggregation for Purposes of the Actual Deferral Percentage
Test and Actual Average Contribution Percentage Test
5.6 Multiple Use Limitations
5.7 The Committee
5.8 Voluntary After-Tax Contributions
5.9 Rollover Contributions
5.10 Deductible Employee Contributions
ARTICLE VI - ALLOCATION OF CONTRIBUTIONS AND FORFEITURES
6.1 Determination of Participants Eligible to Share in Allocation
in Non-Matching Employer Contributions and Qualified
Non-Elective Contributions
6.2 Allocation of Non-Matching Employer Contributions
6.3 Allocation of Employer Matching Contributions
6.4 Allocation of Forfeitures
6.5 Transfer of Participants
6.6 Annual Additions Limitations
6.7 One Point Four/One Point Two Five Limitations
6.8 Adjustments to One Point Four/One Point Two Five
Limitations for Top Heavy Plans
6.9 Limitation on Allocations
6.10 Manner of Reduction when Employer Maintains a
Defined Benefit Plan
6.11 Short Limitation Year
ARTICLE VII - ALLOCATION OF INVESTMENT RESULTS
7.1 Valuation of the Trust Fund
7.2 Crediting of Investment Results - Trust Fund Investment
7.3 Crediting of Investment Results - Segregated Accounts/
Separate Investments Funds
ARTICLE VIII - BENEFITS PAYABLE UPON RETIREMENT
8.1 Normal and Late Retirement Benefit
8.2 Early Retirement Benefit
8.3 Disability Benefit
8.4 Determination of Total Disability
8.5 Eligibility for Post Normal Retirement Age Benefit
8.6 Employer's Consent
<PAGE>
ARTICLE IX- BENEFITS PAYABLE UPON DEATH
9.1 Pre-Retirement Death Benefit
9.2 Post-Retirement Death Benefit
9.3 Death Benefits of Terminated Vested or Terminated Participants
9.4 Beneficiary Designations
9.5 Automatic Spousal Designation
9.6 Qualified Pre-Retirement Survivor Annuity
9.7 Failure of Beneficiary Designation
ARTICLE X- BENEFITS PAYABLE UPON TERMINATION
10.1 Employer Contributions
10.2 Determination of Years of Service for Vesting Purposes
10.3 Forfeiture of Non-Vested Benefits
10.4 Accelerated Vesting for Top Heavy Plans
10.5 Employee Contributions and Salary Reduction Contributions
10.6 Statutory Vesting Requirement
10.7 Amendment of Vesting Schedule
ARTICLE XI - TOP HEAVY PROVISIONS
11.1 Generally
11.2 Determination of Top Heavy Status
11.3 Top Heavy Rules and Definitions
11.4 Top Heavy Requirements
ARTICLE XII - FORM AND MANNER OF BENEFIT DISTRIBUTIONS
12.1 Standard Form of Distribution
12.2 Optional Forms of Benefit Payments
12.3 Statutory Restriction on Lump Sum Payments
12.4 Commencement of Benefit Payments
12.5 Qualified Pre-Retirement Survivor Annuity
ARTICLE XII - FORM AND MANNER OF BENEFITS DISTRIBUTIONS
12.6 Qualified Joint and Survivor Annuities
12.7 Payments Prior to Breaks-In-Service
12.8 Payments Pursuant to Qualified Domestic Relations Orders
12.9 Hardship Withdrawal
ARTICLE XIII - TRUST PROVISIONS
13.1 Establishment of Trust
13.2 Rights, Duties and Obligations of the Trustees
13.3 Investment of the Trust Fund
13.4 Accounts to be Kept and Rendered by the Trustees
13.5 Exclusive Benefit
ARTICLE XIV - POLICIES
14.1 Purchase of Policies
14.2 Procedure for Purchase
<PAGE>
14.3 Requirements Concerning the Purchase of Policies
14.4 Incidental Benefit Limitations
14.5 Non-Insurable Participants
14.6 Participant Provided Benefits
14.7 Protection of Insurer
ARTICLE XV - ADMINISTRATION OF THE PLAN
15.1 Appointment of Plan Administrator
15.2 Manner of Acting
15.3 Disqualification to Act
15.4 Authority and Responsibility of Plan Administrator
15.5 Requests for Documentation
15.6 Removal or Resignation
15.7 Failure to Appoint Plan Administrator
15.8 Compensation
15.9 Allocation of Responsibilities
15.10 Delegation to Retirement Committee
15.11 Bonding
15.12 Indemnification
ARTICLE XVI - CLAIMS PROCEDURES
16.1 Claim for Benefits
16.2 Disposition of Claim
16.3 Claims Review Procedure
16.4 Conclusiveness of Determination
ARTICLE XVII - AMENDMENT, TERMINATION AND MERGER
17.1 Employer's Right Reserved
17.2 Amendments to Cover Additional Employers
17.3 Effect of Terminations
ARTICLE XVII - AMENDMENT, TERMINATION AND MERGER
17.4 Suspension or Discontinuance of Employer Contributions
17.5 Allocation Upon Termination of Trust
17.6 Merger and Consolidation
17.7 Withdrawal of a Participating Employer
17.8 If the employer's plan fails to attain or retain qualification,
such plan will no longer participate in this Regional prototype
plan and will be considered an individually designed plan
17.9 The Regional Prototype sponsor may amend any part of the plan
ARTICLE XVIII - MISCELLANEOUS PROVISIONS
18.1 Controlling State Law
18.2 Disputes
18.3 Gender and Number
18.4 Headings and Subheadings
18.5 Heirs, Assigns and Representatives
18.6 No Contract of Employment
18.7 Treatment of Owner-Employees Under the Plan
<PAGE>
18.8 Non-Alienation of Benefits
18.9 Notices and Deliveries
18.10 Payments to Persons under Legal Disability
18.11 Severability of Provisions
18.12 Service of Process
18.13 Title to Trust Assets
<PAGE>
ARTICLE I - NATURE OF THE PLAN
1.1 Statement of Purpose
This Plan has been prepared for the purpose of providing a savings plan for
the exclusive benefit of Eligible Employees of any Participating Employer.
Any Employer may adopt this Plan and Trust, provided that such Employer and
the Trustee designated by such Employer executes an Adoption Agreement and
agrees to conform to and abide by all of the terms and provisions of this
Plan and Trust.
1.2 Intention to Conform to Statute
The Plan and Trust are intended to qualify as a profit sharing plan and
trust under Sections 401(a), 401(k) and 501(a) of the Internal Revenue Code
of 1986 as those sections may be amended from time to time.
1.3 Effective Date
The Effective Date of this Plan shall be the date set forth in Section
I.A.4. of the Adoption Agreement. The Restatement Effective Date, if any,
shall be the date set forth in Section I.A.5. of the Adoption Agreement.
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<PAGE>
ARTICLE II - DEFINITIONS
2.1 "Account" or "Accrued Benefit"
shall mean the entire interest of a Participant in the Trust Fund including
forfeitures, appreciation, depreciation and if applicable, the cash
surrender value of any Policies maintained by the Plan on his life. A
Participant's Account shall include his Employer Contribution Account, his
Participant Contribution Account, and his Salary Reduction Account.
2.2 "Administrator"
shall mean the Plan Administrator as defined in Article II, Section 2.59
hereof.
2.3 "Adoption Agreement"
shall mean the agreement entered into by the Employer and the Trustee
adopting this Plan and Trust and setting forth certain provisions of this
Plan as specified therein.
2.4 "Affiliated Employer"
shall mean:
(a) in the event the Plan provides benefits on behalf of an Owner-
Employee (within the meaning of Section 401(c) of the Code): The
Employer and any unincorporated entity or partnership under common
control with the Employer within the meaning of Section
401(d)(1)(B) of the Code and as further described in Article XVIII,
Section 18.7; and
(b) in all other events: the Employer and any corporation, partnership
or other unincorporated entity which forms a controlled group of
corporations, a group of trades or businesses under common control,
or an affiliated service group with the Employer, within the
meaning of Sections 414(b), 414(c) and 414(m) of the Code, and
where applicable Sections 415(h) and 414(o) of the Code.
2.5 "Age"
shall mean actual age attained by a person as of his most recent birthday.
2.6 "Aggregation Group"
shall mean each plan of the Affiliated Employer, whether or not terminated,
in which a Key Employee is or was a participant and each other plan of the
Affiliated Employer which enables any plan in which a Key Employee is a
participant to meet the requirements of Sections 401(a)(4) or 410 of the
Code. The Employer may treat any plan of an Affiliated Employer as being
part of the Aggregation Group if such group would continue to meet the
requirements of Sections 401(a)(4) and 410 (permissive Aggregation Group)
with such plan being taken into account.
2.7 "Alternate Payee"
shall mean any spouse, former spouse, child or other dependent of a
Participant who is recognized as having a right to receive all or any
portion of the benefits payable hereunder with respect to such Participant
in accordance with Articles XII and XVIII hereof.
-2-
<PAGE>
2.8 "Anniversary Date"
shall mean the last day of the Plan Year unless otherwise specified in
Section II.B.5. of the Adoption Agreement.
2.9 "Annual Addition"
shall mean for each Participant, in any Limitation Year, an amount so
determined in accordance with Article VI of this Plan.
2.10 "Annuity Starting Date"
shall mean the first day of the first period for which an amount is payable
as an annuity, or in the case of a benefit not payable in the form of an
annuity, the first day on which all events have occurred which entitle the
Participant to such benefit.
2.11 "Beneficiary
shall mean any individual, individuals, estate or trust designated by a
Participant, Plan Administrator or pursuant to Section 206(d)(3)(J) of
ERISA to receive benefits on behalf of a Participant.
2.12 "Board of Directors"
shall mean:
(a) in the case of corporation: the Board of Directors (or sole
director) of the Employer, or of a Participating Employer, as the
case may be; and
(b) in the case of a Partnership or Sole proprietorship: the general
partners or the sole proprietor, as the case may be.
2.13 "Breaks-ln-Service"
Unless Elapsed Time is selected in Section II B.4.e. of the Adoption
Agreement, shall mean an applicable Computation Period in which an Employee
fails to complete an aggregate of five hundred (500) Hours of Service with
any Affiliated Employer. If Elapsed Time is selected, Breaks-in-Service is
a Period of Severance of at least twelve (12) consecutive months.
2.14 "Code" or"IRC"
shall mean the Internal Revenue Code of 1986 as amended from time to time.
2.15 "Collective Bargaining Agreement"
shall mean an agreement between the Employer and employee representatives
if retirement benefits were the subject of good faith bargaining. Employee
representatives does not include any organization more than half of whose
members are employees who are owners, officers and executives of the
Employer.
2.16 "Committee"
shall mean the committee members appointed pursuant to Article XV, Section
15.10 hereof and specified in Section I.B.8 of the Adoption Agreement.
-3-
<PAGE>
2.17 "Computation Period"
shall mean:
(a) with respect to eligibility:
(i) the initial twelve (12) consecutive months beginning on the
Employee's Employment Commencement Date; and
(ii) subsequent Plan Years beginning with the Plan Year which
begins in the period specified in (i) above regardless of
whether the Employee is entitled to be credited with 1,000
Hours of Service during that period; or
(iii) successive anniversaries of the Employee's Employment
Commencement Date if specified in Section II.B.3. of the
Adoption Agreement; and
(b) with respect to vesting, breaks in service, and accruals: the Plan
Year unless otherwise specified in Section II.B.2. of the Adoption
Agreement.
2.18 "Compensation"
shall mean:
Unless otherwise elected by the Employer under the Adoption Agreement,
Compensation is defined as wages within the meaning of section 3401(a) of
the Code and all other payments of compensation to the employee by the
employer (in the course of the employer's trade or business) for which the
employer is required to furnish the employee a written statement under
sections 6041(d), 6051(d) and 6052 of the Code, determined without regard
to any rules under section 3401(a) that limit the remuneration included in
wages based on the nature or location of the employment or the services
performed. As elected by the Employer in the Adoption Agreement,
compensation shall mean:
(a) in the case of an Employee: the total non-deferred renumeration
paid to an Employee during the period specified in Section
II.A.2.b. of the Adoption Agreement as reported on his W-2 (if
Section II.A.2.a.(i) of the Adoption Agreement is selected) for
such period including all compensation within the meaning of Code
Section 415(c)(3) unless otherwise specified in Section II.A.l.b.
of the Adoption Agreement which do not exceed the limitations in
Article XI, Section 11.4, subsection (c) hereof as adjusted
pursuant to Code Section 415(d) (which limitation shall be
applicable to all employees for Plan years beginning after December
31, 1988), but excluding non-cash renumeration, and contributions
on behalf of the Employee to this or any other employee benefit
plan (except for elective contributions to this or any other
employee benefit plan pursuant to a Salary Reduction Agreement and
which is not includable in the Employee's income pursuant to Code
Section 125, 402(a)(8), 402(h) or 403(b)) unless otherwise elected
in Section II.A.1 of the Adoption Agreement;
(b) Compensation shall mean total 415 Compensation actually paid to an
Employee during the period specified in Section II.A.2.b. of the
Adoption Agreement (if Section II.A.2.a.(ii) of the Adoption
Agreement is selected); and
(c) in the case of a Self-Employed Person: earned income as defined in
Section 401(c)(2) of the Code in the trade or business for which
the plan is established for which personal services of the
individual are a material income-producing factor, but excluding
any non-cash renumeration and contributions to this or any other
retirement and/or fringe benefit plan to the extent deductible
under Code Section 404 (except for elective contributions to this
or any other employee benefit plan). For taxable years beginning
after December 31, 1989, net earnings shall be determined by
reducing such earnings by the deduction permitted under Code
Section
-4-
<PAGE>
164(f). Compensation taken into account under the Plan for the
first Plan Year beginning on or after January 1, 1989, shall not
exceed $200,000 as determined in Section 11.4(c) of the Plan.
(d) In addition to other applicable limitations set forth in the plan,
and not withstanding any other provision in the plan to the
contrary, for plan years beginning on or after January 1, 1994, the
annual compensation of each employee taken into account under the
plan shall not exceed the OBRA '93 annual compensation limit. The
OBRA '93 annual compensation limit is $150,000, as adjusted by the
Commissioner for increases in the cost of living in accordance with
section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-
living adjustment in effect for a calendar year applies to any
period, not exceeding 12 months, over which compensation is
determined (determination period) beginning in such calendar year.
If a determination period consists of fewer than 12 months, the
OBRA '93 annual compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
For plan years beginning on or after January 1, 1994, any reference
in this plan to the limitation under section 401(a)(17) of the Code
shall mean the OBRA '93 annual compensation limit set for in this
provisions.
If compensation for any prior determination period is taken into
account in determining an employee's benefits accruing in the
current year, the compensation for that prior determination period
is subject to the OBRA '93 annual compensation limit in effect for
that prior determination period. For this purpose, for
determination periods beginning before the first day of the first
plan year beginning on or after January 1, 1994, the OBRA '93
annual compensation limit is $150,000.
2.19 "Defined Benefit Fraction"
shall mean for each Participant, for any Limitation Year, a fraction so
determined in accordance with Article VI of this Plan.
2.20 "Defined Contribution Fraction"
shall mean for each Participant, for any Limitation Year, a fraction so
determined in accordance with Article VI of this Plan.
2.21 "Determination Date"
shall mean, for any Plan Year, the date so determined in accordance with
Article XI of this Plan.
2.22 "Determination Year"
shall mean the applicable Plan Year.
2.23 "Early Retirement Date"
shall mean the date specified in Section II.C.2. of the Adoption Agreement.
2.24 "Effective Date"
shall have the meaning set forth in Section I.A.4. of the Adoption
Agreement.
-5-
<PAGE>
2.25 "Elective Deferrals"
shall mean any salary reduction contributions made to the Plan. With
respect to any taxable year of the Employer, a participant's Elective
Deferral is the sum of all employer contributions made on behalf of such
participant pursuant to an election to defer under any qualified cash or
deferred arrangement as described in section 401(k) of the Code, any
simplified employee pension cash or deferred arrangement as described in
Section 402(h)(1)(B), any eligible deferred compensation plan under
Section 457, any plan as described under Section 501(c)(18), and any
employer contributions made on the behalf of a participant for the
purchase of an annuity contract under Section 403(b) pursuant to a salary
reduction agreement. Elective deferrals shall not include any deferrals
properly distributed as excess annual additions.
2.26 "Eligible Employee"
shall mean an Employee who has satisfied the requirements set forth in
Sections III.A.I., III.A.2. and III.A.3. of the Adoption Agreement.
2.27 "Employee"
shall mean either:
(a) a person who performs services for an Affiliated Employer in the
employer-employee relation;
(b) a person who is a Leased Employee with respect to an Affiliated
Employer within the meaning of Code Sections 414(n) and 414(o) and
this Article II; or
(c) a person who is a self-employed individual (within the meaning of
Section 401(c)(1) of the Code) with respect to an Affiliated
Employer.
2.28 "Employee Contributions"
shall mean after-tax Employee Contributions as elected in Section
III.B.7.a.(i) of the Adoption Agreement.
2.29 " Employer"
shall mean the corporation, partnership, association or sole proprietorship
set forth in Section I.B.1. of the Adoption Agreement.
2.30 "Employer Contribution Account"
shall mean that portion of a Participant's Account attributable to
Participating Employer contributions (including Matching Contributions) and
the earnings and accretions attributable to such contributions.
2.31 "Employment Commencement Date"
shall mean the date on which an Employee first performs an Hour of Service
on behalf of an Affiliated Employer or, if applicable, the date on which an
Employee first performs an Hour of Service after his most recent Breaks-In-
Service that has resulted in cancellation of his previous Years of Service.
2.32 "Entry Date"
shall mean each date set forth in Section III.A.4. of the Adoption
Agreement which shall be the date on which the Employee commences
participation.
-6-
<PAGE>
2.33 "ERISA"
shall mean the Employee Retirement Income Security Act of 1974 (P.L. 93-
406) as it presently exists or as it may hereafter be amended from time to
time.
2.34 "Excess Aggregate Contributions"
shall mean, with respect to any Plan Year, the excess of:
a. the aggregate Employee Contributions, Matching Contributions,
Qualified Matching Contributions and Qualified Non-Elective
Contributions (if applicable) taken into account in computing the
Actual Contribution Percentage (ACP) of Highly Compensated
Employees for such Plan Year, but shall not include Matching
Contributions that are forfeited either to correct Excess Aggregate
Contributions or because the contributions to which they relate are
Excess Deferrals.
b. the maximum percentage of such contributions permitted by the ACP
test (determined by reducing contributions made on behalf of Highly
Compensated Employees in order of their Contribution Percentages
beginning with the highest of such percentages). Such determination
shall be made after first determining Excess Elective Deferrals
pursuant to Section 5.3(e) and then determining Excess
Contributions pursuant to Section 5.4(b).
2.35 "Excess Elective Deferrals"
shall mean those Elective Deferrals that are includable in a Participant's
gross income under Section 402(g) of the Code to the extent such
Participant's Elective Deferrals for a taxable year exceed the dollar
limitation under such Code section. Excess Elective Deferrals shall be
treated as Annual Additions under the Plan, unless such amounts are
distributed no later than April 15th following the close of this
participant's taxable year.
2.36 "Family Member"
shall mean family member as defined in Section 414(q)(6) of the Code.
2.37 "415 Compensation"
shall mean the Participant's earned income, wages, salaries, and fees for
professional services actually rendered in the course of employment with an
employer maintaining the Plan (including, but not limited to, commissions
paid to salesmen, compensation for service on the basis of a percentage of
profits, commissions or insurance premiums, tips and bonuses), which for
any Limitation Year are actually paid or includable in gross income in a
Limitation Year but excluding:
(a) contributions made by the Employer to a plan of deferred
compensation which are not included in the Employee's gross income
for the taxable year in which contributed;
(b) contributions made to a "simplified employee pension" (within the
meaning of Section 408 of the Code) to the extend such
contributions are deductible by the Employee; (c) amounts realized
from exercise of a non-qualified stock option;
(d) amounts realized when restricted stock or property held by the
Employee either becomes freely transferable or is no longer subject
to risk of forfeiture; (e) any distributions from a plan of
deferred compensation;
(f) amounts realized from the sale or exchange of stock acquired under
a qualified stock option;
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(g) contributions made by the Employer towards the purchase of an annuity
(whether or not under a salary reduction agreement) pursuant to
Section 403(b) of the Code (whether or not excludable from gross
income); or (h) any other amounts which received special tax benefits.
2.38 "Highly Compensated Employee"
shall mean
(a) An Employee who performs services for an Affiliated Employer during
the applicable Determination Year and who during the Look-Back Year
either:
(i) received Compensation from an Affiliated Employer in excess
of $75,000 (as adjusted pursuant to Code Section 415(d));
(ii) received Compensation from an Affiliated Employer in excess
of $50,000 (as adjusted pursuant to Code Section 415(d))
and such Employee was among the twenty percent (20%) who
received the highest Compensation from an Affiliated
Employer, or
(iii) The Employee was an officer of an Affiliated Employer and
either received Compensation in excess of fifty percent
(50%) of the current limitation imposed by Code Section
415(b)(1)(A), or in the event no officers of any Affiliated
Employer received Compensation in excess of the foregoing
limit, the most highly compensated officer, or
(b) Employees who are five percent (5%) owners (within the meaning of
Code Section 416(i)) of an Affiliated Employer at any time during
the Look-Back Year or the Determination Year or Employees described
in Section 2.38(a) who are one of the 100 Employees who received
the most compensation from the Employer during the Determination
Year, or
(c) A Highly Compensated former Employee who:
(i) separated from the service (or who was deemed to have
separated) of all Affiliated Employers prior to the
Determination Year;
(ii) performed no services for an Affiliated Employer during the
Determination Year, and was a Highly Compensated Employee
(who was actively employed) during either his year of
separation from service, or any Determination Year ending
on or after his fifty-fifth (55th) birthday.
(d) Any other Employee deemed to be highly compensated under Code
Section 414(q) and the Treasury Regulation thereunder.
(e) If an Employee is a family member (spouse, lineal ascendants and
descendants and their spouses of the Employee or former Employee)
of a Key Employee as defined in Section 11.3(c)(iii) or of a Highly
Compensated Employee who is one of the ten (10) most highly
compensated Employees ranked on the basis of Compensation paid by
the Employer during the Determination Year or Look-Back Year, then
the family member and such Key Employee shall be aggregated and
compensation and plan contributions and benefits shall be
aggregated for the purpose of determining if an Employee is a
Highly Compensated Employee.
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2.39 "Hour of Service"
shall mean:
(a) Each hour for which an Employee (including those persons treated as
employees pursuant to Code Section 414(n)) is paid or entitled to be
paid currently or as a back pay award irrespective of mitigation of
damages, by any Affiliated Employer (including any other entity
required to be aggregated pursuant to Code Section 414(o) and
regulations thereunder) for the performance of duties provided,
however, that all hours shall be credited in the Computation Period in
which the work was performed or to which the back pay award relates;
and
(b) Each hour for which an Employee is paid or is entitled to payment due
to vacation, holiday, illness, incapacity, disability, lay off, jury
duty, military duty, maternity or paternity leave or leave of absence,
but not periods for which payments are made or due:
(i) Under a plan maintained solely for the purpose of compliance
with Worker's Compensation, Unemployment Compensation,
disability insurance laws; or
(ii) Solely as reimbursement for medical expenses incurred by the
Employee provided, however, that no more than five hundred one
(501) Hours of Service be credited to an Employee during a
single continuous period during which the Employee performs no
duties, except in the case where the Employee is on leave of
absence due to illness, injury or disability;
(c) Each hour for which an Employee is absent from work because of:
(i) pregnancy,
(ii) the birth of a child of the Employee,
(iii) the placement of a child with the Employee in connection with
the adoption of the child by the Employee, or
(iv) the need for care of the child during the period immediately
following the birth or placement for adoption, but solely for
the purpose of determining whether a Breaks-In-Service has
occurred for participation and vesting.
(d) (i) The Employee shall be credited with the number of hours which
otherwise would have been credited but for such absence under
subsection (c), unless said number of hours cannot be
determined, in which case eight (8) hours per working day shall
be credited.
(ii) Total hours credited pursuant to subsections (c) and (d) shall
not exceed five hundred one (501) hours.
(iii) Hours pursuant to subsections (c) and (d) shall be credited in
the Computation Period in which the absence pursuant to
subsections (c) and (d) begins if such hours would prevent an
Employee from incurring a Breaks-In-Service, or in any other
case in the following computation period.
(iv) No credit shall be given pursuant to subsections (c) and (d)
unless the Employee furnishes the Plan Administrator with
information, as it may reasonably be required to establish the
length of and reasons for the absence, or the Plan
Administrator has access to such relevant information.
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(e) Hours of Service shall be determined in accordance with Department of
Labor Regulations, Sections 2530.200-2(b) and (c) which are
incorporated herein by reference.
(f) Hours of Service may be credited at the rate of forty-five (45) hours
for each week, ninety-five (95) hours for each semi-monthly pay period
or one hundred ninety (190) hours for each monthly pay period in which
an Employee is credited with one (1) Hour of Service, if so elected by
the Employer in Section II.B.4. of the Adoption Agreement.
(g) Notwithstanding the above, if an Employer has selected use of the
elapsed time method of credited service in Section II.B.4.e. of the
Adoption Agreement, Hour of Service shall mean each hour for which an
employee is paid or entitled to payment for the performance of duties
with the employer.
2.40 "Insurer"
shall mean any legal reserve insurance company from which any policies may
be acquired in accordance with the terms of the Plan.
2.41 "Investment Fund"
shall mean that portion of the Trust Fund consisting of all monies not
applied under Policies.
2.42 "Key Employee"
shall mean, for any Plan Year, a Participant or Beneficiary so determined
in accordance with Article XI of this Plan.
2.43 "Leased Employee"
shall mean any person (not otherwise an employee of an Affiliated Employer)
who pursuant to an agreement between the Affiliated Employer (as recipient)
and any other person (as "leasing organization") has performed services for
an Affiliated Employer or other "related person" (within the meaning of
Code Section 414(n)(6)) on a substantially full time basis for at least one
year of a type historically performed by employees in the business field of
the Affiliated Employer, except if all of the following conditions are
satisfied:
(a) Such Employee is covered by a money purchase pension plan providing:
(i) a non-integrated Employer Contribution of not less than ten
percent (10%) of Compensation (as defined in Code Section
415(c)(3) and without regard to any salary reduction
agreement);
(ii) immediate participation; and
(iii) immediate nonforfeitability of Employer Contributions.
(b) Leased Employees do not constitute more than twenty (20%) percent of
the non-highly compensated work force of all Affiliated Employers.
2.44 "Limitation Year"
shall mean the consecutive twelve (12) month period selected in Section
II.B.I. of the Adoption Agreement unless otherwise elected by resolution of
the Board of Directors of the Employer.
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2.45 "Look-Back Year"
shall mean the twelve (12) month period immediately preceding the
applicable Determination Year.
2.46 "Matching Contribution"
shall mean Employer contributions as elected in Section III.B.4. of the
Adoption Agreement that are allocated to a Participant's Account by reason
of the Participant's Salary Reduction Contribution. Such contributions may
be forfeited if the contributions to which they relate are Excess
Deferrals, Excess Contributions or Excess Aggregate Contributions. In cases
where Matching Contributions are forfeited for the foregoing reasons, such
contributions will be disregarded when performing the ADP test of Section
5.4.
2.47 "Named Fiduciary"
shall mean the Employer, the Trustees and the Plan Administrator, provided,
however, that the above named (or any member of a group constituting any of
the above named) shall only be considered fiduciaries to the extent of each
of their powers, duties and responsibilities as set forth under the terms
of this Plan.
2.48 "Net Profits"
shall mean the sum of the net earnings of a Participating Employer (or an
"Affiliated Group" as defined in Section 1504 of the Code), as the case may
be, at the close of its taxable year as determined for Federal Income Tax
purposes determined in accordance with generally accepted accounting
principles.
2.49 "Non-Key Employee"
shall have the meaning so ascribed in Article XI of this Plan.
2.50 "Non-Matching Employer Contributions"
shall mean Employer contributions as elected in Section III.B.2. of the
Adoption Agreement.
2.51 "Normal Retirement Age"
shall mean the earlier of:
(a) a Participant's Normal Retirement Date; or
(b) the later of:
(i) the date on which the Participant attains Age sixty-five (65); or
(ii) the fifth (5th) anniversary of the first day of the Plan Year in
which he commences participation; or (c) any mandatory retirement
age enforced by the Employer.
2.52 "Normal Retirement Date"
shall mean the date specified in Section II.C.1. of the Adoption Agreement.
2.53 "Owner-Employee"
shall mean an individual who is a sole proprietor or who is a partner
owning more than ten percent (10%) of either the capital or profits of the
partnership.
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2.54 "Participant"
shall mean any person who is or was an Eligible Employee and who has been
admitted to participation in accordance with the terms of the Plan.
2.55 "Participant Contribution Account"
shall mean that portion of a Participant's Account as is attributable to
after-tax Employee Contributions, rollover contributions or transfer
contributions, if any, as provided under the terms of the Plan, and all
earnings and accretions attributable to such Employee contributions.
2.56 "Participating Employer"
shall mean the Employer and any Affiliated Employer who, with the consent
of the Employer, formally adopts the Plan by completing Section I.B.2. of
the Adoption Agreement.
2.57 "Period of Severance"
shall mean a continuous period of time during which the Employee is not
employed by the Employer beginning when the Employee retires, quits or is
discharged, or if earlier, the 12 month anniversary of the date on which
the Employee was otherwise first absent from service, provided that in the
case of an individual who is absent from work for maternity or paternity
reasons, the 12-consecutive month period beginning on the first anniversary
of the first date of such absence shall not constitute a Breaks In Service.
For purposes of this paragraph, an absence from work for maternity or
paternity reasons shall have the same meaning as in Section 2.39(c) of the
Plan.
2.58 "Plan" or "Plan and Trust"
shall mean the Plan as herein set forth, as it may be amended from time to
time which shall be known by the name set forth in Section I.A.1. of the
Adoption Agreement.
2.59 "Plan Administrator"
shall mean any individual, individuals, corporate entity, or other
organization or combination of any of the above designated in Section
I.B.7. of the Adoption Agreement, or in the absence of such designation,
the Employer.
2.60 "Plan Year"
shall mean the twelve (12) consecutive month period set forth in Section
I.A.7. of the Adoption Agreement.
2.61 "Qualified Employer Matching Contribution"
shall mean Employer contributions as elected in Section III.B.5. of the
Adoption Agreement that the Participant may not elect to receive in cash
until distributed from the plan that are non-forfeitable when made and that
may not be distributed prior to separation from service, death, or
disability, unless the contributions to which they relate are related to
Excess Deferrals, Excess Contributions or Excess Aggregate Contributions.
In such cases, the Qualified Employer Matching Contributions may be
forfeited. Such Qualified Matching Contributions, if forfeited shall be
disregarded when performing the ACP test of Section 5.4.
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2.62 "Qualified Domestic Relations Order"
shall mean any judgment, decree or order (including approval of a property
settlement agreement) made pursuant to a state domestic relations law:
(a) which relates to the provision of child support, alimony payments or
marital property rights;
(b) which creates or recognizes the existence of an Alternate Payee's
right to receive all or any portion of the benefits payable with
respect to a Participant; and
(c) which otherwise satisfies the requirements of Section 414(p) of the
Code and the Regulations thereunder.
2.63 "Qualified Joint and Survivor Annuity"
shall mean, in the case of a married Participant, the amount of an
immediate annuity for the life of the Participant with a fifty percent
(50%) survivor's annuity for the life of the Spouse which is payable during
the joint lives of the Participant and the Spouse that can be purchased
with the Participant's vested Account, and in the case of an unmarried
Participant, the amount of annuity for life that can be purchased with the
Participant's vested Account.
2.64 "Qualified Non-Elective Employer Contributions"
shall mean Employer Contributions as elected in Section III.B.3. of the
Adoption Agreement that the Participant may not elect to receive in cash
until distributed from the Plan, that are non-forfeitable when made and
that may not be distributed prior to separation from service, death or
disability.
2.65 "Qualified Pre-Retirement Survivor Annuity"
shall mean a survivor annuity for the life of Participant's surviving
Spouse which can be purchased with fifty percent (50%) of the Participant's
Account as of the date of his death.
2.66 "Required Beginning Date"
shall mean:
(a) In the case of those Participants who attain age seventy and one-half
(70 1/2) after December 31, 1988: The April 1 of the calendar year
following the calendar year in which the Participant attains age
seventy and one-half (70 1/2).
(b) In the case of those Participants who attain age seventy and one-half
(70 1/2) prior to January 1, 1988 who are not five percent (5%) owners
(within the meaning of Code Section 416(i)): The April 1 following the
later of:
(i) the calendar year in which the Participant attains age seventy
and one-half (70 1/2); or;
(ii) the calendar year in which the Participant retires.
(c) In the case of those Participants who attain age seventy and one-half
(70 1/2) after December 31, 1987 but prior to January 1, 1989 who are
not five percent (5%) owners (within the meaning of Code Section
416(i)): April 1, 1990.
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(d) In the case of those Participants who attain age seventy and one-half
(70 1/2) prior to January 1, 1988 and were five percent (5%) owners
during any Plan Year beginning after December 31, 1979: The April 1
following the later of:
(i) the calendar year in which the Participant attains age seventy
and one-half (70 1/2); or
(ii) the earlier of:
(A) the calendar year in which the Participant retires; or
(B) the calendar year containing the last day of the Plan Year
in which the Participant becomes a five percent (5%) owner.
(e) The determination of five percent (5%) ownership shall be made under
Section 416(i) regardless of whether the Plan is top-heavy and shall
apply to any Participant who is a five percent (5%) owner at any time
during the Plan Year ending with or within the calendar year in which
such owner attains age sixty-six and one-half (66 1/2) or any
subsequent Plan Year.
2.67 "Restatement Effective Date"
shall have the meaning ascribed in Section I.A.5. of the Adoption
Agreement.
2.68 "Salary Reduction Account"
shall mean that portion of a Participant's Account attributable to "salary
reduction" contributions as provided under the terms of the Plan, and all
earnings and accretions attributable to such "salary reduction"
contributions.
2.69 "Self Employed Person"
shall mean an individual who has earned income (within the meaning of Code
Section 401(c)(2)) from the trade or business for which the Plan is
established, or would have such income if such trade or business had net
profits.
2.70 "Separate Investment Fund"
If selected by the Employer in Section III.D.1. of the Adoption Agreement,
shall mean, the various separate funds offered for investment. In addition,
if elected by the Employer in Section III.D.2. and D.3. of the Adoption
Agreement, the Participant may choose to direct the investments in his
Account as a self-directed account.
2.71 "Spouse"
shall mean Spouse or Surviving Spouse of the Participant, provided that a
former Spouse will be deemed the Spouse and the current Spouse will not be
deemed the Spouse to the extent provided under a Qualified Domestic
Relations Order.
2.72 "Super Top Heavy Plan"
shall mean, for any Plan Year, a Plan so determined in accordance with
Article XI hereof.
2.73 "Top Heavy Plan"
shall mean, for any Plan Year, a Plan so determined in accordance with
Article XI hereof.
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2.74 "Total Disability"
shall mean a medically determinable physical or mental impairment which is
expected to result in death or to be a long continued duration and which
prevents the Participant from engaging in his normal and customary duties.
2.75 "Trustees"
shall mean the individual, individuals, corporate entity or other group
designated pursuant to Section I.B.6. of the Adoption Agreement.
2.76 "Trust Fund"
shall mean assets or property held by the Trustees (or any nominee thereof)
under the terms of the Plan and Trust.
2.77 "Valuation Date"
shall mean the close of business on: (a) the last day of the Plan Year, or
(b) any other date selected pursuant to Section III.C.5. of the Adoption
Agreement.
2.78 "Year(s) of Service"
shall mean the number of applicable Computation Periods in which an
Employee accrues one thousand (1,000) Hours of Service according to the
terms of the Plan with respect to vesting and eligibility, that have not
been excluded pursuant to the terms of the Plan. For purposes of
eligibility, an Employer who has not selected Section II.B.3. of the
Adoption Agreement will credit an Employee who accrues one thousand (1,000)
Hours of Service during both the initial twelve month Computation Period
and the Plan Year beginning in the initial twelve month Computation Period,
with two (2) Years of Service.
Notwithstanding the above, where an Employer has elected use of the elapsed
time method of credited service, for purposes of determining an Employee's
initial or continued eligibility to participate in the Plan or the non-
forfeitable interest in the Participant's Account balance derived from
Employer contributions, an Employee will receive credit for the aggregate
of all time period(s) commencing with the Employee's first day of
employment or reemployment and ending on the date a Breaks in Service
begins. The first day of employment or reemployment is the first day the
Employee performs an Hour of Service. An Employee will also receive credit
for any Period of Severance of less than twelve (12) consecutive months.
Fractional periods of a year will be expressed in terms of days.
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ARTICLE III - ELIGIBILITY AND PARTICIPATION
3.1 Eligible Employee Status
An Employee shall be an Eligible Employee on the date on which he satisfies
the requirements set forth in both Sections III.A.1., III.A.2. and III.A.3.
of the Adoption Agreement.
3.2 Commencement of Participation
An Eligible Employee shall enter the Plan, subject to any administrative
requirements set forth herein, on the Entry Date specified in Section
III.A.4. of the Adoption Agreement relating to his completion of the
service requirement set forth in Section III.A.3. of the Adoption
Agreement. Notwithstanding the foregoing, all Employees on the date
specified in Section III.A.5. of the Adoption Agreement shall commence
their participation hereunder on the date specified therein.
3.3 Administrative Requirements
The Plan Administrator may require the Employee to supply information and
to complete such forms as reasonably required and, in its sole discretion,
may delay an Employee's entrance into the Plan until his compliance with
this requirement, and in the event a "salary reduction" contribution is
permitted pursuant to Section III.B.6. of the Adoption Agreement, the
Employee shall be required to complete a salary reduction agreement prior
to his entry into the Plan.
3.4 Re-Employment of Participant
If a Participant experiences an interruption in his employment with all
Affiliated Employers and is subsequently re-employed he shall be eligible
to enter or reenter the Plan immediately upon reemployment.
3.5 Change in Employment Status
An Employee otherwise eligible who was previously not eligible to enter the
Plan because he was not an Eligible Employee shall begin participation
immediately upon becoming an Eligible Employee.
3.6 Inactive Participants
If a Participant subsequently becomes ineligible under Section 3.1
hereunder, but is still employed by an Affiliated Employer he shall become
an inactive Participant and shall no longer be eligible to make salary
reduction contributions, nor receive Employer contributions to the extent
provided in Article IV hereof.
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ARTICLE IV - EMPLOYER CONTRIBUTIONS
4.1 Determination of Amount of Non-Matching Contributions
Each Participating Employer shall contribute to the Trust Fund on account
of its Employees for each Plan Year in the manner set forth in Section
III.B.2. of the Adoption Agreement. No contribution shall be accepted by
the Trust under this Section 4.1 unless it is deductible under Section 404
of the Code.
4.2 Determination of Amount of Matching Contributions
Each Participating Employer shall contribute to the Trust Fund on account
of its Employees in the amounts determined by Section III.B.4. of the
Adoption Agreement.
4.3 Determination of Amount of Qualified Non-Elective Contributions
Each Participating Employer shall contribute to the Trust Fund on account
of its Employees in the amounts determined by Section III.B.3. of the
Adoption Agreement.
4.4 Determination of Amount of Qualified Matching Employer Contributions
If the Employer has selected Section III.B.5 of the Adoption Agreement, all
Employer Matching Contributions are deemed to be Qualified Matching
Employer Contributions.
4.5 Payment of Contributions
Each Participating Employer shall make full payment of its contribution to
the Trustees no later than the due date of its federal income tax return
(including extensions thereof) for the fiscal year with respect to which
such contribution is made.
4.6 Duty of the Trustees
The Trustees shall have no duty to enforce payment of any contribution of
any Participating Employer.
4.7 Contingent Nature of Contributions
Contributions made to the Trust Fund are expressly contingent upon their
deductibility for federal income tax purposes and the maintenance of the
qualified status of the Plan to the extent that loss of said qualified
status would deprive a Participating Employer of the deduction taken for
said contribution.
4.8 Refund of Company Contributions
In the event of:
(a) initial disqualification of the Plan provided the application for
determination relating to initial qualifications is filed by the due
date of the Participating Employers return for the taxable year in
which the Plan is adopted; or
(b) disallowance of a deduction; or
(c) denial of continued qualification (to the extent a Participating
Employer would be deprived of a deduction), or
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(d) mistake of fact, that portion of the contribution which is disallowed
or contributed by mistake of fact may be returned to the Participating
Employer which made said contribution to the extent permitted under
Section 403(c) of ERISA and Section 401(a)(2) of the Code. Return of
contributions pursuant to (b), (c) or (d) of this Section 4.8 shall be
made within one (1) year of the date of disallowance of deduction,
date of denial of continuing qualification or date of payment of the
mistaken portion of the contribution, as the case may be.
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ARTICLE V - EMPLOYEE & SALARY REDUCTION CONTRIBUTIONS;
ADP & ACP TESTS
5.1 Employee Contributions Generally
(a) Non-Forfeitability - All Employee contributions and earnings thereon
shall be fully vested at all times.
(b) Accounting - All Employee contributions shall be allocated to a
Participant's Participant Contribution Account, or to a Participant's
Salary Reduction Account, as the case may be.
5.2 Salary Reduction Contributions
(a) Each Participant shall be permitted to make salary reduction
contributions, in lieu of cash compensation, in one of the percentages
of his Compensation set forth in Section III.B.6.a. of the Adoption
Agreement, as a condition of his participation hereunder, not to
exceed (when taken together with all of the Participant's other
"salary reduction" contributions) $7,000 (as adjusted pursuant to Code
Section 402(g)) per calendar year. Plans acquiring such contributions
are deemed to contain an arrangement pursuant to Code Section 401(k).
(b) All salary reduction contributions to the Plan shall be made through
salary withholding. Contributions withheld shall be paid to the
Trustees by an Employer as soon as practicable thereafter.
(c) A Participant may increase or decrease the rate of his salary
reduction contributions at such times permitted under Section
III.B.6.b. of the Adoption Agreement by delivering an amended
withholding authorization to the Committee within a reasonable period
prior to the effective date of his change of rate. Notwithstanding the
above, a Participant may authorize any additional salary reduction
contribution needed to maximize his salary reduction upon 30 days
notice to the committee.
(d) A Participant may reduce his salary reduction contributions to zero by
delivering an amended withholding authorization to the Committee at
such times permitted under Section III.B.6 of the Adoption Agreement.
(e) In the event a Participant ceases his salary reduction contributions,
effective with the date of such cessation, he shall become an inactive
Participant until such time as he resumes active participation by
resuming his contributions to the Plan. A Participant who becomes an
inactive Participant may not resume salary reduction contributions
until the date selected in Section III.B.6.c of the Adoption
Agreement.
(f) Except upon separation from service, total disability or death, a
Participant may not withdraw any contribution which has been allocated
to his Salary Reduction Account before he attains age fifty-nine and
one-half (59-1/2), except in the event of a severe financial hardship
if hardship withdrawals are permitted pursuant to Section IV.B. of the
Adoption Agreement. Determination of a severe financial hardship shall
be made by the Committee in its sole discretion. A distribution made
on account of severe financial hardship shall not exceed the amount
required to meet the immediate financial need of the Employee as
described in Section 12.9 of the Plan. The Committee may issue
administrative regulations to govern the application of this
Subsection (f).
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5.3 Limitations Applicable to Salary Reduction Contribution
(a) Actual Deferral Percentage Test before January 1, 1987.
(i) For Plan Years beginning before January 1, 1987, the Actual
Deferral Percentage of Highly Compensated Employees (as defined
in subsection (ii) hereof) shall not exceed the lesser of:
(A) the sum of Actual Deferral Percentage on behalf of all other
Participants plus three (3) percentage points; or
(B) the Actual Deferral Percentage on behalf of all other
Participants multiplied by two and one-half (2.5), except in
the event that the Actual Deferral Percentage on behalf of
the group of Highly Compensated Employees does not exceed
the Actual Deferral Percentage on behalf of all other
Participants multiplied by one and one-half (1.5).
(ii) The Actual Deferral Percentage for a specified group of
Participants shall be the average of the ratios (separately
calculated for each Participant) of:
(A) the amount of before-tax contributions for the Plan Year in
reference to
(B) the Participant's Compensation for such Plan Year.
(iii) For purposes of this Subsection, a Highly Compensated Employee
is any Employee who receives greater compensation than two-
thirds (2/3) of all Participants during such Plan Year. For
this purpose, compensation shall mean the Employee's annual
rate of compensation (including all items of compensation set
forth in Article II) as of the last day of the most recent
prior Plan Year.
(b) Actual Deferral Percentage Test after December 31, 1986.
(i) For Plan Years beginning after December 31, 1986, the Actual
Deferral Percentage (ADP) of tax-deferred contributions of
Highly Compensated Employees eligible to participate shall not
exceed the lesser of:
(A) 200% of the Actual Deferral Percentage of the tax deferred
contributions for all other Employees eligible to
participate; or
(B) the Actual Deferral Percentage of all other Employees plus
two (2) percentage points; provided that in the alternative,
the ADP on behalf of Highly Compensated Employees may exceed
the ADP on behalf of all other Employees by no more than
125%.
(ii) The term "Actual Deferral Percentage" for a specified group of
Employees for a Plan Year shall be the average of the ratios
(separately calculated for each Employee) of:
(A) the amount of Employer Contributions and Salary Reduction
contributions (including:
(1) Excess Elective Deferrals, but excluding Elective
Deferrals that are taken into account in the Average
Contribution Percentage test, provided the ADP test is
satisfied both with or without such exclusion, and
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(2) at the election of the Employer, Qualified Non-Elective
Contributions and Qualified Matching Contributions),
actually paid to the Trust on behalf of the Employee for
such Plan Year on or before the last day of the Plan
Year immediately following the Plan Year to which the
contributions relate;
to:
(B) the Employee's Compensation for such Plan Year (whether or
not the Employee was a Participant for the entire Plan
Year). If a Participant makes no Employee contributions, the
ratio for that Participant will equal zero. The term "Highly
Compensated Employee" shall have the same meaning as under
Section 414(q) of the Code. (Note: For Plan Years beginning
after December 31, 1987 at the election of the Employer, the
Compensation taken into account may be limited to the
compensation received by the employee while he is a plan
participant).
(c) Leveling to meet the ADP test
If a limitation or amendment becomes necessary pursuant to section
5.3(a) or (b) above, such limitation or amendment will be made by
reducing the percentage and distributing to the Employee electing the
highest percentage of tax-deferred contributions until the tests of
(a) or (b) are met or until such Participant's salary reduction
election is reduced to the same percentage level as the Participant
who is the Highly Compensated Employee electing the second highest
percentage of salary reduction contributions. If further limitations
are required, then both such Participants' salary reductions shall be
distributed until the tests of (a) or (b) are met or until the two
Participants' salary deferred elections are reduced to the same
percentage level as the Participant who is the Highly-Compensated
Employee electing the third highest percentage of salary reduction
contributions, and such limitations or amendments shall continue to be
made in a similar manner from the Participants who are Highly-
Compensated Employees making the highest percentage salary deferrals
to the lowest until the tests of (a) or (b) are satisfied. The
Employer shall have the right to include the Qualified Non-Elective
Employer Contributions for purposes of meeting the limitation under
this subsection.
The amount of the reduction, plus any income and minus any loss
allocatable thereto, shall be distributed no later than the last day
of each Plan Year to Participants to whose accounts such amounts were
allocated for the preceding Plan Year. If such amounts are distributed
more than 2 1/2 months after the last day of the Plan Year in which
such excess amounts arose, a ten percent (10%) excise tax will be
imposed on the Employer maintaining the Plan with respect to such
amounts. Excess Elective Deferrals of participants who are subject to
the family aggregation rules shall be allocated among the family
members in the same proportion to the Elective Deferrals (and amounts
treated as Elective Deferrals) of each family member that is combined
to determine the combined ADP.
(d) Determination of Income or Loss
The reduction shall be adjusted for any income or loss up to the date
of distribution. The income or loss allocatable is the sum of:
(1) income or loss allocatable to the participant's Salary Reduction
account (and, if applicable, the Qualified Non-Elective
Contribution account or the Qualified Matching Contributions
account or both) for the Plan Year multiplied by a fraction, the
numerator of which is the amount of the reduction for the year
and the denominator is the participant's account balance
attributable to Salary Reductions (and Qualified
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Non-Elective Contributions or Qualified Matching Contributions,
or both, if any of such contributions are included in the Actual
Average Percentage test) without regard to any income or loss
occurring during such Plan Year; and
(2) ten percent (10%) of the amount determined under (1) multiplied
by the number of whole calendar months between the end of the
Plan Year and the date of distribution, counting the month of
distribution if distribution occurs after the 15th of such month.
(e) Excess Elective Deferrals
A Participant may assign to this Plan any Excess Elective Deferrals
made during the taxable year of the Participant by notifying the Plan
Administrator on or before the date specified in Section III.C.ll the
Adoption Agreement of the amount of the Excess Elective Deferrals to
be assigned to the Plan.
A participant is deemed to notify the Plan Administrator of any Excess
Elective Deferrals that arise by taking into account only those
Elective Deferrals made to this plan and any other plans of the
sponsor. Notwithstanding any other provision of the Plan, Excess
Elective Deferrals, plus any income and minus any loss allocatable
thereto, shall be distributed no later than April 15 to any
Participant to whose Account Excess Elective Deferrals were assigned
for the preceding year and who claims Excess Elective Deferrals for
such taxable year.
Determination of Income or Loss:
Excess Elective Deferrals shall be adjusted for any income or loss up
to the date of distribution. The income or loss allocatable to Excess
Elective Deferrals is the sum of:
(1) income or loss allocatable to the Participant's Salary Reduction
Contribution Account for the taxable year multiplied by a
fraction, the numerator of which is such Participant's Excess
Elective Deferrals for the year and the denominator is the
Participant's Account balance attributable to Salary Reduction
Contributions without regard to any income or loss occurring
during such taxable year; and
(2) ten percent (10%) of the amount determined under (1) multiplied
by the number of whole calendar months between the end of the
participant's taxable year and the date of distribution, counting
the month of distribution if distribution occurs after the 15th
of such month.
(f) Return of Contribution to Participant
If a Participant is prevented from making a portion of his salary
reduction contribution due to a permissible limitation, revocation or
amendment by the Employer, such portion shall be considered taxable
income to the Participant in the tax year for which the contribution
was made, and after appropriate taxes have been withheld shall be
returned to the Participant.
5.4 Limitation on Employee Contributions and Matching Contributions
(a) Actual Contribution Percentage after December 31, 1986.
(i) For Plan Years beginning after December 31, 1986, the Actual
Average Contribution Percentage (ACP) (as defined in subsection
(ii) hereof) of Employee Contributions, Qualified Matching
Contributions and Qualified Non-Elective Contributions (if
elected in Section III.B.3. of the Adoption Agreement) of Highly
Compensated Employees shall not exceed the lesser of:
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(A) 200% of the Actual Average Contribution Percentage of
Employee Contributions and Matching Contributions for all
other Employee's eligible to participate, or
(B) the Actual Average Contribution Percentage of all other
Employees plus two (2) percentage points; provided that in
the alternative, the ACP on behalf of Highly Compensated
Employees may exceed the ACP on behalf of all other
Employees by no more than 125%.
(ii) The term "Actual Average Contribution Percentage" for a specified
group of Employees for a Plan Year shall be the average of the
ratios (separately calculated for each Employee) of:
(A) the amount of Employee Contributions, Matching
Contributions, Qualified Matching Contributions and
Qualified Non-Elective Contributions actually paid to the
Trust on behalf of an Employee for such Plan Year; to
(B) the Employee's Compensation for such Plan Year whether or
not the Employee was a Participant for the entire Plan Year.
If a Participant makes no Salary Reduction Contribution, the
ratio for that Participant will equal zero. (Note: For Plan
Years beginning after December 31, 1987 and before January
1, 1992, at the election of the Employer, the Compensation
taken into account may be limited to the compensation
received by the employee while he is a Plan Participant).
(b) Leveling to meet the ACP test
If because of the above limitations a reduction of contributions on
behalf of Highly Compensated Employees becomes necessary pursuant to
Section 5.4 (a), such reduction of contributions will be made by
forfeiting or distributing on a pro-rata basis from the Employee
Contribution Account, Matching Contribution Account, Qualified
Matching Contribution Account and if applicable, the Qualified Non-
Elective Contribution Account or Salary Deferral Account or both, from
the Employee contributing the highest percentage of contributions
until the test of (a) is met or until such Participant's Contribution
is reduced to the same percentage level as the Participant who is the
Highly-Compensated Employee contributing the second highest percentage
of such contributions. If further limitations are required, then both
such Participants' contribution percentages shall be reduced until the
test of Section 5.4(a) is met or until the two Participants'
contributions are reduced to the same percentage level as the
Participant who is the Highly-Compensated Employee contributing the
third highest percentage of such contributions, and such limitations
or amendment shall continue to be made in a similar manner from the
Participants who are Highly-Compensated Employees making the highest
percentage contributions to the lowest until the test of Section
5.4(a) is satisfied. The Employer shall have the right to include the
Qualified Matching Contributions for purposes of meeting the
limitation under this subsection.
If a Participant is prevented from making a portion of his
contributions due to a permissible limitation, revocation or amendment
by the Employer, such portion shall be considered taxable income to
the Participant in the tax year for which the contribution was made,
and after appropriate taxes have been withheld shall be returned to
the Participant.
(c) Distribution of Excess Aggregate Contribution
Notwithstanding any other provision of this Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocatable thereto,
shall be forfeited, if forfeitable, or if not forfeitable, distributed
no later than the last day of each Plan Year to Participants to whose
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accounts such Excess Aggregate Contributions were allocated for the
preceding Plan Year. Excess Aggregation Contributions of participants
who are subject to the family member aggregation rules shall be
allocated among the family member in proportion to the Employee and
Matching Contributions (or amounts treated as Matching Contributions)
of each family member that is combined to determine the combined ACP.
Determination of Income or Loss:
The amount of the reduction or limitation under Section 5.4(b) shall
be an Excess Aggregate Contribution which shall be adjusted for any
income or loss up to the date of distribution. The income or loss
allocatable to the Excess Aggregate Contributions is the sum of:
(i) the income or loss allocatable to the Participant's Employee
Contribution account, Matching Contribution account (if any, and
if all amounts therein are not used in the Actual Deferral
Percentage test) and, if applicable, Qualified Non-elective
Contribution account and Salary Reduction account for the Plan
Year multiplied by a fraction, the numerator of which is such
participant's Excess Aggregate Contributions for the year and the
denominator of which is the Participant's account balance(s)
attributable to Employee Contributions, Matching Contributions,
Qualified Matching Contributions and Salary Reduction
Contributions without regards to any income or loss occurring
during such Plan Year; and
(ii) ten percent (10%) of the amount determined under (i) multiplied
by the number of whole calendar months between the end of the
Plan Year and the date of distribution, counting the month of
distribution if distribution occurs after the 15th of such month.
(d) Forfeitures of Excess Aggregate Contributions
Forfeitures of Excess Aggregate Contributions may either be
reallocated to the accounts of Non-Highly Compensated Employees or
applied to reduce Employer Contributions, as elected by the Employer
in Section III.C.4.B. of the Adoption Agreement.
(e) Allocation of Excess Aggregate Contributions
Excess Aggregate Contributions shall be allocated to Participants who
are subject to the family member aggregation rules of Section
414(q)(6) of the Code in the manner prescribed by the regulations. If
such Excess Aggregate Contributions are distributed more than 2 1/2
months after the last day of the Plan Year in which such excess
amounts arose, a ten percent (10%) excise tax will be imposed on the
Employer maintaining the Plan with respect to those amounts. Excess
Aggregate Contributions shall be treated as Annual Additions under the
Plan.
(f) Alternative Leveling to Meet the ACP Test
Notwithstanding the provisions of Section 5.4(c), if an Employer so
elects in Section III.C.10 of the Adoption Agreement, the Actual
Average Contribution Percentage Test of Section 5.4(a) will be met by
increasing (1) the Qualified Non-Elective Contributions allocated in
accordance with Section III.C.3. of the Adoption Agreement, or (2) the
Qualified Matching Contributions allocated in proportion to the salary
deferrals of all Non-Highly Compensated Employees who are Participants
in the Plan and employed as of the end of the Plan Year. The Employer
shall have the right to include such contributions for purposes of
meeting the Actual Average Contributions Percentage test.
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(g) Timing of Contributions for purposes of the ACP test
For purposes of the ACP test defined in Section 5.4(a), Employee
Contributions are considered to have been made in the Plan Year in
which contributed to the Trust Fund. Matching Contributions and
Qualified Non-Elective Contributions are considered to have been made
for a Plan Year if made no later than the end of the twelve-month
period beginning on the day after the close of the Plan Year.
5.5 Aggregation for Purposes of the Actual Deferral Percentage Test and Actual
Average Contribution Percentage Test.
(a) Aggregation of Contributions for Highly Compensated Employees
The ADP or ACP for any Participant who is a Highly Compensated
Employee for the Plan Year and who is eligible to have Salary
Reduction Contributions (and Qualified Non-Elective Contributions or
Qualified Matching Contributions, or both, if treated as Elective
Deferrals for purposes of the ADP test) allocated to his or her
Accounts under two or more plans described in Section 401(a) of the
Code or two or more plans described in Section 401(k) of the Code,
that are maintained by the Affiliated Employer, shall be determined as
if such contributions were made under a single arrangement. If a
Highly Compensated Employee participates in two or more plans
described in Section 401(k) of the Code that have different Plan
Years, all such arrangements ending with or within the same calendar
year shall be treated as a single arrangement.
(b) Aggregation of Plans
In the event that this Plan satisfies the requirements of Sections
401(k), 401(m), 401(a)(4), or 410(b) of the Code only if aggregated
with one or more other plans, or if one or more other plans satisfy
the requirements of such Sections of the Code only if aggregated with
this Plan, then this section shall be applied by determining the ADP
and/or ACP of Employees as if all such plans were a single plan. For
Plan Years beginning after December 31, 1989, plans may be aggregated
in order to satisfy Section 401(k) or Section 401(m) of the Code only
if they have the same Plan Year.
(c) Aggregation of Family Members
For purposes of determining the ADP or ACP of a Participant who is a
five-percent (5%) owner or one of the ten most highly-paid Highly
Compensated Employees, the
(i) A) Salary Reduction Contributions of a Participant (and
Qualified Non-Elective Contributions or Qualified Matching
Contributions, or both, if treated as Salary Reduction
Contributions for purposes of the ADP test); or
B) Employee Contributions, Matching Contributions and Qualified
Matching Contributions of a Participant (to the extent not
taken into account for the ADP test) used for the ACP test;
and
(ii) Compensation of such Participant shall include such Contributions
and Compensation for the Plan Year of Family Members. Family
Members, with respect to such Highly Compensated Employees, shall
be disregarded as separate Employees in determining the ADP and
ACP both for Participants who are non-Highly Compensated
Employees and for Participants who are Highly Compensated
Employees.
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5.6 Multiple Use Limitations
If... one or more Highly Compensated Employees participates in both a CODA
and a Plan subject to the ACP test maintained by the Affiliated Employer
and the sum of the ADP and ACP of those Highly Compensated Employees
subject to either or both of these tests exceeds the sum of:
(i) 125 percent (125%) of the greater of:
a) the ADP of the non-Highly Compensated Employees for the Plan
Year; or
b) the ACP of the non-Highly Compensated Employees for the Plan Year
beginning with or within the Plan Year for which the ADP test was
performed; and
(ii) two plus the lesser of such ADP or such ACP (but in no event exceeding
200 percent (200%) of such ADP or such ACP)
then... the ACP of those Highly Compensated Employees also subject to the
ADP test will be reduced (beginning with such Highly Compensated Employee
whose ACP is the highest) so that the limit is not exceeded. The amount of
the reduction shall be treated as an Excess Aggregate Contribution. The ADP
and ACP of the Highly Compensated Employees are determined after any
corrections required to meet the ADP and ACP tests. Multiple use does not
occur if both the ADP and ACP of the Highly Compensated Employees does not
exceed 1.25 multiplied by the ADP and ACP of the non-Highly Compensated
Employees. "Lesser," is substituted for "greater" at "(i)" above, and
"greater" is substituted for "lesser" after "two plus the" in "(ii)" if it
would result in a larger sum of (i) and (ii).
5.7 The Committee
shall monitor the application of Sections 5.3, 5.4, 5.5 and 5.6. The
Employer shall maintain records to demonstrate compliance with the
Sections. The Plan Administrator shall periodically inform the Highly
Compensated Employees of the maximum percentage that will be permitted to
be allocated to their Salary Reduction Accounts in a manner to permit said
Employees to change their salary reduction agreements within a reasonable
time prior to the end of the Plan Year. For this purpose, the Trustees may
round down the maximum percentage to the largest integer permitted under
Section 401(k) of the Code.
5.8 Voluntary After-Tax Contributions
(a) Permissibility
Voluntary after-tax contributions shall be permitted if such option is
selected pursuant to Section III.B.7.a. of the Adoption Agreement, at
the sole discretion of the Plan Administrator and if permitted shall
be subject to such administrative regulations as may be promulgated by
the Plan Administrator.
(b) Maximum Limitation
In no event shall a Participant be permitted to make voluntary
contribution which shall either:
(i) cause his aggregate voluntary contributions to all qualified
plans maintained by all Affiliated Employers to exceed ten
percent (10%) of his aggregate Compensation during his years of
employment with any Affiliated Employer; or
(ii) cause the limitations on allocations set forth in Article VI to
be exceeded.
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(c) Withdrawal
A Participant may withdraw the entire value of his accumulated
voluntary contributions (including all earnings, additions and
accretions thereto) upon written notice to the Plan Administrator,
subject to any administrative regulations as may be promulgated by the
Plan Administrator from time to time, and if applicable, to the
requirements of Article XII, Section 12.6 hereof.
5.9 Rollover Contributions
(a) Permissibility
Rollover contributions may be accepted if such option is selected
pursuant to Section III.B.7.b. of the Adoption Agreement only upon
such terms and conditions as may be provided under administrative
regulations set forth by the Plan Administrator, provided, however,
that no funds shall be accepted as a rollover contribution if
acceptance of said funds adversely affects the qualified status of the
Plan or Trust Fund under the Code.
(b) Evidence of Source of Rollover Funds
The Plan Administrator, at its sole discretion, may require the
Participant to provide such evidence as it deems necessary to
determine that the rollover funds originate from a source which may be
rolled over to the Plan without adversely affecting its qualified
status.
(c) Types of Rollovers Accepted
Subject to the requirements of this Section, rollover contributions
from the following types of plans may be accepted:
(i) those received by a Participant directly from a plan which is
qualified under Section 401(a) of the Code;
(ii) those received by a Participant from an Individual Retirement
Account which consists only of rollover contributions as
provided in Section 408(d)(3) of the Code;
(iii) those received by a Participant from an employee annuity
described in Section 403(b) of the Code;
(iv) a transfer of funds directly from the trustee of a plan which
is qualified under Section 401(a) of the Code; provided,
however, that such direct transfers shall be accepted only as
specified in Section III.B.7.c. of the Adoption Agreement.
(d) Withdrawal
A Participant may withdraw his rollover contributions (including
earnings and appreciation) in the same manner provided for the
withdrawal of voluntary after-tax contributions.
(e) Direct Rollover of Eligible Distributions. General Rule.
The subsection applies to distributions made on or after January 1,
1993. Notwithstanding any provision of the plan to the contrary that
would otherwise limit a distributee's election under this Article, a
distributed may elect, at the time and in the manner prescribed by the
plan administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by
the distributes in a direct rollover.
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(f) Direct Rollover of Eligible Distributions. Definitions.
(i) Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of the
balance to the credit of the distributed except that an
eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributed or the joint
lives (or joint life expectancies) of the distributee and the
distributors designated beneficiary, or for a specified period
of ten years or more; any distribution to the extent such
distribution is required under section 401(a)(9) of the Code;
and the portion of any distribution that is not includable in
gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to employer
securities).
(ii) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in section 408(a) of
the Code, an individual retirement annuity described in section
408(b) of the Code, an annuity plan described in section 403(a)
of the Code, or a qualified trust described in section 401(a)
of the Code, that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement
plan is an individual retirement account or individual
retirement annuity.
(iii) Distributee: A distributed includes an employee or former
employee. In addition, the employee's or former employee's
surviving spouse and the employee's or former employee's spouse
or former spouse who is the alternate payee under a qualified
domestic relations order, as defined in section 414(p) of the
Code, are distributees with regard to the interest of the
spouse or former spouse.
(iv) Direct rollover: A direct rollover is a payment by the plan to
the eligible retirement plan specified by the distributee.
5.10 Deductible Employee Contributions
The Plan will not accept deductible employee contributions which are made
for a taxable year beginning after December 31, 1986. Contributions made
prior to that date will be maintained in a separate account which will be
nonforfeitable at all times. The account will share in the gains and losses
of the Trust in the same manner as described in Section 7.2 of the Plan. No
part of the deductible voluntary contribution account will be used to
purchase life insurance. Subject to Section 12.5 and Section 12.6 (if
applicable), the Participant may withdraw any part of the deductible
voluntary contribution account by making a written application to the Plan
Administrator.
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ARTICLE VI - ALLOCATION OF CONTRIBUTIONS AND FORFEITURES
The Plan Administrator will separately credit contributions, distributions
and forfeitures to the respective bookkeeping account of each separate type
of Contribution (e.g., Employer Matching Contribution, Non-Matching
Employer Contribution, etc.).
6.1 Determination of Participants Eligible to Share of Allocation of Non-
Matching Employer Contributions and Qualified Non-Elective Contributions
The Plan Administrator shall determine, as of the last day of each Plan
Year, each Participant (or former Participant) who is eligible to receive
an allocation of NonMatching Employer Contributions in accordance with the
Adoption Agreement or an allocation of Qualified Non-Elective Contributions
in accordance with Section III.C.3. of the Adoption Agreement.
6.2 Allocation of Non-Matching Employer Contributions
Subject to the Annual Addition limitations and the One Point Four/One Point
Two Five limitations as more particularly set forth in this Article VI,
Non-Matching Employer Contributions from each Participating Employer shall
be allocated to the Account of each Participant (or former Participant) who
is eligible to receive an allocation in the manner set forth in the
Adoption Agreement.
INTEGRATED ALLOCATION OF NON-MATCHING EMPLOYER CONTRIBUTIONS:
If an integrated allocation is selected in Section III.C.2.b. of the
Adoption Agreement, the Non-Matching Employer Contributions for the Plan
Year and forfeitures, if applicable, will be allocated to Participants'
accounts as follows:
STEP ONE: Contributions and forfeitures, if applicable, will be allocated
to each Participant's Account in the ratio that each Participant's total
Compensation bears to all Participants' total compensation, but not in
excess of three percent (3%) of each Participant's Compensation.
STEP TWO: After the allocation in Step One any remaining portion will be
allocated to each Participant's Account in the ratio that each
Participant's Compensation for the Plan Year in excess of the integration
level bears to the excess compensation of all Participants, but not in
excess of three percent (3%).
STEP THREE: After the allocation in Step Two any remaining portion will be
allocated to each Participant's Account in the ratio that the sum of each
Participant's total Compensation and compensation in excess of the
integration level bears to the sum of all Participants total Compensation
and Compensation in excess of the integration level, but not in excess of
the profit-sharing maximum excess allowance percentage selected in Section
III.C.2.c. of the Adoption Agreement less three percent (3%).
STEP FOUR: Any remaining portion will be allocated to each Participant's
Account in the ratio that each participant's total Compensation for the
Plan Year bears to all Participants' total compensation for that year. If
in any year the Plan is not a Top-Heavy Plan, STEP ONE and STEP TWO above
shall be disregarded and allocations shall be made in accordance with STEP
THREE and STEP FOUR above without regard to the three percent (3%)
reduction of STEP THREE. The integration level shall be equal to the
Taxable Wage Base or such lesser amount elected by the Employer in the
Adoption Agreement. The Taxable Wage Base is the maximum amount of earnings
which may be considered wages for a year under Section 3121(a)(1) of the
Code in effect as of the beginning of the Plan Year. Qualified Non-Elective
Contributions shall be allocated in accordance with Section III.C.3 of the
Adoption Agreement.
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6.3 Allocation of Employer Matching Contributions
Subject to the Annual Addition limitations and the One Point Four/One Point
Two Five limitations as more particularly set forth in this Article VI,
Employer Matching contributions from a Participating Employer shall be
allocated to the account of each Participant (or former Participant) who
made a salary reduction contribution to the Plan, in the amount which the
Employer is required to match such salary reduction contribution pursuant
to Section III.B.4. of the Adoption Agreement and as required in accordance
with Section III.C.9. of the Adoption Agreement.
6.4 Allocation of Forfeitures
Forfeitures (including forfeitures of Matching Contributions other than
Excess Aggregate Contributions) shall be allocated in the manner set forth
in Section III.C. of the Adoption Agreement, provided that such forfeitures
shall be allocated among the Employees of the Participating Employer who
employed the Participant.
6.5 Transfer of Participants
In the event of the transfer of a Participant between Participating
Employers, the nonmatching contribution of each Participating Employer
shall be allocated to his Employer Contribution Account to the extent he
received Compensation from the Participating Employer during the Plan Year.
6.6 Annual Additions Limitations
In no event shall an allocation be made to a Participant's Account in any
defined contribution plan (as defined in Section 414(i) of the Code) for
any Limitation Year which shall cause his Annual Addition to exceed the
lesser of:
(a) twenty-five percent (25%) of the Participant's 415 Compensation
(excluding amounts contributed for medical benefits within the meaning
of Section 401(h) or 419A(f)(2) of the Code that are treated as Annual
Additions); or
(b) the greater of:
(i) thirty thousand dollars ($30,000); or
(ii) one fourth (l/4) of the current maximum dollar limitation for
defined benefit plans.
For purposes of this Plan, the Annual Addition on behalf of a Participant
in any Limitation Year is equal to the sum of:
(a) All Employer Contributions allocated to his Account under this Plan or
any other defined contribution plan (as defined under Section 414(i)
of the Code) maintained by an Affiliated Employer; and
(b) The Participant's contributions to all qualified plans (within the
meaning of Section 401(a) of the Code) except that Employee
Contributions made on account of Limitation Years beginning on or
before January 1, 1987 shall be determined in accordance with the law
in effect prior to such date; and
(c) The forfeitures allocated to his Account; and
(d) Contributions allocated to any individual medical account within the
meaning of Code Section 415(a) after March 31, 1984 by an Affiliated
Employer; and
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(e) Contributions allocated to any separate account of a Key Employee
welfare benefit fund (within the meaning of Code Section 419(e)) after
December 31, 1985 under a Plan maintained by an Affiliated Employer;
and
(f) Any excess amount applied under Section 6.9 in the Limitation Year to
reduce Employer Contributions.
6.7 One Point Four/One Point Two Five Limitations
In no event shall an allocation be made to the Account of a Participant for
any Limitation Year which shall cause the sum of the Participant's Defined
Benefit Fraction and the Participant's Defined Contribution Fraction to
exceed one (1).
(a) A Participant's Defined Benefit Fraction is a fraction:
(1) The numerator of which is the Participant's projected annual
benefit (i.e., the annual retirement benefit adjusted to an
actuarially equivalent straight life annuity if expressed in a
form other than a straight life annuity or qualified joint and
survivor annuity) to which the Participant would be entitled
under the terms of the Plan assuming:
(a) the Participant will continue employment until Normal
Retirement Age (or current age, if later), and
(b) the Participant's Compensation for the current Limitation
Year and all other relevant factors used to determine
benefits under the Plan will remain constant for all future
Limitation Years provided under all defined benefit plans
(as defined in Section 414(j) of the Code) (whether or not
terminated) maintained by an Affiliated Employer;
(2) Except as modified by Subsection 3 hereof, the denominator of
which is the lesser of:
(i) the projected annual benefit (as defined in (a) above) of
the Participant if such plan provided the maximum benefit
permitted under Section 415(b) of the Code multiplied by one
and four-tenths (1.4); and
(ii) the maximum dollar limitation which may be considered under
Code Section 415(b)(1)(A) (as adjusted by Code Section
415(d)(1)) multiplied by one and one-quarter (1.25).
(3) In the event an Employee was a Participant as of the first day of
the first Limitation Year beginning after December 31, 1986, in a
defined benefit plan maintained by an Affiliated Employer which
plan was in existence of May 6, 1986 and satisfied individually
and when aggregated with all other such plans the requirements of
Code Section 415 for all Limitation Years beginning before
January 1, 1987, the denominator of the Participant's Defined
Benefit Fraction shall not be less than one hundred twenty five
percent (125%) of the Participant's Accrued Benefit under all
such defined benefit plans as of the last Limitation Year
beginning before January 1, 1987, disregarding any amendments to
such plan after May 5, 1986. In addition, the numerator shall be
reduced in accordance with Tefra Section 235(g)(3) and Defra
713(a).
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(b) A Participant's Defined Contribution Fraction is a fraction:
(1) Except as modified by Subsection (3) hereof, the numerator of
which is the sum of the Annual Additions (as defined under
Section 415(c)(2) of the Code) made to:
(i) the Participant's Account under all defined contribution
plans (as defined in Section 414(i) of the Code) (whether
or not terminated);
(ii) employee contributions defined benefit pension plans
(within the meaning of Code Section 414(j));
(iii) contributions to welfare benefit funds (within the meaning
of Code Section 419(e)); and
(iv) contributions to individual medical accounts (within the
meaning of Code Section 415(1)(2)) maintained by all
Affiliated Employers;
(2) The denominator of which is the lesser of:
(i) the sum of the maximum amount of Annual Additions that could
have been made on behalf of the Participant in accordance
with Section 415(c) of the Code for each year of his
employment with an Affiliated Employer or any predecessor
entity for which service is recognized pursuant to Section
II.B.6.c. of the Adoption Agreement multiplied by one and
four-tenths (1.4); and
(ii) the maximum amount of Annual Additions that could have been
made to the Participant's Account pursuant to Code Section
415(c)(1)(A) (as adjusted by Code Section 415(d)(1))
multiplied by one and one quarter (1.25).
(3) In the event an Employee was a Participant in a defined
contribution plan (within the meaning of Code Section 414(i))
maintained by an Affiliated Employer (which plan was in existence
on May 6,1986) on the end of the first day of the Limitation Year
beginning after December 31, 1986, the numerator of the Defined
Contribution Fraction shall be adjusted if the sum of this
fraction and the Defined Benefit Fraction would otherwise exceed
1.0 under the terms of the Plan. The excess of the sum of the
fraction (calculated as of the end of the last Limitation Year
beginning after January 1, 1987 and computed in accordance with
Code Section 415(a) in effect for Limitation Years beginning
after December 31, 1986 but disregarding any plan amendments made
after May 6, 1986) over 1.0 times the denominator of the Defined
Contribution Fraction shall reduce the numerator of the Defined
Contribution Fraction so that the Defined Contribution Fraction
equals one (1.0). In addition, the numerator shall be reduced in
accordance with Tefra Section 235(g)(3) and Defra 713(a).
6.8 Adjustments to One Point Four/One Point Two Five Limitations for Top Heavy
Plans
(a) Reduced One Point Four/One Point Two Five Limitations
If, during any Limitation Year in which the Plan is a Top Heavy Plan,
a Participant participates in both a defined contribution plan (as
defined in Section 414(i) of the Code) and a defined benefit plan (as
defined in Section 414(j) of the Code) maintained by an Affiliated
Employer, the denominator of the Participant's Defined Contribution
Fraction and Defined Benefit Fraction shall be calculated by
substituting "1.0" for "1.25" each place it appears in Section 6.7
above.
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(b) Exceptions to Applicability
This Section 6.8 shall not apply for any Plan Year if:
(i) The top heavy ratio determined under Section 11.2, Subsections
(a) and (b) does not exceed ninety percent (90%) for the Plan
Year in reference; and
(ii) The minimum contribution allocated to the Account of each Non-Key
Employee who is otherwise eligible to receive a contribution was
one percent (1%) greater than the required minimum contribution
allocated under Section 11.4, Subsection (b).
6.9 Limitation on Allocations
(a) Employee Participating Only in This Plan
(1) If the Participant does not participate in, and has never
participated in, another qualified plan maintained by an
Affiliated Employer or a welfare benefit fund, as defined in
Section 419(e) of the Code maintained by the Employer, or an
individual medical account, as defined in Section 415(1)(2) of
the Code, maintained by the Affiliated Employer, which provides
an Annual Addition, the amount of Annual Addition which may be
credited to the Participant's Account for any Limitation Year
will not exceed the lesser of the maximum permissible amount or
any other limitation contained in this Plan. If the Employer
Contribution that would otherwise be contributed or allocated to
the Participant's Account would cause the Annual Addition for the
Limitation Year to exceed the maximum permissible amount, the
amount contributed or allocated will be reduced so that the
Annual Addition for the Limitation Year will equal the maximum
permissible amount.
(2) Prior to determining the Participant's actual Compensation for
the Limitation Year, the Employer may determine the maximum
permissible amount for a Participant on the basis of a reasonable
estimation of the Participant's Compensation for the Limitation
Year, uniformly determined for all Participants similarly
situated.
(3) As soon as it is administratively feasible after the end of the
Limitation Year, the maximum permissible amount for the
Limitation Year will be determined on the basis of the
Participant's actual Compensation for the Limitation Year.
(4) If pursuant to Subsection (a)(3) or as a result of the allocation
of forfeitures, there is an excess amount, the excess will be
disposed of as follows:
(i) Any nondeductible voluntary employee contributions, to the
extent they would reduce the excess amount, will be
returned to the Participant;
(ii) If after the application of paragraph (4)(i) an excess
amount still exists, and the Participant is covered by the
Plan at the end of the Limitation Year, the excess amount
in the Participant's Account will be used to reduce
Employer Contributions (including any allocation of
forfeitures) for such Participant in the next Limitation
Year, and each succeeding Limitation Year if necessary;
(iii) If after the application of paragraph (4)(i) an excess
amount still exists, and the Participant is not covered by
the Plan at the end of the Limitation Year, the excess
amount will be held unallocated in a suspense account. The
suspense account will be applied to reduce future Employer
Contributions (including allocation of any forfeitures)
for all remaining Participants in the next Limitation
Year, and each succeeding Limitation Year if necessary;
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(5) If a suspense account is in existence at any time during the
Limitation Year pursuant to this Section, it will not participate
in the allocation of the Trust's investment gains and losses.
(b) Employer Participating in this and another Master or Prototype Defined
Contribution Plan
(1) This Section applies if, in addition to this Plan, the
Participant is covered under another qualified master or
prototype defined contribution plan, welfare benefit fund, as
defined in Section 419(e) of the Code or an individual medical
account, as defined in Section 415(1)(2) of the Code, maintained
by the Affiliated Employer, which provides an Annual Addition
during any Limitation Year. The Annual Addition which may be
credited to a Participant's Account under this Plan for any such
Limitation Year will not exceed the maximum permissible amount
reduced by the Annual Addition credited to a Participant's
account under the other plans and welfare benefit funds for the
same Limitation Year. If the Annual Addition with respect to the
Participant under other defined contribution plans and welfare
benefit funds maintained by the Affiliated Employer are less than
the maximum permissible amount and the Employer Contribution that
would otherwise be contributed or allocated to the Participant's
Account under this Plan would cause the Annual Addition for the
Limitation Year to exceed this limitation, the amount contributed
or allocated will be reduced so that the Annual Addition under
all such plans and funds for the Limitation Year will equal the
maximum permissible amount. If the Annual Addition with respect
to the Participant under such other defined contribution plan and
welfare benefit funds in the aggregate are equal to or greater
than the maximum permissible amount, no amount will be
contributed or allocated to the Participant's Account under this
Plan for the Limitation Year.
(2) Prior to determining the Participant's actual Compensation for
the Limitation Year, the Employer may determine the maximum
permissible amount for a Participant in the manner described in
Subsection (a)(2).
(3) As soon as it is administratively feasible after the end of the
Limitation Year, the maximum permissible amount for the
Limitation Year will be determined on the basis of the
Participant's actual Compensation for the Limitation Year.
(4) If, pursuant to Subsection (b)(3) or as a result of the
allocation of forfeitures, a Participant's Annual Addition under
this Plan and such other plans would result in an excess amount
for a Limitation Year, the excess amount will be deemed to
consist of the Annual Addition last allocated, except that Annual
Addition attributable to a welfare benefit fund or individual
medical account will be deemed to have been allocated first
regardless of the actual allocation date.
(5) If an excess amount was allocated to a Participant on an
allocation date of this Plan which coincides with an allocation
date of another plan, the excess amount attributed to this Plan
will be the product of:
(a) the total excess amount allocated as of such date, times:
(b) the ratio of:
(i) the Annual Addition allocated to the Participant for
the Limitation Year as of such date under this Plan to
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(ii) the total Annual Addition allocated to the Participant
for the Limitation Year as of such date under this and
all the other qualified master or prototype defined
contribution plans.
(6) Any excess amount attributed to this Plan will be disposed in the
manner described in Subsection (a)(4).
(c) Employer participating in this Plan and another non-Master or
Prototype Defined Contribution plan
If the Participant is covered under another qualified defined
contribution plan maintained by the Affiliated Employer which is not a
master or prototype plan, Annual Addition which may be credited to the
Participant's Account under this Plan for any Limitation Year will be
limited in accordance with Subsections (b)(1) through (b)(6) as though
the other plan were a master or prototype plan unless the Employer
provides other limitations in the Adoption Agreement.
6.10 Manner of Reduction when Employer Maintains a Defined Benefit Plan
Contributions under this Plan shall be reduced to the extent possible to
satisfy the limitations set forth in Section 6.7 hereof before reductions
are made in any defined benefit plan (within the meaning of Section 414(j)
of the Code) maintained by any Affiliated Employer unless otherwise
specified in Section III.C.6. of the Adoption Agreement.
6.11 Short Limitation Year
If a short Limitation Year is created because of an amendment changing the
Limitation Year to a different 12-consecutive month period, the maximum
permissible amount will not exceed the defined contribution dollar
limitation multiplied by the following fraction:
Number of months in the short limitation year
---------------------------------------------
12
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ARTICLE VII - ALLOCATION OF INVESTMENT RESULTS
7.1 Valuation of the Trust Fund
The Trust Fund shall be valued at the close of business on the last day of
Plan Year, or on the valuation period specified in Section III.C.5(b) of
the Adoption Agreement except in the case where Separate Investment Funds
are permitted pursuant to Section III.D.I. of the Adoption Agreement in
which case the Trust Fund and each Separate Investment Fund shall be valued
on the last day of the Plan Year, or on the date specified in Section I-
II.C.5(b) of the Adoption Agreement, to be known as Valuation Date.
Valuation shall be at fair market value.
7.2 Crediting of Investment Results - Trust Fund Investment
results shall be credited in the following manner:
First: The Plan Administrator shall determine which Accounts (or portions
of Accounts) are eligible to share in the Plan's earnings and appreciation.
Any separate investment Funds or Accounts that have been segregated
pursuant to Article XIII hereof shall not share in the earnings and
appreciation of the Trust Fund.
Second: The value of each Account which is to share in the earnings and
appreciation of the Trust Fund shall be determined as of the most recent
prior Valuation Date, excluding the value of any policies.
Third: The value of each Account which is to share in the earnings and
appreciation of the Trust Fund shall be adjusted for:
(a) the amount of premiums paid, and dividends received on account of any
policies maintained on behalf of the Participant; and
(b) any withdrawals or distributions made from or additions made to the
Account since the most recent previous Valuation Date.
Fourth: The adjusted values of all Accounts which are to share in the
earnings and appreciation of the Trust Fund shall be aggregated.
Fifth: The fair market value of the Trust Fund shall be computed as of the
applicable Valuation Date. For this purpose, the cash value of any
policies, separate investment funds, and segregated accounts shall not be
considered.
Sixth: The earnings and appreciation of the Trust Fund shall be determined
first by subtracting the value of all items that do not constitute earnings
of the Trust Fund (such as advance contributions, withdrawals and
transfers) from the fair market value as computed above. Then the
difference from the adjusted fair market value of the Trust Fund assets and
the aggregate value of the Participant Accounts as determined in the fourth
paragraph of this Section 7.2 shall be determined. Said amount shall
constitute the earnings and appreciation of the Trust Fund. For this
purpose the Plan Administrator may ratably allocate earnings to accounts
which contain funds deposited or withdrawn since the last Valuation Date.
Seventh: The earnings and appreciation as determined above shall be
credited (or debited) to the Accounts which are to share in the earnings
and appreciation of the Trust Fund in the ratio that each Account or
portion thereof bears to the aggregate value of such Accounts as determined
in the fourth paragraph of this Section 7.2.
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Eighth: The cash value of any Policies held by the Trust Fund and the value
of any segregated accounts or separate investment funds shall be
reallocated to those Participants' Accounts.
7.3 Crediting of Investment Results - Segregated Accounts/Separate Investment
Funds
To the extent a segregated account or Separate Investment Fund (including a
self-directed account) has been separately invested by the Trustees, all
accretions and earnings attributable to said Account since the most recent
prior Valuation Date shall be credited (or debited) to said Account less
all identifiable separate expenses incurred in the operation of said
Account or fund. In the event two or more Participants' Accounts are
jointly invested by the Trustees in a segregated Account or Separate
Investment Fund, the earnings and appreciation shall be allocated between
said Accounts in a manner consistent with allocation of the earnings of the
entire Trust Fund as set forth in this Article VII.
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ARTICLE VIII - BENEFITS PAYABLE UPON RETIREMENT
8.1 Normal and Late Retirement Benefit
A Participant who retires on or after his Normal Retirement Date shall be
entitled to receive one hundred percent (100%) of his Account as of the
Valuation Date coincident with or immediately preceding payment.
8.2 Early Retirement Benefit
In the event an Early Retirement Date has been selected in Section II.C.2
of the Adoption Agreement, a Participant who retires on his Early
Retirement Date shall be entitled to receive one hundred percent (100%) of
his Account as of the Valuation Date coincident with or immediately
preceding payment.
8.3 Disability Benefit
A Participant who has suffered a Total Disability shall be entitled to
receive one hundred percent (100%) of his Account as of the last day of the
month coincident with or immediately preceding payment.
8.4 Determination of Total Disability
The Plan Administrator shall have the sole authority to determine a
Participant's eligibility for a Total Disability and, in its discretion,
may require submission of appropriate medical evidence by the Participant
as may be necessary to make said determination.
8.5 Eligibility for Post Normal Retirement Age Benefit
A Participant who remains in the employ of a Participating Employer after
reaching his Normal Retirement Date shall continue to receive an allocation
of Employer Contributions to his Account, provided he continues to satisfy
the requirements thereof as applicable to all other Participants.
8.6 Employer's Consent
It is the intention of each Participating Employer to require its Employees
to retire at the earliest age permitted under applicable state and federal
age discrimination laws unless consent of the Board of Directors of the
Participating Employer is granted in writing. Nothing contained in this
Plan shall be construed as granting an Employee the right to remain in the
employ of any Participating Employer beyond such time as required by
applicable law.
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ARTICLE IX - BENEFITS PAYABLE UPON DEATH
9.1 Pre-Retirement Death Benefit
Upon the death of a Participant, his Spouse or his beneficiary shall be
entitled to receive one hundred percent (100%) of his Account as of the
Valuation Date immediately preceding payment, including any of the proceeds
of any policies which are received by the Trustee on account of the death
of said Participant, unless the Participant has previously made an election
to receive benefits as a life annuity or any portion of the Participant's
Account is attributable to transfer contributions within the meaning of
Section 401(a)(11)(B)(ii)(II) of the Code, in which case, the provisions of
Sections 9.5 and 9.6 shall apply, in which case, the remaining fifty
percent (50%) of his Account shall be paid to his Beneficiary.
9.2 Post-Retirement Death Benefit
Upon the death of a former Participant who has retired under the terms of
the Plan there shall be no death benefit payable to his Beneficiary except
for the balance of payments yet to be made in accordance with a previously
selected method of payment by the Participant prior to his death. In the
event the Participant has not selected a method of distribution, the
benefit payable to his Beneficiary shall be determined as if the benefit
were a pre-retirement death benefit as provided in Section 9.1 hereof.
9.3 Death Benefits of Terminated Vested or Terminated Participants
There shall be no death benefit payable on account of the death of a
terminated Participant who has no vested interests in his Account. The Plan
Administrator, however, shall cause a Participant's termination benefit
(determined in accordance with Article X hereof) to be payable to his
Beneficiary as soon as practicable after his death.
9.4 Beneficiary Designations
Subject to the provisions hereof, each Participant shall have the right to
designate one or more direct and/or contingent Beneficiaries. Said
designation shall not be effective unless it is made on a form provided by
the Plan Administrator, duly executed by the Participant and received by
the Plan Administrator. A Participant may change his Beneficiary from time
to time by executing an amended beneficiary designation form.
9.5 Automatic Spousal Designation
Unless the Plan provides for acceptance of transfer contributions within
the meaning of Section 401(a)(11)(B)(iii)(III) of the Code or permits
payment of benefits as a life annuity (which shall be signified by an
affirmative election pursuant to either Section III.F.3., III.F.4. or
III.F.5. of the Adoption Agreement) and the Participant does not elect
payment of his benefits in the form of a life annuity, the Plan shall pay
the Participant's entire Account upon his death to his surviving spouse
regardless of any contrary designation of Beneficiaries made by the
Participant, provided, however, that the Participant may designate another
Beneficiary if such designation complies with the requirements of Section
417(a)(2)(A) of the Code and Article XII, Sections 12.5 and 12.6; hereof.
9.6 Qualified Pre-Retirement Survivor Annuity
In the event the Plan provides for acceptance of certain transferred
contributions (within the meaning of Section 401(a) (ll)(B)(iii)(III) of
the Code) or permits payment of benefits as a life annuity (which shall be
signified by an affirmative election pursuant to either Section III.F.3.,
III.F.4. or III.F.5. of the Adoption Agreement) death benefits which become
payable shall be paid as follows: In the case of a transfer contribution,
the funds so transferred, including any appreciation, depreciation
interest,
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accretions or declarations or in the case of election of a life annuity
payment, the Participant's entire Account, shall be paid the Participant's
surviving spouse in the form of a Qualified Pre-Retirement Survivor's
Annuity as more particularly set forth in Section 12.5 hereof, regardless
of any contrary designation of Beneficiaries made by the Participant,
provided, however, that the Participant may designate a Beneficiary other
than his spouse or another form of payment if such designation complies
with the requirements of Section 417(a)(2)(A) of the Code and Article XII
Section 12.5 hereof.
9.7 Failure of Beneficiary Designation
In the event that a Participant fails to deliver a properly executed
beneficiary designation form to the Plan Administrator or in the event that
all the designated Beneficiaries predecease the Participant, the Plan
Administrator shall direct the Board of Trustees to pay any benefit due in
accordance with this Article according to the following priorities:
(a) Surviving spouse;
(b) Lineal descendants, per stirpes;
(c) Surviving parents;
(d) Participant's estate.
Each priority class shall share equally among other members of the class
but to the exclusion of the members of the subsequent classes.
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ARTICLE X - BENEFITS PAYABLE UPON TERMINATION
10.1 Employer Contributions
A Participant who voluntarily or involuntarily terminates his employment
with all Affiliated Employers for any reason other than his Normal or Early
Retirement, or by reason of death or disability in accordance with the
terms of the Plan, shall be entitled to receive the respective percentages
of his Employer Contribution Account (including Matching Contributions) as
of the Valuation Date coincident with or immediately preceding the date
upon which said benefits become payable, (further adjusted for
contributions and withdrawals through the date of payment) in accordance
with the respective schedules selected in Section III.E. of the Adoption
Agreement.
10.2 Determination of Years of Service for Vesting Purposes
For vesting purposes, the term Years of Service shall include all periods
of employment with an Affiliated Employer except for the periods specified
in Section III.E.3. of the Adoption Agreement but shall include such
predecessor service specified in Section II.B.6. of the Adoption Agreement.
10.3 Forfeiture of Non-Vested Benefits
After a Participant terminates service and receives a distribution of his
vested Account Balance, he shall forfeit the non-vested portion of his
Account Balance. Where a Participant who is zero percent vested in his
Account balances terminates service, a distribution of his vested Account
balance will be deemed and he shall forfeit the non-vested portions of his
Account balance. Said forfeited amount shall be reallocated in the manner
set forth in Article IV hereof. Notwithstanding the foregoing, a nonvested
Participant who incurs less than five (5) consecutive one-year Breaks-in-
Service and who subsequently returns to the employ of an Affiliated
Employer shall be recredited with any amount forfeited in accordance with
Article XII, Section 12.7.
10.4 Accelerated Vesting for Top Heavy Plans
In the event a Plan is a Top Heavy Plan during a Plan Year, a Participant's
non-forfeitable interest shall be no less favorable than the Top Heavy
Vesting Schedule provided in Section III.E.2. of the Adoption Agreement.
10.5 Employee Contributions and Salary Reduction Contributions
A Participant shall have a one hundred percent (100%) vested interest, at
all times, in his Participant Contribution Account and Salary Reduction
Account. This Section 10.5 shall not be construed as permitting or
requiring employee contributions. No forfeiture will be deemed to occur
solely as a result of an employee's withdrawal of employee contributions.
10.6 Statutory Vesting Requirement
Notwithstanding any other provision contained in this Article X, a
Participant shall be entitled to a one hundred percent (100%) interest in
his Employer Contribution Account upon the attainment of his Normal
Retirement Age.
10.7 Amendment of Vesting Schedule
(a) Except as may be specifically permitted under law, no amendment of the
vesting schedule shall cause a Participant to be deprived of any
current portion of his Account.
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(b) If the vesting schedule of this Plan is directly or indirectly amended
by any subsequent amendment, the Plan Administrator may give each
Participant who has completed five (5) Years of Service (or three (3)
Years of Service for Participants who have completed one (1) or more
Hours of Service in a Plan Year beginning after December 31, 1988) an
opportunity to have his vested percentage determined without regard to
said amendment. Said election shall be in writing and shall be
irrevocable. The period during which the election may be made shall
commence with the date the amendment is adopted or deemed to be made
and shall end on the latest of:
(i) 60 days after the amendment is adopted;
(ii) 60 days after the amendment becomes effective; or
(iii) 60 days after the Participant is issued written notice of the
amendment by the Employer or Plan Administrator.
(c) In the event that the Plan Administrator does not provide an election
as outlined in this Section 10.7(b), it shall be assumed that each
Participant who would have been entitled to make such an election
shall be deemed to have elected to receive benefits determined in
accordance with the vesting schedule which produces the largest non-
forfeitable interest on behalf of the Participant at the time it is
actually applied.
(d) The change from a top heavy to a non-top heavy vesting schedule shall
be considered an amendment within the meaning of this Section 10.7.
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ARTICLE XI - TOP HEAVY PROVISIONS
11.1 Generally
Notwithstanding anything contained in the Adoption Agreement or herein to
the contrary, if the Plan is a Top Heavy Plan as determined pursuant to
Section 416 of the Code for any Plan Year beginning after December 31,
1983, the provisions of Section 11.4 hereof shall automatically become
effective and shall supersede any contrary provision of the Plan.
11.2 Determination of Top Heavy Status
For purposes of this Article XI:
(a) The Plan is a Top Heavy Plan if, as of the Determination Date, the
aggregate of the Accounts and individual calculated present values of
Accrued Benefits of all Key Employees under the Plan and any other
plans in the Aggregation Group exceeds sixty percent (60%) of the
aggregate of the Accounts and individually calculated present values
of Accrued Benefits of all Employees under the Plan and any other
plans in the Aggregation Group, as determined in accordance with the
provisions of Section 416(g) of the Code.
(b) The Plan is a Super Top Heavy Plan if, as of the Determination Date,
the Plan would meet the test specified in Section 11.2, Subsection (a)
above for being a Top Heavy Plan if ninety percent (90%) were
substituted for sixty percent (60%) in each place it appears.
(c) For purposes of the calculations in (a) and (b) above, the following
account balances and accrued benefits must be taken into account:
(i) If an Affiliated Employer maintains one or more defined
contribution plans (including any Simplified Employee Pension
Plan) and the Affiliated Employer has not maintained any
defined benefit plan which during the 5-year period ending on
the determination date(s) has or has had accrued benefits, the
account balances of all Key Employees or for all Employees as
of the Determination Date(s) (including any part of any account
balance distributed in the 5-year period ending on the
determination date(s)), both computed in accordance with
Section 416 of the Code and the Regulations thereunder, must be
respectively increased to reflect any contribution not actually
made as of the Determination Date, but which is required to be
taken into account on that date under Section 416 of the Code
and the Regulations thereunder.
(ii) If the Affiliated Employer maintains one or more defined
contribution plans (including any Simplified Employee Pension
Plan) and the Affiliated Employer maintains or has maintained
one or more defined benefit plans which during the 5-year
period ending on the Determination Date(s) has or has had any
accrued benefits, the sum of account balances under the
aggregated defined contribution plan or plans for all Key
Employees, determined in accordance with (i) above, and the
present value of accrued benefits under the aggregated defined
benefit plan or plans for all Key Employees or for all
Employees as of the Determination Date(s), all determined in
accordance with Section 416 of the Code and the Regulations
thereunder must be respectively increased for any distribution
of an accrued benefit made in the five-year period ending on
the determination date.
(iii) For purposes of (i) and (ii) above the value of account
balances and the present value of accrued benefits will be
determined as of the most recent valuation date that falls
within or ends with the 12-month period ending on the
determination date, except as provided in Section 416 of the
Code and the Regulations thereunder for the first and
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second Plan Years of a defined benefit plan. The account
balances and accrued benefits of a participant (1) who is not a
Key Employee but who was a Key Employee in a prior year, or (2)
who has not been credited with at least one hour of service
with any Affiliated Employer maintaining the Plan at any time
during the 5-year period ending on the Determination Date will
be disregarded. The calculation under (a) and (b), and the
extent to which distributions, rollovers, and transfers are
taken into account will be made in accordance with Section 416
of the Code and the Regulations thereunder. Deductible Employee
Contributions will not be taken into account for purposes of
the calculations in (a) and (b) above. When aggregating plans
the value of account balances and accrued benefits will be
calculated with reference to the Determination Dates that fall
within the same calendar year. The accrued benefit of a
participant other than a Key Employee shall be determined under
the uniform accrual method for all plans maintained by the
Affiliated Employer, or if no such method exists, as if such
benefit accrued not more rapidly than the slowest accrual rate
permitted under the fractional rule of Section 411(b)(1)(C) of
the Code.
11.3 Top Heavy Rules and Definitions
(a) The determination of whether the Plan is a Top Heavy Plan shall be
made after aggregating all other plans of all Affiliated Employers
which may be aggregated at the discretion of the Plan Administrator
pursuant to Section 416(g)(2)(A)(ii) of the Code if such permissive
Aggregation Group thereby eliminates the top heavy status of any
plan within such permissive Aggregation Group.
(b) For purposes of determining whether the Plan is a Top Heavy Plan for a
particular Plan Year, the Determination Date is the last day of the
preceding Plan Year (or, in the case of the first Plan Year of a Plan,
the last day of the first Plan Year).
(c) For purposes of determining whether the Plan is a Top Heavy Plan, Key
Employee shall mean any Employee or Former Employee (including a
Beneficiary of such Employee) who at any time during the Plan Year
containing the Determination Date or any of the four (4) preceding
Plan Years is:
(i) An officer of the Employer or any Affiliated Employer with 415
Compensation in excess of one-half (1/2) times the dollar limit
on Annual Additions to a qualified defined benefit plan as
announced by the Secretary of the Treasury pursuant to Section
415(b)(1)(A) of the Code. In no event shall more than fifty
(50) Employees or, if less, the greater of three (3) or ten
percent (10%) of all Employees be treated as Key Employees
under this Subsection;
(ii) One of the ten (10) Employees with 415 Compensation in excess
of the dollar limit on Annual Additions to a qualified defined
contribution plan as announced by the Secretary of the Treasury
pursuant to Section 415(c)(1)(A) and owning the largest
interest of the Employer or any Affiliated Employer, provided,
however, that if two (2) Employees have the same interest in
the Employer, the Employee having the greater 415 Compensation
from the Employer shall be treated as having a larger interest;
(iii) An Employee owning more than five percent (5%) of the
outstanding stock of the Employer or any Affiliated Employer or
stock possessing more than five percent (5%) of the total
combined voting power of all stock of the Employer or any
Affiliated Employer; or
(iv) A person with 415 Compensation from the Employer or any
Affiliated Employer of more than one hundred fifty thousand
dollars ($150,000) and owning one percent
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(1%) or more of the outstanding stock of the Employer or any
Affiliated Employer or stock possessing more than one percent
(1%) of the total combined voting power of all stock of the
Employer or any Affiliated Employer.
(v) For purposes of (i) and (iv) 415 Compensation shall include
amounts contributed by the Affiliated Employer pursuant to a
salary reduction agreement which are excludable from the
Employee's gross income under Section 125, Section 402(a)(8),
Section 402(h) or Section 403(b) of the Code.
(d) For purposes of determining the percentage of ownership of the
Employer and any Affiliated Employer, the constructive ownership rules
of Section 416(i)(1)(B) and (C) and Section 318 of the Code shall be
applicable and the rules of Sections 414(b), (c) and (m) shall not be
applicable.
(e) For purposes of determining whether the Plan is a Top Heavy Plan, Non-
Key Employee shall mean any Employee (including a Beneficiary of such
Employee) who is not a Key Employee.
(f) For purposes of determining whether the Plan is a Top Heavy Plan, the
accrued benefit and the account of any individual who has not received
any compensation from any Employer maintaining the Plan (other than
benefits under the Plan) during the five (5) year period ending on the
Determination Date shall not be taken into account.
(g) Present values of accrued benefits of any defined benefit plan
maintained by any Affiliated Employer shall be calculated in
accordance with the election specified in Section III.C.7. of the
Adoption Agreement.
11.4 Top Heavy Requirements
(a) Minimum Vesting Requirements
A Participant will have a fully-vested interest in Employer
Contributions according to the top heavy vesting schedule set forth in
Section III.E.2. of the Adoption Agreement.
(b) Minimum Contribution Requirements
The minimum Employer Contribution which shall be made on behalf of any
Participant who is a Non-Key Employee and shall be made on behalf of
all Participants if so elected in Section III.C.12. of the Adoption
Agreement for any Plan Year in which the Plan is a Top Heavy Plan
shall not be less than three percent (3%) of such Participant's 415
Compensation, regardless of whether the Participant was credited with
one thousand (1000) Hours of Service. The minimum contribution
requirements set forth hereinabove shall be reduced in the following
circumstances:
(i) The percentage minimum contribution required hereunder shall in
no event exceed the percentage contribution made for the Key
Employee for whom such percentage is the highest for the Plan
Year after taking into account contributions or benefits under
other qualified plans in this Plan's Aggregation Group as
provided pursuant to Section 416(c)(2)(B)(ii) of the Code; and
(ii) In the event a Non-Key Employee also participates in a defined
benefit plan maintained by an Affiliated Employer, a minimum
contribution of five percent (5%) of his 415 Compensation shall
be contributed on his behalf unless:
(i) this Plan is ever frozen in which case such defined benefit
plan shall provide required minimum accruals under Code
Section 416; or
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(ii) if the Plan Administrator makes an affirmative election to
provide an alternate method in which case either:
(A) In accordance with Section III.C.8 of the Adoption
Agreement contributions hereunder shall be comparable
(within the meaning of Rev. Rul. 81-202 or any
subsequent pronouncement which modifies or supersedes
it) to the required minimum accruals in the defined
benefit plan; or
(B) the minimum benefit provided under such defined benefit
plan shall be offset by contributions hereunder, in
accordance with actuarial assumptions specified in such
defined benefit plan.
(iii) the Participating Employer has provided in the Adoption
Agreement that the minimum allocation or benefit will be
met in the other plan or plans.
(c) Maximum Compensation Limitation
The Compensation of each Participant under the Plan for such Plan Year
shall not exceed the first two hundred thousand dollars ($200,000) of
such Participant's Compensation, provided, however, that such dollar
limitation shall be adjusted to take into account any adjustments made
by the Secretary of the Treasury pursuant to Section 415(d) of the
Code. The rules of Section 414(q)(6) of the Code shall apply except
for purposes of determining Compensation treated as Compensation of a
Participant, only Compensation paid to the Spouse and lineal
descendants of the participants (who have not attained age 19 before
the close of the year) shall be considered. This limitation - does not
apply for purposes of applying Section 415(e) in Section 6.7 of the
Plan under One Point Four/One Point Two Five Limitations.
(d) Adjustments to Maximum Benefit Limitations
The maximum contribution allocatable to the Account of a Participant
shall be adjusted in accordance with Article VI, Section 6.9 hereof.
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ARTICLE XII - FORM AND MANNER OF BENEFIT DISTRIBUTIONS
12.1 Standard Form of Distribution
Where the Plan does not provide benefits in the form of a life annuity, the
Participant does not elect payment in the form of a life annuity and no
portion of the Participant's Account Balance is attributable to transfer
contributions within the meaning of Section 401(a)(11)(B)(iii)(II) of the
Code, the standard form of distribution shall be a single lump sum payment
of a Participant's entire vested interest in the Trust Fund. If the
Participant dies before distribution, the Participant's Account Balance
will be paid to the Participant's Spouse but if there is no Spouse or the
Spouse cannot be located or the Spouse has consented in a manner consistent
with Section 12.5 or 12.6 after receipt of Notice under Section 12.5(d) or
Section 12.6(d), then to the Participant's designated Beneficiary. In all
other instances, the standard form of distribution shall be in the form of
a Qualified Joint and Survivor Annuity or a Qualified Pre-retirement
Survivor Annuity.
12.2 Optional Forms of Benefit Payments
(a) Generally
Subject to the requirements of Section 12.5 and Section 12.6 hereof, a
Participant or Beneficiary shall be permitted to receive benefits in
an alternate form as selected in Section III.F. of the Adoption
Agreement, subject to any regulations set forth by the Plan
Administrator.
(b) Options Permitted
Subject to the requirements of Section 12.5 and 12.6, the following
options shall be permitted if so designated in the Adoption Agreement:
(i) periodic payments of substantially equal amounts for a period
which does not exceed the Participant's and/or the designated
Beneficiary's life expectancy;
(ii) a lump sum payment which may include policies in lieu of cash;
(iii) a Qualified Joint and Survivor Annuity;
(iv) a monthly annuity for the Participant's life;
(v) a monthly annuity for the Participant's life, with a fixed
number of guaranteed payments;
(vi) a monthly annuity for the Participant's life with a
survivorship pension to the Participant's Beneficiary;
(vii) a combination of currently available forms of payment.
(c) Options Not Permitted
The following payment options shall not be permitted by the Plan
Administrator:
(i) an option which permits a Participant or Beneficiary to receive
only interest earned on the value of his Account ("interest
only" option);
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(ii) for calendar years beginning before January 1, 1989, where the
Participant's Spouse is not designated as beneficiary or
contingent annuitant, any option under which more than fifty
percent (50%) of the actuarial value (determined as of the date
benefits commence) is paid to a person other than the
Participant.
12.3 Statutory Restriction on Lump Sum Payments
Where an Account is immediately distributable, no lump sum payment in
excess of (or which at the time of any prior distribution exceeded) three
thousand five hundred dollars ($3,500.00), including Participant
contributions, shall be made to a Participant without his consent, and if
the Plan provides for payment of annuities or the Account includes transfer
contributions under Section 401(a)(ii)(B)(iii)(II), the consent of his
Spouse. Consent of the Participant and Spouse shall be made in accordance
with Section 12.6. In addition, the Plan Administrator must notify the
Participant and Spouse of the right to defer payment until the Account
Balance is no longer immediately distributable. Notwithstanding the above,
consent shall not be required to the extent a distribution is necessary to
satisfy Section 401(a)(9) or Section 415 of the Code or is distributed to
the Participant or transferred to another deferred contribution plan other
than a Section 4975(e) (employee stock ownership plan) of an Affiliated
Employer where the Plan is terminated and does not offer an annuity option
(purchased from a commercial provider).
An Account Balance is immediately distributable if any part of the Account
Balance could be distributed before the participant attains or would have
attained the later of Normal Retirement Age or age 62. The requirements of
consent to distributions made before the first day of the first Plan Year
beginning after December 31, 1988, do not apply to the portion of the
Participants vested Account balance attributable to accumulated deductible
Employee Contributions.
12.4 Commencement of Benefit Payments
(a) Upon the Participant's Death
(i) Generally- Death Benefits - Benefit payments pursuant to Article
IX hereof shall commence as soon as practicable after the
Participant's death but may be deferred upon the request of a
beneficiary.
(ii) Generally - Retirement and Termination Benefits - The Plan
Administrator, may accelerate the payment of any other form of
retirement or termination benefit in the event of a Participant's
death.
(iii) Minimum Required Distributions
(A) Death before Commencement of Benefits - In the event a
Participant dies on or after the first day of the Plan Year
beginning after December 31, 1984, but before commencement of
benefits hereunder, his entire beneficial interest in the Plan
must be distributed by the December 31st coincident or next
following the fifth (5th) anniversary of the date of his death,
except:
(1) Spousal Beneficiary - if the Participant's designated
Beneficiary is the Participant's surviving spouse, any
remaining portion of such interest shall be distributed to
the surviving spouse;
(a) beginning no later than the later of 1) December 31
coincident with or next following the date on which the
Participant would have attained age seventy and one-
half (70-1/2) or 2) December 31 of the
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calendar year immediately following the calendar year
in which the Employee died; and
(b) payable over the life of such surviving spouse for a
period not extending beyond the life expectancy of such
surviving spouse. If such surviving spouse dies prior
to receiving a distribution pursuant to this Subsection
12.4(a)(iii)(A) such surviving spouse shall be treated
as if he or she were the Participant for purposes of
distributing the Participant's remaining interest under
the Plan.
(2) Non-Spousal Beneficiary - if the Participant's designated
Beneficiary is not the Participant's surviving spouse, any
remaining portion of such interest shall be distributed:
(a) beginning no later than the December 31 coincident with or
next following the one (I) year anniversary of the
Participant's death; and
(b) payable over the life of such designated Beneficiary or over
a period not extending beyond the life expectancy of such
Beneficiary.
(B) Death after Commencement of Benefits - In the event a Participant dies
after the commencement of benefits has begun and before his entire
interest has been distributed to him, the remaining portion of such
interest shall be distributed at least as rapidly as under the method
of distribution being used as of the date of death.
(b) Retirement, Disability and Termination Benefits
(i) Earliest Commencement Date - Except in the case of a Hardship
Withdrawal as may be provided in this Article XII, payment of
retirement, disability or termination benefits shall not commence
prior to a Participant's termination of employment with all Affiliated
Employers, or retirement.
(ii) Latest Commencement Date - Subject to the provisions of Subsections
(b)(iv) and (b)(v) hereof, payment of benefits may not commence later
than the sixtieth (60th) day after the latest of the close of the Plan
Year following:
(A) The date the Participant reaches his Normal Retirement Date or
attains Age sixty-five (65), whichever shall first occur; or
(B) The fifth (5th) anniversary of the date in which the Participant
commenced participation in the Plan; or
(C) The date the Participant terminates employment with all
Affiliated Employers; or the Participant and/or his Spouse fail
to consent to a distribution of a benefit requiring such consent
unless the Participant elects otherwise. Notwithstanding the
foregoing, the failure of a Participant and Spouse to consent to
a distribution while a benefit is immediately distributable,
within the meaning of Section 12.3 of the Plan, shall be deemed
to be an election to defer commencement of payment of any benefit
sufficient to satisfy this Section.
(iii) Early Retirement Commencement Date - Notwithstanding any other
provision in this Section 12.4
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to the contrary, a Participant who has met the service
requirement in order to entitle him to satisfy the provisions for
an Early Retirement Benefit, if any has been selected pursuant to
Section II.C.2. of the Adoption Agreement, shall be entitled to
commencement of his benefits not later than the date upon which
he satisfies the age requirement for such Early Retirement (as
provided in Section II.C.2 of the Adoption Agreement) despite the
fact that he may have terminated his employment prior to
attainment of such age requirement.
(iv) Minimum Required Distributions - Except as provided in Subsections (C)
and (D) hereof, the entire interest of a participant who
commences participation after the Plan Year beginning December
31, 1984 shall be distributed to him either:
(A) by a time not later than the Required Beginning Date; or
(B) commencing not later than the Required Beginning Date and
continuing over a period not extending beyond the life
expectancy of such Participant or the joint life
expectancies of such Participant and his designated
Beneficiary as of the date his benefits commence, consisting
of an amount not less than the quotient obtained by dividing
the value of the Participant's Account by the applicable
life expectancy; provided that the second payment shall be
made within the same calendar year as payments commence, and
succeeding payments be made before December 31 of each
succeeding year.
(C) For calendar years beginning after December 31, 1988,
similar distributions shall not be less than the quotient
obtained by dividing the value of the Participant's Account
by the lesser of:
(1) the Participants life expectancy; or
(2) the life expectancy of the Participant and his spouse,
where such life expectancies are determined by use of
the expected return multiples set forth in Tables V and
VI of Treasury Regulation 1.72-9 which shall be
recalculated annually.
(D) Notwithstanding the above, any Participant (including a five
percent (5%) owner (within the meaning of Section 416 (i) of
the Code) who made a written deferral election under Section
242(b) of the Tax Equity and Fiscal Responsibility Act of
1982 shall be entitled to receive his distribution in
accordance with the method of distribution specified in such
election provided that the method of distribution complies
with the Code Section 401(a)(9) in effect prior to amendment
by the Deficit Reduction Act of 1984.
(E) The additional requirements of Section 401(a)(9) of the Code
and the Regulations thereunder including the minimum
distribution incidental benefit requirement of Section
401(a)(9) - 2 of the Proposed Treasury Regulations are
incorporated into the Plan by reference and will govern
distribution of benefits hereunder. The provisions
reflecting Section 401(a)(9) of the Code override any
distribution options in the Plan inconsistent with Section
401 (a)(9).
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(v) Plan Administrator's Discretion - Subject to the requirements set forth
in this Section 12.4, the time which benefit payments are to commence
shall be determined by the Plan Administrator, to be applied on a
uniform basis. The Plan Administrator shall be entitled to accelerate
payments if it determines that such acceleration is necessary to
comply with Section 401(a)(9) of the Code, the Regulations thereunder
and Section 12.6 hereof. The Plan Administrator, at its discretion,
may issue administrative regulations from time to time to govern the
application of this Section 12.4.
12.5 Qualified Pre-Retirement Survivor Annuity
(a) Notwithstanding the provisions of Sections 12.1 and 12.2 hereof, in
the event a Participant (who has elected to receive benefits in the
form of a life annuity) dies before the Annuity Starting Date, his
benefit shall be paid in the form of a Qualified Pre-retirement
Survivor Annuity unless he elects out of that form of benefit and his
Spouse has consented thereto;
(b) The entire vested portion of a Participant's Account (whether vested
before or at death) attributable to Employer and Employee
contributions, rollover contributions, proceeds of life insurance
contracts or transfer contributions within the meaning of Code Section
401(a) (Il)(B)(iii)(III) shall be paid as specified in Subsection (a)
above;
(c) The portion of a Participant's account otherwise subject to (a) and
(b) above shall be reduced by any amounts used to repay the
Participant's loans to which spousal consent was obtained;
(d) A waiver of the Qualified Pre-retirement Survivor Annuity form of
benefit (in favor of an alternate form or beneficiary) must be made in
writing on forms provided by the Plan Administrator after the
Participant receives notice under Section 12.5(f), must be signed by
the Participant and his Spouse and must be witnessed by a notary
public or plan representative. The waiver must designate the specific
beneficiary or class of beneficiaries and the form of benefit payment
which may not be changed without spousal consent unless the Spouse
expressly permits later changes without further consent. The Spouse's
consent must acknowledge the effect of the election and shall be valid
only with respect to such Spouse. Where it is established that there
is no Spouse or that the Spouse cannot be located, a waiver of the
benefit will be deemed a revocation of a prior waiver and may be made
by a Participant without consent of the Spouse at any time prior to
the commencement of benefits. The number of revocations is unlimited.
(e) The election period with regard to elections and spousal consent shall
commence on the first day of the Plan Year in which the Participant
attains age thirty-five (35) and ends on the date of the Participant's
death. If a Participant separates from the service of an Employer
prior to the first day of the Plan Year in which he attains age
thirty-five (35), with respect to benefits accrued prior to
separation, the election period shall begin on the date of separation
and the notice required under Section 12.5(f) below shall begin not
earlier than one year before separation nor later than one year after
separation. Pre-age 35 waiver: A Participant who will not yet attain
age 35 as of the end of any current Plan Year may make a special
qualified election to waive the Qualified Pre-retirement Survivor
Annuity for the period beginning on the date of such election and
ending on the first day of the Plan Year in which the Participant will
attain age 35. Such election shall not be valid unless the Participant
receives a written explanation of the Qualified Pre-retirement
Survivor Annuity in such terms as are comparable to the explanation
required under Section 12.5(f). Qualified Pre-retirement Survivor
Annuity coverage will be automatically reinstated as of the first day
of the Plan Year in which the Participant attains age 35. Any new
waiver on or after such date shall be subject to the full requirements
of this Article.
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(f) The Plan Administrator shall provide each Participant with the
following written information by mail or personal delivery before the
latest of: the period beginning with the first day of the Plan Year in
which the Participant attains age 32 and ending with the close of the
Plan Year in which the Participant attains age thirty-five (35); a
reasonable period after a Participant enters the Plan (but not earlier
than one year before nor later than one year after the Participant
enters the Plan); or a reasonable time after the survivor benefit
provisions of this Section become applicable to the Participant (but
not earlier than one year before nor later than one year after the
provisions of this Section become applicable). Notwithstanding the
above, notice must be provided within a reasonable period ending after
separation from service in the case of a Participant who separates
from service before attaining age 35. Such notice shall contain:
(i) a non-technical description of a Qualified Pre-retirement
Survivor Annuity;
(ii) the Participant's right to make and the effect of an election
to waive the Qualified Pre-retirement Survivor Annuity form of
benefit;
(iii) the rights of a Participant's Spouse; and
(iv) the right to make, and the effect of, a revocation of a
previous election to waive the Qualified Pre-retirement
Survivor Annuity.
12.6 Qualified Joint and Survivor Annuities
(a) Notwithstanding the provisions of Sections 12.1 and 12.2 hereof, in
the event a Participant elects payment of benefits in the form of a
life annuity, said benefit shall be paid as a Qualified Joint and
Survivor Annuity, unless an optional form is elected within the ninety
(90) day period ending on the Annuity Starting Date. The Participant
may elect to have such annuity distributed upon attainment of the
earliest retirement age under the Plan.
(b) Any portion of Participant's account attributable to transfer
contributions within the meaning of Section 401(a)(11)(B)(iii)(III)
shall be paid as specified in Subsection (a) above.
(c) A waiver of a Qualified Joint and Survivor Annuity (in favor of an
alternate form or beneficiary) must be made in writing on forms
provided by the Plan Administrator after the Participant receives
notice under Section 12.6(d), must be signed by the Participant and
his Spouse and must be witnessed by a notary public or plan
representative. The waiver must designate the specific beneficiary or
class of beneficiaries and the form of benefit payment which may not
be changed without spousal consent unless the Spouse expressly permits
later changes without further consent. The Spouse's consent must
acknowledge the effect of the election and shall be valid only with
respect to such Spouse. Where it is established that there is no
Spouse or that the Spouse cannot be located, a waiver of the benefit
will be deemed a revocation of a prior waiver, such waiver may be made
by a Participant without consent of the Spouse at any time prior to
the commencement of benefits. The number of revocations is unlimited.
(d) The Plan administrator shall provide each Participant with the
following written information by mail or personal delivery no less
than thirty (30) days and no more than the ninety (90) day period
provided in Subsection (a) hereof:
(i) a non-technical description of a Qualified Joint and Survivor
Annuity;
(ii) the Participant's right to make and the effect of an election
to waive the Qualified Joint and Survivor Annuity;
(iii) the rights of a Participant's Spouse; and
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(iv) the right to make, and the effect of, a revocation of a previous
election to waive the Qualified Joint and Survivor Annuity.
(e) If a distribution is one to which sections 401 (a)(11) and 417 of the
Internal Revenue Code do not apply, such distribution may commence
less than 30 days after the notice required under section 1.411(a)-
11(c) of the Income Tax Regulations is given, provided that:
(1) the plan administrator clearly informs that the participant has a
right to a period of at least 30 days after receiving the notice
to consider the decision of whether or not to elect a
distribution (and, if applicable, a particular distribution
option), and
(2) the participant, after receiving the notice, affirmatively elects
a distribution.
12.7 Payments Prior to Breaks-ln-Service
(a) Forfeitures
Immediately as of the last day of each Plan Year -
If the employer elects to provide that after a distribution or deemed
distribution, forfeitures shall be reallocated immediately as of the last
day of each Plan Year pursuant to Section III.I.2. of the Adoption
Agreement and in accordance with Article VI hereof, the following provision
shall apply:
In the event a Participant receives a payment of the entire vested portion
of his Employer Contribution Account, the non-vested portion will be
treated as a forfeiture. For purposes of this Section, if the value of a
Participant's vested Employer Contribution Account is zero, he shall be
deemed to have received a distribution of such vested Employer Contribution
Account.
If the Participant elects to have distributed in accordance with the
requirements of Section 12.3 less than the entire vested portion of his
Employer Contribution Account, the part of the nonvested portion that will
be treated as a forfeiture to be reallocated is the total nonvested portion
multiplied by a fraction, the numerator of which is the amount of the
distribution and the denominator is the total value of the vested Employer
Contribution Account.
As of the Plan Year following a number of years of consecutive one-year Breaks
If the Employer elects to provide that after a distribution or deemed
distribution, forfeitures shall be reallocated as of the last day of each
Plan Year following a number of years of consecutive one-year Breaks-in-
Service pursuant to Section III.I.3. of the Adoption Agreement, the
following provision shall apply:
In the event a Participant receives a payment of all or part of his
Employer Contribution Account at a time when he is less than one hundred
percent (100%) vested in said Employer Contribution Account, the amount in
excess of his vested percentage shall be allocated to a separate account
until the Participant incurs the Breaks-in-Service selected in the Adoption
Agreement at which time said forfeited amount shall be reallocated in
accordance with Article VI hereof.
The separate account will be established for the Participant's interest in
the Plan as of the time of the distribution, and at any relevant time the
Participant's nonforfeitable portion of the separate account will be equal
to an amount ("X") determined by the formula:
X = P(AB + (R x D)) - (R x D)
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For purposes of applying the formula: P is the nonforfeitable percentage at
the relevant time, AB is the Account balance at the relevant time, D is the
amount of the distribution, and R is the ratio of the Account balance at
the relevant time to the Account balance after distribution.
(b) Return to Employment
In the event a Participant who receives a distribution as provided in
Subsection (a) above returns to the employ of an Affiliated Employer prior
to incurring five (5) consecutive one-year Breaks-In-Service, said
Participant shall be entitled to have his Employer Contribution Account
restored to the amount prior to his distribution, less the amount of the
distribution.
(c) Determination of Vested Amount After Prior Distribution
In the event any Participant who has received a distribution at any time
prior to five (5) consecutive one-year Breaks-In-Service shall subsequently
incur five (5) consecutive one-year Breaks-In-Service, the amount
distributed from his Account shall not be less than the difference between:
(i) the product of:
(A) his current vested percentage, and
(B) the sum of the amount of the Participant's Account and the amount
of the prior distribution; and
(ii) the amount of the previous distribution.
12.8 Payments Pursuant to Qualified Domestic Relations Orders
Upon receipt of any court order relating to the benefit payable to a
Participant hereunder, the Plan Administrator shall:
a) notify the Participant and the Alternate Payee(s) of the receipt of
such order and the Plan's procedures for determining the qualified
status of such order; and
b) segregate in a separate account in the Plan or in an escrow account
the amount payable to the Alternate Payee(s) pursuant to such order.
Within eighteen (18) months of receipt of such order, the Plan
Administrator shall determine whether the order is a Qualified
Domestic Relations Order, pursuant to written administrative
procedures adopted in accordance with Sections 414(p)(6) and (7) of
the Code. If such order is a Qualified Domestic Relations Order, the
Plan Administrator shall pay the segregated amount plus interest to
the Alternate Payee(s) entitled thereto in the manner required by such
Qualified Domestic Relations Order.
12.9 Hardship Withdrawal
(a) If Section IV.B.2., IV.B.3. or IV.B.4. of the Adoption Agreement has
been selected by the Employer, the Plan Administrator, in its sole
discretion, may permit a Participant to withdraw a portion of his
Employer Account or Salary Reduction Account for the purpose of
enabling the Participant to meet an unusual hardship or financial
emergency such as, but not limited to:
(1) withdrawals from the Salary Reduction Account portion of the
Employer Account in Plans Years beginning before December 31,
1988, and withdrawals commencing from the Non-Matching Employer
Contribution portion of Employer Account in any Plan Year,
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(i) accident or illness,
(ii) purchase or preservation of a house, and/or
(iii) educational expenses; and
(2) for withdrawals from the Salary Reduction Account for Plans Years
beginning after December 31, 1988, the following are the only
financial needs considered immediate and heavy:
(i) expenses incurred or necessary for medical care, described in
I.R.C. Section 213(d) of the employee, employee's spouse or
dependents,
(ii) payment of tuition and related educational fees for the next 12
months of post-secondary education for the employee, the
employee's spouse, children or dependents,
(iii) the purchase (excluding mortgage payments) of a principal
residence for the employee, or
(iv) the need to prevent the eviction of the employee from, or a
foreclosure on the mortgage of, the employee's principal
residence.
(b) The Plan Administrator shall permit Hardship Withdrawals only after
the Participant has withdrawn his entire Participant Contribution
Account and the maximum permitted amount of his Salary Reduction
Account. To be eligible for a Hardship Withdrawal under Article
12.9(a)(2), the Participant must have an immediate and heavy financial
need and must lack other available resources. Such hardship
distributions are subject to the spousal consent requirements of
Section 401(a)(11) and 417 of the Code and may not exceed the amount
of an immediate and heavy financial need (including amounts necessary
to pay any federal, state or local income taxes or penalties
reasonably anticipated to result from distributions).
(c) Withdrawals shall be limited to the greater of the vested portion or
the non-integrated portion of his Employer Contribution Account.
Withdrawals from the Salary Reduction Account may not include that
portion of the account attributable to earnings and accretions accrued
after December 31, 1988.
(d) A Participant may not make Elective Deferrals or Employee
Contributions to this or any other Plan of the Employer for a period
of twelve months after the receipt of the hardship distribution.
(e) A Participant may not make Elective Deferrals to this or any other
Plan of the Employer for the taxable year of the Employee immediately
following the year of the hardship distribution in excess of $7,000
(as adjusted pursuant to Sections 402(g) of the Code) less the amount
of Elective Deferrals for the taxable year of the hardship
distribution.
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ARTICLE XIII - TRUST PROVISIONS
13.1 Establishment of Trust
(a) Appointment of Trustees
The Trustees shall consist of one (I) or more individuals,
partnerships, corporations or combination thereof as chosen by the
Employer in Section I.B.6. of the Adoption Agreement. The Employer may
change the number of said group at any time. The Trustees shall be
Named Fiduciaries for the purpose of managing the Trust Fund for -
purposes of Section 402(a)(1) of ERISA.
(b) Acceptance of Trust
Each Trustee hereby accepts the Trust created hereunder and agrees to
perform the duties on his part to be performed pursuant to this Plan
and Trust.
(c) Corpus of the Trust Fund
The Trustees shall receive any contributions paid to them in cash or
in other property presently acceptable to them. All contributions so
received together with any earnings, profits, increments, additions
thereto and appreciation thereon, less any disbursements authorized
herein shall constitute and be called the Trust Fund.
(d) Control of Trust Fund
The Trustees shall take control and manage the Trust Fund and shall
hold, invest, and reinvest the same together with the income thereof.
All contributions received by the Trustees in accordance with the
terms of the Plan and the earnings and accretions thereto, without
distinction between income and principal, shall constitute and shall
be held and administered as a single fund and the Trustees shall not
be required to segregate or invest separately any share of any
Participant's account except as otherwise required by the Plan but may
do so in accordance with this Section.
(e) Title to Trust Assets
The Trustees shall have title to the assets of the Trust Fund. The
Employer shall have no right, title, interest or claim to said Trust
Fund except as permitted under the terms of Article IV, Sections 4.4
and 4.5 hereof.
(f) Segregated Accounts, Separate Investment Funds and Annuities
The Trust Fund shall be deemed to also include such segregated
accounts, Separate Investment Funds or annuity contracts or policies
which may be purchased by the Trustees for the purpose of providing
benefits to a Participant, Beneficiary or group thereof,
notwithstanding the fact that such segregated account may not share in
the earnings, profits, increments or appreciation of the balance of
the Trust Fund.
13.2 Rights, Duties and obligations of the Trustees
(a) Manner of Acting
The Trustees, except when there is a single Trustee, shall exercise
any discretion or authority granted hereunder through a majority of
its members in office at the time. Such exercise may be by a vote at a
meeting or in writing without a meeting.
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(b) Non-Disqualification of Interested Parses
A Participant, Beneficiary, or person who is otherwise interested in
the Trust Fund shall not be disqualified from voting or acting upon
any matter relating to this Trust Agreement. The power of the Trustees
or any member thereof to act hereunder shall not be restricted, and no
transaction or decision involving this Trust Fund shall be deemed
invalidated in any way by reason of any personal or beneficial
interest in the Trust Fund that any Trustee may have with respect to
such transaction or decision, including any sale or exchange of trust
property to or with any Trustee in another capacity, including another
corporation, partnership or other business in which they, or any of
them, may have a personal interest as stockholder, officer, director,
partner or otherwise, regardless of any conflict of interest,
provided, however, that nothing herein contained shall permit the
Trustees or any Trustee to engage in any activity which would
constitute a "prohibited transaction" within the meaning of Part 4 of
Title I of ERISA or Section 4975 of the Code.
(c) Standard of Care
The Trustees shall discharge their duties with the care, skill,
prudence and diligence under the circumstances then prevailing that a
prudent man acting in a like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and with
like aims, and shall diversify the investments of the Trust Fund so as
to minimize the risk of large losses unless, under the circumstances,
it is clearly not prudent to do so.
(d) Compensation and Expenses
The Trustees shall not be compensated for their services as such
unless otherwise agreed by said Trustees and the Employer in writing.
Said compensation, if any, may be paid by the Employer and to the
extent not paid by the Employer shall be payable as an expense from
the Trust Fund. All expenses reasonably incurred by the Trustees in
connection with the performance of their duties and in respect of the
assets or operations of the Trust Fund including, but not limited to,
taxes of any nature, fees, salaries, compensation, counsel and
accounting fees may be paid by the Employer. To the extent not paid by
the Employer, said expenses shall be paid from the Trust Fund as
expenses thereof.
(e) Liability of the Board of Trustees
(i) Reliance on other Fiduciaries - The Trustees shall not be
answerable nor incur any liability for any action taken
pursuant to any written direction or request from the Plan
Administrator or the Employer. Evidence of action with
regard to the Plan shall be by resolution of the Board of
Directors certified by the Secretary or Assistant Secretary
of the Employer, or resolution of a majority of the members
of the group constituting the Plan Administrator as the case
may be. The Trustees shall be fully protected in acting upon
any resolution, certificate, or paper believed by it to be
genuine and to be signed or presented by the proper person
or persons and the Trustees shall be under no duty to make
investigation or inquiry as to any statement contained in
any such writing but may accept the same as conclusive
evidence of the truth and accuracy of the statements
contained therein.
(ii) Reliance on Delegates - Either the Employer or the Plan
Administrator may duly authorize a delegate to make
determinations or perform actions, either specifically or
generally, in this regard. Upon the appointment of a
delegate by either the Employer or the Plan Administrator,
the Trustees shall be fully
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protected in assuming that said delegate is duly authorized
in acting, unless otherwise informed by the Employer or Plan
Administrator.
(iii) Liability of Successor - No successor Trustee shall be held
liable or accountable in any manner for the acts of its
predecessor or predecessors.
(iv) Responsibility for Adequacy of Trust Fund - No Trustee shall be
responsible for the adequacy of the Trust Fund to meet and
discharge any payments or liabilities under the Plan or for any
loss, damage or depreciation of the Trust Fund in connection
with its exercise of discretion hereunder, except when due to
its own breach of trust committed in bad faith or intentionally
or with reckless indifference to the interest of Participants
and Beneficiaries or in violation of the fiduciary standards as
set forth in Part 4 of Title I of ERISA or Section 4975 of the
Code.
(f) Indemnification of the Trustees
Each Trustee shall be indemnified by the Employer for all costs,
expenses, including attorneys' fees, claims or liability actually and
necessarily incurred in connection with any claims or litigation by
reason of the Trustees having followed written instructions of the
Employer or the Plan Administrator. No such indemnification shall
apply where litigation is occasioned by the fault of the Trustees, or
is in connection with a violation of ERISA, and any subsequent
statutes of similar purpose. Any such indemnification shall apply only
after full recovery has been made under any insurance contract
protecting the Trustees with respect to each litigation and in no
event exceed the difference between the costs, expenses and liability
determined by such litigation and the amounts payable by such
insurance, had this provision not been in effect.
(g) Resignation or Removal of Trustees
(i) The Trustees and each Trustee shall serve until death,
resignation or removal by the Employer.
(ii) Any Trustee may resign upon written notice to the Employer or
be removed by delivery of a certified copy of a resolution of
the Board of Directors to that effect.
(iii) Said removal or resignation shall be effective sixty (60) days
from the date of delivery of such written notice or resolution
unless a different time is specified by the Employer.
(iv) The Employer may remove any Trustee and fill vacancies however
arising at its pleasure except there shall be at least one
Trustee at all times. Appointment of successor Trustees shall
take effect upon delivery to the Trustees (and the removed
members thereof) of an instrument so appointing the
successor(s) and an instrument of acceptance executed by such
successor(s).
(v) Any successor Trustee shall become vested with all funds,
powers, rights, duties, obligations, privileges and immunities
as the Trustees have hereunder as if it had been originally
appointed.
(vi) In the event there are no remaining Trustees for whatever
reason and the Employer fails to appoint successor Trustees
within thirty (30) days after the effective date of the
resignation or removal or death or incapacity of all of the
Trustees, any court of competent jurisdiction of the state
under whose law the Plan is to be construed may,
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while such failure continues, appoint successor Trustees upon
application therefore by any Participant or Beneficiary
hereunder, or by any removed Trustees.
13.3 Investment of the Trust Fund
(a) Authority of Trustees
The Trustees shall have full authority and responsibility for
investment of the Trust Fund, subject to the limitations set forth
herein.
(b) Investment Powers of the Trustees
The Trustees in investing the Trust Fund shall not be restricted to
securities commonly known as legal investments for trust funds,
regardless of any statutes or rules of law limiting the investments of
trustees or trust funds. The Trustees shall have the same power to
invest funds as any individual of full legal competence has with
regard to his own funds, including the right to deal with the
Employer, provided, however, that nothing herein shall permit any
Trustee to engage in any activity which would constitute a "prohibited
transaction" within the meaning of Part 4 of Title I of ERISA or
Section 4975 of the Code.
Without limiting the generality of the foregoing, the Trustees at such
times, places and prices and under such terms, conditions and
circumstances (including public and private sales and transactions) as
in its discretion they deem advisable may, subject to the restrictions
referred to above, but shall not be required:
(i) To buy, sell, sell short, purchase on margin, exchange, pledge,
encumber, and otherwise acquire, dispose of, trade and deal in
secured and unsecured bonds and notes (whether unmatured, due,
past due, or defaulted), common and preferred, voting and
nonvoting stock (regardless of dividend or earnings record),
warrants, options, puts, calls, straddles, spreads, voting
trust certificates, equipment trust and receivers certificates,
fractional oil and gas and mineral interests, timber rights,
and all other forms of private and governmental securities
(both foreign and domestic) including securities of the
Employer. The Trustees are specifically empowered to invest in
securities of the Employer, or any Affiliated Employer to the
extent of ten (10%) percent of the Trust Fund, unless a
different percentage is specified by resolution of the Board of
Directors, provided, however, that the Trust Fund shall not
hold any employer security which is not a qualifying employer
security as provided in Section 407(a)(5) of ERISA;
(ii) To buy, sell, exchange, mortgage, encumber, hold, manage,
repair, control, lease or license for any term (even though
such term extends beyond the duration of the Plan or Trust
Agreement, or commences in the future) and otherwise acquire,
dispose of, trade and deal in all forms of tangible and
intangible real and personal property, wherever located,
including, without limitation, real estate, including real
property and related personal property leased to the Employer
or any Affiliated Employer, but only to the extent permitted
under Section 407(a) of ERISA, leaseholds, machinery and
equipment, senior and junior mortgages and liens, accounts
receivable, conditional sales contracts, rental purchase
agreements and other forms of agreement evidencing indebtedness
(whether fixed or contingent), patents, copyrights, trademarks,
trade secrets, and other industrial and intellectual property,
bills of exchange, notes, trade acceptances, commodities and
futures;
(iii) To make investments which entail risk or with the principal aim
of obtaining capital appreciation rather than security of
investment and current income;
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(iv) To borrow, raise or lend monies and guarantee payment of any
obligation for the purposes of the Trust Fund, in such amounts
and upon such terms and conditions as the Trustees in their
absolute discretion may deem advisable and for any such monies
so borrowed to issue their promissory note as Trustees and to
secure the repayment thereof by pledging or mortgaging all or
any part of the Trust Fund;
(v) To buy, sell, exchange, mortgage, encumber, hold, manage,
acquire, dispose of or otherwise trade or deal in all types of
business ventures in all lines of endeavor, including, without
limitation, exploration for and extraction of oil, gas and
other minerals and natural resources, manufacturing, wholesale
and retail trade, exporting and importing, brokerage,
factoring, transportation, communication and hotels;
(vi) To cause any investment in the Trust Fund to be registered in,
or transferred into, its name as Trustees or in the name of
its nominee or nominees or to retain them unregistered or in
form permitting transfer by delivery, but the books and
records of the Trustees shall at all times show that all such
investments are part of the Trust Fund, and the Trustees shall
cause the indicia of ownership to be maintained within the
jurisdiction of the dis trict courts of the United States;
(vii) To retain in cash or in banks and keep unproductive of income
or appreciation such part or all of the Trust Fund as it may
deem adv isable;
(viii) To amortize any premium paid or discount received;
(ix) To vote (or refrain from voting) stock and securities, either
in person or by proxy, and otherwise consent to, or request,
par ticipate in, protest, and oppose any action by the issuer;
(x) To give general or special proxies and powers of attorney with
or without power of substitution or revocation;
(xi) To participate in, consent to, protest, oppose and take any
other action in connection with and receive and retain any
securities resulting from any reorganization,
recapitalization, financial readjustment, consolidation,
merger, spin-off, split-offs, foreclosure, bankruptcy,
assignment, liquidation, dissolution, sale, lease, encumbrance
or other disposition of assets of any issuer, the securities
of which are held or acquired by the Trustees;
(xii) To deposit securities in voting trusts with protective
creditors, stockholders or other committees or with any
trustee or depository designated thereby;
(xiii) To exercise, sell or permit to lapse any subscription or
conversion privileges;
(xiv) To abandon property which it deems inadvisable to retain;
(xv) To determine what is principal and what is income and whether
and what part of any cost, charge, tax, expense or liability
should be charged against principal or income;
(xvi) To concentrate investments where prudent to do so;
(xvii) To make joint investments with other trusts, persons, firms or
corporations, buy, sell, exchange, mortgage, encumber, hold,
manage, acquire, dispose of or otherwise trade or deal in
undivided and fractional interests in real and personal
property and enter into joint operation, exploration,
development and oth er agreements with co-owners of
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undivided or fractional interests in such property and with
owners of interests in property adjacent to or in the
vicinity of property owned by the Trust Fund;
(xviii) To invest and reinvest all or any part of the Fund through
the medium of any common, collective or commingled trust fund
maintained by the Trustee, or an affiliate of the Trustee, as
the same may have heretofore been or hereafter be established
or amended, which consists solely of the assets of employee
benefit accounts which are either qualified under the
provision Section 401(a) or satisfy the requirements of
Section 408 or 414(d) and are exempt under the provisions of
Section 408(e) or 501(a) of the Internal Revenue Code of
1986, as such sections may be from time to time amended or
renumbered; and during such period of time as an investment
through any such medium shall exist the Declaration of Trust
as such fund shall constitute a part of the Trust Agreement;
(xix) To settle, compromise or submit to arbitration any claims,
debts or damages due or owing to or from the Trust Fund,
commence or defend suits or legal or administrative
proceedings, and represent the Trust Fund in all suits and
legal and administrative proceedings;
(xx) The Trustee may appoint an investment manager, who is
registered as an investment advisor under the Investment
Advisors Act of 1940, to invest all or a portion of the
investments. The investment manager shall be paid by the
Trustee such reasonable compensation as agreed upon in
writing by the Trustee and Investment Manager. The Investment
Manager's compensation and expenses shall be charge against
the Trust Fund to the extent not pa id by the Trustee within
a reasonable period of time;
(xxi) To apply for and procure from insurance companies selected by
the Trustees such Contracts as the Trustees shall deem proper
for carrying out the purposes of the Plan; to exercise at any
time or from time to time whatever rights and privileges may
be granted under such Policies; to collect, receive and
settle from the proceeds of all such Policies as and when
entitled to do so under the provisions thereof; to make
policies loans provided that such loans and repayments
thereof are in proportion for all Participants and deal with
such Policies in any manner that may be necessary or
desirable to carry out and effectuate the terms and
provisions of the Plan, provided, however, that any Policies
shall be purchased in amounts specified by the Plan
Administrator but in no event to cause the death benefit to
exceed the incidental benefit limitations set forth herein;
(xxii) To renew or extend or participate in the renewal or extension
of any mortgage upon such terms as may be deemed advisable,
and to agree to a reduction in the rate of interest on any
mortgage or to any other modification or change in the terms
of any mortgage or of any guarantee pertaining thereto in any
manner and to any extent that may be deemed advisable for the
protection of the Trust Fund or the preservation of the value
of the investment; to waive any default, whether in the
performance of any covenant or condition of any mortgage or
in the performance of any guarantee, or to enforce any such
default in such manner and to such extent as may be deemed
advisable; to exercise and enforce any and all rights of
foreclosure, to bind in property on foreclosure, to take a
deed in lieu of foreclosure with or without paying a
consideration therefore, and in connection therewith, to
release the obligation on the bond secured by such mortgage;
and to exercise and enforce in any action, suit or proceeding
at law or in equity any rights or remedies in respect to any
mortgage or guarantee;
(xxiii) To make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance and any and all other
instruments and do all other acts, although not
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specifically mentioned herein, that may be necessary or
appropriate to carry out the powers herein granted for the
purpose of this Trust.
(c) Segregated Accounts
Upon the request of the Plan Administrator, the Trustees shall establish
segregated accounts in which to place, hold and invest the following
classes of funds:
(i) voluntary or mandatory contributions received from
Participants;
(ii) funds received from a Participant which constitute a rollover
contribution within the meaning of IRC Sections 408(d)(3),
402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8), 405(d)(3) or
409(b)(3)(C);
(iii) funds received directly from the Trustee of another qualified
plan on behalf of a Participant as permitted under law;
(iv) the value of the vested portion of the Accrued Benefit of any
terminated Participant;
(v) the Account Balance of any Participant who so directs the
investment of his account (Separate Investment Funds) pursuant
to the terms of the Plan;
(vi) funds which may become payable to an Alternate Payee(s)
pursuant to a Qualified Domestic Relations Order.
Any funds segregated by the Trustees shall not participate in the earnings
and appreciation of the Trust Fund, and shall be invested separately by the
Trustees. In the event the Plan provides for Participant directed accounts
or Separate Investment Funds authorized under Subsection (e) hereof and
Section III.D.I. and 2. of the Adoption Agreement, the Trustees shall
invest same separately or, if applicable, in accordance with the
Participant's directions. This Subsection shall not be construed as
permitting the segregation of assets in any manner not authorized under the
terms of the Plan. The Trustees shall be required to segregate amounts that
may become payable pursuant to a Qualified Domestic Relations Order during
a determination of such order's qualified status in accordance with Section
414(p) of the Code.
(d) Loans to Participants
Loans to Participants may be permitted as investments of the Trust Fund if
so provided in Section IV.A.2. of the Adoption Agreement subject to the
following limitations:
(i) Approval - Each loan must be approved by the Trustees and the Plan
Administrator upon written application of the Participant. In
reviewing any loan application, the Trustees and the Plan
Administrator shall utilize uniform, nondiscriminatory policies and
shall not make loans available to Highly Compensated Employees on a
more favorable basis than made available to other employees.
(ii) Security - The security provided by the Participant must be adequate
in the opinion of the Trustees. The security may consist solely of
the Participant's vested interest in the Plan and the interest of
the Participant's Spouse in his account (in which case the amount
of the loan shall not exceed 50% of the Participant's vested
interest) and/or may be in the form of other security such as a
mortgage or security agreement. In the event the security is given
in the form of a mortgage or security agreement, the Trustees may
in its discretion, lodge a record of said mortgage or security
agreement by filing same or, if applicable, a Uniform Commercial
Code
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financing statement, in the public offices of the state, county or
municipality where such notices are customarily filed.
(iii) Terms and Conditions - Loans shall not be made from the Trust Fund on
terms and conditions more favorable to the Participant than could
be obtained by the Participant from a recognized financial
institution such as a bank or credit union at the time the loan was
made. To the extent such Account Balance which served as security
for a loan is subject to the requirements of Code Section
401(a)(11)(B), loans shall be made only upon consent of the
Participant's Spouse to be given under the same manner provided in
Article XII, Section 12.5 hereof. Consent shall be obtained no
earlier than the beginning of the 90-day period that ends on the
date on which the loan is to be secured. On renegotiation,
extension, renewal or revision of the loan, a new consent shall be
required. All loans shall be made in accordance with applicable
state usury laws. No distributions shall be made to a Participant,
his spouse or Beneficiary until all loans are repaid in full.
(iv) Limitations on Non-taxable Amount - In no event shall a loan be made
to a Participant which exceeds the lesser of:
(A) fifty thousand dollars ($50,000) (reduced by the excess of the
highest outstanding loan balance of the Participant during the
twelve (12) month period immediately preceding the date of the
loan over the outstanding balance of loans from the Plan on the
date the loan was made); or
(B) one-half (1/2) of the nonforfeitable portion of the Participant's
Account, but in no event less than ten thousand dollars
($10,000). Said loan must be amortized in level monthly or
quarterly payments and shall not be repayable, by its terms, for
a period exceeding five (5) years except if the loan is used to
acquire the principal residence of the Participant.
(v) Restrictions Applicable to Owner-Employees - No loans shall be made to
any owner-employee (within the meaning of Section 401(c)(3) of the
Code); or to a shareholder employee (within the meaning of Section
1379 of the Code as in effect on the day before enactment of the
Subchapter S Revision Act of 1982).
(vi) Default - In the event of default, foreclosure on the note and
attachment of security will not occur until a distributable event
occurs under the Plan.
(e) Self-directed Funds
If elected pursuant to Section III.D.2. of the Adoption Agreement, a
Participant, upon proper advance written notice, may elect to have all or
any portion of the amount credited to his Account invested in one or more
of those investment funds. Each such fund shall be invested in either a
portfolio of funds selected by the Trustees meeting the objectives inherent
in the nature of the fund selected or in a mutual fund meeting - such
objectives.
(f) Rules relating to Separate Investment Funds
(1) An election made by a Participant pursuant to this Subsection (f)
hereof shall be filed with the Trustees in writing on a form which
they prescribe, provided, however, that elections may not be made at
times other than permitted pursuant to Section III.D.4. of the
Adoption Agreement.
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Any such election made by a Participant shall remain in effect until
another valid election has been made by the Participant.
(2) In the event that a Participant fails to file an election, such
Participant's Account shall be invested in a short term liquid asset
investment.
(3) Whenever, in the sole discretion of the Trustees, transfers between
funds pursuant to the provisions of this Section would require the
liquidation of assets at a time or in a manner which would not be
prudent considering the purposes for which the Plan was established
and the interests of all Plan Participants, the Trustees shall have
the right to prescribe uniform, nondiscriminatory rules prohibiting or
limiting the amount which a Participant may transfer.
(4) The Trustees shall not be liable for any loss, damage or depreciation
of a Participant's Account to the extent such Participant has elected
to direct the Trustees to invest any portion of his Participant
Account.
13.4 Accounts to be Kept and Rendered by the Trustees
(a) Records to be kept by the Trustees
The Trustees shall keep detailed and accurate records and accounts of
all investments, receipts, disbursements and other transactions made
with respect to the Trust Fund as well as any additional records that
may be required by law or government regulation or as may be agreed
upon by the Trustees and the Plan Administrator.
(b) Availability of Records
A11 books and records maintained by the Trustees shall be available
for inspection by any person designated by the Employer or by the Plan
Administrator at reasonable times.
(c) Written Reports to be Filed by the Board of Trustees
Not later than seven (7) months after each Valuation Date the Trustees
shall file with the Employer a written statement setting forth all
investments, receipts and disbursements, and other transactions
effected by it since the last Valuation Date and containing an exact
description of all securities and property purchased and sold, and the
cost or the net proceeds of sale, and showing the securities and
property and investments held on such Valuation Date and the cost and
value thereof as carried on its books. The written statement shall
include the value of any asset which is valued at other than fair
market value, if requested by the Plan Administrator. Such written
statement, after being filed with the Employer, shall be available for
inspection by any Participant or Beneficiary during normal business
hours of the Employer until ten (10) months after the Valuation Date.
(d) Conclusiveness of Report
In the absence of filing in writing with the Trustees by the Employer
of an exception or objection to any such account within sixty (60)
days, the Employer shall be deemed to have approved such account and
in such case, except as required by law, the Trustees shall be
relieved of all matters and things set forth in such account as though
such account had been settled by decree of competent jurisdiction.
Except as required by law, no person other than the Employer may
require an accounting or may bring any action against the Trust Fund
or Trustees to require an accounting.
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(e) Written Reports to be Filed Upon Removal of Trustee
In the event of such removal or resignation of the Trustees, the
replaced Trustees shall, within sixty (60) days from the effective
date of such removal or resignation, file with the Employer and Plan
Administrator a written statement and report of its accounts and
proceedings covering the period from its last statement and report to
the effective date of such removal or resignation in the manner
provided in this Section 13.4 relating to books and records) and said
statement and report shall have the same effect as if delivered
pursuant to this Section 13.4.
13.5 Exclusive Benefit
No part of the corpus or income of the Trust may be used for other than the
exclusive benefit of Participants.
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ARTICLE XIV - POLICIES
14.1 Purchase of Policies
The Plan Administrator shall purchase policies on the lives of the
Participants specified in Section III.G.2. of the Adoption Agreement in the
manner and amounts set forth in Section III.G.I. of the Adoption Agreement.
14.2 Procedure for Purchase
In the event Section III.G.I. of the Adoption Agreement has provided for
the purchase of policies, the Trustees, upon direction from the Plan
Administrator, shall purchase policies ratably on behalf of all
Participants. All policies shall have an issue date specified in Section
III.G.3.e. of the Adoption Agreement. However, no provision of this Article
XIV shall be construed as creating a right to an insured death benefit on
behalf of any Participant or Beneficiary until and unless a policy on his
life has actually been purchased, and a Participant's death benefit shall
only include proceeds of policies in force on the date of his death.
14.3 Requirements Concerning the Purchase of Policies
Unless otherwise specified in Section III.G.3. of the Adoption Agreement,
all policies purchased hereunder shall conform to the following
requirements:
(a) Legal Reserve Carrier
All policies purchased by the Trustee shall be purchased from a legal
reserve life insurance company.
(b) Premiums
All premiums shall be paid from the Trust Fund and charged to the
Account of the Participant for whose benefit the policy is held. If at
any time, the premium on a policy is not paid, the Trustee shall pay
premiums by policy loan or shall elect an alternative option permitted
under the terms of the policy.
(c) Dividends
All dividends, refunds or proceeds of any nature received under a
policy may be applied in such manner permitted by the Insurer. Any
dividends or credits earned on insurance contracts will be allocated
to the Participant's Account derived from Employer Contributions for
whose benefit the contract is held.
(d) Uniformity
The Trustees shall purchase policies to be as nearly uniform in nature
as possible with respect to basic options, cash surrender values and
other material features.
(e) Ownership
The Trustee shall be the owner and beneficiary of all policies
purchased hereunder and shall be entitled to exercise all incidents of
ownership. The policy shall provide that proceeds will be payable to
the Trustee who shall be required to pay the proceeds in accordance
with the distribution provisions of the Plan.
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(f) Disposition of Policies
Subject to the terms of Sections 12.5 and 12.6, all policies purchased
shall be surrendered or sold to the Participant who is insured under
the policy (for its cash surrender value, if any) as soon as
practicable after the Participant ceases employment with all
Affiliated Employers or at such time when continued maintenance of
such policies would cause a violation of the incidental benefit
limitations set forth in this Article XIV or under Treasury Regulation
1.401-l(b)(l)(i), provided, however, that the settlement options
provided in said policy do not differ materially from those provided
under Article XII of this Plan. The Plan provisions shall control in
the event of a conflict between the terms of the policy and the terms
of the Plan. Any contract distributed must be non-transferable.
(g) Supplemental Benefits
Agreements for supplemental benefits, including waiver of premium or
additional indemnity benefits, may be purchased if available from the
Insurer if the additional cost of said benefits is charged to the
Participant's Account, and the limitations set forth in Section 14.4
are not violated.
14.4 Incidental Benefit Limitations
The aggregate amount of the premiums paid for ordinary life insurance
contracts (contracts that provide for both non-decreasing death benefits
and non-increasing premium) maintained on behalf of a Participant plus two
(2) times the aggregate amount of premiums paid on term insurance and
universal life insurance contracts maintained on behalf of a Participant
shall not exceed fifty percent (50%) of the aggregate contributions and
forfeitures which have been allocated to the Participant's Employer
Contribution Account as of the most recent Anniversary Date. The premiums
paid for ordinary life insurance contracts must in any event be less than
fifty percent (50%) of the aggregate Employer Contribution allocated to the
Participant's Employer Contribution Account.
14.5 Non-lnsurable Participants
In the event a Participant who is entitled to insured death benefits is not
insurable or not insurable at standard rates, the Trustees may, in their
sole discretion, provide benefits under one of the following methods:
(a) entirely through the Trust Fund (without providing any insured death
benefits on behalf of the Participant); or
(b) through the purchase of annuity contracts; or
(c) through the purchase of policies in reduced face amounts (based upon
the amounts purchasable with the premium that would be required to
purchase the necessary face amount of insurance if the Participant was
insurable at standard rates).
14.6 Participant Provided Benefits
If provided in Section III.D.2. of the Adoption Agreement, a Participant
shall have the right to direct a portion of his Employer Contribution
Account or his Participant Contribution Account to purchase policies,
provided, however, that such purchase shall not cause the limitations set
forth in Section 14.4 to be violated.
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14.7 Protection of Insurer
(a) Insurance Carrier Not a Party
No Insurer from which the Trustees procure a policy shall be deemed to
be a party to this Plan.
(b) Reliance Upon Action of Trustees
Any Insurer shall be fully protected in relying upon the written
direction or certification of the Trustees or Plan Administrator. The
Insurer shall not be responsible to see that the actions of any
Trustee or the Plan Administrator are authorized under the terms of
the Plan, nor shall it be obliged to see to the distribution or
further application of monies paid by the Trustees. The Insurer shall
be entitled to rely upon a notice, certification, direction or other
communication duly executed by any party acting as a Trustee or the
Plan Administrator according to the latest written information
received at the Insurer's home office.
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ARTICLE XV - ADMINISTRATION OF THE PLAN
15.1 Appointment of Plan Administrator
The Plan Administrator shall consist of one (I) or more persons,
partnerships, or corporations or combinations thereof who shall be
appointed by the Employer by action of its Board of Directors and who shall
be set forth in Section I.B.7. of the Adoption Agreement. The Plan
Administrator shall constitute a Named Fiduciary as provided in Section
402(a)(1) of ERISA.
15.2 Manner of Acting
The Plan Administrator, except when it consists of a single corporation,
shall exercise its discretion or authority through a majority vote of those
members in office at the time. Such exercise may be by vote at a meeting or
in writing without a meeting. Any entity who is part of a group who
together comprise the Plan Administrator may perform any act necessary
including the promulgation of administrative regulations and filing of
government reports. No person need inquire into the propriety of any act of
the Plan Administrator evidenced by an instrument bearing the signature of
any individual (or individual properly acting on behalf of another
organization) who is part of the group who together comprise the Plan
Administrator.
15.3 Disqualification to Act
No individual (or individual acting on behalf of a partnership or
corporation) who is part of the group who together comprise the Plan
Administrator shall be disqualified from voting or acting on any matter
relating to the Plan because he is also a Participant, Beneficiary,
Trustee, officer, director or shareholder of any Affiliated Employer.
15.4 Authority and Responsibility of Plan Administrator
The Plan Administrator shall have the following duties and
responsibilities:
(a) To maintain records concerning Participants and Beneficiaries
including personal data, records of employment, participation,
allocations to Accounts and eligibility therefore;
(b) To prepare and furnish any forms and information which is required to
be distributed to Participants under law and/or the terms of the Plan;
(c) To prepare and file all forms and other information which is required
to be filed with any government agency as required by law, regulations
and/or by the terms of this Plan;
(d) To provide directions to the Trustee concerning purchase of life
insurance, funding policies, amounts, method and timing of benefit
payments and any other data or instructions that may be reasonably
required or requested by the Trustee;
(e) To promulgate and set forth administrative regulations concerning the
operation of the Plan as specifically required under the terms of the
Plan or as may be required by circumstances, provided said regulations
are not inconsistent with the terms of the Plan;
(f) To construe and interpret provisions of the Plan and to correct
defects and supply omissions as may be required from time to time;
(g) To provide and implement the proper operation of the Plan, provided,
however, the Plan Administrator shall not be liable to any party by
virtue of acting or refraining from - acting in
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accordance with the advice of said advisors. Compensation for such
services, to the extent not paid by a Participating Employer, shall be
payable as an expense of the Plan.
15.5 Requests for Documentation
The Plan Administrator, before deciding the eligibility for benefits of a
Participant or Beneficiary, in its discretion, may require submission of
proper documentation of age, death, disability or any other item as it
deems necessary for the administration of the Plan.
15.6 Removal or Resignation
The Plan Administrator or any member of the group who together comprise the
Plan Administrator may be removed at the pleasure of the Employer by action
of its Board of Directors or may resign by written notice to the Employer.
Said removal or resignation shall be effective sixty (60) days after
delivery of such notice to the other party unless some other date is
designated by the Employer. After removal or resignation the Employer may
appoint a successor Plan Administrator or member of the group who together
constitute the Plan Administrator.
15.7 Failure to Appoint Plan Administrator
If no individual or organization has been appointed to the group, or if
there are no remaining members of the group, the Employer shall be deemed
to be the Plan Administrator.
15.8 Compensation
The Plan Administrator shall perform his duties without compensation,
provided, however, that all expenses reasonably incurred by the Plan
Administrator, to the extent not paid by a Participating Employer, shall be
payable as an expense of the Plan.
15.9 Allocation of Responsibilities
Members of the group comprising the Plan Administrator may agree among
themselves to specifically allocate or delegate specific responsibilities,
duties or obligations to one (I) or more members of said group, in which
event the other members of the group shall not be liable for any action
taken with respect to such allocated responsibilities, duties or
obligations to the extent permitted by Section 405(c) of ERISA.
15.10 Delegation to Retirement Committee
If the Employer is designated as the Plan Administrator hereunder it may,
at its sole discretion, make a revocable delegation of its
responsibilities, duties and obligations to a Retirement Committee by
naming a committee of not less than two (2) persons who shall be set forth
in Section I.B.8. of the Adoption Agreement. In the event a Retirement
Committee is so designated, it shall act on behalf of the Employer as if
each member thereof was a member of the group constituting the Plan
Administrator and shall have all the rights and authority attendant
thereto, except that said Retirement Committee shall act on behalf of the
Employer which shall be formally designated as Plan Administrator.
15.11 Bonding
The Plan Administrator shall arrange to be bonded in an amount only to the
extent required under applicable law.
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15.12 Indemnification
The Employer shall indemnify the Plan Administrator for any expenses and
liabilities reasonably incurred in connection with or as a result of
performance of its duties, unless it shall be adjudged to be grossly
negligent or guilty of willful misconduct. The Employer may provide for
indemnification of the Plan Administrator through insurance in addition to,
or in lieu of, its obligation to indemnify the Plan Administrator.
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ARTICLE XVI - CLAIMS PROCEDURES
16.1 Claim for Benefits
It is anticipated that the Plan Administrator will administer the Plan in
such a manner as to provide benefits without requiring Participants to file
claims, however, any Participant or Beneficiary who at any time believes he
is entitled to payment of a benefit under the Plan may apply for said
benefit on a form supplied by the Plan Administrator. The Plan
Administrator may within thirty (30) days require the Participant to submit
such additional information as the Plan Administrator deems necessary to
determine the validity of the Participant's claim.
16.2 Disposition of Claim
Written notice of the disposition of the claim shall be given to the
Participant or Beneficiary within ninety (90) days after the claim for
benefits (or any additional information requested by the Plan
Administrator) is submitted. If the claim is denied, in whole or in part,
the Plan Administrator shall furnish the following to the Participant or
Beneficiary:
(a) The specific reasons for the denial with references to the Plan,
administrative regulations of the Plan Administrator and/or the law as
appropriate;
(b) A description of any additional material necessary for the Participant
or Beneficiary to perfect his claim and why such information is
necessary;
(c) An explanation of the Plan's claim review procedure.
If the Participant or Beneficiary fails to request review of a full or
partial denial of benefits within sixty (60) days of his notice thereof,
except as required by law, his claim shall be deemed conclusively denied.
16.3 Claims Review Procedure
Any Participant or Beneficiary who desires further review of a claim
denied, in whole or in part, shall file a written request for
reconsideration with the Plan Administrator within sixty (60) days after
receipt of a written denial. The Plan Administrator, in its sole
discretion, may convene a hearing on reasonable notice to all parties or
may make its decision solely based upon any written evidence submitted by
the Participant or Beneficiary. For this purpose, the Plan Administrator
may request such additional evidence from the Participant or Beneficiary as
it deems necessary. The Plan Administrator shall file written notice of his
decision concerning the review with the Participant or Beneficiary within
sixty (60) days thereafter. Said decision shall contain the specific
reasons for said decision, with appropriate references to the Plan, the
law, and/or to administrative regulations set forth by the Plan
Administrator.
16.4 Conclusiveness of Determination
Except as required by law, the Participant or Beneficiary shall be
conclusively bound by the final decision rendered by the Plan
Administrator, unless he notifies the Plan Administrator within ninety (90)
days of his intention to commence legal proceedings and actually commences
such legal proceedings within one hundred eighty (180) days after such
final decision.
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ARTICLE XVII - AMENDMENT, TERMINATION AND MERGER
17.1 Employer's Right Reserved
While it is the intention of the Employer to continue the Plan indefinitely
and to make recurring and substantial contributions to the Trust Fund,
pursuant to the terms of the Plan, the Employer reserves the right to
amend, modify or terminate the Plan or to suspend contributions of all
Participating Employers at any time, subject to the following limitations:
(a) The Employer may:
(1) change the choice of options in the Adoption Agreement,
(2) add overriding language in the Adoption Agreement when such
language is necessary to satisfy Section 415 or Section 416 of
the Code because of the required aggregation of multiple plans,
and
(3) add certain model amendments published by the Internal Revenue
Service which specifically provide that their adoption will not
cause the Plan to be treated as individually designed. An
Employer that amends the Plan for any other reason, including a
waiver of the minimum funding requirement under Section 412(d) of
the Code, will no longer participate in this Regional Prototype
Plan and will be considered to have an individually designed
plan.
(b) No amendment enlarging the duties or responsibilities of the Trustees
shall be made without their consent;
(c) Except as specially permitted under law, no amendment, merger or
termination shall decrease the value of the Account of a Participant
or Beneficiary as of the effective date of the amendment, merger or
termination;
(d) No amendment, merger or termination shall deprive a Participant or
Beneficiary currently receiving or entitled to receive benefits of any
benefits so designated as of the effective date of the amendment;
(e) No amendment, merger or termination shall provide for diversion of any
part of the Trust Fund other than for the exclusive benefit of
Participants or Beneficiaries, except as permitted by law;
(f) No amendment shall deprive a Participant of an accrued benefit or
eliminate an optional form of benefit in violation of Section
411(d)(6) of the Code or Section 204(g)(1) of ERISA. Notwithstanding
the preceding sentence, a Participant's Account Balance may be reduced
to the extent permitted under Section 412(c)(8) of the Code. For
purposes of this paragraph, a Plan Amendment which has the effect of
decreasing a Participant's Account Balance or eliminating an optional
form of benefit, with respect to benefits attributable to service
before the amendment shall be treated as reducing an accrued benefit.
Furthermore no amendment to the Plan shall have the effect of
decreasing a Participant's vested percentage determined without regard
to such amendment as of the later of the date such amendment is
adopted or the date it becomes effective.
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17.2 Amendments to Cover Additional Employers
The Employer shall have the right, in its discretion, to amend the Plan to
render eligible for participation hereunder the Employees of any other
organization (whether a sole proprietorship, partnership or corporation).
17.3 Effect of Terminations
(a) Full Vesting
All Participants affected by a full or partial termination of this
Plan or permanent cessation of contributions shall be one hundred
percent (100%) vested in their Accounts as of the effective date of
such full or partial termination. An amendment shall not be considered
a partial termination unless so required under law and/or Regulations
in order to enable the Plan to continue to meet the requirements of
Section 401(a) of the Code.
(b) Continuation of Trust
In the event this Plan is terminated, the Employer shall instruct the
Trustee to liquidate the Trust Fund and to pay over all monies due
Participants and Beneficiaries as soon as practicable thereafter in
accordance with the provisions of Article XVII hereof Section 17.5 and
Article XII hereof.
17.4 Suspension or Discontinuance of Employer Contributions
In the event contributions to the Trust Fund are temporarily suspended by
any Participating Employer, the only effect upon the operation of the Plan
shall be as follows:
(a) If contributions are ever permanently suspended by written resolution
of the Board of Directors, the Plan shall be deemed to have been
terminated as of the effective date of such resolution;
(b) In the event that a temporary suspension of contributions is made
permanent by a resolution of the Board of Directors, subsequent
termination of the Plan or action by the Internal Revenue Service, the
effective date of said termination shall be the last day of the Plan
Year following the last Plan Year in which any Participating Employer
failed to make a substantial contribution to the Plan from available
Net Earnings;
(c) In the event that all remaining Participating Employers dissolve for
any reason (except by virtue of acquisition of said Participating
Employers' assets by another company which assumes all liabilities and
obligations hereunder and shall be substituted as the Employer
hereunder), such dissolution shall be deemed a permanent
discontinuance of contributions and termination hereunder.
(d) The termination of this Plan by a Participating Employer or the
withdrawal of a Participating Employer from this Plan shall not affect
the continuance of this Plan and Trust with respect to other
Participating Employer.
17.5 Allocation Upon Termination of Trust
In the event of a dissolution of the Trust Fund, it shall be liquidated in
the following manner:
(a) A11 expenses of the Trust Fund shall be paid;
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(b) A11 Forfeiture Suspense Accounts shall be reallocated to the Accounts
of the Participants from whose Accounts the forfeitures originated or,
at the discretion of the Plan Administrator, allocated in another
equitable manner;
(c) The Trust Fund shall be valued as provided in Article VII hereof and
the earnings and appreciation shall be allocated to all remaining
Accounts in a manner consistent therewith;
(d) A11 remaining unallocated suspense accounts shall be allocated to
Participant's Accounts as if they were Employer Contributions;
(e) Distributions shall be made to Participants based upon the value of
their Accounts as determined in this Section 17.5.
17.6 Merger and Consolidation
In the event that this Plan is merged, consolidated with, or transfers its
assets and/or liabilities to another plan, each Participant shall be entitled to
a benefit (if the surviving plan was then terminated immediately after the
merger, consolidation or transfer) which is equal to or greater than the benefit
said Participant would be entitled to if this Plan was terminated immediately
before said merger, consolidation or transfer.
17.7 Withdrawal of a Participating Employer
A Participating Employer may at any time withdraw from participation in the
Plan and Trust upon certification by the Employer, the Plan Administrator
and the Trustees that such Participating Employer intends to continue the
Plan and Trust as a separate plan and trust for its Employees. In such
event, the Plan Administrator shall determine the amounts credited or
creditable to the Account of each of the Participants or their
Beneficiaries in that portion of the Trust Fund allocatable to the
Employees of such Participating Employer and shall direct the Trustees to
deliver any such amounts, in cash or in kind, to the trustee or trustees of
such separate plan and trust. A withdrawing Employer that does not adopt
another Regional Prototype Plan is considered to have an individually
designed plan. Prior to any such delivery, the withdrawing Participating
Employer shall certify that such separate plan and trust meets the
applicable requirements of Section 401(a) of the Code. The Plan
Administrator and the Trustees shall be entitled to rely conclusively upon
any certification made by a Participating Employer pursuant to this Section
17.7.
17.8 If the Employer's Plan fails to attain or retain qualification, such Plan
will no longer participate in this Regional Prototype Plan and will be
considered an individually designed plan.
17.9 The Regional Prototype sponsor may amend any part of the plan.
In the case of the mass submitter, the mass submitter shall amend the Plan
on behalf of the sponsor.
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ARTICLE XVIII - MISCELLANEOUS PROVISIONS
18.1 Controlling State Law
To the extent not preempted by federal law, this Plan shall be construed
and enforced according to the laws of the State set forth in Section IV.D.
of the Adoption Agreement.
18.2 Disputes
If a dispute arises as to the proper recipient of any payment or delivery
of any Policies, the Trustee in its sole discretion, may withhold such
payment or delivery until the dispute is settled by the parties concerned
or final adjudication by a court of competent jurisdiction.
18.3 Gender and Number
Except as otherwise clearly indicated by the context, words in the
masculine gender shall be deemed to include the feminine gender and vice
versa. Words in the singular form shall be deemed to include the plural
form and vice versa.
18.4 Headings and Subheadings
The titles, headings and subheadings in this Plan are inserted for
administrative convenience only and shall not be considered in the
construction of any of the Plan provisions.
18.5 Heirs, Assigns and Representatives
This Plan and its terms shall be binding and conclusive upon the heirs,
executors, administrators, successors and assigns of all the parties hereto
including each Participant and Beneficiary.
18.6 No Contract of Employment
Neither participation in the Plan, establishment of the Plan or any
modification thereof, creation of any account or fund (whether
nonforfeitable or forfeitable), nor payment of any benefit shall give any
Participant or Employee the right to be retained in the employ of any
Participating Employer.
18.7 Treatment of Owner-Employees Under the Plan
If this Plan provides contributions or benefits for one or more Owner-
employees who control both the business for which this Plan is established
and one or more other trades or businesses, this Plan and the plan
established for other trades of businesses must, when looked at as a single
plan, satisfy Sections 401(a) and (d) of the Code for the Employees of this
and all other trades or businesses.
If the Plan provides contributions or benefits for one or more Owner-
employees who control one or more other trades or businesses, the Employees
of the other trades or businesses must be included in a plan which
satisfies Sections 401(a) and (d) and which provides contributions and
benefits not less favorable than provided for Owner-employees under this
Plan.
If an individual is covered as an Owner-employee under the plans of two or
more trades or businesses which are not controlled and the individual
controls a trade or business, then the contributions or benefits of the
Employees under the plan of the trades or businesses which are controlled
must be as favorable as those provided for him under the most favorable
plan of the trade or business which is not controlled.
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For purposes of the preceding paragraphs, an Owner-employee, or two or more
Owner employees, will be considered to control a trade or business if the
Owner-employee, or two or more Owner-employees together:
(1) own the entire interest in an unincorporated trade or business,
or
(2) in the case of a partnership, own more than fifty percent (50%)
of either the capital interest or the profits interest in the
partnership.
For purposes of the preceding sentence, an Owner-employee, or two or more
Owner-Employees shall be treated as owning any interest in a partnership
which is owned, directly or indirectly, by a partnership which such Owner-
employee, or such two or more Owner-Employees, are considered to control
within the meaning of the preceding sentence.
18.8 Non-Alienation of Benefits
(a) Except as otherwise provided in Subsections (b) and (c) hereof, none
of the payments, benefits or rights of any Participant shall be
subject to the claim of any creditor, and shall not be subject to
attachment, garnishment, trustee's process, or any other legal process
available to any creditor of such Participant.
(b) No Participant or Beneficiary shall have the right to alienate,
anticipate, commute, pledge, encumber or assign any of the benefits or
payments which he may expect to receive under the terms of this Plan,
except that a loan to a Participant from the Trust Fund, to the extent
permitted hereunder, shall not be considered an alienation of
benefits. The Trustee shall have a lien upon the borrower's Account to
the extent of the entire unpaid amount of said loan plus collection
costs and interest.
(c) Distributions to an Alternate Payee(s) pursuant to a Qualified
Domestic Relations Order which provides for the creation, assignment
or recognition of a right to any benefit payable with respect to a
Participant hereunder shall be made in accordance with administrative
regulations adopted by the Plan Administrator in accordance with
Article XII hereof.
18.9 Notices and Deliveries
All notices hereunder shall be made in writing. Any notices or deliveries
to the Trustee, Plan Administrator or any Participating Employer shall be
directed to the address set forth in Section I.B. of the Adoption
Agreement.
18.10 Payments to Persons under Legal Disability
Any benefit payable to or for the benefit of any person under a legal
disability, including, without limitation, minority or incompetency, shall
be paid to said person's legal guardian, Beneficiary or to the person who,
in the judgement of the Plan Administrator, reasonably appears to be
providing for the care and custody of such person.
18.11 Severability of Provisions
If any provision or portion of a provision of this Plan is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
affect the balance of the Plan. The Plan shall be construed and enforced as
if such provision had not been included, provided, however, this Plan shall
be reformed only to the extent necessary so that it complies with
applicable law.
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18.12 Service of Process
The Employer and each Trustee is designated as a party for service of legal
process.
18.13 Title to Trust Assets
No Participant or Beneficiary shall have any right to, or interest in, any
assets of the Trust Fund other than as provided under the terms of this
Plan. All payments of benefits shall be made from the Trust Fund and no
claim shall be made upon the Employer or any other person for such
payments.
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This Plan was approved by the Board of Directors on May __, 1996.
This Plan was approved by the Stockholders on May __, 1996.
This Plan was approved by the Securities and Exchange Commission on ________ __,
199__.
MEDALLION FINANCIAL CORP.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
This Non-Employee Director Stock Option Plan dated ________ ___, 1996 (the
"Plan") governs options to purchase Common Stock, $0.01 par value (the "Common
---- ------
Stock"), of Medallion Financial Corp. (the "Company") granted on or after the
- ----- -------
date hereof by the Company to members of the Board of Directors (the "Board") of
-----
the Company who are not also employees, officers or interested persons (as
defined in Section 2 below) of the Company. The purpose of the Plan is to
attract and retain qualified persons to serve as Directors of the Company and to
encourage ownership of stock of the Company by such Directors so as to provide
additional incentives to promote the success of the Company.
1. Administration of the Plan.
--------------------------
Grants of stock options (individually referred to herein as an "Option" and
------
collectively as "Options") under the Plan shall be automatic as provided in
-------
Section 6 hereof. However, all questions of interpretation with respect to the
Plan and Options granted under it shall be determined by a committee (the
"Committee") consisting of the Directors of the Company who are not eligible to
- ----------
participate in the Plan, and such determination shall be final and binding upon
all persons having an interest in the Plan.
2. Persons Eligible to Participate in the Plan.
-------------------------------------------
Members of the Board who are not also employees, officers or interested
persons (as defined in Section 2(a)(19) of the Investment Company Act of 1940,
as amended (the "1940 Act")) of the Company shall be eligible to participate in
--------
the Plan ("Eligible Directors").
------------------
<PAGE>
3. Shares Subject to the Plan.
--------------------------
(a) Number of Shares. The aggregate number of shares of Common Stock of
----------------
the Company which may be optioned under this Plan is 100,000 shares. In the
event of a stock dividend, split-up, combination or reclassification of shares,
recapitalization or other similar capital change relating to the Common Stock,
the maximum aggregate number and kind of shares or securities of the Company as
to which Options may be granted under this Plan and as to which Options then
outstanding shall be exercisable, and the exercise price of such Options, shall
be appropriately adjusted by the Committee (whose determination shall be
conclusive) so as to preserve the value of the Option.
(b) Effect of Certain Transactions. In order to preserve an Eligible
------------------------------
Director's rights under an Option in the event of a change in control of the
Company, the Committee in its discretion may, on the Date of Grant (as defined
in Section 6(b) below) or at any time thereafter, take one or more of the
following actions: (i) provide for the acceleration of any time period relating
to the exercise or payment of the Option, (ii) provide for payment to the
Eligible Director of cash or other property with a fair market value equal to
the amount that would have been received upon the exercise or payment of the
Option had the Option been exercised or paid upon the change in control, (iii)
adjust the terms of the Option in a manner determined by the Committee to
reflect the change in control, (iv) cause the Option to be assumed, or new
rights substituted therefor, by another entity, or (v) make such other provision
as the Committee may consider equitable to the Eligible Director and in the best
interests of the Company.
(c) Restoration of Shares. If any Option expires or is terminated
---------------------
unexercised or is forfeited for any reason, the shares subject to such Option,
to the extent of such expiration, termination or forfeiture, shall again be
available for granting pursuant to Options under the Plan.
(d) Reservation of Shares. The Company shall at all times while the Plan
---------------------
is in force reserve such number of shares of Common Stock as will be sufficient
to satisfy the requirements of the Plan. Shares issued under the Plan may
consist in whole or in part of authorized but unissued shares or treasury
shares.
4. Types of Options.
----------------
All Options granted under this Plan shall be non-statutory options not
entitled to special tax treatment under Section 422 of the Internal Revenue Code
of l986, as amended.
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<PAGE>
5. Form of Options.
---------------
Options granted hereunder shall be evidenced by a writing delivered to the
optionee specifying the terms and conditions thereof and containing such other
terms and conditions not inconsistent with the provisions of the Plan as the
Committee considers necessary or advisable to achieve the purposes of the Plan
or comply with applicable tax and regulatory laws and accounting principles.
6. Grant of Options and Option Terms.
---------------------------------
(a) Initial Grant of Options. On the date of the approval of the Plan (the
------------------------
"Approval Date") by the Securities and Exchange Commission in accordance with
-------------
the 1940 Act, each of the following Directors shall automatically be granted
Options to purchase the number of shares of Common Stock determined by dividing
$100,000 by the Current Market Value (as defined in Section 6(c) below)
multiplied by the fraction indicated opposite each Director's name (the "Initial
-------
Grants") provided each such Director is serving on the Company's Board as an
- ------
Eligible Director on the Approval Date:
Name of Director Fraction
- ----------------------- --------
Stanley Kreitman 1/3
David L. Rudnick 1/3
Mario M. Cuomo 2/3
Benjamin Ward 1
(b) Automatic Grant of Options. At each annual meeting of the
--------------------------
stockholders of the Company after the Approval Date, each Eligible Director
elected or re-elected at such meeting to a three year term shall automatically
be granted upon such election an Option to purchase the number of shares of
Common Stock determined by dividing $100,000 by the Current Market Value of the
Common Stock on the date of such election. In addition, upon the election of an
Eligible Director other than at an annual meeting of stockholders (whether by
the Board or the stockholders and whether to fill a vacancy or otherwise), each
such Eligible Director shall automatically be granted an Option to purchase that
number of shares that is determined by (A) dividing $100,000 by the Current
Market Value of the Common Stock on the date of election and (B) multiplying the
resulting quotient by a fraction, the numerator of which shall equal the number
of whole months remaining in the newly elected Director's term and the
denominator of which shall be 36. For example, if an Eligible Director is
elected to an 18 month term of office and an Eligible Director elected to a full
three year term of office would have received an Option to
- 3 -
<PAGE>
purchase 10,000 shares of Common Stock, then the Eligible Director elected to
the 18 month term would receive an Option to purchase 5,000 shares of Common
Stock. After the Initial Grants have been made, all subsequent grants of
Options to Eligible Directors upon their election to the Board shall be referred
to as "Automatic Grants". The "Date of Grant" for the Initial Grants shall be
---------------- -------------
the Approval Date and the Date of Grant for the Automatic Grants shall be the
date of election or re-election as an Eligible Director, as the case may be. No
Options shall be granted hereunder after ten years from the date on which this
Plan was initially approved and adopted by the Board.
(c) Exercise Price. The price at which shares may from time to time
--------------
be optioned shall be determined by the Committee, provided that such price shall
not be less than the current market value (the "Current Market Value") of the
--------------------
Common Stock on the date of grant, or if no such market value exists, then the
current net asset value of the Common Stock as determined in good faith by the
Committee.
To the extent permitted by law, the Committee may in its discretion
permit the option price to be paid in whole or in part by a note or in
installments or with shares of Common Stock of the Company or such other lawful
consideration as the Committee may determine.
(d) Term of Option. The term of each Option granted under this Plan
--------------
shall be five years from the Date of Grant.
(e) Period of Exercise. Options granted under this Plan as either
------------------
Initial Grants or Automatic Grants at an annual meeting of stockholders shall
become exercisable with respect to one third of such shares of Common Stock
covered by such Option on the date of each annual stockholders meeting following
the Date of Grant, so long as the optionee remains an Eligible Director.
Options granted under this Plan as Automatic Grants other than at an annual
meeting of stockholders shall become exercisable at each annual meeting of
stockholders with respect to that number of shares that is determined by
multiplying the number of shares covered by such Option by a fraction, the
numerator of which shall equal the number of whole months elapsed since the most
recent to have occurred of either (i) the Date of Grant or (ii) the last annual
meeting of stockholders and the denominator shall be the number of whole months
for which such Director was elected. For example, in the example in Section
6(b) above, 1,667 of such Director's Options would become exercisable at the
first annual stockholders meeting following the Date of Grant and the remaining
3,333 Options would become exercisable at the second annual stockholders meeting
following the Date of Grant. Notwithstanding the foregoing, in the event that
the Company holds an annual meeting of stockholders in 1996, such meeting shall
not cause any Options under the Plan to become exercisable. Directors holding
exercisable Options under this Plan who cease to be Eligible Directors for any
reason, other than death, may exercise
- 4 -
<PAGE>
the rights they had under such Options at the time they ceased being an Eligible
Director for three months following the date on which such Director ceased to be
an Eligible Director, provided, however, no additional Options held by such
Directors shall become exercisable thereafter. Upon the death of a Director,
those entitled to do so under the Director's will or the laws of descent and
distribution shall have the right, at any time within twelve months after the
date of death, to exercise in whole or in part any rights which were available
to the Director at the time of his or her death. Options granted under the Plan
shall terminate, and no rights thereunder may be exercised, after the expiration
of five years from their Date of Grant.
(f) Method of Exercise and Payment. Options may be exercised only by
------------------------------
written notice to the Company at its executive offices accompanied by payment of
the full exercise price for the shares of Common Stock as to which they are
exercised. The exercise price shall be paid in cash or by check or by the
surrender of unrestricted shares of Common Stock or by any combination of the
foregoing. Upon receipt of such notice and payment, the Company shall promptly
issue and deliver to the optionee (or other person entitled to exercise the
Option) a certificate or certificates for the number of shares as to which the
exercise is made.
(g) Non-transferability. Options granted under this Plan shall not be
-------------------
transferable by the holder thereof otherwise than by will or the laws of descent
and distribution, and shall be exercisable, during the holder's lifetime, only
by him or her.
7. Limitation of Rights.
--------------------
(a) No Right to Continue as a Director. Neither the Plan, nor the
----------------------------------
granting of an Option or any other action taken pursuant to the Plan, shall
constitute an agreement or understanding, express or implied, that the Company
will retain an optionee as a Director for any period of time or at any
particular rate of compensation.
(b) No Stockholders' Rights for Options. No Director shall have any
-----------------------------------
rights as a stockholder with respect to the shares covered by his or her Option
until the date he or she exercises such Option and pays the Option price to the
Company, and no adjustment will be made for dividends or other rights for which
the record date is prior to the date such Option is exercised and paid for.
- 5 -
<PAGE>
8. Amendment or Termination.
------------------------
The Board may amend, suspend or terminate the Plan or any portion thereof
at any time, subject to any shareholder approval that the Board determines to be
necessary or advisable, provided that the Participant's consent will be required
for any amendment, suspension or termination that would adversely affect the
rights of the Participant under any outstanding Options.
9. No Fractional Shares. All grants of Options shall be rounded to the
--------------------
nearest whole share and no Options representing fractional shares shall be
issued.
10. Governing Law.
-------------
The provisions of the Plan shall be governed by and interpreted in
accordance with the laws of the State of Delaware.
- 6 -
<PAGE>
AGREEMENT
FOR STOCK TRANSFER SERVICES
between
MEDALLION FINANCIAL CORPORATION
and
THE FIRST NATIONAL BANK OF BOSTON
This Agreement sets forth the terms and conditions under which The First
National Bank of Boston ("Bank of Boston") will serve as Sole Transfer Agent and
Registrar for the Common Stock of Medallion Financial Corporation.
A. TERM
The term of this Agreement shall befor a period of three (3) years,
commencing from the effective date of this Agreement. _________, 1996.
B. FEE FOR STANDARD SERVICES
For standard services as stated in Section D provided by Bank of Boston
under tis Agreement. Medallion Financial Corporation will be charged as
follows:
-----------------------------------------------------------------------
$ 900.00 Monthly Administrative Fee*
$ 1.00 Per Dividend Reinvestment Transaction
-----------------------------------------------------------------------
C. FEE FOR PREFERRED OFFERING
For the Initial Public Offering services provided by the Bank of Boston
under this Agreement, Medallion Financial Corporation will be charged
as follows:
$2,500.00 Minimum One-Time Administrative Fee Includes the Following
Services:
Base Administrative Services
----------------------------
includes the conversion of existing shareholder records,
administrative coordination relative to the offering,
attendance at closing, and issuance of up to 250 stock
certificates in connection with the initial offering.
Additional stock certificates issued at $1.50 each.
<PAGE>
Medallion Financial
Corporation
Page 2
D. STANDARD SERVICES
Bank of Boston agrees to provide the following services to Medallion
Financial Corporation in accordance with the standard fees set forth in
Section B hereinabove.
Account Maintenance:
1. Annual administrative services as Transfer Agent
2. Annual administrative services as Registrar
3. Maintaining shareholder accounts, including processing of new accounts
4. Posting and acknowledging address changes and processing other routine
file maintenance adjustments
5. Posting all transactions, including debit and credit certificates to
the stockholder file
6. Researching and responding to all stockholder inquiries
7. Safekeeping of Treasury Shares in connection with Stock Option
Issuances
Certificate Issuance:
8. Certificate issuance, cancellation and registration
9. Daily Transfer Reports
10. Processing window items, mail items and all legal transfers
11. Combining certificates into large denominations
12. Processing Indemnity Bonds and replacing lost certificates
13. Maintaining stop-transfers, including the placing and removing of same
14. Processing Employee Stock Options
15. Processing Restricted Transfers
Mailing, Reporting and Miscellaneous Services:
16. On-line inquiry to shareholder base via a PC
17. Addressing and enclosing Quarterly Reports, three(3) per annum for
registered shareholders
18. Preparing two (2) full Statistical Reports to reflect shareholder base
by geographic residence code, class code, and share group one (1)
per annum
19. Preparing a full stockholder list, one (1) per annum
20. Coding "multiple" accounts at a singe household to suppress mailing of
reports to same
21. BKB's 800# for Investor Relations
Annual Meeting Services:
22. Preparing a full stockholder list as the Annual Meeting Record Date
23. Administrative coordination in connection with Proxy Material
Distribution
<PAGE>
Medallion Financial
Corporation
Page 3
Annual Meeting Services (Cont'd):
24. Addressing proxy cards
25. Enclosing proxy card along with notice and statement, return envelope
and Annual Report via Bipak envelope
26. Receving, opening and examining returned proxies
27. Writing in connection with unsigned or improperly executed proxies
28. Providing summary reports on status of tabulation on a daily basis
29. Responding to inquiries as to whether specific accounts have yet voted
30. Tabulating returned proxies to include up to four (4) proposals, excess to
be billed at $ 0.30 per account, per proposal
31. Preparing a final Annual Meeting List reflecting how each account has
voted on each proposal
32. Paying and reconciling Broker Order invoices
33. Attending Annual Meeting as Inspector of Election
Dividend Services:
As Dividend Disbursing Agent and Paying Agent (checks to be drawn on The
First National Bank of Boston and funds immediately available in-house on
mailing date). Bank of Boston will perform the following dividend related
services:
34. Preparing and mailing quarterly dividends (check includes address
change feature) with an additional enclosure with each dividend check
35. Preparing a hardcopy dividend list as of each dividend record date
36. Preparing and filing Federal Information Returns (Form 1099) of
dividends paid in a year and mailing a statement to each stockholder
37. Preparing and filing State Information Returns of dividends paid in a
year to stockholders resident within such state
38. Preparing and filing annual withholding return (Form 1042) and
payments to the government of income taxes withheld from Non-Resident
Aliens
39. Replacing lost dividend checks
40. Providing photocopies of cancelled checks when requested
41. Reconciling paid and outstanding checks
42. Coding "undeliverable" accounts to suppress mailing dividend checks to
same
43. Processing and recordkeeping of accumulated uncashed dividends
44. Furnishing requested dividend information to stockholders
45. Performing the following duties as required by the Interest and Dividend
Tax Compliance Act of 1983:
. Withholding tax from shareholder account not in compliance with
the provisions of the Act
. Reconciling and reporting taxes withheld, including additional 1099
reporting requirements to the Internal Revenue Service
. Responding to shareholder inquiries regarding the Regulations
<PAGE>
Medallion Financial
Corporation
Page 4
. Mailing to new accounts who have had taxes withheld, to inform them
of procedures to be followed to curtail subsequent back-up
withholding
. Annual mailing to pre-1984 accounts which have not yet been
certified
. Performing shareholder file adjustments to reflect certification of
accounts
Dividend Reinvestment Services:
As Administrator of your Dividend Reinvestment Plan ("DRP"), Bank of Boston will
perform the following DRP related services:
46. Reinvestment and/or cash investment transactions of Dividend
Reinvestment Plan participating accounts
47. Preparing and mailing a dividend reinvestment detailed statement with
an additional enclosure to each Dividend Reinvestment Plan participant
48. Preparing and mailing a cash investment detailed statement with an
additional enclosure to each Dividend Reinvestment participant
49. Maintaining DRP accounts and establishing new participant accounts
50. Processing termination requests
51. Processing withdrawal requests
52. Supplying summary reports for each reinvestment/investment to
Medallion Financial Corporation
53. Certificate depository
54. Handing shareholder inquiries concerning the Plan
55. Preparing and mailing Form 1099 to participants and related filings
with the IRS
56. Preparing a Dividend Reinvestment Journal four (4) per annum
E. * LIMITATIONS
The fees as stated in Section B include:
. The issuance and registration of 1,000 certificates per annum
(2,000 in the first year of the agreement); excess will be billed
at 1.50 each.
. The processing of up to 75 stock options per annum: excess will be
billed at 7.50 each.
. Maintaining up to 2,000 shareholder accounts: in excess to be
billed $4.00 per account, per annum
F. CONVERSION OF RECORDS
Bank of Boston agrees to convert stockholder records as provided on the
stockholder masterfile tape. Manual conversion of records and subsequent
conversion of additional information including, but not limited to, uncashed or
returned dividend check information of certificate detail not included on tape
will be priced by appraisal.
<PAGE>
Medallion Financial
Corporation
Page 5
G. ITEMS NOT COVERED
Items not included in the fees set forth in this Agreement for "Standard
Services" such as payment of a stock dividend or any services associated
with a special project are to be billed separately, on an appraisal basis.
Services required by legislation or regulatory fiat which become effective
after the date of this Agreement shall not be a part of the Standard
Services and shall be billed by appraisal.
All out-of-pocket expenses such as telephone line charges associated with
toll-free telephone call, overprinting of proxy card, postage, insurance,
stationary, facsimile charges, excess material disposal, etc. will be
filled as incurred.
Overtime charges will be assessed in the event of late delivery of material
for mailings to shareholders unless the mail date is rescheduled. Such
material includes, but is not limited to: proxy statements, annual and
quarterly reports, dividend enclosure and news releases. Receipt of
material for mailing to shareholders by Bank of Boston's Mail Unit must be
in accordance with Shareholder Services Schedule of Required Material
Delivery Time Frames.
All services not specifically covered under this Agreement will be billed
by appraisal, as applicable.
H. BILLING DEFINITION OF ACCOUNT MAINTENANCE
For billing purposes, number of accounts will be based on open accounts on
file at beginning of each billing period, plus any new accounts added
during that period.
I. TERMINATION
This Agreement is terminable by thirty (30) days written notice by either
party. If this Agreement is terminated there will be a termination charge
of 25% of the fees billed during the preceding twelve (12) months (minimum
charge $6,000.00). This charge will cover the coordination of Bank of
Boston's termination process and the cost of transferring Medallion
Financial Corporation's records to a successor Transfer Agent or to
Medallion Imperial Corporation.
Upon expiration of this Agreement, without termination by either party. It
shall continue in effect from month to month on the same terms unless and
until either party terminates by (30) days written notice to the other or
until a new agreement superseding the within Agreement has been executed.
J. PAYMENT FOR SERVICES
It is agreed that invoices will be rendered and payable on a monthly basis.
Each billing period will, therefor, be on one (1) month duration.
<PAGE>
Medallion Financial
Corporation
Page 6
K. CONFIDENTIALITY
The information contained in this Agreement is confidential and proprietary
in nature. By receiving this Agreement, Medallion Financial Corporation
agrees that none of its directors, officers, employees, or agents without
the prior written consent of Bank of Boston, will divulge, furnish or make
accessible to any third party, except as permitted by the next sentence,
any part of this Agreement or information in connection therewith which
has been or may be made available to it. In this connection, Medallion
Financial Corporation agrees that it will limit access to the Agreement
and such information to only those officers or employees with
responsibilities for analyzing the Agreement and to such independent
consultants hired expressly for the purpose of assisting in such analysis.
In addition, Medallion Financial Corporation agrees that any persons to
whom such information is properly disclosed shall be informed of the
confidential nature of the Agreement and the information relating thereto,
and shall be directed to treat the same appropriately.
L. ASSIGNABILITY
The Bank may, without further consent on the part of the Company,
subcontract for the performance hereof with any entity with which the
Bank is affiliated, which entity is duly registered as a transfer agent
pursuant to Section 17A (c) (1) of the Securities Exchange Act of 1934
provided however, that the Bank shall be as fully responsible to the
Company for the acts and omissions of any subcontractor as it is for its
own acts and omissions.
M. CONTRACT ACCEPTANCE
In witness whereof, the parties hereto have caused this Agreement to be
executed by their respective officers, hereunto duly agreed and authorized,
as of the effective date of this Agreement.
THE FIRST NATIONAL BANK OF BOSTON MEDALLION FINANCIAL
CORPORATION
By:/s/ [SIGNATURE ILLEGIBLE] By:/s/ DANIEL F. BAKER
---------------------------- ---------------------------
Title: Vice President Title: Vice President
------------------------- ------------------------
Date: 2/18/96 Date: 4/25/96
-------------------------- --------------------------
<PAGE>
AMENDMENT NUMBER 1
TO
STOCK PURCHASE AGREEMENT
This Amendment Number 1 to Stock Purchase Agreement is entered into this
30th day of April, 1996 by and between Medallion Financial Corp. ("MFC"), a
---
Delaware corporation, and Transportation Capital Corp., a New York corporation
("TCC"), LNC Investments, Inc., a Delaware corporation and the sole stockholder
---
of TCC (the "Stockholder"), Leucadia, Inc., a New York Corporation ("Leucadia")
----------- --------
and Leucadia National Corporation, a New York Corporation ("Leucadia
--------
National")(TCC, the Stockholder, Leucadia and Leucadia National being
- --------
collectively referred to herein as the "Leucadia Parties"). Reference is hereby
----------------
made to the Stock Purchase Agreement dated February 12, 1996 (the "Purchase
--------
Agreement"), pursuant to which MFC will acquire all of the outstanding capital
- ---------
stock of TCC. Capitalized terms used in this Amendment that are not defined
herein shall have the same meanings as contained in the Purchase Agreement.
MFC and the Leucadia Parties desire to amend the Purchase Agreement in
order to extend certain times for performance set forth in Section 1.4 and
Section 8.1 (d) of the Purcahse Agreement. Accordingly, in consideration of the
mutual promises and covenants contained in the Purchase Agreement, as amended
hereby, MFC and the Leucadia Parties hereby agree as follows:
1. The date "March 31, 1996" in Section 1.4 is hereby deleted and
replaced with "June 30, 1996".
2. The date "May 31, 1996" in subparagraph (d) of Section 8.1 is hereby
deleted and replaced with "June 30, 1996".
Entire Agreement. The Purchase Agreement, as amended hereby, remains in
----------------
full force and effect and embodies the entire agreement and understanding
between the parties thereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings relating to such subject
matter.
Counterparts. This Amendment may be executed simultaneously in any
------------
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
1
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment under
seal as of the day and year first above written.
MEDALLION FINANCIAL CORP.
By: /s/ Andrew Murstein
----------------------
TRANSPORTATION CAPITAL CORP.
By: /s/ Mark Hornstein
---------------------
LNC INVESTMENTS, INC.
By: /s/ Mark Hornstein
---------------------
LEUCADIA, INC.
By: /s/ Mark Hornstein
---------------------
LEUCADIA NATIONAL CORPORATION
By: /s/ Mark Hornstein
---------------------
2
<PAGE>
AMENDMENT NUMBER 1
TO
ASSET PURCHASE AGREEMENT
This Amendment Number 1 to Asset Purchase Agreement is entered into this
30th day of April, 1996 by and between Medallion Financial Corp. ("MFC"), a
---
Delaware corporation, and Edwards Capital Company ("Edwards"), a New York
-------
limited partnership. Reference is hereby made to the Asset Purchase Agreement
dated February 21, 1996 between MFC and Edwards (the "Purchase Agreement"),
------------------
pursuant to which MFC shall purchase the Purchased Assets of Edwards.
Capitalized terms used in this Amendment that are not defined herein shall have
the same meanings as contained in the Purchase Agreement.
MFC and Edwards desire to amend the Purchase Agreement in order to extend
certain times for performance set forth in Section 1.10 and 8.1 of the Purchase
Agreement. Accordingly, in consideration of the mutual promises and covenants
contained in the Purchase Agreement, as amended hereby, MFC and Edwards hereby
agree as follows:
1. The date "April 30, 1996" in Section 1.10 is hereby deleted and
replaced with "June 14, 1996".
2. The date "April 30, 1996" in subparagraph (v) of Section 8.1 is hereby
deleted and replaced with "June 14, 1996".
Entire Agreement. The Purchase Agreement, as amended hereby, remains in
----------------
full force and effect and embodies the entire agreement and understanding
between the parties thereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings relating to such subject
matter.
Counterparts. This Amendment may be executed simultaneously in any
------------
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment under
seal as of the day and year first above written.
MEDALLION FINANCIAL CORP.
By: /s/ Andrew Murstein
----------------------
EDWARDS CAPITAL COMPANY
By: HARVARD SERVICING CORP.
its sole General Partner
By: /s/ Edward M. Abramson
-----------------------
<PAGE>
Schedule of Promissory Notes from Edwards Capital Company
---------------------------------------------------------
payable to Israel Discount Bank of New York
-------------------------------------------
Supplying the variable terms and conditions of the Promissory Notes
-------------------------------------------------------------------
<TABLE>
<CAPTION>
Date Amount Due Interest Rate
- --------------------- -------- ------------- --------------
<S> <C> <C> <C>
(a) April 29, 1996 $300,000 June 28, 1996 6.86875%
(b) April 22, 1996 $350,000 June 21, 1996 6.86875%
(c) April 12, 1996 $150,000 June 11, 1996 6.90%
(d) April 10, 1996 $450,000 June 10, 1996 6.90%
(e) April 3, 1996 $250,000 June 3, 1996 6.8375%
</TABLE>
<PAGE>
Schedule of Secured Notes from Edwards Capital Company
------------------------------------------------------
payable to Sterling National Bank & Trust Company of New York
-------------------------------------------------------------
Supplying the variable terms and conditions of the Secured Notes
----------------------------------------------------------------
<TABLE>
<CAPTION>
Date Amount Due Interest Rate
---- ------ --- -------------
<S> <C> <C> <C>
(a) May 3, 1996 $250,000 June 3, 1996 6.9375%
(b) April 24, 1996 $150,000 June 24, 1996 6.96875%
</TABLE>
<PAGE>
NatWest Bank
August 14, 1995
Michael Kowalsky
Edwards Capital Company
2 Park Avenue
New York, NY 10016
Dear Michael:
I am pleased to inform you that NatWest Bank N.A. has approved the renewal of a
$5,000,000 secured line of credit for Edwards Capital Company. The line will be
available through July 31, 1996. Borrowings will be subject to the usual credit
factors being favorable at the time of each request for an advance. As a
further condition to this line of credit, Edwards Capital Company agrees to
furnish NatWest with quarterly financial statements as well as a certified
annual financial statement. Edwards Capital also agrees to allow NatWest to
perform periodic examinations of their books, records and operation. The cost
of such examination to be borne by NatWest.
Edwards Capital can borrow, at its option, at the rate that NatWest announces as
its "Prime" rate, LIBOR plus 160 basis points, or at a rate quoted as NatWest's
Cost of Funds plus 160 basis points. Interest will be calculated on the basis
of actual days elapsed divided by 360. In the event of "Prime" rate loans,
interest will be due monthly and will be debited from your account.
If you are in agreement with these terms, please have the enclosed copy of this
letter signed and returned. I have also enclosed an Endorsement to our existing
Promissory Note reflecting this renewal. Please sign and return one copy to me.
NatWest is very happy to make this facility available and we look forward to a
continued excellent relationship.
Accepted: Sincerely yours,
Edwards Capital Company NatWest Bank N.A.
By: Harvard Servicing Corp.
General Partner /s/ Richard J. Miller
Vice President
/s/ Edward M. Abramson
President
<PAGE>
ENDORSEMENT NO. 2
- -----------------
The undersigned, EDWARDS CAPITAL COMPANY (the "Borrower"), and NATWEST BANK,
N.A. (formerly National Westminster Bank USA, hereinafter called the "Bank")
hereby agree that the Promissory Note of the Borrower in favor of the Bank dated
July 31, 1993 (the "Note") to which this Endorsement No. 1 is attached is hereby
amended as follows:
The Note is hereby modified as follows:
A. The references to "July 31, 1995" in the first paragraph of the Note
are modified to read "July 31, 1996".
B. The reference to "July 31, 1995" in the second paragraph on page 2 of
the Note is modified to read "July 31, 1996".
Except as expressly amended by this Endorsement all the terms and conditions of
the Note to which this Endorsement No. 2 is attached shall continue in full
force and effect.
This Endorsement shall be as of July 31, 1995.
EDWARDS CAPITAL COMPANY
By: Harvard Servicing Corp.
General Partner
By: /s/ Edward M. Abramson
-------------------------
President
NATWEST BANK N.A.
By: /s/ Richard J. Miller
------------------------
Vice President
Dated: As of July 31, 1995
-2-
<PAGE>
$5,000,000 July 31, 1993
FOR VALUE RECEIVED, EDWARDS CAPITAL COMPANY, a New York Limited
Partnership ("Borrower"), promises to pay to the order of NATIONAL WESTMINSTER
BANK USA ("Bank") at the office of the Bank located at 175 Water Street, New
York, New York 10038 or at such other place as the holder hereof may direct in
writing, in lawful money of the United States of America,and in immediately
available funds, the principal amount of Five Million Dollars ($5,000,000), or,
if less than such principal amount, the aggregate unpaid principal amount of all
loans made by the Bank to the Borrower as shown on the schedule attached to and
made part of this Note, on the maturity dates set forth on such schedule. The
Borrower further agrees to pay interest at said office in like money, from the
date hereof on the unpaid principal amount hereof outstanding from time to time
(computed on the basis of a 360 days year for actual days elapsed) at a rate per
annum for each loan hereunder equal to either (i) the Bank's Prime Rate (the
rate established from time to time by the Bank as its prime rate), and which
rate shall be adjusted for changes in the Prime Rate effective on the date on
which a change in the Prime Rate occurs, or (ii) such other rate of interest as
may otherwise be agreed upon and set forth on the attached schedule. The
applicable rate shall be fixed at the time each loan is made. Any loan with an
applicable interest rate based upon the Prime Rate (a "Prime Rate Loan") shall
be payable on July 31, 1994 and any loan with an applicable interest rate as
otherwise agreed upon (an "Agreed Rate Loan") shall have such maturity date as
may be agreed upon and set forth in the attached schedule but in no event later
than July 31, 1994. Each loan made hereunder shall be in a minimum amount of
$100,000. Any Prime Rate Loan made hereunder may be prepaid at any time in
whole or in part together with interest on the amount prepaid to the date of
prepayment without premium or penalty.
Interest on each Prime Rate Loan shall be payable on the last business
date of each calendar month, and on the date such loan becomes due, and payable
(whether at the stated maturity thereof, by acceleration or otherwise).
Interest on each Agreed Rate Loan shall be payable on the date of maturity of
such loan (whether at the stated maturity thereof, by acceleration or
otherwise). Whenever any unpaid principal amount of a loan made hereunder shall
become due and payable (whether at the stated maturity thereof,m by acceleration
or otherwise) interest thereon shall thereafter be payable on demand at a rate
per annum equal to 2% above the Bank's Prime Rate (the "Default Rate") at the
time of any such maturity adjusted daily for changes in the Prime Rate provided,
however, that no interest payable hereunder shall be in excess of the maximum
permitted under any applicable law.
Notwithstanding the foregoing, if any principal amount of a loan made
hereunder shall become due and payable at its stated maturity date, then, so
long as no Event of Default has occurred hereunder (other than non-payment of
principal on the stated maturity date), interest on such principal amount shall
continue to be payable at a rate per annum equal to the Bank's Prime Rate,
instead of the Default Rate, unless and until 90 days after the date notice is
given by Bank to Borrower that Bank does not intend to grant any extensions or
renewals of this Note.
-3-
<PAGE>
The Borrower shall give the Bank notice of each request for a loan
hereunder setting forth the amount thereof, the interest rate on which such loan
is to be based, the Business Day on which it is to be made and the maturity date
thereof. Such notice may be written or oral, but if oral, it shall thereafter
be confirmed promptly in a writing or telex delivered by the Borrower to the
Bank.
The Borrower hereby expressly authorizes the Bank to record on the
attached schedule the amount and date of each loan made hereunder, the rate of
interest thereon, the maturity date thereof and the date and amount of each
payment of principal. All such notations shall be presumptive as to the
correctness thereof. In no event shall the Bank be obligated to make any loans
to the Borrower hereunder, except that, if any loans made hereunder shall mature
prior to July 31, 1994, then, provided no Event of Default has occurred
hereunder, Bank shall be obligated to make a loan to Borrower, in the amount of
such matured loans, at the time of such maturity.
If payment of principal or interest hereunder becomes due on a day
which is not a Business Day, such payment may be made on the next succeeding
Business Day, and such extension of time shall be included in computing interest
in connection with such payment. As used herein, "Business Day" shall mean any
day other than a Saturday, Sunday or day which shall be in the City of New York
a legal holiday or day on which banking institutions are authorized or required
by law to close.
If the Bank determines that the effect of any applicable law or
governmental regulation, guideline or order or any change therein or in the
interpretation thereof by any governmental authority charged with the
administration thereof (such as, for example, a change in official reserve
requirements which the Bank is required to maintain in respect of loans or
deposits or other funds procured for funding such loans) is to increase the cost
to the Bank of making or maintaining Agreed Rate Loans hereunder or to reduce
the amount of any payment or principal or interest receivable by the Bank, then
the borrower will pay to the Bank on demand such additional amounts as the Bank
may determine to be required to compensate the Bank for such additional cost or
reduction. Any additional payment under this clause will be computed from the
30th day after the date on which Bank shall give Borrower notice that such
additional costs have to be borne by the Bank. For the purpose of this clause
the determination of the Bank shall be conclusive if made reasonably and in good
faith.
The Borrower hereby indemnifies the Bank against any loss or expense
(including, without limitation, loss of anticipated profit) which the Bank may
sustain or incur as a consequence of (a) the failure of the borrower to borrow
an Agreed Rate Loan after agreement shall have been reached on the amount,
interest rate and the maturity date thereof or (b) the receipt of recovery by
the Bank, whether by acceleration or otherwise, of all or any part of an Agreed
Rate Loan prior to the maturity date thereof. The amount to be paid by the
Borrower to the Bank in order to so indemnify the Bank for any loss occasioned
by any of the events described in the preceding sentence, and as liquidated
damages therefor, shall be equal to the excess, discounted to its present value
as of the date paid to the Bank, of (i) the amount of interest which otherwise
would have accrued on the principal amount so received, recovered or not
borrowed during the period (the "Indemnity Period") commencing
-4-
<PAGE>
with the date of such receipt, recovery or failure to borrow to the maturity
date for such Agreed Rate Loan at the rate of interest applicable to such loan
(or the rate of interest agreed to in the case of a failure to borrow) provided
for herein (prior to default) over (ii) the amount of interest which would be
earned by the Bank during the Indemnity Period if it invested the principal
amount so received, recovered or not borrowed at the rate per annum determined
by the Bank (in the exercise of its reasonable judgment) as the rate it would
bid in the London interbank market for a deposit of Eurodollars in an amount
approximately equal to such principal amount for a period of time comparable to
the Indemnity Period. A certificate as to any additional amounts payable
pursuant to this paragraph setting forth the basis and method of determining
such amounts shall be conclusive, absent manifest error, as to the determination
by the Bank set forth therein if made reasonably and in good faith. The
Borrower shall pay any amounts so certified to it by the Bank within 10 days of
receipt of any such certificate.
The Borrower represents and warrants that: 1) it is a limited
partnership duly organized and existing under the laws of the State of New York
and is duly qualified to do business and is in good standing in every state
where the failure to qualify would materially and adversely affect the financial
condition of the borrower; 2) the execution, issuance and delivery of this Note
by the borrower are within its partnership powers and have been duly authorized,
and the Note is valid, binding and enforceable in accordance with its terms, and
is not in violation of the terms of the borrower's Agreement of Limited
Partnership and does not result in the breach of or constitute a default under
any indenture, agreement or undertaking to which the borrower is a party or by
which it or its property may be bound or affected and, to the best of the
Borrower's knowledge, is not in violation of law; 3) Financial statements of the
borrower dated as of December 31, 1992 heretofore furnished to the Bank are
complete and correct and fairly represent the financial condition of the
borrower as of such date and the results of its operations for the period ending
on such date, and since such date no material adverse change in the financial
condition of the borrower has occurred; 4) No Event of Default has occurred or
is outstanding and no event has occurred which with the giving of notice or the
lapse of time or both would constitute an Event of Default; 5) The Borrower
shall not use any part of the proceeds of any Loan hereunder to purchase or
carry any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System or to extend credit to others for the
purpose of purchasing or carrying any margin stock; 6) On the occasion of each
loan hereunder all representations and warranties contained herein or otherwise
made in writing in connection herewith shall be true and correct and with the
same force and effect as though such representations and warranties had been
made on and as of the date of the making of such loan.
The Borrower agrees to furnish to the Bank within 90 days after the
last day of each of its fiscal years, the consolidated and consolidating balance
sheets of the borrower and its Subsidiaries as at such last day of the fiscal
year and statements of income and retained earnings and cash flows for such
fiscal year each prepared in accordance with generally accepted accounting
principles consistently applied and certified by a firm of independent certified
public accountants satisfactory to the Bank; and within 60 days after the close
of each of the first three quarters of each fiscal year consolidated and
consolidating balance sheets, statements of income and retained earnings and
cash flows of the borrower and its Subsidiaries as of the last day of and for
such quarter and for the period of the fiscal year
-5-
<PAGE>
ended as of the close of the particular quarter, all such quarterly statements
to be in reasonable detail. The Borrower will also, with reasonable promptness,
furnished such other data as may be reasonably requested by the Bank, including,
but not limited to, detailed schedules of all delinquent loans and all non-
performing loans, which schedules shall be furnished simultaneously with the
annual and quarterly financial statements furnished in accordance with this
paragraph.
As collateral security for the payment of any and all sums owing under
this Note and all other obligations direct or contingent, joint, several or
independent, of the Borrower now or hereafter existing, due or to become due to,
or held, or to be held by, the Bank, which obligations have been created
directly to Bank, the borrower hereby grants to the Bank a lien on and security
interest in any and all deposits or other sums at any time credited by or due
from the Bank to the borrower, whether in regular or special depository accounts
or otherwise, and any and all monies, securities and other property of the
borrower, and the proceeds thereof, now or hereafter held or received by or in
transit to the Bank from or for the borrower, whether for safekeeping, custody,
pledge, transmission, collection or otherwise, and any such deposits, sums,
monies, securities and other property, may at any time after the occurrence of
any Event of Default be set-off, appropriated and applied by the Bank against
any of the aforesaid obligations whether or not such obligations are then due or
are secured, whether or not such collateral held by the Bank is considered to be
adequate and with respect to all collateral security the Bank shall have all the
rights and remedies available to it under the Uniform Commercial Code of New
York and other applicable law. Such lien and security interest shall be subject
to the rights of Borrower's other lenders set forth in the Intercreditor
Agreement entered into by Bank.
Upon the occurrence of any of the following specified events of
default (each an "Event of Default"): 1) Default in any payment of principal of
or interest when due which shall continue for more than 3 days or default in
payment of any other sums payable under this Note which shall continue for more
than 30 days; 2) Default in the due payment of the Borrower's indebtedness for
borrowed money or in observance or performance of any covenant or condition
contained in any agreement or instrument evidencing, securing, or relating to
any of such indebtedness (after giving effect to any applicable grace or cure
period) which shall continue for more than 30 days; or 3) Default in the
observance or performance of any other agreement of the Borrower set forth
herein which shall continue for more than 30 days; or 4) Any representation or
warranty made by the borrower herein or in any certificate furnished by the
Borrower pursuant to the provisions hereof, proves untrue in any material
respect; or 5) the Borrower becomes insolvent or bankrupt, is generally not
paying its debts as they become due, or makes an assignment for the benefit of
creditors, or a trustee or receiver is appointed for the borrower or for any
part of the properties of the borrower with or without the consent of the
borrower and, if not consented to by the Borrower, is not discharged within 75
days, or bankruptcy, reorganization, liquidation or similar proceedings are
instituted by or against the borrower with or without the Borrower's consent
and, if not consented to by the borrower, is not dismissed within 75 days, or a
writ or warrant of attachment or similar process shall be issued against any
party of the property of the borrower and is not dismissed within 75 days; or 6)
the Bank shall have determined, in the exercise of its reasonable discretion,
that one or more conditions exist or events have occurred which have resulted in
a material adverse change in the business, properties or
-6-
<PAGE>
financial condition of the borrower; then in any such event, and at any time
thereafter, the Bank may without notice, declare the principal and the accrued
interest in respect of all loans under this Note to be, whereupon the Note shall
become, immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are expressly waived by the Borrower.
The Borrower agrees to pay on demand all of the Bank's costs and
expenses, including reasonable counsel fees, in connection with collection of
any sums due to the Bank and enforcement of its rights under this Note.
No modification or waiver of any provision of this Note and no consent
by the Bank to any departure therefrom by the borrower shall be effective unless
such modification or waiver shall be in writing and signed by a duly authorized
officer of the Bank,and the same shall then be effective only for the period and
on the conditions and for the specific instances specified in such writing. No
failure or delay by the Bank in exercising any right, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any rights, power or privilege.
This Note shall be construed in accordance with and governed by the
laws of the State of New York.
The General Partners of the borrower shall not personally be liable on
this Note and the Bank shall look solely to the borrower and its assets for
satisfaction of any claim, liability, expense, action, judgment or other matter
arising hereunder or on account hereof.
This Note shall supersede and replace that certain $5,000,000 note of
the Borrower in favor of the Bank dated October 26, 1992, as amended, and all
outstanding indebtedness under such prior note shall be deemed to be evidenced
by this Note and shall be payable on the maturity dates set forth on the
Schedule attached to this Note. All accrued and unpaid interest on the
aforesaid prior note shall be payable on the next applicable dates on which
interest is payable pursuant to this Note.
EDWARDS CAPITAL COMPANY
By: Harvard Servicing Corp.
General Partner
By: /s/ Edward M. Abramson
-------------------------
President
- -7-
<PAGE>
PROMISSORY NOTE
EDWARDS CAPITAL COMPANY
TO
NATIONAL WESTMINSTER BANK USA
LOAN AND REPAYMENT SCHEDULE
<TABLE>
<CAPTION>
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Date of Interest Maturity Principal Date of Principal Interest Date
Advance Rate Date Payment Principal Balance Payment Interest
Payment Paid
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------
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====================================================================================
</TABLE>
-8-
<PAGE>
ENDORSEMENT NO. 1
-----------------
The undersigned, EDWARDS CAPITAL COMPANY (the "Borrower"), and NATIONAL
WESTMINSTER BANK USA (the "Bank") hereby agree that the Promissory Note of the
Borrower in favor of the Bank dated July 31, 1993 (the "Note") to which this
Endorsement No. 1 is attached is hereby amended as follows:
The Note is hereby modified as follows:
A. The reference to "July 31, 1994" in the first paragraph of the Note is
modified to read "July 31, 1995".
B. The reference to "July 31, 1994" in the second paragraph on page 2 of
the Note is modified to read "July 31, 1995".
Except as expressly amended by this Endorsement all the terms and conditions of
the Note to which this Endorsement No.1 is attached shall continue in full force
and effect.
This Endorsement shall be effective as of July 31, 1994.
EDWARDS CAPITAL COMPANY
By: Harvard Servicing Corp.
General Partner
By: /s/ Edward M. Abramson
-------------------------
NATIONAL WESTMINSTER BANK USA
By: /s/ Charles Thomas, V.P.
---------------------------
<PAGE>
NATWEST BANK N.A.
TERM NOTE
$3,231,900 Office: 175 Water Street September 29, 1995
Address: New York, NY 10038
On April 1, 1996 or on such earlier date as TRI-MAGNA CORPORATION (the
"Borrower") receives the proceeds of its initial public offering of common stock
currently scheduled for December 1995, the Borrower promises to pay to the order
of NATWEST BANK N.A. (the "Bank") at the office of the Bank located at the place
first above stated or such other place as the holder hereof may from time to
time appoint in writing, in lawful money of the United States of America in
immediately available funds, the principal sum of Three Million Two Hundred
Thirty One Thousand Nine Hundred ($3,231,900) Dollars. The Borrower also
promises to pay interest (computed on the basis of a 360 day year for actually
days elapsed) at said office in like money on the unpaid principal amount hereof
from time to time outstanding from the date hereof until maturity on the last
day of each month, commencing October 31, 1995 and upon the payment in full of
this Note at a rate equal to the Prime Rate (the rate established from time to
time by the Bank as its "prime rate"), which interest rate shall change when and
as the Prime Rate changes. If any payment of principal or interest becomes due
on a day on which the banks in New York, New York, are required or permitted by
law to remain closed, such payment may be made on the next succeeding business
day on which such banks are open, and such extensions shall be included in
computing interest in connection with such payment. The Borrower further agrees
that after the stated or any accelerated maturity hereof this Note shall bear
interest at a rate of 2% per annum in excess of the rate hereinbefore provided,
payable on demand. In no event shall interest be payable hereunder in excess of
the maximum rate of interest permitted under applicable law.
In consideration of the granting of the loan evidenced by this Note, the
Borrower hereby agrees as follows:
1. Prepayment. The Borrower may prepay this Note in whole or in part
----------
without premium or penalty. Each prepayment shall be made together with
interest accrued thereon to and including the date of prepayment.
2. Representations and Warranties. The Borrower hereby represents and
------------------------------
warrants to the Bank that:
a. The Borrower is duly organized, validly existing and in good
standing under the laws of the state of its incorporation and is qualified to do
business and in good standing under the laws of each state where its failure to
so qualify would have a material adverse effect on the business, operations,
property or other condition of the borrower.
<PAGE>
b. This Note has been duly authorized, executed and delivered and
constitutes the valid and legally binding obligation of the Borrower,
enforceable in accordance with its terms.
c. The execution and delivery of this Note, and performance hereunder,
will not violate any provision of the law.
d. There are no actions or proceedings pending before any court or
governmental authority, bureau or agency, with respect to or threatened against
or affecting the Borrower, or any Subsidiary, which if determined adversely
would have a material adverse effect on the business, the assets or the
financial condition of the Borrower or any Subsidiary. As used herein, the term
"Subsidiary" or "Subsidiaries" means any corporation or corporations of which
the Borrower, alone, or the borrower and/or one or more of its Subsidiaries,
owns, directly or indirectly, at least a majority of the securities having
ordinary voting power for the election of directors.
e. Neither the Borrower nor any Subsidiary is in default under, or in
violation of, any term of, any agreement, ordinance, resolution, decree, bond,
note, indenture, order or judgment to which it is a party or by which it is
bound, or by which any of the properties or assets owned by or used in the
conduct of its business is affected, which default or violation may have a
material adverse effect on the business, the assets or the financial condition
of the Borrower or any Subsidiary. The operations of the Borrower and each
Subsidiary comply in all respects with all laws, ordinances and regulations
applicable to them.
f. Neither the Borrower nor any Subsidiary is a party to or bound by, nor
are any of the properties or assets owned by it or used in the conduct of its
business affected by, any agreement, ordinance, resolution, decree, bond, note,
indenture, order or judgment, or subject to any charter or other corporate
restriction, which materially and adversely affects the business, assets or
financial condition of the Borrower or of any Subsidiary.
g. All balance sheets, profit and loss statements and other financial
information heretofore furnished to the Bank are true, correct and complete and
present fairly the financial condition of the Borrower and its Subsidiaries as
at the dates thereof and for the periods covered thereby, including contingent
liabilities of every kind, which financial condition has not materially
adversely changed since the date of the most recently dated balance sheet of the
Borrower heretofore furnished to the Bank.
h. No part of the proceeds of the loan which is evidenced by this Note
will be used directly or indirectly for the purpose of purchasing or carrying,
or for payment in full or in part or indebtedness which was incurred for the
purpose of purchasing or carrying, any margin stock as such term is defined in
Section 221.3 of Regulation U of the Board of Governors of the Federal Reserve
System.
i. The Borrower and its Subsidiaries are in compliance in all material
respects with the Employee Retirement Income Security Act of 1974 ("ERISA") and
all rules
<PAGE>
and regulations thereunder. Neither the Borrower nor any of its Subsidiaries
has any unfunded vested liability under any type of plan described in Section
3021(a) of ERISA ("Plan") and no reportable event, as set forth in Section
4043(b) of ERISA, has occurred or is continuing with respect to any Plan.
j. Each of the Borrower and its Subsidiary, Medallion Funding Corp.
referred to in Section 3(b) hereof is an "investment company" as defined in, and
is subject to regulation under, the Investment Company Act of 1940; provided
that neither such Act nor any such regulation prohibits the Loan evidenced by
this Note, requires any consent to the Loan evidenced hereby which has not been
obtained or requires any action prior or subsequent to the making of such Loan
on the part of the Borrower or Medallion Funding Corp. which, if not taken may
affect the enforceability hereof.
3. Affirmative Covenants. The Borrower will, and with respect to the
---------------------
agreements set forth in Subsections 3(a) through 3(f) hereof, will cause each
Subsidiary to:
a. with respect to its properties, assets and business, maintain
insurance against loss or damage, to the extent that property, assets and
businesses of similar character are usually so insured by companies similarly
situated and operating like properties, assets or businesses with insurance
companies believed by the borrower to be responsible;
b. duly paid and discharge all taxes or other claims which might
become a lien upon any of its property except to the extent that such items are
being in good faith appropriately contested;
c. maintain, preserve and keep its properties in good repair, working
order and condition, and make all reasonable repairs, replacements, additions,
betterments and improvements thereto;
d. conduct its business in substantially the same manner and in
substantially the same field as such business is now carried on and conducted;
e. comply with all statutes, rules and regulations and maintain its
corporate existence;
f. permit the Bank to make or cause to be made, inspections and audits
of any books, records and papers of the Borrower and to make extracts therefrom
at all such reasonable times and as often as the Bank may reasonably require;
g. use the proceeds of the loan evidenced by this Note for the
following purposes and for no other purpose: purchase of $9,234,000 (face value)
of the preferred stock of Medallion Funding Corp., a subsidiary of the Borrower,
from the Small Business Administration;
i) immediately give notice to the Bank that an Event of Default
has occurred or that an event which, with the giving of notice or lapse of time,
or both, would
<PAGE>
constitute an Event of Default, has occurred and specifying the action which the
Borrower has taken and proposes to take with respect thereto.
4. Negative Covenants. The Borrower will not, and will not permit any
------------------
Subsidiary to:
a. enter into any merger or consolidation or liquidate, windup or
dissolve itself or sell, transfer or lease or otherwise dispose of all or any
substantial part of its assets, (other than sales in the ordinary course of
business) or acquire by purchase or otherwise the business or assets of, or
stock of another corporation; except that any Subsidiary may merge into or
consolidate with any other Subsidiary which is wholly-owned by the Borrower, and
any Subsidiary which is wholly-owned by the Borrower may merge with or
consolidate into the Borrower provided that the Borrower is the surviving
corporation;
b. create, assume or permit to exist, any mortgage, pledge, lien or
encumbrance of or upon or security interest in, any of its property or assets
now owned or hereafter acquired except (i) mortgages, liens, pledges and
security interests in favor of the Bank; (ii) other liens, charges and
encumbrances incidental to the conduct of its business or the ownership of its
property and assets which were not incurred in connection with the borrowing of
money or the obtaining of advances or credit and which do not materially impair
the use thereof in the operation of its business; and (iii) liens for taxes or
other governmental charges which are not delinquent or which are being contested
in good faith and for which a reserve shall have been established in accordance
with generally accepted accounting principles;
c. (i) terminate any Plan so as to result in any material liability to
The Pension Benefit Guaranty Corporation established pursuant to Subtitle A of
Title IV of ERISA (the "PBGC"), (ii) engage in or permit any person to engage in
any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975
of the Internal Revenue Code of 1954, as amended) involving any Plan which would
subject the Borrower to any material tax, penalty or other liability, (iii)
incur or suffer to exist any material "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, involving any Plan, or
(iv) allow or suffer to exist any event of condition, which presents a material
risk of incurring a material liability to the PBGC by reason of termination of
any Plan.
d. sell, discount or otherwise dispose of notes, accounts receivable
or other obligations owing to the Borrower, with or without recourse, except for
the purpose of collection in the ordinary course of business; or sell any asset
pursuant to an arrangement to thereafter lease such asset from the purchaser
thereof.
5. Collateral Security. a. As collateral security for the payment of any
-------------------
and all sums owing under this Note and all other obligations, direct or
contingent, joint, several or independent, of the borrower now or hereafter
existing, due or to become due to, or held, or to be held by, the Bank, whether
created directly or acquired by assignment or otherwise (all of such
obligations, including this Note, are hereinafter called the "Obligations"), the
Borrower hereby grants to the Bank a lien on and security interest in any and
all deposits or
<PAGE>
other sums at any time credited by or due from the Bank to the Borrower, whether
in regular or special depository accounts or otherwise, and any and all monies,
securities and other property of the Borrower, and the proceeds thereof, now or
hereafter held or received by or in transit to the Bank from or for the
borrower, whether for safekeeping, custody, pledge, transmission, collection or
otherwise, and any such deposits, sums, monies, securities and other property,
may at any time after the occurrence of any Event of Default be set-off,
appropriated and applied by the Bank against any of the Obligations whether or
not such Obligations are then due or are secured by any collateral, or, if they
are so secured, whether or not such collateral held by the Bank is considered to
be adequate and with respect to all collateral security the Bank shall have the
rights and remedies available to it under the Uniform Commercial Code of New
York and other applicable law.
b. Payment of this Note is also secured by and the Borrower hereby
grants to the Bank a security interest in and delivers to the Bank herewith, all
of the issued and outstanding capital stock of Medallion Funding Corp. including
the common stock to be issued to the borrower in replacement of the preferred
stock to be purchased with the proceeds of the Loan evidenced by this Note and
referred to in Section 3(g) hereof.
6. Events of Default. If any one or more of the following events ("Events
-----------------
of Default") shall occur, the entire unpaid balance of the principal of and
interest on the Obligations shall immediately become due and payable:
a. Failure to make any payment of principal or interest in respect of
any of the Obligations when due; or
b. Failure to observe any of the agreements of the Borrower contained
in Sections 4 or 5 hereof; or,
c. Failure by the respective parties hereunder or thereunder to
perform any other term, condition or covenant of this Note or any other
agreement, instrument or document delivered pursuant hereto or in connection
herewith or therewith, which shall remain unremedied for a period of 15 days
after notice thereof shall have been given by the Bank to the Borrower; or,
d. (i) Failure to perform any term, condition or covenant of any bond,
note, debenture, loan agreement, indenture, guaranty, trust agreement, mortgage
or other instrument or agreement in connection with the borrowing of money or
the obtaining of advances or credit to which the Borrower or any Subsidiary is a
party or by which is bound, or by which any of its properties or assets may be
affected (a "Debt Instrument"), so that, as a result of any such failure to
perform, the indebtedness included therein or secured or covered thereby is
declared due and payable prior to the date on which such indebtedness would
otherwise become due and payable; or,
(ii) any event or condition referred to in any Debt Instrument
shall occur or fail to occur, so that, as a result thereof, the indebtedness
included therein or
<PAGE>
secured or covered thereby is declared due and payable prior to the date on
which such indebtedness would otherwise become due and payable; or,
(iii) any indebtedness included in any Debt Instrument or secured
or covered thereby is not paid when due; or
e. Any representation or warranty made in writing to the Bank in this
Note or in connection with the making of the loan evidenced hereby or any
certificate, statement or report made in compliance with this Note, shall have
been false in any material respect when made; or
f. An order for relief under the Federal Bankruptcy Code as now or
hereafter in effect, shall be entered against the Borrower or any Subsidiary; or
the Borrower or any Subsidiary shall become insolvent, generally fail to pay its
debts as they become due, make an assignment for the benefit of creditors, file
a petition in bankruptcy, be adjudicated insolvent or bankrupt, petition or
apply to any tribunal for the appointment of a receiver or any trustee for it or
a substantial part of its assets, or shall commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect; or if there shall have been filed any such petition or application, or
any such proceeding shall have been commenced against it, which remains
undismissed for a period of thirty days or more; or the Borrower or any
Subsidiary or endorser or guarantor hereof by any act or omission shall indicate
its consent to approval of or acquiescence in any such petition, application or
proceeding or the appointment of a receiver of or any trustee for it or any
substantial part of any of its properties, or shall suffer any such receivership
or trusteeship to continue undischarged for a period of third days or more; or,
g. Any judgment against the Borrower or any Subsidiary or any
attachment, levy or execution against any of its properties for any amount shall
remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a
period of sixty days or more; or,
h. The Bank shall have determined, in its sole discretion, that one or
more conditions exist or events have occurred which may result in a material
adverse change in the business, properties or financial condition of the
Borrower.
7. Payments. All payments by the Borrower on account of principal,
--------
interest, or any other sum due hereunder, shall be made in lawful money of the
United States of America in immediately available funds. The Bank may charge
any account of the Borrower maintained at any office of the Bank for any such
amount due hereunder. If any payment of principal or interest becomes due on a
day on which the banks in New York, New York, are required or permitted by law
to remain closed, such payment may be made on the next succeeding business day
on which such banks are open, and such extensions shall be included in computing
interest in connection with such payment.
8. Miscellaneous.
-------------
<PAGE>
a. All agreements, representations and warranties made herein shall
survive the delivery of this Note. The Borrower waives trial by jury, set-off
and counterclaim of any nature or description in any litigation in any court
with respect to, in connection with, or arising out of, this Note or any
instrument or document delivered pursuant hereto or the validity, protection
interpretation, collection or enforcement hereof.
b. No modification or waiver of or with respect to any provision of
this Note, or consent to any departure by the Borrower from any of the terms or
conditions to any departure by the Borrower from any of the terms or conditions
hereof, shall in any event be effective unless it shall be in writing and signed
by the Bank, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice to or demand on
the borrower in any case shall, of itself, entitle it to any other or further
notice or demand in similar or other circumstances.
c. Each and every right granted to the Bank hereunder or under any
other document delivered hereunder or in connection herewith, or allowed it by
law or equity, shall be cumulative and may be exercised from time to time. No
failure on the part of the Bank or the holder of this Note to exercise, and no
delay in exercising, any right shall operate as a waiver thereof, nor shall any
single or partial exercise of any right preclude any other or future exercise
thereof or the exercise of any other right.
d. In the event that this Note is placed in the hands of an attorney
for collection by reason of any default hereunder, the Borrower agrees to pay
reasonable attorney's fees so incurred. The Borrower promises to pay all
expenses of any nature as soon as incurred whether in or out of court and
whether incurred before or after this Note shall become due at its maturity date
or otherwise and costs which the Bank may deem necessary or proper in connection
with the satisfaction of the indebtedness or the administration, supervision,
preservation, protection (including but not limited to maintenance of adequate
insurance) of or the realization upon the collateral.
e. The Borrower hereby waives presentment, demand for payment,
protest, notice of protest, notice of dishonor, and any and all other notices or
demands except as otherwise expressly provided for herein.
f. All accounting terms not otherwise defined in this Note shall have
the meanings ascribed thereto under generally accepted accounting principles.
g. This Note and any other agreements, documents and instruments
executed and delivered pursuant to or in connection with the Obligations contain
the entire agreement between the parties relating to the subject matter hereof
and thereof. The undersigned is not relying on any oral representations,
agreements or commitments of the Bank or of any officer, employee, agent or
representative thereof.
9. Notices. All notices, requests and other communications pursuant to
-------
this Note shall be in writing, either by letter (delivered by hand or sent by
certified mail, return receipt requested) or telegram, addressed as follows:
<PAGE>
(a) if to the Borrower:
Tri-Magna Corporation
205 East 42nd Street
New York, New York 10017
Attn: Daniel F. Baker
Vice President - Finance
and,
(b) if to the Bank:
NatWest Bank N.A.
175 Water Street
New York, New York 10038
Attn: National Markets Group
Finance Companies
Any notice, request or communication hereunder shall be deemed to have been
given when deposited in the mails, postage prepaid, addressed as aforesaid. Any
party may change the person or address to whom or which the notices are to be
given hereunder, but any such notice shall be effective only when actually
received by the party to whom it is addressed.
10. Governing Law; Severability. This Note and the rights and obligations
---------------------------
of the parties shall be construed and interpreted in accordance with the laws of
the state of New York and the Borrower consents to the jurisdiction of the
courts of New York in any action brought to enforce any rights of the Bank under
this Note. The provisions of this Note are severable and if any clause or
provision shall be held invalid or unenforceable in whole or in part in any
Jurisdiction, then such invalidity or unenforceability shall affect only such
clause or provision, or any part thereof, in such jurisdiction and shall not in
any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision in this Note in any jurisdiction.
TRI-MAGNA CORPORATION
By: /s/ Alvin Murstein
--------------------
By: /s/ Daniel Baker, Vice President
-----------------------------------
<PAGE>
ENDORSEMENT
-----------
and
---
AMENDMENT NO. 1
---------------
The Undersigned Tri-Magna Corporation (the "Borrower") and NATWEST BANK N.A.
(formerly National Westminster Bank USA, and hereinafter referred to as the
"Bank") hereby amend the Term Note dated September 29, 1995, made by the
Borrower to the order of the Bank, in the principal amount of $3,231,900 (the
"Term Note") as hereinafter set forth.
The Term Note matures on April 1, 1996, on which date the entire unpaid
principal balance of $3,231,900 together with all interest accrued and unpaid
thereon is due and payable. In accordance with the request of the Borrower, the
Borrower and the Bank have agreed to extend the maturity of the Term Note from
April 1, 1996 to May 31, 1996.
Accordingly, the Term Note is hereby amended to the extent that the date "April
1, 1996" set forth at the beginning of the first sentence thereof is deleted,
and the date "May 31, 1996" substituted therefor.
Except as expressly amended by this Endorsement and Amendment No. 1, all the
terms and conditions of the Term Note shall continue in full force and effect.
This Endorsement and Amendment No. 1 is dated, and shall be effective as of
March 30, 1996.
TRI-MAGNA CORPORATION
By: /s/ Daniel Baker, V.P.
---------------------------
NATWEST BANK N.A.
By: /s/ Amy G. Josephson, V.P.
-------------------------------
<PAGE>
TERM NOTE
$2,000,000.00 July 16, 1990
FOR VALUE RECEIVED, MEDALLION FUNDING CORP. (the "Borrower") promises to
pay to the order of NATIONAL WESTMINSTER BANK USA (the "Bank') at the office of
the Bank located at 175 Water Street, New York, New York or such other place as
the holder hereof may from time to time appoint in writing, in lawful money of
the United States of America in immediately available funds, the principal sum
of Two Million Dollars ($2,000,000.00) on July 16, 1993. The Borrower also
promises to pay interest (computed on the basis of a 360 day year for actual
days elapsed) at said office in like money on the unpaid principal amount hereof
from time to time outstanding from the date hereof until maturity quarterly on
the last day of each March, June, September and December, commencing on December
31, 1989, and on the maturity hereof, at the rate of 10.30% per annum. If any
payment of principal or interest becomes due on a day on which the banks in New
York, New York are required or permitted by law to remain closed, such payment
may be made on the next succeeding business day on which such banks are open,
and such extensions shall be included in computing interest in connection with
such payment. The Borrower further agrees that this Note shall bear interest
after any stated or accelerated maturity hereof at a rate 2% per annum in excess
of the rate established from time to time by the Bank as its prime rate, payable
on demand. In no event shall interest be payable hereunder in excess of the
maximum rate of interest permitted under applicable law.
In consideration of the granting of the loan evidenced by this Note, the
Borrower hereby agrees as follows:
1. Fees. The Borrower agrees to pay to the Bank a fee in the amount of
----
$10,000.00 simultaneously with the execution and delivery of this Note.
2. Indemnity. The Borrower hereby indemnifies the Bank against any loss
---------
or reasonable expenses which the Bank may sustain or incur as a consequence of
any default in payment of the principal amount of the loan evidenced by this
Note or any part thereof or interest accrued thereon or any other amount due
hereunder, or as a consequence of the occurrence of any default hereunder with
respect to the loan, or as a consequence of the receipt or recovery by the Bank
of all or any part of the loan other than on the maturity date thereof. Such
loss and expenses shall be limited to loss or expenses sustained or incurred in
liquidating or employing deposits from third parties acquired to effect or
maintain such loan or any part thereof and computed substantially in accordance
with the formula set forth on the exhibit attached hereto. For the purpose of
this paragraph the determination by the Bank of such losses and reasonable
expenses shall be conclusive if made reasonably and in good faith.
3. Representations and Warranties. The Borrower hereby represents and
------------------------------
warrants to the Bank that:
<PAGE>
(a) The Borrower is duly organized, validly existing and in good
standing under the laws of the state of its incorporation and is qualified to do
business and in good standing under the laws of each state where its failure to
so qualify would have a material adverse effect on the business, operations,
property or other condition of the Borrower.
(b) This Note has been duly authorized, executer and delivered and
constitutes the valid and legally binding obligation of the Borrower,
enforceable in accordance with its terms.
(c) The execution and delivery of this Note, and performance
hereunder, will not violate any provision of law.
(d) There are no actions or proceedings pending before any court or
governmental authority, bureau or agency, with respect to or threatened against
or affecting the Borrower, or any Subsidiary, which if determined adversely
would have a material adverse effect on the business, the assets or the
financial condition of the Borrower or any Subsidiary. As used herein, the term
"Subsidiary" or "Subsidiaries" means any corporation or corporations of which
the Borrower, alone, or the Borrower and/or one or more of its Subsidiaries,
owns, directly or indirectly, at least a majority of the securities having
ordinary voting power for the election of directors.
(e) Neither the Borrower nor any Subsidiary is in default under, or in
violation of, any term of, any agreement, ordinance, resolution, decree, bond,
note, indenture, order or judgment to which it is a party or by which it is
bound, or by which any of the properties or assets owned by or used in the
conduct of its business is affected, which default or violation may have a
material adverse effect on the business, the assets or the financial condition
of the Borrower or any Subsidiary. The operations of the Borrower and each
Subsidiary comply in all material respects with all laws, ordinances and
regulations applicable to them.
(f) Neither the Borrower nor any Subsidiary is a party to or bound by,
nor are any of the properties or assets owned by it or used in the conduct of
its business affected by, any agreement, ordinance, resolution, decree, bond,
note, indenture, order or judgment, or subject to any charter or other corporate
restriction, which materially and adversely affects the business, assets or
financial condition of the Borrower or of any Subsidiary.
(g) All balance sheets, profit and loss statements and other financial
information heretofore furnished to the Bank are true, correct and complete and
present fairly the financial condition of the Borrower and its Subsidiaries as
at the dates thereof and for the periods covered thereby, including contingent
liabilities of every kind, which financial condition has not materially
adversely changed since the date of the most recently dated balance sheet of the
Borrower heretofore furnished to the Bank.
(h) No part of the proceeds of the loan which is evidenced by this
Note will be used directly or indirectly for the purpose of purchasing or
carrying, or for payment in full or in part of indebtedness which was incurred
for the purpose of purchasing or carrying, any margin stock as such term is
defined in Sec. 221.3 of Regulation U of the Board of Governors of the Federal
Reserve System.
-2-
<PAGE>
(i) The Borrower and its Subsidiaries are in compliance in all
material respects with the Employee Retirement Income Security Act of 1974
("ERISA") and all rules and regulations thereunder. Neither the Borrower nor
any of its Subsidiaries has any unfunded vested liability under any type of plan
described in Section 4021(a) of ERISA ("Plan") and no reportable event, as set
forth in Section 4043(b) of ERISA, has occurred or is continuing with respect to
any Plan.
4. Financial Statements. The Borrower shall deliver to the Bank:
--------------------
(a) Annually, as soon as available, but in any event within 120 days
after the last day of each of its fiscal years, consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries, as at such last day of the
fiscal year, and consolidated and consolidating statements of income and
retained earnings and statement of cash flows, for such fiscal year, each
prepared in accordance with generally accepted accounting principles
consistently applied, in reasonable detail, such consolidated statements to be
certified without qualification by a firm of independent certified public
accountants satisfactory to the Bank, except a qualification substantially
similar to the qualification made by Arthur Anderson and Company in the
Borrower's certified financial statement for the fiscal year ended March 31,
1987.
(b) As soon as available, but in any event within 70 days after the
end of each of its first three fiscal quarterly periods, the consolidated and
consolidating balance sheets of the Borrower and its Subsidiaries as of the last
day of such quarter, and consolidated and consolidating statements of income and
retained earnings and statement of cash flows, for such quarterly period and the
portion of the fiscal year through such date, all in reasonable detail, each
such statement to be signed by the President or Treasurer of the Borrower and
stated by the President or Treasurer that to the best of his or her knowledge
are true and correct and have been prepared in accordance with generally
accepted accounting principles consistently applied (subject to year-end audit
adjustments).
(c) At the same time as it delivers the financial statements required
under the provisions of subsection 4(a), a copy of the most recent Robert Morris
Associates commercial financing questionnaire prepared by the Borrower.
(d) At the same time as it delivers the financial statements required
under the provisions of subsection 4(b), a Robert Morris delinquency report for
all loans made by the Borrower, including the principal balance outstanding
thereunder, substantially in the form of the last such delinquency report
heretofore furnished to the Bank.
(e) Promptly after a written request therefor, such other financial
data or information as the Bank may reasonably request from time to time.
(f) At the same time as it delivers the financing statements required
under the provisions of subsections 4(a) and 4(b), a certificate signed by the
President or Treasurer of the Borrower, to the effect that no Event of Default
hereunder or under any other agreement to which the Borrower or any Subsidiary
is a party or by which it is bound, or by which any of its properties or assets
may be affected, and no event which, with the giving of notice or the lapse of
time, or both, would constitute such an Event of Default, has occurred.
-3-
<PAGE>
5. Affirmative Covenants. The Borrower will, and with respect to the
---------------------
agreements set forth in Subsections 5(a) through 5(f) hereof, will cause each
Subsidiary to:
(a) with respect to its properties, assets and business, maintain
insurance against loss or damage, to the extent that property, assets and
businesses of similar character are usually so insured by companies similarly
situated and operating like properties, assets or businesses with insurance
companies believed by the Borrower to be responsible;
(b) duly pay and discharge all taxes or other claims which might
become a lien upon any of its property except to the extent that such items are
being in good faith appropriately contested;
(c) maintain, preserve and keep its properties in good repair, working
order and condition, and make all reasonable repairs, replacements, additions,
betterments and improvements thereto;
(d) conduct its business in substantially the same manner and in
substantially the same fields as described in Section 5(g) hereof;
(e) comply in all material respects with all statutes, rules and
regulations and maintain its corporate existence;
(f) permit the Bank to make or cause to be made, inspections and
audits of any books, records and papers of the Borrower and to make extracts
therefrom at all such reasonable times and as often as the Bank may reasonably
require;
(g) use the proceeds of the loan evidenced by this Note for the
purpose of financing receivables, making loans and conducting other activities
relating to the foregoing;
(h) maintain at all times consolidated tangible net worth in an amount
not less than $17,000,000 ("tangible net worth" to be equal to the sum of
capital surplus, earned surplus and capital stock minus loans more than 120 days
past due on a contractual basis which are in excess of the allowance for
losses);
(i) maintain at all times a ratio of total unsubordinated debt to
consolidated tangible net worth plus subordinated debt of not more than 1.5 to
1;
(j) maintain at all times a ratio of net income plus interest expense
divided by interest expense of not less than 1.35 to 1; and
(k) immediately give notice to the Bank that an Event of Default has
occurred or that an event which, with the giving of notice or lapse of time, or
both, would constitute an Event of Default, has occurred and specifying the
action which the Borrower has taken and proposes to take with respect thereto.
-4-
<PAGE>
6. Negative Covenants. The Borrower will not, and will not permit any
------------------
Subsidiary to:
(a) enter into any merger or consolidation or liquidate, windup or
dissolve itself or sell, transfer or lease or otherwise dispose of all or any
substantial part of its assets, (other than sales of participations in loans in
the ordinary course of business and with respect to which the participant
obtains no greater rights than the Borrower) or acquire by purchase or otherwise
the business or assets of, or stock of another corporation; except that any
Subsidiary may merge into or consolidate with any other Subsidiary which is
wholly-owned by the Borrower, and any Subsidiary which is wholly-owned by the
Borrower may merge with or consolidate into the Borrower provided that the
Borrower is the surviving corporation;
(b) lend or advance money, credit or property to or invest in (by
capital contribution, loans, purchase or otherwise) any firm, corporation, or
other person except loans, advances and extensions of credit in the ordinary
course of business and investments in United States Government obligations and
certificates of deposit of any banking institution with combined capital and
surplus of at least $200,000,000;
(c) create, assume or permit to exist, any mortgage, pledge, lien or
encumbrance of or upon or security interest in, any of its property or assets
now owned or hereafter acquired except (i) mortgages, liens, pledges and
security interests in favor of the Bank and in favor of any other entities who
are parties to an Inter-Creditor Agreement with the Bank; (ii) other liens,
charges and encumbrances incidental go the conduct of its business or the
ownership of its property and assets which were not incurred in connection with
the borrowing of money or the obtaining of advances or credit and which do not
materially impair the use thereof in the operation of its business; and (iii)
liens for taxes or other governmental charges which are not delinquent or which
are being contested in good faith and for which a reserve shall have been
established in accordance with generally accepted accounting principles;
(d) assume, endorse, be or become liable for or guarantee the
obligations of any person in excess of $200,000 in the aggregate for all such
obligations except by the endorsement of negotiable instruments for deposit or
collection in the ordinary course of business;
(e) declare or pay any dividends on its capital stock (other than
dividends payable solely in shares of its own common stock), or purchase,
redeem, retire or otherwise acquire any of its capital stock at any time
outstanding, if (i) an Event of Default, or an event which, with the giving of
notice or the lapse of time, or both, would constitute such an Event of Default,
has occurred or (ii) such action will result in an Event of Default hereunder;
(f) permit loan concentrations by types of business (determined in
accordance with the Standard Industrial Classification promulgated by the Office
of Management and Budget) in excess of 20% of the Borrower's total outstanding
loans, except loans made to owners of taxicab medallions; and
(g) (i) terminate any Plan so as to result in any material liability
to The Pension Benefit Guaranty Corporation established pursuant to Subtitle A
of Title IV of ERISA
-5-
<PAGE>
(the "PBGC"), (ii) engage in or permit any person to engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Internal
Revenue Code of 1954, as amended) involving any Plan which would subject the
Borrower to any material tax, penalty or other liability, (iii) incur or suffer
to exist any material "accumulated funding deficiency" (as defined in Section
302 of ERISA), whether or not waived, involving any Plan, or (iv) allow or
suffer to exist any event of condition, which presents a material risk of
incurring a material liability to the PBGC by reason of termination of any Plan.
7. Events of Default. If any one or more of the following events ("Events
-----------------
of Default") shall occur, the entire unpaid balance of the principal of and
interest on the loan evidenced by this Note shall immediately become due and
payable:
(a) Failure to make any payment of principal payable hereunder when
due; or,
(b) Failure to make any Payment of interest or any other amounts due
hereunder within five days after the same shall become due; or,
(c) Failure to observe any of the agreements of the Borrower contained
in Sections 5 or 6 hereof; or,
(d) Failure by the respective parties hereunder or thereunder to
perform any other term, condition or covenant of this Note or any other
agreement, instrument or document delivered pursuant hereto or in connection
herewith or therewith, which shall remain unremedied for a period of 15 days
after notice thereof shall have been given by the Bank to the Borrower; or,
(e) (i) Failure to perform any term, condition or covenant of any
bond, note, debenture, loan agreement, indenture, guaranty, trust agreement,
mortgage or other instrument or agreement in connection with the borrowing of
money or the obtaining of advances or credit to which the Borrower or any
Subsidiary is a party or by which it is bound, or by which any of its properties
or assets may be affected (a "Debt Instrument"), so that, as a result of any
such failure to perform the indebtedness included therein or secured or covered
thereby may be declared due and payable prior to the date on which such
indebtedness would otherwise become due and payable, provided, however, that a
default by the Borrower under Section 6.15 (entitled Ratio of Total
Unsubordinated Liabilities to Net Assets Plus Subordinated Debt) of a certain
Standby Credit and Term Note Agreement between the Borrower and Chemical Bank
dated April 16, 1986 shall not be deemed to be an Event of Default hereunder
until Chemical Bank shall have declared the indebtedness evidenced by such
agreement to be due and payable by reason of such default; or,
(ii) any event or condition referred to in any Debt Instrument
shall occur or fail to occur, so that, as a result thereof the indebtedness
included therein or secured or covered thereby may be declared due and payable
prior to the date on which such indebtedness would otherwise become due and
payable; or,
-6-
<PAGE>
(iii) any indebtedness included in any Debt Instrument or secured
or covered thereby is not paid when due (after giving effect to any applicable
grace period); or
(f) Any representation or warranty made in writing to the Bank in this
Note or in connection with the making of the loan evidenced hereby or any
certificate, statement or report made in compliance with this Note, shall have
been false in any material respect when made; or
(g) An order for relief under the Federal Bankruptcy Code as now or
hereafter in effect shall be entered against the borrower or any Subsidiary; or
the Borrower or any Subsidiary shall become insolvent, generally fail to pay its
debts as they become due, make an assignment for the benefit of creditors, file
a petition in bankruptcy, be adjudicated insolvent or bankrupt, petition or
apply to any tribunal for the appointment of a receiver or any trustee for it or
a substantial part of its assets, or shall commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect; or if there shall have been filed any such petition or application, or
any such proceeding shall have been commenced against it, which remains
undismissed for a period of sixty days or more; or the Borrower or any
Subsidiary or endorser or guarantor hereof by any act or omission shall indicate
its consent to approval of or acquiescence in any such petition, application or
proceeding or the appointment of a receiver of or any trustee for it or any
substantial part of any of its properties, or shall suffer any such receivership
or trusteeship to continue undischarged for a period of thirty days or more; or,
(h) Any judgment against the Borrower or any Subsidiary or any
attachment, levy or execution against any of its properties for an amount in
excess of $100,000 shall remain unpaid, unstayed on appeal, undischarged,
unbonded or undismissed for a period of sixty days or more.
8. Interest Adjustment. Notwithstanding anything to the contrary
-------------------
contained in this Note, the rate of interest payable on this Note shall never
exceed the maximum rate of interest permitted under applicable law. If at any
time the rate of interest otherwise prescribed herein shall exceed such maximum
rate, and such prescribed rate is thereafter below such maximum rate, the
prescribed rate shall be increased to the maximum rate for such period of time
as is required so that the total amount of interest received by the Bank is that
which would have been received by the Bank, except for the operation of the
first sentence of this Section 8.
9. Miscellaneous.
-------------
(a) All agreements, representations and warranties made herein shall
survive the delivery of this Note. The Borrower waives trial by jury, set-off
and counterclaim in any litigation in any court with respect to, in connection
with, or arising out of, this Note or any instrument or document delivered
pursuant hereto or the validity, protection, interpretation, collection or
enforcement hereof.
(b) No modification or waiver of or with respect to any provision of
this Note, or consent to any departure by the Borrower from any of the terms or
conditions hereof, shall in any event be effective unless it shall be in writing
and signed by the Bank, and then such
-7-
<PAGE>
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on the Borrower in any case
shall, of itself, entitle it to any other or further notice or demand in similar
or other circumstances.
(c) Each and every right granted to the Bank hereunder or under any
other document delivered hereunder or in connection herewith, or allowed it by
law or equity, shall be cumulative and may be exercised from time to time. No
failure on the part of the Bank or the holder of this Note to exercise, and no
delay in exercising, any right shall operate as a waiver thereof, nor shall any
single or partial exercise of any right preclude any other or future exercise
thereof or the exercise of any other right.
(d) In the event that this Note is placed in the hands of an attorney
for collection by reason of any default hereunder, the Borrower agrees to pay
reasonable attorney's fees so incurred. The Borrower promises to pay all
expenses of any nature as soon as incurred whether in or out of court and
whether incurred before or after this Note shall become due at its maturity date
or otherwise and costs which the Bank may deem necessary or proper in connection
with the satisfaction of the indebtedness.
(e) The Borrower hereby waives presentment, demand for payment,
protest, notice of protest, notice of dishonor, and any or all other notices or
demands except as otherwise expressly provided for herein.
(f) All accounting terms not otherwise defined in this Note shall have
the meanings ascribed thereto under generally accepted accounting principles.
10. Notices. All notices, requests and other communications pursuant to
-------
this Note shall be in writing, either by letter (delivered by hand or sent by
certified mail, return receipt requested) or telegram, addressed as follows:
(a) if to the Borrower:
Medallion Funding Corp.
205 East 42nd Street
Suite 2020
New York, New York 10017
Attn: Alvin Murstein, President
and,
(b) if to the Bank:
National Westminster Bank USA
175 Water Street
New York, New York 10038
Attn: Barbara A. Wenner, Assistant Vice President
-8-
<PAGE>
Any notice, request or communication hereunder shall be deemed to have been
given when deposited in the mails, postage prepaid, addressed as aforesaid. Any
party may change the person or address to whom or which the notices are to be
given hereunder, but any such notice shall be effective only when actually
received by the party to whom it is addressed.
11. Governing Law. This Note and the rights and obligations of the
-------------
parties shall be construed and interpreted in accordance with the laws of the
State of New York and the Borrower consents to the jurisdiction of the courts of
New York in any action brought to enforce any rights of the Bank under this
Note.
MEDALLION FUNDING CORP.
By /s/ Alvin Murstein
-------------------
(Title)
By /s/ Myron Cohen
----------------
(Title)
-9-
<PAGE>
ENDORSEMENT
and
AMENDMENT NO. 3
---------------
The undersigned, MEDALLION FUNDING CORP. (the "Borrower") and NATWEST BANK N.A.
(formerly National Westminster Bank, USA, and hereinafter referred to as
"NATWEST") hereby amend the Term Note dated July 16, 1990, made by the Borrower
to the order of the Bank, as amended by Amendment No. 1 dated as of March 27,
1992, and Amendment No. 2 dated as of July 16, 1993 in the principal amount of
$2,000,000 (the "Term Note") as hereinafter set forth.
The Term Note matures on July 16, 1995 on which date the entire unpaid principal
balance of $2,000,000 together with all interest accrued and unpaid thereon is
due and payable. In accordance with the request of the Borrower, the Borrower
and the Bank have agreed to extend the maturity of the Term Note from July 16,
1995 to July 31, 1997 and to change the rate of interest applicable thereto
during such extension from 5.88% per annum to 7.50% per annum.
Accordingly, the Term Note is hereby amended to the extent that: (a) the date,
"July 16, 1995" set forth at the end of the first sentence thereof is deleted,
and the date "July 31, 1997" is substituted therefor and (b) the interest rate
of "5.88% per annum" set forth at the end of the second sentence thereof is
deleted and the rate "7.50% per annum" is substituted therefor.
Except as expressly amended by this Endorsement and Amendment No. 3, all the
terms and conditions of the Term Note shall continue in full force and effect.
This endorsement and Amendment No. 3 is dated, and shall be effective, as of
July 16, 1995.
MEDALLION FUNDING CORP.
By /s/ Daniel Baker
-----------------
NATWEST BANK N.A.
By /s/ Richard J. Miller
----------------------
-10-
<PAGE>
Endorsement
and
Amendment No. 2
---------------
The undersigned, MEDALLION FUNDING CORP., (the "Borrower") and NATIONAL
WESTMINSTER BANK USA ("NatWest") hereby amend the Term Note dated July 16, 1990,
made by the Borrower to the order of the Bank, as amended by Amendment No. 1
dated as of March 27, 1992, in the principal amount of $2,000,000 (the "Term
Note") as hereinafter set forth.
The Term Note matures on July 16, 1993 on which date the entire unpaid
principal balance of $2,000,000 together with all interest accrued and unpaid
thereon is due and payable. In accordance with the request of the Borrower, the
Borrower and the bank have agreed to extend the maturity of the Term Note from
July 16, 1993 to July 16, 1995 and to change the rate of interest applicable
thereto during such extension from 10.30% per annum to 5.88% per annum.
Accordingly, the Term Note is hereby amended to the extent that: (a) the
date "July 16, 1993" set forth at the end of the first sentence thereof is
deleted, and the date "July 16, 1995" is substituted therefor and (b) the
interest rate of "10.30% per annum" set forth at the end of the second sentence
thereof is deleted and the rate "5.88% per annum" is substituted therefor.
Except as expressly amended by this Endorsement and Amendment No. 2, all
the terms and conditions of the Term Note shall continue in full force and
effect.
This Endorsement and Amendment No. 2 is dated, and shall be effective, as
of July 16, 1993.
MEDALLION FUNDING CORP.
By: /s/ Alvin Murstein
----------------------
NATIONAL WESTMINSTER BANK USA
By: /s/ Richard J. Miller, V.P.
------------------------------
<PAGE>
AMENDMENT NUMBER ONE, dated as of March 27, 1992, to the Term Note, dated
July 16, 1990, from MEDALLION FUNDING CORP. (the "Borrower") to the order of
NATIONAL WESTMINSTER BANK USA (the "Bank"), in the principal amount of Two
Million Dollars (the "Term Note").
WHEREAS, the Borrower, the Bank, as a bank and as Agent, and certain other
banks that are signatory thereto (the "Other Banks") have entered into a Loan
Agreement, dated as of March 27, 1992 (as the same may be amended or
supplemented from time to time, the "Loan Agreement"), providing for revolving
credit loans (the "Revolving Credit Loans") and term loans (the "Term Loans")
not to exceed the amounts provided in the Loan Agreement.
WHEREAS, it is a condition precedent to the obligation of the Bank and the
Other Banks to make such Revolving Credit Loans and Term Loans that the Borrower
agree to amend the Term Note pursuant to the terms set forth herein.
NOW, THEREFORE, in consideration of the Bank's and the Other Bank's
willingness to make such Revolving Credit Loans and Term Loans, and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the Borrower and the Bank hereby covenant and agree as follows:
1. Section 4 is hereby amended by deleting the text thereof in its
entirety and substituting in its place the following:
"4. Affirmative Covenants. The Borrower covenants and agrees that, until
---------------------
the Term Note together with interest and all other indebtedness of the Borrower
owed to the Bank thereunder are paid in full and all of the Borrower's
obligations thereunder are terminated, Borrower will, unless specifically waived
in writing by the Required Banks (as such term is defined in the Loan
Agreement):
(a) provide to the Bank all of the information required to be provided
to the Agent or the Banks (as such terms are defined in the Loan
Agreement) pursuant to Section 6.1 of the Loan Agreement, in all cases
within the time periods and in accordance with all of the terms and
conditions of such Section 6.1.
(b) comply with and abide by all of the terms, covenants and
conditions set forth in Sections 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8,
6.9, 6.10, 6.12, 6.13, 6.14 and 6.15 of the Loan Agreement, and such
Sections, and the definitions of all terms utilized in such Sections,
are hereby incorporated herein in full by reference.
(c) upon the request of the Bank, at Borrower's cost and expense, duly
execute and deliver, or cause to be duly executed and delivered, to
the Bank
<PAGE>
such further instruments, and do and cause to be done such further
acts as may be reasonably necessary and proper in the opinion of the
Bank to carry out more effectually the provisions and purposes of the
Term Note and the Borrower Security Agreement (as such term is defined
in the Loan Agreement)."
2. Section 5 is hereby amended by deleting the text thereof in its
entirety and substituting in its place the following:
"5. Financial Covenants. The Borrower covenants and agrees that,
--------------------
until the Term Note, together with interest and all other indebtedness of the
Borrower owed to the Bank thereunder are paid in full and the Borrower's
obligations thereunder are terminated, the Borrower will not suffer or permit,
without the prior written consent of the Required Banks, any of the
circumstances set forth in Sections 7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8 or
7.9 of the Loan Agreement, and such Sections and the definitions of all terms
utilized in such Sections, are hereby incorporated herein in full by reference."
3. Section 6 is hereby amended by deleting the text thereof in its
entirety and substituting in its place the following:
"6. Negative Covenants. The Borrower covenants and agrees that,
-------------------
until the Term Note, together with interest and all other indebtedness of the
Borrower owed to the Bank thereunder are paid in full and the Borrower's
obligations thereunder are terminated, Borrower will not create, suffer or
permit, without the prior written consent of the Required Banks, any of the
circumstances set forth in Sections 8.1, 8.2, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 8.9,
8.10, 8.11, 8.12, 8.13 or 8.14 of the Loan Agreement, and such Sections, are
hereby incorporated herein in full by reference."
4. Section 7 of the Term Note is hereby amended by adding thereto a new
subsection (i), which shall read as follows:
"(i) if a Default or Event of Default (as such terms are defined in
the Loan Agreement) shall occur or have been declared under the Loan Agreement
and such Default or Event of Default shall not have been remedied within the
grace or cure period, if any, as may be provided therefor."
5. A new Section 12 shall be added to the Term Note, which shall read as
follows:
"11. Security. This Term Note is one of the "NatWest Existing Term
---------
Notes" referred to in the Loan Agreement and is secured as provided therein."
6. Except as specifically amended hereby, all terms and provisions of the
Term Note shall remain unchanged and in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the Borrower and the Bank have caused this Amendment
Number One to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
MEDALLION FUNDING CORP.
By:/s/ Alvin Murstein
----------------------------
Title: President
/s/ Daniel F. Baker
----------------------------
Title: V.P., Finance
NATIONAL WESTMINSTER BANK USA
By: /s/ Thomas J. Levy
----------------------------
Title: Vice President
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT dated ________ ___, 1996, is between Medallion
Financial Corp., a Delaware corporation with its principal place of business at
205 East 42nd Street, Suite 2020, New York, NY 10017 (the "Company"), and Alvin
Murstein residing at 6 Sandpiper Court, Old Westbury, NY 11568 (the
"Executive").
WHEREAS, the Executive is presently employed by the Company as the Chief
Executive Officer of the Company;
WHEREAS, the Board of Directors of the Company (the "Board") desires to
-----
provide for the continued employment of the Executive, which the Board believes
is in the best interests of the Company and its shareholders, and the Executive
is willing to commit himself to serve the Company, on the terms and conditions
herein provided;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto hereby agree as follows:
The Company agrees to employ the Executive, and the Executive agrees to
serve the Company, on the terms and conditions set forth herein.
1. Title; Capacity. The Executive shall serve as Chief Executive Officer
---------------
of the Company and shall be based at the Company's headquarters in New York
City. The Executive hereby accepts such employment and agrees to undertake the
duties and responsibilities inherent in such position and such other duties and
responsibilities as the Board or its designee shall from time to time reasonably
assign to him. The Executive
<PAGE>
agrees to abide by the rules, regulations, instructions, personnel practices and
policies of the Company and any changes therein which may be adopted from time
to time by the Company.
The Company further agrees to use its best efforts to cause the Executive
to be nominated as a member of the Board and a member of the Executive Committee
(if such a committee is created).
2. Term of Employment. The Company agrees to employ the Executive, and
------------------
the Executive agrees to serve the Company for a period commencing on ________
___, 1996 (the "Commencement Date") and continuing for five years thereafter
-----------------
(such period, including all extensions thereto, to be collectively referred to
as the "Employment Period"), unless otherwise terminated pursuant to the terms
-----------------
hereof. The Employment Period shall automatically renew annually for a new
five-year term unless prior to the end of the first year of each five-year term,
either the Company or the Executive provides notice to the other party to this
Agreement of its intention not to extend the Employment Period beyond the then
current five-year term. Any notice given pursuant to this Section shall be
provided in accordance with the terms of Section 8.1 hereof and shall be
provided not later than 30 days prior to the end of such one-year period.
3. Compensation and Benefits.
-------------------------
3.1 Salary. The Company shall pay the Executive, in monthly
------
installments, an annual base salary of $250,000 for the one-year period
commencing on the Commencement Date. Such salary shall be subject to
adjustment thereafter as determined by mutual agreement between the Board
and the Executive.
3.2 Bonus and Fringe Benefits. The Executive shall be entitled to
-------------------------
participate in all bonus and benefit programs or plans that the Company
establishes
-2-
<PAGE>
and makes available to its employees to the extent that the Executive's
position, tenure, salary, and other qualifications make him eligible to
participate.
3.3 Reimbursement of Expenses. The Company shall reimburse the
-------------------------
Executive for all reasonable travel, entertainment and other expenses
incurred or paid by the Executive in connection with, or related to, the
performance of his duties, responsibilities or services under this
Agreement, upon presentation by the Executive of documentation, expense
statements, vouchers and/or such other supporting information as the
Company may reasonably request, provided, however, that the amount
-------- -------
available for such travel, entertainment and other expenses may be fixed in
advance by the Board.
3.4 Insurance. The Executive shall be entitled to health insurance
---------
coverage, term life insurance and long term disability insurance to the
extent that the Executive's position, tenure, salary, age, health and other
qualifications make him eligible to participate.
3.5 Vacation. The Executive shall be entitled to six weeks paid
--------
vacation per year.
4. Employment Termination. The employment of the Executive by the
----------------------
Company pursuant to this Agreement may be terminated under the following
circumstances:
4.1 Expiration of Term. Expiration of the Employment Period in
------------------
accordance with Section 2.
4.2 Death. Upon the death of the Executive.
-----
4.3 Disability. If, as a result of the Executive's incapacity due to
----------
physical or mental illness, the Executive shall have failed to perform the
services contemplated under this Agreement for a period of 270 consecutive
days, or a total of at least 300
-3-
<PAGE>
calendar days during any 365-day period, or a determination of disability
shall have been made by a physician satisfactory to both the Executive and
the Company, provided that if the Executive and the Company do not agree on
a physician, the Executive and the Company shall each select a physician
and these two together shall select a third physician whose determination
as to disability shall be binding on both parties.
4.4 Cause. The Company may terminate the Executive's employment
-----
hereunder for Cause. For purposes of this Agreement, the Company shall
have "Cause" to terminate the Executive's employment hereunder in the
-----
event:
(i) the Executive shall have willfully failed and continued to
fail substantially to perform the duties (other than any failure
resulting from the Executive's incapacity due to physical or mental
illness or any actual or anticipated failure after the issuance by him
of a Notice of Termination, as defined in Section 4.6), for 30 days
after a written demand for performance is delivered to the Executive
on behalf of the Company which specifically identifies the manner in
which it is alleged that the Executive has not substantially performed
his duties; provided that the Company's economic performance or
--------
failure to meet any specific projection shall not, in and of itself,
constitute "Cause"; or
-----
(ii) the Executive shall have engaged in (A) any material
misappropriation of funds, properties or assets of the Company, it
being understood that "material" for these purposes shall take into
--------
account both the amount of funds, properties or assets misappropriated
and the circumstances thereof (including the intent of the Executive
in connection therewith) or (B)
-4-
<PAGE>
any malicious damage or destruction of any property or assets of the
Company, whether resulting from the Executive's wilful actions or
omissions or the Executive's gross negligence; or
(iii) the Executive shall (A) have been convicted of a crime
involving moral turpitude or constituting a felony or (B) entered a
plea of nolo contendere to any such crime, either of which has had a
material adverse effect upon the business of the Company; or
(iv) the Executive shall have (A) materially breached his
obligations under Section 6 hereof or (B) breached any of the other
material provisions of this Agreement and such breach shall remain
uncured by the Executive within 30 days following receipt of notice
from the Company specifying such breach.
4.5 Termination by the Executive. The Executive may terminate his
----------------------------
employment hereunder (i) upon 90 days written notice or (ii) for Good
Reason (as defined below).
For purposes of this Agreement, "Good Reason" shall exist if there is
-----------
a Change in Control (as defined below) of the Company and one or more of
the following events shall have occurred (without the Executive's express
written consent):
(a) the assignment to the Executive of any duties
inconsistent with his status as Chief Executive Officer of the
Company, his removal from the position of Chief Executive Officer
of the Company, or a substantial alteration in the nature or
status of his responsibilities from those in effect immediately
prior to the Change in Control;
-5-
<PAGE>
(b) a reduction by the Company of the Executive's annual
base salary in effect on the date immediately prior to the Change
in Control;
(c) the relocation of the Company's principal executive
offices to a location outside mid-town New York City or a
requirement that the Executive shall be based anywhere other than
the Company's principal executive offices except for required
travel on the Company's business to an extent substantially
consistent with his business travel obligations prior to the
Change in Control;
(d) the failure by the Company to continue in effect any
bonus plan in which the Executive was participating immediately
prior to the Change in Control; or
(e) the failure by the Company to continue to provide the
Executive with benefits at least as favorable as those enjoyed by
him under any of the Company's pension, life insurance, medical,
health and accident, disability, deferred compensation or savings
plans in which he was participating at the time of the Change in
Control, the taking of any action by the Company which would
directly or indirectly materially reduce any of such benefits or
deprive him of any material fringe benefit enjoyed by him at the
time of the Change in Control, or the failure by the Company to
provide the Executive with the number of paid vacation days to
which he was entitled at the time of the Change in Control.
-6-
<PAGE>
For purposes of this Agreement, a "Change in Control" of the Company
-----------------
shall mean a change in control of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended.
4.6 Notice of Termination. Any termination of the Executive's
---------------------
employment by the Company or by the Executive (other than termination
pursuant to Section 4.2) shall be communicated by Notice of Termination to
the other party hereto. For purposes of this Agreement, a "Notice of
---------
Termination" shall mean a written notice which shall indicate the specific
-----------
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances which provide a basis for
termination of the Executive's employment under the provision so indicated.
4.7 Date of Termination. "Date of Termination" shall mean (i) if the
------------------- -------------------
Executive's employment is terminated pursuant to Section 4.1, the date on
which the Employment Period expires pursuant to Section 2, (ii) if the
Executive's employment is terminated pursuant to Section 4.2, the date of
the Executive's death, (iii) if the Executive's employment is terminated
pursuant to Section 4.3, 30 days after the Notice of Termination is given
(provided that the Executive shall not have returned to the performance of
his duties on a full-time basis during such 30 day period), (iv) if the
Executive's employment is terminated pursuant to Section 4.4 or subsection
(i) of Section 4.5, the date specified in the Notice of Termination,
provided that in the case of a Section 4.4 termination it is at least 30
days subsequent to the date of the issuance of such Notice of Termination
and in the case of a subsection (i) of Section 4.5 termination it is at
least 90 days subsequent to the date of the issuance of such
-7-
<PAGE>
Notice of Termination, (v) if the Executive's employment is terminated
pursuant to subsection (ii) of Section 4.5, the date specified in such
Notice of Termination, and (vi) if the Executive's employment is terminated
other than as provided herein, the date specified in the Notice of
Termination, provided that it is at least 30 days subsequent to the date of
the issuance of such Notice of Termination.
5. Compensation Upon Termination.
-----------------------------
5.1 If the Executive's employment is terminated under the provisions
of Sections 4.1, 4.4 or subsection (i) of Section 4.5, the Company shall
pay to the Executive his full salary, bonus and benefits through the Date
of Termination.
5.2 If the Executive's employment is terminated by the Executive's
death under the provisions of Section 4.2, the Company shall pay to the
Executive's estate the Executive's full salary, bonus and benefits to the
Executive through the Date of Termination.
5.3 If the Executive's employment is terminated under the provisions
of Section 4.3, the Company shall pay to the Executive his full salary,
bonus and benefits through the Date of Termination. During any period that
the Executive fails to perform his duties hereunder as a result of
disability (as defined in Section 4.3), the Executive shall continue to
receive his full salary, bonus and benefits through the Date of
Termination.
5.4 If the Company shall terminate the Executive's employment other
than as provided herein or the Executive shall terminate his employment
pursuant to subsection (ii) of Section 4.5, then:
(i) The Company shall pay the Executive his full salary, bonus
and benefits through the Date of Termination.
-8-
<PAGE>
(ii) Subject to subsection (iv) of this Section 5.4, in lieu of
any further salary payments to the Executive for periods subsequent to
the Date of Termination, the Company shall pay as severance pay to the
Executive an amount equal to the remainder of the salary, bonus and
value of the fringe benefits which the Executive would be entitled to
receive for the balance of the Employment Period.
(iii) The Company shall pay all other damages to which the
Executive may be entitled as a result of such termination, including
damages for any and all legal fees and expenses incurred by him as a
result of such termination.
(iv) In the event that (A) any payment or benefit received or to
be received by the Executive in connection with a Change in Control of
the Company or the termination of the Executive's employment (whether
pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with the Company) (collectively referred to herein as
"Severance Payments") would not be deductible (in whole or part) as a
-------------------
result of section 280G of the Internal Revenue Code of 1986, as
amended, (the "Code") by the Company, an affiliate or other person
----
making such payment or providing such benefit and (B) it shall be
determined that the net amount retained by the Executive, after
deduction of the excise tax imposed by section 4999 of the Code and
any federal, state and local income and employment taxes on the
Severance Payments, does not exceed 110% of the net amount retained by
the Executive after applying the limitations of this subsection (iv)
of Section 5.4 and after deduction of any federal, state and local
income and employment taxes on the
-9-
<PAGE>
Severance Payments as so reduced, the Severance Payments shall be
reduced until no portion of the Severance Payments is not deductible,
or the Severance Payments are reduced to zero. For purposes of this
limitation (i) no portion of the Severance Payments the receipt or
enjoyment of which the Executive shall have effectively waived in
writing prior to the date of payment of the Severance Payments shall
be taken into account, (ii) no portion of the Severance Payments shall
be taken into account which in the opinion of tax counsel selected by
the Company's independent auditors and acceptable to the Executive
does not constitute a "parachute payment" within the meaning of
-----------------
section 280G(b)(2) of the Code, (iii) the Severance Payments shall be
reduced only to the extent necessary so that the Severance Payments
(other than those referred to in clauses (i) or (ii)) in their
entirety constitute reasonable compensation for services actually
rendered within the meaning of section 280G(b)(4) of the Code or are
otherwise not subject to disallowance as deductions, in the opinion of
the tax counsel referred to in clause (ii); and (iv) the value of any
non-cash benefit or any deferred payment or benefit included in the
Severance Payments shall be determined by the Company's independent
auditors in accordance with the principles of sections 280G(d)(3) and
(4) of the Code. For purposes of determining the income taxes on the
Severance Payments, the Executive shall be deemed to pay federal
income tax at the highest marginal rate of federal income taxation in
the calendar year in which the Severance Payments are to be made and
local income taxes at the highest marginal rate of taxation in the
state and locality of the Executive's residence
-10-
<PAGE>
on the Date of Termination, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and
local taxes.
6. Proprietary Information and Developments.
----------------------------------------
6.1 Proprietary Information.
-----------------------
(i) The Executive agrees that all information and know how,
whether or not in writing, of a private, secret or confidential nature
concerning the Company's business or financial affairs (collectively,
"Proprietary Information") is and shall be the exclusive property of
-----------------------
the Company. By way of illustration, but not limitation, Proprietary
Information may include inventions, products, processes, methods,
techniques, projects, developments, plans, research data, financial
data, personnel data, and lists of borrowers, advertisers, fleet and
taxi owners. The Executive will not disclose any Proprietary
Information to others outside the Company or use the same for any
unauthorized purposes without written approval by the Board, either
during or after his employment, unless and until such Proprietary
Information has become public knowledge without fault by the
Executive.
(ii) The Executive agrees that all files, letters, memoranda,
reports, records, data, sketches, drawings, or other written,
photographic, or other tangible material containing Proprietary
Information, whether created by the Executive or others, which shall
come into his custody or possession, shall be and are the exclusive
property of the Company to be used by the Executive only in the
performance of his duties for the Company.
(iii) The Executive agrees that his obligation not to disclose
or use information, know-how and records of the types set forth in
subsection (i) and
-11-
<PAGE>
(ii) above, also extends to such types of information, know-how,
records and tangible property of borrowers, advertisers, fleet and
taxi owners or other third parties who may have disclosed or entrusted
the same to the Company or to the Executive in the course of the
Company's business.
6.2 Other Agreements. The Executive hereby represents that he is not
----------------
bound by the terms of any agreement with any previous employer or other
party to refrain from using or disclosing any trade secret or confidential
or proprietary information in the course of his employment with the Company
or to refrain from competing, directly or indirectly, with the business of
such previous employer or any other party. The Executive further
represents that his performance of all the terms of this Agreement and as
an employee of the Company does not and will not breach any agreement to
keep in confidence proprietary information, knowledge or data acquired by
him in confidence or in trust prior to his employment with the Company.
7. Non-Competition, Non-Solicitation.
---------------------------------
7.1 Non-solicitation of Employees. The Executive agrees that during
-----------------------------
the term of the Executive's employment with the Company and for a period of
one year after the termination of the Executive's employment with the
Company for any reason, the Executive shall not directly recruit, solicit
or otherwise induce or attempt to induce any employees of the Company to
leave the employment of the Company.
7.2 Non-competition. The Executive agrees that during the term of
---------------
the Executive's employment with the Company and for a period of one year
after the termination of the Executive's employment with the Company for
any reason, the Executive shall not directly or indirectly, except as a
passive investor in publicly held companies and except for investments held
at the date hereof, engage in competition
-12-
<PAGE>
with the Company or any of its subsidiaries, or own or control any interest
in, or act as director, officer or employee of, or consultant to, any firm,
corporation or institution directly engaged in competition with the Company
or any of its subsidiaries; provided the Company or one of its subsidiaries
are actively engaged in such business at the time the Executive's
employment by the Company is terminated.
8. Miscellaneous.
-------------
8.1 Notices. All notices required or permitted under this Agreement
-------
shall be in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the other party at the address shown above, or at
such other address or addresses as either party shall designate to the other in
accordance with this Section 8.1.
8.2 Pronouns. Whenever the context may require, any pronouns used in
--------
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular forms of nouns and pronouns shall include the plural,
and vice versa.
8.3 Entire Agreement. This Agreement constitutes the entire
----------------
agreement between the parties and supersedes all prior agreements and
understandings, whether written or oral, relating to the subject matter of this
Agreement.
8.4 Amendment. This Agreement may be amended or modified only by a
---------
written instrument executed by both the Company and the Executive.
8.5 Governing Law. This Agreement shall be construed, interpreted
-------------
and enforced in accordance with the laws of the State of Delaware.
8.6 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of both parties and their respective successors and
assigns, including any corporation with which or into which the Company may be
merged or which may succeed to
-13-
<PAGE>
its assets or business, provided, however, that the obligations of the Executive
are personal and shall not be assigned by him.
8.7 Waivers. No delay or omission by the Company in exercising any
-------
right under this Agreement shall operate as a waiver of that or any other right.
A waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
8.8 Captions. The captions of the sections of this Agreement are for
--------
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
8.9 Severability. In case any provision of this Agreement shall be
------------
invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
-14-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
MEDALLION FINANCIAL CORP.
By:
-------------------------------
Title:
----------------------------
EXECUTIVE
----------------------------------
Andrew Murstein
-15-
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT dated ________ ___, 1996, is between Medallion
Financial Corp., a Delaware corporation with its principal place of business at
205 East 42nd Street, Suite 2020, New York, NY 10017 (the "Company"), and Andrew
-------
Murstein residing at 920 Park Avenue, Apt 15D, New York, NY 10028 (the
"Executive").
---------
WHEREAS, the Executive is presently employed by the Company as the
President of the Company;
WHEREAS, the Board of Directors of the Company (the "Board") desires to
-----
provide for the continued employment of the Executive, which the Board believes
is in the best interests of the Company and its shareholders, and the Executive
is willing to commit himself to serve the Company, on the terms and conditions
herein provided;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto hereby agree as follows:
The Company agrees to employ the Executive, and the Executive agrees to
serve the Company, on the terms and conditions set forth herein.
1. Title; Capacity. The Executive shall serve as President and Chief
---------------
Operating Officer of the Company and shall be based at the Company's
headquarters in New York City. The Executive hereby accepts such employment and
agrees to undertake the duties and responsibilities inherent in such position
and such other duties and responsibilities as the Board or its designee shall
from time to time reasonably assign to him. The Executive
<PAGE>
agrees to abide by the rules, regulations, instructions, personnel practices and
policies of the Company and any changes therein which may be adopted from time
to time by the Company.
The Company further agrees to use its best efforts to cause the Executive
to be nominated as a member of the Board and a member of the Executive Committee
(if such a committee is created).
2. Term of Employment. The Company agrees to employ the Executive, and
------------------
the Executive agrees to serve the Company for a period commencing on ________
___, 1996 (the "Commencement Date") and continuing for five years thereafter
-----------------
(such period, including all extensions thereto, to be collectively referred to
as the "Employment Period"), unless otherwise terminated pursuant to the terms
-----------------
hereof. The Employment Period shall automatically renew annually for a new
five-year term unless prior to the end of the first year of each five-year term,
either the Company or the Executive provides notice to the other party to this
Agreement of its intention not to extend the Employment Period beyond the then
current five-year term. Any notice given pursuant to this Section shall be
provided in accordance with the terms of Section 8.1 hereof and shall be
provided not later than 30 days prior to the end of such one-year period.
3. Compensation and Benefits.
-------------------------
3.1 Salary. The Company shall pay the Executive, in monthly
------
installments, an annual base salary of $155,000 for the one-year period
commencing on the Commencement Date. Such salary shall be subject to
adjustment thereafter as determined by mutual agreement between the Board
and the Executive.
3.2 Bonus and Fringe Benefits. The Executive shall be entitled to
-------------------------
participate in all bonus and benefit programs or plans that the Company
establishes
-2-
<PAGE>
and makes available to its employees to the extent that the Executive's
position, tenure, salary, and other qualifications make him eligible to
participate.
3.3 Reimbursement of Expenses. The Company shall reimburse the
-------------------------
Executive for all reasonable travel, entertainment and other expenses
incurred or paid by the Executive in connection with, or related to, the
performance of his duties, responsibilities or services under this
Agreement, upon presentation by the Executive of documentation, expense
statements, vouchers and/or such other supporting information as the
Company may reasonably request, provided, however, that the amount
-------- -------
available for such travel, entertainment and other expenses may be fixed in
advance by the Board.
3.4 Insurance. The Executive shall be entitled to health insurance
---------
coverage, term life insurance and long term disability insurance to the
extent that the Executive's position, tenure, salary, age, health and other
qualifications make him eligible to participate.
3.5 Vacation. The Executive shall be entitled to six weeks paid
--------
vacation per year.
4. Employment Termination. The employment of the Executive by the
----------------------
Company pursuant to this Agreement may be terminated under the following
circumstances:
4.1 Expiration of Term. Expiration of the Employment Period in
------------------
accordance with Section 2.
4.2 Death. Upon the death of the Executive.
-----
4.3 Disability. If, as a result of the Executive's incapacity due to
----------
physical or mental illness, the Executive shall have failed to perform the
services contemplated under this Agreement for a period of 270 consecutive
days, or a total of at least 300
-3-
<PAGE>
calendar days during any 365-day period, or a determination of disability
shall have been made by a physician satisfactory to both the Executive and
the Company, provided that if the Executive and the Company do not agree on
a physician, the Executive and the Company shall each select a physician
and these two together shall select a third physician whose determination
as to disability shall be binding on both parties.
4.4 Cause. The Company may terminate the Executive's employment
-----
hereunder for Cause. For purposes of this Agreement, the Company shall
have "Cause" to terminate the Executive's employment hereunder in the
-----
event:
(i) the Executive shall have willfully failed and continued to
fail substantially to perform the duties (other than any failure
resulting from the Executive's incapacity due to physical or mental
illness or any actual or anticipated failure after the issuance by him
of a Notice of Termination, as defined in Section 4.6), for 30 days
after a written demand for performance is delivered to the Executive
on behalf of the Company which specifically identifies the manner in
which it is alleged that the Executive has not substantially performed
his duties; provided that the Company's economic performance or
--------
failure to meet any specific projection shall not, in and of itself,
constitute "Cause"; or
-----
(ii) the Executive shall have engaged in (A) any material
misappropriation of funds, properties or assets of the Company, it
being understood that "material" for these purposes shall take into
--------
account both the amount of funds, properties or assets misappropriated
and the circumstances thereof (including the intent of the Executive
in connection therewith) or (B)
-4-
<PAGE>
any malicious damage or destruction of any property or assets of the
Company, whether resulting from the Executive's wilful actions or
omissions or the Executive's gross negligence; or
(iii) the Executive shall (A) have been convicted of a crime
involving moral turpitude or constituting a felony or (B) entered a
plea of nolo contendere to any such crime, either of which has had a
material adverse effect upon the business of the Company; or
(iv) the Executive shall have (A) materially breached his
obligations under Section 6 hereof or (B) breached any of the other
material provisions of this Agreement and such breach shall remain
uncured by the Executive within 30 days following receipt of notice
from the Company specifying such breach.
4.5 Termination by the Executive. The Executive may terminate his
----------------------------
employment hereunder (i) upon 90 days written notice or (ii) for Good
Reason (as defined below).
For purposes of this Agreement, "Good Reason" shall exist if there is
-----------
a Change in Control (as defined below) of the Company and one or more of
the following events shall have occurred (without the Executive's express
written consent):
(a) the assignment to the Executive of any duties
inconsistent with his status as President or Chief Operating
Officer of the Company, his removal from the position of
President or Chief Operating Officer of the Company, or a
substantial alteration in the nature or status of his
responsibilities from those in effect immediately prior to the
Change in Control;
-5-
<PAGE>
(b) a reduction by the Company of the Executive's annual
base salary in effect on the date immediately prior to the Change
in Control;
(c) the relocation of the Company's principal executive
offices to a location outside mid-town New York City or a
requirement that the Executive shall be based anywhere other than
the Company's principal executive offices except for required
travel on the Company's business to an extent substantially
consistent with his business travel obligations prior to the
Change in Control;
(d) the failure by the Company to continue in effect any
bonus plan in which the Executive was participating immediately
prior to the Change in Control; or
(e) the failure by the Company to continue to provide the
Executive with benefits at least as favorable as those enjoyed by
him under any of the Company's pension, life insurance, medical,
health and accident, disability, deferred compensation or savings
plans in which he was participating at the time of the Change in
Control, the taking of any action by the Company which would
directly or indirectly materially reduce any of such benefits or
deprive him of any material fringe benefit enjoyed by him at the
time of the Change in Control, or the failure by the Company to
provide the Executive with the number of paid vacation days to
which he was entitled at the time of the Change in Control.
-6-
<PAGE>
For purposes of this Agreement, a "Change in Control" of the Company
-----------------
shall mean a change in control of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended.
4.6 Notice of Termination. Any termination of the Executive's
---------------------
employment by the Company or by the Executive (other than termination
pursuant to Section 4.2) shall be communicated by Notice of Termination to
the other party hereto. For purposes of this Agreement, a "Notice of
---------
Termination" shall mean a written notice which shall indicate the specific
-----------
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances which provide a basis for
termination of the Executive's employment under the provision so indicated.
4.7 Date of Termination. "Date of Termination" shall mean (i) if the
------------------- -------------------
Executive's employment is terminated pursuant to Section 4.1, the date on
which the Employment Period expires pursuant to Section 2, (ii) if the
Executive's employment is terminated pursuant to Section 4.2, the date of
the Executive's death, (iii) if the Executive's employment is terminated
pursuant to Section 4.3, 30 days after the Notice of Termination is given
(provided that the Executive shall not have returned to the performance of
his duties on a full-time basis during such 30 day period), (iv) if the
Executive's employment is terminated pursuant to Section 4.4 or subsection
(i) of Section 4.5, the date specified in the Notice of Termination,
provided that in the case of a Section 4.4 termination it is at least 30
days subsequent to the date of the issuance of such Notice of Termination
and in the case of a subsection (i) of Section 4.5 termination it is at
least 90 days subsequent to the date of the issuance of such
-7-
<PAGE>
Notice of Termination, (v) if the Executive's employment is terminated
pursuant to subsection (ii) of Section 4.5, the date specified in such
Notice of Termination, and (vi) if the Executive's employment is terminated
other than as provided herein, the date specified in the Notice of
Termination, provided that it is at least 30 days subsequent to the date of
the issuance of such Notice of Termination.
5. Compensation Upon Termination.
-----------------------------
5.1 If the Executive's employment is terminated under the provisions
of Sections 4.1, 4.4 or subsection (i) of Section 4.5, the Company shall
pay to the Executive his full salary, bonus and benefits through the Date
of Termination.
5.2 If the Executive's employment is terminated by the Executive's
death under the provisions of Section 4.2, the Company shall pay to the
Executive's estate the Executive's full salary, bonus and benefits to the
Executive through the Date of Termination.
5.3 If the Executive's employment is terminated under the provisions
of Section 4.3, the Company shall pay to the Executive his full salary,
bonus and benefits through the Date of Termination. During any period that
the Executive fails to perform his duties hereunder as a result of
disability (as defined in Section 4.3), the Executive shall continue to
receive his full salary, bonus and benefits through the Date of
Termination.
5.4 If the Company shall terminate the Executive's employment other
than as provided herein or the Executive shall terminate his employment
pursuant to subsection (ii) of Section 4.5, then:
(i) The Company shall pay the Executive his full salary, bonus
and benefits through the Date of Termination.
-8-
<PAGE>
(ii) Subject to subsection (iv) of this Section 5.4, in lieu of
any further salary payments to the Executive for periods subsequent to
the Date of Termination, the Company shall pay as severance pay to the
Executive an amount equal to the remainder of the salary, bonus and
value of the fringe benefits which the Executive would be entitled to
receive for the balance of the Employment Period.
(iii) The Company shall pay all other damages to which the
Executive may be entitled as a result of such termination, including
damages for any and all legal fees and expenses incurred by him as a
result of such termination.
(iv) In the event that (A) any payment or benefit received or
to be received by the Executive in connection with a Change in Control
of the Company or the termination of the Executive's employment
(whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company) (collectively referred to
herein as "Severance Payments") would not be deductible (in whole or
------------------
part) as a result of section 280G of the Internal Revenue Code of
1986, as amended, (the "Code") by the Company, an affiliate or other
----
person making such payment or providing such benefit and (B) it
shall be determined that the net amount retained by the Executive,
after deduction of the excise tax imposed by section 4999 of the Code
and any federal, state and local income and employment taxes on the
Severance Payments, does not exceed 110% of the net amount retained by
the Executive after applying the limitations of this subsection (iv)
of Section 5.4 and after deduction of any federal, state and local
income and employment taxes on the
-9-
<PAGE>
Severance Payments as so reduced, the Severance Payments shall be
reduced until no portion of the Severance Payments is not deductible,
or the Severance Payments are reduced to zero. For purposes of this
limitation (i) no portion of the Severance Payments the receipt or
enjoyment of which the Executive shall have effectively waived in
writing prior to the date of payment of the Severance Payments shall
be taken into account, (ii) no portion of the Severance Payments shall
be taken into account which in the opinion of tax counsel selected by
the Company's independent auditors and acceptable to the Executive
does not constitute a "parachute payment" within the meaning of
-----------------
section 280G(b)(2) of the Code, (iii) the Severance Payments shall be
reduced only to the extent necessary so that the Severance Payments
(other than those referred to in clauses (i) or (ii)) in their
entirety constitute reasonable compensation for services actually
rendered within the meaning of section 280G(b)(4) of the Code or are
otherwise not subject to disallowance as deductions, in the opinion of
the tax counsel referred to in clause (ii); and (iv) the value of any
non-cash benefit or any deferred payment or benefit included in the
Severance Payments shall be determined by the Company's independent
auditors in accordance with the principles of sections 280G(d)(3) and
(4) of the Code. For purposes of determining the income taxes on the
Severance Payments, the Executive shall be deemed to pay federal
income tax at the highest marginal rate of federal income taxation in
the calendar year in which the Severance Payments are to be made and
local income taxes at the highest marginal rate of taxation in the
state and locality of the Executive's residence
-10-
<PAGE>
on the Date of Termination, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and
local taxes.
6. Proprietary Information and Developments.
----------------------------------------
6.1 Proprietary Information.
-----------------------
(i) The Executive agrees that all information and know how,
whether or not in writing, of a private, secret or confidential nature
concerning the Company's business or financial affairs (collectively,
"Proprietary Information") is and shall be the exclusive property of
-----------------------
the Company. By way of illustration, but not limitation, Proprietary
Information may include inventions, products, processes, methods,
techniques, projects, developments, plans, research data, financial
data, personnel data, and lists of borrowers, advertisers, fleet and
taxi owners. The Executive will not disclose any Proprietary
Information to others outside the Company or use the same for any
unauthorized purposes without written approval by the Board, either
during or after his employment, unless and until such Proprietary
Information has become public knowledge without fault by the
Executive.
(ii) The Executive agrees that all files, letters, memoranda,
reports, records, data, sketches, drawings, or other written,
photographic, or other tangible material containing Proprietary
Information, whether created by the Executive or others, which shall
come into his custody or possession, shall be and are the exclusive
property of the Company to be used by the Executive only in the
performance of his duties for the Company.
(iii) The Executive agrees that his obligation not to disclose
or use information, know-how and records of the types set forth in
subsection (i) and
-11-
<PAGE>
(ii) above, also extends to such types of information, know-how,
records and tangible property of borrowers, advertisers, fleet and
taxi owners or other third parties who may have disclosed or entrusted
the same to the Company or to the Executive in the course of the
Company's business.
6.2 Other Agreements. The Executive hereby represents that he is not
----------------
bound by the terms of any agreement with any previous employer or other
party to refrain from using or disclosing any trade secret or confidential
or proprietary information in the course of his employment with the Company
or to refrain from competing, directly or indirectly, with the business of
such previous employer or any other party. The Executive further
represents that his performance of all the terms of this Agreement and as
an employee of the Company does not and will not breach any agreement to
keep in confidence proprietary information, knowledge or data acquired by
him in confidence or in trust prior to his employment with the Company.
7. Non-Competition, Non-Solicitation.
---------------------------------
7.1 Non-solicitation of Employees. The Executive agrees that during
-----------------------------
the term of the Executive's employment with the Company and for a period of
one year after the termination of the Executive's employment with the
Company for any reason, the Executive shall not directly recruit, solicit
or otherwise induce or attempt to induce any employees of the Company to
leave the employment of the Company.
7.2 Non-competition. The Executive agrees that during the term of
---------------
the Executive's employment with the Company and for a period of one year
after the termination of the Executive's employment with the Company for
any reason, the Executive shall not directly or indirectly, except as a
passive investor in publicly held companies and except for investments held
at the date hereof, engage in competition
-12-
<PAGE>
with the Company or any of its subsidiaries, or own or control any interest
in, or act as director, officer or employee of, or consultant to, any firm,
corporation or institution directly engaged in competition with the Company
or any of its subsidiaries; provided the Company or one of its subsidiaries
are actively engaged in such business at the time the Executive's
employment by the Company is terminated.
8. Miscellaneous.
-------------
8.1 Notices. All notices required or permitted under this Agreement
-------
shall be in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the other party at the address shown above, or at
such other address or addresses as either party shall designate to the other in
accordance with this Section 8.1.
8.2 Pronouns. Whenever the context may require, any pronouns used in
--------
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular forms of nouns and pronouns shall include the plural,
and vice versa.
8.3 Entire Agreement. This Agreement constitutes the entire
----------------
agreement between the parties and supersedes all prior agreements and
understandings, whether written or oral, relating to the subject matter of this
Agreement.
8.4 Amendment. This Agreement may be amended or modified only by a
---------
written instrument executed by both the Company and the Executive.
8.5 Governing Law. This Agreement shall be construed, interpreted
-------------
and enforced in accordance with the laws of the State of Delaware.
8.6 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of both parties and their respective successors and
assigns, including any corporation with which or into which the Company may be
merged or which may succeed to
-13-
<PAGE>
its assets or business, provided, however, that the obligations of the Executive
are personal and shall not be assigned by him.
8.7 Waivers. No delay or omission by the Company in exercising any
--- -------
right under this Agreement shall operate as a waiver of that or any other right.
A waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
8.8 Captions. The captions of the sections of this Agreement are for
--------
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
8.9 Severability. In case any provision of this Agreement shall be
------------
invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
-14-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
MEDALLION FINANCIAL CORP.
By:
--------------------------
Title:
-----------------------
EXECUTIVE
-----------------------------
Andrew Murstein
-15-
<PAGE>
[LETTERHEAD OF PALMER & DODGE LLP APPEARS HERE]
Telephone: (617) 573-0100 Facsimile: (617) 227-4420
May 17, 1996
Medallion Financial Corp.
205 East 42nd Street
New York, NY 10017
Dear Sirs:
We are rendering this opinion in connection with the Registration Statement
on Form N-2 (the "Registration Statement") filed by Medallion Financial Corp.
(the "Company") with the Securities and Exchange Commission under the Securities
Act of 1933, as amended. The Registration Statement relates to up to 5,750,000
of shares of the Company's Common stock, $0.01 par value (the "Shares"). We
understand that the Shares are to be offered and sold in the manner described in
the Registration Statement.
We have acted as your counsel in connection with the preparation of the
Registration Statement. We are familiar with the proceedings of the Board of
Directors in connection with the authorization, issuance and sale of the Shares
(the "Resolutions"). We have examined such other documents as we consider
necessary to render this opinion.
Based upon the foregoing, we are of the opinion that the Shares have been
duly authorized and, when issued and delivered by the Company against payment
therefor at the price to be determined pursuant to the Resolutions, will be
validly issued, fully paid and non-assessable.
The foregoing opinion is limited to the General Corporation Law of the
State of Delaware, and we are expressing no opinion as to the effect of the laws
of any other jurisdiction. We have relied as to certain matters on information
obtained from public officials, officers of the Company and other sources
believed by us to be responsible.
We hereby consent to the filing of this opinion as a part of the
Registration Statement and to the reference to our firm under the caption
"Validity of the Shares" in the Prospectus filed as part thereof. In giving
such consent, we do not thereby admit that we are in the category of persons
whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ Palmer & Dodge LLP
<PAGE>
[ARTHUR ANDERSEN LLP Letterhead]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the inclusion in this
registration statement on Form N-2 of our report dated February 21, 1996, on our
audit of the balance sheet of Medallion Financial Corp., and to all references
to our Firm included in Pre-Effective Amendment No. 2 to registration statement
File No. 333-1670.
/s/ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
May 17, 1996
<PAGE>
[ARTHUR ANDERSEN LLP Letterhead]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the inclusion in this
registration statement on Form N-2 of our report dated March 14, 1996, on our
audit of the financial statements of Transportation Capital Corp. and to all
references to our Firm included in Pre-Effective Amendment No. 2 to registration
statement File No. 333-1670.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
May 17, 1996
<PAGE>
[ARTHUR ANDERSEN LLP Letterhead]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the inclusion in this
registration statement on Form N-2 of our report dated March 14, 1996, on our
audit of the financial statements of Edwards Capital Company and to all
references to our Firm included in Pre-Effective Amendment No. 2 to this
registration statement File No. 333-1670.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
May 17, 1996
<PAGE>
[ARTHUR ANDERSEN LLP Letterhead]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the inclusion in this
registration statement on Form N-2 of our report dated March 15, 1996, on our
audit of the financial statements of Tri-Magna Corporation and Subsidiaries and
to all references to our Firm included in Pre-Effective Amendment No. 2 to
registration statement File No. 333-1670.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
May 17, 1996
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form N-2 (File
No. 333-1670) of our report dated October 24, 1995, on our audits of the
financial statements and financial statement schedules of Transportation Capital
Corp. We also consent to the reference to our firm under the caption
"Experts".
/s/ COOPERS & LYBRAND L.L.P.
New York, NY
May 17, 1996
<PAGE>
[Friedman Alpren & Green LLP Letterhead]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this
Form N-2 of our report dated January 28, 1995 included in or made a part of this
registration statement.
/s/ FRIEDMAN ALPREN & GREEN LLP
New York, New York
May 20, 1996
<PAGE>
SUBSCRIPTION AGREEMENT FOR SHARES OF COMMON STOCK OF
MEDALLION FINANCIAL CORP.
(For Institutional Investors)
Gentlemen:
The undersigned understands that Medallion Financial Corp., a Delaware
corporation (the "Company"), is offering for sale 200 shares of Common Stock,
par value $0.01 per share (the "Shares"), at a price of $10.00 per share.
1. Subscription. Subject to the terms and conditions hereof, the
------------
undersigned hereby irrevocably agrees to purchase the number of Shares set forth
opposite its name below and with this subscription delivers a check in the
amount of the total purchase price therefor.
2. Acceptance of Subscription. It is understood and agreed that the
--------------------------
Company shall have the right to accept or reject this subscription in whole or
in part and that the same shall be deemed to be accepted only when it is signed
by the Company. Subscriptions need not be accepted in the order received, and
Shares may be allocated in the event of oversubscription.
3. Representations, Warranties and Covenants of the Undersigned. The
------------------------------------------------------------
undersigned hereby represents and warrants to and covenants with the Company and
with each officer, employee and agent of the Company that:
(a) The undersigned is a trust duly organized and validly existing under
the laws of the State of New York. The purchase by the undersigned of the
number of Shares set forth below for the purchase price per share specified
above has been duly authorized by all action necessary under the trust agreement
or other governing documents of the undersigned.
(b) The undersigned is able to bear the economic risks of this investment,
and consequently, without limiting the generality of the foregoing, is able to
hold the Shares for an indefinite period of time and has a sufficient net worth
to sustain a loss of its entire investment in the Company in the event such loss
should incur.
(c) The undersigned has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Company. The undersigned recognizes that its investment in
the Company involves a high degree of risk which may result in the loss of the
total amount of its investment.
<PAGE>
(d) The undersigned is aware that it must bear the economic risk of its
investment in the Company for an indefinite period of time because the Shares
have not been registered under the Securities Act of 1933 (the "Act") as
amended, or under the securities laws of any state, and, therefore, cannot be
sold unless they are subsequently registered under the Act and any applicable
state securities laws or an exemption from registration is available, and
further that the Company is under no obligation and does not propose to attempt
to register the Shares.
(e) The undersigned is acquiring the Shares for its own account for
investment and not with a view to or for sale in connection with any
distribution or resale thereof. The undersigned has not offered or sold any
portion of the Shares and has no present intention of dividing the Shares with
others or of reselling or otherwise disposing of any portion of the Shares
either currently or after the passage of a fixed or determinable period of time
or upon the occurrence or nonoccurrence of any predetermined event or
circumstance.
(f) The undersigned understands and agrees that the following restrictions
and limitations are applicable to its purchase and any resales, pledges,
hypothecations or other transfers of the Shares:
(i) The undersigned agrees that the Shares shall not be sold,
transferred, pledged, or otherwise disposed of unless they are registered under
the Act and all applicable state securities laws or an exemption from such
registration is available.
(ii) A legend will be placed on any certificate(s) or other document(s)
evidencing the Shares in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, (THE "ACT") AND MAY NOT BE TRANSFERRED BY
THE HOLDER EXCEPT (1) AS PART OF AN OFFERING DESCRIBED IN AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT COVERING SAID SHARES OR (2) AFTER RECEIPT
BY THE CORPORATION OF AN OPINION OF COUNSEL, SATISFACTORY IN FORM AND SUBSTANCE
TO IT, THAT SUCH TRANSFER MAY BE ACCOMPLISHED UNDER AN EXEMPTION CONTAINED IN
THE ACT WITHOUT VIOLATION OF SECTION 5 THEREOF.
THE SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SHARES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AND RESTRICTED BY THE PROVISIONS
OF A SUBSCRIPTION AGREEMENT DATED OCTOBER 23, 1995 BETWEEN THE STOCKHOLDER NAMED
ON THE FACE OF THIS CERTIFICATE AND THE CORPORATION. A COPY OF THE SUBSCRIPTION
AGREEMENT MAY BE OBTAINED FROM THE OFFICE OF THE SECRETARY OF THE CORPORATION
UPON WRITTEN REQUEST WITHOUT CHARGE.
2
<PAGE>
(iii) Stop transfer instructions have been or may be placed with
respect to the Shares so as to restrict the resale, pledge, hypothecation or
other transfer thereof.
(iv) The legend and stop transfer instructions described in
subparagraphs (ii) and (iii) above will be placed on or with respect to any new
certificate(s) or other document(s) issued upon presentment by the undersigned
of certificate(s) or other document(s) for transfer.
(g) The undersigned acknowledges that it has been advised that Rule 144
promulgated under the Act is not currently applicable to the Shares and further
acknowledges that the Company will not be obligated to make the filings and
reports, or make available publicly the information, which is a condition to the
availability of such Rule 144.
(h) The undersigned acknowledges that it has had the opportunity to meet
with officers and directors of the Company, and to have said officials answer
any questions regarding the terms and conditions of this particular investment,
and all such questions have been answered to its full satisfaction.
(i) The undersigned has received no representations from the Company, its
employees or agents, and in making its decision to become an investor has relied
solely upon its independent investigations made by the undersigned without
assistance of the Company, its employees, or agents.
4. Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants to the undersigned that:
(a) The Company is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on its business as now conducted and as
proposed to be conducted. The Company is duly qualified to transact business
and is in good standing in each jurisdiction in which the failure so to qualify
would have a material adverse effect on its business or properties.
(b) No consent, approval, order or authorization of, or registration,
qualification, designation, declaration, or filing with, any federal, state, or
local governmental authority on the part of the Company is required in
connection with the consummation of the transactions contemplated by this
Subscription Agreement, except for such filings as may be necessary pursuant to
the Act, as amended, and applicable state securities laws, and establishment of
such exemptions thereunder as required.
3
<PAGE>
(c) There is no action, suit, proceeding or investigation pending or
currently threatened against the Company which questions the validity of this
Subscription Agreement or the right of the Company to enter into it, or to
consummate the transactions contemplated hereby, or which might result, either
individually or in the aggregate, in any material adverse changes in the assets,
condition, affairs or prospects of the Company, financially or otherwise, or any
change in the current equity ownership of the Company, nor is the Company aware
that there is any basis for the foregoing.
(d) The Company has all requisite corporate power and authority to enter
into this Subscription Agreement and to issue and sell the Shares as
contemplated hereby. The execution, delivery and performance of this
Subscription Agreement and the issuance and sale of the Shares as contemplated
hereby have been duly authorized by all requisite corporate action on the part
of the Company. This Subscription Agreement has been duly executed and
delivered by the Company and (assuming the due authorization, execution and
delivery hereof by the undersigned purchaser) is a valid and binding obligation
of the Company. The execution, delivery and performance of this Subscription
Agreement and the issuance and sale of the Shares as contemplated hereby will
not: (i) violate any provisions of law applicable to the Company; (ii) with or
without the giving of notice and/or the passage of time, conflict with or result
in the breach of any provision of the Articles of Organization or Bylaws of the
Company or any material instrument, license, agreement or commitment to which
the Company is a party or by which any of its assets or properties are bound; or
(iii) constitute a violation of any order, judgment or decree to which the
Company is a party or by which any of its assets or properties are bound.
(e) The Shares when issued and delivered in accordance with the terms
hereof, will be duly and validly issued, fully paid and nonassessable.
(f) The authorized capital stock of the Company consists of 3,000 shares of
Common Stock, and no shares are held in the treasury. Except as contemplated by
this Agreement, the Company does not have any shares of its capital stock issued
or outstanding and does not have any outstanding subscriptions, options,
warrants, rights or other agreements or commitments obligating the Company to
issue shares of its capital stock.
4
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement as a sealed instrument as of the 23rd day of October, 1995.
Number of Shares Total Purchase
Purchased: 100 Price: $1,000
ALVIN MURSTEIN SECOND FAMILY TRUST
By: /s/ Alvin Murstein
------------------------
Alvin Murstein, Trustee
By: /s/ Amie Murstein
-----------------------
Amie Murstein, Trustee
Accepted
MEDALION FINANCIAL CORP.
By: /s/ Andrew Murstein
--------------------------
Andrew Murstein, President
Date: October 23, 1995
5
<PAGE>
SUBSCRIPTION AGREEMENT FOR SHARES OF COMMON STOCK OF
MEDALLION FINANCIAL CORP.
(For Institutional Investors)
Gentlemen:
The undersigned understands that Medallion Financial Corp., a Delaware
corporation (the "Company"), is offering for sale 200 shares of Common Stock,
par value $0.01 per share (the "Shares"), at a price of $10.00 per share.
1. Subscription. Subject to the terms and conditions hereof, the
------------
undersigned hereby irrevocably agrees to purchase the number of Shares set forth
opposite its name below and with this subscription delivers a check in the
amount of the total purchase price therefor.
2. Acceptance of Subscription. It is understood and agreed that the
--------------------------
Company shall have the right to accept or reject this subscription in whole or
in part and that the same shall be deemed to be accepted only when it is signed
by the Company. Subscriptions need not be accepted in the order received, and
Shares may be allocated in the event of oversubscription.
3. Representations, Warranties and Covenants of the Undersigned. The
------------------------------------------------------------
undersigned hereby represents and warrants to and covenants with the Company and
with each officer, employee and agent of the Company that:
(a) The undersigned is a trust duly organized and validly existing under
the laws of the State of New York. The purchase by the undersigned of the
number of Shares set forth below for the purchase price per share specified
above has been duly authorized by all action necessary under the trust agreement
or other governing documents of the undersigned.
(b) The undersigned is able to bear the economic risks of this investment,
and consequently, without limiting the generality of the foregoing, is able to
hold the Shares for an indefinite period of time and has a sufficient net worth
to sustain a loss of its entire investment in the Company in the event such loss
should incur.
(c) The undersigned has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Company. The undersigned recognizes that its investment in
the Company involves a high degree of risk which may result in the loss of the
total amount of its investment.
<PAGE>
(d) The undersigned is aware that it must bear the economic risk of its
investment in the Company for an indefinite period of time because the Shares
have not been registered under the Securities Act of 1933 (the "Act") as
amended, or under the securities laws of any state, and, therefore, cannot be
sold unless they are subsequently registered under the Act and any applicable
state securities laws or an exemption from registration is available, and
further that the Company is under no obligation and does not propose to attempt
to register the Shares.
(e) The undersigned is acquiring the Shares for its own account for
investment and not with a view to or for sale in connection with any
distribution or resale thereof. The undersigned has not offered or sold any
portion of the Shares and has no present intention of dividing the Shares with
others or of reselling or otherwise disposing of any portion of the Shares
either currently or after the passage of a fixed or determinable period of time
or upon the occurrence or nonoccurrence of any predetermined event or
circumstance.
(f) The undersigned understands and agrees that the following restrictions
and limitations are applicable to its purchase and any resales, pledges,
hypothecations or other transfers of the Shares:
(i) The undersigned agrees that the Shares shall not be sold,
transferred, pledged, or otherwise disposed of unless they are registered under
the Act and all applicable state securities laws or an exemption from such
registration is available.
(ii) A legend will be placed on any certificate(s) or other document(s)
evidencing the Shares in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, (THE "ACT") AND MAY NOT BE TRANSFERRED BY
THE HOLDER EXCEPT (1) AS PART OF AN OFFERING DESCRIBED IN AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT COVERING SAID SHARES OR (2) AFTER RECEIPT
BY THE CORPORATION OF AN OPINION OF COUNSEL, SATISFACTORY IN FORM AND SUBSTANCE
TO IT, THAT SUCH TRANSFER MAY BE ACCOMPLISHED UNDER AN EXEMPTION CONTAINED IN
THE ACT WITHOUT VIOLATION OF SECTION 5 THEREOF.
THE SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SHARES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AND RESTRICTED BY THE PROVISIONS
OF A SUBSCRIPTION AGREEMENT DATED OCTOBER 23, 1995 BETWEEN THE STOCKHOLDER NAMED
ON THE FACE OF THIS CERTIFICATE AND THE CORPORATION. A COPY OF THE SUBSCRIPTION
AGREEMENT MAY BE OBTAINED FROM THE OFFICE OF THE SECRETARY OF THE CORPORATION
UPON WRITTEN REQUEST WITHOUT CHARGE.
2
<PAGE>
(iii) Stop transfer instructions have been or may be placed with
respect to the Shares so as to restrict the resale, pledge, hypothecation or
other transfer thereof.
(iv) The legend and stop transfer instructions described in
subparagraphs (ii) and (iii) above will be placed on or with respect to any new
certificate(s) or other document(s) issued upon presentment by the undersigned
of certificate(s) or other document(s) for transfer.
(g) The undersigned acknowledges that it has been advised that Rule 144
promulgated under the Act is not currently applicable to the Shares and further
acknowledges that the Company will not be obligated to make the filings and
reports, or make available publicly the information, which is a condition to the
availability of such Rule 144.
(h) The undersigned acknowledges that it has had the opportunity to meet
with officers and directors of the Company, and to have said officials answer
any questions regarding the terms and conditions of this particular investment,
and all such questions have been answered to its full satisfaction.
(i) The undersigned has received no representations from the Company, its
employees or agents, and in making its decision to become an investor has relied
solely upon its independent investigations made by the undersigned without
assistance of the Company, its employees, or agents.
4. Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants to the undersigned that:
(a) The Company is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on its business as now conducted and as
proposed to be conducted. The Company is duly qualified to transact business
and is in good standing in each jurisdiction in which the failure so to qualify
would have a material adverse effect on its business or properties.
(b) No consent, approval, order or authorization of, or registration,
qualification, designation, declaration, or filing with, any federal, state, or
local governmental authority on the part of the Company is required in
connection with the consummation of the transactions contemplated by this
Subscription Agreement, except for such filings as may be necessary pursuant to
the Act, as amended, and applicable state securities laws, and establishment of
such exemptions thereunder as required.
3
<PAGE>
(c) There is no action, suit, proceeding or investigation pending or
currently threatened against the Company which questions the validity of this
Subscription Agreement or the right of the Company to enter into it, or to
consummate the transactions contemplated hereby, or which might result, either
individually or in the aggregate, in any material adverse changes in the assets,
condition, affairs or prospects of the Company, financially or otherwise, or any
change in the current equity ownership of the Company, nor is the Company aware
that there is any basis for the foregoing.
(d) The Company has all requisite corporate power and authority to enter
into this Subscription Agreement and to issue and sell the Shares as
contemplated hereby. The execution, delivery and performance of this
Subscription Agreement and the issuance and sale of the Shares as contemplated
hereby have been duly authorized by all requisite corporate action on the part
of the Company. This Subscription Agreement has been duly executed and
delivered by the Company and (assuming the due authorization, execution and
delivery hereof by the undersigned purchaser) is a valid and binding obligation
of the Company. The execution, delivery and performance of this Subscription
Agreement and the issuance and sale of the Shares as contemplated hereby will
not: (i) violate any provisions of law applicable to the Company; (ii) with or
without the giving of notice and/or the passage of time, conflict with or result
in the breach of any provision of the Articles of Organization or Bylaws of the
Company or any material instrument, license, agreement or commitment to which
the Company is a party or by which any of its assets or properties are bound; or
(iii) constitute a violation of any order, judgment or decree to which the
Company is a party or by which any of its assets or properties are bound.
(e) The Shares when issued and delivered in accordance with the terms
hereof, will be duly and validly issued, fully paid and nonassessable.
(f) The authorized capital stock of the Company consists of 3,000 shares of
Common Stock, and no shares are held in the treasury. Except as contemplated by
this Agreement, the Company does not have any shares of its capital stock issued
or outstanding and does not have any outstanding subscriptions, options,
warrants, rights or other agreements or commitments obligating the Company to
issue shares of its capital stock.
4
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement as a sealed instrument as of the 23rd day of October, 1995.
Number of Shares Total Purchase
Purchased: 100 Price: $1,000
ANDREW MURSTEIN FAMILY TRUST
By: /s/ Andrew Murstein
-------------------------
Andrew Murstein, Trustee
By: /s/ Barbara Murstein
------------------------
Barbara Murstein, Trustee
Accepted
MEDALION FINANCIAL CORP.
By: /s/ Alvin Murstein
------------------------
Alvin Murstein, Chairman
Date: October 23, 1995
5
