Registration No.
Page 1 of Pages Investment Company
Act File No. 33-26356
_________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
to
FORM N-5
REGISTRATION STATEMENT OF SMALL BUSINESS
INVESTMENT COMPANY
Under
THE INVESTMENT COMPANY ACT OF 1940
Dated June 17, 1997
______________________
UNITED CAPITAL INVESTMENT CORP.
(Exact name of registrant as specified in charter)
60 East 42nd Street, Suite 1515
New York, New York 10165
(Address of principal executive offices)
RAYMER W. MCQUISTON, ESQ.
Hill, Betts & Nash LLP
One World Trade Center, Suite 5214
New York, New York 10048
(Exact name and address of Agent for Service of Process)
The Registrant hereby amends this Registration Statement in accordance
with Section 8(b) of the Investment Company Act of 1940.
1. Organization and Business
2. Fundamental Polices of the Registrant
3. Policies With Respect to Security Investments
4. Ownership of Voting and Convertible Securities of Other
Issuers
5. Special Tax Provisions Applicable to Registrant
6. Pending Legal Proceedings
7. Summary of Earnings
8. Persons in Control Relationship With Registrant
9. Persons Owning Equity Securities of Registrant
10. Number of Holders of Equity Securities
11. Directors and Executive Officers
12. Members of Advisory Board of Registrant
13. Remuneration of Directors, Officers and Members of Advisory
Board
14. Indemnification of Directors and Officers
15. Custodians of Portfolio Securities
16. Investment Advisers
17. Business and Other Connections of Investment Advisers and
Their Managements
18. Interest of Affiliated Persons in Certain Transactions
Capital Stock
19. Long-term Debt
20. Other Securities
21. Financial Statements
PART I.INFORMATION REQUIRED IN REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Item 1. Organization and Business
United Capital Investment corp. (the "Company") was formed as a New York
corporation on May 11, 1984 for the purpose of operating as a Specialized
Small Business Investment Company ("SSBIC") (formerly characterized as a
Minority Enterprise Small Business Investment Company), is licensed under the
Small Business Investment Act of 1958 (the "1958 Act"), and regulated and
financed in part by the United States Small Business Administration ("SBA").
The Company currently maintains offices at 60 East 42nd Street, Suite 1515,
New York, New York 10165 (telephone: 212-682-7210).
The Company is registered as a non-diversified, closed-end investment
company under the Investment Company Act of 1940, as amended (the "1940 Act")
and is taxed as a "regulated investment company" under the Internal revenue
Code of 1954, as amended (the "Code"). See "Item 5." The Company's business
is to provide financing to persons who qualify under SBA regulations as
socially or economically disadvantaged persons or to entities which are at
least 50% owned, controlled and managed by such persons. The Company
concentrates at least twenty percent (20%) or more of the value of its assets
in the following group of industries: wholesale and retail trade; services;
and manufacturing. These businesses are primarily comprised of restaurants,
fast food businesses, grocery stores, dry cleaners and laundromats, import-
export businesses, garage services and taxi cabs located primarily in
New York, New Jersey and Connecticut.
The Company was granted a license to operate as an SSBIC by the SBA on
February 5, 1985. At such time, the shareholders of the Company consisted of
Paul Lee, Pei Chung Lee, Simon Lai and James Yu. The initial shareholders had
contributed a total of approximately $1,030,000 to the capitalization of the
Company. In 1986 and 1987, the Company received its initial financing from
the SBA through the sale to the SBA of 1,000 shares of Preferred Stock for a
total of $1,000,000 and the issuance to the SBA of Subordinated Debentures in
the aggregate principal amount of $2,000,000. The Company is actively
operating as an SSBIC.
In 1989, the Company offered 49,000 shares of its common stock, $.01 par
value (the "Common Stock"), at a purchase price of $10.40 per share pursuant
to its Registration Statement. The Company currently has outstanding a total
of 199,000 shares of Common Stock.
SSBIC Benefits
(a) General. As an SSBIC, the Company is eligible to receive certain
financing from the SBA on favorable terms, and the Company and its
stockholders are entitled to certain tax benefits, both described below.
The SBA has a certain amount of discretion in determining the type and amount
of financing that will be made available to an SSBIC. In addition, there are
certain restrictions and requirements to which the Company is subject by
virtue of its being an SSBIC. See "SBA Regulations", below.
(b) Background. Small Business Investment Companies ("SBICs") were
created under the 1958 Act as a vehicle for providing equity capital, long-
term loan funds and management assistance to small business. In general,
the SBA considers a business to be "small," and therefore eligible to receive
loans from an SSBIC, only if its net worth does not exceed $6,000,000 and if
the average of its net annual income after taxes for the preceding two years
was not more than $2,000,000 or the Borrower meets the size standard adopted
by the SBA for the industry in which it is then engaged. Although SBICs are
privately owned, they are licensed, regulated and sometimes financed in part
by the SBA. SSBICs are SBICs which specialize in providing equity funds,
long-term loans and management to individuals, or to small business concerns
at least 50% owned and managed by individuals, from groups in the United
States that are socially or economically disadvantaged, such as Blacks,
Indians, Eskimos, persons of Mexican, Puerto Rican, Cuban, Filipino or Asian
extraction, Vietnam War era veterans, and other groups which fall within SBA
guidelines relating to socially or economically disadvantaged persons.
(c) Benefits. The principal benefits to the Company as a result of its
being licensed as an SSBIC are as follows:
1. The SBA is authorized to purchase shares of nonvoting preferred stock
of an SSBIC which provide for preferred and cumulative dividends. For a
discussion of the amount of preferred stock of the Company previously acquired
by the SBA, see "Item 20" below.
2. The SBA is also authorized to purchase debentures issued by an SSBIC
which loans funds to, but does not invest in the equity of, small businesses.
For a discussion of the amount of debentures sold to the SBA, see "Item 20"
below.
3. The tax benefits to a company licensed as an SSBIC and to its
shareholders are discussed below in "Item 5."
SBA Regulation.
The Company, as a holder of a license from the SBA to operate as an SSBIC
is subject to broad regulations by the SBA with respect to various aspects of
its ownership and operation. The Company is subject to certain restrictions
and requirements under the 1958 Act and SBA regulations thereunder. These
restrictions and requirements include, but are not limited to, the following:
(i) The interest rate charged by SSBICs on loans to small businesses may
not exceed the greater of 19% per annum or 11% above the current announced
rate of the most recent sales of debentures by the SBIC funding corporation.
(ii) The aggregate commitments by an SSBIC to any single small business
enterprise may not exceed 30% of the aggregate paid-in capital and paid-in
surplus of the SSBIC.
(iii) Management and advisory services must be performed by an SSBIC in
accordance with a written contract and certain record-keeping requirements
must be satisfied.
(iv) The term of SSBIC loans to small businesses may not exceed 20 years.
(v) Prior written consent of the SBA is required in the event of any
proposed transfer of control of an SSBIC and any proposed transfer of 10% or
more of any class of an SSBIC's stock ownership by any person or group of
persons acting in concert owning 10% or more of any class of an SSBICs stock.
(vi) Limitations are imposed on the ability of the officers, directors,
managers or 10% stockholders of an SSBIC to become an officer, director,
manager or 10% stockholder of another SSBIC.
(vii) Prior written consent of the SBA is required in the event of a
merger, consolidation or reorganization of an SSBIC.
(viii) SSBIC funds in excess of $1,000 not invested or loaned to small
businesses and not applied to the conduct of its operations are required to
be deposited in, or invested in time deposits of, federally-insured banks.
An SSBIC may not control its investee companies except to the extent
temporarily required to protect its investment. Additionally, SBA regulations
require SSBICs to conduct active operations. An SSBIC is inactive and thus
violates SBA Regulations if at the close of any fiscal year it has more than
20% of its assets in idle funds and if it has failed to provide financing
aggregating 20% of the average amount of its idle funds during the past
eighteen months. The SBA requires the SSBIC to submit written justification
of such inactivity.
As part of the regulatory framework, SSBICs are subject to examinations
by SBA agents at least once annually and are required to pay examination fees
and maintain certain records, files, internal control programs and reports.
Moreover, the SBA is authorized to suspend an SSBIC's license, issue cease
and desist orders, remove officers and directors of an SSBIC, subpoena
witnesses and records, apply for injunctions to the appropriate district
court, and apply for further acts of enforcement to the appropriate U.S.
Circuit Court of Appeals.
Item 2. Fundamental Policies of the Registrant
(a) Issuance of Senior Securities. The Company is authorized by its
Certificate of Incorporation to issue shares of 3% cumulative Class A
preferred stock, $1,000 par value (the "Class A Preferred Stock"), 4%
cumulative Class B preferred stock, $1,000 par value (the "Class B Preferred
Stock"), and subordinated debentures to the SBA pursuant to the applicable
provisions of the 1958 Act, and the regulations promulgated thereunder. As of
December 31, 1993, the Company had repurchased its Class A Preferred Stock
through the SBA Repurchase Program. As of December 31, 1996, the Company
had issued 900 shares of its Class B Preferred Stock to the SBA for a total
of $900,000. The Company has issued ten-year subordinated debentures
("Subordinated Debentures") to the SBA as follows:
Principal Amount Date of Maturity Annual Rate of Interest
1st 5 Years 2nd 5 Years
$400,000 September 1, 2001 5.33% 8.33%
$1,400,000 December 18, 2006 7.08% 7.08%
The Company intends to issue preferred stock and subordinated debentures
to the SBA in the maximum amounts permissible under the 1958 Act and the
applicable regulations. The SBA's claims are subordinated only in favor of
lenders not Associated with the Company with respect to the Subordinated
Debentures unless the SBA otherwise consents to subordinate any of its claims
in writing.
(b) Borrowing of Money. The Company is authorized by its Certificate of
Incorporation to borrow money and issue debenture bonds, promissory notes and
other obligations, subject to SBA regulatory limitations. The Company reserves
the right to borrow additional funds if determined by the Company's Board of
Directors to be in the best interests of the Company. The Company has the
power to borrow funds from banks, trust companies, other financial institutions,
the U.S. Small Business Administration or any successor agency and/or other
private or governmental sources, if determined by the Company's Board of
Directors to be in the best interests of the Company. At December 31, 1996,
the Company utilized $350,000 of its $500,000 line of credit with the
Hong Kong & Shanghai Banking Corporation.
(c) Underwriting. The Company has not engaged, and does not intend to
engage, in the business of underwriting the securities of other issuers.
(d) Concentration of Investments. The Company has engaged, and intends
to continue to engage, primarily in the business of financing the acquisition
and/or operation of a variety of retail businesses which include but are not
limited to restaurants, fast food operations, grocery stores, dry cleaners
and laundromats, import-export businesses, garage services and taxi cabs
located primarily in New York, New Jersey and Connecticut, by those persons
defined by SBA regulations as socially or economically disadvantaged persons
or entities which are at least 50% owned by persons so defined as socially or
economically disadvantaged. The Company will concentrate at least twenty-
five percent (25%) or more of the value of its assets in the following group
of industries: wholesale and retail trade; services; and manufacturing. No
loans are to businesses owned or controlled by affiliated or interested persons
of the Company as defined in Sections 2(a)(3) and (19) of the 1940 Act.
(e) Real Estate. The Company has not engaged, and does not intend to
engage, in the purchase and sale of real estate.
(f) Commodities Contracts. The Company has not engaged, and does not
intend to engage, in the purchase and sale of commodities or commodities
contracts.
(g)Loans. The Company has made, and will continue to make, loans to
small business concerns in accordance with the provisions of the 1958 Act and
the regulations issued by the SBA thereunder. Since obtaining its SBA license
on February 5, 1985, the Company had, as of December 31, 1996, made loans to
small business concerns in the aggregate principal amount of $16,735,075, of
which $3,690,880 was outstanding on December 31, 1996.
A substantial portion of the Company's loans have been made in the past
to owners of wholesale and retail trade; services, and manufacturing businesses.
The Company currently anticipates that a substantial portion of its financing
operations will continue to be directed at purchasers or owners of wholesale
and retail trade; services; and manufacturing businesses. The Company reserves
the right, subject to any limitations imposed by SBA regulations or the 1940 Act
or to shareholder approval of a change in what constitutes a fundamental policy
of the Company, if its Board of Directors deems it to be in the Company's best
interest, to make loans to and investments in any business that would be allowed
by applicable SBA regulations.
Loans made by the Company are subject to certain restrictions imposed by
the SBA as to interest rates (as described above ) and term (currently, no
more than 20 years). Reference is made to the discussion under the heading
"SBA Regulations", Item 1 for more detailed information in this regard.
Generally, such loans have been and will continue to be made to finance the
acquisition and operation of retail businesses, will be secured by fixtures,
equipment, other related assets, real estate (if available) and shares of
stock of the borrower (if available) and will in many cases be personally
guaranteed by owners of the company owning the retail business. As stated
above, the Company may revise the nature of its loan portfolio at such time as
its Board of Directors determines, in its sole discretion, that such revision
is in the best interests of the Company in light of then existing business and
financial conditions. (No such revision is currently contemplated.) The
Company does not currently anticipate that its loan portfolio will realize an
annual turnover in excess of 50%. The Company will not lend to, or otherwise
invest more than, the lesser of (i) 10% of its total assets, or (ii) 30% of its
paid-in capital attributable to its common stock, in any one small business
concern. (See "SBA Regulations, Item 1") The Company has not made, and is
prohibited by applicable SBA regulations from making, loans to officers,
directors or principal stockholders of the Company or "Associates" of the
Company, as such term is defined in applicable SBA Regulations.
The proceeds of the Company's 1989 offering of Common Stock were invested
in accordance with applicable SBA regulations, which permit the investment of
such funds in certificates of deposit issued by FDIC- or FSLIC-insured
institutions which mature within one year or less, direct obligations of the
United States or obligations guaranteed by the United States, the remaining
maturities of which do not exceed fifteen months, or in savings accounts in
any institution insured by the FDIC or FSLIC.
The Company's currently outstanding loans represented loans made to finance
certain diversified businesses. The following table sets forth a classification
of the Company's outstanding loans as of December 31, 1996:
Schedule of Portfolio
BALANCE
TYPE OF OUTSTANDING
TYPE OF BUSINESS LOANS DEC. 31, 1996
Grocery 4 $102,323
Restaurant 5 509,908
Art Supply 1 37,476
Food Supply 3 390,025
Sneaker Shop 1 47,672
Taxi 9 835,229
Nail Salon 1 50,000
Photo Shop 1 39,380
Import-Export 2 106,454
Dental Lab 1 39,387
Contractor 1 29,122
Hair Salon 1 135,682
Laundromat 1 38,719
Dry Cleaning 11 872,102
Manufacturing 2 260,615
Bakery 1 27,881
Garage Service 3 126,330
Physician's Office 1 42,575
TOTAL: $3,690,880
The average loan made by the Company to finance the acquisition and/or
operation of retail or commercial businesses varies from 25% to 50% of the
market value of fixtures and related assets and, in certain cases, real estate
used to collateralize the loan. In all cases, the loans are also personally
guaranteed by the stockholders of the borrower. The balance of the acquisition
price of a retail or manufacturing business is typically financed through a
combination of loans secured by a second subordinated mortgage on real estate
and cash furnished by the owners. In many instances the Company has obtained
a relatively higher rate of interest in connection with these subordinated
financings. The Company has not committed more than 10% of its assets to any
one business concern. The interest rate charged by the Company on its currently
outstanding loans ranges from 8.75% to 16.25% per annum. For the month of
December 31, 1996, the average annual unweighted rate per loan was 14%.
The average term of the Company's currently outstanding loans is approximately
45 months.
As an SSBIC, the Company is required by applicable SBA regulations to
submit to the SBA annual valuations of its investment portfolio, as determined
by its Board of Directors which considers numerous factors including but not
limited to financial strength of borrowers to determine "good" or "bad" status,
any fluctuations in interest rates to determine marketability of loans. The
Board of Directors has valued the investment portfolio based upon the cost of
such investments, less a provision for loan losses. The provision for loan
losses represents a good faith determination by the Board of Directors. In the
event the Company invests in the future in securities for which price quotations
are readily available, the Company will value such investments at their fair
market value, based on such quoted prices. With respect to securities for which
price quotations are not readily available, such securities will be valued at
fair value as determined by the Board of Directors.
In evaluating each applicant for a loan, the Company considers the
following factors: (1) the application (or at least fifty percent (50%) in
interest of the concern's principal owners) must be classified as a
disadvantaged person under SBA regulations, (2) the applicant must be credit-
worthy (which normally included an analysis of the income and assets of the
borrower) as determined on the basis of a standard credit check performed or
commissioned by the Company, and (3) the value and type of collateral proposed
by the prospective borrower to collateralize the loan.
The Company's current provision of $27,881 for depreciation on loan losses
is deemed sufficient.
SBICs, SSBICs, smaller banks and private lenders have traditionally
financed the acquisition and/or operation of small retail and manufacturing
businesses. The Company expects to continue to encounter substantial
competition from these concerns, many of which are well established and have
resource which far exceed those available to the Company.
Item 3. Policies With Respect to Security Investments
(a) Types of Investments. The Company has been organized primarily to
provide long term loan funds to small business concerns, as described in item
2(g) above. The Company's Certificate of Incorporation provides the Company
with the authority to invest in the equity capital of small business concerns.
The Company will concentrate at least 20% of the value of its assets in the
following group of industries: wholesale and retail trade; services; and
manufacturing.
The Company filed a Notice of Registration on Form N-8A with the Securities
and Exchange Commission ("SEC") on September 27, 1989 stating its intention to
qualify as a closed-end, non-diversified investment company as such terms are
defined in Section 5 of the 1940 Act. The Registration was declared effective
on October 18, 1989 by the SEC.
(b) Maximum Investment. The Company will not lend or otherwise invest
more [than the lesser of (i) 10% of its total assets or (ii)] 30% of its paid-
in capital attributable to its Common Stock with respect to any one small
business concern.
(c) Percentage of Voting Securities. The percentage of voting securities
of any one small business concern which the Company may acquire may not exceed
49% of the outstanding voting securities of such small business, directly or
indirectly, if there are fewer than 50 shareholders, except as set forth in
paragraph (d) of this Item 3.
(d) Management Control. The Company does not intend to invest in any
company for the purpose of exercising control of management. However, the
Company may elect to acquire control in order to protect any of its prior
investments which it considers at risk.
(e) Investment Companies. The Company intends to make changes in its
portfolio when, in the judgment of its Board of Directors, such changes will be
in the best interest of the Company's stockholders in light of the existing
business and financial conditions.
(f) Loan Portfolio Turnover. The Company does not anticipate that its
loan portfolio will realize an annual turnover in excess of 50%, although there
can be no assurance with respect thereto.
The policies set forth in response to this Item 3 constitute fundamental
policies of the Company which may be changed only by the vote of majority of its
outstanding voting securities.
Item 4. Ownership of Voting and Convertible Securities of Other Issuers
The Company does not own, control or hold the power to vote 5% or more of
the voting securities of any company, nor does it own securities of any company
which are convertible into voting securities of such company and which would,
upon such conversion, represent 5% or more of the voting securities of such
company. See paragraph (d) of item 3 above.
Item 5. Special Tax Provisions Applicable to Registrant
The following discussion is based on the currently existing provisions of
the Code and the currently existing regulations. No assurance can be given that
future legislation or administrative changes or court decisions will not
significantly modify the statements expressed herein. The following discussion
is only a general summary of some of the federal tax principles applicable to
the Company and to an investment in the Company's Common Stock, and does not
purport to be a complete description of the tax considerations applicable to
such investment. Prospective investors should consult their own tax advisers
with respect to the tax considerations which pertain to their purchases of the
Company Common Stock.
Taxation of a Regulated Investment Company
Under Section 851 of the Code, a domestic corporation which satisfies
certain statutory and regulatory criteria may elect to be taxed as a "regulated
investment company", thereby generally avoiding federal income taxation at the
corporate level to the extent its income is distributed to its stockholders,
since it can claim a deduction for such distributions. In general, in order
for the Company to qualify for the tax status of a regulated investment company
for a given taxable year, it must meet each of the following conditions for that
taxable year:
(a) The Company must elect to be treated as a regulated investment company
on its return for the current taxable year or must have made such election in a
prior taxable year.
(b) The Company must be registered as a management company or remit
investment under the 1940 Act during the entire year.
(c) At least 90% of the Company's gross income for the year must be
derived from dividends, interest, gains on the sale or other disposition of
stocks or other securities, and payments with respect to securities loans.
(d) Less than 30% of the Company's gross income must be derived from the
sale or other disposition of certain securities which were held for less than
three months.
(e) At the close of each quarter, at least 50% of the value of the
Company's total assets must be represented by cash, cash items (including
receivables), government securities, securities of other regulated investment
companies and other securities (which are subject to limitations on the extent
to which the Company's holdings may be concentrated in the securities of a
single issuer).
(f) The Company's deduction for dividends paid (as defined in the Code)
equals or exceeds the sum of (i) 90% of its investment company taxable income
(as defined in Section 852) and (ii) 90% of the excess of its tax-exempt income
over certain disallowed tax-exempt interest deductions.
(g) The Company must have been a regulated investment company for all tax
years after November 7, 1983, or at the end of the current tax year, the Company
had no accumulated earnings or profits from a tax year that it did not qualify
as a regulated investment company.
A regulated investment company is subject to normal corporate tax on its
"investment company taxable income," which is, in general, determined by
excluding from its taxable income any net capital gain and without allowing
the deduction for net operating losses and the dividend received deductions
for corporations; however, a deduction for certain dividends paid, computed
without regard to the capital gains dividend and exempt interest, is allowed.
Also, a tax is imposed upon any excess of net capital gain over the amount of
deduction for the capital gains dividends paid to shareholders during the year.
The Company is also subject to a non-deductible excise tax equal to four
percent (4%) of the excess, if any of the "required distributions" for each
calendar year over the "distributed amount" for such calendar year. For these
purposes, the term "required distributions" means, in general, the sum of
(i) 98% of the Company's ordinary income for the calendar year, and (ii) 98% of
the Company's capital gain for the 12-month period ending December 31 of the
calendar year (unless the Company elects to also use the calendar year for
purposes of computing its capital gain), plus an amount denominated as "prior
year shortfall". The term "distributed amount" means, in general, the deduction
for dividends paid for such calendar year plus the amount, if any, of corporate
tax payable by the Company.
The tax benefits available to a qualified regulated investment company are
prospective, commencing with the fiscal year in which all the conditions listed
above are met, and would not permit the Company to avoid income tax at the
corporate level on income earned during prior taxable years.
If the Company fails to elect or fails to qualify as a regulated investment
company, the Company's earnings will generally be subject to corporate income
taxation, and distributions by the Company in the form of dividends will
generally be taxed as ordinary income to its shareholders to the extent of the
Company's current and accumulated earnings and profits.
Taxation of Regulated Investment Company Shareholders
A shareholder of a regulated investment company is taxable on the
distributions received from a regulated investment company. The portion of the
dividend that represents a capital gains distribution is reportable as long term
capital gains, regardless of how long the shareholder may have owned the stock.
Individuals' capital gains distributions are taxed at the individuals regular
rates, but subject to the maximum 28% rate; net long term capital gain received
by corporations are subject to regular corporate rates, but subject to a
maximum rate of 35%. Long term capital gain distributions do not qualify for
the corporate dividends received deduction and cannot be used to circumvent the
investment interest limitation rules. The portion of dividends that represents
a capital gains distribution received by a corporate shareholder may qualify
for the dividends received deduction if regulated investment company designates
the amount distributed as an ordinary dividend, and the aggregate amount
received does not exceed the aggregate amount of dividends received by the
regulated investment company. In general, part of the ordinary income dividends
paid by a regulated investment company will qualify for the dividend received
deductions available to corporate shareholders in the same ratio that the
regulated investment company's dividend income from domestic corporations for a
taxable year bears to its gross income for such year (excluding from the
Company's gross income gain from the sale or other disposition of stock or other
securities). The Company has and will only enter into transactions that will
result in interest income, and, therefore, it is unlikely that any part of the
ordinary dividends payable by the Company will qualify for the dividend received
deduction.
The Tax Reform Act of 1986 ("1986 Act") and subsequent statutory amendments
have significantly changed the Federal income tax system. The marginal Federal
income tax rate of individuals and other taxpayers were reduced thereby
decreasing the favorable capital gains treatment available upon the sale,
exchange or other taxable disposition of a capital assets. In addition, the
dividend exclusion available to individuals was eliminated and the dividend
received deduction available to corporations was reduced from 85% to 80% or 70%
of the dividends received.
Under the Code, the miscellaneous itemized deductions of a taxpayer are
only allowed as a deduction to the extent that such miscellaneous itemized
deductions exceed two percent (2%) of the taxpayer's adjusted gross income.
The limit on such itemized deductions will apply to a shareholder of regulated
investment companies if such company is not a "publicly offered" regulated
investment company, in which case the shareholder is treated as if he had
earned his allocable share of the company's income and incurred his allocable
share of the expenses of the company directly. For this purpose, substantially
all of the expenses of the Company (compensation to employees, allocable office
expenses, management fees, etc.) will be treated as miscellaneous itemized
deductions of the shareholders.
Tax Benefits of SSBICs
The Company and its shareholders should qualify for certain tax benefits
not ordinarily not available to corporations not licensed as SSBICs,
specifically:
1. Under Section 1243 of the Code, the Company would be entitled to an
ordinary loss (rather than capital loss) for losses sustained on stock derived
from the conversion of convertible debentures. Because the Company does not
presently intend to purchase convertible debentures, however, this potential
benefit is not likely to be of practical significance to investors.
2. Under Section 1242 of the Code, the Company's shareholders would be
entitled to take a deduction for an ordinary loss rather than a capital loss
on losses resulting from the worthlessness or the sale or exchange of the
Company's Common Stock. Shareholders may treat such losses as if they were
attributable to a trade or business of the Shareholder, thereby enabling them to
treat such losses as net operating losses. The shareholders may also qualify
for ordinary loss treatment under Section 1244 of the Code or losses arising
from the sale, exchange or worthlessness of shares.
Item 6. Pending Legal Proceedings
The Company is not a party to any material pending legal proceedings.
Item 7.Summary of Earnings
The following table sets forth certain financial information of the
Company for 1996, 1995, 1994, 1993 and 1992 and should be read in conjunction
with the more detailed financial information included herein. In the opinion of
the Company, all adjustments necessary to a fair presentation of the results of
the unaudited periods have been included:
For the Years Ended December 31,
1996 1995 1994 1993 1992
Total Revenue $428,721 $468,684 $447,813 $494,801 $602,225
Interest Expense 117,448 111,288 141,917 187,119 163,689
Other Expense -- -- -- -- --
Total Expense 381,125 363,792 414,417 454,360 421,131
Investment
Income Before
Taxes and Loan
Loss Reserve 46,733 104,892 15,066 17,406 40,653
Unrealized
Depreciation in
Value of
Investments 27,881 64,033 97,171 120,816 100,165
Provision
(Benefit) for
Income Taxes
(State and
Federal) 704 721 2,288 2,806 4,958
Net Investment
Income (Loss) 47,596 104,892 33,396 40,441 181,094
Dividends on
Preferred Stock
to SBA
Restricted 85,885 32,667 16,000 36,000 --
Net Investment
Income (Loss)
Available to
Common Stock 46,029 104,171 12,778 14,900 35,695
Earnings (Loss)
per Share of
Common Stock
(after payment
of Preferred
Stock dividend) .14 .35 -- -- --
Dividends -- -- -- -- --
Shares of
Common Stock
Outstanding 199,000 199,000 199,000 199,000 199,000
Item 8. Persons in Control Relationship With Registrant
The following table sets forth certain information concerning the directors
and executive officers of the Company (See Item 9 for a listing of the
percentage of Common Stock owned by the following persons):
NAME ADDRESS POSITION
Paul Lee c/o United Capital Investment President and
Corp. Director
60 East 42nd Street
New York, New York 10065
Linda Lee c/o United Capital Investment Secretary
Corp.
60 East 42nd Street
New York, New York 10065
Robert Lee c/o United Capital Investment Vice President
Corp.
60 East 42nd Street
New York, New York 10065
Simon Lai c/o United Capital Investment Treasurer and
Corp. Director
60 East 42nd Street
New York, New York 10065
Pei Chung Lee c/o United Capital Investment Director<F1>
Corp.
60 East 42nd Street
New York, New York 10065
Robert Hsieh c/o United Capital Investment Director
Corp.
60 East 42nd Street
New York, New York 10065
Chek Jun Chan c/o United Capital Investment Director
Corp.
60 East 42nd Street
New York, New York 10065
PAUL LEE, 71, has been President and a Director of the Company since May 1984.
From 1975 to April 1984, Mr. Lee served as President and Director of World Wide
Marine, Inc.
LINDA LEE, 61, has been a Vice President of the Company since May 1984.
Ms. Lee is the wife of Paul Lee, President and a Director of the Company.
ROBERT LEE, 49, has been a Vice President of the Company since May 1984.
Mr. Lee resigned on April 19, 1991 but rejoined the Company as Vice President
on December 27, 1996. From September 1978 to May 1987, Mr. Lee was employed
by Time, Inc. Mr. Lee is the son of Pei Chung Lee, a Director of the Company.
SIMON LAI, 63, has been Treasurer and a Director of the Company since May 1984.
From 1968 to 1995, Mr. Lai has served as Director of General Accounting for
St. Luke's-Roosevelt Hospital Center located in New York, New York.
PEI CHUNG LEE, 76, has been a Director of the Company since May 1984. From 1980
to the present, Mr. Lee has served as director for World International Holdings
Ltd. Mr. Lee has served as Vice Chairman for World Wide Shipping Agency Ltd.
from 1973 to 1994.
ROBERT HSIEH, 62, has been a Director of the Company since May 1984. From 1985
to 1995 he has served as President of Suntan Knitwear Inc. and from 1976 to 1985
he served as President of ATA Knit Inc.
CHEK JUN CHAN, 61, has been a Director of the Company since January 1989.
Mr. Chan is the Manager of the Accounting Department of World Wide Marine, Inc.
from 1970 to the present.
Paul Lee, President and Director of the Company, and P.C. Lee, a Director of the
Company, own in the aggregate 61.80% of the Company's Common Stock, and are
deemed "Control Persons" under the 1958 Act.
Item 9. Persons Owning Equity Securities of Registrant
The following table sets forth certain information as to those persons who,
to the knowledge of the Company, owned beneficially 5% or more of the
outstanding Common Stock of the Company as of the date of December 31, 1996 and
as to the officers and directors of the Company as a group. As long as each
person listed continues to hold 5% or more of the Company's outstanding Common
Stock, he will be deemed as an "affiliate" of the Company as such term is
defined in the 1940 Act:
Number of Shares Percent of Class as of
Name and Address of Common Stock December 31, 1996
Owned
Paul Lee 68,250 34.30%
c/o United Capital
Investment Corp.
60 East 42nd Street
New York, NY 10165
Pei Chung Lee 54,753 27.50%
c/o United Capital
Investment Corp.
60 East 42nd Street
New York, NY 10165
Linda Lee 19,200 9.6%
c/o United Capital
Investment Corp.
60 East 42nd Street
New York, NY 10165
Rita Lee 18,900 9.5%
c/o United Capital
Investment Corp.
60 East 42nd Street
New York, NY 10165
James Yu 14,260 7.20%
c/o United Capital
Investment Corp.
60 East 42nd Street
New York, NY 10165
All Officers and 157,243 79%
Directors as a Group
Item 10. Number of Holders of Equity Securities
The following table indicates the approximate number of holders of record
of each class of equity securities of the Company as of December 31, 1996:
Title of Class Number of Holders
Common Stock 114
Class A Preferred Stock 0
Class B Preferred Stock 1<F2>
Item 11. Directors and Executive Officers
See Item 8 of this Registration Statement.
Item 12. Members of Advisory Board of Registrant
The Company does not have an Advisory Board or similar board, other than
its Board of Directors.
Item 13. Remuneration of Directors, Officers and Members of Advisory Board
The following table sets forth all remuneration for services rendered to
the Company during the year ended December 31, 1996, paid to or accrued for the
account of all executive officers as a group. Paul Lee received $80,000 in
salary in 1996 as President of the Company and Linda Lee received $60,000 in
salary in 1996 as Secretary of the Company:
Name of Individual or
Number of Persons in Group Salaries
All executive officers as a group (2) $141,600<F3>
Item 14. Indemnification of Directors and Officers
By action of its Board of Directors, the Company has modified its by-laws
to provide indemnification to its past and present directors and officers as
follows:
The Company shall indemnify its past and present officers and directors
against reasonable expenses (including attorneys' fees) and, in non-derivative
suits, against judgments, fines, and amounts paid in settlement resulting from
any action or proceeding, whether civil or criminal, by reason of the fact of
such officership or directorship. Such indemnification is only available,
however, if the liability of such officer or director did not arise by reason
of the proposed indemnity's willful malfeasance, bad faith, gross negligence
or reckless disregard of duties (such conduct to be referred to hereinafter as
"disabling conduct"). The proposed indemnitee shall be deemed to have not
engaged in disabling conduct if (a) a final decision on the merits is entered by
a court or other body before whom the proceeding is brought that the proposed
indemnity was not liable by reason of disabling conduct (which shall be
understood to include the dismissal of an action or proceeding for insufficiency
of disabling conduct with which the proposed indemnitee is charged), (b) in the
absence of such a decision, a reasonable determination, based upon a review of
the facts, is made that the proposed indemnitee was not liable by reason of
disabling conduct by (i) the vote of a majority of a quorum of directors who
are neither "interested persons" (as defined in the 1940 Act) nor parties to the
proceeding ("independent directors") or (ii) independent legal counsel in a
written opinion. The Company may also advance attorneys' fees or other expenses
incurred by a proposed underwriter in defending a proceeding, provided that the
proposed indemnitee in defending a proceeding, provided that the proposed
indemnitee (or another party on his behalf) undertakes to repay the advance
unless it is ultimately determined that he is entitled to indemnification, and
further provided, that (a) the proposed indemnity shall provide security for
his undertaking, (b) the Company shall be insured against losses arising by
reason of lawful advances, or (c) a majority of a quorum of independent
directors, or independent legal counsel in a written opinion, shall determine,
based upon a review of readily available facts, that there is reason to believe
that the proposed indemnitee will ultimately be found entitled to
indemnification.
Item 15. Custodians of Portfolio Securities
The Company acts as custodian for all securities held in its portfolio. As
such, the Company is subject to the "self-custodian" provisions of Rule 17f-2
under the 1940 Act. The Company maintains its securities at Chase Manhattan
Bank, 60 East 42nd Street, New York, New York 10165 in a safe deposit box
maintained by the Company.
Item 16. Investment Advisers
Not applicable.
Item 17. Business and Other Connections of Investment Advisers and
Their Management
Not applicable.
Item 18. Interests of Affiliated Persons in Certain Transactions
The Board of Directors of the Company has adopted policies governing
potential conflicts of interest between the Company and its directors and
officers. Together, these policies comprise the Company's "Code of Ethics" as
required under the 1940 Act. The Company complies with SBA regulations
prohibiting conflicts of interest in providing financings to associated
entities.
These policies generally provide that no officer, director or employee of
the Company will make any loan which might be deemed to be appropriate for the
Company, unless and until such transaction is first approved by a majority of
the directors of the Company who are not "interested persons" of the Company
within the meaning of the 1940 Act and who have no financial or other material
interest in the transaction. In reviewing any such transaction, the directors
will examine, among other factors, whether the transaction would deprive the
Company of an opportunity or whether it would otherwise conflict with the best
interests of the Company and its stockholders. A complete record of any such
review and the results of the review will be maintained by the Company as part
of its permanent records.
A copy of the Company's Code of Ethics has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part and the discussion
thereof in this Prospectus is qualified in its entirety by this reference
thereto.
See Item 13 of this Registration Statement.
Item 19. Capital Stock
The authorized capital stock of the Company consists of 1,000 shares of
Cumulative Class A Preferred Stock, $1,000 par value, 3,000 shares of Cumulative
Class B Preferred Stock, $1,000 par value, and 300,000 shares of Common Stock.
Common Stock
Each share of Common Stock is entitled to one vote on all matters submitted
to a vote of stockholders. The Common Stock does not have cumulative voting
rights, which means that the holders of a majority of the outstanding share of
Common Stock may elect all of the Directors of the Company. The Common Stock
does not have any preemptive rights. All shares of the Common Stock outstanding
are fully paid and non-assessable. Upon liquidation, dissolution or winding up
of the affairs of the Company, its assets remaining after provision for payment
of creditors would be distributed pro rata among holders of the Common Stock.
Dividends may be paid to the holders of the Common Stock when and if
declared by the Board of Directors out of funds legally available therefor, but
only after the Company has paid all cumulated dividends then in arrears on its
Class B Preferred Stock. In order to qualify as a "regulated investment
company" for federal income tax purposes, the Company is required to distribute
annually as dividends at least 90% of its taxable income, to the extent earned.
As of December 31, 1996, the Company had issued and outstanding 199,000 shares
of Common Stock. See "Item 5."
Preferred Stock
Shares of preferred stock may be issued only to the SBA. Such shares are
nonvoting and dividends thereon are preferred and cumulative to the extent of 4%
of par value per annum for Class B Preferred Stock. Since the Company, in order
to continue to qualify as a "regulated investment company", will be required to
make dividend distributions to its stockholders, the Company will be required to
pay the cumulative dividend on the Class B Preferred Stock on a current basis.
Prior to any liquidation or redemption or repurchase of Common Stock, the SBA,
as the holder of the Class B Preferred Stock, will be entitled to the payment
of the par value of such shares, and to the payment of all cumulative dividends
then in arrears. The Company had dividends in arrears on its Class B Preferred
Stock of $36,000 as of December 31, 1996. As of December 31, 1996, the Company
had issued an outstanding 900 shares of Class B Preferred Stock. Under the
1940 Act, the Company is not permitted to issue any senior securities other
than the Class B Preferred Stock and debentures.
The following table sets forth the capitalization of the Company as of
December 31, 1996:
As of December 31, 1996
(Unaudited)
Subordinated Debentures to SBA<F4> $1,800,000
4% Preferred Stock, $1,000 Par
Value<F5> 900,000
Common Stock, $.01 Par Value<F6> 1,990
Total Capitalization and
Additional Paid-in Capital 1,028,500
Total Capitalization
4% Preferred Stock 1,030,000
Net Assets Per Share of
Common Stock, shares
outstanding<F7> 10.0
Number of shares of
Common Stock outstanding 199,000
Item 20. Long-term Debt
In the past, the Company has sought, and will continue to seek, to obtain
financing from the SBA to the maximum extent permitted under the 1958 Act for
the SSBIC which loans funds to, but does not generally invest in, the equity
of small business concerns.
General
The SBA may purchase shares of cumulative preferred stock of the Company
for cash up to an amount equal to the Company's aggregate paid-in capital and
paid-in surplus, net of organizational expenses and excluding any amounts paid
by the SBA, if on average the Company has been profitable for its last three
fiscal years. As required by statute, such preferred stock must be non-voting
and must yield preferred and cumulative dividends to the extent of 4% of par
value per share per annum. Because the Company, in order to preserve certain
federal income tax benefits available to it as a regulated investment company
(see "Item 5"), will make distributions to its stockholders of at least 90% of
its investment company taxable income, the Company will be required to pay this
4% dividend on a current basis on its Class B Preferred Stock owned by the SBA.
The amount of the dividends in arrears was $36,000 and as of December 31, 1996
will be paid from current earnings prior to distribution of dividends to any
shareholder of Common Stock.
The SBA may also purchase subordinated debentures issued by an SSBIC equal
in value to the lesser of $10 million or 200% of the SSBIC's aggregate paid-in
capital and paid-in surplus, net of organization and start-up expenses and
excluding any amounts paid by the SBA. As required by statute, the maturity
date of such debentures may not be extended to a date exceeding 15 years from
the date of issue and must bear an interest rate determined by statute and
described above under the heading "Item SSBIC Benefits." The Subordinated
Debentures most recently purchased by the SBA from the Company bear interest at
a rate of 5.33% and 7.08%, respectively, per annum for the first five years of
their term and at a rate of 8.33% and 7.08%, respectively, per annum for the
remaining five years of the term. The actual rate of interest which will be
borne by any debentures issued in the future will be determined in accordance
with the applicable statutes and will depend on economic factors existing at
the time the debentures are issued. The SBA's policy is to purchase such
debentures only after the SSBIC has committed and/or invested 50% or more of its
aggregate paid-in capital and paid-in surplus (including the amount paid by the
SBA for preferred stock) to loans for small businesses, and only to the extent
the SSBIC can demonstrate a need for additional financing at that time.
Although such debentures may be issued for a term up to 15 years, the term of
issuance is typically ten years.
Prior SBA Financing
The Company has been able to obtain substantial financing from the SBA
since its initial capitalization in 1985. As of December 31, 1996, the Company
had obtained $2,700,000 of SBA financing for which it was eligible on the basis
of its then existing paid-in capital. This SBA financing consisted of $900,000
received as payment for 900 shares of the Company's Preferred Stock and
$1,800,000 received in exchange for Subordinated Debentures in such total
principal amount. See "Item 19."
Item 21. Other Securities
The Company does not have authorized any security other than the capital
stock described in response to Item 19 above and the long-term debt described in
response to Item 20 above.
FINANCIAL STATEMENTS
Table of Contents Page
Report of Independent Certified Public Accountants............F-1
Statements of Assets and Liabilities of United
Capital Investment Corp. as at December 31,
1996, 1995, and 1994.....................................F-2
Statements of Operations for the Years Ended
December 31, 1996, 1995, and 1994........................F-4
Statements of Cash Flow for the Years Ended
December 31, 1996, 1995, and 1994........................F-5
Statements of Stockholders' Equity for the Years
Ended December 31, 1996, 1995, and 1994..................F-6
Notes to the Financial Statements.............................F-7
Scheduled Investments.........................................F-13
Information Per Share Data December 31, 1996, 1995,
and 1994................................................F-14
PART III.INFORMATION NOT REQUIRED IN PROSPECTUS
Item 35. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part I.
(b) Exhibits:
(1) Certificates of Incorporation, as amended
(2) By-laws
(3) Shareholder Agreement. as amended
(4) Safe Box Agreement
(5) Pension Plan and Profit Sharing Plans
(6) SBA License
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Amendment 2 to its Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of New York, and the State of New York on the 17th day of June, 1997.
UNITED CAPITAL INVESTMENTS CORP.
By: /s/ Paul Lee
Paul Lee
President
EXHIBIT INDEX
Page No.
in Sequentially
Exhibit No. Description Numbered Volume
1. Certificates of Incorporation,
as amended
2. By-laws
3. Shareholder Agreement, as amended
4. Safe Box Agreement
5. Pension Plan and Profit Sharing
Plans
6. SBA License
<F1>Such person is not an "interested" person as that term is defined in the
1940 Act.
<F2>Under the terms of the Certificate of Incorporation of the Company,
Preferred Stock may be issued only to the United States of America Small
Business Administration (or a successor agency) pursuant to the provisions of
the 1958 Act, and the regulations promulgated thereunder.
<F3>Mr. Paul Lee's and Linda Lee's salary constitutes the major portion of the
Company's total "Management fee compensation" which must be approved by the SBA.
The SBA approved management fee compensation of $160,000 for the year ended
December 31, 1996.
<F4>As of December 31, 1996, the Company has outstanding $1,800,000 principal
amount of ten-year Subordinate Debentures held by the SBA as follows:
Principal Amount Date of Maturity Annual Rate
of Interest
1st 5 Years 2nd 5 Years
$400,000 September 1, 2001 5.33% 8.33%
$1,400,000 September 1, 2001 7.08% 7.08%
<F5>The Company is authorized by its Certificate of Incorporation, as amended,
to issue 4,000 shares of Preferred Stock, $1,000 par value to the SBA. As of
December 31, 1996, the Company had issued 900 shares of Class B Preferred
Stock of the SBA for an aggregate price of $900,000.
<F6>The Company has issued an outstanding 199,000 shares of its Common Stock,
$.01 par value. The company is authorized by its Certificate of Incorporation,
as amended, to issue up to 300,000 shares of its Common Stock.
<F7>Computed on the basis of total assets less total
liabilities divided by total numbers of common shares.
<PAGE> MICHAEL C. FINKELSTEIN
Certified Public Accountant
198 ROUTE 9, SUITE 205 253 FIFTH AVENUE, 5TH FLOOR
MANALAPAN, NEW JERSEY 07726 NEW YORK, NEW YORK 10016
TEL. (908) 577-7055 TEL (212) 689-4633
FAX (908) 577-1844
Board of Directors
United Capital Investment Corp.
Auditors' Report
We have audited the accompanying statements of assets and
liabilities of United Capital Investment Corp. (the "Company"), including the
schedule of portfolio investments, as of December 31, 1996 and 1995 and the
related statements of operations, cash flows and stockholders' equity for the
three years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based oil our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
As described in Note 2, these financial statements were prepared in
conformity with the accounting practices prescribed by the Small Business
Administration, which provides for specific allocations of certain types of
income to specific capital accounts. As explained in Note 2, the financial
statements include securities valued at $3,662,999 and $3,533,133 (172% and 163%
of the net assets), whose values have been estimated by the Board 'of Directors
in the absence of readily ascertainable market values. We have reviewed the
procedures used by the Board of Directors in arriving at its estimate of value
of such securities and have inspected underlying documentation, and, in the
circumstances, we believe the procedures are reasonable and the documentation
appropriate. However, because of the inherent uncertainty of valuation, those
estimated values may differ significantly from values that would have been used
had a ready market for the securities existed, and the differences could be
material.
In our opinion, the financial statements referred to above, present
fairly, in all material respects, the Company's financial position as of
December 31, 1996 and 1995 and the results of its operation and its cash flows
for the three years then ended in conformity with generally accepted accounting
principles.
/s/ Michael C. Finkelstein
February 24, 1997
Certified Public Accountants
F-1
<PAGE>
UNITED CAPITAL INVESTMENT CORP.
STATEMENTS OF ASSETS AND LIABILITIES
ASSETS
December 31
1996 1995
Loans Receivable--Long Term Portion (Note 2) $ 3,690,880 $ 3,597,166
Less: Unrealized Depreciation on Loans (27,881) (64,033)
Receivable 3,662,999 3,533,133
Less: Current Maturities--Loans 519,243 529,970
Receivable
Total Loans Receivable--Net of 3,143,756 3,003,163
Current Maturities
Current Assets:
Cash 1,487,354 1,350,377
Accrued Interest 27,687 30,636
Current Maturities--Loans Receivable 519,243 529,970
(Note 2)
Other Assets 60,398 11,704
Current Assets 2,094,682 1,922,687
Total Assets 5,238,438 4,925,850
See Notes to the Financial Statements
-3-
F-2
<PAGE>
UNITED CAPITAL INVESTMENT CORP.
STATEMENTS OF ASSETS AND LIABILITIES
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31
1996 1995
Long Term Debt:
Debenture Payable to SBA (Note 4) $1,800,000 $1,400,000
Class B, 4% Cumulative, 15 Year Redeemable
Preferred Stock (Note 5) 900,000 900,000
Total Long Term Debt 2,700,000 2,300,OO0
Current Liabilities
Loans Payable - Credit Line (Note 3) 350,000 350,000
Accrued Interest 17,907 22,869
Other Current Liabilities 19,441 13,368
Accrued SBA Dividends 36,0OO 84,667
Total Current Liabilities 423,348 470,904
Total Liabilities 3,123,348 2,770,904
Commitments and Contingencies - -
Stockholders' Equity: (Notes 5, 6 and 8)
Class A, 3% Cumulative Preferred Stock,
$1,000 Par Value; 1,000 Shares Authorized - -
Class B, 4% Cumulative, 15 Year Redeemable
Preferred Stock, $1,000 Par Valuel; 3,000
Shares Authorized: 900 Shares Issued and
Outstanding (See Long Term Debt and Note 5) - -
Restricted Capital 224,339 351,888
Common Stock, $.01 Par Value; 300,000 Shares
Authorized: 199,000 Shares Issued and
Outstanding 1,990 1,990
Additional Paid in Capital 1,842,154 1,714,605
Retained Earnings 46,607 86,463
Total Stockholders' Equity 2,115,090 2,154,946
Total Liabilities and Stockholders' Equity $5,238,438 $4,925,850
See Notes to the Financial Statement
-4-
F-3
<PAGE>
UNITED CAPITAL INVESTMENT CORP.
STATEMENTS OF OPERATIONS
Years Ended December 31,
1996 1995 1994
Revenue:
Interest Earned on Outstanding $366,559 $412,245 $408,643
Receivables
Interest Income on Idle Funds 51,991 52,879 23,446
Other Income 10,171 3,560 15,724
Total Revenue 428,721 468,684 447,813
Expenses:
Interest 117,448 111,288 141,917
Officers Salaries 140,004 140,004 140,004
Professional Fees 36,323 31,650 42,774
Insurance Expense 19,632 19,523 18,564
Pension Expense 14,000 14,000 14,000
Payroll and Other Taxes 10,523 9,582 10,687
Depreciation and Amortization 955 1,598 954
Other Operating Expenses 42,240 36,147 45,517
Total Expenses 381,125 363,792 414,417
Net Investment Income 47,596 104,892 33,396
Unrealized Depreciation in
Value of Investments and
Bad Debt Write-Off 863 - 18,330
Net Income Before Taxes 46,733 104,892 15,066
Provision for Taxes 704 721 2,288
Net Income $ 46,029 104,171 $ 12,778
Earnings Per Common Share
(Note 2) $ .14 $ .35 $ -
Actual Dividends Paid Per
Common Share $ .27 $ - $ .02
See Notes to the Financial Statements
-5-
F-4
<PAGE>
UNITED CAPITAL INVESTMENT CORP.
STATEMENTS OF CASH FLOWS
Years Ended December 31,
1996 1995 1994
Cash Flow From Operating Activities:
Net Income $ 46,029 $ 104,171 $ 12,778
Depreciation and Amortization 955 1,598 954
Decrease in Accrued Interest 2,949 6,209 18,330
(Increase) in Other Assets (49,649) (2,471) (7,088)
(Decrease) Increase in Accrued
Liabilities 1,111 (11,471) (4,401)
Unrealized Depreciation in Value
of Investments 864 - (29,234)
Dividends Paid and Accrued the
SBA (85,885) (32,667) (16,000)
Net Cash Provided (Used) by Operating
Activities (83,626) 65,369 (24,661)
Cash Flows from Investing Activities:
Loans Receivable Originated (1,398,550) (877,500) (835,045)
Repayment of Loans Receivable 1,267,820 1,160,664 837,519
Net Cash Provided (Used by)
Investing Activities (130,730) 283,164 2,474
Cash Flow From Financing Activities:
Net Increase in Debentures
Payable to SBA 400,000 - (1,000,000)
Amortization of Restricted
Capital (127,549) (127,548) (127,549)
Increase in Additional Paid in
Capital 127,549 127,548 127,549
Decrease in Accrued SBA
Dividends (48,667) 32,667 16,000
Sale of Class B, 4% Preferred
Stock - 500,000 -
Net Cash Provided by Financing
Activities 351,333 532,667 (984,000)
Net Increase in Cash 136,977 881,200 (1,006,187)
Cash Balance--Beginning of Year 1,350,377 469,177 1,475,364
Cash Balance--End of Period $1,487,354 $1,350,377 $ 469,177
Supplemental Disclosures of Cash
Flow Information
Cash Paid During the Year For:
Interest $ 122,410 $ 111,096 $ 166,254
Taxes $ 704 $ 721 $ 2.288
See Notes to the Financial Statement
-6-
F-5
<PAGE>
UNITED CAPITAL INVESTMENT CORP.
STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31,
1996 1995 1994
Class A--See Balance Sheet $ - $ - $ -
Class B, 4% Cumulative, 15 Year
Redeemable Preferred Stock,
$1,000 Par Value; 3,000 Shares
Authorized: 900 Shares Issued
and Outstanding (See Long Term
Debt and Note 5) - - -
Common Stock, $.01 Par Value,
300,000 Shares Authorized;
199,000 Shares Issued and
Outstanding 1,990 1,990 1,990
Additional Paid in Capital--
Beginning of Period 1,714,605 1,587,057 1,459,508
Amortization of Restricted Capital 127,549 127,548 127,549
Additional Paid in Capital--End of
Period 1,842,154 1,714,605 1,587,057
Restricted Capital
Balance--Beginning of Period 351,888 479,436 606,985
Amortization of Restricted
Capital (127,549) (127,548) (127,549)
Balance--End of Period 224,332 351,888 479,436
Retained Earnings
Balance, Beginning of Period 86,463 14,959 18,181
Net Income 46,029 104,171 12,778
Less: Dividends Paid and
Accrued to the SBA (85,885) (32,667) (16,000)
Balance End of Period 46,607 86,463 14,959
Total Stockholders' Equity $2,115,090 $2,154,946 $2,083,442
See Notes to The Financial Statements
-7-
F-6
<PAGE>
UNITED CAPITAL INVESTMENT CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 1 ORGANIZATION
United Capital Investment Corp. (The "Company") was formed on May 11, 1984, for
the purpose of operating as a specialized small business investment company
(SSBIC, licensed under the Small Business Investment Act of 1958 and regulated
and financed in part by the Small Business Administration (SBA). The Company's
business is to provide financing to persons who qualify as disadvantaged persons
under applicable SBA and SSBIC by the SBA on February 5, 1985.
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies applied by the
Company in the preparation of its financial statements. The Company maintains
its accounts and prepares its financial statements on the accrual method of
accounting in conformity with generally accepted accounting principles for
investment companies.
Valuation of Loans and Investments
As of December 31, 1996, all investments made by the Company have been in the
form of loans to closely held corporations. The Board of Directors has valued
the investment portfolio based upon the cost of such investments, less a
provision for loan losses. However, because of the inherent uncertainty of the
valuation, the estimated values might otherwise be significantly higher or lower
than the values that would exist in a ready market for such loans which market
has not and does not exist. The provision for loan losses of $27,881 represents
a good faith determination by the Board of Directors. Substantially, all loans
are collateralized by business assets and real estate. See schedule for
analysis of loan portfolio.
Recognition of Interest Income
It is the Company's policy to record interest on loans and debt securities only
to the extent that management and the Board of Directors anticipate such amounts
may be collected. As of December 31, 1996, the Board of Directors elected to
accrue interest on substantially all outstanding loans.
Gains or Losses on Securities
Cost of securities sold is reported on the average cost basis. Amounts reported
as realized gains and losses are measured by the difference between the proceeds
of sale and the cost basis of the investment without regard to unrealized gain
or loss reported in prior years.
No gain is recognized on the exchange of one investment security for another, or
on the exchange of an equity or debt investment for other tangible or intangible
assets.
-8-
F-7
<PAGE>
UNITED CAPITAL INVESTMENT CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31,1996 AND 1995
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Furniture, Fixtures and Equipment
Fixed assets are recorded at cost. Depreciation is computed on the straight
line basis.
Pension Plan
The Company maintains a defined contribution money purchase plan covering all
qualifying employees. A provision of $14,000 was included for the years ended
December 31, 1996 and 1995.
Income Taxes
Tax provisions for the various periods were as follows:
December 31, 1996 $ 704
December 31, 1995 $ 721
The Company has registered as an investment company under the Investment Company
Act of 1940 for the first year ended December 31, 1989 and intends to make the
election for the current period ending December 31, 1996. A regulated
investment company can generally avoid taxation at the corporate level to the
extent 90% of the income is distributed to its stockholders.
Earnings Per Share
Earnings per share of common stock are based on a weighted average number of
shares outstanding during the period, less preferred stock dividend.
NOTE 3 LOANS PAYABLE - LINE OF CREDIT
Effective February 25, 1993, the Company renewed a $500,000 line of credit with
the Hong Kong Shanghai Banking Corp., at a rate of 1% above the New York prime
rate, secured by a blanket lien on all assets and guaranteed personally for the
first $150,000 by Mr. Paul Lee, President of the Company.
-9-
F-8
<PAGE>
UNITED CAPITAL INVESTMENT CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31,1996 AND 1995
NOTE 3 LOANS PAYABLE--LINE OF CREDIT
(Continued)
The Company will pay a commitment fee of .5% per annum payable monthly on the
unused balance of the credit line. There are no restrictions on advances
under the agreement. The balance outstanding as of December 31, 1996 was
$350,000.
Maximum Average
Weighted Amount Amount
Category Balance Average Outstanding Outstanding
of End of Interest During During
Borrowing Period Rate Period Period
June 30, 1996 $350,000 4.875% $350,000 $350,000
June 30, 1995 350,000 4.875% 350,000 350,000
NOTE 4 LONG TERM DEBT--SBA SUBORDINATED DEBENTURES
On December 18, 1996, the Company issued a $1,400,000 subordinated Debenture to
the SBA and paid off its previously issued subordinated debenture maturing on
October 29, 1996 for $1,000,000.
As of December 31, 1996, long term debt to the Small Business Administration
consisted of the following subordinated debentures:
First Second
Due Date Five Years Principal Amount
September 1, 2001 5.33% 8.33% $ 400,000
December 18, 2006 7.08% 7.08% 1,400,000
$1,800,000
NOTE 5 REDEEMABLE PREFERRED STOCK
Effective November 21, 1989 Congress passes legislation which alters the
preferred stock to a 4 percent cumulative dividend and a fifteen year call
provision for all preferred stock sold subsequent to the effective date.
-10-
F-9
<PAGE>
UNITED CAPITAL INVESTMENT CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31,1996 AND 1995
NOTE 5 REDEEMABLE PREFERRED STOCK
(Continued)
The Company amended its certificate of incorporation to create a class A
preferred stock $1,000 par value which will consist of the 1,000 outstanding
preferred stock and to change the existing 3,000 authorized but unissued shares
of preferred stock into a new class B preferred stock $1,000 par value which
will carry a 4 percent cumulative dividend rate and a mandatory 15 year
redemption. Subsequent to the repurchase of the 3% preferred stock (see
note 8), the Company retired the class A preferred stock. On February 17, 1995
the Company sold 500 shares of its 15 year redeemable, 4% cumulative preferred
stock to the SBA for $500,000 and on September 20, 1991, the Company sold 400
shares of its 15 year redeemable, 4 percent cumulative preferred stock to the
SBA for $400,000. The mandatory redemption provisions call for the preferred
stock to be repurchased by the Company at its face value. In accordance with
Regulation S-X, the Company's financial statements present the preferred stock
as Long Term Debt.
NOTE 6 PREFERRED STOCK
As of December 31, 1996 the Company was authorized to issue 4,000 shares of
cumulative preferred stock, consisting of 1,000 shares of 3 percent cumulative
preferred stock and a second class of 4 percent cumulative, 15 year redeemable
preferred stock, $ 1,000 par value.
As of December 31, 1996, 900 shares of 4 percent preferred stock were issued to
the SBA. Each share is entitled to receive 4 percent per annum. Dividends are
not required to be paid to the SBA on an annual or other periodic basis, so long
as cumulative dividends are paid to the SBA before any other payments are made
to shareholders. Such dividends on the preferred stock will be deemed to be
earned at the time dividends on the Company's common stock are declared, and
accordingly will reduce the amounts available for distribution to the Company's
shareholders. As of December 31, 1996, the Company was contingently liable to
the SBA on the 4 percent redeemable preferred stock from January 1, 1996 to
December 31, 1996 in the amount of $36,000.
NOTE 7 LEASE AGREEMENT
Minimum rental commitments under operating leases in effect as of December 31,
1996 are as follows:
Rental expense for the current period was $16,396. The lease expires on
April 30, 1997 with a minimum rental of $12,936 per year.
NOTE 8 REPURCHASE OF 3% PREFERRED STOCK
Effective August 23, 1993, the Company amended its certificate of incorporation
granting the SBA a liquidating interest in a newly created restricted capital
surplus account.
-11-
F-10
<PAGE>
UNITED CAPITAL INVESTMENT CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31,1996 AND 1995
NOTE 8 REPURCHASE OF 3% PREFERRED STOCK
(Continued)
The Company and the SBA entered into a repurchase agreement dated October 5,
1993. Pursuant to the agreement, the Company repurchased all 1,000 shares of
its 3% preferred stock, $1,000 par value, from the SBA for a purchase price of
$362.257 per share, or an aggregate of $362,257. The repurchase price was at a
substantial discount to the original sale price of $1,000 per share. As a
condition precedent to the repurchase, the Company granted the SBA a liquidating
interest in the restricted capital surplus account.
The surplus account is equal to the amount of the repurchase discount less
expenses associated with the repurchase. The initial value of the liquidating
interest was equal to $637,743. the amount of the repurchase discount on the
date of repurchase, and is being amortized over a sixty (60) month period on a
straight-line basis. Should the Company be in default under the repurchase
agreement, at any time, the liquidating interest will become fixed at the level
immediately preceding the event of default and will not decline further until
such time as the default is cured or waived. The liquidating interest will
expire on the earlier of (1) sixty (60) months from the date of the repurchase
agreement, or (ii) if any event of default has occurred and such default has
been cured or waived, such later date on which the liquidating interest is
full amortized. Should the Company voluntarily or involuntarily liquidate prior
to the expiration of the liquidating interest, any assets which are available,
after the payment of all debts of the Company, shall be distributed first to the
SBA until the amount of the then remaining liquidating interest has been
distributed to the SBA. Such payment, if any, would be prior in right to any
payments made to the Company's shareholders.
NOTE 9 MANAGEMENT FEES
Effective February 9, 1993, the SBA approved the Company's request for an
increase in total compensation to $160,200 retroactive to January 1, 1993.
NOTE 10 RELATED PARTY TRANSACTION
Certain officers and directors of the Company are also shareholders of the
Company. Officers' salaries are set by the Board of Directors and are also
subject to maximum compensation by the SBA.
NOTE II FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISKS
The Company maintains an aggregate of approximately $885,915 in various banks
in excess of amounts that would be insured by the Federal Depository Insurance
Company.
-12-
F-11
<PAGE>
UNITED CAPITAL INVESTMENT CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31,1996 AND 1995
NOTE 12 COMMITMENTS AND CONTINGENCIES
Pursuant to SBA regulations, all SSBIC's issuing debentures subsequent to
April 25, 1994, were required to amend their certificates of incorporation to
indicate that they have consented, in advance, to the SBA's right to require
the removal of officers or directors and to the appointment of the SBA, or its
designee, in the event of certain default provisions. Effective November 1994,
the Company amended its certificate of incorporation in accordance with the
current provision of the SBA regulation.
NOTE 13 SIGNIFICANT CONCENTRATION OF CREDIT RISK
Approximately twenty three percent (23%) of the Company's loan portfolio
consists of loans made for the financing and purchase of New York City Taxicab
Medallions and related assets.
-13-
F-12
<PAGE>
UNITED CAPITAL INVESTMENT CORP.
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31,1996
Original
Outstanding Number Maturity Balance
Type of Loan of Loans Interest Rate Date Outstanding
Taxi Cab 9 8.75%-13.50% 4-15 years $835,229
Restaurant 5 11.50%-15.00% 4-15 years 126,330
Dry Cleaning 8 10.00%-16.25% 5-10 years 102,323
Manufacturing 2 9.75%-14.50% 5-10 years 42,575
Food Supply 5 12.00%-15.00% 4-5 years 135,682
Contractor 1 14.50% 5 years 37,476
Laundromat 1 13.87% 5 years 47,672
Bakery 1 16.25% 5 years 390,025
Garage Service 5 10.00%-13.00% 5 years 38,719
Hair Salon 1 10.00% 10 years 29,122
Physicians Office 2 10.00%-12.50% 10 years 260,615
Import & Export 1 11.00%-14.00% 4 years 509,908
Deli Grocery 2 11.75%-14.00% 5 years 50,000
Art Supply 1 14.50% 4 years 27,881
Sneaker Shop 1 14.50% 4 years 39,380
Nail Salon 1 14.50% 4 years 872,102
Photo Shop 1 14.50% 4 years 106,454
Dental Lab 1 14.50% 4 years 39,387
49 $3,690,880
-14-
F-13
<PAGE>
UNITED CAPITAL INVESTMENT CORP.
SUPPLEMENTARY INFORMATION
PER SHARE DATA AND RATIOS
FOR THE FIVE YEARS ENDED
December 31,
1996 1995 1994 1993 1992
Per Share Data
Investment Income $2.15 $2.36 $2.25 $2.49 $3.03
Investment Expenses (1.91) (1.84) (2.09) (2.30) (2.14)
Net Investment
Income .24 .52 .16 .19 .89
Net Realized and
Unrealized Gains
and Losses on
Securities - - (.09) (.11) (.72)
Dividends (.44) (.17) (.09) - -
Gain on Repurchase
of Preferred Stock - - - 2.98 -
Net Increase/Decrease
in Net Asset Value (.20) .35 (.02) 3.06 .17
Net Asset Value--
Beginning of
Period $10.82 $10.47 $10.49 $ 7.43 $7.26
Net Asset Value--End
of Year $10.62 $10.82 $10.47 $10.49 $7.43
Ratios
Ratio of Expenses to
Average Net Assets 17.9% 17.2% 20.9% 25.5% 29.1%
Ratio of Net
Investment Income
to Average Net
Assets 2.2% 4.9% .6% 2.3% 12.1%
-15-
F- 14
<PAGE>
PART III. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 35. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part I.
(b) Exhibits:
(1) Certificates of Incorporation, as amended
(2) By-laws
(3) Shareholder Agreement. as amended
(4) Safe Box Agreement
(5) Pension Plan and Profit Sharing Plans
(6) SBA License
<PAGE>
State of New York
SS.:
Department of State 29199
I hereby certify that I have compared the annexed copy with the original
document filed by tire Department of State and that the same is a correct
transcript of said original.
Witness my hand and seal of the Department of State on MAY 11, 1994
/s/ Gail S. Shaffer
Secretary of State
380507-004(12/82)
<PAGE>
CERTIFICATE OF INCORPORATION
OF
UNITED CAPITAL INVESTMENT CORP.
(Under Section 402 of the Business Corporation Law)
The undersigned, a natural person at least eighteen years of age, for the
purpose of forming a corporation pursuant to the provisions of the Business
Corporation Law of the State of New York, does hereby certify as follows:
FIRST: The name of the corporation is United Capital Investment Corp.:
SECOND: The corporation is formed for the following purposes:
As used in this Certificate of Incorporation the "Act" means the Small
Business Investment Act of 1958, as amended.
The corporation will make investments, both of loan and equity, in small
businesses.
This corporation is organized and chartered solely for the purpose of
performing the functions and conducting the activities contemplated under the
Small Business Investment Act of 1958, as amended from time to time, and will
provide assistance solely to small business concerns which will contribute to a
well-balanced national economy by facilitating ownership in such concerns by
persons whose participation in the free enterprise system is hampered because of
social or economic disadvantages.
The corporation in furtherance of its corporate purposes set forth above
shall have all the powers enumerated in Sec. 202 of the Business Corporation
Law of the State of New York or any other applicable statute of the State of
New York.
THIRD: The aggregate number of shares which the Corporation shall have
the authority to issue is Six Thousand (6,000) shares as follows:
(a) Two Thousand (2000) shares of Common Stock of the par value of One
Dollar ($1.00) each;
(b) Four Thousand (4,000) shares of Preferred Stock, all of One Hundred
Dollar ($100.00) par value.
The Board of Directors is specifically authorized to fix and determine the
terms, limitations and relative rights of such preferred stock and to establish
series and fix and determine the variations as among series, all to the fullest
extent permitted by law, except that if more than one class of preferred stock
is so authorized the rights of any Small Business Administration (SBA) preferred
stock shall take precedence over the right of any other class of stock.
The Small Business Administration ("SBA") shall not be entitled to vote on
any matters for which a vote of the shareholders of the corporation may be
sought.
Subject to the sound discretion of the Board of Directors the Small
Business Administration ("SBA") shall be paid from the retained earnings of the
corporation an annual dividend of 3 percent of the par value of its Preferred
Stock payable from the date of issuance.
Such dividends shall be payable on a preferred and cumulative basis so that
no amount shall be set aside or paid to any other class of stock until the
3 percent dividend for that year has been paid or, in the event SBA has received
less than 3 percent in any fiscal year, until the full amount of 3 percent per
annum which has cumulated up to that time upon all of SBA's preferred stock has
been paid to SBA. Accumulations of dividends shall not bear interest.
In addition, before a declaration of dividends or any other kind of
distribution to any shareholders of the corporation other than SBA, SBA in its
discretion may require the preferred payment of the dividend subsidy which shall
be the difference between dividends paid on SBA's preferred stock and cumulative
dividends payable at a rate equal to the interest rate determined at the time of
SBA's purchase of such preferred stock pursuant to Section 303(b) of the Act for
debentures with a term of fifteen years, without interest on such difference.
Such interest rate shall be inscribed on the stock certificates issued to SBA.
In the event SBA has purchased the corporations subordinated debentures,
the corporation shall not pay dividends or make any distributions to
shareholders other than SBA until it has first paid SBA the interest subsidy,
which shall be the difference between the rate of interest on such subordinated
debentures payable pursuant to Section 317 of the Act and the rate of interest
which would have been payable pursuant to Section 303(b) of said Act, without
interest on such difference.
Before any redemption of stock not purchased by SBA, or liquidation in
whole or in part, or any distribution of assets to other stockholders, SBA shall
be entitled to the preferred payment in full of the amounts stated in the two
preceding paragraphs above (i.e., the dividend subsidy in SBA's discretion and
the interest subsidy unconditionally) and the par value of its preferred stock.
Such par value need not be paid to SBA before the distribution of ordinary
dividends from retained earnings to other shareholders.
The corporation may, at its option, redeem the whole or any part of SBA's
outstanding Preferred Stock on any dividend payment date where at least thirty
days prior written notice has been given to SBA. The corporation shall pay SBA
the par value of the shares to be redeemed ($50,000 minimum per transaction) and
shall give an undertaking to pay SBA, in its discretion, any amounts due on the
dividend subsidy.
This charter shall not be amended without the prior written approval of SBA.
No stockholder of the Corporation shall have any preemptive or other
right of subscription to any shares of any class of stock of the
Corporation issued or to be issued or sold, whether now or hereafter
authorized or to any securities convertible into stock of the
Corporation of any class, or to receive any such shares or securities
by way of dividend, other than such right or rights, if any, as the
Board of Directors may determine, but any shares of stock or
convertible securities which the Board of Directors may determine to
offer for subscription to stockholders may at the discretion of the
Board of Directors, be offered in such proportions and to the holders
of any one or more of all classes of stock of the Corporation then
issued.
In any election of directors, owners of the voting Common Stock shall
each be entitled, upon the giving of such prior notice as may be
required by law, to vote in person or by proxy the number of shares
owned by him for as many persons as there are directors to be elected,
or to cumulate his votes by giving one candidate as many votes as
equal the number of shares owned by him, or to distribute such votes
on the same principle among any number of such candidates.
FOURTH: The principal office of the corporation for the transaction of its
business is to be in the City of New York, County of New York and State of
New York.
FIFTH: The Secretary of State is designated as the agent of the
corporation upon whom process in any action or proceeding against the
corporation may be served. The post office address to which the Secretary of
State shall mail a copy of any process against the corporation served upon him
is c/o Hill, Betts and Nash, One World Trade Center, Suite 5215, New York,
New York 10048.
SIXTH: For the management of the business and the conduct of the affairs
of the corporation, and in further definition, limitation and regulations of the
powers of the corporation and its directors and its stockholders or any class
thereof, as the case may be, it is further provided:
Any action required or permitted to be taken board or any committee thereof
may be taken without a meeting of all members of the board or the committee
consent in writing to the adoption of a resolution authorizing the action.
The resolution and the written consents thereto by the members of the board or
committee shall be filed with the minutes of the proceedings of the board
or committee.
Any one or more members of the board or an committee thereof may
participate in a meeting of such board or committee by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation by such means
shall constitute presence in person at a meeting.
IN WITNESS WHEREOF, this Certificate has been signed this 9th day of May, 1984.
Judy Winston, Sole Incorporate
70 Pine Street
New York, New York 10270
STATE OF NEW YORK
SS.:
COUNTY OF NEW YORK
On this 9th day of May, 1984, before me personally came Judy Winston, to
me known and known to me to be the individual described in and who executed the
foregoing certificate, and she severally duly acknowledged to me that she
executed the same.
/s/ Tammy Lavelle
TAMMY LAVELLE
Notary Public, State of New York
No. 31-4775711
Qualified in New York County
Commission Expires March 30, 1986
<PAGE>
STATE OF NEW YORK
BANKING DEPARTMENT
I, Derrick D. Cephas, Deputy Superintendent of Banks of the State of New York,
hereby approve, pursuant to section 301(a)(5)(B) of the Business Corporation
Law, as amended, the use of the word "investment" in the corporate title of
United Capital Investment Corp.
WITNESS, my hand and official seal of the Banking Department at the City of
New York, this 1st day of May in the Year of our Lord one thousand nine hundred
and eighty-four.
/s/ Derrick Cephas
Deputy Superintendent of Banks
Department of State
I hereby certify that I have compared the annexed copy with the original
document filed by the Department of State and that the same is a correct
transcript of said original.
Witness my hand and seal of the Department of State on OCT. 10, 1984
/s/ Gail S. Shaffer
Secretary of State
380507-004(12/82)
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
UNITED CAPITAL INVESTMENT CORP.
- -----------------------
Under Section 805 of the
Business Corporation Law
- -----------------------
Pursuant to the provisions of Section 805 of the Business Corporation Law the
undersigned, being the President and the Secretary of United Capital Investment
Corp., respectively, hereby certify:
FIRST: That the name of the Corporation is United Capital Investment Corp.
SECOND: That the Certificate of Incorporation of the Corporation was filed by
the Department of State Albany, New York on the llth day of May 1984.
THIRD: The Certificate of Incorporation of the Corporation is hereby amended
pursuant to Section 801(b)(9) of the Business Corporation Law, to increase the
par value of all issued or unissued authorized shares of Preferred Stock of the
Corporation from one hundred dollars ($100.00) per share to one thousand dollars
($1,000-00) per share.
FOURTH: Clause (b) of Paragraph THIRD of the Certificate of Incorporation of
the Corporation which-sets forth the number and par value of the authorized
shares of Preferred Stock is hereby amended to read as follows:
"(b) Four Thousand (4,000) shares of Preferred Stock, all of One Thousand Dollar
($1,000.00) par value."
FIFTH: That the amendment of the Certificate of Incorporation was authorized by
a vote of the Board of Directors followed by a vote of the holders of a majority
of all outstanding shares entitled to vote on an amendment to the Certificate of
Incorporation at a meeting of shareholders duly called and held on the 5th day
of October, 1984.
IN WITNESS WHEREOF, this Certificate has been signed this 5th day of October,
1984.
/s/ Paul Lee
Paul Lee, President
/s/ Robert Lee
Robert Lee, Secretary
STATE OF NEW YORK
Ss.:
COUNTY OF NEW YORK
Paul Lee, being duly sworn, deposes and says that he is President of United
Capital Investment Corp., the corporation mentioned and described in the
foregoing instrument; that he has read and signed the same and that the
statements contained therein are true.
/s/ Paul Lee
Sworn to before me this
5th day of October, 1984.
/s/ John F. Lang
Notary Public
John F. Lang
Notary Public, State of New York
No. 31-2248931
Qualified in New York County
Commission Expires March 30, 1985
STATE OF NEW YORK
Ss.:
COUNTY OF NEW YORK
Robert Lee, being duly sworn, deposes and says that he is Secretary of United
Capital Investment Corp., the corporation mentioned and described in the
foregoing instrument; that he has read and signed the same and that the
statements contained therein are true.
/s/ Robert Lee
Sworn to before me this
5th day of October, 1984.
/s/ John F. Lang
Notary Public
John F. Lang
Notary Public, State of New York
No. 31-2248931
Qualified in New York County
Commission Expires March 30, 1985
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
UNITED CAPITAL INVESTMENT CORP.
- -----------------------
Under Section 805 of the
Business Corporation Law
- -----------------------
HILL, BETTS & NASH
One World Trade Center
Suite 5215
New York, New York 10048
(212)839-7000
State of New York 07736
ss:
Department of State
I hereby certify that I have compared the annexed copy with the original
document filed by the Department of State and that the same is correct
transcript of said original.
Witness my hand and seal of the Department of State on
/s/ Gail S. Shaffer
Secretary of State
380507-004 (12/87)
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
UNITED CAPITAL INVESTMENT CORP.
Under Section 805 of the Business Corporation Law
It is hereby certified that:
FIRST: The name of the corporation is UNITED CAPITAL INVESTMENT CORP.
SECOND: The Certificate of Incorporation of the Corporation was filed by the
Department of State on May 11, 1984, under the name of United Capital
Investment Corp.
THIRD: The Certificate of Incorporation of United Capital Investment Corp. is
hereby amended, pursuant to Section 801(b)(7) of the Business Corporation Law.
The amendments to the Certificate of Incorporation of the corporation effected
by this Certificate of Amendment are (i) to change 1,000 authorized common
shares of $1.00 par value of the corporation, all of which ire issued, into
150,000 issued common shares of a par value of $.01 each, the terms of the
change being at the rate of 1 issued common share (including fractions thereof)
of $1.00 par value for 150 issued common shares of a par value of $.01 each,
and, in that connection, to reduce the stated capital of the corporation in
respect of each issued common share to $.01 so that the -aggregate stated
capital of the corporation with respect to all issued common shares is changed
to $1,500.00; and to change 1,000 authorized common shares of $1.00 par value of
the corporation, none of which is issued, into 150,000 unissued common shares of
a par value of $.Ol each, and (ii) to change the address to which the Secretary
of State shall mail a copy of any process against the Corporation served upon
him or her to the Corporation at the Corporation's current office address at
60 East 42nd Street, Suite 1515, New York, New York 10165.
FOURTH: To accomplish the foregoing amendments, the first paragraph of
Article 3 of the Certificate of Incorporation of the corporation, relating to
par value of the Common Stock of the corporation is hereby amended and Article 5
concerning the address to which the Secretary of State is to mail any process
served upon him or her is restated in its entirety:
(a) The first paragraph of Article 3 of the Certificate of Incorporation shall
be deemed restated as follows:
"3. The total number of authorized shares of capital stock of this corporation
shall consist of 304,000 shares of which 4,000 shares shall be preferred stock
having a par value of $1,000. each and 300,000 shares shall be common shares
having a par value of $.0l (one cent) per share. The designation of each class,
the number of shares of each class and par value of the shares of each class are
as follows:
Number of Shares Class Par Value Per Share
4,000 Preferred $1,000.
300,000 Common .01 (one cent)
The Preferred Shares authorized are restricted solely for issuance to the
United States Government Small Business Administration."
b) Article 5 to the Certificate of Incorporation is hereby amended and restated
to read in its entirety as follows:
"5. The Secretary of State is designated as the agent of the Corporation upon
whom process in any action or proceeding against the Corporation may be served
and the address to which the Secretary of State shall mail a copy of any process
against the Corporation which may be served upon him or her is:
UNITED CAPITAL INVESTMENT CORP., 60 East 42nd Street, Suite 1515, New York,
New York 10165.
FIFTH: The issued and outstanding shares of common stock of the corporation
which number 1,000 and the shares of common stock of the corporation that are
not issued and outstanding which number 1,000 each of $1.00 par value, shall
be changed into new shares of common stock, each of a par value of one cent
($.01) per share, at the rate of 150 of the new shares of common stock for each
one (1) share (including fractions thereof) of the former shares of common
stock.
SIXTH: The foregoing amendments of the Certificate of Incorporation of the
corporation were authorized by the unanimous written consent of the holders of
all of the outstanding shares of the corporation entitled to vote on the said
amendments of the Certificate of Incorporation and, pursuant to the provisions
of Article THIRD of the Certificate of Incorporation, by the Small Business
Administration, subsequent to the affirmative vote of the Board of Directors.
IN WITNESS WHEREOF, this Certificate of has been subscribed to this day of
October, 19 by the undersigned who affirms that the statements made herein,
under the penalties of perjury.
/s/ Paul Lee
Paul Lee, President
/s/ Robert Lee
Robert Lee, Secretary
State of New York
SS:
Department of State 007868
I hereby certify that I have compared the annexed copy with the original
document filed by the Department of State and that the same is a correct
transcript of said original.
Witness my hand and seal of the Department of State on JAN 31 1991
/s/ Gail S. Shaffer
Secretary of State
Certificate of Change
of
Certificate of Incorporation
of
UNITED CAPITAL INVESTMENT CORP.
- -------------------------------------------------
Under Section 805-A of the Business Corporation Law
- -------------------------------------------------
Pursuant to provisions of Section 805-A of the Business Corporation Law, the
undersigned, being the President and Secretary of United Capital Investment
Corp., respectively, hereby certify:
FIRST: That the name of the corporation is United Capital Investment Corp.
SECOND: That the Certificate of Incorporation of the corporation was filed by
the Department of State, Albany, New York on the 11th day of May, 1984.
THIRD: The change in the Certificate of Incorporation effected by this
Certificate of Change is as follows:
To change the post office address to which the Secretary of State of the State
of New York shall mail a copy of any process against the corporation served
upon said Secretary of State.
FOURTH: To accomplish the foregoing change, Article FIFTH of the Certificate
of Incorporation relating to the address of service of process is hereby
stricken out in its entirety and the following new Article is substituted in
lieu thereof:
FIFTH: The Secretary of State is designated as the agent of the corporation
upon whom process in any action or proceeding against the corporation may be
served. The post office address to which the Secretary .of State shall mail a
copy of any process against the corporation served upon him is c/o the
corporation, 60 East 42nd Street, New York, New York 10165."
SIXTH: The foregoing change was approved by the Board of Directors.
IN WITNESS WHEREOF, we have subscribed this document on this 17th day of
December, 1990 and do hereby affirm, under the penalties of perjury, that the
statements contained therein have been examined by us and are true and correct.
/s/ Paul Lee
Paul Lee President
/s/ Robert Lee
Robert Lee Secretary
JM:1\5248/5248-cer.chr
CERTIFICATE OF CHANGE
OF
CERTIFICATE OF INCORPORATION
OF
UNITED CAPITAL INVESTMENT CORP.
(Under Section 805-A of the Business Corporation Law)
Hill, Betts & Nash
One World Trade Center
Suite 5215
New York, NY 10048
State of New York
SS:
Department of State 032625
I hereby certify that I have compared the annexed copy with the original
document filed by the Department Of State and that the same is a correct
transcript of said original.
Witness my hand and seal of the Department of State on MAY 08 1990
/s/ Gail S. Shaffer
Secretary of State
380507-004 (12187)
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
UNITED CAPITAL INVESTMENT
Under Section 805 of the Business Corporation Law It is hereby certified that:
FIRST: The name of the corporation is UNITED CAPITAL INVESTMENT CORP.
SECOND: The Certificate of Incorporation of the Corporation was filed by the
Department of State on May 11, 1984, under the name of United Capital Investment
Corp.
THIRD: The Certificate of Incorporation of United Capital Investment Corp. is
hereby amended, pursuant to Section 801(b) (7) of the Business Corporation Law.
The amendments to the Certificate of Incorporation of the Corporation effected
by this Certificate of Amendment are to change the existing 4,000 shares of
Preferred Stock, each having a $1,000. par value of which 1,000 shares are
issued and outstanding, into a Class A and Class B Preferred Stock of which
the Class A Preferred Stock shall consist of the existing issued and outstanding
1,000 shares of three (3%) percent Preferred Stock of $1,000. par value which
shall continue to remain outstanding under the same terms and w conditions as
set forth in the Certificate of Incorporation, as amended, and the balance of
3,000 shares of the previously authorized but unissued Preferred Stock shall be
considered from and after the date hereof as Class B Preferred Stock having a
four (4%) percent dividend rate and a requirement that any shares of the Class B
Preferred Stock that are issued to the United States Government Small Business
Administration be redeemed by the Corporation within fifteen (15) years from the
date of issuance of said shares. All issued and unissued shares shall be
changed at a rate of one (1) share per one (1) share.
FOURTH: To accomplish the foregoing amendments, the first paragraph of Article
THIRD of the Certificate of Incorporation of the Corporation is hereby amended
and restated in its entirety:
(a) The first paragraph of Article THIRD of the Certificate of Incorporation
shall be deemed restated as follows:
"3. The total number of authorized shares of capital stock of this corporation
shall consist of 304,000 shares of which 4,000 shares shall be preferred stock
having a par value of $1,000. each and 300,000 shares shall be common shares
having a par value of $.Ol (one cent) per share. The preferred stock shall
further be dividend into 1,000 shares of Class A Preferred Stock having a par
value of $1,00o. per share, and 3,000 shares of Class B Preferred Stock having a
par value of $1,000. per share. The designation of each class, the number of
shares of each class and par value of the shares of each class are as follows:
Number of Shares Type Par Value Per Share
1,000 Class A Preferred Stock $1,000.
3,000 Class B Preferred Stock $1,000.
300,000 Common Stock .01 (one cent)
The Preferred Shares authorized are restricted solely for issuance to the
United States Government Small Business Administration."
(b) Paragraph (b) of Article THIRD of the Certificate of Incorporation shall be
deemed amended by the following additional paragraph:
"All references in this Certificate of Incorporation to the Preferred Stock to
be issued to the United States Government Small Business Administration which
carries an annual dividend of three (3%) percent of the par value of its
Preferred Stock shall apply solely to the 1,000 shares of Preferred Stock
previously issued by this Corporation to the United States Government Small
Business Administration and such 1,000 shares of Preferred Stock that are
presently issued are herein designated for future reference as Class A Preferred
Stock. Any Preferred Stock to be issued from and after the date of the filing
of this Certificate of Amendment to the Certificate of Incorporation of the
Corporation shall be deemed to be Class B Preferred Stock which shall have an
annual dividend of (4) percent of the par value of said Preferred Stock, payable
from the date of issuance and which shares shall be deemed to have a mandatory
redemption requirement so that any Class B Preferred Stock that is issued by the
Corporation shall be redeemed by the Corporation within fifteen (15) years from
the date of any issuance of such shares.
All other terms and conditions that are presently set forth in the Certificate
of Incorporation, as amended, that otherwise apply to the Class A Preferred
Stock shall also be deemed to apply to the Class B Preferred Stock. In the
event of any liquidation of the Corporation the Class A Preferred Stock and
Class B Preferred Stock, after payment of all accrued but unpaid dividends,
shall have equal standing with neither class having priority over the other
with respect to any liquidation distributions."
FIFTH: The foregoing amendments of the Certificate of Incorporation of the
Corporation were authorized by the written consent of a majority of the holders
of all of the outstanding shares of the corporation entitled to vote on the said
amendments of the Certificate of Incorporation subsequent to the affirmative
vote of the Board of Directors and, pursuant to the provisions of Article THIRD
of the Certificate of incorporation, by the United States Government Small
Business Administration.
IN WITNESS WHEREOF, this Certificate of Amendment has been subscribed to this
11th day of January, 1990 by the undersigned who affirms that the statements
made herein are true under the penalties of perjury.
/s/ Paul Lee
PAUL LEE, President
/s/ Robert Lee
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
UNITED CAPITAL INVESTMENT CORP.
Under Section 805 of the Corporation Law
It is hereby certified that:
FIRST: The name of the corporation is UNITED CAPITAL INVESTMENT CORP.
SECOND: The Certificate of Incorporation of the Corporation was filed with the
Department of State on May 11, 1984, under the name of United Capital
Investment Corp. and Certificates of Amendment to the Certificate of
Incorporation were subsequently filed with the Department of State on
October 10, 1984, November 8, 1989 and May 8, 1990.
THIRD: The Certificate of Incorporation of United Capital Investment Corp. is
hereby amended, pursuant to Section 801 (b) (7) of the Business Corporation Law.
The amendment to the Certificate of Amendment is to add provisions to grant a
Liquidating Interest to the United States Small Business Administration in the
event the corporation redeems its 3% Preferred Stock outstanding at a discount
from its par value.
FOURTH: To accomplish the foregoing amendments, a new paragraph shall be added
to Article 3 of the Certificate of Incorporation of the corporation, relating to
the grant of a Liquidating Interest to the United States Small Business
Administration in the event the corporation redeems its 3 % Preferred Stock at
a discount from its par value is hereby added to read in its entirety as is
hereinafter set forth:
(a) A new paragraph (C) of Article 3 of The Certificate of Incorporation of The
Corporation shall be deemed added as follows:
(f) Grant of Liquidating Interest to the United States Small Business
Administration and creation of 'RESTRICTED CONTRIBUTED CAPITAL SURPLUS'Account.
i. Definitions: For the purposes of this Article 3 (c) the following terms
shall have the meaning hereinafter set forth:
"LIQUIDATING INTEREST" shall mean a preferential limited ownership interest in a
NOW capital surplus account to be created by the corporation and to be known as
the RESTRICTED CONTRIBUTED CAPITAL SURPLUS ACCOUNT. The "Liquidating Interest"
may only be granted to the United States Small Business Administration and only
in conjunction with a redemption at a discount of the Corporation's outstanding
3% Preferred Stock held by the United States Small Business Administration, as
contemplated and authorized by Public Law 101-162, dated November 21, 1989.
"RESTRICTED CONTRIBUTED CAPITAL SURPLUS" shall mean the NOW capital account
which will be used solely for the purpose of recording on the accounts of the
corporation, a credit representing the difference between the purchase price to
be paid for the redemption of the redemption of the 3% Preferred Stock, and the
par value of the 3% Preferred Stock.
"THE SHARES" shall mean the aggregate number of shares of 3% Preferred Stock
being repurchased.
"PURCHASE PRICE" shall mean the aggregate value of the consideration to be paid
to the United States Small Business Administration by the Corporation for The
Shares, including the right to any unpaid dividends accrued thereon.
"DISCOUNT" shall mean the amount by which the aggregate par value of the 3%
Preferred Stock being repurchased exceeds the Purchase Price.
LIQUIDATING INTEREST
The Corporation shall carry on its balance sheet a capital account designated
Restricted Contributed Capital Surplus. The Corporation has granted to the
United States Small Business Administration a Liquidating Interest in the
Restricted Contributed Capital Surplus Account pursuant to the Preferred Stock
Repurchase Agreement (the "Agreement"), dated August 23, 1993, between the SBA
and United Capital Investment Corp.
The initial value of the Liquidating Interest shall be equal to $637,743. and
shall decline on a straight-line basis at the end of each month by an amount
equal to 1/60th (1.6667%) of its original amount beginning one month after the
date of the Agreement, Upon the occurrence of any Event of Default (as defined
in the Agreement) the value of the Liquidating Interest shall become fixed at
the level immediately preceding the Event of Default and shall not decline
further until such time as the default is cured or waived.
The Liquidating Interest shall expire on the later of (1) the date sixty (60)
months from the date of the Agreement, or (ii) if an Event of Default has
occurred and such default has been cured or waived, such later date on which the
Liquidating Interest is fully amortized.
If, prior to the expiration of the Liquidating Interest as set forth above, the
Corporation's Board of Directors or its shareholders authorizes the liquidation
of the Corporation, or a judicial order is issued directing the voluntary or
involuntary liquidation of the Corporation, or the United Small Business
Administration initiates receivership or liquidation proceedings, pursuant to
the Small Business Investment Act of 1958 and the regulations adopted
thereunder, any assets which are available, after the payment or the provision
for the payment of all debts of the Corporation, shall be distributed first to
the United States Small Business Administration until the fair market value of
such assets is equal to the amount of the Liquidating Interest or all remaining
assets have been distributed to the United States Small Business Administration.
FIFTH: The foregoing amendment of the Certificate of Incorporation of the
corporation was authorized by a majority vote of the holders of the outstanding
shares of the corporation entitled to vote on the said amendments of the
Certificate of Incorporation and by the United States Small Business
Administration, subsequent to the affirmative vote of the Board of Directors.
IN WITNESS WHEREOF, this certificate of Amendment to the Certificate of
Incorporation has been subscribed to this of August, 1 993, by the undersigned
who affirm that the statements made herein are true under the penalties of
perjury.
/s/ Paul Lee
Paul Lee, President
/s/ Linda Lee
Linda Lee, Secretary
CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF INCORPORATION
OF
UNITED CAPITAL INVESTMENT CORP.
Under Section 805 of the
Business Corporation Law
GRANOFF & WALKER, P.C.
600 Third Avenue
Suite 38
New York, Now York 10016
State of New York
SS:
Department of State
I hereby certify that I have compared the annexed copy with the original
document filed by the Department of State and that the same is a correct
transcript of said original.
Witness my hand and seal of the Department of State on NOV 14, 1994
/s/ Gail S. Shaffer
Secretary of State
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
UNITED CAPITAL INVESTMENT CORP.
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW
We, Paul Lee, President, and Linda Lee, Secretary, of UNITED CAPITAL INVESTMENT
CORP. do hereby certify:
FIRST: The name of the corporation (hereinafter referred to as the
"Corporation") is UNITED CAPITAL INVESTMENT CORP.
SECOND: The Corporation's Certificate of Incorporation was filed with the
Department of State on May 11, 1984, under the name of United Capital Investment
Corp.
THIRD: The Corporation's Certificate of Incorporation is hereby amended
pursuant to Section 801(b)(14) of the Business Corporation Law. The amendments
to the Corporation's Certificate of Incorporation effected by this Certificate
of Amendment are to grant to the U.S. Small Business Administration of all of
the rights of the u. S. Small Business Administration set forth in Federal
Regulation 13 CFR Sec. 107.262, the text of which is set forth in Article
FOURTH of this Certificate of Amendment.
FOURTH: To accomplish the foregoing amendments, a new Article SEVENTH is hereby
added to the Corporation I s 1 Certificate of Incorporation as follows:
SEVENTH: The Corporation hereby consents to the exercise by the U.S. Small
Business Administration of all of the rights of the U.S. Small Business
Administration under Federal Regulation 13 CPR Sec. 107.262, and agrees to
take all actions which the U.S. Small Business Administration may require in
accordance with such Regulation. The text of Federal Regulation 13 CFR Sec.
107.262, which is as follows, is hereby made a part of this Certificate of
Incorporation:
Sec. 107.262 Conditions affecting issuing of Preferred Securities and/or
Participating Securities.
(a) Applicability. The conditions of this section apply to Licensees issuing
Preferred Securities after April 25, 1994, and to Licensees with outstanding
Participating Securities or with Earmarked Assets in their portfolios. The
Articles of any such Licensee shall include the provisions Of this Sec. 107.262
as a condition to the purchase by SBA of Preferred Securities, or as a condition
to the guarantee by SBA of Participating Securities and for so long as the
Licensee owns Earmarked Assets. Preferred Securities issued prior to April 25,
1994 shall continue to be governed by the remedies in effect at the time of
their issuance.
(b) Consent to removal of officers, directors, or general partners, and/or
appointment of receiver. Upon the occurrence of any of the conditions set forth
below, as determined by SBA, SBA shall have the following rights, and Licensee
consents to SBA's exercise of any or all of such rights: With respect to a
Corporate Licensee, upon written notice, to require Licensee to replace, with
individuals approved by SBA, one or more of Licensee's officers and/or such
number of directors of Licensee's board of directors as is sufficient to
constitute a majority of such board; or with respect to an Unincorporated
Licensee, upon written notice, to require Licensee to remove the person(s)
responsible for such occurrence and/or to remove the general partner of
Licensee, which general partner shall then be replaced in accordance with
Licensee's Articles by a new general partner approved by S13A; and/or with
respect to either a Corporate or Unincorporated Licensee, to the appointment of
SBA or its designee as receiver of Licensee pursuant to section 311(c) of the
Act for the purposes of continuing to operate Licensee. The appointment of a
receiver to liquidate a Licensee shall riot be within such consent, but shall
instead be governed by the relevant provisions of the Act. The conditions
shall be as follows:
(1) Insolvency or extreme Capital Impairment. Licensee becomes equitably or
legally insolvent, or has a Capital Impairment Percentage of one hundred
percent (100%) or more ("extreme Capital Impairment") and has not cured such
Capital Impairment within the time limits set by SBA in writing. In this
regard, no issuer of Participating Securities shall be deemed to have a
condition of extreme Securities or with Earmarked Assets in their portfolios.
The Articles of any such Licensee shall include the provisions of this
Sec. 107.262 as a condition to the purchase by SBA of Preferred Securities, or
as a condition to the guarantee by SBA of Participating Securities and for so
long as the Licensee owns Earmarked Assets. Preferred Securities issued prior
to April 25, 1994 shall continue to be governed by the remedies in effect at the
time of their issuance.
(b) Consent to removal of officers, directors, or general partners, and/or
appointment of receiver, Upon the occurrence of any of the conditions set forth
below, as determined by SBA, SBA shall have the following rights, and Licensee
consents to SBA's exercise of any or all of such rights: With respect to a
Corporate Licensee, upon written notice, to require Licensee to replace, with
individuals approved by SBA, one or more of Licensee's officers and/or such
number of directors of Licensee's board of directors as is sufficient to
constitute a majority of such board: or with respect to an Unincorporated
Licensee, upon written notice, to require Licensee to remove the person(s)
responsible for such occurrence and/or to remove the general partner of
Licensee, which general partner shall then be replaced in accordance with
Licensee's Articles by a new general partner approved by SBA; and/or with
respect to either a Corporate or Unincorporated Licensee, to the appointment of
SBA or its designee as receiver of Licensee pursuant to section 311(c) of the
Act for the purposes of continuing to operate Licensee. The appointment of a
receiver to liquidate a Licensee shall not be within such consent, but shall
instead be governed by the relevant provisions of the Act. The conditions
shall be as follows:
(1) insolvency or extreme Capital Impairment. Licensee becomes equitably or
legally insolvent, or has a Capital Impairment Percentage of one hundred percent
(100%) or more ("extreme Capital Impairment) and has not cured such Capital
Impairment within the time limits set by SBA in writing, In this regard, no
issuer of Participating Securities shall be deemed to have a condition of
extreme Capital impairment during the first eight (8) years following its
initial issuance of Participating Securities, and no Licensee shall be afforded
an opportunity to cure its Capital Impairment under paragraph (d) (3) of this
section.
(2) Voluntary assignment. Licensee makes a voluntary assignment for the
benefit of creditors.
(3) Bankruptcy. Licensee commences any bankruptcy or reorganization
proceeding, receivership, dissolution or other similar creditors' rights
proceeding, or such action is initiated against Licensee and is not dismissed
within sixty (60) days.
(4) Transfer of Control. Licensee violates Sec. 107.104 and/or willfully
violates Sec. 107.601, and such violation results in a transfer of Control of
Licensee.
(5) Fraud. Licensee commits a fraudulent act which causes serious detriment to
SBA's position as a guarantor.
(6) Fraudulent transfers, Licensee makes any transfer or incurs any obligation
that is fraudulent under the term of 11 U.S.C. 548.
(C) Failure to remove. Upon the occurrence of any of the conditions set forth
as determined by SBA, and only if Licensee fails to remove the Persons) SBA
identifies as responsible for such occurrence and/or cure such occurrence to
SBA's satisfaction within a time period determined by SBA (but not less than
fifteen (15) days), SBA shall have the following rights, and Licensee consents
to SBA's exercise 'of any or all of such rights; With respect to a Corporate
Licensee, upon written notice, to replace one or more of Licensee's officers
and/or such number of directors of Licensee's board of directors as is
sufficient to constitute a majority of such board; or with respect to an
Unincorporated Licensee, upon written notice, to require Licensee to remove
the person(s) responsible for such occurrence and/or to remove the general
partner of Licensee, which general partner shall then be replaced in accordance
with Licensee's Articles by a new general partner approved by SBA; and/or with
respect to either a Corporate or Unincorporated Licensee, to obtain the
appointment of SBA or its designee as receiver of Licensee pursuant to section
311 (c) of the Act for the purpose of continuing to operate Licensee. The
appointment of a receiver to liquidate a Licensee shall not be within such
consent, but shall instead be governed by the relevant provisions of the Act.
The conditions shall be as follows:
(1) Willful conflicts of interest. Licensee willfully violates Sec. 107.903.
(2) Willful or repeated noncompliance. Licensee willfully or repeatedly
violates one or more of the substantive provisions of the Act, specifically
including, but not limited to, the provisions summarized in section 310(c) of
the Act, or any substantive regulation promulgated under the Act.
(3) Failure to comply with restrictions under Section 107.262(d). Licensee
fails to comply with the restrictions imposed by SBA under paragraph (d) of
this section.
(d) Consent to restricted operations. Upon the occurrence of any of the
conditions set forth in this paragraph (d), as determined by SBA, and until such
conditions are cured to SBA's satisfaction within a time period determined by
SBA, (but not less than fifteen (15) days, upon written notice SBA shall have
the following rights, and Licensee consents to SBA's exercise of any or all of
such rights: To prohibit Licensee from making any additional investments except
for investments pursuant to legally binding commitments entered into by Licensee
prior to such notice and, subject to SBA's prior written approval " investments
that are necessary to protect Licensee's investment; until all Leverage is
redeemed and amounts due are paid, to prohibit Distributions by the Licensee
to any party other than SBA, its agent or Trustee; to require all commitments
to Licensee to be funded at the earliest time(s) permitted in accordance with
Licensee's Articles; and to review and re-determine Licensee's approved
Management Expenses or, for Preferred Securities issuers, Licensee's approved
management compensation. The conditions shall be as follows:
(1) Removal Conditions. Any condition occurs which is listed in paragraph
b) or (c) of this section.
(2) Failure to maintain Regulatory Capital. Licensee fails to maintain its
minimum Regulatory Capital as required by these regulations.
(3) Capital or Liquidity Impairment. Licensee has a condition of Capital
Impairment as determined under Sec. 107.210(h) or, if applicable to such
Licensee, a condition of Liquidity Impairment as determined under
Sec. 107.241(f), and fails to
cure the impairment within time limits set by SBA in writing.
(4) Improper Distributions. A Licensee makes any Distribution to its
shareholders or partners other than those permitted by Sec. 107.245 and
Sec. 107.802.
(5) Excessive Management Expenses or fees. Without the prior written consent
of SBA:
(i) Licensee incurs Management Expenses in excess of these permitted under
Sec. 107.241(d), if applicable to such Licensee; or
(ii) If S13A has previously approved an aggregate amount to be paid for salaries
or other compensation of officers, directors, employees, or fees paid to
investment Advisers/Managers, Licensee increases such amount; or
(iii) If SBA has previously approved a formula for the aggregate amount to be
paid for salaries or other compensation of officers, directors, or employees,
or fees paid to Investment Advisers/Managers, Licensee pays an aggregate amount
in excess of the formula amount or changes the formula.
(6) Failure to make payment. Licensee fails to pay any amounts due under
Preferred Securities or required by Sec. 107.240 through 107.247, unless
otherwise permitted by SBA.
(7) Noncompliance. Except as otherwise provided for in (c) (1) and (c) (2)
of this section, SBA determines that Licensee has failed to comply with one or
more of the substantive provisions of the Act, specifically including but not
limited to the provisions summarized in section 310(c) of the Act, or any
substantive ,regulation promulgated under the Act,
(8) Failure to maintain diversity. Licensee fails to maintain diversity
between management and ownership as required by Sec. 107-241(c), if applicable,
to such Licensee.
(d) Failure to maintain investment ratios. Licensee fails to maintain the
investment radios or amounts required for Participating Securities
(Sec. 107.241(b)) or Leverage in excess of three hundred percent (300%) of
Leverageable Capital (Sec. 107.230 (c) (3)) or Preferred Securities in excess
of one hundred percent (100%) of Leverageable Capital (Sec. 107.230(c)(4)), if
applicable to such Licensee, as of the end of each fiscal year. In this regard,
any
(i) Prepayment, sale, or disposition of Equity Capital Investments or Venture
Capital Financing or Qualified Investments, as appropriate,
(ii) Increase in Leverageable Capital, or
(iii) Receipt of additional Leverage, occurring within one hundred twenty (120)
days prior to the end of the fiscal year shall be disregarded in determining
whether Licensee meets the foregoing requirements as of the close of its fiscal
year,
(10) Nonperformance. Licensee violates or fails to perform one more of the
terms and conditions of any Participating Security or Preferred Security or of
any agreement with or conditions imposed by SBA in its administration of the Act
and the regulations promulgated thereunder.
(11) Noncooperation under Section 107.262(e). Licensee fails to take
appropriate steps, satisfactory to SBA, to accomplish such action as SBA may
have required pursuant to paragraph (e) of this section.
(e) Repeated non-substantive violations. If a Licensee repeatedly fails to
Comply with any one or more of the non-substantive provisions of the Act or any
non-substantive regulation promulgated thereunder, SBA, after written
notification to the Licensee and until such condition is cured to SBA's
satisfaction, shall deny additional Leverage to such Licensee and/or require
such Licensee to take such action as SBA may determine to be appropriate under
the circumstances."
FIFTH: The manner in which this Certificate of Amendment was authorized, was
by the unanimous written consent of all of the Corporation's Directors, followed
by the affirmative vote of the holders of a majority of all outstanding shares
entitled to vote on the amendments set forth in this Certificate of Amendment at
a meeting of the stockholders held on November 4, 1994, and, pursuant to the
provisions of Article THIRD of the Certificate of Incorporation, by the written
approval of the U.S. Small Business Administration.
IN WITNESS whereof, this certificate of Amendment has been subscribed to this
10th day of November, 1994, by the undersigned who affirm that the statements
made herein are true under the penalties of perjury.
ATTEST: UNITED CAPITAL INVESTMENT CORP.
/s/ Linda Lee /S/ Paul Lee
Linda Lee, Secretary Paul Lee, President
[Corporate Seal]
CERTIFICATE OF AMENDMENT
OF
UNITED CAPITAL INVESTMENT CORP.
Under Section 805 of the Business Corporation Law
Filed by: Joseph, Gajarsu, McDermott & Reiner, P.C.
Address: Suite 400
City & State: 1300 Nineteenth Street N.W.
Washington DC 20036
B Y L A W S
OF
UNITED CAPITAL INVESTMENT CORP.
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE. -- The principal office of the corporation shall be
in the City and County of New York.
SECTION 2. OTHER OFFICES. -- The corporation may have other offices and places
of business, within or without the State of New York, as shall be determined by
the directors, subject to the prior written approval of the U.S. Small Business
Administration.
ARTICLE II
SHAREHOLDERS
SECTION l. PLACE OF MEETINGS. -- Meetings of the shareholders may be held at
such place or places, within or without the State of New York, as shall be fixed
by the directors and stated in the notice of the meeting.
SECTION 2. ANNUAL MEETING. -- The annual meeting of shareholders for the
election of directors and the transaction of such other business as may
properly come before the meeting shall be held, commencing in 1985, on the
second Wednesday in April of each year.
SECTION 3. NOTICE OF ANNUAL MEETING. -- Notice of the annual meeting shall be
given to each shareholder entitled to vote at least ten days prior to the
meeting.
SECTION 4. SPECIAL MEETINGS. -- Special meetings of the shareholders for any
purpose or purposes may be called by the President or Secretary and must be
called upon receipt by either of them of the written request of the holders of
twenty-five percent of the stock then outstanding and entitled to vote.
SECTION 5. NOTICE OF SPECIAL MEETING. -- Notice of a special meeting, stating
the time, place and purpose or purposes thereof, shall be given to each
shareholder entitled to voter at least ten days prior to the meeting. The
notice shall also set forth at whose direction it is being issued.
SECTION 6. QUORUM. -- At any meeting of the shareholders, the holders of a
majority of the shares of stock then entitled to vote, shall constitute a
quorum for all purposes, except as otherwise provided by law or the Certificate
of Incorporation.
SECTION 7. VOTING. -- At each meeting of the shareholders, every holder of stock
then entitled to vote may vote in person or by proxy, and, except as may be
otherwise provided by the Certificate of Incorporation shall have one vote for
each share of stock registered in his name.
SECTION 6. ADJOURNED MEETINGS. -- Any meeting of shareholders may be adjourned
to a designated time and place by a vote of a majority in interest of the
shareholders present in person or by proxy and entitled to vote, even though
less than a quorum is so present. No notice of such an adjourned meeting need
be given, other than by announcement at the meeting, and any business may be
transacted which might have been transacted at the meeting as originally called.
SECTION 9. ACTION BY WRITTEN CONSENT OF SHAREHOLDERS. -- Whenever by any
provision of statute or of the Certificate of Incorporation or of these By-Laws,
the vote of shareholders at a meeting thereof is required or permitted to be
taken in connection with any corporate action, the meeting and vote of
shareholders may be dispensed with, if all the shareholders who would have been
entitled to vote upon the action if such meeting were held, shall consent in
writing to such corporate action being taken.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER. -- The number of directors shall be three (3), who shall hold
office for the term of one year and until their successors are elected and
qualify. The number of directors may be increased or decreased from time to
time by amendment to these By-Laws made by a majority of the Board of Directors
or by the shareholders; provided, however, that the number of directors may not
be less than three.
SECTION 2. POWERS. -- The Board of Directors may adopt such rules and
regulations for the conduct of its meetings, the exercise of its powers and the
management of the affairs of the corporation as it may deem proper not
inconsistent with the laws of the State of New York the Certificate of
Incorporation or these By-Laws.
SECTION 3. MEETING, QUORUM, ACTION WITHOUT MEETING. -- Meetings of the Board
may be held at any place, either within or outside the State of New York,
provided a quorum be in attendance. Except as may be otherwise provided by the
Certificate of Incorporation or by the Business Corporation Law, a majority of
the directors in office shall constitute a quorum at any meeting of the Board
and the vote of a majority of a quorum of directors shall constitute the act of
the Board.
The Board of Directors may hold an annual meeting, without notice, immediately
after the annual meeting of shareholders. Regular meetings of the Board of
Directors may be established by a resolution adopted by the Board. The Chairman
of the Board (if any) or the President or Secretary may call, and at the request
of any two directors, must call a special meeting of the Board of Directors,
five days' notice of which shall be given by mail, or two days' notice
personally or by telegraph or cable to each director.
Any one or more members of the Board or any Committee thereof may participate
in a meeting of such Board or Committee by means of a conference telephone or
similar communications equipment allowing all persons participating in the
meeting to hear each other at the same time. Participation by such means shall
constitute presence in person at a meeting.
Any action required or permitted to be taken by the Board or any Committee
thereof may be taken without a meeting if all members of the Board or the
Committee consent in writing to the adoption of a resolution authorizing the
action. The resolution and the written consents thereto by the members of the
Board or Committee shall be filed with the minutes of the proceedings of the
Board or Committee.
SECTION 4. VACANCIES, REMOVAL. -- Except as otherwise provided in the
Certificate of Incorporation or in the following paragraph, vacancies occurring
in the membership of the Board of Directors, from whatever cause arising
(including vacancies occurring by reason of the removal of directors without
cause and newly created directorships resulting from any increase in the
authorized number of directors)? may be filled by a majority vote of the
remaining directors, though less than a quorum, or such vacancies may be filled
by the shareholders.
Except where the Certificate of Incorporation contains provisions authorizing
cumulative voting or the election of one or more directors by class or their
election by holders of bonds, or requires all action by shareholders to be by a
greater vote, any one or more of the directors may be removed (a) either for or
without cause, at any time, by vote of the shareholders holding a majority of
the outstanding stock of the corporation entitled to vote, present in person or
by proxy, at any special meeting of the shareholders or, (b) for cause, by
action of the Board of Directors at any regular or special meeting of the Board.
A vacancy or vacancies occurring from such removal may be filled at the special
meeting of shareholders or at a regular or special meeting of the Board of
Directors.
SECTION 5. COMMITTEES. -- The Board of Directors, by resolution adopted by a
majority of the entire Board, may designate from its members an Executive
Committee or other committee or committees, each consisting of three or more
members, with such powers and authority (to the extent permitted by law) as
may be provided in said resolution.
ARTICLE IV
OFFICERS
SECTION 1. EXECUTIVE OFFICERS. -- The executive officers of the corporation
shall be a President, one or more Vice-Presidents, a Treasurer and a Secretary
all of whom shall be elected annually by the directors, who shall hold office
during the pleasure of the directors. In addition, the Board of Directors may
elect a Chairman of the Board of Directors. Except for the offices of President
and Secretary, any two offices or more may be held by one person. All vacancies
occurring among any of the officers shall be filled by the directors. Any
officer may be removed at any time by the affirmative vote of a majority (unless
the Certificate of Incorporation required a larger vote) of the directors
present at a special meeting of directors called for the purpose.
SECTION 2. OTHER OFFICERS. -- The Board of Directors may appoint such other
officers and agents with such powers and duties as it shall deem necessary.
SECTION 3. THE CHAIRMAN OF THE BOARD. -- The Chairman of the Board of Directors
if one be elected shall preside at all meetings of the Board of Directors and he
shall have and perform such other duties as from time to time may be assigned to
him by the Board of Directors or the Executive Committee.
SECTION 4. THE PRESIDENT. -- The President, who may, but need not be a director,
shall in the absence or non-election of a Chairman of the Board, preside at all
meetings of the shareholders and directors. While the directors are not in
session, he shall have general management and control of the business and
affairs of the corporation.
SECTION 5. THE VICE-PRESIDENT. -- The Vice-President, or if there be more than
one, the senior Vice-President, as determined by the Board of Directors, in the
absence or disability of the President, shall exercise the powers and perform
the duties of the President and each Vice-President shall exercise such other
powers and perform such other duties as shall be prescribed by the directors.
SECTION 6. THE TREASURER. -- The Treasurer shall have custody of all funds,
securities and evidences of indebtedness of the corporation; he shall receive
and give receipts and acquittances for moneys paid in on account of the
corporation, and shall pay out of the funds on hand all bills, pay-rolls, and
other just debts of the corporation, of whatever nature, upon maturity; he shall
enter regularly in books to be kept by him for that purpose, full and accurate
accounts of all moneys received and paid out by him on account of the
corporation, and he shall perform all other duties incident to the office of
Treasurer and as may be prescribed by the directors.
SECTION 7. THE SECRETARY. -- The Secretary shall keep the minutes of all
proceedings of the directors and of the shareholders; he shall attend to the
giving and serving
of all notices to the shareholders and directors or other notice required by law
or by these By-Laws; he shall affix the SBAl of the corporation to deeds
contracts and other instruments in writing requiring a SBAl when duly signed or
when so ordered by the directors; he shall have charge of the certificate books
and stock books and such other books and papers as the Board may direct, and he
shall perform all other duties incident to the office of Secretary.
SECTION 8. SALARIES. -- The salaries of all officers shall be fixed by the Board
of Directors, and the fact that any officer is a director shall not preclude him
from receiving a salary as an officer, or from voting upon the resolution
providing the same.
ARTICLE V
CAPITAL STOCK
SECTION 1. FORM AND EXECUTION OF CERTIFICATES. -- Certificates of stock shall be
in such form as required by the Business Corporation Law of New York and as
shall be adopted by the Board of Directors. They shall be numbered and
registered in the order issued; shall be signed by the Chairman or a
Vice-Chairman of the Board (if any) or by the President or a Vice-President and
by the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer and may be SBAled with the corporate SBAl or a facsimile thereof.
When such a certificate is countersigned by a transfer agent or registered by a
registrar, the signatures of any such officers may be facsimile.
SECTION 2. TRANSFER. -- Transfer of shares shall be made only upon the books of
the corporation by the registered bolder in person or by attorney, duly
authorized, and upon surrender of the certificate or certificates for such
shares properly assigned for transfer.
SECTION 3. LOST OR DESTROYED CERTIFICATES. -- The bolder of any certificate
representing shares of stock of the corporation may notify the corporation of
any loss, theft or destruction thereof, and the Board of Directors may thereupon
in its discretion, cause a new certificate for the same number of shares, to be
issued to such holder upon satisfactory proof of such loss, theft or
destruction, and the deposit of indemnity by way of bond or otherwise, in such
form and amount and with such surety or sureties as the Board of Directors may
require, to indemnify the corporation against loss or liability by reason of the
issuance of such new certificates.
SECTION 4. RECORD DATE. -- In lieu of closing the books of the corporation, the
Board of Directors may fix, in advance, a date not exceeding fifty days, nor
less than ten days, as the record date for the determination of shareholders
entitled to receive notice of, or to vote, at any meeting of shareholders, or
to consent to any proposal without a meeting, or for the purpose of determining
shareholders entitled to receive payment of any dividends, or allotment of any
rights, or for the purpose of any other action.
ARTICLE VI
SECTION 1. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEE AND AGENTS. -- The
corporation shall have power to indemnify any 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
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officers employee or agent of 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 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 corporation, and, with respect to any criminal action
or proceeding had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement
conviction, or upon a plea of non contenders or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to be best interests
of the corporation, and with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
The corporation shall have power to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit 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 corporation and except that no indemnification shall
be made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable for negligence or misconduct in the performance
of his duty to the corporation unless and only to the extent that the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.
To the extent that a director, officer, employee or agent of the corporation has
been successful on the merits or otherwise in defense of any action, suit or
preceding referred to in subsections (a) or (b), or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
Any indemnification under subsections (a) or (b) (unless by a court) shall be
made by the corporation only as authorized in the specific case upon a
determination that indemnification of the director officer employee or agent is
proper in the circumstances because he has met the applicable standard of
conduct set forth in subsections (a) or (b). Such determination shall be
made (1) by the board of directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (2) if
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (3) by the shareholders.
Expenses (including attorneys' fees) incurred in defending a civil or criminal
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding as authorized in the
manner provided in subsection (d) upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such amount unless
it shall ultimately be determined that he is entitled to be indemnified by the
corporation at authorized in this section.
The indemnification provided by this section shall not be deemed exclusive of
any other rights to which those indemnified may be entitled under any by-law,
agreement, vote of shareholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
The corporation shall have power to purchase and maintain insurance on behalf of
any person who is or was a director, officers employee or agent of the
corporation, or is or was serving at the request of-the corporation as a
director, officers employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liability under the provisions of this section.
ARTICLE VII
MISCELLANEOUS
SECTION 1. DIVIDENDS. -- The directors may declare dividends from time to time
upon the capital stock of the corporation from the surplus or net profits
available therefor.
SECTION 2. SBAL. -- The directors shall provide a suitable corporate SBAl which
shall be in charge of the Secretary and shall be used as authorized by the
By-Laws.
SECTION 3. FISCAL YEAR. -- The fiscal year of the corporation shall be January
lst to December 1st.
SECTION 4. CHECKS, NOTES ETC. -- Checks, notes, drafts, bills of exchange and
orders for the payment of money shall be signed or endorsed in such manner as
shall be determined by the directors.
The funds of the corporation shall be deposited in such bank or trust company,
and checks drawn against such funds shall be signed in such manner as may be
determined from time to time by the directors.
SECTION S. ACCESS TO SECURITIES. -- Access to Securities of the Corporation
shall be by two officers or by one officer and an authorized employee.
SECTION 6. NOTICE AND WAIVER OF NOTICE. -- Any notice required to be given
under these By-Laws may be waived by the person entitled thereto, in writing, by
telegram, cable or radiogram, and the presence of any person at a meeting shall
constitute waiver of notice thereof as to such person.
Whenever any notice is required by these By-Laws to be given, personal notice is
not meant unless expressly so stated; and any notice so required shall be deemed
to be sufficient if given by depositing it in a post office or post box in a
sealed postpaid wrapper addressed to such shareholder, officer or director, at
such address as appears on the books of the corporation and such notice shall be
deemed to have been given on the day of such deposit.
ARTICLE VIII
AMENDMENTS
SECTION 1. BY SHAREHOLDERS. -- These By-Laws may be amended at any shareholders'
meeting by vote of the shareholders holding a majority (unless the Certificate
of Incorporation requires a larger vote) of the outstanding stock having voting
power present either in person or by proxy, provided notice of the amendment is
included in the notice or waiver of notice of such meeting.
SECTION 2. BY DIRECTORS. -- The Board of Directors may also amend these By-Laws
at any regular or special meeting of the Board by a majority (unless the
Certificate of Incorporation requires a larger vote) vote of the entire Board,
but any By-Laws so made by the Board of Directors may be altered or repealed by
the shareholders.
STATEMENT OF ORGANIZATION BY INCORPORATE
OF
UNITED CAPITOL INVESTMENT CORP.
- ------------
The undersigned incorporate of UNITED CAPITAL INVESTMENT CORP., a New York
corporation, pursuant to Section 404 (b) of the Business Corporation Law, makes
the following statements and takes the following actions to organize said
corporation:
First: That the Certificate of Incorporation of UNITED CAPITOL INVESTMENT CORP.
was filed with the Department of State of New 'York on the 11th day of May,
1984.
Second: That the By-Laws annexed hereto are hereby adopted as the By-Laws of
the corporation.
Third: That the following named persons are hereby elected as the directors of
the corporation, to hold office until the first annual meeting of shareholders
and until their successors are elected and qualify:
Paul Lee
Pei Change Lee
Simon Lai
IN WITNESS WHEREOF, I have signed this instrument at 70 Pine Street, New York,
New York on the 9th day of July, 1984.
/s/ Judy Winston
Judy Winston
Sole Incorporate
A G R E E M E N T made this 1st day June, 1984 by and among:
Name Address
Paul Lee 4 Fern Court
North Brunswick, N.J. 08902
Pei Change Lee 83 Repulse Bay Road
Hong Kong
James Yu 103 Birch Road
Briarcliff Manor, N.Y. 10510
Simon Lai 182-04 Henley Road
Jamaica Estates, N.Y. 11432
sometimes collectively referred to herein as (the "Shareholders")
W I T N E S S E T H
WHEREAS, the Shareholders have decided to form a small business corporation in
the State of New York under the name "UNITED CAPITAL INVESTMENTS CORP."
(hereinafter the "Company") and to apply to the U.S. Small Business
Administration for a license; and
WHEREAS, the Shareholders wish to provide, among other things, for the
subscription to shares of stock in the Company, for the establishment of certain
policies concerning the business to be conducted by the Company and the
organization and operations of the Company.
N 0 W, T H E R E F 0 R E, in consideration of the promises, covenants and
conditions herein contained and the mutual benefits to be derived by the parties
hereto, it is agreed as follows:
FIRST: The Company shall be authorized to issue 2,000 shares of common stock of
the par value of 1.00 each and 4,000 shares of preferred stock of the par value
of $100.00 each. The Shareholders hereby subscribe to the number of shares of
common stock of the Company set opposite their names at a subscription price of
$1,030.00 per share:
Name Number of Shares
Paul Lee 455
Pei Change Lee 350
James Yu 95
Simon Lai 100
The aforesaid subscriptions will be paid at the time of issuance of the shares.
The preferred stock will be issued from time to time as determined by the Board
of Directors of the Company.
SECOND: Each of the Shareholders agrees so long as he shall remain a
stockholder of the Company, he shall vote his shares for the election of the
following persons as Directors of the Company:
Paul Lee
Pei Change Lee
Simon Lai
and will vote at Shareholders' and Directors' Meeting so as to carry out and
make effective the provisions of this agreement.
THIRD: Until otherwise determined by a majority vote of the Shareholders of
common stock of the Company, the following persons will be elected officers of
the Company at the annual salary set opposite their respective names:
Name Annual Salary
Paul Lee, President and Treasurer $20,000.00
Burgis Coates, Vice President & Manager $25,000.00
Robert Lee, Vice President and Secretary $15,000.00
FOURTH: Each of the Shareholders expressly agrees not to sell, transfer,
pledge, assign or otherwise in any manner dispose of or encumber any of his
shares unless or until he shall have first offered to sell his shares to the
other Shareholders in accordance with the provisions hereinafter set forth.
FIFTH: If any of the Shareholders desires to sell, transfer, pledge, assign or
otherwise dispose of or encumber any of his shares, he shall first make a
written offer by registered mail to sell his shares to the other Shareholders
at a price to be determined in accordance with paragraph SIXTH hereof and in
accordance with the following provisions hereof. Each of such other
Shareholders shall have an option to purchase the number of such shares equal to
the proportion that his stockholding bears to the total number of shares held by
Shareholders who are not then offering to dispose of the whole or a part of
their shares. If fractional shares are permitted the shares shall be offered
(where requisite) with appropriate fractions so that each offer is exactly
proportionate to existing holdings. If such is not permitted the following
shall apply:-
Where a calculation as above does not permit the offering of an entire number of
whole shares exactly proportionate to existing holdings without fractions, the
member of shares to be offered shall be calculated so that the member(s)
entitled to the largest fraction of a share shall be entitled to a whole share
by combining with another fraction or fractions or part thereof which would
otherwise go to a shareholder excluded by the next phrase and in descending
order of size of fractional entitlement until all fractions have been accounted
for. Where entitlements are equal and insufficient fractions of shares are
available lots shall be drawn. To exercise such option a stockholder must give
Written notice of election by registered mail to the disposing stockholder not
later than 30 days after receipt of the offer to sell and shall pay for his
proportionate number of shares within 30 days after the date of mailing of such
notice of election. If any of the optioned stockholders shall fail to exercise
his option or, having exercised his option, fails to pay for his proportionate
number of shares within the time allowed, the disposing Shareholder shall notify
by registered mail not less than 30 days after such happens those Shareholders
who have elected to buy all the shares offered to them respectively who have
not defaulted in payment and such Shareholders shall have an option to purchase
such undisposed of shares proportionately to their shareholding when the first
offer aforesaid was made in like manner of entitlement to that already
mentioned. So long as there are shares which have not been accepted and paid
for and so long as there is at least one shareholder who has purchased all
shares at that stage offered to him the foregoing process shall be repeated
until there are no further shares available or no further interest to buy is
evinced by any stockholder. On each occasion when shares are offered 30 days
after receipt of the offer are to be allowed for acceptance and 30 days after
mailing of acceptance shall be allowed for payment. Any further availability of
shares for sale consequent upon a stockholder's unwillingness to buy shall be
advised and the further entitlement specified in a notice by registered post
posted not later than 30 days after the previous offers made have been completed
or if not completed, the time for acceptance of payment has expired. If any of
the shares are not purchased as hereinabove provided, the disposing Shareholder
shall be free to sell, transfer, pledge, assign or otherwise in any manner to
dispose of or encumber any of his shares for a period of 90 days after the time
limit for acceptance (and payment if applicable) allowed to the last offeree(s)
has expired. if the disposing Shareholder does not dispose of or encumber his
shares within such 90 days period, such shares shall be again subject to the
restrictions of this agreement.
SIXTH: In the event that an option to purchase shares shall arise under
paragraph FIFTH, the price to be paid shall be the fair value of such shares as
of the end of the fiscal quarter of the Company immediately preceding the date
on which the written offer to sell was mailed by registered mail, as determined
and computed by the regular accountants for the Company from books maintained by
the Company in accordance with generally accepted accounting principles. The
determination of said accountants shall be final, conclusive and binding on all
the parties hereto.
The fees, if any, of the accountants for determining such value shall be paid by
the Shareholder offering his shares for sale.
SEVENTH: Any person who acquires shares from a disposing Shareholder or who
acquires a secured interest in the shares of a disposing Shareholder shall
become a party to and be bound by this agreement by executing a counterpart
hereof as a condition of the issuance and delivery of the stock certificates to
him.
EIGHTH: The Shareholders shall be entitle to full preemptive rights to purchase
and/or subscribe for their proportionate share of any additional share of common
stock which may be issued at any time hereafter by the Company.
NINTH: All notices pursuant to this Agreement shall be addressed to the
addressees set forth in the opening paragraph of this Agreement or to such other
address as the Shareholder shall notify to the Company with copies to each of
the other Shareholders.
TENTH: This Agreement shall continue in force so long as any two of the
original parties hereto remain Shareholders of the Company.
ELEVENTH: This Agreement contains the entire agreement of the parties with
respect to its subject matter and no modification, termination, amendment or
alteration hereof or waiver of any provision hereof shall be valid unless it
is in writing and signed by all of the parties hereto.
TWELFTH: This Agreement and all of the provisions hereof shall be binding upon
the legal representatives, heirs, distributees, successors and assigns of the
parties hereto.
THIRTEENTH: This Agreement shall be construed and interpreted in accordance
with the laws of the State of New York.
FOURTEEN: This Agreement may be executed in any number of counterparts all of
which together shall constitute one original agreement.
IN WITNESS WHEREOF, the parties hereto have executed this agreement the day and
year first above written.
/s/ Paul Lee
Paul Lee
/s/ Pei Chung Lee
Pei Chung Lee
/s/ James Yu
James Yu
/s/ Simon Lai
Simon Lai
AMENDMENT NO. I
THIS AMENDMENT TO THE SHAREHOLDER AGREEMENT (hereinafter called this
"Amendment") is made this day of May, 1997 among (i) Paul Lee, having his
principal residence at 4 Fern Court, North Brunswick, New Jersey 08902 and a
shareholder of United Capital Investments Corp. (the "Company"); (ii) Pei Chung
Lee, having his principal residence at Apt. 42A, Estoril Court, 55 Garden Road,
Hong Kong and a shareholder of the Company; (iii) James Yu, having his principal
residence at 7 Tall Tulip Lane, Yonkers, New York 10710 and a shareholder of the
Company; and (iv) Simon Lai, having his principal residence at 182-04 Henley
Road, Jamaica Estates, New York 11432 and a shareholder of the Company
(collectively, Mr. Paul Lee, Mr. Pei Chung Lee, Mr. James Yu and Mr. Simon Lai
are hereinafter referred to as the "Shareholders" or any one singly, a
"Shareholder"), and amends and supplements that certain shareholder agreement
dated June 1, 1984 (hereinafter the "Original Agreement") made by and amongst
the Shareholders.
WHEREAS:
A. The Original Agreement provides for the subscription of shares of stock of
the Company and the establishment of certain policies concerning the business of
the Company.
B. The Original Agreement was entered into prior to the public offer of common
stock of the Company in 1989 pursuant to the terms of that certain registration
statement filed with the Securities and Exchange Commission.
C. The Shareholders desire to amend the Original Agreement to
confirm and ratify changes to the terms of the Original Agreement and conform
the Original Agreement to the registration statement.
NOW THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged:
I . The Original Agreement is hereby amended as follows:
A. All references in the Original Agreement to " this Agreement" shall be read
and construed to mean the Original Agreement as amended by this Amendment.
B. The FIRST Clause of the Original Agreement is hereby amended in its entirety
to read as follows:
"The Company shall be authorized to issue 300,000 shares of common stock, par
value $0.0 1, 1,000 shares of Class A preferred stock, S 1,000 par value, and
3,000 shares of Class B preferred stock; $1,000 par value. The authorized
capital stock of the Company may be increased or decreased by a majority vote
of the Board of Directors of the Company and the majority vote of the
shareholders of the Company."
C. The SECOND Clause of the Original Agreement is deleted in its entirety and
shall have no force nor effect.
D. The THIRD Clause of the Original Agreement is deleted in its entirety and
shall have no force nor effect.
E. The EIGHT Clause of the Original Agreement is deleted in its entirety and
shall have no force nor effect.
F. All the other terms and conditions of the Original Agreement shall remain in
full force and effect, and the Original Agreement shall be read and construed as
if the terms of this Amendment were included therein by way of addition or
substitution, as the case may be.
G. This Amendment may be executed in any number of counterparts all of which
together shall constitute one original amendment.
IN WITNESS WHEREOF, the parties have executed this Amendment the day and year
first above written.
/s/ Paul Lee /s/ Pei Chung Lee
Paul Lee Pei Chung Lee
James Yu Simon Lai
B. The FIRST Clause of the Original Agreement is hereby amended in its entirety
to read as follows:
"The Company shall be authorized to issue 300,000 shares of common stock, par
value $0.0 1, 1,000 shares of Class A preferred stock, $ 1,000 par value, and
3,000 shares of Class B preferred stock,'$ 1,000 par value. The authorized
capital stock of the Company may be increased or decreased by a majority vote of
the Board of Directors of the Company and the majority vote of the shareholders
of the Company."
C. The SECOND Clause of the Original Agreement is deleted in its entirety and
shall have no force nor effect.
D. The THIRD Clause of the Original Agreement is deleted in its entirety and
shall have no force nor effect.
E. The EIGHT Clause of the Original Agreement is deleted in its entirety and
shall have no force nor effect.
F. All the other terms and conditions of the Original Agreement shall remain in
full force and effect, and the Original Agreement shall be read and construed as
if the terms of this Amendment were included therein by way of addition or
substitution, as the case may be.
G. This Amendment may be executed in any number of counterparts all of which
together shall constitute one original amendment.
IN WITNESS WHEREOF, the parties have executed this Amendment the day and year
first above written.
/s/ Paul Lee /s/ Pei Chung Lee
Paul Lee Pei Chung Lee
/s/ James Yu /s/ Simon Lai
James Yu Simon Lai
B. The FIRST Clause of the Original Agreement is hereby amended in its entirety
to read as follows:
"The Company shall be authorized to issue 300,000 shares of common stock, par
value $0 .0 1, 1,000 shares of Class A preferred stock, $ 1,000 par value, and
3,000 shares of Class B preferred stock, $1,000 par value. The authorized
capital stock of the Company may be increased or decreased by a majority vote of
the Board of Directors of the Company and the majority vote of the shareholders
of the Company."
C. The SECOND Clause of the Original Agreement is deleted in its entirety and
shall have no force nor effect.
C. The THIRD Clause of the Original Agreement is deleted in its entirety and
shall have no force nor effect.
D. The EIGHT Clause of the Original Agreement is deleted in its entirety and
shall have no force nor effect.
E. All the other terms and conditions of the Original Agreement shall remain in
full force and effect, and the Original Agreement shall be read and construed as
if the terms of this Amendment were included therein by way of addition or
substitution, as the case may be.
F. This Amendment may be executed in any number of counterparts all of which
together shall constitute one original amendment.
IN WITNESS WHEREOF, the parties have executed this Amendment the day and year
first above written.
Paul,Lee Pei Chung Lee
/s/ James Yu
James Yu Simon Lai
B. The FIRST Clause of the Original Agreement is hereby amended in its entirety
to read as follows.:
"The Company shall be authorized to issue 300,000 shares of common stock, par
value $0.0 1, 1,000 shares of Class A preferred stock, $ 1,000 par value, and
3,000 shares of Class B preferred stock, $1,000 par value. The authorized
capital stock of the Company may be increased or decreased by a majority vote of
the Board of Directors of the Company and the majority vote of the shareholders
of the Company."
C. The SECOND Clause of the Original Agreement is deleted in its entirety and
shall have no force nor effect.
C. The THIRD Clause of the Original Agreement is deleted in its entirety and
shall have no force nor effect.
D. The EIGHT Clause of the Original Agreement is deleted in its entirety and
shall have no force nor effect.
E. All the other terms and conditions of the Original Agreement shall
remain in full force and effect, and the Original Agreement shall be read and
construed as if the terms of this Amendment were included therein by way of
addition or substitution, as the case may be.
F. This Amendment may be executed in any number of counterparts all of which
together shall constitute one original amendment.
IN WITNESS WHEREOF, the parties have executed this Amendment the day and year
first above written.
Paul Lee Pei Chung Lee
/s/ Simon Lai
James Yu Simon Lai
CHASE Authorization For Access
To Safe Deposit Box
At a meeting of the Board of Directors of United Capital Investment Corp. a
corporation organized and existing under the laws of the State of New York, duly
called and held on the 20th day of January 1995 at which a quorum was present
and voting throughout, the following resolutions were unanimously adopted and
entered on the minute book of the Corporation:
RESOLVED, That any two of the following, namely:
(insert -one- or -two-, etc.)
President, Secretary, Treasurer and Director
Chek Jun Chan
be and they hereby are authorized to have access from time to time to the safe
deposit compartment(s) in the vaults of The Chase Manhattan Bank, N.A., rented
in the name of this Corporation, subject to the rules and regulations of said
The Chase Manhattan Bank, N.A., and be it
FURTHER RESOLVED, that said The Chase Manhattan Bank, N.A., is hereby authorized
and requested to grant access from time to time to said safe deposit
compartment(s) in accordance with the foregoing resolution until the authority
thereby granted has been revoked and written notice of such revocation signed by
an officer of this Corporation has been received by said The Chase Manhattan
Bank, N.A., at the office or branch where said compartment(s) is/are located,
and be it
FURTHER RESOLVED, that the Secretary or any other officer of this Corporation
be, and hereby is, authorized to certify to The Chase Manhattan Bank, N.A., the
names of the officers of this Corporation authorized as aforesaid and the
offices respectively held by them and the names of any other persons authorized
to have access on behalf of this Corporation, together with specimens of their
signatures; and The Chase Manhattan Bank, N.A., be, and hereby is, authorized
to permit access to, and to honor any instrument signed by, any such officer or
officers or other persons in respect of whom it has received any such
certificate or certificates.
IN WITNESS WHEREOF, I have hereunto set my hand as Secretary of said Corporation
and affixed.
the corporate SBAl this 20th day of January, 1995
/s/ Linda Lee
As secretary of the said Corporation
/s/ Paul Lee
Other officer
President
(CORPORATE SBAL
NOTE: If authorization is given to one or more officers the designation should
be by title of the office rather than in the officer's individual name and
certificate of election of officers should also be furnished.
NOTE: In case the Secretary or other recording officer is authorized for access
this certificate must also be signed by a second officer of the
Corporation.
Received by
(Date)
UNITED CAPITAL INVESTMENT CORP.
PROFIT SHARING PLAN
AND
MONEY PURCHASE PENSION PLAN
Effective
January 1, 1986
PLAN 001
ADOPTION AGREEMENT
FOR
STATE MUTUAL OF AMERICA PROTOTYPE DEFINED CONTRIBUTION PLAN NO. 12 NON-
STANDARDIZED PLAN-PROFIT SHARING FORMULA NOT INTEGRATED WITH SOCIAL SECURITY
(State Mutual Basic Plan Document No. 04)
For the benefit of its employees, the undersigned adopts this Profit Sharing
Plan and in connection therewith makes the following statements and
designations, which designations are subject to change as required to obtain
approval by the Internal Revenue Service.
1. Name of Employer:
United Capital Investment Corp.
2. Address of Employer: 3. Employer's Telephone Number:
60 East 42nd St. suite 1515
New York, New York 10165 (212) 682-7210
4. Name and Address of Other Participating Employers Adopting Plan:
NA
5. Name of Employer's Profit Sharing Plan:
United Capital Investment Corp. Profit Sharing Plan and Trust
6.(a) Effective Date of 7. Date of Adoption Agreement:
Plan and Trust:
1/1/86 12/01/86
8. Plan Number Assigned by the
Employer:
(x) 001 002 003 004
9. Name of Trustee(s) (and Trustee(s) Address if Different from Employer
Address):
Paul Lee, Linda Lee
10. Name and Address of Plan Administrator (and Address Plan Administrator's
Tax ID#:
if Different from Employer Address:)
11. Name and Address of Plan's Designated Agent for Legal Process (if other
than Trustee):
12: Date Incorporated (or Business 13. Type of Entity:
Commenced if not a Corporation): Corporation Partnership
5/84 (X) "Sub S" Corporation Other
Sole Proprietary ___________
14. Is this a Plan of
(a) Affiliated Service Group
Yes (x) No
(b) Controlled Group of Corporations
or Common Control Employer
Yes (x) No
15. Nature of Employer's Business 16. Employer Identification
Investments Number (Tax ID Number): 13-3202379
17. Predecessor Employers (Service with Employers named below shall be treated
as Service with the Employer -- See Section 2.32 of the Plan):
18. Employer's Fiscal Year for Federal Income Tax Purposes:
(x) Calendar Year Year Beginning First day of ___________ (month)
19. First Plan Anniversary: 1/1/87 (Each Plan Anniversary thereafter shall be
an anniversary of such date)
DESIGNATED PLAN PROVISIONS
Section 2.05 DEFINITION OF COMPENSATION
Compensation or Earned Income means for a Participant (Check or complete (a) or
(b) and, if appropriate, (c), (d) or (e) below):
(a) his Compensation or Earned Income for the taxable year of the Employer
ending with or within the Plan Year which is subject to tax under section
3101(a) of the Internal Revenue Code without the dollar limitation of
Section 3121(a), but not including deferred compensation other than
contributions through a salary reduction agreement to a cash or deferred
plan under Code Section 401(k) or to a tax deferred annuity under Code
Section 403(b). Provided, however, that in the case of an incorporated
Employer, those items specified in (c) below shall be excluded.
(x) (b) his Compensation or Earned Income for the Limitation Year ending with
or within the Plan Year which is ( ) actually paid, or ( ) accrued within such
Year. Provided however, that in the case of an incorporated Employer, those
items specified in (c) below shall be excluded.
* (c) his Compensation, elected in (a) or (b) above, but excluding:
(i) overtime pay
(ii) commissions
(iii) bonuses
(iv) other extra compensation (specify):__________________________________
(d) If the Employer is incorporated, for the first year of Plan
participation, Compensation shall exclude compensation paid (or accrued, if
so specified in (b) above) prior to the date the Employee becomes a Plan
Participant.
(x) (e) Maximum Compensation for Plan purposes: $200,000.00.
*NOTE: Items (c) and (d) may not be elected if the Plan is intended to benefit
a Self-Employed Individual.
NOTE: In the case of a Top Heavy or Super Top Heavy Plan, the maximum
compensation for Plan purposes cannot exceed $200,000 -- See Section 2.05 of the
Plan.
Section 2.12(e) HOURS OF SERVICE
Hours of Service shall be determined on the basis of the method selected below.
Only one method may be elected. The method selected shall be applied to all
Employees covered under the Plan (Check one of the following):
(x) (ii) On the basis of actual hours for which an Employee is paid or
entitled to payment.
(ii) On the basis of days worked.
An Employee shall be credited with 10 Hours of Service if under Section 2.12 of
the Plan such Employee would be credited with at least one Hour of Service
during the day.
(iii) On the basis of weeks worked.
An Employee shall be credited with 45 Hours of Service if under Section 2.12 of
the Plan such Employee would be credited with at least one Hour of Service
during the week.
(iv) On the basis of months worked.
An Employee shall be credited with 190 Hours of Service if under Section 2.12 of
the Plan such Employee would be credited with at least one Hour of Service
during the month.
Section 21.7 LIMITATION YEAR
The Limitation Year of the Plan shall be (Check or complete one of the
following);
(x) (a) Calendar Year
(b) Plan Year
(c) Other 12 consecutive month period (specify):______________________
Section 2.19 NORMAL RETIREMENT AGE
The Normal Retirement Age of a Participant shall be (Check and complete one of
the following):
(x) (a) The date the Participant attains his 70th birthday (maximum 70).
(b) The date the Participant attains his _________birthday (maximum 65) or
the 10th anniversary of the time the Participant commenced participation in
the Plan, whichever is later, but in no event later than the Participant's
______birthday (maximum 70). The participation commencement date is the
first day of the first Plan Year in which the Participant commenced
participation in the Plan.
See Section 2.20 of the Plan for the definition of Normal Retirement Date.
Section 3.01(1) PARTICIPATION REQUIREMENTS (Classification)
The following classification of Employees is eligible to become Participants
(Check or complete one of the following):
(a) All Employees of the Employer maintaining the Plan.
(b) All Employees of the Employer maintaining the Plan or of any other
employer required to be aggregated under Section 414(b), (c) or (m) of the
Internal Revenue Code. Any individual deemed under Section 414(n) of Code
to be an employee of any employer described in the previous sentence shall
also be considered an Employee.
(c) All Employees of the Employer maintaining the Plan compensated on an
hourly basis.
(d) All Employees of the Employer maintaining the Plan compensated on a
salaried basis.
(e) All Employees of the Employer maintaining the Plan not eligible to
participate in another qualified pension or profit sharing plan to which
the Employer is making contributions.
(x) (f) All Employees of the Employer maintaining the Plan except Employees
included in a unit of Employees covered by a collective bargaining agreement
between the Employer and Employee representatives, if retirement benefits were
the subject of good faith bargaining. For this purpose, the term "employee
representative" does not include any organization more than half of whose
members are Employees who are owners, officers or executives of the Employer.
(g) All Employees of the Employer maintaining the Plan covered by a
collective bargaining agreement between the Employer and Employee
representatives (as described above).
(h) Other Employee classification (specify):
Section 3.01(2) PARTICIPATION REQUIREMENTS (Entry Date)
The Plan eligibility requirements are (Check and complete (a), (b) or (c)
below):
(a) Single Entry Date
An eligible Employee who complies with the requirements set forth in the Plan
and Trust shall become a Participant on the Plan Anniversary following the
date the Employee meets the Age and Service requirements specified below, if he
is employed on such entry date:
(i) The Employee has completed.______Year(s)of Service(not more than 1/2 unless
Section 9.01 (1)(a) below is elected and then not more than 2-1/2), and
(ii) The Employee has attained Age _____ (not more than 20 1/2).
(x) (b) Single Entry Date - Retroactive Participation
An eligible Employee who complies with the requirements set forth in the Plan
and Trust shall become a Participant as of the Plan Anniversary immediately
preceding the date the Employee meets the Age and Service requirements specified
below:
(i) The Employee has completed one Year(s)of Service(not more than 1 unless
Section 9.01(1)(a) below is elected and then not more than 3), and
(ii) The Employee has attained Age 21 (not more than 21).
(c) Dual Entry Dates
(i) An Employee who complies with the requirements set forth in the Plan and
Trust shall become a Participant on whichever of the following dates first
occurs after the date the Employee meets the Age and Service requirements
specified in (ii) below, if he is then employed:
A. The following Plan Anniversary; or
B. The date 6 months following the Effective Date or thereafter the date 6
months following each Plan Anniversary.
(ii) The Plan eligibility requirements are (complete both A and B below):
A. The Employee has completed _____ Year(s) of Service (not more than 1 unless
Section 9.01 (1)(a) is elected and then not more than 3), and
B. The Employee has attained Age._____.(not more than 21).
If the Year(s) of Service elected is or includes a fractional year, an Employee
shall not be required to complete any specified number of Hours of Service to
receive credit for such fractional year.
Notwithstanding (a),(b)and(c)above, an eligible Employee who satisfies the Plan
Age and Service requirements on the Effective Date and who complies with the
requirements set forth in the Plan and Trust will become a Participant on such
date if he is then employed.
Section 3.01(3) PARTICIPATION REQUIREMENTS (Service Exclusions)
In determining when an Employee is eligible to participate, the following
periods of Service shall be disregarded (Check (a) or (b), if applicable):
(a) In the case of a Participant who does not have any nonforfeitable
right to the Account balance derived from Employer contributions, Years of
Service before a period of consecutive One Year Breaks in Service will not
be taken into account in computing eligibility service if the number of
consecutive One Year Breaks in Service in such period equals or exceeds the
greater of five or the aggregate number of Years of Service. Such aggregate
number of Years of Service will not include any Years of Service
disregarded under the preceding sentence by reason of prior Breaks in
Service.
(x) (b) If an Employee had a One Year Break in Service before he had become a
Participant, Service before the Break shall not be counted (applicable only if
the Plan provides full and immediate vesting, i.e., when Section 9.01 (1)(a) of
the Adoption Agreement is checked).
Section 4.01 EMPLOYER CONTRIBUTIONS
Employer Contributions will be made out of Employer Profits on the following
basis:
(x) (a) For each Plan Year the Board of Directors or other governing
authority of the Employer shall determine the amount of Profits to be
contributed to the Trust.
(x) (b) For each Plan Year the Board of Directors or other governing
authority of the Employer shall determine the amount of Profits to be
contributed to the Trust. However, if no resolve is made, the amount to be
contributed from Profits to the Trust for the Plan Year shall be(Check and
complete one of the following):
(i) An amount equal to ____% of each Participant's Plan Compensation for
such Plan Year.
(ii) An amount equal to ____ % of the Profits of the Employer.
(iii) An amount equal to ____% of Profits in excess of $ ________________
of Employer Profits.
(iv) An amount equal to $_________________from Employer Profits.
(v) An amount equal to.____% of participating payroll for the Plan Year.
Section 4.02 TOP HEAVY PLAN MINIMUM BENEFITS FOR EMPLOYERS WITH MULTIPLE PLANS
If the Employer maintains one or more qualified retirement plans in addition to
this Plan and if this Plan is or becomes a Top Heavy or Super Top Heavy Plan,
the minimum allocation or benefit requirement applicable to Non-Key Employees
participating in this Plan will be met as follows (Check (a) or (b) below):
(x) (a) The Top Heavy or Super Top Heavy Plan minimum allocation or benefit
requirements will be met pursuant to the provisions of Subsection 4.02(e) of the
Plan.
(b) The Top Heavy or Super Top Heavy minimum allocation or benefit
requirements will be met under the Employer's other plan or plans.
Section 4.03 REQUIRED PARTICIPANT CONTRIBUTIONS
(x) (a) No Employee Contributions required by Employer.
(b) Each Employee shall contribute an amount equal to ____% of his Plan
Compensation.
(c) Each Employee shall contribute an amount equal to $ per (week, month,
year).
(d) Other basis
(specify):_____________________________________________________________________
NOTE: if Employee Contributions are required, the maximum annual contribution
shall not exceed 6% of the Participant's Plan Compensation (as elected in
Section 2.05 of the Adoption Agreement) in accordance with Section 4.03 of the
Plan.
Section 4.04 VOLUNTARY PARTICIPANT CONTRIBUTIONS
Voluntary Participant Contributions:
(a) are permitted
(x) (b) are not permitted
(c) Minimum permitted (Check and complete, if applicable):
(i) No minimum
(ii) _____% of Plan Compensation.
NOTE: (iii) $_____per_____ (week, month,year) The maximum a Participant may
contribute to the Plan on the voluntary basis is specified in Section 4.04 of
the Plan.
Section 5.02 ALLOCATION OF CONTRIBUTIONS
(a) Except as provided in Section 4.02 of the Plan (relating to minimum
contributions for Top Heavy Plan Years), in order to share in the Employer's
contributions for a Plan Year a Participant must complete 1000 (0-1,000) Hours
of Service during such Plan Year.
A Participant whose employment is terminated before the end of a Plan Year but
after he has completed the Hours of Service specified above (Check (i) or (ii)
below):
(x) (i) shall share in Employer contributions for such Plan Year.
(ii) shall not share in Employer contributions for such Plan Year.
(b) Allocation formula:
After any minimum contributions have been allocated to the Accounts of Non-Key
Employees pursuant to Section 4.02 of the Plan, any additional Employer
contributions and Plan forfeitures (unless Plan forfeitures are used to reduce
Employer Contributions pursuant to Section 5.03 of the Adoption Agreement)for
each Plan Year shall be allocated among the Accounts of eligible Participants in
amounts determined in accordance with the ratio which each eligible
Participant's Plan Compensation bears to the total Plan Compensation of all
Participants eligible to share in Employer Contributions for each year.
NOTE: The above formulas do not apply to the minimum contribution required for
Top Heavy Plan Years - See Section 4.02 of the Plan.
NOTE: In no event will the amount allocated to a Participant's Account exceed
the maximum permitted under Article VII of the Plan.
Section 5.03 METHOD OF ALLOCATING PLAN FORFEITURES
Amounts forfeited for each Plan Year shall be applied as follows check one:
(x) Forfeitures shall be allocated in the same manner as Employer contributions
at the end of the Plan Year in which the forfeiture occurs.
Forfeitures shall be used to reduce Employer contributions for the Plan
Year following the Plan Year in which the forfeiture occurs.
Section 6.02(g) TOP HEAVY VALUATION DATE
For purposes of computing the top heavy ratio described in Section 6.02 of the
Plan, the valuation date shall be (Check or complete one of the following):
(x) (i) the last day of the Plan Year
(ii) other (specify):
Section 6.02(h) TOP HEAVY PRESENT VALUES
For purposes of establishing present value to compute the top heavy ratio
described in Section 6.02 of the Plan, any benefit shall be discounted only for
mortality and interest based on the following:
(x) (i) Based on the current settlement factors determined and used by the
State Mutual Life Assurance Company of America for its Whole Life Ordinary
Insurance Contract being issued on the date the benefit is determined.
(ii) Based on settlement factors determined on the basis of the following
assumptions. (Include both interest and mortality assumptions applicable):
Interest Rate: 6%
Mortality table: UP84
Article VII LIMITATION OF ALLOCATIONS
Limitation on Allocations - More than One Plan
If you maintain or ever maintained another qualified plan in which any
Participant in this Plan is (or was) a participant or could possibly become a
participant, you must complete this section.
(Other Defined Contribution Plans)
1. If the Participant is covered under another qualified defined contribution
plan maintained by the Employer, other than a Master or Prototype Plan:
(x) the provisions of Sections 7.05 through 7.10 of Article VII will apply as
if the other plan were a master or prototype plan.
(Provide the method under which the plans will limit total Annual
Additions to the Maximum Permissible Amount, and will properly reduce any
excess amounts, in a manner that precludes employer discretion.)
(Other Defined Benefit Plans) 2. If the Participant is or has ever been a
participant in a defined benefit plan maintained by the Employer (the adopting
Employer must provide language which will satisfy the 1.0 limitation of Section
415(e) of the Internal Revenue Code. Such language must preclude employer
discretion. See Section 1.415-1 of the Income Tax Regulations for guidance).
Section 9.01(1) VESTING SCHEDULES
The portion of a Participant's Accrued Benefit attributable to Employer
Contributions shall be vested to the extent designated below:
(Check or complete one of (a) through (g):
(a) 100% at all times (must be checked if Section 3.01(2)(a) has been
elected and more than 1/2 Year of Service is required or if Section
3.01(2)(b) or 3.01(2)(c) has been elected and more than 1 Year of Service
is required).
(b) 100% _____ after (1 to 1 0) Years of Service.
(c) A percentage determined in accordance with the following schedule
(5-15
vesting):
Nonforfeitable
Years of Service Percentage
Less than 5 0%
5 25
6 30
7 35
8 40
9 45
10 50
11 60
12 70
13 80
14 90
15 or more 100
(d) A percentage which is the greater of (I) or (ii) below (Rule of 45):
(i) A Participant with at least 5 Years of Service whose Age and Years of
Service at least equal 45 shall be vested in accordance with the following
schedule:
then the Non-
If Completed Years and sum of Age and forfeitable
of Service equal Service equals Percentage is
5 45 or 46 50%
6 47 or 48 60
7 49 or 50 70
8 51 or 52 80
9 53 or 54 90
10 or more 55 or more 100
(ii) After completion of 10 Years of Service, all Participants shall be 50%
vested, plus 10% for each of the next 5 Years of Service.
(e) A percentage determined in accordance with the following schedule
(4-40 vesting):
Nonforfeitable
Years of Service Percentage
Lessthan 4 0%
4 40
5 45
6 50
7 60
8 70
9 80
10 90
11 or more 100
(x) (f) A percentage determined in accordance with the following schedule
(Top Heavy Graded Vesting):
Nonforfeitable
Years of Service Percentage
Less than 2 0%
2 20
3 40
4 60
5 80
6 or more 100
(g) After _____ Years of Service, ____%, plus ____% for each Year of
Service completed thereafter. Full vesting after completion of ____ Years
of Service (not to exceed 10).
NOTE: Notwithstanding the above, in any event a Participant's vesting
percentage shall be 1 00% on the date he attains his Normal Retirement Age, the
date he attains his Normal Retirement Date or the date he is eligible for early
retirement, whichever is the earliest.
Section 9.01(2) TOP HEAVY PLAN VESTING
Notwithstanding anything in Section 9.01(l) to the contrary, if the Plan is a
Top Heavy Plan for any Plan Year beginning after December 31, 1983, then the
Plan shall meet the following vesting requirements for such Plan Year and for
all subsequent Plan Years, even if the Plan is not a Top Heavy Plan for such
subsequent Plan Years. Provided, however, if the vesting schedule elected in
Section 9.01(1)is more favorable to a Participant, such schedule shall be
applicable to such Participant for such Plan Years.
The portion of a Participant's Accrued Benefit attributable to Employer
Contributions shall be vested to the extent designated below (Check or complete
(a) or (b) below):
(a) 100% after..(1 to 3) Years of Service,
(x) (b) A percentage determined in accordance with the following schedule:
Nonforfeitable
Years of Service Percentage
Less than 2 0%
2 20
3 40
4 60
5 80
6 or more 100
Section 9.01(3) VESTING (Service Exclusions)
In determining a Participant's Vesting Percentage, the following periods of
Service shall be disregarded (Check one or more boxes, if applicable):
NOTE: If all Years of Service are to be counted, no boxes should be checked.
*(a) Years of Service before Age 18 (except that if Section 9.01(l)(d) of
the Adoption Agreement is checked, such Years during which the Employee was
a Participant shall not be disregarded).
*(b) Years of Service during a period for which the Participant declined to
make any part of a Required Contribution.
*(c) Periods during which the Plan or a predecessor plan was not maintained
by the Employer.
(d) If a Participant has a One Year Break in Service, Service before the
Break shall not be taken into account until he has completed a Year of
Service after such Break in Service.
(e) In the case of a Participant who has 5 or more consecutive One Year
Breaks in Service, the Participant's pre-break service will count in
vesting of the Employer-derived accrued benefit only if either:
(i) such Participant has any nonforfeitable interest in the Accrued Benefit
attributable to Employer contributions at the time of separation from service,
or
(ii) upon returning to service the number of consecutive One Year Break in
Service is less than the number of Years of Service.
(f) Years of Service before January 1, 1971, unless the Employee has had
at least 3 Years of Service after December 31, 1970.
(g) Years of Service before the Plan Year in which Internal Revenue Code
Section 411 became applicable to the Plan, if such Service would have been
disregarded under the rules of the Plan with regard to Breaks in Service as
in effect on the applicable date. For this purpose, Break in Service rules
are rules which result in loss of prior vesting or benefit accruals, or
which deny an employee eligibility to participate, by reason of separation
or failure to complete a required period of service within a specified
period of time.
NOTE: In all events Years of Service during which the Employee did not complete
a least 1,000 Hours of Service shall be disregarded.
*Subsections (a), (b) and (c) may not be checked in Section 9.01 (1)(e) has been
elected.
Section 1 0.01 PARTICIPANT LOANS
Participant loans (Check one):
(a) are permitted
(x) (b) are not permitted
Section 13.06 PARTICIPANT DIRECTED INVESTMENTS
Participants ( ) shall (x) shall not have the power, at their discretion, to
direct the Trustee with respect to the investment of all or a portion of their
Participant's Account
If Participant investment direction is permitted:
(i) Participants may direct the Trustee to invest all of their Account in
any, investment, to include Policies, permitted under the terms of the Plan
and Trust.
(ii) Participant investment direction shall be limited to direction to
invest in insurance or annuity Policies.
Section 14.01 INVESTMENT IN LIFE INSURANCE OR ANNUITY POLICIES
(a) Without Limiting the Trustee's powers in any other respect, contributions
for each Participant shall be invested in life insurance or annuity Policies as
follows
(Check and complete one of the following):
(i) Subject to any restrictions specified in (b) below, the percentage of
Plan contributions allocated to the purchase of Policies shall be as
elected by each Participant with the consent of the Plan Administrator.
(ii) No life insurance or annuity Policies shall be purchased by the
Trustee.
(iii) Subject to any restrictions specified in (b) below, the Trustee
shall uniformly invest Required Participant and Employer contributions for
each Participant as follows:
(A)____% Ordinary Life lnsurance (Maximum less than 5O%)
(B)____% Term or Universal Life insurance (Maximum 25%)
(C)____% Annuity Policies (Maximum lOO%)
(b) If item(a)(i)or(a)(iii)above is checked, the purchase of life insurance
Policies shall be subject to the following restrictions (Check and complete
whichever of the following is applicable):
(i) All Policies will have a common issue date (the Plan Anniversary)
i.e., no Policies will be issued by the Insurer on other than the Plan
Anniversary.
(ii) The amount of life insurance issued on the life of any Participant
shall not exceed $__________
(iii) The amount of life insurance issued on the life of any Participant
shall be limited to the initial amount purchased for such Participant.
(iv) The maximum Age for the purchase of insurance on the life of a
Participant shall be ____________.
(v) The minimum Years of Service that must be completed by a Participant
before insurance may be purchased on such Participant's life shall be _____
(not more than 2).
NOTE: Any purchase of life insurance Policies shall be subject to the rules and
restrictions specified in Section 2.28 and in Article XIV.
EXECUTION AND ACCEPTANCE
BY
EMPLOYER AND TRUSTEE(S)
STATE MUTUAL OF AMERICA PROTOTYPE DEFINED CONTRIBUTION PLAN NO.,
The Employer, which hereby agrees that neither the Trustee nor the Insurer shall
be responsible for the tax and legal aspects of the Plan and Trust, and which
assumes full responsibility therefor, hereby accepts provisions of State Mutual
Life Assurance Company of America Prototype Defined Contribution Plan No. agrees
to be bound by the provisions thereof, and adopts such Plan and the Plan
Adoption Agreement causing its name to be signed hereto by its duly authorized
officer, all as of this first day of December, 1986.
The adopting Employer may not rely on an opinion letter issued by the National
Office of the Internal Revenue Service as evidence that the plan is qualified
under Section 401 of the Internal Revenue Code. In order to obtain reliance
with respect to plan qualification, the Employer must apply to the appropriate
key district office for a determination letter.
This Adoption Agreement may be used only in conjunction with Basic Plan Document
No. 04.
Employer __________________________________ Employer United Capital
Investment Corp.
By_________________________________________ By_____________________________
Title: ____________________________________ Title: President
The undersigned Trustee, or each undersigned Trustee, hereby accepts the
provisions of State Mutual Life Assurance Company of America Prototype Defined
Contribution Plan No. 12 and the trusts provided therein, and hereby declares,
and agrees with the aforesaid Employer to receive, hold, invest, expend and
distribute all funds deposited with, contributed to, earned or otherwise
received by, the Trustee as Trustees, in accordance with the terms and
provisions of said Plan and Trust.
For Signature by Corporate Trustee
TrusteeXXXXXXXXXXXXXX
By_____________________________
Title:
For Signature by Individual Trustee(s)
X PL
As Trustee
X LL
As Trustee
________________________________
As Trustee
PLAN 004
ADOPTION AGREEMENT
FOR
STATE MUTUAL OF AMERICA PROTOTYPE DEFINED CONTRIBUTION PLAN NO. 12 NON-
STANDARDIZED PLAN-PROFIT SHARING FORMULA NOT INTEGRATED WITH SOCIAL SECURITY
(State Mutual Basic Plan Document No. 04)
For the benefit of its employees, the undersigned adopts this Profit Sharing
Plan and in connection therewith makes the following statements and
designations, which designations are subject to change as required to obtain
approval by the Internal Revenue Service.
1. Name of Employer:
United Capital Investment Corp.
2. Address of Employer: 3. Employer's Telephone Number:
60 East 42nd St. s. 1515
New York, New York 10165 (212) 682-7210
4. Name and Address of Other Participating Employers Adopting Plan:
NA
5. Name of Employer's Profit Sharing Plan:
United Capital Investment Corp. Profit Sharing Plan and Trust
6.(a) Effective Date of 7. Date of Adoption Agreement:
Plan and Trust:
1/1/86 12/01/86
8. Plan Number Assigned by the Employer:
001 (XX) 002 003 004 _______
9. Name of Trustee(s) (and Trustee(s) Address if Different from Employer
Address):
Paul Lee, Linda Lee
10. Name and Address of Plan Administrator (and Address Plan Administrator's
Tax ID#:
if Different from Employer Address:)
11. Name and Address of Plan's Designated Agent for Legal Process (if other
than Trustee):
12: Date Incorporated (or Business 13. Type of Entity:
Commenced if not a Corporation): Corporation Partnership
5/84 (X) "Sub S" Corporation Other
Sole Proprietary __________
14. Is this a Plan of
(a) Affiliated Service Group
Yes (x) No
(b) Controlled Group of Corporations
or Common Control Employer
Yes (x) No
15. Nature of Employer's Business 16. Employer Identification
Investments Number (Tax ID Number): 13-3202379
17. Predecessor Employers (Service with Employers named below shall be treated
as Service with the Employer -- See Section 2.32 of the Plan):
18. Employer's Fiscal Year for Federal Income Tax Purposes:
(x) Calendar Year Year Beginning First day of __________________
(month)
19. First Plan Anniversary: 1/1/87 (Each Plan Anniversary thereafter shall be
an anniversary of such date)
DESIGNATED PLAN PROVISIONS
Section 2.05 DEFINITION OF COMPENSATION
Compensation or Earned Income means for a Participant (Check or complete (a) or
(b) and, if appropriate, (c), (d) or (e) below):
(a) his Compensation or Earned Income for the taxable year of the Employer
ending with or within the Plan Year which is subject to tax under section
3101(a) of the Internal Revenue Code without the dollar limitation of
Section 3121(a), but not including deferred compensation other than
contributions through a salary reduction agreement to a cash or deferred
plan under Code Section 401(k) or to a tax deferred annuity under Code
Section 403(b). Provided, however, that in the case of an incorporated
Employer, those items specified in (c) below shall be excluded.
(x) (b) his Compensation or Earned Income for the Limitation Year ending with
or within the Plan Year which is ( ) actually paid, or ( ) accrued within such
Year. Provided however, that in the case of an incorporated Employer, those
items specified in (c) below shall be excluded.
* (c) his Compensation, elected in (a) or (b) above, but excluding:
(i) overtime pay
(ii) commissions
(iii) bonuses
(iv) other extra compensation (specify):_________________________________
(d) If the Employer is incorporated, for the first year of Plan
participation, Compensation shall exclude compensation paid (or accrued, if
so specified in (b) above) prior to the date the Employee becomes a Plan
Participant.
(x) (e) Maximum Compensation for Plan purposes: $200,000.00.
*NOTE: Items (c) and (d) may not be elected if the Plan is intended to benefit
a Self-Employed Individual.
NOTE: In the case of a Top Heavy or Super Top Heavy Plan, the maximum
compensation for Plan purposes cannot exceed $200,000 -- See Section 2.05 of the
Plan.
Section 2.12(e) HOURS OF SERVICE
Hours of Service shall be determined on the basis of the method selected below.
Only one method may be elected. The method selected shall be applied to all
Employees covered under the Plan (Check one of the following):
(x) (ii) On the basis of actual hours for which an Employee is paid or
entitled to payment.
(ii) On the basis of days worked.
An Employee shall be credited with 10 Hours of Service if under Section 2.12 of
the Plan such Employee would be credited with at least one Hour of Service
during the day.
(iii) On the basis of weeks worked.
An Employee shall be credited with 45 Hours of Service if under Section 2.12 of
the Plan such Employee would be credited with at least one Hour of Service
during the week.
(iv) On the basis of months worked.
An Employee shall be credited with 190 Hours of Service if under Section 2.12 of
the Plan such Employee would be credited with at least one Hour of Service
during the month.
Section 21.7 LIMITATION YEAR
The Limitation Year of the Plan shall be (Check or complete one of the
following);
(x) (a) Calendar Year
(b) Plan Year
(c) Other 12 consecutive month period (specify):__________________________
Section 2.19 NORMAL RETIREMENT AGE
The Normal Retirement Age of a Participant shall be (Check and complete one of
the following):
(x) (a) The date the Participant attains his 70th birthday (maximum 70).
(b) The date the Participant attains his _________birthday (maximum 65) or
the 10th anniversary of the time the Participant commenced participation in
the Plan, whichever is later, but in no event later than the Participant's
______birthday (maximum 70). The participation commencement date is the
first day of the first Plan Year in which the Participant commenced
participation in the Plan.
See Section 2.20 of the Plan for the definition of Normal Retirement Date.
Section 3.01(1) PARTICIPATION REQUIREMENTS (Classification)
The following classification of Employees is eligible to become Participants
(Check or complete one of the following):
(a) All Employees of the Employer maintaining the Plan.
(b) All Employees of the Employer maintaining the Plan or of any other
employer required to be aggregated under Section 414(b), (c) or (m) of the
Internal Revenue Code. Any individual deemed under Section 414(n) of Code
to be an employee of any employer described in the previous sentence shall
also be considered an Employee.
(c) All Employees of the Employer maintaining the Plan compensated on an
hourly basis.
(d) All Employees of the Employer maintaining the Plan compensated on a
salaried basis.
(e) All Employees of the Employer maintaining the Plan not eligible to
participate in another qualified pension or profit sharing plan to which
the Employer is making contributions.
(x) (f) All Employees of the Employer maintaining the Plan except Employees
included in a unit of Employees covered by a collective bargaining agreement
between the Employer and Employee representatives, if retirement benefits were
the subject of good faith bargaining. For this purpose, the term "employee
representative" does not include any organization more than half of whose
members are Employees who are owners, officers or executives of the Employer.
(g) All Employees of the Employer maintaining the Plan covered by a
collective bargaining agreement between the Employer and Employee
representatives (as described above).
(h) Other Employee classification (specify):
Section 3.01(2) PARTICIPATION REQUIREMENTS (Entry Date)
The Plan eligibility requirements are (Check and complete (a), (b) or (c)
below):
(a) Single Entry Date
An eligible Employee who complies with the requirements set forth in the Plan
And Trust shall become a Participant on the Plan Anniversary following the date
the Employee meets the Age and Service requirements specified below, if he is
employed on such entry date:
(i) The Employee Has completed.______Year(s)of Service(not more than 1/2
unless Section 9.01 (1)(a) below is elected and then not more than 2-1/2),
and
(ii) The Employee has attained Age _____ (not more than 20 1/2).
(x) (b) Single Entry Date - Retroactive Participation
An eligible Employee who complies with the requirements set forth in the Plan
and Trust shall become a Participant as of the Plan Anniversary immediately
preceding the date the Employee meets the Age and Service requirements specified
below:
(i) The Employee has completed one Year(s)Of Service(not more than 1 unless
Section 9.01(1)(a) below is elected and then not more than 3), and
(ii) The Employee has attained Age 21 (not more than 21).
(c) Dual Entry Dates
(i) An Employee who complies with the requirements set forth in the Plan and
Trust shall become a Participant on whichever of the following dates first
occurs after the date the Employee meets the Age and Service requirements
specified in (ii) below, if he is then employed:
A. The following Plan Anniversary; or
B. The date 6 months following the Effective Date or thereafter the date 6
months following each Plan Anniversary.
(ii) The Plan eligibility requirements are (complete both A and B below):
A. The Employee has completed_____Year(s) of Service (not more than 1 unless
Section 9.01 (1)(a) is elected and then not more than 3), and
B. The Employee has attained Age._____.(not more than 21).
If The Year(s) of Service elected is or includes a fractional year, an
Employee shall not
be required to complete any specified number of Hours of Service to receive
credit for such fractional year.
Notwithstanding (a),(b)and(c)above, an eligible Employee who satisfies the
Plan Age and Service requirements on the Effective Date and who complies with
the requirements set forth in the Plan and Trust will become a Participant on
such date if he is then employed.
Section 3.01(3) PARTICIPATION REQUIREMENTS (Service Exclusions)
In determining when an Employee is eligible to participate, the following
periods of Service shall be disregarded (Check (a) or (b), if applicable):
(a) In the case of a Participant who does not have any nonforfeitable
right to the Account balance derived from Employer contributions, Years of
Service before a period of consecutive One Year Breaks in Service will not
be taken into account in computing eligibility service if the number of
consecutive One Year Breaks in Service in such period equals or exceeds
the greater of five or the aggregate number of Years of Service. Such
aggregate number of Years of Service will not include any Years of Service
disregarded under the preceding sentence by reason of prior Breaks in
Service.
(x) (b) If an Employee had a One Year Break in Service before he had become a
Participant, Service before the Break shall not be counted (applicable only if
the Plan provides full and immediate vesting, i.e., when Section 9.01 (1)(a) of
the Adoption Agreement is checked).
Section 4.01 EMPLOYER CONTRIBUTIONS
(a) Except as provided in Section 4.02 of the Plan (relating to minimum
contributions for Top Heavy Plan Years), the annual Employer Contribution
allocated to the Account of each eligible Participant shall be equal to:
(x) (i) 10% of the Participant's Compensation, plus
(x) (ii) 5.7%* of such Compensation in excess of:
(x) (a) $20,000**, or
(b) The Taxable Wage Base.
*The maximum percentage shall be the OASDI tax rate in effect at the beginning
of the Plan Year.
**If the designated dollar amount exceeds the Taxable Wage Base, the maximum
percentage is the amount produced by the following formula:
(Taxable Wage Base) X the OASDI tax rate in effect at
(Designated Dollar Amount) the beginning of the Plan Year.
NOTE: The above formula does not apply to the minimum contribution required to
Top Heavy Plan Years - See Section 4.02 of the Plan.
NOTE: In no event will the amount allocated to a Participant's Account exceed
the maximum permitted under Article VII of the Plan.
(b) Except as provided in Section 4.02 (relating to minimum contributions for
Top Heavy Plan Years) in order to share in the Employer's Contributions for a
Plan Year, a Participant must complete 1000 (0-1,000) Hours of Service during
such Plan Year.
A Participant whose employment is terminated before the end of a Plan Year but
after he has completed the Hours of Service specified above (Check (i) or (ii)
below):
(x) (i) shall share in Employer Contributions for such Plan Year.
(ii) shall not share in Employer Contributions for such Plan Year.
Section 4.02 TOP HEAVY PLAN MINIMUM BENEFITS FOR EMPLOYERS WITH MULTIPLE PLANS
If the Employer maintains one or more qualified retirement plans in addition to
this Plan and if this Plan is or becomes a Top Heavy or Super Top Heavy Plan,
the minimum allocation or benefit requirement applicable to Non-Key Employees
participating in this Plan will be met as follows (Check (a) or (b) below):
(x) (a) The Top Heavy or Super Top Heavy Plan minimum allocation or benefit
requirements will be met pursuant to the provisions of Subsection 4.02(e) of the
Plan.
(b) The Top Heavy or Super Top Heavy minimum allocation or benefit
requirements will be met under the Employer's other plan or plans.
Section 4.03 REQUIRED PARTICIPANT CONTRIBUTIONS
(x) (a) No Employee Contributions required by Employer.
(b) Each Employee shall contribute an amount equal to ____% of his Plan
Compensation.
(c) Each Employee shall contribute an amount equal to $ _________ per
(week, month, year).
NOTE: If Employee Contributions are required, the maximum annual contribution
shall not exceed 6% of the Participant's Plan Compensation (as elected in
Section 2.05 of the Adoption Agreement) in accordance with Section 4.03 of the
Plan.
Section 4.04 VOLUNTARY PARTICIPANT CONTRIBUTIONS
Voluntary Participant Contributions:
(a) are permitted
(x) (b) are not permitted
(c) Minimum permitted (Check and complete, if applicable):
(i) No minimum
(ii) _____% of Plan Compensation
(iii) _____% of Plan Compensation per ____________ (week, month, year)
NOTE: The maximum a Participant may contribute to the Plan on the voluntary
basis is specified in Section 4.04 of the Plan.
Section 6.02(g) TOP HEAVY VALUATION DATE
For purposes of computing the top heavy ratio described in Section 6.02 of the
Plan, the valuation date shall be (Check or complete one of the following):
(x) (i) the last day of the Plan Year
(ii) other (specify):
Section 6.02(h) TOP HEAVY PRESENT VALUES
For purposes of establishing present value to compute the top heavy ratio
described in Section 6.02 of the Plan, any benefit shall be discounted only for
mortality and interest based on the following:
(i) Based on the current settlement factors determined and used by the
State Mutual Life Assurance Company of America for its Whole Life Ordinary
Insurance Contract being issued on the date the benefit is determined.
(x) (ii) Based on settlement factors determined on the basis of the following
assumptions. (Include both interest and mortality assumptions applicable):
Interest Rate: 6%
Mortality table: UP84
Article VII LIMITATION OF ALLOCATIONS
Limitation on Allocations - More than One Plan
If you maintain or ever maintained another qualified plan in which any
Participant in this Plan is (or was) a participant or could possibly become a
participant, you must complete this section.
(Other Defined Plans)
1. If the Participant is covered under another qualified defined contribution
plan maintained by the Employer, other than a Master or Prototype Plan:
(x) the provisions of Sections 7.05 through 7.1 0 of Article VII will apply as
if the other plan were a master or prototype plan.
(Provide the method under which the plans will limit total Annual Additions
to the Maximum Permissible Amount, and will properly reduce any excess
amounts, in a manner that precludes employer discretion.)
(Other Defined Benefit Plans) 2. If the Participant is or has ever been a
participant in a defined benefit plan maintained by the Employer (the adopting
Employer must provide language which will satisfy the 1.0 limitation of Section
41 5(e) of the Internal Revenue Code. Such language must preclude employer
discretion. See Section 1.415-1 of the Income Tax Regulations for guidance).
Section 9.01(1) VESTING SCHEDULES
The portion of a Participant's Accrued Benefit attributable to Employer
Contributions shall be vested to the extent designated below:
(Check or complete one of (a) through (g):
(a) 100% at all times (must be checked if Section 3.01(2)(a) has been
elected and more than 1/2 Year of Service is required or if Section
3.01(2)(b) or 3.01(2)(c) has been elected and more than 1 Year of Service
is required).
(b) 100% after (1 to 1 0) Years of Service.
(c) A percentage determined in accordance with the following schedule
(5-15 vesting):
Nonforfeitable
Years of Service Percentage
Less than 5 0%
5 25
6 30
7 35
8 40
9 45
10 50
11 60
12 70
13 80
14 90
15 or more 100
(d) A percentage which is the greater of (i) or (ii) below (Rule of 45):
(i) A Participant with at least 5 Years of Service whose Age and Years of
Service at least equal 45 shall be vested in accordance with the following
schedule:
then the Non-
If Completed Years and sum of Age and forfeitable
of Service equal Service equals Percentage is
5 45 or 46 50%
6 47 or 48 60
7 49 or 50 70
8 51 or 52 80
9 53 or 54 90
10 or more 55 or more 100
(ii) After completion of 10 Years of Service, all Participants shall be 50%
vested, plus 10% for each of the next 5 Years of Service.
(e) A percentage determined in accordance with the following schedule (4-40
vesting):
Nonforfeitable
Years of Service Percentage
Lessthan 4 0%
4 40
5 45
6 50
7 60
8 70
9 80
10 90
11 or more 100
(x) (f) A percentage determined in accordance with the following schedule (Top
Heavy Graded Vesting):
Nonforfeitable
Years of Service Percentage
Less than 2 0%
2 20
3 40
4 60
5 80
6 or more 100
(g) After _____ Years of Service, ____%, plus..% for each Year of Service
completed thereafter. Full vesting after completion of ______ Years of
Service (not to exceed 10).
NOTE: Notwithstanding the above, in any event a Participant's vesting
percentage shall be 1 00% on the date he attains his Normal Retirement Age, the
date he attains his Normal Retirement Date or the date he is eligible for early
retirement, whichever is the earliest.
Section 9.01(2) TOP HEAVY PLAN VESTING
Notwithstanding anything in Section 9.01(l) to the contrary, if the Plan is a
Top Heavy Plan for any Plan Year beginning after December 31, 1983, then the
Plan shall meet the following vesting requirements for such Plan Year and for
all subsequent Plan Years, even if the Plan is not a Top Heavy Plan for such
subsequent Plan Years. Provided, however, if the vesting schedule elected in
Section 9.01(1)is more favorable to a Participant, such schedule shall be
applicable to such Participant for such Plan Years.
The portion of a Participant's Accrued Benefit attributable to Employer
Contributions shall be vested to the extent designated below (Check or
complete (a) or (b) below):
(a) 100% after_________ (1 to 3) Years of Service.
(x) (b) A percentage determined in accordance with the following schedule:
Nonforfeitable
Years of Service Percentage
Less than 2 0%
2 20
3 40
4 60
5 80
6 or more 100
Section 9.01(3) VESTING (Service Exclusions)
In determining a Participant's Vesting Percentage, the following periods of
Service shall be disregarded (Check one or more boxes, if applicable):
NOTE: If all Years of Service are to be counted, no boxes should be checked.
*(a) Years of Service before Age 18 (except that if Section 9.01(l)(d) of
the Adoption Agreement is checked, such Years during which the Employee was
a Participant shall not be disregarded).
*(b) Years of Service during a period for which the Participant declined to
make any part of a Required Contribution.
*(c) Periods during which the Plan or a predecessor plan was not maintained
by the Employer.
(d) If a Participant has a One Year Break in Service, Service before the
Break shall not be taken into account until he has completed a Year of
Service after such Break in Service.
(e) In the case of a Participant who has 5 or more consecutive One Year
Breaks in Service, the Participant's pre-break service will count in
vesting of the Employer-derived accrued benefit only if either:
(i) such Participant has any nonforfeitable interest in the Accrued Benefit
attributable to Employer contributions at the time of separation from service,
or
(ii) upon returning to service the number of consecutive One Year Break in
Service is less than the number of Years of Service.
(f) Years of Service before January 1, 1971, unless the Employee has had
z least 3 Years of Service after December 31, 1970.
(g) Years of Service before the Plan Year in which Internal Revenue Code
Section 411 became applicable to the Plan, if such Service would have been
disregarded under the rules of the Plan with regard to Breaks in Service as
in effect on the applicable date. For this purpose, Break in Service rules
are rules which result in loss of prior vesting or benefit accruals, or
which deny an employee eligibility to participate, by reason of separation
or failure to complete a required period of service within a specified
period of time.
NOTE: In all events Years of Service during which the Employee did not complete
a least 1,000 Hours of Service shall be disregarded.
*Subsections (a), (b) and (c) may not be checked in Section 9.01 (1)(e) has been
elected.
Section 10.01 PARTICIPANT LOANS
Participant loans (Check one):
(a) are permitted
(x) (b) are not permitted Owners of S corps are not permitted loans.
Section 13.06 PARTICIPANT DIRECTED INVESTMENTS
Participants ( ) shall (x) shall not have the power, at their discretion, to
direct the Trustee with respect to the investment of all or a portion of their
Participant's Account
If Participant investment direction is permitted:
(i) Participants may direct the Trustee to invest all of their Account in
an, investment, to include Policies, permitted under the terms of the Plan
and Trust.
(ii) Participant investment direction shall be limited to direction to
invest if insurance or annuity Policies.
Section 14.01 INVESTMENT IN LIFE INSURANCE OR ANNUITY POLICIES
(a) Without Limiting the Trustee's powers in any other respect, contributions
for each Participant shall be invested in life insurance or annuity Policies as
follows
(Check and complete one of the following):
(i) Subject to any restrictions specified in (b) below, the percentage of
Plan contributions allocated to the purchase of Policies shall be as
elected by each Participant with the consent of the Plan Administrator.
(ii) No life insurance or annuity Policies shall be purchased by the
Trustee.
(iii) Subject to any restrictions specified in (b) below, the Trustee
shall uniformly invest Required Participant and Employer contributions for
each Participant as follows:
(A)____% Ordinary Life lnsurance (Maximum Less than 5O%)
(B)____% Term or Universal Life insurance (Maximum 25%)
(C)____% Annuity Policies (Maximum lOO%)
(b) If item(a)(i)or(a)(iii)above is checked, the purchase of life insurance
Policies shall be subject to the following restrictions (Check and complete
whichever of the following is applicable):
(i) All Policies will have a common issue date (the Plan Anniversary)
i.e., no Policies will be issued by the Insurer on other than the Plan
Anniversary.
(ii) The amount of life insurance issued on the life of any Participant
shall not exceed $__________
(iii) The amount of life insurance issued on the life of any Participant
shall be limited to the initial amount purchased for such Participant.
(iv) The maximum Age for the purchase of insurance on the life of a
Participant shall be ____________.
(v) The minimum Years of Service that must be completed by a Participant
before insurance may be purchased on such Participant's life shall be
________________ (not more than 2).
NOTE: Any purchase of life insurance Policies shall be subject to the rules and
restrictions specified in Section 2.28 and in Article XIV.
EXECUTION AND ACCEPTANCE
BY
EMPLOYER AND TRUSTEE(S)
STATE MUTUAL OF AMERICA PROTOTYPE DEFINED CONTRIBUTION PLAN NO.,
The Employer, which hereby agrees that neither the Trustee nor the Insurer shall
be responsible for the tax and legal aspects of the Plan and Trust, and which
assumes full responsibility therefor, hereby accepts provisions of State Mutual
Life Assurance Company of America Prototype Defined Contribution Plan No. agrees
to be bound by the provisions thereof, and adopts such Plan and the Plan
Adoption Agreement causing its name to be signed hereto by its duly authorized
officer, all as of this first day of December, 1986.
The adopting Employer may not rely on an opinion letter issued by the National
Office of the Internal Revenue Service as evidence that the plan is qualified
under Section 401 of the Internal Revenue Code. In order obtain reliance with
respect to plan qualification, the Employer must apply to the appropriate key
district office for a determination letter.
This Adoption Agreement may be used only in conjunction with Basic Plan
Document No. 04. Employer __________________________ Employer United Capital
Investment Corp.
By_________________________________________ By_______________________________
Title: ____________________________________ Title: President
The undersigned Trustee, or each undersigned Trustee, hereby accepts the
provisions of State Mutual Life Assurance Company of America Prototype Defined
Contribution Plan No. 12 and the trusts provided therein, and hereby declares,
and agrees with the aforesaid Employer to receive, hold, invest, expend a
distribute all funds deposited with, contributed to, earned or otherwise
received by, the Trustee as Trustees, in accordance with the terms and
provisions of said Plan and Trust.
For Signature by Corporate Trustee
TrusteeXXXXXXXXXXXXXX
By_____________________________
Title:
For Signature by Individual Trustee(s)
PL
As Trustee
LL
As Trustee
________________________________
As Trustee
The United States of America
Small Business Administration
License
This is to certify that United Capital Investment Corp. a New York corporation
with its principal office located at New York, New York is hereby licensed as a
Small Business Investment Company under the Small Business Investment Act of
1958, as amended to provide equity capital, long-term loans and management
assistance to small business for their operations growth, expansion and
modernization.
This license is not assignable or transferable.
The aforesaid Licensee is authorized to conduct its operations in New York
State. Issued at Washington, D.C. on February 5, 1985.
/s/ Edwin P. Hollaway
Associate Administrator for Finance and Investment
/s/ James C. Sanders
Administrator
