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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Amendment No. 1)
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-27812
MEDALLION FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
DELAWARE No. 04-3291176
(State of Incorporation) (IRS Employer Identification No.)
437 MADISON AVE, NEW YORK, NEW YORK 10022
(Address of principal executive offices) (Zip Code)
(212) 328-2100
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Number of shares of Common Stock outstanding at the latest practicable date,
April 30, 1998:
Class Outstanding PAR VALUE SHARES OUTSTANDING
----------------- --------- ------------------
Common Stock.......................... $.01 12,882,996
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The undersigned registrant hereby amends Item 6 of its Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 1998, as set forth below, to
include Exhibit 10.2 and to add an electronic copy of Exhibit 10.1, an exhibit
previously filed in paper format pursuant to a temporary hardship exemption.
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
3.1 Medallion Financial Corp. Restated Certificate of Incorporation. Filed as
Exhibit 3.1 to the Company's Annual Report on Form 10-K/A for the fiscal
year ended December 31, 1996 and incorporated by reference herein.
3.2 Medallion Financial Corp. Restated By-Laws. Filed as Exhibit b to the
Company's Registration Statement on Form K-2 (File No. 333-1670) and
incorporated by reference herein.
4.1 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"). Filed
as Exhibit f.2 to the Company's Registration Statement on Form N-2 (File
No. 333-1670) and incorporated by reference herein.
4.2 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.
Filed as Exhibit f.3 to the Company's Registration Statement on Form N-2
(File No. 333-1670) and incorporated by reference herein.
4.3 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"). Filed as Exhibit f.4 to the Company's
Registration Statement on Form N-2 (File No. 333-1670) and incorporated by
reference herein.
4.4 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. Filed as Exhibit f.5 to the Company's Registration
Statement on Form N-2 (File No. 333-1670) and incorporated by reference
herein.
4.5 Debenture due June 1, 2004 in the amount of $4,600,000 issued by Edwards
Capital
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Company and payable to Chemical Bank under the Amended Trust Agreement.
Filed as Exhibit f.6 to the Company's Registration Statement on Form N-2
(File No. 333-1670) and incorporated by reference herein.
4.6 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. Filed as Exhibit f.7 to the Company's Registration
Statement on Form N-2 (File No. 333-1670) and incorporated by reference
herein.
4.7 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. Filed as Exhibit f.8
to the Company's Registration Statement on Form N-2 (File No. 333-1670) and
incorporated by reference herein. Letter dated September 19, 1996 from the
U.S. Small Business Administration to Edwards Capital Corp. amending such
Letter Agreement was filed as Exhibit 4.7 to the Company's Annual Report on
Form 10-K/A for the fiscal year ended December 31, 1996 and is incorporated
by reference herein.
4.8 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. Filed as Exhibit f.10 to the Company's Registration
Statement on Form N-2 (File No. 333-1670) and incorporated by reference
herein.
10.1 (CE) Commercial Paper Dealer Agreement [4(2) Program] between Medallion
Funding Corp., as issuer, and Smith Barney Inc., as dealer, dated as of
March 13, 1998. Filed herewith.
10.2 Agency Agreement, by and between Medallion Funding Corp. and Bank of
Montreal Trust Company, dated as of March 13, 1998.
27 Medallion Financial Corp. Financial Data Schedule.
(b) Reports on Form 8-K.
There were no reports on Form 8-K were filed during the fiscal quarter
ended March 31, 1998.
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MEDALLION FINANCIAL CORP.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
MEDALLION FINANCIAL CORP.
Date: May 26, 1998 By: /s/ Daniel F. Baker
-------------------------------------
Daniel F. Baker
Chief Financial Officer
(Principal Financial Officer and
Chief Accounting Officer)
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EXHIBIT 10.1
COMMERCIAL PAPER DEALER AGREEMENT
[4(2) PROGRAM]
between
MEDALLION FUNDING CORP., as Issuer
and
SMITH BARNEY INC., as Dealer
Concerning Notes to be issued pursuant to an
Issuing and Paying Agency Agreement dated as
of March 13, 1998 between the Issuer and Bank
of Montreal Trust Company, as Issuing and
Paying Agent
Dated as of
March 13, 1998
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COMMERCIAL PAPER DEALER AGREEMENT
[4(2) Program]
This agreement ("Agreement") sets forth the
understandings between the Issuer and the Dealer, each named on
the cover page hereof, in connection with the issuance and sale
by the Issuer of its short-term promissory notes (the "Notes")
through the Dealer.
Certain terms used in this Agreement are defined in
Section 6 hereof.
The Addendum to this Agreement, and any Annexes or
Exhibits described in this Agreement or such Addendum, are hereby
incorporated into this Agreement and made fully a part hereof.
Section 1. Offers, Sales and Resales of Notes.
1.1 While (i) the Issuer has and shall have no
obligation to sell the Notes to the Dealer or to permit the
Dealer to arrange any sale of the Notes for the account of the
Issuer, and (ii) the Dealer has and shall have no obligation to
purchase the Notes from the Issuer or to arrange any sale of the
Notes for the account of the Issuer, the parties hereto agree
that in any case where the Dealer purchases Notes from the
Issuer, or arranges for the sale of Notes by the Issuer, such
Notes will be purchased or sold by the Dealer in reliance on the
representations, warranties, covenants and agreements of the
Issuer contained herein or made pursuant hereto and on the terms
and conditions and in the manner provided herein.
1.2 So long as this Agreement shall remain in effect,
and in addition to the limitations contained in Section 1.7
hereof, the Issuer shall not, without the consent of the Dealer,
offer, solicit or accept offers to purchase, or sell, any Notes
except (a) in transactions with one or more dealers which may
from time to time after the date hereof become dealers with
respect to the Notes by executing with the Issuer one or more
agreements which contain provisions substantially identical to
those contained in Section 1 of this Agreement, of which the
Issuer hereby undertakes to provide the Dealer prompt notice or
(b) in transactions with the other dealers listed on the Addendum
hereto, which are executing agreements with the Issuer which
contain provisions substantially identical to Section 1 of this
Agreement contemporaneously herewith. In no event shall the
Issuer offer, solicit or accept offers to purchase, or sell, any
Notes directly on its own behalf in transactions with persons
other than broker-dealers as specifically permitted in this
Section 1.2.
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1.3 The Notes shall be in a minimum denomination of
$250,000 or integral multiples of $1,000 in excess thereof, will
bear such interest rates, if interest bearing, or will be sold at
such discount from their face amounts, as shall be agreed upon by
the Dealer and the Issuer, shall have a maturity not exceeding
270 days from the date of issuance (exclusive of days of grace)
and shall not contain any provision for extension, renewal or
automatic "rollover."
1.4 The authentication and issuance of, and payment
for, the Notes shall be effected in accordance with the Issuing
and Paying Agency Agreement, and the Notes shall be either
individual physical certificates or book-entry notes evidenced by
a Master Note registered in the name of DTC or its nominee, in
the form or forms annexed to the Issuing and Paying Agency
Agreement.
1.5 If the Issuer and the Dealer shall agree on the
terms of the purchase of any Note by the Dealer or the sale of
any Note arranged by the Dealer (including, but not limited to,
agreement with respect to the date of issue, purchase price,
principal amount, maturity and interest rate (in the case of
interest-bearing Notes) or discount thereof (in the case of Notes
issued on a discount basis), and appropriate compensation for the
Dealer's services hereunder) pursuant to this Agreement, the
Issuer shall cause such Note to be issued and delivered in
accordance with the terms of the Issuing and Paying Agency
Agreement and payment for such Note shall be made by the
purchaser thereof, either directly or through the Dealer, to the
Issuing and Paying Agent, for the account of the Issuer. Except
as otherwise agreed, in the event that the Dealer is acting as an
agent and a purchaser shall either fail to accept delivery of or
make payment for a Note on the date fixed for settlement, the
Dealer shall promptly notify the Issuer, and if the Dealer has
therefore paid the Issuer for the Note, the Issuer will promptly
return such funds to the Dealer against its return of the Note to
the Issuer, in the case of a certificated Note, and upon notice
of such failure in the case of a book-entry Note. If such failure
occurred for any reason other than default by the Dealer, the
Issuer shall reimburse the Dealer on an equitable basis for the
Dealer's loss of the use of such funds for the period such funds
were credited to the Issuer's account.
1.6 The Dealer and the Issuer hereby establish and
agree to observe the following procedures in connection with
offers, sales and subsequent resales or other transfers of the
Notes:
(a) Offers and sales of the Notes by or
through the Dealer shall be made only to:
(i) investors reasonably believed by the Dealer to
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be Qualified Institutional Buyers, Institutional
Accredited Investors or Sophisticated Individual
Accredited Investors and (ii) non-bank fiduciaries
or agents that will be purchasing Notes for one or
more accounts, each of which is reasonably believed
by the Dealer to be an Institutional Accredited
Investor or Sophisticated Individual Accredited
Investor.
(b) Resales and other transfers of the Notes
by the holders thereof shall be made only in
accordance with the restrictions in the legend
described in clause (e) below.
(c) No general solicitation or general
advertising shall be used in connection with the
offering of the Notes. Without limiting the
generality of the foregoing, without the prior
written approval of the Dealer, the Issuer shall
not issue any press release or place or publish any
"tombstone" or other advertisement relating to the
Notes.
(d) No sale of Notes to any one purchaser
shall be for less than $250,000 principal or face
amount, and no Note shall be issued in a smaller
principal or face amount. If the purchaser is a
non-bank fiduciary acting on behalf of others, each
person for whom such purchaser is acting must
purchase at least $250,000 principal or face amount
of Notes.
(e) Offers and sales of the Notes by the
Issuer through the Dealer acting as agent for the
Issuer shall be made in accordance with Rule 506
under the Securities Act, and shall be subject to
the restrictions described in the legend appearing
on Exhibit A hereto. Offers and sales of the Notes
to the Dealer shall also be made in accordance with
Rule 506 under the Securities Act. A legend
substantially to the effect of such Exhibit A shall
appear as part of the Private Placement Memorandum
used in connection with offers and sales of Notes
hereunder, as well as on each individual
certificate representing a Note and each Master
Note representing book-entry Notes offered and sold
pursuant to this Agreement.
(f) The Dealer shall furnish or shall have
furnished to each purchaser of Notes for which it
has acted as the Dealer a copy of the then-current
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Private Placement Memorandum unless such purchaser
has previously received a copy of the Private
Placement Memorandum as then in effect. The Private
Placement Memorandum shall expressly state that any
person to whom Notes are offered shall have an
opportunity to ask questions of, and receive
information from, the Issuer and the Dealer and
shall provide the names, addresses and telephone
numbers of the persons from whom information
regarding the Issuer may be obtained.
(g) The Issuer agrees, for the benefit of the
Dealer and each of the holders and prospective
purchasers from time to time of the Notes that, if
at any time the Issuer shall not be subject to
Section 13 or 15(d) of the Exchange Act, the Issuer
will furnish, upon request and at its expense, to
the Dealer and to holders and prospective
purchasers of Notes information required by
Rule 144A(d)(4)(i) in compliance with Rule 144A(d).
(h) In the event that any Note offered or to
be offered by the Dealer would be ineligible for
resale under Rule 144A, the Issuer shall
immediately notify the Dealer (by telephone,
confirmed in writing) of such fact and shall
promptly prepare and deliver to the Dealer an
amendment or supplement to the Private Placement
Memorandum describing the Notes that are
ineligible, the reason for such ineligibility and
any other relevant information relating thereto.
(i) The Issuer hereby agrees that, not later
than 15 days after the first sale of Notes as
contemplated by this Agreement, it will file with
the SEC a notice on Form D in accordance with Rule
503 under the Securities Act and that it will
thereafter file such amendments to such notice as
Rule 503 may require.
1.7 The Issuer hereby represents and warrants to the
Dealer, in connection with offers, sales and resales of Notes, as
follows:
(a) Issuer hereby confirms to the Dealer that
within the preceding six months neither the Issuer
nor any person other than the Dealer or the other
dealers referred to in Section 1.2 hereof acting on
behalf of the Issuer has offered or sold any Notes,
or any substantially similar security of the Issuer
(including, without limitation, medium-term notes
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issued by the Issuer), to, or solicited offers to
buy any such security from, any person other than
the Dealer or the other dealers referred to in
Section 1.2 hereof. The Issuer also agrees that,
as long as the Notes are being offered for sale by
the Dealer and the other dealers referred to in
Section 1.2 hereof as contemplated hereby and until
at least six months after the offer of Notes
hereunder has been terminated, neither the Issuer
nor any person other than the Dealer or the other
dealers referred to in Section 1.2 hereof (except
as contemplated by Section 1.2 hereof) will offer
the Notes or any substantially similar security of
the Issuer for sale to, or solicit offers to buy
any such security from, any person other than the
Dealer or the other dealers referred to in
Section 1.2 hereof, it being understood that such
agreement is made with a view to bringing the offer
and sale of the Notes within the exemption provided
by Section 4(2) of the Securities Act and Rule 506
thereunder and shall survive any termination of
this Agreement. The Issuer hereby represents and
warrants that it has not taken or omitted to take,
and will not take or omit to take, any action that
would cause the offering and sale of Notes
hereunder to be integrated with any other offering
of securities, whether such offering is made by the
Issuer or some other party or parties.
(b) The Issuer represents and agrees that the
proceeds of the sale of the Notes are not currently
contemplated to be used for the purpose of buying,
carrying or trading securities within the meaning
of Regulation T and the interpretations thereunder
by the Board of Governors of the Federal Reserve
System. In the event that the Issuer determines to
use such proceeds for the purpose of buying,
carrying or trading securities, whether in
connection with an acquisition of another company
or otherwise, the Issuer shall give the Dealer at
least five business days' prior written notice to
that effect. The Issuer shall also give the Dealer
prompt notice of the actual date that it commences
to purchase securities with the proceeds of the
Notes. Thereafter, in the event that the Dealer
purchases Notes as principal and does not resell
such Notes on the day of such purchase, to the
extent necessary to comply with Regulation T and
the interpretations thereunder, the Dealer will
sell such Notes either (i) only to offerees it
reasonably believes to be QIBs or to QIBs it
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reasonably believes are acting for other QIBs, in
each case in accordance with Rule 144A or (ii) in a
manner which would not cause a violation of
Regulation T and the interpretations thereunder.
Section 2. Representations and Warranties of Issuer.
The Issuer represents and warrants that:
2.1 The Issuer is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation and has all the requisite power and
authority to execute, deliver and perform its obligations under
the Notes, this Agreement and the Issuing and Paying Agency
Agreement.
2.2 This Agreement and the Issuing and Paying Agency
Agreement have been duly authorized, executed and delivered by
the Issuer and constitute legal, valid and binding obligations of
the Issuer enforceable against the Issuer in accordance with
their terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally, and subject,
as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at
law).
2.3 The Notes have been duly authorized, and when
issued as provided in the Issuing and Paying Agency Agreement,
will be duly and validly issued and will constitute legal, valid
and binding obligations of the Issuer enforceable against the
Issuer in accordance with their terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors'
rights generally, and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law).
2.4 The offer and sale of Notes in the manner
contemplated hereby do not require registration of the Notes
under the Securities Act, pursuant to the exemption from
registration contained in Section 4(2) thereof and Regulation D
promulgated thereunder, and no indenture in respect of the Notes
is required to be qualified under the Trust Indenture Act of
1939, as amended.
2.5 The Notes will rank at least pari passu with all
other unsubordinated indebtedness of the Issuer.
2.6 No consent or action of, or filing or registration
with, any governmental or public regulatory body or authority,
including the SEC, is required to authorize, or is otherwise
required in connection with the execution, delivery or
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performance of, this Agreement, the Notes or the Issuing and
Paying Agency Agreement, except as may be required by the
securities or Blue Sky laws of the various states in connection
with the offer and sale of the Notes.
2.7 Neither the execution and delivery of this
Agreement and the Issuing and Paying Agency Agreement, nor the
issuance of the Notes in accordance with the Issuing and Paying
Agency Agreement, nor the fulfillment of or compliance with the
terms and provisions hereof or thereof by the Issuer, will
(i) result in the creation or imposition of any mortgage, lien,
charge or encumbrance of any nature whatsoever upon any of the
properties or assets of the Issuer other than as provided
pursuant to the Security Agreement, or (ii) violate or result in
a breach or a default under any of the terms of the Issuer's
charter documents or by-laws, any contract or instrument to which
the Issuer is a party or by which it or its property is bound, or
any law or regulation, or any order, writ, injunction or decree
of any court or government instrumentality, to which the Issuer
is subject or by which it or its property is bound, which breach
or default might have a material adverse effect on the condition
(financial or otherwise), operations or business prospects of the
Issuer or the ability of the Issuer to perform its obligations
under this Agreement, the Notes or the Issuing and Paying Agency
Agreement.
2.8 There is no litigation or governmental proceeding
pending, or to the knowledge of the Issuer threatened, against or
affecting the Issuer or any of its subsidiaries which might
result in a material adverse change in the condition (financial
or otherwise), operations or business prospects of the Issuer or
the ability of the Issuer to perform its obligations under this
Agreement, the Notes or the Issuing and Paying Agency Agreement.
2.9 Pursuant to an exemptive order (the "Order") of the
Securities and Exchange Commission dated May 21, 1996 (Release
No. IC-21969), the Issuer obtained (i) exemptions from Sections
12(d), 17(a), 18(a), 57(a)(1), (2) and (3) and 61(a) of the
Investment Company Act of 1940 (the "1940 Act"), and (ii)
authorization to undertake certain joint transactions under
Section 17(b) of the 1940 Act pursuant to Sections 17(d) and
57(a)(4) and Rule 17d-1 of the 1940 Act. Neither the offer nor
sale of the Notes as contemplated by this Agreement and the
Issuing and Paying Agency Agreement will violate the Order or any
provision of the 1940 Act.
2.10 Neither the Private Placement Memorandum nor the
Company Information contains any untrue statement of a material
fact 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.
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2.11 Each (a) issuance of Notes by the Issuer hereunder
and (b) amendment or supplement of the Private Placement
Memorandum shall be deemed a representation and warranty by the
Issuer to the Dealer, as of the date thereof, that, both before
and after giving effect to such issuance and after giving effect
to such amendment or supplement, (i) the representations and
warranties given by the Issuer set forth above in this Section 2
remain true and correct on and as of such date as if made on and
as of such date, (ii) in the case of an issuance of Notes, the
Notes being issued on such date have been duly and validly issued
and constitute legal, valid and binding obligations of the
Issuer, enforceable against the Issuer in accordance with their
terms, subject to applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and subject, as to
enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at
law) and (iii) in the case of an issuance of Notes, since the
date of the most recent Private Placement Memorandum, there has
been no material adverse change in the condition (financial or
otherwise), operations or business prospects of the Issuer which
has not been disclosed to the Dealer in writing.
2.12 The Issuer represents and warrants that, as to
those assets for which perfection may be accomplished by filing
or by possession under the Uniform Commercial Code, the security
interests granted to the Agent under the Security Agreement
constitute and will constitute at all times a valid and perfected
security interest vested in the Agent in and upon the Collateral.
The Issuer further represents and warrants that the Agent's
security interests in the Collateral are not and hereinafter
shall not become subordinate or junior to the security interests,
liens or claims of any other person, firm or corporation,
including the United States or any department, agency or
instrumentality thereof, or any state, county or local
governmental agency, except for Permitted Liens. The Issuer
shall not grant (except as permitted by the Security Agreement) a
security interest in or permit a lien or encumbrance upon any of
the Collateral to anyone except the Agent as long as any Notes
remain unpaid, except for Permitted Liens. Notwithstanding the
priority of any filed financing statement, the Dealer
acknowledges and agrees that the security interest in that part
of the Collateral which constitutes the SBA Collateral granted by
the Issuer under the SBA Security Agreement is senior and prior
in right of distribution to the security interest granted under
the Security Agreement for the benefit of the holders of the
Notes and the Issuing and Paying Agent, to the extent and as
provided in the Security Agreement.
2.13 The Issuer hereby repeats and reaffirms for the
benefit of the Dealer and the holders of the Notes from time to
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time the representations and warranties made by it in the
Security Agreement.
Section 3. Covenants and Agreements of Issuer.
The Issuer covenants and agrees that:
3.1 The Issuer will give the Dealer prompt notice (but
in any event prior to any subsequent issuance of Notes hereunder)
of any amendment to, modification of or waiver with respect to,
the Notes, the Issuing and Paying Agency Agreement or the
Security Agreement, including a complete copy of any such
amendment, modification or waiver.
3.2 The Issuer shall, whenever there shall occur any
change in the Issuer's condition (financial or otherwise),
operations or business prospects or any development or occurrence
in relation to the Issuer that would be material to holders of
the Notes or potential holders of the Notes (including any
downgrading or receipt of any notice of intended or potential
downgrading or any review for potential change in the rating
accorded any of the Issuer's securities by any nationally
recognized statistical rating organization which has published a
rating of the Notes), promptly, and in any event prior to any
subsequent issuance of Notes hereunder, notify the Dealer (by
telephone, confirmed in writing) of such change, development or
occurrence.
3.3 The Issuer shall from time to time furnish to the
Dealer such information as the Dealer may reasonably request,
including, without limitation, any press releases or material
provided by the Issuer to any national securities exchange or
rating agency, regarding (i) the Issuer's operations and
financial condition, (ii) the due authorization and execution of
the Notes and (iii) the Issuer's ability to pay the Notes as they
mature. All information that the Dealer obtains from the Issuer
pursuant to this Agreement that is specifically identified by the
Issuer in writing as confidential or proprietary (collectively,
the "Confidential Information") shall, except as provided below,
remain the exclusive property of the Issuer. Confidential
Information does not include information that (i) was or becomes
generally available to the public other than as a result of
disclosure by the Dealer or its affiliates or (ii) was or becomes
available to the Dealer or its affiliates on a non-confidential
basis from a source other than the Issuer provided that such
source is not, to the actual knowledge of the Dealer, itself
bound by a confidentiality agreement with the Issuer. Except as
otherwise provided herein and except as (i) required by law,
order, rule regulation, court order or subpoena or (ii) the
Dealer may deem necessary to assert any defenses available under
the various state and federal securities laws, including due
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diligence defenses, or to enforce any of the obligations of the
Issuer under this Agreement, the Notes, the Issuing and Paying
Agency Agreement or the Security Agreement, the Dealer shall not
disclose any of the Confidential Information to any other party,
other than its affiliates, officers, directors, employees,
agents, accountants and attorneys and other parties who have a
need to know the Confidential Information in connection with the
transactions contemplated hereby (the Dealer's
"Representatives"), without the prior written consent of the
Issuer, and the Dealer shall use such information only in
connection with its role as the Dealer under this Agreement. The
Dealer shall take reasonable steps to ensure that the
Confidential Information is kept fully private and confidential
by its Representatives. At the request of the Issuer, the Dealer
shall return to the Issuer all Confidential Information and shall
return or destroy, or cause to be returned or destroyed, any
copies thereof, provided that the Dealer and its Representatives
may retain such Confidential Information as they may reasonably
deem necessary in order to satisfy legal and regulatory
requirements or to preserve, enforce or protect any rights under
or relating to this Agreement or the transactions contemplated
hereby.
3.4 The Issuer will take all such action as the Dealer
may reasonably request to ensure that each offer and each sale of
the Notes will comply with any applicable state Blue Sky laws;
provided, however, that the Issuer shall not be obligated to file
any general consent to service of process or to qualify as a
foreign corporation in any jurisdiction in which it is not so
qualified or subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so
subject; and provided, further, however, that the Issuer may
assume that the Dealer will comply at its own expense with
applicable state securities law requirements regarding the
registration of brokers and dealers.
3.5 The Issuer will not be in default of any of its
obligations hereunder, under the Notes or under the Issuing and
Paying Agency Agreement, at any time that any of the Notes are
outstanding.
3.6 The Issuer shall not issue Notes hereunder until
the Dealer shall have received (a) an opinion of counsel to the
Issuer, addressed to the Dealer, satisfactory in form and
substance to the Dealer, (b) a copy of the executed Issuing and
Paying Agency Agreement as then in effect, (c) a copy of
resolutions adopted by the Board of Directors of the Issuer,
satisfactory in form and substance to the Dealer and certified by
the Secretary or similar officer of the Issuer, authorizing
execution and delivery by the Issuer of this Agreement, the
Issuing and Paying Agency Agreement and the Notes and
11
<PAGE>
consummation by the Issuer of the transactions contemplated
hereby and thereby, (d) prior to the issuance of any Notes
represented by a book-entry note registered in the name of DTC or
its nominee, a copy of the executed Letter of Representations
among the Issuer, the Issuing and Paying Agent and DTC and
(e) such other certificates, opinions, letters and documents as
the Dealer shall have reasonably requested.
3.7 The Dealer will be entitled to compensation for its
services and expenses in an amount to be agreed upon with the
Issuer respect to each proposed issuance and sale of Notes by the
Issuer, which compensation may be deducted from the proceeds of
the sale of the Notes.
3.8 The Issuer shall perform all of its covenants and
agreements contained in the Security Agreement and the Loan
Agreement.
3.9 The Issuer agrees that it shall, by 10:00 a.m. on
each business day immediately preceding the day on which any
Notes mature, make a request for a loan pursuant to and in
accordance with the Loan Agreement in an amount sufficient to
make full payment in respect of all such maturing Notes unless
the Issuer has sold Notes on such business day for next day
settlement in an amount such that the net proceeds thereof are
sufficient to make such payment. In addition, if any Notes shall
not be paid on their maturity date, the Issuer will immediately
request a loan pursuant to and in accordance with the Loan
Agreement in an amount sufficient to make full payment in respect
of such Notes and all Notes maturing on the immediately
succeeding two business days.
Section 4. Disclosure.
4.1 The Private Placement Memorandum and its contents
(other than the Dealer Information) shall be the sole
responsibility of the Issuer. The Private Placement Memorandum
shall contain a statement expressly offering an opportunity for
each prospective purchaser to ask questions of, and receive
answers from, the Issuer concerning the offering of Notes and to
obtain relevant additional information which the Issuer possesses
or can acquire without unreasonable effort or expense. The
Dealer agrees that it will not distribute any Private Placement
Memorandum until the Issuer has approved it.
4.2 The Issuer agrees to promptly furnish the Dealer
the Company Information as it becomes available.
4.3 (a) The Issuer further agrees to notify the Dealer
promptly upon the occurrence of any event relating to or
affecting the Issuer that would cause the Company Information
12
<PAGE>
then in existence to include an untrue statement of a material
fact or to omit to state a material fact necessary in order to
make the statements contained therein, in light of the
circumstances under which they are made, not misleading.
(b) In the event that the Issuer gives the Dealer
notice pursuant to Section 4.3(a) and the Dealer notifies the
Issuer that it then has Notes it is holding in inventory, the
Issuer agrees promptly to supplement or amend the Private
Placement Memorandum so that the Private Placement Memorandum, as
amended or supplemented, shall not contain an untrue statement of
a material fact or omit to state a material fact necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and the
Issuer shall make such supplement or amendment available to the
Dealer.
(c) In the event that (i) the Issuer gives the
Dealer notice pursuant to Section 4.3(a), (ii) the Dealer does
not notify the Issuer that it is then holding Notes in inventory
and (iii) the Issuer chooses not to promptly amend or supplement
the Private Placement Memorandum in the manner described in
clause (b) above, then all solicitations and sales of Notes shall
be suspended until such time as the Issuer has so amended or
supplemented the Private Placement Memorandum, and made such
amendment or supplement available to the Dealer.
Section 5. Indemnification and Contribution.
5.1 The Issuer will indemnify and hold harmless the
Dealer, each individual, corporation, partnership, trust,
association or other entity controlling the Dealer, any affiliate
of the Dealer or any such controlling entity and their respective
directors, officers, employees, partners, incorporators,
shareholders, servants, trustees and agents (hereinafter the
"Indemnitees") against any and all liabilities, penalties, suits,
causes of action, losses, damages, claims, costs and expenses
(including, without limitation, fees and disbursements of
counsel) or judgments of whatever kind or nature (each a
"Claim"), imposed upon, incurred by or asserted against the
Indemnitees arising out of or based upon (i) any allegation that
the Private Placement Memorandum, the Company Information or any
information provided by the Issuer to the Dealer included (as of
any relevant time) or includes an untrue statement of a material
fact or omitted (as of any relevant time) or omits to state any
material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading
or (ii) arising out of or based upon the breach by the Issuer of
any agreement, covenant or representation made in or pursuant to
this Agreement. This indemnification shall not apply to the
13
<PAGE>
extent that the Claim arises out of or is based upon Dealer
Information.
5.2 Provisions relating to claims made for
indemnification under this Section 5 are set forth on Exhibit B
to this Agreement.
5.3 In order to provide for just and equitable
contribution in circumstances in which the indemnification
provided for in this Section 5 is held to be unavailable or
insufficient to hold harmless the Indemnitees, although
applicable in accordance with the terms of this Section 5, the
Issuer shall contribute to the aggregate costs incurred by the
Dealer in connection with any Claim in the proportion of the
respective economic interests of the Issuer and the Dealer;
provided, however, that such contribution by the Issuer shall be
in an amount such that the aggregate costs incurred by the Dealer
do not exceed the aggregate of the commissions and fees earned by
the Dealer hereunder with respect to the issue or issues of Notes
to which such Claim relates. The respective economic interests
shall be calculated by reference to the aggregate proceeds to the
Issuer of the Notes issued hereunder and the aggregate
commissions and fees earned by the Dealer hereunder.
Section 6. Definitions.
6.1 "Claim" shall have the meaning set forth in
Section 5.1.
6.2 "Collateral" shall have the meaning assigned to
such term in the Security Agreement.
6.3 "Company Information" at any given time shall mean
the Private Placement Memorandum together with, to the extent
applicable, (i) the Issuer's most recent report on Form 10-K
filed with the SEC and each report on Form 10-Q or 8-K filed by
the Issuer with the SEC since the most recent Form 10-K, (ii) the
Issuer's most recent annual audited financial statements and each
interim financial statement or report prepared subsequent
thereto, if not included in item (i) above, (iii) the Issuer's
and its affiliates' other publicly available recent reports,
including, but not limited to, any publicly available filings or
reports provided to their respective shareholders, (iv) any other
information or disclosure prepared pursuant to Section 4.3 hereof
and (v) any information prepared or approved by the Issuer for
dissemination to investors or potential investors in the Notes.
6.4 "Dealer Information" shall mean material concerning
the Dealer provided by the Dealer in writing expressly for
inclusion in the Private Placement Memorandum.
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<PAGE>
6.5 "DTC" shall mean The Depository Trust Company.
6.6 "Exchange Act" shall mean the U.S. Securities
Exchange Act of 1934, as amended.
6.7 "Indemnitee" shall have the meaning set forth in
Section 5.1.
6.8 "Institutional Accredited Investor" shall mean an
institutional investor that is an accredited investor within the
meaning of Rule 501 under the Securities Act and that has such
knowledge and experience in financial and business matters that
it is capable of evaluating and bearing the economic risk of an
investment in the Notes, including, but not limited to, a bank,
as defined in Section 3(a)(2) of the Securities Act, or a savings
and loan association or other institution, as defined in
Section 3(a)(5)(A) of the Securities Act, whether acting in its
individual or fiduciary capacity.
6.9 "Issuing and Paying Agency Agreement" shall mean
the issuing and paying agency agreement described on the cover
page of this Agreement, as such agreement may be amended or
supplemented from time to time.
6.10 "Issuing and Paying Agent" shall mean the party
designated as such on the cover page of this Agreement, as
issuing and paying agent under the Issuing and Paying Agency
Agreement, or any successor thereto in accordance with the
Issuing and Paying Agency Agreement.
6.11 "Loan Agreement" shall mean the Amended and
Restated Loan Agreement dated as of December 24, 1997 among the
Issuer, Fleet Bank, National Association, The Bank of New York
and the lenders party thereto, as such agreement may be amended
or supplemented from time to time.
6.12 "Non-bank fiduciary or agent" shall mean a
fiduciary or agent other than (a) a bank, as defined in
Section 3(a)(2) of the Securities Act, or (b) a savings and loan
association, as defined in Section 3(a)(5)(A) of the Securities
Act.
6.13 "Permitted Liens" shall have the meaning assigned
to that term in the Security Agreement.
6.14 "Private Placement Memorandum" shall mean offering
materials prepared in accordance with Section 4 (including
materials referred to therein or incorporated by reference
therein) provided to purchasers and prospective purchasers of the
Notes, and shall include amendments and supplements thereto which
may be prepared from time to time in accordance with this
15
<PAGE>
Agreement (other than any amendment or supplement that has been
completely superseded by a later amendment or supplement).
6.15 "Qualified Institutional Buyer" shall have the
meaning assigned to that term in Rule 144A under the Securities
Act.
6.16 "Regulation D" shall mean Regulation D (Rules 501
et seq.) under the Securities Act.
6.17 "Rule 144A" shall mean Rule 144A under the
Securities Act.
6.18 "SBA Collateral" shall have the meaning assigned to
that term in the Security Agreement.
6.19 "SBA Security Agreement" shall have the meaning
assigned to that term in the Security Agreement.
6.20 "SEC" shall mean the U.S. Securities and Exchange
Commission.
6.21 "Securities Act" shall mean the U.S. Securities Act
of 1933, as amended.
6.22 "Security Agreement" shall mean the Amended and
Restated Security Agreement dated as of December 24, 1997 between
the Issuer and Fleet Bank, N.A., as Agent and as secured party,
as such agreement may be further amended or supplemented from
time to time.
6.23 "Sophisticated Individual Accredited Investor"
shall mean an individual who (a) is an accredited investor within
the meaning of Regulation D under the Securities Act and (b)
based on his or her pre-existing relationship with the Dealer, is
reasonably believed by the Dealer to be a sophisticated investor
(i) possessing such knowledge and experience (or represented by a
fiduciary or agent possessing such knowledge and experience) in
financial and business matters that he or she is capable of
evaluating and bearing the economic risk of an investment in the
Notes and (ii) having a net worth of at least $5 million.
Section 7. General
7.1 Unless otherwise expressly provided herein, all
notices under this Agreement to parties hereto shall be in
writing and shall be effective when received at the address of
the respective party set forth in the Addendum to this Agreement.
16
<PAGE>
7.2 This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without
regard to its conflict of laws provisions.
7.3 The Issuer agrees that any suit, action or
proceeding brought by the Issuer against the Dealer in connection
with or arising out of this Agreement or the Notes or the offer
and sale of the Notes shall be brought solely in the United
States federal courts located in the Borough of Manhattan or the
courts of the State of New York located in the Borough of
Manhattan. EACH OF THE DEALER AND THE ISSUER WAIVES ITS RIGHT TO
TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
7.4 This Agreement may be terminated, at any time, by
the Issuer, upon one business day's prior notice to such effect
to the Dealer, or by the Dealer upon one business day's prior
notice to such effect to the Issuer. Any such termination,
however, shall not affect the obligations of the Issuer under
Sections 3.7, 5 and 7.3 hereof or the respective representations,
warranties, agreements, covenants, rights or responsibilities of
the parties made or arising prior to the termination of this
Agreement.
7.5 This Agreement is not assignable by either party
hereto without the written consent of the other party; provided,
however, that the Dealer may assign its rights and obligations
under this Agreement to any affiliate of the Dealer.
7.6 This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same
instrument.
7.7 This Agreement is for the exclusive benefit of the
parties hereto, and their respective permitted successors and
assigns hereunder, and shall not be deemed to give any legal or
equitable right, remedy or claim to any other person whatsoever.
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date and year first above
written.
MEDALLION FUNDING CORP., as Issuer
/s/ Allen S. Greene
By:________________________
Allen S. Greene
Name:________________________
Chief Operating Officer
Title:________________________
/s/ Daniel F. Baker
By:_______________________
Daniel F. Baker
Name:_______________________
Chief Financial Officer
Title:_______________________
SMITH BARNEY INC., as Dealer
/s/ Steven Becton
By:_______________________
Steven Becton
Name:_______________________
Director
Title:_______________________
18
<PAGE>
ADDENDUM
The following additional clauses shall apply to the
Agreement and be deemed a part thereof when the respective
parties have placed their initials in the left margin beside the
respective paragraph number.
1. The other dealers referred to in clause (b) of
Section 1.2 of the Agreement are none at this time.
2. The addresses of the respective parties for
purposes of notices under Section 7.1 are as
follows:
For the Issuer: Medallion Funding Corp.
Address: 437 Madison Avenue
New York, New York 10022
Attention: Mr. Daniel Baker
Treasurer & Chief Financial
Officer
Telephone number: (212) 328-2100
Fax number: (212) 328-2155
For the Dealer: Smith Barney Inc.
Salomon Smith Barney
Address: Seven World Trade Center
New York, New York 10048
Attention: Mr. Steven A. Becton
Money Markets Origination
Telephone number: (212) 783-5641
Fax number: (212) 783-2831
<PAGE>
EXHIBIT A
FORM OF LEGEND FOR
PRIVATE PLACEMENT MEMORANDUM AND NOTES
THE NOTES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY OTHER APPLICABLE SECURITIES
LAW, AND OFFERS AND SALES THEREOF MAY BE MADE ONLY IN COMPLIANCE
WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. BY ITS
ACCEPTANCE OF A NOTE, THE PURCHASER WILL BE DEEMED TO REPRESENT
THAT IT HAS BEEN AFFORDED AN OPPORTUNITY TO INVESTIGATE MATTERS
RELATING TO THE ISSUER AND THE NOTES, THAT IT IS NOT ACQUIRING
SUCH NOTE WITH A VIEW TO ANY DISTRIBUTION THEREOF AND THAT IT IS
EITHER (A) AN INSTITUTIONAL INVESTOR OR HIGHLY SOPHISTICATED
INDIVIDUAL INVESTOR THAT IS AN ACCREDITED INVESTOR WITHIN THE
MEANING OF RULE 501(a) UNDER THE ACT AND WHICH, IN THE CASE OF AN
INDIVIDUAL, (i) POSSESSES SUCH KNOWLEDGE AND EXPERIENCE IN
FINANCIAL AND BUSINESS MATTERS THAT HE OR SHE IS CAPABLE OF
EVALUATING AND BEARING THE ECONOMIC RISK OF AN INVESTMENT IN THE
NOTES AND (ii) HAS A NET WORTH OF AT LEAST $5 MILLION (AN
"INSTITUTIONAL ACCREDITED INVESTOR" OR "SOPHISTICATED INDIVIDUAL
ACCREDITED INVESTOR", RESPECTIVELY) AND THAT EITHER IS PURCHASING
NOTES FOR ITS OWN ACCOUNT, IS A U.S. BANK (AS DEFINED IN
SECTION 3(a)(2) OF THE ACT) OR A SAVINGS AND LOAN ASSOCIATION OR
OTHER INSTITUTION (AS DEFINED IN SECTION 3(a)(5)(A) OF THE ACT)
ACTING IN ITS INDIVIDUAL OR FIDUCIARY CAPACITY OR IS A FIDUCIARY
OR AGENT (OTHER THAN A U.S. BANK OR SAVINGS AND LOAN) PURCHASING
NOTES FOR ONE OR MORE ACCOUNTS EACH OF WHICH IS SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR OR SOPHISTICATED INDIVIDUAL
ACCREDITED INVESTOR (i) WHICH ITSELF POSSESSES SUCH KNOWLEDGE AND
EXPERIENCE OR (ii) WITH RESPECT TO WHICH SUCH PURCHASER HAS SOLE
INVESTMENT DISCRETION; OR (B) A QUALIFIED INSTITUTIONAL BUYER
("QIB") WITHIN THE MEANING OF RULE 144A UNDER THE ACT WHICH IS
ACQUIRING NOTES FOR ITS OWN ACCOUNT OR FOR ONE OR MORE ACCOUNTS,
EACH OF WHICH IS A QIB AND WITH RESPECT TO EACH OF WHICH THE
PURCHASER HAS SOLE INVESTMENT DISCRETION; AND THE PURCHASER
ACKNOWLEDGES THAT IT E SELLER MAY RELY UPON THE EXEMPTION FROM
THE REGISTRATION PROVISIONS OF SECTION 5 OF THE ACT PROVIDED BY
RULE 144A. BY ITS ACCEPTANCE OF A NOTE, THE PURCHASER THEREOF
SHALL ALSO BE DEEMED TO AGREE THAT ANY RESALE OR OTHER TRANSFER
THEREOF WILL BE MADE ONLY (A) IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER THE ACT, EITHER (1) TO THE ISSUER OR TO SMITH
BARNEY INC. OR ANOTHER PERSON DESIGNATED BY THE ISSUER AS A
PLACEMENT AGENT FOR THE NOTES (COLLECTIVELY, THE "PLACEMENT
AGENTS"), NONE OF WHICH SHALL HAVE ANY OBLIGATION TO ACQUIRE SUCH
NOTE, (2) THROUGH A PLACEMENT AGENT TO AN INSTITUTIONAL
<PAGE>
ACCREDITED INVESTOR, SOPHISTICATED INDIVIDUAL ACCREDITED INVESTOR
OR A QIB, OR (3) TO A QIB IN A TRANSACTION THAT MEETS THE
REQUIREMENTS OF RULE 144A AND (B) IN MINIMUM AMOUNTS OF $250,000.
<PAGE>
EXHIBIT B
FURTHER PROVISIONS RELATING
TO INDEMNIFICATION
(a) The Issuer agrees to reimburse each Indemnitee for
all expenses (including reasonable fees and disbursements of
internal and external counsel) as they are incurred by it in
connection with investigating or defending any loss, claim,
damage, liability or action in respect of which indemnification
may be sought under Section 5 of the Agreement (whether or not it
is a party to any such proceedings).
(b) Promptly after receipt by an Indemnitee of notice
of the existence of a Claim, such Indemnitee will, if a claim in
respect thereof is to be made against the Issuer, notify the
Issuer in writing of the existence thereof; provided that (i) the
omission so to notify the Issuer will not relieve the Issuer from
any liability which it may have hereunder unless and except to
the extent it did not otherwise learn of such Claim and such
failure results in the forfeiture by the Issuer of substantial
rights and defenses, and (ii) the omission so to notify the
Issuer will not relieve it from liability which it may have to an
Indemnitee otherwise than on account of this indemnity agreement.
In case any such Claim is made against any Indemnitee and it
notifies the Issuer of the existence thereof, the Issuer will be
entitled to participate therein, and to the extent that it may
elect by written notice delivered to the Indemnitee, to assume
the defense thereof, with counsel reasonably satisfactory to such
Indemnitee; provided that if the defendants in any such Claim
include both the Indemnitee and the Issuer, and the Indemnitee
shall have concluded that there may be legal defenses available
to it which are different from or additional to those available
to the Issuer, the Issuer shall not have the right to direct the
defense of such Claim on behalf of such Indemnitee, and the
Indemnitee shall have the right to select separate counsel to
assert such legal defenses on behalf of such Indemnitee. Upon
receipt of notice from the Issuer to such Indemnitee of the
Issuer's election so to assume the defense of such Claim and
approval by the Indemnitee of counsel, the Issuer will not be
liable to such Indemnitee for expenses incurred thereafter by the
Indemnitee in connection with the defense thereof (other than
reasonable costs of investigation) unless (i) the Indemnitee
shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the
next preceding stood, however, that the Issuer shall not be
liable for the expenses of more than one separate counsel (in
<PAGE>
addition to any local counsel in the jurisdiction in which any
Claim is brought), approved by the Dealer, representing the
Indemnitee who is party to such Claim), (ii) the Issuer shall not
have employed counsel reasonably satisfactory to the Indemnitee
to represent the Indemnitee within a reasonable time after notice
of existence of the Claim or (iii) the Issuer has authorized in
writing the employment of counsel for the Indemnitee. The
indemnity, reimbursement and contribution obligations of the
Issuer hereunder shall be in addition to any other liability the
Issuer may otherwise have to an Indemnitee and shall be binding
upon and inure to the benefit of any successors, assigns, heirs
and personal representatives of the Issuer and any Indemnitee.
The Issuer agrees that without the Dealer's prior written
consent, it will not settle, compromise or consent to the entry
of any judgment in any Claim in respect of which indemnification
may be sought under the indemnification provision of the
Agreement (whether or not the Dealer or any other Indemnitee is
an actual or potential party to such Claim), unless such
settlement, compromise or consent includes an unconditional
release of each Indemnitee from all liability arising out of such
Claim.
<PAGE>
OPINION OF PALMER & DODGE LLP, COUNSEL TO ISSUER
[Date]
Smith Barney Inc.
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
We have acted as counsel to Medallion Funding Corp., a
New York corporation (the "Company"), in connection with the
proposed offering and sale by the Company in the United States of
commercial paper in the form of short-term promissory notes (the
"Notes").
In our capacity as such counsel, we have examined a
specimen form of Note, an executed copy of the Commercial Paper
Dealer Agreement dated as of March 13, 1998 (the "Dealer
Agreement") between the Company and Smith Barney Inc. (the
"Dealer"), the Agency Agreement dated as of March 13, 1998 (the
"Agency Agreement") between the Company and Bank of Montreal
Trust Company, as issuing and paying agent (the "Paying Agent"),
and the Amended and Restated Security Agreement dated as of
December 24, 1997, as amended by Amendment No. 1 thereto dated as
of March 12, 1998, between the Company and Fleet Bank, N.A. (the
"Security Agreement"), as well as originals, or copies certified
or otherwise identified to our satisfaction, of such other
records and documents as we have deemed necessary as a basis for
the opinions expressed below. In such examination, we have
assumed the genuineness of all documents submitted to us as
originals and the conformity to the originals of all documents
submitted to us as copies.
For purposes of this opinion, we have also assumed that
the Dealer Agreement, Agency Agreement and the Security Agreement
(collectively, the "Agreements") constitute the valid and binding
obligations of the parties thereto other than the Company. We
have also assumed that the terms of the Notes will at all times
be in compliance with applicable usury laws. As to various
questions of fact material to our opinion, we have relied upon
representations made in or pursuant to the Agreements.
<PAGE>
References in this opinion to matters known to us mean
the actual knowledge of the lawyers in the firm responsible for
preparing this opinion after consultation with such other lawyers
in the firm and review of such documents in our possession as
they considered appropriate, but without examination of the
docket of any court or agency or any other special investigation.
Capitalized terms used in this paragraph and in
paragraph 9 below which are not defined herein have their
respective meanings as defined in the Security Agreement. For
the purpose of our opinion in paragraph 9 below, "Collateral"
refers to the Company's currently existing Instruments, Equipment
(to the extent it does not constitute vehicles, fixtures or other
interests in real estate), General Intangibles and Chattel Paper
and any products or proceeds thereof which consist of such
currently existing Instruments, Equipment (to the extent it does
not constitute vehicles, fixtures or other interests in real
estate), General Intangibles or Chattel Paper. We have also
assumed that the Company has rights in this Collateral. Our
opinion as to the perfection of the security interest in
Instruments is limited to Instruments in the possession of the
Agent, and our opinion on the perfection of the security interest
in the Equipment is limited to such Equipment as is located in
the State of New York. We also call your attention to the
necessity of filing continuation statements, amendments or
additional financing statements from time to time or under
certain circumstances under the applicable provisions of the UCC
in order to maintain the perfection of the security interest. We
have assumed, without making any search of applicable filing
offices, that the Borrower Financing Statements were duly filed
and have been duly continued.
This opinion is limited to the laws of The Commonwealth
of Massachusetts and the federal laws of the United States. We
give this opinion as if the Agreements were governed by the laws
of The Commonwealth of Massachusetts, notwithstanding their
recitation that New York law governs.
Based upon and subject to the foregoing, we are of the
opinion that:
1. The Company is a corporation validly existing and
in good standing under the laws of the State of New York and has
all requisite corporate power and authority to execute, deliver
and perform its obligations under the Notes, the Dealer Agreement
and the Agency Agreement.
2. Each of the Dealer Agreement and the Agency
Agreement has been duly authorized, executed and delivered by the
Company, and constitutes a legal, valid and binding obligation of
the Company enforceable against the Company in accordance with
<PAGE>
its terms, subject to applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors'
rights, and subject, as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law), and except as rights under the
Dealer Agreement to indemnity and contribution may be limited by
federal or state laws.
3. The Notes have been duly authorized and, when
issued as provided in the Agency Agreement, will constitute the
legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their terms, subject to
applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights, and
subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding in
equity or at law).
4. The issuance and sale of Notes under the
circumstances contemplated by the Agreement and the Agency
Agreement do not require registration of the Notes under the
Securities Act of 1933, as amended, pursuant to the exemption
from registration contained in Section 4(2) thereof, and do not
require the qualification of any indenture under the Trust
Indenture Act of 1939, as amended; and the Notes will rank at
least pari passu with all other unsecured and unsubordinated
indebtedness of the Company.
5. No consent or action of, or filing or registration
with, any governmental or public regulatory body or authority,
including the Securities and Exchange Commission, is required to
be made or obtained by the Company, to authorize, or is otherwise
required to be made or obtained by the Company in connection with
the execution, delivery or performance of, the Dealer Agreement,
the Agency Agreement or the Notes, except as may be required by
the securities or blue sky laws of the various states in
connection with the offer and sale of the Notes.
6. Neither the execution, delivery or performance by
the Company of the Dealer Agreement or the Agency Agreement, nor
the issuance by the Company of the Notes in accordance with the
Agency Agreement, will (i) result in the creation or imposition
of any mortgage, lien, charge or encumbrance upon any of the
properties or assets of the Company other than as described in
paragraph 9 below, or (ii) violate or result in a breach or
default under any of the terms of the Company's Certificate of
Incorporation or Bylaws or any law or regulation, or, to our
knowledge, any contract or instrument to which the Company is a
party or by which its property is bound, or any order, writ,
<PAGE>
injunction or decree of any court or government instrumentality,
to which the Company is subject or by which it or its property is
bound, excluding, in each case, any exceptions to the foregoing
that, in the aggregate, would not have a material adverse effect
on the business or financial condition of the Company or on the
ability of the Company to perform its obligations under the
Dealer Agreement, the Agency Agreement or the Notes.
7. To our knowledge, there is no litigation or
governmental proceeding pending or threatened against the Company
that would have a material adverse effect on the business of the
Company or on the ability of the Company to perform its
obligations under the Dealer Agreement, the Agency Agreement or
the Notes.
8. Pursuant to an exemptive order (the "Order") of the
Securities and Exchange Commission dated May 21, 1996 (Release
No. IC-21969, the Company obtained (i) exemptions from Sections
12(d), 17(a), 18(a), 57(a)(1), (2) and (3) and 61(a) of the
Investment Company Act of 1940 (the "1940 Act"), and (ii)
authorization to undertake certain joint transactions under
Section 17(b) of the 1940 Act pursuant to Sections 17(d) and
57(a)(4) and Rule 17d-1 of the 1940 Act. Neither the offer nor
sale of the Notes as contemplated by the Dealer Agreement and the
Agency Agreement will violate the Order or any provision of the
1940 Act.
9. The provisions of the Security Agreement are
effective under the UCC to create a valid security interest in
the Collateral in favor of the Agent for the benefit of the Banks
and the CP Holders to secure the Obligations of the Company and
to secure the Permitted Debt owing from time to time to the
holders of the Notes. The offices of the New York Secretary of
State and the City Register of New York County, New York are the
only locations where the filing of UCC financing statements is,
under applicable law, necessary to perfect the security interest
granted pursuant to the Security Agreement in the Collateral.
Upon proper filing in such filing offices of the Borrower
Financing Statements and any applicable continuation statements
and amendments thereto, and the receipt of the Instruments by the
Agent, the security interest in the Collateral granted pursuant
to the Security Agreement was and remains a perfected security
interest.
This opinion may be delivered to the Paying Agent, each
<PAGE>
Very truly yours,
Palmer & Dodge LLP
<PAGE>
Model Certificate as to Resolutions*
Medallion Funding Corp.
I, ____________, the [Assistant] Secretary of Medallion
Funding Corp., a New York corporation (the "Issuer"), do hereby
certify, in connection with the issuance and sale of short-term
promissory notes under the Commercial Paper Dealer Agreement
dated ____________, 1998 (the "Agreement", the terms defined
therein being used herein as therein defined) between the Issuer
and Smith Barney Inc. (the "Dealer"), that:
1. The following resolution was duly adopted by the
Board of Directors of the Issuer [by unanimous written consent
dated _____, 199_] [at a meeting thereof duly called and held on
_______, 199_, at which meeting a quorum was present and acting
throughout], and such resolution has not been amended, modified
or revoked and is in full force and effect on the date hereof:
RESOLVED, that the Chairman of the Board, the
President, the Executive Vice President, any Vice
President and the Treasurer of the Issuer be, and
each of them hereby is, individually authorized to:
(i) borrow for the use and benefit of the Issuer
from time to time up to an aggregate of
$___________ at any one time outstanding through
the issuance of commercial paper notes;
(ii) execute such commercial paper notes in the
name and on behalf of the Issuer and issue such
notes in accordance with the Issuing and Paying
Agency Agreement referred to below; (iii) execute
and deliver (A) a Commercial Paper Dealer Agreement
between the Issuer and Smith Barney Inc., as
Dealer, providing, among other things,for the sale
of commercial paper notes on behalf of the Issuer
and the indemnification of the Dealer in connection
therewith, (B) an Issuing and Paying Agency
Agreement between the Issuer and Bank of Montreal
____________________
* This model certificate will serve as a guide for
resolutions adopted by the Issuer. Any resolutions
actually adopted, regardless of form, should cover all the
substantive matters covered in this model, and a
certificate substantially to the effect of this model is
required to be delivered to the Dealer under
Section 3.6(c) of the Agreement.
<PAGE>
Trust Company, as issuing and paying agent, and
(C) a Letter of Representations addressed to The
Depository Trust Company; (iv) execute and file
with the Securities and Exchange Commission Form D
and any and all amendments thereto, as required by
Section 1.6(j) of the Agreement** ; (v) delegate to
any other officers or employees of the Issuer
authority to give instructions to the Dealer
pursuant to the Agreement; and (vi) do such acts
and execute such other instruments and documents as
may be necessary and proper to effect the
transactions contemplated hereby including (a)
amending documents referred to herein and (b)
appointing additional dealers and successors to any
of the parties named.
2. Each of the Agreement and the Issuing and Paying
Agency Agreement, as executed and delivered by the Issuer, is
substantially in the form thereof approved by the Board of
Directors and referred to in the resolution set forth in
paragraph 1 hereof.
IN WITNESS WHEREOF, I have signed this certificate the
_____ day of _________, 199_.
________________________
[Assistant] Secretary
____________________
** Clause (iv) may be deleted if Section 1.6(j) is not
part of the Agreement. See paragraph 2 of the
Addendum and the Guidance Note relating to
Section 1.6 generally.
01452015.AD0
<PAGE>
EXHIBIT 10.2
AGENCY AGREEMENT
This agreement is made as of the 13th day of March, 1998 between
Medallion Funding Corp., a Delaware corporation (the "Issuer"),
and Bank of Montreal Trust Company, a trust company organized and
existing under the laws of the State of New York ("BMTC").
Whereas the Issuer desires to appoint BMTC to act as its issuing
agent, paying agent and depositary with respect to certain
unsecured short-term promissory notes to be issued and sold by
the Issuer from time to time and BMTC desires to accept such
appointment;
Now, therefore, in consideration of the premises and for other
good and valuable consideration, the parties agree to the
following.
1. Appointment of Agent
Subject to the terms and conditions of this Agreement, the
Issuer hereby appoints BMTC to act as the issuing agent,
paying agent and depositary for the short-term promissory
notes issued and sold by the Issuer from time to time during
the term of this Agreement. Such short-term promissory notes
shall be referred to in this Agreement as the "Notes", which
shall, without restricting the generality of the foregoing
and unless the context otherwise requires, include the
Physical Notes, the Book-Entry Notes and the Master Notes,
each as hereinafter defined. The Notes will be secured by
certain assets of the Issuer pursuant to an Amended and
Restated Security Agreement between the Issuer and Fleet
Bank, N.A., as secured party (in such capacity, the
"Collateral Agent").
2. The Notes
(a) The Issuer may issue and sell the Notes either (i) in
certificated physical form in substantially the forms
set out in Schedule A to this Agreement (the "Physical
Notes"), or (ii) in electronic book-entry form through
The Depository Trust Company ("DTC") and DTC's nominee
from time to time ("DTC's Nominee"), currently Cede &
Co. (the "Book-Entry Notes").
(b) Where Notes are issued and sold by the Issuer as Book-
Entry Notes, they will be represented by a master note
in substantially the form set out in Schedule B to this
Agreement to be registered in the name of DTC's Nominee
and held by the Agent on behalf of DTC (the "Master
Note").
<PAGE>
3. Supply of Physical Notes; Certificates; Delivery
Instructions
(a) The Issuer shall from time to time furnish the Agent
with an adequate supply of Physical Notes, serially
numbered but not authenticated and with the face or
principal amount, date of issue and maturity date left
blank. Each such Physical Note shall have been duly
executed on behalf of the Issuer by the manual or
facsimile signature of an authorized person. The Agent
is authorized to honor such facsimile signatures if it
is satisfied that they resemble the facsimile specimens
as shall from time to time be filed with the Agent by
the Issuer.
(b) When any Physical Notes are delivered by the Issuer to
the Agent, the Agent will acknowledge receipt by
returning a receipt form to the Issuer. All Notes
delivered to the Agent shall be held by it for the
Issuer's account for safekeeping, and the Agent shall
immediately advise the Issuer if the Agent should become
aware of the loss, disappearance or theft of any blank
Physical Note held by it for safekeeping.
(c) By an appropriate certificate of designation, the Agent
shall furnish the Issuer from time to time with the
names and manual or facsimile signatures of the
designated officers and employees of the Agent who are
authorized to issue receipts for Notes and to complete,
countersign and deliver the Notes pursuant to Section 5.
(d) The Issuer shall from time to time furnish the Agent
with incumbency certificates respecting the persons
authorized to execute the Physical Notes by manual or
facsimile signature or countersignature. In addition,
the Issuer shall furnish the Agent with a letter
substantially in the form set out in Schedule C,
designating those officers, employees and agents of the
Issuer authorized to issue instructions to the Agent
("Authorized Person" or "Authorized Persons"), and the
Agent shall be entitled to rely upon such letter, and
any amendments thereto or replacements thereof, until
such time as the Agent shall have received from the
Issuer written notice to the contrary. No person, other
than an Authorized Person, is authorized to issue
instructions to the Agent.
(e) An Authorized Person may from time to time furnish the
Agent with instructions respecting the persons to whom
Physical Notes are to be delivered.
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<PAGE>
4. Authentication and Delivery; Risk of Non-receipt of
Final Payment
(a) In accordance with any specific procedures set out in
Schedule D to this Agreement, an Authorized Person shall
cause to be delivered in writing, or shall transmit by
telephone (in all instances confirmed in writing), on-
line terminal apparatus, telex or facsimile,
instructions to the Agent with respect to the issuance
of Notes.
(b) In the event that Physical Notes are to be issued, the
Agent will, in accordance with the Issuer's instructions
given in accordance with subsection (a) of this section:
(i) complete each Physical Note as to face or principal
amount, date of issue, maturity date, cities of
payment and, if the Note is to be interest bearing,
the interest rate, and insert the word "bearer", if
applicable, or the name of the payee;
(ii) cause each Physical Note to be authenticated by at
least one duly authorized officer or employee of
the Agent designated for that purpose; and
(iii) deliver each Physical Note to or for the account of
such person as the Agent shall have been instructed
(A) against payment, or (B) against receipt and
undertaking to remit funds by wire, or (C) in
exchange for other outstanding Physical Notes in
like aggregate amount, in accordance with the
instructions of the Issuer.
All Physical Notes once duly authenticated and delivered by
the Agent shall constitute legal, valid and binding
obligations of the Issuer.
(c) In the event that Book-Entry Notes are to be issued, the
Agent will, in accordance with the Issuer's instructions
given in accordance with subsection (a) of this section:
(i) assign a CUSIP number to each issue using numbers
provided beforehand by Standard and Poors CUSIP
Bureau; and
(ii) enter an issuance instruction (via a computer link
with DTC) listing descriptive information and all
settlement details of the issuance.
(d) It is understood that, when the Agent is instructed to
deliver the Physical Notes against payment, delivery of
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<PAGE>
the Physical Notes and the receipt of payment therefore
are not completed simultaneously. The risk of
nonreceipt of payment shall be borne by the Issuer, the
Agent shall have no responsibility or liability
therefor, and the risk of the Issuer shall continue
until final payment has been received by the Agent.
Payment with respect to a transaction shall not be final
until the Agent shall have received immediately
available funds which under applicable law or rule are
irreversible, which are not subject to any security
interest, levy or other encumbrance, and which are
specifically applicable, or are deemed by the Agent to
be specifically applicable, to such transaction. A
debit by the Agent to any account of a person to whom or
for whose account the Physical Notes shall have been
delivered shall not constitute final payment to the
extent that such debit creates an overdraft or does not
otherwise result in the receipt by the Agent of
immediately available, irreversible and unencumbered
funds.
(e) The Agent will deposit all proceeds of payment for the
Notes into the Issuer's applicable commercial paper
account with the Agent, as set out in Schedule E (each,
a "Commercial Paper Account"). It is understood that as
a matter of bookkeeping convenience the Agent may credit
a Commercial Paper Account with the proceeds of the
Notes prior to the Agent's actual receipt of final
payment therefor and that such bookkeeping credits may
also be reflected on the Agent's books, and otherwise,
as "immediately available" or "same day" funds or by
some similar characterization. Notwithstanding any such
credit or characterization, all such credits shall be
conditional upon the Agent's actual receipt of final
payment and may be reversed by the Agent to the extent
that such payment is not received.
(f) Although it is acknowledged that it will be standard
procedure, the Agent shall not be obligated to transfer
funds from a Commercial Paper Account before final
payment for the Notes has been received by the Agent.
If, however, the Agent elects in its sole discretion to
permit such a transfer, the Issuer shall nonetheless
continue to bear the risk of nonreceipt of final
payment, and to the extent that final payment for any of
the Notes delivered on any day is not received by the
close of business on that day, the Issuer will
immediately upon demand reimburse the Agent for the
amount so transferred in anticipation of final payment.
4
<PAGE>
(g) In the event that a discrepancy exists between any
telephonic instructions received by the Agent and the
written confirmation received by the Agent, oral
instructions which have been acted upon shall be deemed
the controlling and proper instructions. The Agent is
entitled to rely on any communication, written or oral,
which is reasonably believed by the Agent to be genuine
and to have been sent or signed by any Authorized
Person.
5. Payment of Notes at Maturity
(a) The Agent is authorized, without further instruction, to
pay all matured Notes either when presented to the Agent
physically at such offices of the Agent as set out in
Schedule F, or in the case of Book-Entry Notes, when
presented by way of a debit for the maturity amount via
computer link from DTC. The Issuer shall be responsible
for providing the Agent with sufficient funds in such
account to pay the Notes as they mature. In the event
that, on any day that Notes mature, the Issuer shall not
have provided the Agent with sufficient funds to pay all
of such Notes by 1:00 P.M., the Agent shall notify the
Issuer and the Collateral Agent immediately by telephone
(confirmed in writing promptly thereafter) of such
insufficiency. If the Agent shall elect, in its sole
discretion, to pay a Note in anticipation of sufficient
funds being in such account, and final payment of such
funds is not made to such account by the close of
business on the date of such payment, the Issuer shall
immediately upon demand reimburse the Agent for all
amounts so paid by it, plus interest thereon at the
Agent's prime rate of interest, from the date of the
Agent's payment to the date of reimbursement in full by
the Issuer. As used herein, "prime rate of interest"
means the per annum rate of interest established from
time to time by the Agent as the reference rate it will
use to determine the rates of interest on loans to
customers in the currency of the Agent's payment in the
particular case, and designated as prime rate.
(b) (i) Upon the payment in full of a Physical Note
delivered to an Agent, the Agent shall cancel it
and:
(ii) return it to the Issuer,
(iii) unless the Agent and the Issuer agree in writing
that the Agent shall retain it for a period of one
year, within the following year destroy it and
5
<PAGE>
deliver a letter of confirmation of such
destruction to the Issuer.
(c) The Agent agrees to take all reasonable care in
accepting Physical Notes presented for payment at
maturity. Such care will include a check on the issue
number of the Physical Note, its format and signatures.
In the event of a discrepancy, the Agent may telephone
any Authorized Person, and may act in accordance with
instructions which it then receives from the Authorized
Person.
6. Effect of Change of Officers
If any officer of the Issuer whose facsimile signature or
countersignature appears on any Physical Note shall cease to
be such officer before the Physical Note has been delivered
by the Agent, the Physical Note may nevertheless be
authenticated, issued and delivered with the same effect as
though the signatory had not ceased to be such officer. The
Agent is hereby authorized to pay each Physical Note in
accordance with its terms notwithstanding (a) any changes in
the office or authority of the signatory of any Physical Note
which occur between the time of signature and the time of
payment of such Physical Note, or (b) any changes which occur
between the time of authentication and the time of payment of
any Physical Note in the office or authority of the officer
of the Agent who authenticated such Physical Note. The
provisions of this section 6 also apply to Master Notes.
7. Issuer's Representations and Warranties
The Issuer hereby represents and warrants to the Agent, which
shall be a continuing representation and warranty, that: (1)
all Physical Notes and the Master Notes delivered to the
Agent by the Issuer pursuant to this Agreement have been duly
and validly authorized and, when duly completed, signed,
countersigned, and delivered pursuant hereto, will constitute
the legal, valid and binding obligations of the Issuer and
(ii) the execution, delivery and performance of this
Agreement are within the Issuer's powers, and have been duly
authorized by all required action on the part of the Issuer.
8. Responsibility for Purchaser Creditworthiness
The Issuer acknowledges that it is and will continue to be
solely responsible for making its own independent appraisal
of and investigation into the financial condition and
creditworthiness of each person to whom or for whose account
the Agent is instructed to issue the Notes, and the Issuer
confirms to the Agent that the Agent is under no obligation
6
<PAGE>
to the Issuer to assess or review the financial condition or
creditworthiness of any such person or to advise it as to the
results of any such appraisal or investigation the Agent may
have conducted on its own or of any adverse information
concerning any such person that may in any way have come to
the Agent's attention.
9. Term and Termination
(a) This Agreement is effective as of the date first above
written, and may be terminated at any time by the Issuer
or the Agent in accordance with the following.
(b) The Issuer may terminate this Agreement at any time by
giving thirty days' advance written notice to the Agent;
provided, however, to the extent there are any
outstanding Notes on such termination dates, this
Agreement shall remain in full force and effect with
respect to such Notes until maturity thereof, provided
further that, unless the Issuer shall have appointed a
successor, the current Agent shall continue to perform
its obligations under this Agreement until the earlier
to occur of:
(i) the payment in full of all Notes; and
(ii) a successor Agent has been appointed by the Issuer
and has accepted said appointment.
The Agent shall deliver within a reasonable time to the
Issuer, as may be applicable, all canceled or unissued
Physical Notes and Master Notes then held by the Agent and
copies of all current records relating to the issuance and
payment of the Notes requested by the Issuer and shall
transfer the funds if any then held by it in the Commercial
Paper Account in accordance with the instructions of the
Issuer. The Agent shall thereafter be discharged from any
future duties and obligations under this Agreement. Such
termination shall not affect the rights or the obligations of
the Issuer under the Notes or hereunder, or of the terminated
Agent hereunder with respect to actions, omissions and events
occurring prior to such termination.
(c) The Agent may terminate this Agreement as to its own
services at any time by giving thirty days' advance
written notice to the Issuer effective upon the
appointment of a successor Agent and the assignment and
acceptance of this Agreement to the successor Agent.
The Agent shall deliver to the Issuer, or upon the
Issuer's written direction, to a successor agent, as may
be applicable, all canceled or unissued Physical Notes
7
<PAGE>
and Master Notes then held by the Agent and copies of
all current records relating to the issuance and payment
of the Notes requested by the Issuer and shall transfer
the funds if any then held by it in the Commercial Paper
Account in accordance with the instructions of the
Issuer. The Agent shall thereafter be discharged from
any future duties and obligations under this Agreement.
Any outstanding Physical Notes countersigned by the
Agent shall remain in full force and effect until such
Physical Notes have been paid in full. Such termination
by the Agent shall not affect the rights or the
obligations of the Issuer under the Notes or hereunder,
or of the Agent hereunder with respect to actions,
omissions and events occurring prior to such
termination.
10. Care by the Agent
In performing its obligations under this Agreement, the Agent
will take the same care as a prudent and careful person with
the facilities of a bank may fairly be expected to take of
his own property of like description.
11. Conditions Precedent
As a condition precedent to any obligations on the part of
the Agent hereunder, respectively, the Agent shall have
received from the Issuer:
(a) duly certified copies of standing authorizations and
appropriate opinions regarding the authorization of the
appropriate officers of the Issuer to execute and
deliver this Agreement and any and all instruments,
agreements, certificates and documentation reasonably
necessary to implement the issuance of the Notes; and
(b) an opinion of counsel that registration of the Notes
under the Securities Act of 1933 (US) is not required
for the sale of the Notes in the manner contemplated by
the Issuer.
12. Indemnification
(a) The Issuer shall indemnify and save harmless the Agent
and its respective successors, directors, officers, and
employees from and against any and all liabilities,
obligations, losses, damages, payments, costs or
expenses of any kind whatsoever, including reasonable
legal fees, which may be imposed on, incurred by,
asserted against, or made by, them or any of them, as
the result directly or indirectly of the holding,
8
<PAGE>
issuance, delivery, payment or non-payment of the Notes
in accordance with this Agreement, or the receipt by, or
delivery to, the Agent of any checks or funds in payment
for the Notes in accordance with this Agreement, except
any liabilities, obligations, losses, damages, payments,
costs or expenses arising out of gross negligence or
willful misconduct on the part of the Agent or any of
its officers, employees, or agents in performing this
Agreement. The Agent shall have no liability or
obligation in any respect whatsoever as to Physical
Notes delivered by it upon instructions which are in
accordance with the terms of this Agreement and which
are received, or believed to have been received, from
any Authorized Person and relied upon by the Agent
reasonably and in good faith.
13. Notices
Unless otherwise specified herein, all notices or other
communications to be given in connection with this Agreement
shall be in writing, and shall be given by personal delivery
or prepaid registered mail addressed as follows:
if to the Issuer:
Medallion Funding Corp.
437 Madison Avenue
New York, New York 10022
Attention:
Telephone: (212) 328-2100
Facsimile: (212) 328-2155
if to BMTC:
Bank of Montreal Trust Company
Wall Street Plaza
88 Pine Street - 19th Floor
New York, NY 10005
Attention: Vice President and General Manager
Telephone: (212) 701-7650
Facsimile: (212) 701-7664
if to the Collateral Agent:
Fleet Bank, N.A.
1185 Avenue of the Americas
New York, New York 10036
Attention: Finance Companies
9
<PAGE>
Telephone: (212) 819-6130
Facsimile: (212) 819-6212
or to such other address or number as any party may from time
to time notify the other parties in accordance with this
provision. All notices or other communications given in
accordance with this provision shall be deemed to have been
received by the addressee: if given by personal delivery, on
the date of delivery; or if given by prepaid registered mail,
on the fifth business day following the date of mailing
(except in the event of a disruption of postal service).
14. Amendments; Assignment
This Agreement may only be amended by a further written
agreement signed by the parties hereto. Neither party hereto
may assign any of the rights or obligations hereunder without
the consent of the other party hereto.
15. Schedules
The Schedules attached to this Agreement are hereby
incorporated into and form part of this Agreement.
16. Counterparts
This Agreement may be executed in any number of counterparts
and by each party hereto on separate counterparts, each of
which counterparts, when executed executed and delivered,
shall be deemed to be an original and all of which
counterparts taken together shall constitute one and the same
Agreement.
17. Headings
The section headings are inserted for convenience of
reference only and do not form part of this Agreement.
18. Governing Law
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(b) For any action related to the judicial enforcement or
interpretation of this Agreement, each of the parties
hereto expressly submits to the nonexclusive
jurisdiction of the state or federal courts located in
the County of New York in the State of New York. Each
of the parties hereto further irrevocably consents to
the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing
10
<PAGE>
of copies thereof by registered or certified mail,
postage prepaid, to such party at its address for notice
under this Agreement, such service to become effective
five (5) days after such mailing. Each of the parties
hereto hereby stipulates that the venues referenced in
this Section 18 are convenient, and each waives any
objection that it may now or hereafter have relating to
the venue or convenience of such courts.
(c) The parties hereto hereby agree that no party shall
request a trial by jury in the event of litigation
between them concerning this Agreement or any claims or
transactions in connection herewith, and any right to
trial by jury is expressly waived. Each of the parties
hereto hereby acknowledges that such waiver is made with
full understanding and knowledge of the nature of the
rights and benefits waived hereby.
In witness whereof the parties hereto have caused the execution
of this Agreement by their properly authorized signatories.
MEDALLION FUNDING CORP.
By: /s/ Allen S. Greene
___________________________
Chief Operating Officer
Title:________________________
By: /s/ Daniel F. Baker
___________________________
Chief Financial Officer
Title:________________________
BANK OF MONTREAL TRUST
COMPANY
By: /s/ Terese Gaballah
___________________________
Title: Vice President
________________________
11
