-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ci/7O6FZTQ6qeqGRHNXwZwp3nGRginXNuDlXVGe6y4iVsm0oiKaEiqOHdeLqSQCG GvJPp8IDWp4TNXeFy//EIw== 0000950109-96-003342.txt : 19960523 0000950109-96-003342.hdr.sgml : 19960523 ACCESSION NUMBER: 0000950109-96-003342 CONFORMED SUBMISSION TYPE: N-2/A PUBLIC DOCUMENT COUNT: 28 FILED AS OF DATE: 19960522 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDALLION FINANCIAL CORP CENTRAL INDEX KEY: 0001000209 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-2/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-01670 FILM NUMBER: 96571155 BUSINESS ADDRESS: STREET 1: 205 E 42ND ST STREET 2: STE 2000 CITY: NEW YORK STATE: NY ZIP: 10017 N-2/A 1 FORM N-2/A AS FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION ON MAY 22, 1996 SECURITIES ACT FILE NO. 333-1670 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM N-2 (CHECK APPROPRIATE BOX OR BOXES) [X] REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X] PRE-EFFECTIVE AMENDMENT NO. 2 [_] POST-EFFECTIVE AMENDMENT NO. ---------------- MEDALLION FINANCIAL CORP. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) 205 EAST 42ND STREET, SUITE 2020, NEW YORK, NEW YORK 10017 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (212) 682-3300 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) ---------------- ALVIN MURSTEIN CHIEF EXECUTIVE OFFICER MEDALLION FINANCIAL CORP. 205 EAST 42ND STREET, SUITE 2020 NEW YORK, NEW YORK 10017 (NAME AND ADDRESS OF AGENT FOR SERVICE) WITH COPIES TO: STEVEN N. FARBER, ESQ. MARIO M. CUOMO, ESQ. STANLEY KELLER, ESQ. CHRISTOPHER E. MANNO, ESQ. PALMER & DODGE LLP WILLKIE FARR & GALLAGHER ONE BEACON STREET 153 EAST 53RD STREET BOSTON, MASSACHUSETTS 02108 NEW YORK, NEW YORK 10022 (617) 573-0100 (212) 821-8000 ---------------- APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this form will be offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933, other than securities offered in connection with a dividend reinvestment plan, check the following box [_] It is proposed that this filing will become effective (check appropriate box): [_] when declared effective pursuant to Section 8(c) of the Securities Act of 1933. [_] This form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933 and the Securities Act registration statement number of the earlier effective registration statement for the same offering is 333- . [_] This Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933 and the Securities Act registration statement number of the earlier effective registration statement for the same offering is 333- . If delivery of the prospectus is expected to be made pursuant to Rule 434 under the Securities Act of 1933, please check the following box: [_] CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933 - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
PROPOSED PROPOSED MAXIMUM TITLE OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF SECURITIES BEING BEING OFFERING PRICE OFFERING REGISTRATION REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE - ------------------------------------------------------------------------------- Common Stock, $.01 par value................. 5,750,000 $12.00 $69,000,000 $23,793.10(3)
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (1) Includes 750,000 shares which may be sold by the Company pursuant to an option granted to the Underwriters solely to cover over-allotments, if any. (2) Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(a) under the Securities Act of 1933. (3) This amount was paid in connection with the initial filing of the Registration Statement on February 26, 1996. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Medallion Financial Corp. incorporates by reference herein Parts A and B of Amendment No. 1 to its Registration Statement (File No. 333-1670) as filed with the Securities and Exchange Commission on April 30, 1996. PART C INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS 1. Financial Statements. The following financial statements are included in the Prospectus on the identified pages.
PAGE ---- MEDALLION FINANCIAL CORP. Introduction to Pro Forma Combined Financial Statements.................. F-3 Pro Forma Balance Sheet at December 31, 1995 (unaudited)................. F-4 Pro Forma Combined Statement of Operations for the year ended December 31, 1995 (unaudited)........................................... F-5 Pro Forma Combined Statement of Operations for the three months ended December 31, 1995 (unaudited)........................................... F-6 Pro Forma Combined Statement of Operations for the three months ended September 30, 1995 (unaudited).......................................... F-7 Pro Forma Combined Statement of Operations for the three months ended June 30, 1995 (unaudited)............................................... F-8 Pro Forma Combined Statement of Operations for the three months ended March 31, 1995 (unaudited).............................................. F-9 Notes to the Unaudited Pro Forma Combined Financial Statements........... F-10 MEDALLION FINANCIAL CORP. Report of Arthur Andersen LLP, Independent Public Accountants............ F-13 Balance Sheet as of December 31, 1995.................................... F-14 Notes to Balance Sheet................................................... F-15 TRI-MAGNA CORPORATION AND SUBSIDIARIES Report of Arthur Andersen LLP, Independent Public Accountants............ F-18 Consolidated Balance Sheets as of December 31, 1995 and December 31, 1994.................................................................... F-19 Consolidated Statements of Operations for the years ended December 31, 1995, 1994 and 1993..................................................... F-20 Consolidated Statements of Shareholders' Equity for the years ended December 31, 1995, 1994, 1993 and 1992.................................. F-21 Consolidated Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993........................................ F-22 Notes to Consolidated Financial Statements............................... F-23 EDWARDS CAPITAL COMPANY (A LIMITED PARTNERSHIP) Independent Auditors' Report of Friedman, Alpren & Green LLP............. F-33 Report of Arthur Andersen LLP, Independent Public Accountants............ F-34 Balance Sheets as of December 31, 1995 and 1994.......................... F-35 Statements of Operations for the years ended December 31, 1995, 1994 and 1993.................................................................... F-36 Statements of Changes in Partners' Capital for the years ended December 31, 1995, 1994 and 1993........................................ F-37 Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993.................................................................... F-38 Notes to Financial Statements............................................ F-39 TRANSPORTATION CAPITAL CORP. Report of Coopers & Lybrand LLP, Independent Public Accountants.......... F-46 Report of Arthur Andersen LLP, Independent Public Accountants............ F-47 Balance Sheets as of December 31, 1995 and 1994.......................... F-48 Statements of Operations for the years ended December 31, 1995, 1994 and 1993.................................................................... F-49 Statements of Changes in Shareholders' Equity for each year in the two year period ended December 31, 1994....................................................... F-50 Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993.................................................................... F-51 Notes to Financial Statements............................................ F-52
II-1 2. Exhibits. a. --Form of Medallion Financial Corp. Restated Certificate of Incorporation++ b. --Form of Medallion Financial Corp. Restated By-Laws++ e. --Form of Medallion Financial Corp. Dividend Reinvestment Plan++ f.1 --Debenture due September 1, 1996 in the amount of $1,200,000 issued by Edwards Capital Company and payable to the U.S. Small Business Administration+ f.2 --Debenture due April 1, 1997 in the amount of $1,500,000 issued by Edwards Capital Company and payable to Chemical Bank as Trustee under the Trust Agreement dated January 15, 1987 among the Trustee, the U.S. Small Business Administration and SBIC Funding Corporation (the "Trust Agreement")+ f.3 --Debenture due June 1, 1998 in the amount of $3,000,000 issued by Edwards Capital Company and payable to Chemical Bank under the Trust Agreement+ f.4 --Debenture due September 1, 2002 in the amount of $3,500,000 issued by Edwards Capital Company and payable to Chemical Bank as Trustee under the Amended and Restated Trust Agreement dated March 1, 1990 among the Trustee, the U.S. Small Business Administration and SBIC Funding Corporation (the "Amended Trust Agreement")+ f.5 --Debenture due September 1, 2002 in the amount of $6,050,000 issued by Edwards Capital Company and payable to Chemical Bank under the Amended Trust Agreement+ f.6 --Debenture due June 1, 2004 in the amount of $4,600,000 issued by Edwards Capital Company and payable to Chemical Bank under the Amended Trust Agreement+ f.7 --Debenture due September 1, 2004 in the amount of $5,100,000 issued by Edwards Capital Company and payable to Chemical Bank under the Amended Trust Agreement+ f.8 --Letter Agreement, dated September 8, 1992, between the U.S. Small Business Administration and Edwards Capital Company regarding limit on incurrence of senior indebtedness, as amended on January 17, 1996+ f.9 --Subordinated Debenture due May 7, 1996 in the amount of $1,090,000 issued by Transportation Capital Corp. and payable to the U.S. Small Business Administration+ f.10 --Debenture due June 1, 2002 in the amount of $5,640,000 issued by Transportation Capital Corp. and payable to Chemical Bank under the Amended Trust Agreement+ g. --Form of Sub-Advisory Agreement between Medallion Financial Corp. and FMC Advisers, Inc.++ h.1 --Form of Underwriting Agreement++ h.2 --Form of Master Agreement Among Underwriters+ h.3 --Form of Master Selected Dealer Agreement+ i.1 --Form of Medallion Financial Corp. 1996 Stock Option Plan++ i.2 --Form of Medallion Financial Corp. 401(k) Investment Plan++ i.3 --Form of Medallion Financial Corp. 1996 Non-Employee Directors Stock Option Plan++ j. --Custodial Services Agreement with The First National Bank of Boston, dated April 25, 1996++ k.1 --Stock Purchase Agreement among Medallion Financial Corp., Transportation Capital Corp., LNC Investments, Inc., Leucadia, Inc. and Leucadia National Corporation, dated February 12, 1996* k.1(i) --Amendment Number 1 to Stock Purchase Agreement among Medallion Financial Corp. Transportation Capital Corp., LNC Investments, Inc., Leucadia, Inc. and Leucadia National Corporation dated April 30, 1996.++ k.2 --Asset Purchase Agreement between Medallion Financial Corp., and Edwards Capital Company, dated February 21, 1996* k.2(i) --Amendment Number 1 to Asset Purchase Agreement between Medallion Financial Corp. and Edwards Capital Company dated April 30, 1996++ II-2 k.3(i) --Agreement of Merger between Medallion Financial Corp. and Tri- Magna Corporation, dated December 21, 1995, as amended on February 22, 1996* k.3(ii)--Amendment Number 2 to Agreement of Merger between Medallion Financial Corp. and Tri-Magna Corporation, dated April 26, 1996+ k.4 --Form of Promissory Note from Edwards Capital Company payable to Israel Discount Bank of New York+ k.5 --Schedule of Promissory Notes from Edwards Capital Company payable to Israel Discount Bank of New York++ k.6 --Form of Secured Note from Edwards Capital Company payable to Sterling National Bank & Trust Company of New York+ k.7 --Schedule of Secured Notes from Edwards Capital Company payable to Sterling National Bank & Trust Company of New York++ k.8 --Promissory Note dated July 31, 1993 in the principal amount of $5,000,000 from Edwards Capital Company payable to NatWest Bank N.A. (formerly National Westminster Bank USA) as endorsed by Endorsement No. 1 dated July 31, 1994 and Endorsement No. 2 dated July 31, 1995++ k.9 --Committed Line of Credit Agreement in the principal amount of $3,000,000 dated as of July 29, 1993, as amended May 31, 1994, October 31, 1994 and September 30, 1995 between Edwards Capital Company and Bank Hapoalim B.M.+ k.10 --Inter-Creditor Agreement among and between Edwards Capital Company and Bank Hapoalim B.M., Chemical Bank, Israel Discount Bank of New York, NatWest Bank N.A. (formerly National Westminster Bank USA), Marine Midland Bank and Sterling National Bank & Trust Company of New York dated as of May 14, 1991+ k.11 --Security Agreement between Bank Hapoalim B.M. and Edwards Capital Company dated May 1, 1989+ k.12 --Continuing General Security Agreement between NatWest Bank N.A. (formerly National Westminster Bank USA) and Edwards Capital Company dated June 17, 1987+ k.13 --General Loan and Security Agreement between Sterling National Bank & Trust of New York and Edwards Capital Company dated May 1, 1991+ k.14 --General Security Agreement between Israel Discount Bank of New York and Edwards Capital Company dated May 2, 1991+ k.15 --Promissory Note dated March 5, 1996 in the principal amount of $275,000 from Medallion Taxi Media, Inc. payable to Israel Discount Bank of New York+ k.16 --Promissory Note dated September 1, 1995 in the principal amount of $2,000,000 from Tri-Magna Corporation payable to NatWest Bank N.A. (formerly National Westminster Bank USA)+ k.17 --Term Note dated September 29, 1995 in the principal amount of $3,231,900 from Tri-Magna Corporation payable to NatWest Bank N.A. (formerly National Westminister Bank USA) as amended March 30, 1996++ k.18 --Term Note in the principal amount of $2,000,000 dated July 16, 1990 as amended March 27, 1992, July 16, 1993 and July 16, 1995 from Medallion Funding Corp. payable to NatWest Bank N.A. (formerly National Westminster Bank USA)++ k.19 --Loan Agreement dated as of March 27, 1992 among Medallion Funding Corp., the banks signatory thereto and NatWest Bank N.A. (formerly National Westminster Bank USA), as amended March 31, 1993, September 29, 1993, March 31, 1994, September 29, 1995 and March 28, 1996.+ II-3 k.20 --Security Agreement between Medallion Funding Corp. and NatWest Bank N.A. (formerly National Westminster Bank USA) dated as of March 27, 1992 for the benefit of the banks signatory to the Loan Agreement dated as of March 27, 1992, among Medallion Funding Corp., the banks signatory thereto and NatWest Bank N.A. (formerly National Westminster Bank USA)+ k.21 --Revolving Credit Note dated September 29, 1995 in the amount of $18,000,000 from Medallion Funding Corp. payable to NatWest Bank N.A. (formerly National Westminster Bank USA)+ k.22 --Revolving Credit Note dated September 29, 1995 in the amount of $17,500,000 from Medallion Funding Corp. payable to The First National Bank of Boston+ k.23 --Revolving Credit Note dated September 29, 1995 in the amount of $17,500,000 from Medallion Funding Corp. payable to Fleet Bank of Massachusetts, N.A.+ k.24 --Revolving Credit Note dated September 29, 1995 in the amount of $10,000,000 from Medallion Funding Corp. payable to The Bank of Tokyo Trust Company+ k.25 --Revolving Credit Note dated September 29, 1995 in the amount of $6,000,000 from Medallion Funding Corp. payable to Israel Discount Bank of New York+ k.26 --Revolving Credit Note dated September 29, 1995 in the amount of $6,000,000 from Medallion Funding Corp. payable to European American Bank+ k.27 --Revolving Credit Note dated March 28, 1996 in the amount of $3,000,000 from Medallion Funding Corp. payable to Harris Trust and Savings Bank+ k.28 --Specialized Small Business Investment Company 3% Preferred Stock Repurchase Agreement dated as of August 12, 1994 between Medallion Funding Corp. and the U.S. Small Business Administration+ k.29 --Specialized Small Business Investment Company 3% Preferred Stock Repurchase Agreement dated as March 22, 1995 between Transportation Capital Corp. and the U.S. Small Business Administration as amended by letter agreement dated June 1, 1995+ k.30 --Form of Employment Agreement between Medallion Financial Corp and Alvin Murstein.++ k.31 --Form of Employment Agreement between Medallion Financial Corp. and Andrew Murstein.++ l. --Opinion and consent of Palmer & Dodge LLP++ n.1 --Consent of Arthur Andersen LLP relating to its report dated February 21, 1996++ n.2 --Consent of Arthur Andersen LLP relating to its report dated March 14, 1996++ n.3 --Consent of Arthur Andersen LLP relating to its report dated March 14, 1996++ n.4 --Consent of Arthur Andersen LLP relating to its report dated March 15, 1996++ n.5 --Consent of Coopers & Lybrand LLP relating to its report dated October 24, 1995++ n.6 --Consent of Friedman, Alpren & Green LLP relating to its report dated January 28, 1995++ p.1 --Subscription Agreement between the Alvin Murstein Second Family Trust and Medallion Financial Corp.++ p.2 --Subscription Agreement between the Andrew Murstein Family Trust and Medallion Financial Corp.++ r. --Medallion Financial Corp. Financial Data Schedule+ - ---------------- * Filed on February 26, 1996. + Filed on April 30, 1996. ++ Filed herewith. II-4 ITEM 25. MARKETING ARRANGEMENTS See Section 12 of the Underwriting Agreement which is filed as Exhibit h.1 hereto, Sections 12 and 15 of the Master Agreement Among Underwriters which is filed as Exhibit h.2 hereto and Section 3(c) of the Master Selected Dealer Agreement which is filed as Exhibit h.3 hereto. In connection with the Offering, the Underwriters may over-allot or effect transactions which stabilize or maintain the market price of the Common Stock at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. Pursuant to Lock-up Agreements with the Company's directors and officers and certain other stockholders, each party to a Lock-up Agreement has agreed that he or she will not, directly or indirectly, offer for sale, sell, contract to sell, grant an option to purchase or otherwise dispose of any shares of the Company's Common Stock, except for shares escrowed by the Murstein Trusts for the benefit of FMC or gifts to family members or charitable institutions, provided that such family member or charitable institution agrees to be bound by such Lock-up Agreement, for a period of two years from the date of this Prospectus without the prior written consent of Furman Selz LLC. In addition, the Company has agreed that for a period of 180 days from the date of this Prospectus, the Company will not, without the prior written consent of Furman Selz LLC, directly or indirectly, offer for sale, sell, contract to sell, or grant any option to purchase or otherwise dispose of or transfer any shares of Common Stock other than options granted under the 1996 Plan, the Director Plan or shares issued pursuant to the exercise of outstanding options. ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following table sets forth the estimated expenses expected to be incurred in connection with the Offering: SEC registration fee.......................................... $ 23,793.10 NASD fees..................................................... 7,400.00 Nasdaq initial listing fee.................................... 36,250.00 Blue Sky fees and expenses.................................... 15,000.00 Financial advisory fees....................................... 225,000.00 Accounting fees and expenses.................................. 670,000.00 Legal fees and expenses....................................... 675,000.00 Printing and engraving fees................................... 120,000.00 Registrar and transfer agent's fees........................... 10,000.00 Miscellaneous fees and expenses............................... 67,556.90 ------------- Total....................................................... $1,850,000.00 =============
ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL MEDALLION FINANCIAL CORP. --------------------------------------------------------------- Medallion Medallion Edwards Transportation Funding Corp. Media, Inc. Capital Capital Corp. Company All of the subsidiaries are 100% owned by Medallion Financial and they are Delaware corporations. The financial statements for Edwards Capital Company and Transportation Capital Corp. are included in the Prospectus which forms a part of this Registration Statement. The financial statements of Medallion Funding Corp. are consolidated with the financial statements of Tri-Magna Corporation included in the Prospectus. Summary financial statements of Medallion Media, Inc. are included in the notes to the financial statements of Tri-Magna Corporation and have not been consolidated because Medallion Media, Inc. is not an investment company and its results of operations may not be consolidated with the results of operations of Tri-Magna Corporation which is an investment company. II-5 ITEM 28. NUMBER OF HOLDERS OF SECURITIES The following table sets forth the number of record holders of the Company's Common Stock as of April 26, 1996.
NAME OF CLASS NUMBER OF RECORD HOLDERS ------------- ------------------------ Common Stock, $.01 par value per share 2
ITEM 29. INDEMNIFICATION Section 145 of the Delaware General Corporation Law grants the Company the power to indemnify each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that he is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgements, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful, provided, however, no indemnification shall be made in connection with any proceeding brought by or in the right of the Company where the person involved is adjudged to be liable to the Company except to the extent approved by a court. Article TENTH of the Company's Certificate of Incorporation as currently in effect provides that the Company shall, to the fullest extent permitted by the Delaware General Corporation Law, as amended from time to time, indemnify each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that he is or was, or has agreed to become, a director or officer of the Company, or is or was serving, or has agreed to serve, at the request of the Company, as a director, officer or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise. The indemnification provided for in Article TENTH is expressly not exclusive of any other rights to which those seeking indemnification may be entitled under any law, agreement or vote of stockholders or disinterested directors or otherwise, and shall inure to the benefit of the heirs, executors and administrators of such persons. Article TENTH permits the Board of Directors to authorize the grant of indemnification rights to other employees and agents of the Company and such rights may be equivalent to, or greater or less than, those set forth in Article TENTH. Article V, Section 2 of the Company's By-Laws provides that the Company shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company, as a director, officer or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against and incurred by such person in any such capacity. Pursuant to Section 102(b)(7) of the Delaware General Corporation Law, Article NINTH of the Company's Certificate of Incorporation eliminates a director's personal liability for monetary damages to the Company and its stockholders for breaches of fiduciary duty as a director, except to the extent that the elimination or limitation of liability is not then permitted under the Delaware General Corporation Law. The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments that the Underwriters may be required to make in respect thereof. ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER. Information as to the directors and officers of FMC Advisers, Inc. is included in its Form ADV filed with the Commission (File No. 801-50981), as amended as of the date hereof, and is incorporated herein by reference. II-6 ITEM 31. LOCATION OF ACCOUNTS AND RECORDS. The Company maintains at its principal office physical possession of each account, book or other document required to be maintained by Section 31(a) of the 1940 Act as applicable, pursuant to Section 64 of the 1940 Act. ITEM 32. MANAGEMENT SERVICES. Not applicable. ITEM 33. UNDERTAKINGS. (1) The Company hereby undertakes: (a) to suspend the Offering until the Prospectus is amended if (1) subsequent to the effective date of this Registration Statement, its net asset value declines more than ten percent from its net asset value as of the effective date of this Registration Statement or (2) the net asset value increases to an amount greater than its net proceeds as stated in the Prospectus. (b) that, for the purpose of determining any liability under the Securities Act of 1933, the information omitted from the form of Prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of Prospectus filed by the Company under Rule 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective; and (c) that, for the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of Prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering thereof. (2) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Company pursuant to the provisions of the Certificate of Incorporation and By-Laws, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication for such issue. II-7 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT HAS DULY CAUSED AMENDMENT NO. 2 TO THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, AND STATE OF NEW YORK, ON THE 22ND DAY OF MAY 1996. Medallion Financial Corp. By: /s/ Alvin Murstein ------------------------------------ Alvin Murstein Chairman and Chief Executive Officer PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AMENDMENT NO. 2 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
NAME TITLE DATE ---- ----- ---- /s/ Alvin Murstein Chairman and Chief Executive May 22, 1996 - ------------------------------------ Officer (Principal Executive Alvin Murstein Officer) * Andrew Murstein President and Director May 22, 1996 - ------------------------------------ Andrew Murstein * Daniel Baker Treasurer and Chief May 22, 1996 - ------------------------------------ Financial Officer Daniel Baker * Mario M. Cuomo Director May 22, 1996 - ------------------------------------ Mario M. Cuomo * Stanley Kreitman Director May 22, 1996 - ------------------------------------ Stanley Kreitman * David L. Rudnick Director May 22, 1996 - ------------------------------------ David L. Rudnick * Benjamin Ward Director May 22, 1996 - ------------------------------------ Benjamin Ward *By: /s/ Alvin Murstein --------------------------- Alvin Murstein Attorney-in- fact May 22, 1996
II-8 EXHIBIT INDEX PAGE Exhibit Number and Description a. --Form of Medallion Financial Corp. Restated Certificate of Incorporation++ b. --Form of Medallion Financial Corp. Restated By-Laws++ e. --Form of Medallion Financial Corp. Dividend Reinvestment Plan++ f.1 --Debenture due September 1, 1996 in the amount of $1,200,000 issued by Edwards Capital Company and payable to the U.S. Small Business Administration+ f.2 --Debenture due April 1, 1997 in the amount of $1,500,000 issued by Edwards Capital Company and payable to Chemical Bank as Trustee under the Trust Agreement dated January 15, 1987 among the Trustee, the U.S. Small Business Administration and SBIC Funding Corporation (the "Trust Agreement")+ f.3 --Debenture due June 1, 1998 in the amount of $3,000,000 issued by Edwards Capital Company and payable to Chemical Bank under the Trust Agreement+ f.4 --Debenture due September 1, 2002 in the amount of $3,500,000 issued by Edwards Capital Company and payable to Chemical Bank as Trustee under the Amended and Restated Trust Agreement dated March 1, 1990 among the Trustee, the U.S. Small Business Administration and SBIC Funding Corporation (the "Amended Trust Agreement")+ f.5 --Debenture due September 1, 2002 in the amount of $6,050,000 issued by Edwards Capital Company and payable to Chemical Bank under the Amended Trust Agreement+ f.6 --Debenture due June 1, 2004 in the amount of $4,600,000 issued by Edwards Capital Company and payable to Chemical Bank under the Amended Trust Agreement+ f.7 --Debenture due September 1, 2004 in the amount of $5,100,000 issued by Edwards Capital Company and payable to Chemical Bank under the Amended Trust Agreement+ f.8 --Letter Agreement, dated September 8, 1992, between the U.S. Small Business Administration and Edwards Capital Company regarding limit on incurrence of senior indebtedness, as amended on January 17, 1996+ f.9 --Subordinated Debenture due May 7, 1996 in the amount of $1,090,000 issued by Transportation Capital Corp. and payable to the U.S. Small Business Administration+ f.10 --Debenture due June 1, 2002 in the amount of $5,640,000 issued by Transportation Capital Corp. and payable to Chemical Bank under the Amended Trust Agreement+ g. --Form of Sub-Advisory Agreement between Medallion Financial Corp. and FMC Advisers, Inc.++ h.1 --Form of Underwriting Agreement++ h.2 --Form of Master Agreement Among Underwriters+ h.3 --Form of Master Selected Dealer Agreement+ i.1 --Form of Medallion Financial Corp. 1996 Stock Option Plan++ i.2 --Form of Medallion Financial Corp. 401(k) Investment Plan++ i.3 --Form of Medallion Financial Corp. 1996 Non-Employee Directors Stock Option Plan++ j. --Custodial Services Agreement with The First National Bank of Boston, dated April 25, 1996++ k.1 --Stock Purchase Agreement among Medallion Financial Corp., Transportation Capital Corp., LNC Investments, Inc., Leucadia, Inc. and Leucadia National Corporation, dated February 12, 1996* PAGE Exhibit Number and Description k.1(i) --Amendment Number 1 to Stock Purchase Agreement among Medallion Financial Corp., Transportation Capital Corp., LNC Investments, Inc., Leucadia, Inc. and Leucadia National Corporation dated April 30, 1996.++ --Asset Purchase Agreement between Medallion Financial Corp., k.2 and Edwards Capital Company, dated February 21, 1996* k.2(i) --Amendment Number 1 to Asset Purchase Agreement between Medallion Financial Corp. and Edwards Capital Company dated April 30, 1996.++ k.3(i) --Agreement of Merger between Medallion Financial Corp. and Tri-Magna Corporation, dated December 21, 1995, as amended on February 22, 1996* k.3(ii)--Amendment Number 2 to Agreement of Merger between Medallion Financial Corp. and Tri-Magna Corporation, dated April 26, 1996+ k.4 --Form of Promissory Note from Edwards Capital Company payable to Israel Discount Bank of New York+ k.5 --Schedule of Promissory Notes from Edwards Capital Company payable to Israel Discount Bank of New York++ k.6 --Form of Secured Note from Edward Capital Company payable to Sterling National Bank & Trust Company of New York+ k.7 --Schedule of Secured Notes from Edwards Capital Company payable to Sterling National Bank & Trust Company of New York++ k.8 --Promissory Note dated July 31, 1993 in the principal amount of $5,000,000 from Edwards Capital Company payable to NatWest Bank N.A. (formerly National Westminster Bank USA) as endorsed by Endorsement No. 1 dated July 31, 1994 and Endorsement No. 2 dated July 31, 1995++ k.9 --Committed Line of Credit Agreement in the principal amount of $3,000,000 dated as of July 29, 1993, as amended May 31, 1994, October 31, 1994 and September 30, 1995 between Edwards Capital Company and Bank Hapoalim B.M.+ k.10 --Inter-Creditor Agreement among and between Edwards Capital Company and Bank Hapoalim B.M., Chemical Bank, Israel Discount Bank of New York, NatWest Bank N.A. (formerly National Westminster Bank USA), Marine Midland Bank and Sterling National Bank & Trust Company of New York dated as of May 14, 1991+ k.11 --Security Agreement between Bank Hapoalim B.M. and Edwards Capital Company dated May 1, 1989+ k.12 --Continuing General Security Agreement between NatWest Bank N.A. (formerly National Westminster Bank USA) and Edwards Capital Company dated June 17, 1987+ k.13 --General Loan and Security Agreement between Sterling National Bank & Trust of New York and Edwards Capital Company dated May 1, 1991+ k.14 --General Security Agreement between Israel Discount Bank of New York and Edwards Capital Company dated May 2, 1991+ k.15 --Promissory Note dated March 5, 1996 in the principal amount of $275,000 from Medallion Taxi Media, Inc. payable to Israel Discount Bank of New York+ k.16 --Promissory Note dated September 1, 1995 in the principal amount of $2,000,000 from Tri-Magna Corporation payable to NatWest Bank N.A. (formerly National Westminster Bank USA)+ 2 PAGE Exhibit Number and Description k.17 --Term Note dated September 29, 1995 in the principal amount of $3,231,900 from Tri-Magna Corporation payable to NatWest Bank N.A. (formerly National Westminister Bank USA) as amended March 30, 1996++ k.18 --Term Note in the principal amount of $2,000,000 dated July 16, 1990 as amended March 27, 1992, July 16, 1993 and July 16, 1995 from Medallion Funding Corp. payable to NatWest Bank N.A. (formerly National Westminster Bank USA)++ k.19 --Loan Agreement dated as of March 27, 1992 among Medallion Funding Corp., the banks signatory thereto and NatWest Bank N.A. (formerly National Westminster Bank USA), as amended March 31, 1993, September 29, 1993, March 31, 1994, September 29, 1995 and March 28, 1996+ k.20 --Security Agreement between Medallion Funding Corp. and NatWest Bank N.A. (formerly National Westminster Bank USA) dated as of March 27, 1992 for the benefit of the banks signatory to the Loan Agreement dated as of March 27, 1992, among Medallion Funding Corp., the banks signatory thereto and NatWest Bank N.A. (formerly National Westminster Bank USA)+ k.21 --Revolving Credit Note dated September 29, 1995 in the amount of $18,000,000 from Medallion Funding Corp. payable to NatWest Bank N.A. (formerly National Westminster Bank USA)+ k.22 --Revolving Credit Note dated September 29, 1995 in the amount of $17,500,000 from Medallion Funding Corp. payable to The First National Bank of Boston+ k.23 --Revolving Credit Note dated September 29, 1995 in the amount of $17,500,000 from Medallion Funding Corp. payable to Fleet Bank of Massachusetts, N.A.+ k.24 --Revolving Credit Note dated September 29, 1995 in the amount of $10,000,000 from Medallion Funding Corp. payable to The Bank of Tokyo Trust Company+ k.25 --Revolving Credit Note dated September 29, 1995 in the amount of $6,000,000 from Medallion Funding Corp. payable to Israel Discount Bank of New York+ k.26 --Revolving Credit Note dated September 29, 1995 in the amount of $6,000,000 from Medallion Funding Corp. payable to European American Bank+ k.27 --Revolving Credit Note dated March 28, 1996 in the amount of $3,000,000 from Medallion Funding Corp. payable to Harris Trust and Savings Bank+ k.28 --Specialized Small Business Investment Company 3% Preferred Stock Repurchase Agreement dated as of August 12, 1994 between Medallion Funding Corp. and the U.S. Small Business Administration+ k.29 --Specialized Small Business Investment Company 3% Preferred Stock Repurchase Agreement dated as March 22, 1995 between Transportation Capital Corp. and the U.S. Small Business Administration as amended by letter agreement dated June 1, 1995+ k.30 --Form of Employment Agreement between Medallion Financial Corp. and Alvin Murstein++ k.31 --Form of Employment Agreement between Medallion Financial Corp. and Andrew Murstein++ l. --Opinion and consent of Palmer & Dodge LLP++ n.1 --Consent of Arthur Andersen LLP relating to its report dated February 21, 1996++ n.2 --Consent of Arthur Andersen LLP relating to its report dated March 14, 1996++ n.3 --Consent of Arthur Andersen LLP relating to its report dated March 14, 1996++ 3 PAGE Exhibit Number and Description n.4 --Consent of Arthur Andersen LLP relating to its report dated March 14, 1996++ n.5 --Consent of Coopers & Lybrand LLP relating to its report dated October 24, 1995++ n.6 --Consent of Friedman, Alpren & Green LLP relating to its report dated January 28, 1995++ p.1 --Subscription Agreement between the Alvin Murstein Second Family Trust and Medallion Financial Corp.++ p.2 --Subscription Agreement between the Andrew Murstein Family Trust and Medallion Financial Corp.++ r. --Medallion Financial Corp. Financial Data Schedule+ - ---------------- * Filed on February 26, 1996. + Filed on April 30, 1996. ++ Filed herewith. 4 EX-99.2A 2 RESTATED CERTIFICATE OF INC. RESTATED CERTIFICATE OF INCORPORATION OF MEDALLION FINANCIAL CORP. MEDALLION FINANCIAL CORP. (the "Corporation"), a corporation organized and existing under and by virtue of the Delaware General Corporation Law, does hereby certify that the Board of Directors of the Corporation, by a resolution adopted at a meeting of the Board of Directors of the Corporation on May __, 1996, and by a written consent of the stockholders of the Corporation dated May __, 1996, approved and adopted, pursuant to SECTION 242 of the Delaware General Corporation Law, this Restated Certificate of Incorporation, which restates, integrates and amends the Certificate of Incorporation in its entirety pursuant to SECTION 245 of the Delaware General Corporation Law. The Certificate of Incorporation of the Corporation was originally filed with the Secretary of State of Delaware on October 20, 1995. The full text of the Restated Certificate of Incorporation is set forth below: FIRST: The name of the Corporation is Medallion Financial Corp. SECOND: The registered office of the Corporation in the State of Delaware is located at 32 Loockerman Square, Suite L-100, in the City of Dover, County of Kent. The name of its registered agent at such address is The Prentice-Hall Corporation System, Inc. THIRD: The purpose of the corporation is to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law. FOURTH: The aggregate number of shares of all classes of stock which the Corporation is authorized to issue is sixteen million (16,000,000) shares of which one million (1,000,000) shall be shares of Preferred Stock, par value $.01 per share, (the "Preferred Stock") and fifteen million (15,000,000) shall be shares of Common Stock, par value $.01 per share (the "Common Stock"). Any action required or permitted to be taken by the holders of any class or series of stock of the Corporation may be taken by written consent or consents but only if such consent or consents are signed by all holders of the class or series of stock entitled to vote on such action. SECTION 1. COMMON STOCK. ------------ The powers, preferences, rights, qualifications, limitations and restrictions relating to the Common Stock are as follows: a. The Common Stock is junior to the Preferred Stock and is subject to all the powers, rights, privileges, preferences and priorities of the Preferred Stock designated herein or in any resolution or resolutions adopted by the Board of Directors pursuant to authority expressly vested in it by the provisions of SECTION 2 of this ARTICLE FOURTH. b. The Common Stock shall have voting rights for the election of directors and for all other purposes (subject to the powers, rights, privileges, preferences and priorities of the Preferred Stock as provided above), each holder of Common Stock being entitled to one vote for each share thereof held by such holder, except as otherwise required by law. SECTION 2. PREFERRED STOCK. --------------- The Board of Directors is expressly authorized to provide for the issuance of all or any part of the shares of the Preferred Stock in one or more classes or series, and to fix for each such class or series such voting powers, full or limited or fractional, or no voting powers, and such distinctive designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors in its sole discretion providing for the issuance of such class or series and as may be permitted by the Delaware General Corporation Law including, without limitation, (i) whether such shares shall be redeemable, and, if so, the terms and conditions of such redemption, whether for cash, property or rights, including securities of any other corporation, and whether at the option of either the Corporation or the holder or both, including the date or dates or the event or events upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; (ii) whether such shares shall be entitled to receive dividends (which may be cumulative or noncumulative) at such rates, on such conditions, and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or any other series; (iii) the rights of such shares in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation, and the relative rights of priority, if any, of payment of such shares; (iv) whether such shares shall be convertible into, or exchangeable for, shares of any other class or classes of stock, or of any other series of the same or any other class or classes of stock, whether at the option of either the Corporation or the holder or both, and, if so, the terms and conditions of such conversion, including provisions for adjustment of the conversion rate in such events as the Board of Directors shall determine; (v) whether the class or series shall have a sinking fund for the redemption or purchase of such shares, and, if so, the terms and amount of such sinking fund; or (vi) provisions as to any other voting, optional, and/or special or relative rights, preferences, limitations, or restrictions; and (vii) the number of shares and designation of such class or series. SECTION 3. SHARES ENTITLED TO MORE OR LESS THAN ONE VOTE. --------------------------------------------- If any class or series of the Corporation's capital stock shall be entitled to more or less than one vote per share, on any matter, every reference in this Restated Certificate of Incorporation or in any resolution or resolutions adopted by the Board of Directors pursuant to authority expressly vested in it by the provisions of SECTION 2 of this ARTICLE FOURTH -2- with respect to the Preferred Stock or in any relevant provision of law or in any rule or regulation, to a majority or other proportion of stock shall be deemed to refer to such majority or other proportion of the votes of such stock. FIFTH: In furtherance of, and not in limitation of, the powers conferred by statute, the Board of Directors is expressly authorized and empowered a. to manage, or direct the management of, the business and affairs of the Corporation and to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation subject, nevertheless, to the provisions of the Delaware General Corporation Law, this Restated Certificate of Incorporation and the By-Laws of the Corporation, and b. from time to time to determine to what extent, and at what times and places, and under what conditions and regulations, the accounts and books of the Corporation, or any of them, shall be open to inspection by stockholders, and no stockholder shall have any right to inspect any account, book or document of the Corporation except as conferred by applicable law. The Corporation may in its By-Laws confer powers upon the Board of Directors in addition to the foregoing and in addition to the powers and authorities expressly conferred upon the Board of Directors by applicable law. SIXTH: Subject to the rights of the holders of any class or series of stock having a preference expressly vested in it by the provisions of SECTION 2 of ARTICLE FOURTH with respect to the Preferred Stock: a. any action required or permitted to be taken by the stockholders of the Corporation must be effected only at a duly called annual or special meeting of stockholders of the Corporation and may not, after the effective date of this Restated Certificate of Incorporation, be effected by any consent in writing of such stockholders; b. special meetings of the stockholders of the Corporation may be called only (i) by the Chairman of the Board of Directors, (ii) pursuant to a resolution approved by a majority of the Whole Board (as hereinafter defined), or (iii) pursuant to a written request of the holders of not less than twenty percent (20%) of the voting power of the Voting Stock; and c. the business permitted to be conducted at any special meeting of the stockholders is limited to the business brought before the meeting (i) by the Chairman of the Board of Directors, or (ii) at the request of a majority of the Whole Board, or (iii) as specified in the written request of the holders of not less than twenty percent (20%) of the voting power of the Voting Stock. Advance notice of the business to be brought by stockholders before an annual meeting shall be given by such stockholders in the manner provided in the By-Laws of the Corporation. -3- SEVENTH: SECTION 1. NUMBER, ELECTION AND TERMS OF DIRECTORS. --------------------------------------- Subject to the rights of the holders of any class or series of stock having a preference expressly vested in it by the provisions of SECTION 2 of ARTICLE FOURTH with respect to the Preferred Stock, the number of Directors of the Corporation shall be fixed by the By-Laws of the Corporation and may be increased or decreased from time to time in such a manner as may be prescribed by the By-Laws, but in no case shall the number be less than three nor more than fifteen. The Directors shall be divided into three classes, as nearly equal in number as possible. One class of Directors ("Class I") has been initially elected for a term expiring at the annual meeting of stockholders to be held in 1996, another class ("Class II") has been initially elected for a term expiring at the annual meeting of stockholders to be held in 1997, and another class ("Class III") has been initially elected for a term expiring at the annual meeting of stockholders to be held in 1998 with members of each class to hold office until their successors are elected and qualified. At each succeeding annual meeting of the stockholders of the Corporation, the successors of the class of Directors whose term expires at that meeting shall be elected by plurality vote of all votes cast at such meeting to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election. SECTION 2. STOCKHOLDER NOMINATION OF DIRECTOR CANDIDATES. --------------------------------------------- Advance notice of stockholder nominations for the election of Directors shall be given by such stockholders in the manner provided in the By-Laws of the Corporation. SECTION 3. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. ----------------------------------------- Subject to the rights of the holders of any class or series of stock having a preference expressly vested in it by the provisions of SECTION 2 of ARTICLE FOURTH with respect to the Preferred Stock, newly created directorships resulting from any increase in the number of directors and any vacancy on the Board of Directors resulting from death, resignation, disqualification, removal or other cause shall be filled solely by the affirmative vote of a majority of the remaining Directors then in office, even though less than a quorum of the Board of Directors, or by a sole remaining Director. Any Director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the class of Directors in which the new directorship was created or the vacancy occurred and until such Director's successor shall have been elected and qualified. No decrease in the number of Directors constituting the Board of Directors shall shorten the term of an incumbent Director. SECTION 4. REMOVAL OF DIRECTORS. -------------------- Subject to the rights of the holders of any class or series of stock having a preference expressly vested in it by the provisions of SECTION 2 of ARTICLE FOURTH with respect to the Preferred Stock, any Director may be removed from office only by the stockholders in the manner provided in this SECTION 4 of ARTICLE SEVENTH. At any annual meeting of the stockholders of the Corporation or at any special meeting of the stockholders of the -4- Corporation, the notice of which shall state that the removal of a Director or Directors is among the purposes of the meeting, the affirmative vote of the holders of at least seventy-five percent (75%) of the voting power of the Voting Stock, voting together as a single class, may remove such Director or Directors. In any vote required by or provided for in this ARTICLE SEVENTH, each share of Voting Stock shall have the number of votes granted to it generally in the election of Directors. EIGHTH: A director shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent that the elimination or limitation of liability is not permitted under the Delaware General Corporation Law as in effect when such liability is determined. No amendment or repeal of this provision shall deprive a director of the benefits hereof with respect to any act or omission occurring prior to such amendment or repeal. NINTH: The Board of Directors of the Corporation, in determining whether the interests of the Corporation, its subsidiaries and its stockholders will be served by any offer of another person to (i) make a tender or exchange offer for any equity security of the Corporation or any subsidiary of the Corporation, (ii) merge or consolidate the Corporation or any of its subsidiaries with or into another corporation, or (iii) purchase or otherwise acquire all or substantially all of the properties and assets of the Corporation or any of its subsidiaries, may take into account factors in addition to potential economic benefits to stockholders. Such factors may include, without limitation, (a) comparison of the proposed consideration to be received by stockholders, in relation to the then current market price of the capital stock, to the estimated current value of the Corporation or any of its subsidiaries in a freely negotiated transaction, and to the estimated future value of the Corporation or any of its subsidiaries as an independent entity; (b) the impact of such a transaction on the customers and employees of the Corporation or any of its subsidiaries, and its effect on the communities in which the Corporation or any of its subsidiaries operate; and (c) the ability of the Corporation or any of its subsidiaries to fulfill its objectives and obligations under applicable statutes and regulations. The term "offer" as used in this ARTICLE TENTH includes every offer to buy or acquire, solicitation of an offer to sell, tender offer for, or request or invitation for tender of, a security or interest in a security for value. TENTH: The Corporation may not purchase any shares of its stock from any person, entity or group that beneficially owns five percent (5%) or more of the voting power of the Voting Stock at a price exceeding the average closing price for the twenty trading business days prior to the purchase date, unless a majority of the Corporation's Disinterested Stockholders (as hereinafter defined) approves the transaction. The restrictions on purchases by the Corporation set forth in this ARTICLE TENTH do not apply (i) to any offer to purchase shares of any class of the Corporation's stock which is made on the same terms and conditions to all holders of that class of stock, or (ii) to any purchase of stock owned by such a 5% stockholder occurring more than two years after such stockholder's last acquisition of the Corporation's stock, or (iii) to any purchase of the Corporation's stock in accordance with the terms of any stock option or employee benefit plan, or (iv) to any purchase at prevailing market prices pursuant to a stock purchase program. -5- For purposes of this ARTICLE TENTH, the term "Disinterested Stockholders" means those holders each of whom owns less than five percent (5%) of the voting power of the Voting Stock. ELEVENTH: Any vote or votes authorizing liquidation of the Corporation or proceedings for its dissolution may provide, subject to the rights of creditors and the rights expressly provided for particular classes or series of stock, for the distribution pro rata among the stockholders of the Corporation of the assets of the Corporation, wholly or in part in kind, whether such assets be in cash or other property, and may authorize the Board of Directors of the Corporation to determine the valuation of the different assets of the Corporation for the purpose of such liquidation and may divide or authorize the Board of Directors to divide such assets or any part thereof among the stockholders of the Corporation, in such manner that every stockholder will receive a proportionate amount in value (determined as aforesaid) of cash or property of the Corporation upon such liquidation or dissolution even though each stockholder may not receive a strictly proportionate part of each such asset. TWELFTH: BUSINESS COMBINATIONS. --------------------- SECTION 1. HIGHER VOTE FOR BUSINESS COMBINATIONS. ------------------------------------- In addition to any affirmative vote required by law or by this Restated Certificate of Incorporation, unless a Business Combination (as defined below) shall have been approved by the affirmative vote of not less than a majority of the Whole Board, any Business Combination shall require the affirmative vote of the holders of record of outstanding shares representing at least seventy-five percent (75%) of the voting power of the Voting Stock, voting together as a single class. Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage may be specified, by law or in any agreement with any national securities exchange or otherwise. SECTION 2. NO EFFECT ON FIDUCIARY OBLIGATIONS. ---------------------------------- Nothing contained in this provision shall be construed to relieve the members of the Board of Directors from any fiduciary obligations imposed by law. SECTION 3. DEFINITION. ---------- For purposes of this ARTICLE TWELFTH "Business Combination" means: a. any merger or consolidation of the Corporation or any subsidiary; or b. any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) of all or more than ten percent (10%) of the total assets of the Corporation or any subsidiary, as of the end of such corporation's recent fiscal year ending prior to the time the determination is made; or -6- c. the issuance or transfer by the Corporation or any subsidiary (in one transaction or a series of transactions) of any securities of the Corporation or any subsidiary; or d. the adoption of any plan or proposal for the liquidation or dissolution of the Corporation, or any spin-off or split-up of any kind of the Corporation or any subsidiary; or e. any reclassification of securities (including any reverse stock split), or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any subsidiary or any other transaction which has the effect, directly or indirectly; of increasing the percentage of the outstanding shares of (i) any class of equity securities of the Corporation or any subsidiary, or (ii) any class of securities of the Corporation or any subsidiary convertible into equity securities of the Corporation or any subsidiary; or f. any agreement, contract or other arrangement providing for any one or more of the actions specified in clauses (a) through (e) of SECTION 3 of this ARTICLE TWELFTH. SECTION 4. SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW. --------------------------------------------------- Nothing in this ARTICLE TWELFTH or elsewhere in this Restated Certificate of Incorporation shall be construed as a waiver of any rights of the Corporation to the provisions of SECTION 203 of the Delaware General Corporation Law dealing with business combinations with interested stockholders; and the Corporation hereby claims the full benefit of all such provisions or any other similar provisions heretofore or hereafter enacted as part of the Delaware General Corporation Law to the fullest extent in addition to the provisions of this ARTICLE TWELFTH. THIRTEENTH: The By-Laws of the Corporation may be amended, altered, changed or repealed, and a provision or provisions inconsistent with the provisions of the By-Laws as they exist from time to time may be adopted, only by the majority vote of the Whole Board or by the affirmative vote of the holders of at least seventy-five percent (75%) of the Voting Stock, voting together as a single class. FOURTEENTH: The provisions of SECTION 2 of ARTICLE FOURTH and the provisions of ARTICLES FIFTH, SIXTH, SEVENTH, EIGHTH, NINTH, TENTH, TWELFTH, THIRTEENTH, and this ARTICLE FOURTEENTH shall not be amended, altered, changed or repealed, and no provision inconsistent with any of them shall be adopted, except by the affirmative vote of the holders of at least seventy-five percent (75%) of the voting power of the Voting Stock, voting together as a single class. The Corporation reserves the right to amend, alter, change, or repeal any other provision contained in this Restated Certificate of Incorporation in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders are granted subject to this reservation. -7- For the purposes of this Restated Certificate of Incorporation, "Voting Stock" shall mean the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors. For the purposes of this Restated Certificate of Incorporation, "Whole Board" shall mean the total number of Directors which the Corporation would have if there were no vacancies. This Restated Certificate of Incorporation was duly adopted in accordance with the applicable provisions of SECTIONS 242, 245 AND 228 of the Delaware General Corporation Law. -8- IN WITNESS WHEREOF, Medallion Financial Corp. has caused this Certificate to be signed by ________________________, its ________________ and attested by _________________, its ____________ this _______ day of May, 1996. MEDALLION FINANCIAL CORP. By ______________________________ ATTEST By: ___________________________________ -9- EX-99.2B 3 RESTATED BY-LAWS _______________________________________ RESTATED BY-LAWS of MEDALLION FINANCIAL CORP. (a Delaware corporation) Adopted on ____________ __, 199_ _______________________________________ MEDALLION FINANCIAL CORP. (a Delaware corporation) _______________________________________ BY-LAWS _______________________________________ ARTICLE I. OFFICES ------------------- SECTION 1. REGISTERED OFFICE. The registered office of the Corporation in the State of Delaware is located at 32 Loockerman Square, Suite L-100, in the City of Dover, County of Kent. The name of its registered agent at such address is The Prentice-Hall Corporation System, Inc. SECTION 2. OTHER OFFICES. The Corporation may also have offices at such other places, within or without the State of Delaware, as the Board of Directors may from time to time appoint or the business of the Corporation may require. ARTICLE II. MEETINGS OF STOCKHOLDERS ----------- SECTION 1. PLACE OF MEETING. Meetings of the stockholder shall be held either within or without the State of Delaware at such place as the Board of Directors may fix. SECTION 2. ANNUAL MEETINGS. The annual meeting of stockholders shall be held for the election of directors on such date and at such time as the Board of Directors may fix. Any other business properly brought before the annual meeting of stockholders as provided by applicable law and by these By-Laws may be transacted at the annual meeting. SECTION 3. SPECIAL MEETINGS. Special meetings of the stockholders for any purpose or purposes may be called by the Chairman of the Board of Directors, or pursuant to a resolution approved by a majority of the Whole Board (as defined below), or upon receipt of a written request signed by stockholders owning at least 20 percent of the stock entitled to vote at the meeting or when required under the Investment Company Act of 1940, as amended (the "1940 Act"). Any such resolution of the Board of Directors or any such request of stockholders shall state the purpose or purposes of the proposed meeting. Business transacted at any special meeting is limited to the purposes stated in the notice. For the purposes of these By-Laws, the term "Whole Board" is defined as the total number of Directors which the Corporation would have if there were no vacancies. -1- SECTION 4. NOTICE. Written or printed notice of every meeting of stockholders, annual or special, stating the hour, date and place thereof, and, in the case of special meetings, the purpose or purposes for which the meeting is called shall, not less than ten (10), or such longer period as shall be provided by law, the Certificate of Incorporation, these By-Laws, or otherwise, and not more than sixty (60) days before such meeting, be delivered or mailed to each stockholder entitled to vote thereat, at his address as it appears upon the stock records of the Corporation or, if such stockholder shall have filed with the Secretary of the Corporation a written request that notices intended for him be mailed to some other address, then to the address designated in such request. SECTION 5. QUORUM AND ADJOURNMENTS. Except as otherwise provided by law or by the Certificate of Incorporation, the presence in person or by proxy at any meeting of stockholders of the holders of a majority of the shares of the capital stock of the Corporation issued and outstanding and entitled to vote thereat, shall be requisite and shall constitute a quorum. If two or more classes of stock are entitled to vote as separate classes upon any question, then, in the case of each such class, a quorum for the consideration of such question shall, except as otherwise provided by law or by the Certificate of Incorporation, consist of a majority in interest of all stock of that class issued, outstanding and entitled to vote. If a majority of the shares of capital stock of the Corporation issued and outstanding and entitled to vote thereat at, or, where a larger quorum is required, such larger quorum, shall not be represented at any meeting of the stockholders, the holders of a majority of the shares present or represented by proxy and entitled to vote thereat shall have the power to adjourn the meeting to another time, or to another time and place, without notice other than announcement of adjournment at the meeting, and there may be successive adjournments for like cause and in like manner until the requisite amount of shares entitled to vote at such meeting shall be represented; provided, however, that if the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, written notice of the hour, date and place of the adjourned meeting shall be given to each stockholder entitled to vote thereat. At any adjourned meeting any business may be transacted which might have been transacted at the original meeting. Subject to the requirements of law and the Certificate of Incorporation, on any issue on which two or more classes of stock are entitled to vote separately, no adjournment shall be taken with respect to any class for which a quorum is present unless the Chairman of the meeting otherwise directs. At any meeting held to consider matters which were subject to adjournment for want of a quorum at which the requisite amount of shares entitled to vote thereat shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed. SECTION 6. NOTICE OF STOCKHOLDER BUSINESS. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (A) specified in the notice of meeting (or any supplement thereto) given by or at the direction -2- of the Chairman of the Board of Directors, (B) otherwise properly brought before the meeting by or at the direction of a majority of the whole Board, or (C) otherwise properly brought before the meeting by a stockholder as provided by and in accordance with applicable law, rules and regulations, and these By-Laws. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder's notice must be delivered to or mailed to and received at the principal executive offices of the Corporation in accordance with applicable law, rules and regulations and not less than 120 days in advance of the date of the Corporation's notice of annual meeting released to stockholders in connection with the previous year's annual meeting of stockholders, except that if no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than 30 calendar days from the date contemplated at the time of the previous year's notice of annual meeting of stockholders, then, in that event only, a stockholders' notice hereunder must be delivered to and received at the principal executive offices of the corporation at least 30 calendar days before the notice of the date of the annual meeting is mailed to stockholders in the current year. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (A) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (B) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business, (C) the class and number of shares of the Corporation which are beneficially owned by the stockholder, and (D) any material interest of the stockholder in such business. Notwithstanding anything in the By-Laws to the contrary, no business shall be conducted at an annual meeting except in accordance with applicable law, rules and regulations, and in accordance with the procedures set forth in this SECTION 6 OF ARTICLE II. The presiding officer of an annual meeting shall, if the facts warrant, determine and declare to the meeting that the business was not properly brought before the meeting in accordance with this SECTION 6 of ARTICLE II, and if the presiding officer should so determine, the presiding officer shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. SECTION 7. INSPECTORS. The Board of Directors shall appoint inspectors of election to act as judges of the voting and to determine those entitled to vote at any meeting of stockholders, or any adjournment thereof, in advance of such meeting, but if the Board of Directors fails to make such appointments or if an appointee fails to serve, the presiding officer of the meeting of stockholders may appoint substitute inspectors. SECTION 8. VOTING. Except as otherwise provided by law or by the Certificate of Incorporation or by a resolution of the Board of Directors adopted in accordance with SECTION -3- 2 of ARTICLE FOURTH of the Certificate of Incorporation, each stockholder shall be entitled at every meeting of the stockholders to one vote for each share of stock having voting power standing in the name of such stockholder on the books of the Corporation on the record date for the meeting and such votes may be cast either in person or by written proxy. Every proxy must be duly executed and filed with the Secretary of the Corporation. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with the Secretary of the Corporation. Every vote taken by written ballot shall be counted by the inspectors of election. When a quorum is present at any meeting, the vote of the holders of a majority (or such other percentage as may be specified or required by the Certificate of Incorporation, or by a resolution of the Board of Directors adopted in accordance with SECTION 2 of ARTICLE FOURTH of the Certificate of Incorporation, by law, or these By-Laws) of the stock which has voting power present in person or represented by proxy and which has actually voted shall decide any question properly brought before such meeting, except the election or removal of Directors or as otherwise provided by law, these By-Laws or the Certificate of Incorporation. With respect to any election or questions required to be decided by any class of stock voting as a class, the vote of the holders of a majority (or such other percentage as may be specified or required by the Certificate of Incorporation, or by a resolution of the Board of Directors adopted in accordance with SECTION 2 of ARTICLE FOURTH of the Certificate of Incorporation, or by law, or by these By-Laws) of such class of stock present in person or by proxy and which actually voted shall decide any such election or question. The vote, at the annual or a special meeting of the stockholders of the Corporation duly called, (A) of 67% or more of the voting stock present at such meeting, if the holders of more than 50% of the outstanding voting stock of the Corporation are present or represented by proxy; or (B) of more than 50% of the outstanding voting stock of the Corporation, whichever is less, is required to approve any action requiring a vote of stockholders under Section 13(a) of the 1940 Act. ARTICLE III. NOMINATION OF DIRECTOR CANDIDATES ------------ SECTION 1. NOTIFICATION OF NOMINEES. Subject to the rights of holders of any class or series of stock having a preference over the Common Stock as to dividends, upon liquidation, or to elect additional Directors under specified circumstances, nominations for the election of Directors may be made by the Board of Directors or a committee appointed by the Board of Directors or by any stockholder entitled to vote in the election of Directors generally. However, any stockholder entitled to vote in the election of Directors generally may nominate one or more persons for election as Directors at a meeting only if written notice of such stockholder's intent to make such nomination or nominations has been given, either by personal delivery or by United States mail, postage prepaid, to the Secretary of the Corporation not later than 120 days in advance of the date of the Corporation's notice of -4- annual meeting released to stockholders in connection with the previous year's annual meeting of stockholders, except that if no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than 30 calendar days from the date contemplated at the time of the previous year's notice of annual meeting of stockholders, then, in that event only, a stockholders' notice hereunder must be delivered to and received at the principal executive offices of the corporation at least 30 calendar days before the notice of the date of the annual meeting is mailed to stockholders in the current year. Each such notice shall set forth: (A) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (B) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (C) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (D) such other information regarding each nominee proposed by such stockholders as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had the nominee been nominated, or intended to be nominated, by the Board of Directors; and (E) the consent of each nominee to serve as a Director of the Corporation if so elected. SECTION 2. SUBSTITUTION OF NOMINEES. If a person is validly designated as a nominee in accordance with Section 1 of this ARTICLE III, and shall thereafter become unable or unwilling to stand for election to the Board of Directors, the Board of Directors or the stockholder who proposed such nominee, as the case may be, may designate a substitute nominee upon delivery, not fewer than five days prior to the date of the meeting for the election of such nominee, of a written notice to the Secretary setting forth such information regarding such substitute nominee as would have been required to be delivered to the Secretary pursuant to Section 1 of this ARTICLE III, had such substitute nominee been initially proposed as a nominee. Such notice shall include a signed consent to serve as a Director of the Corporation, if elected, of each such substitute nominee. SECTION 3. COMPLIANCE WITH PROCEDURES. If the presiding officer of the meeting for the election or Directors determines that a nomination for any candidate for election as a Director at such meeting was not made in accordance with the applicable provisions of these By-Laws, such person will not be eligible for election as a Director and such nomination shall be void. -5- ARTICLE IV. DIRECTORS ----------- SECTION 1. POWERS. The business and affairs of the Corporation shall be managed by or under the direction of its Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law or by the Certificate of Incorporation directed or required to be exercised or done by the stockholders. SECTION 2. NUMBER, QUALIFICATION, ELECTION AND TERMS. Except as otherwise fixed by, or pursuant to, the provisions of SECTION 2 of ARTICLE FOURTH of the Certificate of Incorporation relating to the rights of the holders of any class or series of stock having a preference over the Common Stock, the number of Directors shall be fixed from time to time by resolution of the Board of Directors, but shall not be less than three nor more than fifteen persons. The Directors shall be classified, with respect to the time for which they severally hold office, into three classes, as nearly equal in number as possible, as determined by the Board of Directors. One class ("Class I") shall hold office initially for a term expiring at the annual meeting of stockholders to be held in 1996, and another class ("Class II") shall hold office initially for a term expiring at the annual meeting of stockholders to be held in 1997, and another class ("Class III") shall hold office initially for a term expiring at the annual meeting of stockholders to be held in 1998, with the members of each class to hold office until their successors are elected and qualified. At each succeeding annual meeting of the stockholders of the Corporation, the successors of the class of Directors whose term expires at that meeting shall be elected by plurality vote by written ballot to hold office for a term expiring at the annual meeting for stockholders held in the third year following the year of their election. SECTION 3. REMOVAL. Subject to the rights of the holders of any class or series of stock having a preference over the Common Stock, any Director may be removed from office by the stockholders in the manner provided in this SECTION 3 OF ARTICLE IV. At any annual meeting of the stockholders of the Corporation or at any special meeting of the stockholders of the Corporation, the notice of which shall state that the removal of a Director or Directors is among the purposes of the meeting, the affirmative vote of the holders of at least 75 percent of the combined voting power of the outstanding shares of Voting Stock (as defined below), voting together as a single class, may remove such Director or Directors. For the purposes of these By-Laws, "Voting Stock" shall mean the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of Directors. SECTION 4. VACANCIES AND NEW DIRECTORSHIPS. Except as otherwise fixed by or provided for or pursuant to the provisions of ARTICLE FOURTH of the Certificate of Incorporation relating to the rights of the holders of any class or series of stock having a preference over the Common Stock, vacancies and newly created directorships resulting from any increase in the authorized number of Directors shall be filled solely by the affirmative vote of a majority of the Directors then in office though less than a quorum, or by a sole -6- remaining Director, except as may be required by law. Any Director so chosen shall hold office for the remainder of the full term of the class of Directors in which the new directorship was created or the vacancy occurred and until such Director's successor shall have been elected and qualified. No decrease in the authorized number of Directors constituting the Board of Directors shall shorten the term of any incumbent Director. SECTION 5. MEETINGS. Meetings of the Board of Directors shall be held at such place, within or without the State of Delaware, as may from time to time be fixed by resolution of the Board of Directors or by the Chairman of the Board, if there be one, or by the President and as may be specified in the notice or waiver of notice of any meeting. Special meetings may be held at any time upon the call of the Chairman of the Board, if there be one, or the President or any two (2) of the Directors in office by oral, telegraphic, telex, telecopy or other form of electronic transmission, or written notice, duly served or sent or mailed to each Director not less than twenty-four (24) hours before such meeting. Meetings may be held at any time and place without notice if all the Directors are present and do not object to the holding of such meeting for lack of proper notice or if those not present shall, in writing or by telegram, telex, telecopy or other form of electronic transmission, waive notice thereof. A regular meeting of the Board may be held without notice immediately following the annual meeting of stockholders at the place where such meeting is held. Regular meetings of the Board may also be held without notice at such time and place as shall from time to time be determined by resolution of the Board. Members of the Board of Directors or any committee thereof may participate in a meeting of such Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other and participation in a meeting pursuant to the foregoing provisions shall constitute presence in person at the meeting. SECTION 6. VOTES. Except as otherwise provided by law, the Certificate of Incorporation or otherwise, the vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. A majority of the directors shall be present at any meeting of the directors in order to constitute a quorum for the transaction of business at such meeting, and except as otherwise expressly required by the Certificate of Incorporation, these By-Laws, the 1940 Act, or other applicable statute, the act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the directors; provided, however, that the approval of any contract with an investment adviser or principal underwriter (as defined in the 1940 Act) which the Corporation enters into or any renewal or amendment thereof, the approval of the fidelity bond required by the 1940 Act, and the selection of the Corporation's independent public accountants shall require the affirmative votes of a majority of the directors who are not interested persons (as defined in the 1940 Act) of the Corporation or, in the case of such contract, any party to such contract. -7- In the absence of a quorum at any meeting of the directors, a majority of the directors present thereat may adjourn the meeting to another time and place until a quorum shall be present thereat. Notice of the time and place of any such adjourned meeting shall be given to the directors who were not present at the time of the adjournment and, unless such time and place were announced at the meeting at which adjournment was taken, to the other directors. At any adjourned meeting at which a quorum is present, any business may be transacted at the meeting as originally called. SECTION 7. QUORUM AND ADJOURNMENT. Subject to SECTION 4 of this ARTICLE IV, and except as otherwise provided by law, the Certificate of Incorporation or otherwise, a majority of the Directors shall constitute a quorum for the transaction of business. If at any meeting of the Board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time without notice other than announcement of the adjournment at the meeting, and at such adjourned meeting at which a quorum is present any business may be transacted which might have been transacted at the meeting as originally noticed. SECTION 8. COMPENSATION. Directors shall receive compensation for their services, as such, and for service on any committee of the Board of Directors, as fixed by resolution of the Board of Directors and for expenses of attendance at each regular or special meeting of the Board or any committee thereof. Nothing in this Section shall be construed to preclude a Director from serving the Corporation in any other capacity and receiving compensation therefor. SECTION 9. ACTION BY CONSENT OF DIRECTORS. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board, or committee. Such consent shall be treated as a vote adopted at a meeting for all purposes. Such consents may be executed in one or more counterparts and not every Director or committee member need sign the same counterpart. ARTICLE V. COMMITTEES OF DIRECTORS ---------- SECTION 1. EXECUTIVE COMMITTEE. The Board of Directors may, by resolution passed by a majority of the Whole Board, appoint an Executive Committee of two (2) or more members, to serve at the pleasure of the Board, to consist of such directors as the Board may from time to time designate. The Board of Directors shall designate the Chairman of the Executive Committee. -8- (A) PROCEDURE. The Executive Committee shall, by a vote of a majority of its members, fix its own times and places of meeting, determine the number of its members constituting a quorum for the transaction of business, and prescribe its own rules of procedure, no change in which shall be made save by a majority vote of its members. (B) RESPONSIBILITIES. During the intervals between the meetings of the Board of Directors, except as otherwise provided by the Board of Directors in establishing such Committee or otherwise, the Executive Committee shall possess and may exercise all the powers of the Board in the management and direction of the business and affairs of the Corporation which are legally delegable to a committee; provided, however, that the Executive Committee shall not, except to the extent the Certificate of Incorporation or the resolution providing for the issuance of shares of stock adopted by the Board of Directors as provided in SECTION 151(A) of the Delaware General Business Corporation Law, have the power: (I) to amend or authorize the amendment of the Certificate of Incorporation or these By-Laws; (II) to authorize the issuance of stock; (III) to authorize the payment of any dividend; (IV) to adopt an agreement of merger or consolidation of the Corporation or to recommend to the stockholders the sale, lease or exchange of all or substantially all the property and business of the Corporation; (V) to recommend to the stockholders a dissolution, or a revocation of a dissolution, of the Corporation; (VI) to adopt a certificate of ownership and merger pursuant to SECTION 253 of the Delaware Business Corporation Law; or (VII) to approve or terminate any contract with an investment adviser or principal underwriter (as defined in the 1940 Act) or to take any other action required by the 1940 Act to be taken by the Board of Directors. (C) REPORTS. The Executive Committee shall keep regular minutes of its proceedings, and all action by the Executive Committee shall be reported promptly to the Board of Directors. Such action shall be subject to review, amendment and repeal by the Board, provided that no rights of third parties shall be adversely affected by such review, amendment or repeal. -9- (D) APPOINTMENT OF ADDITIONAL MEMBERS. In the absence or disqualification of any member of the Executive Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. SECTION 2. AUDIT COMMITTEE. The Board of Directors may, by resolution passed by a majority of the Whole Board, appoint an Audit Committee of two (2) or more members who shall not be officers or employees of the Corporation to serve at the pleasure of the Board. The Board of Directors shall designate the Chairman of the Audit Committee. (A) PROCEDURE. The Audit Committee, by a vote of a majority of its members, shall fix its own times and places of meeting, shall determine the number of its members constituting a quorum for the transaction of business, and shall prescribe its own rules of procedure, no change in which shall be made save by a majority vote of its members. (B) RESPONSIBILITIES. The Audit Committee shall review the annual financial statements of the Corporation prior to their submission to the Board of Directors, shall consult with the Corporation's independent auditors, and may examine and consider such other matters in relation to the internal and external audit of the Corporation's accounts and in relation to the financial affairs of the Corporation and its accounts, including the selection and retention of independent auditors, as the Audit Committee may, in its discretion, determine to be desirable. (C) REPORTS. The Audit Committee shall keep regular minutes of its proceedings, and all action by the Audit Committee shall, from time to time, be reported to the Board of Directors as it shall direct. Such action shall be subject to review, amendment and repeal by the Board, provided that no rights of third parties shall be adversely affected by such review, amendment or repeal. (D) APPOINTMENT OF ADDITIONAL MEMBERS. In the absence or disqualification of any member of the Audit Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. SECTION 3. OTHER COMMITTEES. The Board of Directors may, by resolution passed by a majority of the Whole Board, at any time appoint one or more other committees, including a compensation committee, from and outside of its own number. Every such committee must include at least one member of the Board of Directors. The Board may from time to time designate or alter, within the limits permitted by law, the Certificate of Incorporation and this ARTICLE V, if applicable, the duties, powers and number of members of -10- such other committees or change their membership, and may at any time abolish such other committees or any of them. (A) PROCEDURE. Each committee, appointed pursuant to this SECTION 3, shall, by a vote of a majority of its members, fix its own times and places of meeting, determine the number of its members constituting a quorum for the transaction of business, and prescribe its own rules of procedure, no change in which shall be made save by a majority vote of its members. (B) RESPONSIBILITIES. Each committee, appointed pursuant to this SECTION 3, shall exercise the powers assigned to it by the Board of Directors in its discretion. (C) REPORTS. Each committee appointed pursuant to this SECTION 3 shall keep regular minutes of proceedings, and all action by each such committee shall, from time to time, be reported to the Board of Directors as it shall direct. Such action shall be subject to review, amendment and repeal by the Board, provided that no rights of third parties shall be adversely affected by such review, amendment or repeal. (D) APPOINTMENT OF ADDITIONAL MEMBERS. In the absence or disqualification of any member of each committee, appointed pursuant to this SECTION 3, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors (or, to the extent permitted, another person) to act at the meeting in place of any such absent or disqualified member. SECTION 4. TERM OF OFFICE. Each member of a committee shall hold office until the first meeting of the Board of Directors following the annual meeting of stockholders (or until such other time as the Board of Directors may determine, either in the vote establishing the committee or at the election of such member or otherwise) and until his successor is elected and qualified, or until he sooner dies, resigns, is removed, is replaced by change of membership or becomes disqualified by ceasing to be a Director (where membership on the Board is required), or until the committee is sooner abolished by the Board of Directors. ARTICLE VI. OFFICERS ----------- SECTION 1. OFFICERS. The Board of Directors shall elect a Chief Financial Officer, President, a Secretary and a Treasurer, and, in their discretion, may elect a Chairman of the Board, a Vice Chairman of the Board, a Controller, and one or more Executive Vice Presidents, Senior Vice Presidents, Vice Presidents, Assistant Secretaries, Assistant Treasurers and Assistant Controllers as they deem necessary or appropriate. Such officers shall be elected annually by the Board of Directors at its first meeting following the annual meeting of -11- stockholders (or at such other meeting as the Board of Directors determines), and each shall hold office for the term provided by the vote of the Board, except that each will be subject to removal from office in the discretion of the Board as provided herein. The powers and duties of more than one office may be exercised and performed by the same person. SECTION 2. VACANCIES. Any vacancy in any office may be filled for the unexpired portion of the term by the Board of Directors, at any regular or special meeting. SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the Board of Directors, if elected, shall be a member of the Board of Directors and shall preside at its meetings. He shall advise and counsel with the Chief Executive Officer and the President, and shall perform such duties as from time to time may be assigned to him by the Board of Directors. SECTION 4. CHIEF EXECUTIVE OFFICER. Subject to the direction of the Board of Directors, the Chief Executive Officer shall preside at all meetings of the stockholders and the Board of Directors unless a Chairman or Vice-Chairman of the Board is elected by the Board, empowered to preside, and present at such meeting, shall have general and active management of the business of the Corporation and general supervision of its officers, agents and employees, and shall see that all orders and resolutions of the Board of Directors are carried into effect. The Chief Executive Officer may but need not be a member of the Board of Directors. SECTION 5. PRESIDENT. Subject to the direction of the Board of Directors and the Chief Executive Officer, the President shall have and exercise direct charge of and general supervision over the operations of the Corporation and shall perform all duties incident to the office of the President of a corporation and such other duties as from time to time may be assigned to him by the Board of Directors. The President may but need not be a member of the Board of Directors. SECTION 6. EXECUTIVE VICE PRESIDENTS AND VICE PRESIDENTS. Each Executive Vice President and Vice President shall have and exercise such powers and shall perform such duties as from time to time may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. SECTION 7. SECRETARY. The Secretary shall keep the minutes of all meetings of the stockholders and of the Board of Directors in books provided for the purpose; he shall see that all notices are duly given in accordance with the provisions of law and these By-Laws; he may sign, with the President, an Executive Vice President or a Vice President, certificates of stock of the Corporation; and, in general, he shall perform all duties incident to the office of secretary of a corporation, and such other duties as from time to time may be assigned to him by the Board of Directors. -12- SECTION 8. ASSISTANT SECRETARIES. The Assistant Secretaries in order of their seniority shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties as the Board of Directors shall prescribe or as from time to time may be assigned by the Secretary. SECTION 9. TREASURER. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit, or cause to be deposited, in the name of the Corporation, all monies or other valuable effects in such banks, trust companies or other depositories as shall, from time to time, be selected by the Board of Directors; he may endorse for collection on behalf of the Corporation checks, notes and other obligations; he may sign receipts and vouchers for payments made to the Corporation; he may sign checks of the Corporation, singly or jointly with another person as the Board of Directors may authorize, and pay out and dispose of the proceeds under the direction of the Board; he shall render to the President and to the Board of Directors, whenever requested, an account of the financial condition of the Corporation; he may sign, with the President, or an Executive Vice President or a Vice President, certificates of stock of the Corporation; and in general, shall perform all the duties incident to the office of treasurer of a corporation, and such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 10. ASSISTANT TREASURERS. The Assistant Treasurers in order of their seniority shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties as the Board of Directors shall prescribe or as from time to time may be assigned by the Treasurer. SECTION 11. CONTROLLER. The Controller, if elected, shall be the chief accounting officer of the Corporation, in general, he shall perform all duties incident to the office of a controller of a corporation, and, in the absence of or disability of the Treasurer or any Assistant Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties as the Board of Directors shall prescribe or as from time to time may be assigned by the President or the Treasurer. SECTION 12. ASSISTANT CONTROLLERS. The Assistant Controllers in order of their seniority shall, in the absence or disability of the Controller, perform the duties and exercise the powers of the Controller and shall perform such other duties as the Board of Directors shall prescribe or as from time to time may be assigned by the Controller. SECTION 13. SUBORDINATE OFFICERS. The Board of Directors may appoint such subordinate officers as it may deem desirable. Each such officer shall hold office for such period, have such authority and perform such duties as the Board of Directors may prescribe. The Board of Directors may, from time to time, authorize any officer to appoint and remove subordinate officers and to prescribe the powers and duties thereof. -13- SECTION 14. COMPENSATION. The Board of Directors, or a duly authorized executive compensation committee of the Board of Directors, shall fix the compensation of all officers of the Corporation. It may authorize any officer, upon whom the power of appointing subordinate officers may have been conferred, to fix the compensation of such subordinate officers. SECTION 15. REMOVAL. Any officer of the Corporation may be removed, with or without cause, by action of the Board of Directors. SECTION 16. BONDS. The Board of Directors may require any officer of the Corporation to give a bond to the Corporation, conditional upon the faithful performance of his duties, with one or more sureties and in such amount as may be satisfactory to the Board of Directors. ARTICLE VII. INDEMNIFICATION ------------ SECTION 1. INDEMNIFICATION. --------------- The Corporation shall, to the fullest extent permitted by the General Corporation Law of the State of Delaware, as amended from time to time, indemnify each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom. Indemnification may include payment by the Corporation of expenses in defending an action or proceeding in advance of the final disposition of such action or proceeding upon receipt of any undertaking by the person indemnified to repay such payment if it is ultimately determined that such person is not entitled to indemnification under this ARTICLE VII, which undertaking may be accepted without reference to the financial ability of such person to make such repayments. The Corporation shall not indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person unless the initiation thereof was approved by the Board of Directors of the Corporation. -14- The indemnification rights provided in this ARTICLE VII (i) shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any law, agreement or vote of stockholders or disinterested directors or otherwise, and (ii) shall inure to the benefit of the heirs, executors and administrators of such persons. The Corporation may, to the extent authorized from time to time by its Board of Directors, grant indemnification rights to other employees or agents of the Corporation or other persons serving the Corporation and such rights may be equivalent to, or greater or less than, those set forth in this ARTICLE VII. Any person seeking indemnification under this ARTICLE VII shall be deemed to have met the standard of conduct required for such indemnification unless the contrary shall be established. Any amendment or repeal of the provisions of this ARTICLE VII shall not adversely affect any right or protection of a director or officer of this Corporation with respect to any act or omission of such director or officer occurring prior to such amendment or repeal. ARTICLE VIII. CERTIFICATES OF STOCK ------------- SECTION 1. FORM AND EXECUTION OF CERTIFICATES. The interests of each stockholder of the Corporation shall be evidenced by a certificate or certificates for shares of stock in such form as the Board of Directors may from time to time prescribe. The certificates of stock of each class shall be consecutively numbered and signed by the Chairman or Vice Chairman of the Board, if any, or the President, or an Executive Vice President or a Vice President and by the Secretary, or an Assistant Secretary, or the Treasurer or an Assistant Treasurer of the Corporation, and may be countersigned and registered in such manner as the Board of Directors may by resolution prescribe, and shall bear the corporate seal or a printed or engraved facsimile thereof. Where any such certificate is signed by a transfer agent or transfer clerk acting on behalf of the Corporation, the signatures of any such Chairman, Vice Chairman, President, Executive Vice President, Vice President, Treasurer, Assistant Treasurer, Secretary or Assistant Secretary may be facsimiles, engraved or printed. In case any officer or officers, who shall have signed, or whose facsimile signature or signatures shall have been used on, any such certificate or certificates, shall cease to be such officer or officers, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be issued and delivered by the Corporation as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures shall have been used thereon had not ceased to be such officer or officers. Every certificate for shares of stock which are subject to any restriction on transfer pursuant to law, the Certificate of Incorporation, these By-Laws, or any agreement to which -15- the Corporation is a party, shall have the restriction noted conspicuously on the certificate, and shall also set forth, on the face or back, either the full text of the restriction or a statement of the existence of such restriction and (except if such restriction is imposed by law) a statement that the Corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. Every certificate issued when the Corporation is authorized to issue more than one class or series of stock shall set forth on its face or back either the full text of the preferences, voting powers, qualifications, and special and relative rights of the shares of each class and series authorized to be issued, or a statement of the existence of such preferences, powers, qualifications and rights, and a statement that the Corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. SECTION 2. TRANSFER OF SHARES. The shares of the stock of the Corporation shall be transferred on the books of the Corporation by the holder thereof in person or by his attorney lawfully constituted, upon surrender for cancellation of certificates for the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof or guaranty of the authenticity of the signature as the Corporation or its agents may reasonably require. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person whether or not it shall have express or other notice thereof, save as expressly provided by law or by the Certificate of Incorporation. It shall be the duty of each stockholder to notify the Corporation of his post office address. SECTION 3. CLOSING OF TRANSFER BOOKS. The stock transfer books of the Corporation may, if deemed appropriate by the Board of Directors, be closed for such length of time not exceeding fifty (50) days as the Board may determine, preceding the date of any meeting of stockholders or the date for the payment of any dividend or the date for the allotment of rights or the date when any issuance, change, conversion or exchange of capital stock shall go into effect, during which time no transfer of stock on the books of the Corporation may be made. SECTION 4. FIXING DATE FOR DETERMINATION OF STOCKHOLDER OF RECORD. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and which record date: (A) in the case of determination of stockholders entitled to vote at any meeting of stockholders or adjournment thereof, shall, unless otherwise required by law, the -16- Certificate of Incorporation or otherwise, not be more than sixty (60) nor less than ten (10) days before the date of such meeting; and (B) in the case of any other action, shall not be more than sixty (60) days prior to such other action. If no record date is fixed: (A) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; and (B) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 5. LOST OR DESTROYED CERTIFICATES. In case of the loss or destruction of any certificate of stock, a new certificate may be issued under the following conditions: (A) The owner of said certificate shall file with the Secretary or any Assistant Secretary of the Corporation an affidavit giving the facts in relation to the ownership, and in relation to the loss or destruction of said certificate, stating its number and the number of shares represented thereby; such affidavit shall be in such form and contain such statements as shall satisfy the Chief Executive Officer, the President, any Executive Vice President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer, that said certificate has been accidentally destroyed or lost, and that a new certificate ought to be issued in lieu thereof. Upon being so satisfied, any such officer may require such owner to furnish the Corporation a bond in such sum and in such form as he may deem advisable, and with a surety or sureties approved by him, to indemnify and save harmless the Corporation from any claim, loss, damage or liability which may be occasioned by the issuance of a new certificate in lieu thereof. Upon such bond being so filed, if so required, a new certificate for the same number of shares shall be issued to the owner of the certificate so lost or destroyed; and the transfer agent and registrar, if any, of stock shall countersign and register such new certificate upon receipt of a written order signed by any such officer, and thereupon the Corporation will save harmless said transfer agent and registrar. In case of the surrender of the original certificate, in lieu of which a new certificate has been issued, or the surrender of such new certificate, for cancellation, the bond of indemnity given as a condition of the issue of such new certificate may be surrendered; or (B) The Board of Directors of the Corporation may by resolution authorize and direct any transfer agent or registrar of stock of the Corporation to issue and register respectively from time to time without further action or approval by or on behalf of the Corporation new certificates of stock to replace certificates reported lost, stolen or destroyed upon receipt of an affidavit of loss and bond of indemnity in form and amount and with -17- surety satisfactory to such transfer agent or registrar in each instance or upon such terms and conditions as the Board of Directors may determine. SECTION 6. UNCERTIFICATED SHARES. The Board of Directors of the Corporation may by resolution provide that one or more of any or all classes or series of the stock of the Corporation shall be uncertificated shares, subject to the provisions of SECTION 158 of the Delaware General Corporation Law. ARTICLE IX. EXECUTION OF DOCUMENTS ----------- SECTION 1. EXECUTION OF CHECKS, NOTES, ETC. All checks and drafts on the Corporation's bank accounts and all bills of exchange and promissory notes, and all acceptances, obligations and other instruments for the payment of money, shall be signed by such officer or officers, or agent or agents, as shall be thereunto authorized from time to time by the Board of Directors, which may in its discretion authorize any such signatures to be by facsimile. SECTION 2. EXECUTION OF CONTRACTS, ASSIGNMENTS, ETC. Unless the Board of Directors shall have otherwise provided generally or in a specific instance, all contracts, agreements, endorsements, assignments, transfers, stock powers, or other instruments shall be signed by the Chairman of the Board of Directors, the Chief Executive Officer, the President, any Executive Vice President, any Senior Vice President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer. The Board of Directors may, however, in its discretion, require any or all such instruments to be signed by any two or more of such officers, or may permit any or all of such instruments to be signed by such other officer or officers, agent or agents, as it shall thereunto authorize from time to time. SECTION 3. EXECUTION OF PROXIES. The Chairman of the Board of Directors, the Chief Executive Officer, the President, any Executive Vice President, any Senior Vice President, or any Vice President, and the Secretary, the Treasurer, any Assistant Secretary or any Assistant Treasurer, or any other officer designated by the Board of Directors, may sign on behalf of the Corporation proxies to vote upon shares of stock of other companies standing in the name of the Corporation. ARTICLE X. INSPECTION OF BOOKS ---------- The Board of Directors shall determine from time to time whether, and if allowed, to what extent and at what time and places and under what conditions and regulations, the accounts and books of the Corporation (except such as may by law be specifically open to inspection) or any of them, shall be open to the inspection of the stockholders, and no -18- stockholder shall have any right to inspect any account or book or document of the Corporation, except as conferred by law, unless and until authorized so to do by resolution of the Board of Directors of the Corporation. ARTICLE XI. FISCAL YEAR ----------- The fiscal year of the Corporation shall be determined from time to time by vote of the Board of Directors. ARTICLE XII. INDEPENDENT PUBLIC ACCOUNTANTS ------------ The firm of independent public accountants which shall sign or certify the financial statements of the Corporation filed with the Securities and Exchange Commission shall be selected annually by the Board of Directors and ratified by the stockholders in accordance with the provisions of the 1940 Act. ARTICLE XIII. AMENDMENTS ------------- Subject to the provisions of the Certificate of Incorporation, these By- Laws may be amended, altered, changed or repealed, and a provision or provisions inconsistent with the provisions of these By-Laws as they exist from time to time may be adopted, only by the majority vote of the whole Board or by the affirmative vote of the holders of at least 75% of the voting stock, voting together as a single class. -19- EX-99.2E 4 DIVIDEND REINVESTMENT PLAN MEDALLION FINANCIAL CORP. DIVIDEND REINVESTMENT PLAN MEDALLION FINANCIAL CORP. 205 EAST 42ND STREET SUITE 2020 NEW YORK, NEW YORK 10017 (212) 682-3300 PLAN AGENT: The First National Bank of Boston 160 Royall Street Canton, MA 02021 (617) 575-2000 The following is the Medallion Financial Corp. Dividend Reinvestment Plan (the "Plan"). Further questions and correspondence should be directed to either of the addresses listed on the front of the Plan: 1. WHAT IS THE PURPOSE OF THE PLAN? The purpose of the Plan is to provide stockholders who choose to participate ("Participants") with a simple and convenient method of ------------ investing cash dividends and distributions in additional shares of Common Stock, $0.01 par value, of Medallion Financial Corp. (the "Company") at the ------- current market price. Participants in the Plan may have cash dividends and distributions automatically reinvested without charges for record keeping, and may take advantage of the custodial and reporting services provided by The First National Bank of Boston ("Bank of Boston") at no additional cost. -------------- 2. WHAT DOES THE PLAN AGENT DO? The Bank of Boston administers the Plan for Participants, keeps records, sends statement of accounts to Participants, and performs other duties relating to the Plan. 3. HOW DOES A SHAREHOLDER ENROLL? A shareholder whose shares are registered in his own name may join the Plan by signing an Authorization Form and returning it to the Bank of Boston. Authorization Forms may be obtained at any time by written request to The First National Bank of Boston at 160 Royall Street, Canton, MA 02021 or by telephoning (617 575-2000. 4. WHAT IF THE SHARES ARE HELD BY A BROKER, BANK OR NOMINEE? If your shares are held on the books of the Bank of Boston in the name of a broker, bank or other nominee (a "nominee"), you can participate in the ------- Plan only to the extent that the nominee participates on your behalf. Many nominees do not provide that service and routinely request dividends and distributions to be paid in cash on all shares registered in their names. Therefore, if your shares are held for your account by a nominee, you must either make appropriate arrangements for your nominee to participate on your behalf, or you must become stockholder of record by having a part or all of your shares transferred to your own name. 5. WHAT IF A STOCKHOLDER WOULD RATHER RECEIVE CASH? If you would rather receive cash, you may write a letter to the Bank of Boston to communicate that you would like to terminate your participation in the Plan. Any communication by you expressing a preference for cash in lieu of shares must be received by the Bank of Boston not less than ten days before the record date of the next dividend or distribution; otherwise, it will be effective the day after the next dividend 2 distribution date. 6. WHAT IF A STOCKHOLDER WISHES TO RECEIVE CASH ON A PORTION OF HIS OR HER SHARES? If you wish to receive dividends and distributions in cash on some of your shares, and have the remaining dividends and distribution reinvested, you must write to the Bank of Boston giving notice to that effect. As a partial Participant, you will receive your dividends and distributions in cash only with respect to the number of shares that you have specified. With respect to any other shares registered in your name, and with respect to the shares credited to your account on the books of the Bank of Boston, the corresponding dividends and distributions will be paid in additional shares. Subject to the answer to question 5, the number of shares on which you receive cash may be changed at any time simply by writing to the Bank of Boston. 7. MAY A STOCKHOLDER ELECT TO RE-ENROLL ONCE HE HAS TERMINATED PARTICIPATION IN THE PLAN? Yes. If a stockholder has previously elected to receive dividends and distributions in cash and thus terminated participation in the Plan, and later wishes to participate in the Plan, the stockholder may re-enroll at any time by completing an authorization form and delivering it to the Bank of Boston. Any letter requesting enrollment must be received by the Bank of Boston not less than ten days prior to the next dividend declaration date in order for it to take effect as of the next dividend or distribution. 8. HOW DOES THE DIVIDEND REINVESTMENT PLAN WORK? When the Board of Directors declares a dividend or distribution, all non- participants will receive it in cash. Participants will have credited to their Plan Accounts the number of full and fractional shares (computed to three decimal places) that could be obtained, at the price determined in accordance with the answer to Question 11, with the cash, net of any applicable withholding taxes, that would have been paid to them if they were not Participants. 9. HOW WILL SHARES OF COMMON STOCK BE PURCHASED FOR PARTICIPANTS? The Common Stock is traded on the Nasdaq National Market. The Bank of Boston, as agent for Participants, will make purchases of Common Stock in the over-the-counter market or elsewhere. However, in no event will shares of Common Stock be purchased by the Bank of Boston from the Company, any of its subsidiaries, or any director or officer of the Company or its subsidiaries. The Bank of Boston will commingle each Participant's funds in making purchases for the Participant's account. 3 10. WHEN WILL SHARES OF COMMON STOCK BE PURCHASED UNDER THE PLAN? In the months in which dividends are paid, dividends will be invested beginning on the dividend payment date. The Bank of Boston will make every effort to invest any dividends it receives promptly beginning on each dividend payment date, and in no event later than 30 days from such date, except where necessary under any applicable federal securities laws. 11. AT WHAT PRICE WILL SHARES OF COMMON STOCK BE PURCHASED FOR PARTICIPANTS? The price at which the Bank of Boston will be deemed to have acquired shares of Common Stock will be the weighted average price of all shares of Common Stock purchased for Participants for that period plus brokerage commissions. Neither the Company or any stockholder has the authority or power to direct the time or price at which shares of Common Stock may be purchased or the selection of the broker or dealer through or from whom purchases are to be made. The Company will absorb all administrative expenses connected with the operation of the Plan (except brokerage commissions which shall be borne pro rata by the Participants). The Bank of Boston will hold the total shares of Common Stock purchased for all Participants in the name of its nominee and will have no responsibility for the value of such shares after their purchase. 12. WHAT ACCOUNTS ARE MAINTAINED FOR PARTICIPANTS AND WHAT REPORTS ON THESE ACCOUNTS DO PARTICIPANTS RECEIVE? The Plan Agent will maintain a separate account for each Participant. All shares issued to a Participant under the Plan will be credited to the Participant's account. The Bank of Boston will mail to each Participant a statement confirming the issuance of shares within fifteen days after the allocation of shares is made. The statement will show the amount of the dividend or distribution, the price at which shares were credited, the number of full and fractional shares credited, the number of shares previously credited and the cumulative total of shares credited. In addition, each Participant will receive copies of the Company's annual and quarterly reports to stockholders, proxy statements and dividend income information for tax purposes. The proxy card received by each Participant will represent shares held of record, including shares held in the Plan Account. 13. WILL CERTIFICATES BE ISSUED FOR SHARES ISSUED UNDER THE PLAN? No. Certificates for shares issued under the Plan will not be furnished to you until your account is terminated or unless you request certificates in writing for a specified number of shares credited to your Plan Account. All written requests for certificates should be directed to the Bank of Boston, allowing two weeks for processing. The issuance of certificates of shares credited to a Plan Account will not terminate your participation in the Plan. No certificate for a fractional share will be issued. If you terminate your 4 participation in the Plan (see Question 16), the Bank of Boston will sell for your account any fractional share and send you a check for the proceeds. 14. IN WHOSE NAME WILL CERTIFICATES BE REGISTERED WHEN ISSUED? Accounts under the Plan are maintained in the name in which share certificates of the Participant were registered at the time the Participant entered the Plan. Certificates for whole shares issued at the request of a Participant will be similarly registered. 15. WHAT HAPPENS IF THE COMPANY ISSUES A STOCK DIVIDEND OR DECLARES A STOCK SPLIT? Any stock dividends or split shares distributed by the Company on shares held by the Plan Agent for the Participant will be credited to the Participant's account. 16. WHAT HAPPENS IF A PARTICIPANT WISHES TO TERMINATE PARTICIPATION? You may terminate your participation in the Plan at any time by notifying the Bank of Boston in writing. To be effective on any given dividend payment date, the notice to terminate must be received by the Bank of Boston at least ten days before the record date for the dividend payment. All other dividends with a record date after receipt of your notification will be sent directly to you. Upon termination of your participation, you will receive a certificate for the number of full shares of Common Stock held for you by the Bank of Boston at no charge. At the same time, you will receive a check in payment for any fractional shares in your account, valued at the then current market price of the Company's Common Stock, less any applicable brokerage commissions and any other costs of sale. If you prefer, you can request that your full shares of Common Stock held by the Bank of Boston be sold, and you will receive a check for the proceeds, less any applicable brokerage commissions and any other costs of sale. The Bank of Boston may terminate, for whatever reason at any time as it may determine in its sole discretion, a Participant's enrollment in the Plan upon mailing a notice of termination to the Participant at his or her address as it appears on the Bank of Boston's records. The Company and the Bank of Boston may suspend or terminate the Plan at any time upon notice in writing mailed to each. 17. WHAT ARE THE BANK OF BOSTON'S RESPONSIBILITIES UNDER THE PLAN? The Bank of Boston will not be liable under the Plan for any act done by the Bank of Boston in good faith or for any good faith failure to act including, without limitation, any claims for liability (a) arising out of failure to terminate a Participant's participation in the Plan upon the Participant's death prior to receipt of notice in writing of such death; (b) with respect to the prices at which shares are purchased or sold for the Participant's account and the time such purchases or sales are made; and (c) relating to the value of the shares acquired for the Participant's account. 5 The Internal Revenue Code of 1986, as amended, imposes certain reporting obligations upon brokers and other middlemen. As a result, the Bank of Boston will be required to report to the Internal Revenue Service and the Participant any sales of stock by the Bank of Boston on behalf of a Participant. 6 MEDALLION FINANCIAL CORP. Dividend Reinvestment Plan Authorization Card I wish to participate in the Medallion Financial Corp. Dividend Reinvestment Plan (the "Plan") and authorize Medallion Financial Corp. to forward to The ---- First National Bank of Boston, as my agent, the dividends due to me with respect to the shares of Medallion Financial Corp. common stock held in my name and designated below. I authorize First National Bank of Boston, as my agent, to reinvest my cash dividends and to purchase Medallion Financial Corp. common stock under the terms and conditions set forth in the Plan as from time to time in effect and to have such common stock held by a nominee. DIVIDENDS TO BE REINVESTED: - --------------------------- I wish to have dividends automatically reinvested as follows: [ ] Reinvest dividends for all shares of common stock held in my name. [ ] Reinvest dividends for only _______ shares of common stock held in my name and all shares held in the Plan. Continue to pay dividends in cash for the remainder of my shares of common stock. Name (print)___________________ SS#____________ Signature _____________________ Name (print)___________________ SS#____________ Signature _____________________ Date________________ 7 EX-99.2G 5 SUB-ADVISORY AGREEMENT SUB-ADVISORY AGREEMENT ---------------------- THIS SUB-ADVISORY AGREEMENT (this "Agreement") is entered into as of --------- ________ ___, 1996, by MEDALLION FINANCIAL CORP., a Delaware corporation (the "Company") and FMC ADVISERS, INC., a Delaware corporation (the "Sub-Adviser"). - -------- ----------- W I T N E S S E T H : WHEREAS, the Company is engaged in business as a non-diversified closed-end management investment company and has elected to be treated as a business development company under the Investment Company Act of 1940, as amended (the "1940 Act"); - --------- WHEREAS, the Sub-Adviser is registered as an investment adviser under the Investment Advisers Act of 1940, as amended, (the "Advisers Act") and hereby ------------ undertakes to provide investment advisory services to the Company on the terms and conditions set forth in this Agreement; and WHEREAS, the Company desires to retain the Sub-Adviser to furnish investment advisory services on the terms and conditions set forth in this Agreement; NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties hereto as herein set forth, the parties covenant and agree as follows: ARTICLE 1. Duties of the Sub-Adviser. The Sub-Adviser, subject to the ------------------------- control, direction and supervision of the Board of Directors and management of the Company, shall provide the Company on an ongoing basis with its analysis of the Company's operations and the medallion finance and commercial installment finance industries with a view to assisting the Company in managing its loan portfolio and originating loans. Specifically, but without limitation, senior personnel of the Sub-Adviser shall regularly consult with management of the Company with respect to strategic decisions concerning originations, credit quality assurance, development of financial products, leverage, funding, geographic and product diversification, the repurchase of participations, acquisitions, regulatory compliance and marketing. In addition, the Sub-Adviser will advise the Company on general market, economic, financial and political matters. The Sub-Adviser shall, upon the Company's specific request, offer personal consultation with senior personnel of the Sub-Adviser regarding any of the foregoing matters identified by the Company, and shall provide any other investment advisory services to the Company as may be mutually agreed to by the Company and the Sub-Adviser. ARTICLE 2. Expenses. The Company shall pay or reimburse the Sub-Adviser -------- for reasonable travel expenses, if any, incurred by the Sub-Adviser in connection with the Sub-Adviser's performance of services under this Agreement. All other costs and expenses incurred by Sub-Adviser in connection with such services shall be the sole responsibility of Sub-Adviser. ARTICLE 3. Compensation of the Sub-Adviser. The Company shall pay the ------------------------------- Sub-Adviser, in arrears, a monthly fee of $18,750. ARTICLE 4. Limitation of Liability of the Sub-Adviser. The Sub-Adviser ------------------------------------------ shall not be liable for any error of judgment or mistake of law or for any loss arising out of any loan or for any act or omission in the performance of its duties hereunder, except for willful misfeasance, bad faith or gross negligence in the performance of its duties, or by reason of reckless disregard of its obligations and duties hereunder. As used in this Article 4, the term "Sub- Adviser" shall include directors, officers and employees of the Sub-Adviser when acting in such capacity as well as that corporation itself. ARTICLE 5. Activities of the Sub-Adviser. The services provided by the ----------------------------- Sub-Adviser to the Company hereunder are not exclusive; accordingly, the Sub- Adviser is free to render such services to others. ARTICLE 6. Records. The Sub-Adviser agrees to preserve the records ------- required by Rule 204-2 under the Sub-Advisers Act, for the period specified therein. ARTICLE 7. Duration and Termination of this Agreement. This Agreement ------------------------------------------ shall become effective as of the date first above written and shall remain in force until ________ __, 1998 and from year to year thereafter if approved annually by (i) a majority of the non-interested directors of the Company and (ii) the board of directors of the Company, or by a majority of the outstanding voting securities of the Company. This Agreement may be terminated without penalty on 60 days' written notice by either party or by vote of a majority of the outstanding voting securities of the Company and will terminate if assigned. ARTICLE 8. Amendments of this Agreement. This Agreement may be amended by ---------------------------- the parties only if such amendment is specifically approved by the board of directors of the Company including a majority of the non-interested directors of the Company and by a majority of the outstanding voting securities of the Company. ARTICLE 9. Agency Relationship. Nothing herein shall be construed as ------------------- constituting the Sub-Adviser as an agent of the Company. ARTICLE 10. Severability. If any term or condition of this Agreement ------------ shall be found to be invalid or unenforceable to any extent or in any application, then the remainder of this Agreement and such term or condition, except to the extent or in such application such term or condition is held invalid or unenforceable, shall not be affected thereby, and each and every term and condition of this Agreement shall be valid and enforceable to the fullest extent and in the broadest application permitted by law. - 2 - ARTICLE 11. Captions. The captions of this Agreement are included for -------- convenience only and in no way define or limit any of the provisions hereof or otherwise affect their construction or effect. ARTICLE 12. Definitions of Certain Terms. For purposes of this Agreement, ---------------------------- the terms "majority of the outstanding voting securities," "assignment" and "interested person" shall have the respective meanings specified in the 1940 Act and the rules and regulations thereunder, subject, however, to such exemptions as may be granted to either the Sub-Adviser or the Company by the Securities and Exchange Commission or its staff, under the 1940 Act and the Advisers Act. ARTICLE 13. Notices. All notices required or permitted to be sent under ------- this Agreement shall be sent, if to the Company, to Medallion Financial Corp., Attention: Andrew Murstein, President, 205 East 42nd Street, Suite 2020, New York, NY 10017 and if to the Sub-Adviser to FMC Advisers, Inc., Attention Myron Cohen, Secretary, c/o Cohen, Pontani & Lieberman, 551 Fifth Avenue, New York, NY 10176, with a copy of notices to either party to Steven N. Farber, Esq., Palmer & Dodge, One Beacon Street, Boston, MA 02108, or such other name or address as may be given by any of the above in writing to the other party. Any notice shall be deemed to be given or received on the fifth day after deposit in the United States mail with certified postage prepaid or when actually received, whichever is earlier. ARTICLE 14. Entire Agreement. This Agreement contains the entire ---------------- agreement of the parties with respect to the matters referred to herein and supersedes all prior agreements, negotiations, commitments or understandings. ARTICLE 15. Counterparts. This Agreement may be executed in any number of ------------ counterparts, each of which when so executed and delivered shall be taken to be an original and together shall constitute one and the same document. ARTICLE 16. Governing Law. This Agreement shall be construed in ------------- accordance with the laws of the state of Delaware and the applicable provisions of the 1940 Act. - 3 - IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. MEDALLION FINANCIAL CORP. By ------------------------------ Name: Title: FMC ADVISERS, INC. By ------------------------------ Name: Title: - 4 - EX-99.2H.1 6 UNDERWRITING AGREEMENT 5,000,000 Shares MEDALLION FINANCIAL CORP. Common Stock (Par Value $.01 Per Share) UNDERWRITING AGREEMENT ---------------------- May __, 1996 FURMAN SELZ LLC J.C. BRADFORD & CO. EVEREN SECURITIES, INC. As Representatives of the several Underwriters named on Schedule I hereto c/o Furman Selz LLC 230 Park Avenue New York, New York 10169 Dear Sirs: 1. Introductory. Medallion Financial Corp., a Delaware corporation ------------ (the "Company"), proposes to sell, pursuant to the terms of this Agreement, to the several underwriters named on Schedule I hereto (the "Underwriters," or each, an "Underwriter", which term shall also include any underwriter substituted as hereinafter provided in Section 12), an aggregate of 5,000,000 shares of the Company's common stock, par value $.01 per share (the "Common Stock"). The 5,000,000 shares so proposed to be sold are hereinafter referred to as the "Firm Shares." The Company also proposes to sell to the Underwriters, upon the terms and conditions set forth in Section 3 hereof, up to an additional 750,000 shares of Common Stock (the "Option Shares"). The Firm Shares and the Option Shares are hereinafter referred to collectively as the "Shares." Furman Selz LLC ("Furman Selz"), J.C. Bradford & Co. ("Bradford") and EVEREN Securities, Inc. ("Everen") are acting as representatives of the several Underwriters and in such capacity are hereinafter referred to collectively as the "Representatives." Capitalized terms used in this Agreement without definition have the meanings specified in the Prospectus (as hereinafter defined). 2. Representations and Warranties of the Company. The Company --------------------------------------------- represents and warrants to, and agrees with, the several Underwriters that: (a) A registration statement on Form N-2 (File No. 333-1670) with respect to the Shares has been prepared in conformity in all material respects with the requirements of the Securities Act of 1933, as amended (the "Securities Act"), and the rules and regulations (the "Securities Act Rules and Regulations") of the Securities and Exchange Commission (the "Commission") thereunder, and the Investment Company Act of 1940, as amended (the "Investment Company Act" and, together with the Securities Act, the "Acts"), and the rules and regulations thereunder (the "Investment Company Act Rules and Regulations" and, together with the Securities Act Rules and Regulations, the "Rules and Regulations"); such registration statement has been filed with the Commission under the Securities Act and has been declared effective by the Commission under the Securities Act and no post-effective amendment to such registration statement has been filed as of the date of this Agreement; one or more amendments to such registration statement, including in each case an amended preliminary prospectus, copies of which amendments have heretofore been delivered to you, have been so prepared and filed. A notification of election to be treated as a business development company on Form N-54A (the "Notification") has been prepared in conformity in all material respects with Section 54(a) of the Investment Company Act and has been filed by the Company with the Commission under the Investment Company Act. The term "Registration Statement" means such registration statement, as amended, at the time it was declared effective by the Commission and shall be deemed to include all information omitted therefrom in reliance upon Rule 430A and contained in the Prospectus referred to below. If it is contemplated, at the time this Agreement is executed, that a post-effective amendment to the registration statement will be filed and must be declared effective before the offering of the Shares may commence, the term "Registration Statement" as used in this Agreement means the registration statement as amended by said post-effective amendment. The term "Registration Statement" as used in this Agreement shall also include any registration statement relating to the Shares that is filed and declared effective pursuant to Rule 462(b) under the Securities Act. The term "Prospectus" as used in this Agreement means the prospectus as first filed pursuant to Rule 497(b), (c) or (h) under the Securities Act, except that if any revised prospectus shall be provided to the Underwriters by the Company in conformity with this Agreement for use in connection with the offering of the Shares which differs from the Prospectus on file at the Commission at the time the Registration Statement becomes effective (whether or not such revised prospectus is required to be filed by the Company pursuant to Rule 497(b), (c) or (h) under the Securities Act), the term "Prospectus" shall refer to such revised prospectus from and after the time it is first provided to the Underwriters for such use. The term "Preliminary Prospectus" as used in this Agreement means the prospectus subject to completion in the form included in Amendment No. 1 to the Registration Statement at the time of the initial filing of Amendment No. 1 to the Registration Statement with the Commission, and as such prospectus shall have been amended from time to time prior to the date of the Prospectus and any prospectus filed by the Company with the consent of the Representatives pursuant to Rule 497(a) under the Securities Act. No document has been or will be prepared or distributed in reliance on Rule 434 under the Securities Act. For purposes of the following -2- representations and warranties, to the extent reference is made to the Prospectus and at the relevant time the Prospectus is not yet in existence, such reference shall be deemed to be to the most recent Preliminary Prospectus. (b) Neither the Commission nor any state regulatory authority has issued or, to the Company's knowledge, threatened to issue any order preventing or suspending the use of any Preliminary Prospectus, and, at its date of issue, each Preliminary Prospectus conformed in all material respects with the requirements of the Acts and did not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; the Notification, on the date it was filed with the Commission, complied in all material respects with the requirements of the Investment Company Act and the Investment Company Act Rules and Regulations and did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and, when the Registration Statement became effective and at all times subsequent thereto up to and including the Closing Dates (as defined in Section 3 hereof) the Registration Statement and the Prospectus at the time the Registration Statement became effective (unless the term "Prospectus" refers to a prospectus which has been provided to the Underwriters by the Company for use in connection with the offering of the Shares which differs from the Prospectus on file at the Commission at the time the Registration Statement became effective, in which case at the time it is first provided to the Underwriters for such use) and at the Closing Dates, conformed or will conform, as the case may be, in all material respects to the requirements of the Acts and the Registration Statement and the Prospectus at such times did not or will not, as the case may be, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the foregoing representations, warranties and agreements shall not apply to information contained in or omitted from any Preliminary Prospectus or the Registration Statement or the Prospectus or any amendment thereto in reliance upon, and in conformity with, written information furnished to the Company by or on behalf of any Underwriter, directly or through the Representatives, specifically for use in the preparation thereof; there is no franchise, lease, contract, agreement or other document required to be described in the Registration Statement or Prospectus or to be filed as an exhibit to the Registration Statement which is not described or filed therein as required and the exhibits that have been filed are complete and correct copies of the documents of which they purport to be copies; and all descriptions of any such franchises, leases, contracts, agreements or other documents contained in the Registration Statement are accurate and complete descriptions of such documents in all material respects and fairly present the information required to be shown with respect thereto by Form N-2 under the Act. (c) The Company has filed an exemptive application (as amended and restated, the "Application") and the Commission has issued an order permitting the Company to enter into certain transactions, as set forth in the Application and as described in the Prospectus (the "Exemptive Order"). The Commission has not issued or, to the Company's knowledge, threatened to issue an order rescinding or revoking the Exemptive Order. At the time the Exemptive Order was issued and at all times subsequent thereto up -3- to and including the Closing Date, the Application requested all exemptive relief necessary under the Investment Company Act for the Company to consummate the transactions described in the Prospectus. At the time the Exemptive Order was issued and at all times subsequent thereto up to and including the Closing Date, the Application did not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (d) Tri-Magna has filed a proxy statement (the "Proxy Statement") under the Exchange Act with respect to the meeting of its stockholders in connection with approval of the merger of Tri-Magna with and into the Company. The Proxy Statement, as of the date it was first mailed to stockholders and at all times subsequent thereto up to and including the date of the meeting of its stockholders, complied as to form in all material respects with the applicable provisions of the Exchange Act and the rules and regulations thereunder, and did not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. (e) The Company and each of Tri-Magna Corporation, Medallion Funding Corp., Medallion Media, Inc., Edwards Capital Corp. and Transportation Capital Corp. (together, the "Founding Companies") have been duly organized and are validly existing and in good standing as corporations under the laws of their respective jurisdictions of organization, and after consummation of the Acquisitions will have the corporate power and authority to own or lease their properties and to conduct their respective businesses as described in the Prospectus; the Company and each of the Founding Companies are in possession of and operating in compliance in all material respects with all franchises, grants, registrations, qualifications, authorizations, licenses, permits, easements, consents, certificates and orders required for the conduct of their respective businesses as now being conducted and as described in the Registration Statement and the Prospectus, or for the ownership, leasing and operation of their respective properties, all of which are valid and in full force and effect and no such franchise, grant, registration, consent, certificate or order contains a materially burdensome restriction not adequately disclosed in the Registration Statement or the Prospectus; and the Company and each of the Founding Companies are duly qualified to do business and are in good standing as foreign corporations in all jurisdictions where their respective ownership or leasing of properties or the conduct of their respective businesses requires such qualification and in which the failure to so qualify would have a Material Adverse Effect (as defined in subsection 2(m)). (f) The Company had full corporate power and authority to enter into each of the agreements relating to the Acquisitions (such agreements, as amended, are hereinafter referred to collectively as the "Acquisition Agreements") and has full power and authority to perform its obligations thereunder; true and correct copies of the executed Acquisition Agreements (including all exhibits and schedules thereto) have heretofore been delivered to the Representatives and there have been no amendments, alterations, modifications or waivers relating thereto or in the exhibits or schedules thereto which have not been -4- previously delivered to the Representatives; and each of the Acquisition Agreements has been duly and validly authorized, executed and delivered by the Company and constitutes the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and similar laws of general application affecting the rights and remedies of creditors or by general principles of equity. (g) Each of Tri-Magna Corporation, Transportation Capital Corp., and Edwards Capital Company (together, the "Targets") had full power and authority (corporate or other) to enter into the respective Acquisition Agreement to which it is a party and has full power and authority to perform its obligations thereunder; and each of the Acquisition Agreements has been duly and validly authorized, executed and delivered by the Target executing such agreement and constitutes the valid and binding obligation of such Target, enforceable against such Target in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and similar laws of general application affecting the rights and remedies of creditors or by general principles of equity. (h) Subsequent to the respective dates as of which information is given in the Registration Statement, Prospectus, Proxy Statement and the Application, and except as set forth or contemplated therein or in the Acquisition Agreements, (i) neither the Company nor any of the Founding Companies has incurred any material liabilities or obligations, direct or contingent, or entered into any other transactions not in the ordinary course of business, (ii) there has not been any material adverse change or development involving a material prospective change in the condition (financial or otherwise), properties, business, management, prospects, net worth, capital stock, investment objectives, investment policies or results of operations of the Company and the Founding Companies taken as a whole, or any change in the capital stock, or material change in the short-term or long-term debt, of the Company and the Founding Companies taken as a whole and (iii) there has been no dividend or distribution of any kind declared, paid or made by the Company or the Founding Companies on any class of their respective capital stock. For purposes of this Agreement to the extent reference is made to "the Company and the Founding Companies taken as a whole," such references shall be deemed to assume that the transactions contemplated by each of the Acquisition Agreements have been consummated prior to the date hereof. (i) The financial statements, together with the related notes and schedules, of the Company and the Targets set forth in the Prospectus and elsewhere in the Registration Statement fairly present, on the basis stated in the Registration Statement, the financial position and the results of operations and changes in financial position of the Company and the Targets at the respective dates or for the respective periods therein specified. Such statements and related notes and schedules have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods involved (except as otherwise noted therein). The selected financial and statistical data set forth in the Prospectus under the captions "Summary Financial Data" and -5- "Selected Financial Data" fairly present, on the basis stated in the Prospectus, the information set forth therein and have been prepared in conformity with the requirements of the Securities Act and the Securities Act Rules and Regulations. The pro forma financial statements and other pro forma financial information included in the Registration Statement and the Prospectus present fairly the information shown therein, have been prepared in accordance with the Commission's rules and guidelines with respect to pro forma financial statements, have been properly compiled on the pro forma bases described therein, and, in the opinion of the Company, the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions or circumstances referred to therein. (j) Arthur Andersen LLP, Friedman Alpren & Green LLP and Coopers & Lybrand LLP, who have expressed opinions on the audited financial statements and related schedules included in the Registration Statement and the Prospectus are independent certified public accountants as required by the Securities Act and the Securities Act Rules and Regulations. (k) The Company's capitalization, assuming that the 12,500 for 1 stock split and amendment and restatement of the Certificate of Incorporation of the Company (the "Founders Transactions") had occurred prior to December 31, 1995, is as set forth under the heading "Medallion Financial Historical" in the section of the Prospectus entitled "Capitalization." The Company's capitalization, assuming that the Founders Transactions had occurred prior to December 31, 1995, and as adjusted to give effect to the Offering, is as set forth under the heading "As Adjusted for Offering" in the section of the Prospectus entitled "Capitalization." The Company's capitalization, assuming that (i) the Founders Transactions had occurred prior to December 31, 1995, and (ii) the Acquisitions had been consummated prior to December 31, 1995, and as adjusted for the application of the proceeds of the Offering and the cash acquired in connection with the Acquisitions as described in the section of the Prospectus entitled "Use of Proceeds," is as set forth under the heading "Pro Forma as Adjusted for Application of Offering Proceeds" in the section of the Prospectus entitled "Capitalization." The outstanding shares of Common Stock, including without limitation those shares issued pursuant to the Pre-Offering Issuance, conform to the description thereof in the Prospectus and have been duly authorized and validly issued and are fully paid and nonassessable and have been issued in compliance with all federal and state securities laws and were not issued in violation of or subject to any preemptive rights or similar rights to subscribe for or purchase securities. Except as disclosed in or contemplated by the Prospectus and the financial statements of the Company and related notes thereto included in the Prospectus, neither the Company nor the Founding Companies has outstanding any options or warrants to purchase, or any preemptive rights or other rights to subscribe for or to purchase any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of their respective capital stock or any such options, rights, convertible securities or obligations. The description of the Company's stock option and other stock plans or arrangements, and the options or other rights granted thereunder, as set forth in the Prospectus, accurately and fairly presents in all material respects the information required to be shown with -6- respect to such plans, arrangements, options and rights. All shares of capital stock of each Founding Company issued or to be issued and outstanding immediately after the consummation of the transactions contemplated by the Acquisition Agreements, have been duly authorized and validly issued, and are fully paid and nonassessable and, except as disclosed in the Prospectus, will be owned, directly or indirectly, by the Company free and clear of any liens, encumbrances, equities or claims. (l) The Shares to be issued and sold by the Company to the Underwriters hereunder have been duly and validly authorized and, when issued and delivered against payment therefor as provided herein, will be duly and validly issued, fully paid and nonassessable, free of any preemptive or similar rights and will conform to the description thereof in the Prospectus, and good and marketable title to the Shares will pass to the Underwriters on the Closing Dates free and clear of any lien, encumbrance, security interest, claim or restriction whatsoever except for (a) those restrictions imposed under the Company's credit agreements filed as exhibits to the Registration Statement and (b) those restrictions imposed generally under the Investment Company Act, the Investment Company Act Rules and Regulations, the SBIA and the SBA Regulations. (m) Subject to the transfer of the Targets' SBA licenses in accordance with the approval of such transfer granted by the SBA, which transfer can be effected solely by acts wholly within the Company's discretion and ability, there are no legal or governmental proceedings pending to which the Company or any of the Founding Companies or any of their affiliated persons, as defined under the Investment Company Act, is a party or of which any property of the Company or any Founding Company or any of their affiliated persons is subject, which, if determined adversely to the Company or any such Founding Company or affiliated person, might individually or in the aggregate (i) prevent or materially and adversely affect the transactions contemplated by this Agreement, (ii) suspend the effectiveness of the Registration Statement, (iii) prevent or suspend the use of the Preliminary Prospectus in any jurisdiction or (iv) result in a Material Adverse Effect (as defined below); and to the Company's knowledge no such proceedings are threatened or contemplated against the Company or any Founding Company or any of their affiliated persons by governmental authorities or others. Except as disclosed in the Prospectus, the Company is not a party nor subject to the provisions of any material injunction, judgment, decree or order of any court, regulatory body or other governmental agency or body. "Material Adverse Effect" means, when used in connection with the Company, the Founding Companies or the Targets, any development, change or effect that could reasonably be expected to have a material adverse effect on the condition (financial or otherwise), properties, business, management, prospects, net worth or results of operations of the Company and the Founding Companies taken as a whole assuming the transactions contemplated by each of the Acquisition Agreements had been consummated prior to the date hereof. (n) Neither the Company nor any of the Founding Companies is in violation of its respective charter, by-laws or other organizational documents or in default in the performance of any note or other evidence of indebtedness or any indenture, mortgage, deed of trust, note agreement or other contract, lease or other instrument to which it is a party or by which it is bound, or to which any of its property or assets is subject other than defaults which would not, individually or in the aggregate, result in a Material Adverse Effect and, as of the Closing Dates, no condition or event shall have occurred which, with notice or a lapse of time or both, would constitute a default under such instruments or -7- agreements or result in the imposition of any penalty or acceleration of any indebtedness other than such defaults, penalties or acceleration which would not, individually or in the aggregate, result in a Material Adverse Effect. (o) The execution, delivery and performance of this Agreement and each of the Acquisition Agreements and the consummation of the transactions contemplated herein and therein will not result in a breach or violation of any of the terms or provisions of or constitute a default under any note or other evidence of indebtedness or any indenture, mortgage, deed of trust, note agreement or other contract, lease or instrument to which the Company or any of the Founding Companies is a party or by which any of them or any of their properties is or may be bound, the certificate of incorporation, by-laws or other organizational documents of the Company or any of the Founding Companies, or any law, order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of the Founding Companies or any of their properties and will not result in the creation of any lien, charge or encumbrance upon the assets of the Company or the Founding Companies. (p) Other than those obtained prior to the date hereof, no consent, approval, authorization or order of any court or governmental agency or body is required for the consummation by the Company of the transactions contemplated by this Agreement or the Acquisition Agreements, except such as may be required by the SBA, as described in subsection 2 (m) the National Association of Securities Dealers, Inc. (the "NASD") or the securities or "Blue Sky" laws of any jurisdiction in connection with the purchase and distribution of the Shares by the Underwriters. (q) The Company has duly elected to be treated by the Commission under the Investment Company Act as a business development company and all required action has been taken by the Company under Section 54 of the Investment Company Act to qualify the Company as a business development company and under the Acts to make the public offering and consummate the sale of the Shares as provided in this Agreement. (r) The Company intends to direct the investment of the proceeds of the Offering (as defined in the Prospectus) in such a manner as to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), and, immediately after the First Closing Date, the Company and the RIC Subsidiaries will each be eligible to qualify as a regulated investment company under Subchapter M of the Code. (s) The Company has the full corporate power and authority to enter into this Agreement and to perform its obligations hereunder (including to issue, sell and deliver the Shares), and this Agreement has been duly and validly authorized, executed and delivered by the Company. (t) The Company and the Founding Companies are in compliance with, and conduct their respective businesses in conformity with, all applicable federal, state, local and foreign laws, rules and regulations of any court or governmental agency or body -8- except non-compliance which would not result in a Material Adverse Effect; to the knowledge of the Company, other than as set forth in the Registration Statement and the Prospectus, no prospective change in any of such federal, state, local or foreign laws, rules or regulations has been adopted which, when made effective, would have a Material Adverse Effect. (u) The Company and the Founding Companies have filed all necessary federal, state, local and foreign income, payroll, franchise and other tax returns and have paid all taxes shown as due thereon or with respect to any of their properties, and there is no tax deficiency that has been, or to the knowledge of the Company is likely to be, asserted against the Company or any of the Founding Companies or any of their respective properties or assets that would have a Material Adverse Effect. (v) No person or entity has the right to require registration of shares of Common Stock or other securities of the Company because of the filing or effectiveness of the Registration Statement or otherwise. (w) Neither the Company nor the Founding Companies nor any of their respective officers, directors or any of their affiliated persons has taken or will take, directly or indirectly, any action designed or intended to stabilize or manipulate the price of any security of the Company, or which caused or resulted in, or which might in the future reasonably be expected to cause or result in, stabilization or manipulation of the price of any security of the Company. (x) The Company and the Founding Companies own or possess all patents, trademarks, trademark registrations, service marks, service mark registrations, tradenames, copyrights, licenses, inventions, trade secrets and rights described in the Prospectus as being owned by them or any of them or necessary for the conduct of their respective businesses, and the Company is not aware of any claim to the contrary or any challenge by any other person to the rights of the Company and the Founding Companies with respect to the foregoing. The Company's and the Founding Companies' businesses as now conducted and as proposed to be conducted do not and will not infringe or conflict with in any material respect any patents, trademarks, service marks, tradenames, copyrights, trade secrets, licenses or any other intellectual property or franchise right of any person. No claim has been made against the Company or any Founding Company alleging the infringement by the Company or any Founding Company of any patent, trademark, servicemark, tradename, copyright, trade secret, license in or other intellectual property right or franchise right of any person. (y) The Company and the Founding Companies have performed all material obligations required to be performed by them under all contracts required by Item 24 of Form N-2 under the Securities Act to be filed as exhibits to the Registration Statement, and neither the Company, any of the Founding Companies nor any other party to such contract is in default under or in breach of any such obligations except such as would not -9- result in a Material Adverse Effect. Neither the Company nor any of the Founding Companies has received any notice of such default or breach. (z) Neither the Company or any of the Founding Companies is involved in any labor dispute which would result in a Material Adverse Effect nor, to the Company's knowledge, is any such dispute threatened. Neither the Company nor any of the Founding Companies is aware that (i) any executive, key employee or significant group of employees of the Company or any of the Founding Companies plans to terminate employment with the Company or any of the Founding Companies or (ii) any such executive or key employee is subject to any noncompete, nondisclosure, confidentiality, employment, consulting or similar agreement that would be violated by the present or proposed business activities of the Company or the Founding Companies. Neither the Company nor any Founding Company has or expects to have any liability for any prohibited transaction or funding deficiency or any complete or partial withdrawal liability with respect to any pension, profit sharing or other plan which is subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), to which the Company or any Founding Company makes or ever has made a contribution and in which any employee of the Company or any Founding Company is or has ever been a participant. With respect to such plans, the Company and each Founding Company are in compliance in all material respects with all applicable provisions of ERISA. (aa) The Company has obtained the written agreement described in Section 8(1) of this Agreement from each of its officers, directors and holders of Common Stock listed on Schedule II hereto. (bb) The Company and the Founding Companies have, and the Company and the Founding Companies as of the Closing Dates will have, good and marketable title in fee simple to all real property and good and marketable title to all personal property owned or proposed to be owned by them, in each case free and clear of all liens, charges, encumbrances and defects except as disclosed in the Prospectus or such as would not have a Material Adverse Effect, and any real property and buildings held under lease by the Company and the Founding Companies or proposed to be held after giving effect to the transactions described in the Prospectus are, or will be as of the Closing Dates, held by them under valid, subsisting and enforceable leases with such exceptions as would not have a Material Adverse Effect, in each case except as described in or contemplated by the Prospectus . (cc) The Company and the Founding Companies are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are customary in the businesses in which they are engaged or propose to engage after giving effect to the transactions described in the Prospectus; and neither the Company nor any Founding Company has any reason to believe that it will not be able to renew such insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue their business at a cost that would not have a Material Adverse Effect. -10- (dd) Other than as contemplated by this Agreement or as disclosed in the Prospectus, there is no broker, finder or other party that is entitled to receive from the Company or the Founding Companies any brokerage or finders' fee or other fee or commission as a result of any of the transactions contemplated by this Agreement. (ee) The Company has complied with all applicable provisions of Section 517.075 of the Florida Statutes (Chapter 92-198; Laws of Florida). (ff) The summaries of the terms of each of the Acquisitions contained in the Prospectus, to the extent such summaries purport to describe the provisions of the terms of the Acquisition Agreements, constitute fair and accurate summaries thereof. Each of the Acquisitions shall have been consummated on or prior to the First Closing Date (as defined in Section 3 hereof). (gg) Neither the Company or any of the Founding Companies, nor any director, officer, agent or employee acting on behalf of the Company or the Founding Companies has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity, (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds, (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977 or (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment. (hh) The Company and each of the Targets maintain a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorization, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets, (iii) access to assets is permitted only in accordance with management's general or specific authorization and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (ii) To the Company's knowledge, neither the Company, any of the Founding Companies nor any employee or agent of the Company or any of the Founding Companies has made any payment of funds of the Company or any of the Founding Companies or received or retained any funds in violation of any law, rule or regulation, which payment, receipt or retention of funds is of a character required to be disclosed in the Prospectus. (jj) Each certificate signed by any officer of the Company and delivered to the Underwriters or counsel for the Underwriters in connection to this Agreement or the transactions contemplated hereby shall be deemed to be a representation and warranty by the Company as to the matters covered thereby. -11- (kk) The Shares have been approved, subject to official notice of issuance, for quotation on the Nasdaq National Market. (ll) A registration statement on Form 8-A (the "Form 8-A") with respect to the Shares has been prepared by the Company in conformity with Section 12(g) of the Exchange Act and the rules and regulations thereunder, and has been filed with the Commission under the Exchange Act and the Form 8-A has been declared effective by the Commission. 3. Purchase by, and Sale and Delivery to, the Underwriters - Closing ----------------------------------------------------------------- Dates. - ----- (a) On the basis of the representations, warranties, covenants and agreements herein contained, but subject to the terms and conditions herein set forth, the Company agrees to sell to the Underwriters the Firm Shares, and the Underwriters agree, severally and not jointly, to purchase the Firm Shares from the Company, the number of Firm Shares to be purchased by each Underwriter being set opposite its name on Schedule I, subject to adjustment in accordance with Section 12 hereof. (b) The purchase price per share to be paid by the Underwriters to the Company will be $ ____ per share (the "Purchase Price"). (c) The Company will deliver the Firm Shares to the Representatives for the respective accounts of the several Underwriters (in the form of definitive certificates) issued in such names and in such denominations as the Representatives may direct by notice in writing to the Company given at or prior to 12:00 noon, New York City time, on the second full business day preceding the First Closing Date or, if no such direction is received, in the names of the respective Underwriters or in such other names as Furman Selz may designate (solely for the purpose of administrative convenience) and in such denominations as Furman Selz may determine, against payment of the aggregate Purchase Price therefor by federal funds wire transfer (same day funds) to an account or accounts previously designated in writing by the Company, all at the offices of Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd Street, New York, New York 10022. The time and date of the delivery and closing shall be at 10:00 a.m., New York City time, on [T + 3 business days, or if the pricing of the Firm Shares occurs after 4:30 p.m., T + 4 business days], 1996, in accordance with Rule 15c6-1 of the Exchange Act. The Company will bear the one-day cost of funds of Furman Selz in providing the aggregate Purchase Price in same day funds, rather than next day funds. The time and date of such payment and delivery are herein referred to as the "First Closing Date." The First Closing Date and the location of delivery of, and the form of payment for, the Firm Shares may be varied by agreement between the Company and Furman Selz. The First Closing Date may be postponed pursuant to the provisions of Section 12. (d) The Company shall make the certificates for the Firm Shares available to the Representatives for examination on behalf of the Underwriters not later than 10:00 a.m., New York City time, on the business day preceding the First Closing Date at the offices of Furman Selz LLC, 230 Park Avenue, New York, New York 10169. -12- (e) It is understood that Furman Selz, Bradford or Everen, individually and not as Representatives of the several Underwriters, may (but shall not be obligated to) make payment to the Company on behalf of any Underwriter or Underwriters, for the Shares to be purchased by such Underwriter or Underwriters. Any such payment by Furman Selz, Bradford or Everen shall not relieve such Underwriter or Underwriters from any of its or their other obligations hereunder. (f) The several Underwriters propose to make an initial public offering of the Firm Shares (other than to residents of or in any jurisdiction in which qualification of the Firm Shares is required and has not become effective) at the initial public offering price and upon the other terms set forth in the Prospectus as soon after the effectiveness of the Registration Statement as in their judgment is advisable. The Representatives shall promptly advise the Company of the making of the initial public offering. (g) For the purpose of covering any over-allotments in connection with the distribution and sale of the Firm Shares as contemplated by the Prospectus, the Company hereby grants to the Underwriters an option to purchase, severally and not jointly, up to the aggregate number of shares of Option Shares. The price per share to be paid for the Option Shares shall be the Purchase Price. The option granted hereby may be exercised as to all or any part of the Option Shares at any time, but only once, not more than 30 days subsequent to the effective date of this Agreement. No Option Shares shall be sold and delivered unless the Firm Shares previously have been, or simultaneously are, sold and delivered. The right to purchase the Option Shares or any portion thereof may be surrendered and terminated at any time prior to exercise upon notice by the Underwriters to the Company. The option granted hereby may be exercised by the Underwriters by giving written notice from Furman Selz to the Company setting forth the number of Option Shares to be purchased by them and the date and time for delivery of and payment for the Option Shares. Each date and time for delivery of and payment for the Option Shares (which may be the First Closing Date, but not earlier) is herein called the "Option Closing Date" and shall in no event be earlier than two business days nor later than five business days after written notice is given. The Option Closing Date and the First Closing Date are herein collectively called the "Closing Dates." All purchases of Option Shares from the Company shall be made on a pro rata basis. Option Shares shall be purchased for the account of each Underwriter in the same proportion as the number of Firm Shares set forth opposite such Underwriter's name on Schedule I hereto bears to the total number of Firm Shares (subject to adjustment by the Underwriters to eliminate odd lots). Upon exercise of the option by the Underwriters, the Company agrees to sell to the Underwriters the number of Option Shares set forth in the written notice of exercise and the Underwriters agree, severally and not jointly and subject to the terms and conditions herein set forth, to purchase the number of such shares determined as aforesaid. The Company will deliver the Option Shares to the Underwriters (in the form of definitive certificates, issued in such names and in such denominations as the Representatives may direct by notice in writing to the Company given at or prior to 12:00 noon, New York City time, on the second full business day preceding the Option Closing Date or, if no such direction is received, in the names of the respective Underwriters or in such other names as Furman Selz may designate (solely for the purpose of administrative convenience) and in such denominations as Furman Selz may determine, against payment of the aggregate Purchase Price therefor by certified or official bank check or checks in New York Clearing House funds (next day -13- funds), payable to the order of the Company all at the offices of Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd Street, New York, New York 10022. The Company shall make the certificates for the Option Shares available to the Underwriters for examination not later than 10:00 a.m., New York City time, on the business day preceding the Option Closing Date at the offices of Furman Selz, 230 Park Avenue, New York, New York 10169. The Option Closing Date and the location of delivery of, and the form of payment for, the Option Shares may be varied by agreement between the Company and Furman Selz. The Option Closing Date may be postponed pursuant to the provisions of Section 12. 4. Covenants and Agreements of the Company. The Company covenants and --------------------------------------- agrees with the several Underwriters that: (a) The Company will (i) if the Company and the Representatives have determined not to proceed pursuant to Rule 430A, use its best efforts to cause the Registration Statement to become effective, (ii) if the Company and the Representatives have determined to proceed pursuant to Rule 430A, use its best efforts to comply with the provisions of and make all requisite filings with the Commission pursuant to Rule 430A and Rule 497 of the Securities Act Rules and Regulations and (iii) if the Company and the Representatives have determined to deliver Prospectuses pursuant to Rule 434 of the Securities Act Rules and Regulations, to use its best efforts to comply with all the applicable provisions thereof. The Company will advise the Representatives promptly as to the time at which the Registration Statement becomes effective, will advise the Representatives promptly of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or an order rescinding or revoking the Exemptive Order, or of the institution of any proceedings for such purposes, and will use its best efforts to prevent the issuance of any such stop order or order revoking or rescinding the Exemptive Order, and to obtain as soon as possible the lifting thereof, if issued. The Company will advise the Representatives promptly of the receipt of any comments of the Commission or any request by the Commission for any amendment of or supplement to the Registration Statement or the Prospectus or for additional information and will not at any time file any amendment to the Registration Statement or supplement to the Prospectus which shall not previously have been submitted to the Representatives a reasonable time prior to the proposed filing thereof or to which the Representatives shall reasonably object in writing or which is not in compliance with the Acts. The Company will advise the Representatives promptly of receipt by the Company or any representative or attorney of the Company of any other communication from the Commission relating to (i) the Company, if received during the time a Prospectus relating to the Shares is required to be delivered under the Securities Act, or (ii) the Registration Statement, the Notification, the Exemptive Order, any Preliminary Prospectus, the Prospectus or the transactions contemplated by this Agreement. (b) The Company will promptly prepare and file with the Commission any amendments or supplements to the Registration Statement or the Prospectus which in the judgment of the Company or in the reasonable opinion of the Representatives may be necessary to enable the several Underwriters to continue the distribution of the Shares and will use its best efforts to cause the same to become effective as promptly as possible. -14- (c) If at any time after the effective date of the Registration Statement when a prospectus relating to the Shares is required to be delivered under the Securities Act any event relating to or affecting the Company or any of the Founding Companies occurs as a result of which the Prospectus or any other prospectus as then in effect would include an untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend the Prospectus to comply with the Acts, the Company will promptly notify the Representatives thereof and will prepare an amended or supplemented prospectus which will correct such statement or omission; and in case any Underwriter is required to deliver a prospectus relating to the Shares nine months or more after the effective date of the Registration Statement in connection with the initial sale of any Shares which such Underwriter purchased from the Company pursuant to this Agreement, the Company upon the request of the Representatives but at the expense of such Underwriter will prepare promptly such prospectus or prospectuses as may be necessary to permit compliance with the requirements of Section 10(a)(3) of the Securities Act. (d) The Company will deliver to the Representatives, at or before the Closing Dates, signed copies of the Registration Statement, as originally filed with the Commission, and all amendments thereto including all financial statements and exhibits thereto, and will deliver to the Representatives such number of copies of the Registration Statement, including such financial statements but without exhibits, and all amendments thereto, as the Representatives may reasonably request. The Company will deliver or mail to or upon the order of the Representatives, from time to time until the effective date of the Registration Statement, as many copies of the Preliminary Prospectus as the Representatives may reasonably request. The Company will deliver or mail to or upon the order of the Representatives on the date of the initial public offering, and thereafter from time to time during the period when delivery of a prospectus relating to the Shares is required under the Securities Act, as many copies of the Prospectus, in final form or as thereafter amended or supplemented as the Representatives may reasonably request. (e) The Company will deliver to the Representatives, at or before the First Closing Date, a signed copy of the Notification and the Application as originally filed, and each amendment thereto filed with the Commission, including all consents and exhibits filed therewith, and a copy of the Exemptive Order. (f) The Company will deliver to the Representatives, at or before the First Closing Date, such number of conformed copies of the Notification and the Application as originally filed, and each amendment thereto filed with the Commission, including all consents and exhibits filed therewith, as the Representatives may reasonably request. (g) The Company will make generally available to its shareholders as soon as practicable, but not later than 15 months after the effective date of the Registration Statement, an earnings statement which will be in reasonable detail (but which need not be audited) and which will comply with Section 11(a) of the Securities Act, covering a period of at least 12 months beginning after the "effective date" (as defined in Rule 158 under the -15- Securities Act) of the Registration Statement. (h) The Company will cooperate with the Representatives to enable the Shares to be registered or qualified for offering and sale by the Underwriters and by dealers under the securities laws of such jurisdictions as the Representatives may designate and at the request of the Representatives will make such applications and furnish such consents to service of process or other documents as may be required of it as the issuer of the Shares for that purpose; provided, however, that the Company shall not be required to qualify to do business or to file a general consent (other than that arising out of the offering or sale of the Shares) to service of process in any such jurisdiction where it is not now so subject. The Company will, from time to time, prepare and file such statements and reports as are or may be required of it as the issuer of the Shares to continue such qualifications in effect for so long a period as the Representatives may reasonably request for the distribution of the Shares. The Company will advise the Representatives promptly after the Company becomes aware of the suspension of the qualifications or registration of (or any such exception relating to) the Common Stock of the Company for offering, sale or trading in any jurisdiction or of any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any orders suspending such qualifications, registration or exception, the Company will, with the cooperation of the Representatives use its best efforts to obtain the withdrawal thereof. (i) The Company will furnish to its shareholders annual reports containing financial statements audited by independent certified public accountants and with quarterly summary financial information in reasonable detail which may be unaudited. During the period of five years from the date hereof, the Company will deliver to the Representatives and, upon request, to each of the other Underwriters, as soon as they are available, copies of each annual report of the Company and each other report furnished by the Company to its shareholders and will deliver to the Representatives, (i) as soon as they are available, copies of any other reports (financial or other) which the Company shall publish or otherwise make available to its shareholders as such, (ii) as soon as they are available, copies of any reports and financial statements furnished to or filed with the Commission or any national securities exchange or the Nasdaq National Market and (iii) from time to time such other information concerning the Company as the Representatives may reasonably request. So long as the Company has active subsidiaries, such financial statements will be on a consolidated basis to the extent the accounts of the Company and its subsidiaries are consolidated in reports furnished to its shareholders generally. Separate financial statements shall be furnished for all subsidiaries whose accounts are not consolidated but which at the time are significant subsidiaries as defined in the Securities Act Rules and Regulations. (j) The Company will use its best efforts to cause the Shares to be duly included for quotation on the Nasdaq National Market prior to the First Closing Date. (k) The Company will maintain a transfer agent and registrar for its Common Stock. -16- (l) Prior to filing its first quarterly report on Form 10-Q, the Company will have its independent certified public accountants perform a limited quarterly review of its quarterly financial statements . (m) The Company will not, without the prior written consent of Furman Selz, offer, sell, assign, transfer, encumber, contract to sell, grant an option to purchase or otherwise dispose of any shares of Common Stock or securities convertible into or exercisable or exchangeable for Common Stock (including, without limitation, Common Stock of the Company which may be deemed to be beneficially owned by the Company in accordance with the Securities Act Rules and Regulations) during the 180 days following the date of the Prospectus first filed pursuant to Rule 497(b), (c) or (h), other than (i) the Company's sale of Shares hereunder and the Company's issuance of Common Stock upon the exercise of stock options which are outstanding on the First Closing Date or described in the Prospectus and (ii) the Companys issuance of stock options which are described in the Prospectus. (n) The Company will apply the net proceeds from the sale of the Shares as set forth in the description under the caption "Use of Proceeds" in the Prospectus. The Company will apply the cash acquired in connection with the Acquisitions as set forth in the description under the caption "Use of Proceeds" in the Prospectus. (o) The Company will supply the Representatives with copies of all correspondence to and from, and all documents issued to and by, the Commission in connection with the registration of the Shares under the Securities Act and the Nasdaq National Market. (p) Prior to the Closing Dates, the Company will furnish to the Representatives, as soon as they have been prepared, copies of any unaudited interim consolidated financial statements of the Company and its subsidiaries for any periods subsequent to the periods covered by the financial statements appearing in the Registration Statement and the Prospectus. (q) Prior to the Closing Dates, unless required under the Acts or the Rules and Regulations, the Company will issue no press release or other communications directly or indirectly and hold no press conference with respect to the Company or any of its subsidiaries, the financial condition, results of operation, business, prospects, assets or liabilities of any of them, or the offering of the Shares, without the prior written consent of the Representatives, which shall not be unreasonably withheld. For a period of 12 months following the Closing Date, the Company will use its best efforts to provide to the Representatives copies of each press release or other public communications with respect to the financial condition, results of operations, business, prospects, assets or liabilities of the Company at least 24 hours prior to the public issuance thereof or such longer advance period as may reasonably be practicable. -17- (r) During the period of five years hereafter, the Company will furnish to the Representatives, and upon request of the Representatives, to each of the Underwriters, (i) as soon as practicable after the end of each fiscal year, copies of the annual report of the Company containing the balance sheet of the Company as of the close of such fiscal year and statements of income, shareholders' equity and cash flows for the year then ended and the opinion thereon of the Company's independent certified public accountants, (ii) as soon as practicable after the filing thereof, copies of each proxy statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Report on Form 8-K or other report filed by the Company with the Commission, or the Nasdaq National Market or any national securities exchange, (iii) as soon as available, copies of any report or communication of the Company mailed generally to holders of its Common Stock and (iv) all public reports and all reports and financial statements furnished by the Company to the Commission pursuant to the Investment Company Act and the Investment Company Act Rules and Regulations thereunder. (s) The Company will file timely and accurate reports on Form SR with the Commission in accordance with Rule 463 under the Securities Act or any successor provision. (t) Each of the RIC Subsidiaries has filed, or will file, a Notification of Registration on Form N-8A (the "Forms N-8A") and a Registration Statement on Form N-5 (the "Forms N-5") under the Investment Company Act, as necessary for the election of regulated investment company ("RIC") status under Subchapter M of the Code. Each Form N-8A and Form N-5, complied, or will comply, as to form in all material respects with the applicable provisions of the Investment Company Act and the Investment Company Act Rules and Regulations, and did not, or will not, include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The Company will, and will cause each of the RIC Subsidiaries to, elect RIC status under Subchapter M of the Code, commencing with the year ended December 31, 1996. 5. Payment of Expenses. The Company will pay or cause to be paid ------------------- (directly or by reimbursement) all costs, fees and expenses incurred in connection with and expenses incident to the performance of the obligations of the Company under this Agreement, as follows: (i) all expenses and taxes incident to the issuance and delivery of the Shares to the Representatives, (ii) all expenses incident to the registration of the Shares under the Securities Act, (iii) the costs of preparing stock certificates (including printing and engraving costs), (iv) all fees and expenses of the registrar and transfer agent of the Shares, (v) all necessary issue, transfer and other stamp taxes in connection with the issuance and sale of the Shares to the Underwriters, (vi) all fees and expenses of the Company's counsel and the Company's independent certified public accountants, (vii) all costs and expenses incurred in connection with the preparation, printing, filing, shipping and distribution of the Registration Statement, the Notification, the Application, the Exemptive Order, each Preliminary Prospectus and the Prospectus (including all exhibits and financial statements) and all amendments and supplements provided for herein, the -18- Forms N-8A, the Forms N-5, the Master Agreement Among Underwriters between the Representatives and the Underwriters, the Master Selected Dealer Agreement, the Blue Sky memoranda and this Agreement, (viii) all filing fees, reasonable attorneys' fees and expenses incurred by the Company or the Underwriters in connection with exemptions from qualifying or registering (or obtaining qualification or registration of) all or any part of the Shares for offer and sale and determination of its eligibility for investment under the Blue Sky or other securities laws of such jurisdictions as the Representatives may designate, (ix) all fees and expenses paid or incurred in connection with filings made with the NASD, (x) all fees and expenses paid or incurred in connection with the listing of the Shares on the Nasdaq National Market and (xi) all other costs, fees and expenses incident to the performance of the Company's obligations hereunder which are not otherwise specifically provided for in this Section; provided that, except as provided in Section 11, the Underwriters shall pay their own costs and expenses, including the costs and expenses of their counsel, any transfer taxes on the Shares which they may sell, and the expenses of advertising any offering of the Shares made by the Underwriters. 6. Indemnification and Contribution. -------------------------------- (a) The Company shall indemnify and hold harmless each Underwriter, its officers and employees and each person, if any, who controls any Underwriter within the meaning of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or action relating to purchases and sales of the Shares), to which that Underwriter, officer, employee or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any Preliminary Prospectus, the Registration Statement or the Prospectus or in any amendment or supplement thereto or (B) in any blue sky application or other document prepared or executed by the Company (or based upon any written information furnished by the Company) specifically for the purpose of qualifying any or all of the Shares under the securities laws of any state or other jurisdiction (any such application, document or information being hereinafter called a "Blue Sky Application"), (ii) the omission or alleged omission to state in any Preliminary Prospectus, the Registration Statement or the Prospectus, or in any amendment or supplement thereto, or in any Blue Sky Application any material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse each Underwriter and each such officer, employee or controlling person promptly upon demand for any legal or other expenses reasonably incurred by that Underwriter, officer, employee or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company shall not be - -------- ------- -19- liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, the Registration Statement or the Prospectus, or in any such amendment or supplement, or in any Blue Sky Application, in reliance upon and in conformity with written information furnished to the Company through the Representatives by or on behalf of any Underwriter specifically for inclusion therein. The foregoing indemnity agreement is in addition to any liability which the Company may otherwise have to any Underwriter or to any officer, employee or controlling person of that Underwriter. The foregoing indemnity agreement with respect to any Preliminary Prospectus, Prospectus or Registration Statement shall not inure to the benefit of any Underwriter (its officers and employees or any person who controls such Underwriter within the meaning of the Securities Act) from whom the person asserting any such loss, claims, damages or liabilities purchased Shares if a copy of the Prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Underwriter to such person, at or prior to the written confirmation of the sale of such Shares to such person and if the Prospectus (as so amended or supplemented) would have cured the defect giving rise to such loss, claim, damage or liability; provided, that the Company has complied with its obligation under subsection 4(d) of this Agreement to provide copies of the Prospectus to the Representatives. (b) Each Underwriter, severally and not jointly, shall indemnify and hold harmless the Company, each of its officers who signed the Registration Statement, each of its directors, and each person, if any, who controls the Company within the meaning of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company or any such director, officer or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any Preliminary Prospectus, the Registration Statement or the Prospectus or in any amendment or supplement thereto, or (B) in any Blue Sky Application or (ii) the omission or alleged omission to state in any Preliminary Prospectus, the Registration Statement or the Prospectus, or in any amendment or supplement thereto, or in any Blue Sky Application any material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company through the Representatives by or on behalf of that Underwriter specifically for inclusion therein, and shall promptly reimburse the Company and any such director, officer or controlling person for any legal or other expenses reasonably incurred by the Company or any such director, officer or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred. The foregoing indemnity agreement is in addition to any liability which any Underwriter may otherwise have to the Company or any such director, officer, employee or controlling person. -20- (c) Promptly after receipt by an indemnified party under this Section 6 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under this Section 6, notify the indemnifying party in writing of the claim or the commencement of that action, provided, however, that -------- ------- the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 6 except to the extent it has been materially prejudiced by such failure and, provided further, that the -------- ------- failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 6. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 6 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that -------- ------- (x) the Representatives shall have the right to employ counsel to represent jointly the Representatives and those other Underwriters and their respective officers, employees and controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Underwriters against the Company under this Section 6 if, in the reasonable judgment of the Representatives, it is advisable for the Representatives and those Underwriters, officers, employees and controlling persons to be jointly represented by separate counsel, and in that event the fees and expenses of such separate counsel shall be paid by the Company and (y) the Company shall have the right to employ counsel to represent the Company, its officers, directors, and controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Company against the Underwriters under this Section 6 if, in the reasonable judgment of the Company, it is advisable for the Company, its officers, directors and controlling persons to be represented by separate counsel, and in that event the fees and expenses of such separate counsel shall be paid by the Underwriters. In no event shall the Company or the Underwriters, as the case may be, be liable for the fees and expenses of more than one such separate counsel in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall (i) without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding, or (ii) be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with the consent of the indemnifying party or if there be a final judgment of the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. (d) If the indemnification provided for in this Section 6 shall for any reason be unavailable to or insufficient to hold harmless an indemnified party under Section 6(a) or 6(b) in respect of any loss, claim, damage or liability, or any action in respect thereof, referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company on the one hand -21- and the Underwriters on the other with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other with respect to such offering shall be deemed to be in the same proportion as the total net proceeds from the offering of the Shares purchased under this Agreement (after deducting expenses) received by the Company, on the one hand, and the total underwriting discounts and commissions received by the Underwriters with respect to the Shares purchased under this Agreement, on the other hand, bear to the total net proceeds from the offering of the Shares under this Agreement, in each case as set forth in the table on the cover page of the Prospectus. The relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 6(d) were to be determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section 6 shall be deemed to include, for purposes of this Section 6(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 6(d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public was offered to the public exceeds the amount of any damages which such Underwriter has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute as provided in this Section 6(d) are several in proportion to their respective underwriting obligations and not joint. (e) The Underwriters severally confirm and the Company acknowledges that the first sentence of the last paragraph on the cover page of the Prospectus, concerning conditions of sale; the last three sentences of the second paragraph under the caption "Underwriting" in the Prospectus, concerning the terms of the offering by the Underwriters; and the eight paragraph under the caption "Underwriting" in the Prospectus, concerning accounts over which the Underwriters exercise discretionary authority constitute the only information furnished in writing to the Company through the Representatives by or behalf of any Underwriter specifically for inclusion in the Registration Statement and Prospectus. 7. Survival of Indemnities, Representations, Warranties, etc. The --------------------------------------------------------- respective indemnities, covenants, agreements, representations, warranties and other statements of the Company and the several Underwriters, as set forth in this Agreement or made by them respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any Underwriter, the Company or any of its officers or directors or any controlling person, and shall survive delivery of and payment for the Shares. 8. Conditions of Underwriters' Obligations. The respective --------------------------------------- obligations of the several Underwriters hereunder shall be subject to the accuracy, at and (except as otherwise stated herein) as of the date hereof and at and as of the Closing Dates, of the representations and warranties made herein by the Company, to compliance at and as of the Closing Dates by the Company with its covenants and agreements herein contained and other provisions hereof to be satisfied at or prior to the Closing Dates, and to the following additional conditions: -22- (a) The Registration Statement shall have become effective and no stop order suspending the effectiveness thereof shall have been issued and no proceedings for that purpose shall have been initiated or, to the knowledge of the Company or the Representatives, shall be threatened by the Commission, and any request for additional information on the part of the Commission (to be included in the Registration Statement or the Prospectus or otherwise) shall have been complied with to the reasonable satisfaction of the Representatives. Any filings of the Prospectus, or any supplement thereto, required pursuant to Rule 497 or Rule 434 of the Securities Act Rules and Regulations, shall have been made in the manner and within the time period required by Rule 497 and Rule 434 of the Securities Act Rules and Regulations, as the case may be. (b) The Commission shall have issued, and shall not have rescinded or revoked at or before the Closing Dates, the Exemptive Order. (c) There shall not have occurred any Material Adverse Effect or any change in the investment objectives, investment policies, capital stock, short- term or long-term debt of the Company and the Founding Companies taken as a whole, such that (i) the Registration Statement or the Prospectus, or any amendment or supplement thereto, contains an untrue statement of fact which, in the opinion of the Representatives, is material, or omits to state a fact which, in the opinion of the Representatives, is required to be stated therein or is necessary to make the statements therein not misleading in any material respect or (ii) it is unpracticable in the reasonable judgment of the Representatives to proceed with the public offering or purchase the Shares as contemplated hereby. (d) No legal or governmental action, suit or proceeding affecting the Company which is material and adverse to the Company or which affects or may affect the Company's ability to perform its obligations under this Agreement shall have been instituted or threatened and there shall have occurred no material adverse development in any existing such action, suit or proceeding. (e) On or prior to the Closing Date, (i) the Acquisitions and the transactions contemplated thereby shall have been consummated, (ii) such transactions described in the foregoing clause (i) shall continue to be in full force and effect in accordance with the terms thereof and (iii) the Company shall have provided to each of the Representatives and counsel to the Underwriters copies of all material closing documents delivered to the parties relating to the Acquisitions. (f) At the time of execution of this Agreement, the Representatives shall have received from Arthur Andersen LLP, independent certified public accountants, a "cold comfort" letter, dated the date hereof, in form and substance satisfactory to the Underwriters. (g) The Representatives shall have received from Arthur Andersen LLP, independent certified public accountants, letters, dated the Closing Dates, to the effect that -23- such accountants reaffirm, as of the Closing Dates, and as though made on the Closing Dates, the statements made in the letter furnished by such accountants pursuant to paragraph (f) of this Section 8. (h) The Representatives shall have received from Palmer & Dodge LLP, counsel for the Company, an opinion, dated the Closing Dates, addressed to the Underwriters (and stating that it may be relied upon by counsel to the Underwriters) to the effect that: (i) The Company and each of the Founding Companies has been duly incorporated and are validly existing and in good standing as corporations under the laws of their respective jurisdictions of incorporation, and after consummation of the Acquisitions will have the corporate power and authority to own or lease their properties and to conduct their respective businesses as described in the Prospectus. To such counsel's knowledge, the Company and each of the Founding Companies are duly qualified to do business and are in good standing as foreign corporations in all jurisdictions where their respective ownership or leasing of properties or the conduct of their respective businesses requires such qualification, except where the failure to be so qualified would not have a Material Adverse Effect. (ii) The Company has full corporate power and authority to enter into this Agreement and to issue, sell and deliver to the Underwriters the Shares to be issued and sold hereunder. The Company has full corporate power and authority to execute, deliver and perform its obligations under each of the Acquisition Agreements. (iii) This Agreement has been duly authorized, executed and delivered by the Company. Each of the Acquisition Agreements has been duly authorized, executed and delivered by the Company and constitutes the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and similar laws of general application affecting the rights and remedies of creditors or by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity). (iv) All shares of capital stock of each of the Founding Companies issued or to be issued and outstanding immediately after consummation of the transactions contemplated by the Acquistion Agreements have been duly authorized and validly issued and are fully paid and nonassessable and except as disclosed in the Prospectus, will be owned by the Company, directly or indirectly, free and clear of all liens, encumbrances, equities or claims. (v) The Company has authorized and outstanding capital stock as set forth under the caption "Capitalization" in the Prospectus; the authorized shares of -24- the Company's Common Stock have been duly authorized; the outstanding shares of the Company's Common Stock have been duly authorized and validly issued and are fully paid and nonassessable; all of the Shares conform to the description thereof contained in the Prospectus; the certificates for the Shares are in due and proper form; the Shares have been duly authorized and will be validly issued, fully paid and nonassessable when issued and paid for as contemplated by this Agreement; and no preemptive rights of stockholders exist with respect to any of the Shares or the issue or sale thereof. (vi) To such counsel's knowledge, (a) there are no outstanding securities of the Company or the Founding Companies convertible or exchangeable into or evidencing the right to purchase or subscribe for any shares of capital stock of the Company or the Founding Companies and except as disclosed in the Prospectus, there are no outstanding or authorized options, warrants or rights of any character obligating the Company or the Founding Companies to issue any shares of its capital stock or any securities convertible or exchangeable into or evidencing the right to purchase or subscribe for any shares of such stock; and (b) there is no holder of any securities of the Company or the Founding Companies or any other person who has the right, contractual or otherwise, to cause the Company to sell or otherwise issue to them, or to permit them to underwrite the sale of, any of the Shares or the right to have any Common Stock or other securities of the Company included in the Registration Statement or the right, as a result of the filing of the Registration Statement, to require registration under the Securities Act of any Common Stock or other securities of the Company. (vii) The Registration Statement and all post-effective amendments thereto, if any, have become effective under the Securities Act; any and all filings, if any, required by Rules 497, 434 and 430A of the Securities Act Rules and Regulations have been made; and, to the knowledge of such counsel, no stop order proceedings with respect thereto have been instituted or are pending or threatened under the Securities Act; any required filing of the Prospectus and any supplement thereto pursuant to Rule 497 of the Securities Act Rules and Regulations has been made in the manner and within the time period required by Rule 497. (viii) The Exemptive Order is in full force and effect, and to the knowledge of such counsel, the Commission has not issued or threatened to issue an order rescinding or revoking the Exemptive Order. (ix) The Registration Statement, the Notification and the Prospectus and each amendment or supplement thereto comply as to form in all material respects with the requirements of the Acts and the applicable rules and regulations thereunder (except that such counsel need express no opinion as to the financial statements and related schedules or financial and statistical data included therein). -25- (x) Such counsel knows of no material legal or governmental proceedings pending or threatened against the Company or any of the Founding Companies. (xi) The execution and delivery of this Agreement and the consummation of the transactions herein contemplated do not and will not result in a breach or violation of any of the terms or provisions of, or constitute a default under, the charter, by-laws or other organizational documents of the Company or the Founding Companies, or any agreement or instrument filed as an exhibit to the Registration Statement to which the Company or any of the Founding Companies is a party or by which the Company or any of the Founding Companies may be bound, or, to such counsel's knowledge, any order of any court or governmental agency or body having jurisdiction over the Company or any of the Founding Companies or any of their respective properties except to the extent that any such conflict, breach, violation or default would not have a Material Adverse Effect. (xii) The execution and delivery of the Acquisition Agreements and the consummation of the transactions therein contemplated did not and will not result in a breach or violation of any of the terms or provisions of, or constitute a default under, the charter, by-laws or other organizational documents of the Company or any of the Founding Companies, or any agreement or instrument filed as an exhibit to the Registration Statement to which the Company or any of the Founding Companies is a party or by which the Company or any of the Founding Companies may be bound, or, to such counsel's knowledge, any order of any court or governmental agency or body having jurisdiction over the Company or any of the Founding Companies or any of their respective properties except to the extent that any such conflict, breach, violation or default would not have a Material Adverse Effect. (xiii) No approval, consent, order, authorization, designation, declaration or filing by or with any regulatory, administrative or other governmental body is necessary in connection with the execution and delivery of this Agreement or the Acquisition Agreements and the consummation of the transactions herein and therein contemplated (other than as may be required by the SBA, as described in Subsection 3(m) the NASD or as required by state securities and Blue Sky laws or regulations, as to which such counsel need express no opinion) except such as have been obtained or made. (xiv) The Company has duly elected to be treated under the Investment Company Act as a business development company and all required action has been taken by the Company under the Acts to make the public offering and consummate the sale of the Shares as provided in this Agreement; the provisions of the -26- corporate charter and by-laws of the Company and the Founding Companies and the investment policies and restrictions described in the Prospectus comply with the requirements of the Investment Company Act. (xv) The Shares are duly authorized, subject to official notice of issuance, for quotation on the Nasdaq National Market and a registration statement has been filed pursuant to Section 12 of the Exchange Act for the Shares and has been declared effective. In rendering such opinion Palmer & Dodge LLP may (i) as to matters governed by the laws of states or jurisdictions other than the Commonwealth of Massachusetts or the General Corporation Law of the State of Delaware, render such opinion as if the laws of the Commonwealth of Massachusetts governed, (ii) rely as to matters governed by the SBIA and the rules, regulations, policies and procedures of the SBA, on the opinion of Reid & Priest LLP, and (iii) rely as to matters of fact, upon certificates of officers of the Company, provided that copies of such opinion and certificates are provided to the Representatives. In addition to the matters set forth above, such opinion shall also include a statement to the effect that nothing has come to the attention of such counsel which leads them to believe that (i) the Registration Statement, or any amendment thereto (except as to the financial statements and related schedules or financial and statistical data included therein, with respect to which such counsel need express no belief), as of the time it became effective under the Securities Act, as of the First Closing Date or the Option Closing Date, as applicable, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the Prospectus, or any supplement thereto, on the date it was filed pursuant to the Securities Act Rules and Regulations and as of the First Closing Date or the Option Closing Date, as applicable, contained or contains, an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements, in the light of the circumstances under which they are made, not misleading (except that such counsel need express no belief as to financial statements and related schedules or financial and statistical data included therein), and (iii) (A) the Application, as of the time the Exemptive Order was issued and as of the First Closing Date or the Option Closing Date, as applicable, and (B) the Proxy Statement, as of the time it was mailed to the Tri-Magna stockholders, the date of the meeting of the Tri-Magna stockholders and the First Closing Date or the Option Closing Date, as applicable, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except that such counsel need express no belief as to financial statements and related schedules or financial and statistical data included therein). With respect to such statement, Palmer & Dodge LLP may state that their belief is based upon the procedures set forth therein, but is without independent check and verification. (i) The Representatives shall have received from Willkie Farr & Gallagher, counsel for the Underwriters, their opinion or opinions dated the First Closing Date with -27- respect to the incorporation of the Company, the validity of the Shares, the Registration Statement and the Prospectus and such other related matters as they may reasonably request, and the Company shall have furnished to such counsel such documents as they may request for the purpose of enabling them to pass upon such matters. In addition to the matters set forth above, such opinion shall also include a statement to the effect that nothing has come to the attention of such counsel which leads them to believe that (i) the Registration Statement, or any amendment thereto (except as to the financial statements and related schedules or financial data included therein, with respect to which such counsel need express no belief), as of the time it became effective under the Securities Act, as of the First Closing Date or the Option Closing Date, as applicable, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and (ii) the Prospectus, or any supplement thereto, on the date it was filed pursuant to the Securities Act Rules and Regulations and as of the First Closing Date or the Option Closing Date, as applicable, contained or contains, an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements, in the light of the circumstances under which they are made, not misleading (except that such counsel need express no belief as to financial statements and related schedules or financial data included therein). With respect to such statement, Willkie Farr & Gallagher may state that their belief is based upon the procedures set forth therein, but is without independent check and verification. (j) The Representatives shall have received a certificate, dated the Closing Dates, of the chief executive officer or the President and the chief financial or accounting officer of the Company to the effect that: (i) No stop order suspending the effectiveness of the Registration Statement has been issued, and, to the best of the knowledge of the signers, no proceedings for that purpose have been instituted or are pending or contemplated under the Securities Act; (ii) The Commission has not issued or, to the best of the knowledge of the signers, threatened to issue an order rescinding or revoking the Exemptive Order; (iii) Neither any Preliminary Prospectus, as of its date, nor the Registration Statement nor the Prospectus, nor any amendment or supplement thereto, as of the respective times when the Registration Statement became effective and at all times subsequent thereto up to the delivery of such certificate, included any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (iv) The representations and warranties of the Company in this Agreement are true and correct at and as of the Closing Dates, and the Company has complied with all the agreements and performed or satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Dates; and -28- (v) Subsequent to the respective dates as of which information is given in the Registration Statement, Prospectus, Proxy Statement and the Application, and except as set forth or contemplated therein or in the Acquisition Agreements, (i) neither the Company nor any of the Founding Companies has incurred any material liabilities or obligations, direct or contingent, or entered into any other transactions not in the ordinary course of business, (ii) there has not been any material adverse change in the condition (financial or otherwise), properties, business, management, prospects, net worth, capital stock, investment objectives, investment policies or results of operations of the Company and the Founding Companies taken as a whole, or any change in the capital stock, or material change in the short- term or long-term debt, of the Company and the Founding Companies taken as a whole and (iii) there has been no dividend or distribution of any kind declared, paid or made by the Company or the Founding Companies on any class of their respective capital stock. For purposes of this certificate to the extent reference is made to "the Company and the Founding Companies taken as a whole," such references shall be deemed to assume that the transactions contemplated by each of the Acquisition Agreements have been consummated prior to the date hereof. (k) The Company shall have furnished to the Representatives such additional certificates as the Representatives may have reasonably requested as to the accuracy, at and as of the Closing Dates, of the representations and warranties made herein by it and as to compliance at and as of the Closing Dates by it with its covenants and agreements herein contained and other provisions hereof to be satisfied at or prior to the Closing Dates, and as to satisfaction of the other conditions to the obligations of the Underwriters hereunder. -29- (1) The Representatives shall have received the written agreements of the officers, directors and holders of Common Stock listed on Schedule II that each will not, except as stated therein, offer, sell, assign, transfer, encumber, contract to sell, grant an option to purchase or otherwise dispose of any shares of Common Stock (including, without limitation, Common Stock of the Company which may be deemed to be beneficially owned by such persons in accordance with the Securities Act Rules and Regulations) during the period of time specified in Schedule II following the date of the Prospectus first filed pursuant to Rule 497(b), (c) or (h), without the prior written consent of Furman Selz. All opinions, certificates, letters and other documents will be in compliance with the provisions hereunder only if they are reasonably satisfactory in form and substance to the Representatives. The Company will furnish to the Representatives conformed copies of such opinions, certificates, letters and other documents as the Representatives shall reasonably request. If any of the conditions hereinabove provided for in this Section shall not have been satisfied when and as required by this Agreement, this Agreement may be terminated by the Representatives by notifying the Company of such termination in writing at or prior to the Closing Dates, but Furman Selz shall be entitled to waive any of such conditions on behalf of the Underwriters. 9. Effective Date. This Agreement shall become effective immediately --------------- as to Sections 5, 6, 7, 9, 10, 11, 13, 14, 15, 16 and 17 and, as to all other provisions, at 11:00 a.m. New York City time on the first full business day following the effectiveness of the Registration Statement or at such earlier time after the Registration Statement becomes effective as the Representatives may determine on and by notice to the Company or by release of any of the Shares for sale to the public. For the purposes of this Section 9, the Shares shall be deemed to have been so released upon the release for publication of any newspaper advertisement relating to the Shares or upon written notice from the Representatives (i) advising Underwriters that the Shares are released for public offering or (ii) offering the Shares for sale to securities dealers, whichever may occur first. 10. Termination. This Agreement (except for the provisions of ----------- Section 5) may be terminated by the Company at any time before it becomes effective in accordance with Section 9 by notice to the Representatives and may be terminated by the Representatives at any time before it becomes effective in accordance with Section 9 by notice to the Company. In the event of any termination of this Agreement under this or any other provision of this Agreement, there shall be no liability of any party to this Agreement to any other party, other than as provided in Sections 5, 6 and 11 and other than as provided in Section 12 as to the liability of defaulting Underwriters. This Agreement may be terminated after it becomes effective by the Representatives by notice to the Company (i) if at or prior to the First Closing Date or, as relates to the Option Shares only, prior to any Option Closing Date trading in securities generally or on the Nasdaq National Market shall have been suspended or minimum prices shall have been established on such market, or a banking moratorium shall have been declared by New York or United States authorities, (ii) if at or prior to the First Closing Date or any Option Closing Date there shall have been (A) a major outbreak or significant escalation of hostilities between the United States and any foreign power or of any other insurrection or armed conflict involving the United States or (B) -30- a material change in general, poliitical or economic conditions which, in the judgment of the Representatives, makes it impractical or inadvisable to offer or sell the Firm Shares or Option Shares, as applicable, on the terms contemplated by the Prospectus, (iii) if there shall be any litigation or proceeding, pending or threatened to which the Company is a party, which in the reasonable judgment of the Representatives, makes it impracticable to offer or deliver the Firm Shares or Option Shares, as applicable, on the terms contemplated by the Prospectus or (iv) if there shall have occurred any of the events specified in the immediately preceding clauses (i) - (iii) together with any other such event that makes it, in the judgment of the Representatives, impracticable to offer or deliver the Firm Shares or Option Shares, as applicable, on the terms contemplated by the Prospectus. 11. Reimbursement of Underwriters. Notwithstanding any other ----------------------------- provisions hereof, if this Agreement shall not become effective by reason of any election of the Company pursuant to the first paragraph of Section 10 or shall be terminated by the Representatives under Section 8 or Section 10, the Company will bear and pay the expenses specified in Section 5 hereof and, in addition to its obligations pursuant to Section 6 hereof, the Company will reimburse the reasonable out-of-pocket expenses of the several Underwriters (including reasonable fees and disbursements of counsel for the Underwriters) incurred in connection with this Agreement and the proposed purchase of the Shares, and promptly upon demand the Company will pay such amounts to you as Representatives. 12. Substitution of Underwriters. If any Underwriter or Underwriters ---------------------------- shall default in its or their obligations to purchase Shares hereunder and the aggregate number of Shares which such defaulting Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of the total number of Shares underwritten, the other Underwriters shall be obligated severally, in proportion to their respective commitments hereunder, to purchase the Shares which such defaulting Underwriter or Underwriters agreed but failed to purchase. If any Underwriter or Underwriters shall so default and the aggregate number of Shares with respect to which such default or defaults occur is more than 10% of the total number of Shares underwritten and arrangements satisfactory to the Representatives and the Company for the purchase of such Shares by other persons are not made within 48 hours after such default, this Agreement shall terminate. If the remaining Underwriters or substituted Underwriters are required hereby or agree to take up all or part of the Shares of a defaulting Underwriter or Underwriters as provided in this Section 12, (i) the Company shall have the right to postpone the Closing Dates for a period of not more than five full business days in order that the Company may effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus, or in any other documents or arrangements, and the Company agrees promptly to file any amendments to the Registration Statement or supplements to the Prospectus which may thereby be made necessary, and (ii) the respective numbers of Shares to be purchased by the remaining Underwriters or substituted Underwriters shall be taken as the basis of their underwriting obligation for all purposes of this Agreement. Nothing herein contained shall relieve any defaulting Underwriter of its liability to the Company or the other Underwriters for damages occasioned by its default hereunder. Any termination of this Agreement pursuant to this Section 12 shall be without -31- liability on the part of any non-defaulting Underwriter or the Company, except for expenses to be paid or reimbursed pursuant to Section 5 and except for the provisions of Section 6. 13. Notices. All communications hereunder shall be in writing and, if ------- sent to the Underwriters shall be mailed, delivered or telecopied and confirmed to the Representatives c/o Furman Selz LLC at 230 Park Avenue, New York, New York 10169 (telecopier no.: (212) 692-9608), Attention: Stuart B. Katz, except that notices given to an Underwriter pursuant to Section 6 hereof shall be sent to such Underwriter at the address furnished by the Representatives or, if sent to the Company, shall be mailed, delivered or telecopied and confirmed at 205 East 42nd Street, Suite 2020, New York, New York 10017 (telecopier no.: (212) 983-0351), Attention: Alvin Murstein, with a copy to Palmer & Dodge LLP, One Beacon Street, Boston, Massachusetts 02108 (telecopier no.: (617) 227-4420), Attention: Stanley Keller, Esq. 14. Successors. This Agreement shall inure to the benefit of and be ---------- binding upon the several Underwriters, the Company and their respective successors and legal representatives. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person other than the persons mentioned in the preceding sentence any legal or equitable right, remedy or claim under or in respect of this Agreement, or any provisions herein contained, this Agreement and all conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of such persons and for the benefit of no other person; except that the representations, warranties, covenants, agreements and indemnities of the Company contained in this Agreement shall also be for the benefit of the person or persons, if any, who control any Underwriter or Underwriters within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, and the indemnities of the several Underwriters shall also be for the benefit of each director of the Company, each of its officers who has signed the Registration Statement and the person or persons, if any, who control the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act. 15. Applicable Law. This Agreement shall be governed by and construed -------------- in accordance with the laws of the State of New York. 16. Authority of the Representatives. In connection with this -------------------------------- Agreement, the Representatives will act for and on behalf of the several Underwriters, and hereby represent that they are authorized so to act, and any action taken under this Agreement by the Representatives, will be binding on all the Underwriters. 17. Partial Unenforceability. The invalidity or unenforceability of any ------------------------ Section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other Section, paragraph or provision hereof. If any Section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable. -32- 18. General. This Agreement constitutes the entire agreement of the ------- parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof. In this Agreement, the masculine, feminine and neuter genders and the singular and the plural include one another. The section headings in this Agreement are for the convenience of the parties only and will not affect the construction or interpretation of this Agreement. This Agreement may be amended or modified, and the observance of any term of this Agreement may be waived, only by a writing signed by the Company and the Representatives. 19. Counterparts. This Agreement may be signed in two or more ------------ counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. -33- If the foregoing correctly sets forth our understanding, please indicate your acceptance thereof in the space provided below for that purpose, whereupon this letter and your acceptance shall constitute a binding agreement between us. Very truly yours, MEDALLION FINANCIAL CORP. By: ------------------------------------ Name: Title: Accepted and delivered as of the date first above written: FURMAN SELZ LLC J.C. BRADFORD & CO. EVEREN SECURITIES, INC. Acting on their own behalf and as Representatives of the several Underwriters referred to in the foregoing Agreement. By: Furman Selz LLC By: -------------------------------------- Name: Title: SCHEDULE I
Number Number of of Firm Option Shares Shares to be to be Name Purchased Purchased - ---- --------- --------- Furman Selz LLC...................... J.C. Bradford & Co. ................. EVEREN Securities, Inc. ............. --------- Total 5,000,000 =========
-35- SCHEDULE II Party to Lock-up Agreement Period - -------------------------- ------ Alvin Murstein 2 years Andrew Murstein 2 years Marie Russo 180 days Daniel F. Baker 180 days Michael Fanger 180 days Michael J. Kowalsky 180 days Michael Leible 180 days Mario M. Cuomo 180 days Stanley Kreitman 180 days David L. Rudnick 180 days Benjamin Ward 180 days Alvin Murstein Second Family Trust 2 years Andrew Murstein Family Trust 2 years EX-99.2I.1 7 1996 STOCK OPTION AGREEMENT This Plan was approved by the Board of Directors on May __, 199__. This Plan was approved by the Stockholders on May __, 199__. MEDALLION FINANCIAL CORP. 1996 STOCK OPTION PLAN The purpose of the 1996 Stock Option Plan (the "Plan") is to attract and ---- retain key employees of Medallion Financial Corp. (the "Company") and its ------- affiliates, to provide an incentive for them to achieve long-range performance goals, and to enable them to participate in the long-term growth of the Company by the granting of Incentive Stock Options and Nonstatutory Stock Options (individually referred to herein as an "Option" and collectively as "Options") ------ ------- to purchase the Company's common stock, $0.01 par value (the "Common Stock"). ------------ 1. Administration of the Plan. -------------------------- The administration of the Plan shall be under the general supervision of the Compensation Committee of the Board of Directors of the Company (the "Compensation Committee"). Within the limits of the Plan, the Compensation - ----------------------- Committee shall determine the individuals to whom, and the times at which, Options shall be granted, the type of Option to be granted, the duration of each Option, the price and method of payment for each Option, and the time or times within which (during its term) all or portions of each Option may be exercised. The Compensation Committee may establish such rules as it deems necessary for the proper administration of the Plan, make such determinations and interpretations with respect to the Plan and Options granted under it as may be necessary or desirable and include such further provisions or conditions in Options granted under the Plan as it deems advisable. To the extent permitted by law, the Compensation Committee may delegate its authority under the Plan to a sub-committee of the Compensation Committee. Whenever options are granted to any person subject to Section 16 of the Securities Exchange Act of 1934 (the "Exchange Act"), each member of the committee or sub-committee shall be a - ------------- "disinterested person" within the meaning of Rule 16b-3 under the Exchange Act. - --------------------- 2. Shares Subject to the Plan. -------------------------- (a) Number of Shares. The aggregate number of shares of Common Stock of ---------------- the Company which may be optioned under the Plan is 750,000 shares. In the event that the Compensation Committee in its discretion determines that any stock dividend, split-up, combination or reclassification of shares, recapitalization or other similar capital change affects the Common Stock such that adjustment is required in order to preserve the benefits or potential benefits of the Plan or any Option granted under the Plan, the maximum aggregate number and kind of shares or securities of the Company as to which Options may be granted under the Plan and as to which Options then outstanding shall be exercisable, and the option price of such Options, shall be appropriately adjusted by the Compensation Committee (whose determination shall be conclusive) so that the proportionate number of shares or other securities as to which Options may be granted and the proportionate interest of holders of outstanding Options shall be maintained as before the occurrence of such event. (b) Effect of Certain Transactions. In order to preserve a Participant's ------------------------------ (as defined below) rights under an Option in the event of a change in control of the Company, the Compensation Committee in its discretion may, at the time an Option is made or at any time thereafter, take one or more of the following actions: (i) provide for the acceleration of any time period relating to the exercise or payment of the Option, (ii) provide for payment to the Participant of cash or other property with a fair market value equal to the amount that would have been received upon the exercise or payment of the Option had the Option been exercised or paid upon the change in control, (iii) adjust the terms of the Option in a manner determined by the Compensation Committee to reflect the change in control, (iv) cause the Option to be assumed, or new rights substituted therefor, by another entity, or (v) make such other provision as the Compensation Committee may consider equitable to the Participant and in the best interests of the Company. (c) Restoration of Shares. If any Option expires or is terminated --------------------- unexercised or is forfeited for any reason, the shares subject to such Option, to the extent of such expiration, termination or forfeiture, shall again be available for granting pursuant to Options under the Plan, subject, however, in the case of Incentive Stock Options, to any requirements under the Code (as defined below). (d) Reservation of Shares. The Company shall at all times while the Plan --------------------- is in force reserve such number of shares of Common Stock as will be sufficient to satisfy the requirements of the Plan. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares. 3. Grant of Options; Eligible Persons ---------------------------------- (a) Types of Options. Options shall be granted under the Plan either as ---------------- incentive stock options ("Incentive Stock Options"), as defined in Section 422 ----------------------- of the Internal Revenue Code of l986, as amended (the "Code"), or as Options ---- which do not meet the requirements of Section 422 ("Nonstatutory Stock ------------------ Options"). Options may be granted from time to time by the Compensation Committee, within the limits set forth in Sections l and 2 of the Plan, to all employees of the Company or of any parent corporation or subsidiary corporation of the Company (as defined in Sections 424(e) and (f), respectively, of the Code) (such individuals collectively referred to herein as "Participants"). ------------ (b) Date of Grant. The date of grant for each Option shall be the date on ------------- which it is approved by the Compensation Committee, or such later date as the Compensation Committee may specify. No Incentive Stock Options shall be granted hereunder after ten years from the date on which the Plan was approved by the Board of Directors. - 2 - 4. Form of Options. --------------- Options granted hereunder shall be evidenced by a writing delivered to the optionee specifying the terms and conditions thereof and containing such other terms and conditions not inconsistent with the provisions of the Plan as the Compensation Committee considers necessary or advisable to achieve the purposes of the Plan or comply with applicable tax and regulatory laws and accounting principles. The form of such Options may vary among optionees. 5. Option Price. ------------ The price at which shares may from time to time be optioned shall be determined by the Compensation Committee, provided that such price shall not be less than the current market value of the Common Stock on the date of grant, or if no such market value exists, then the current net asset value of the Common Stock as determined in good faith by the Compensation Committee; and provided further that no Incentive Stock Option shall be granted to any individual who is ineligible to be granted an Incentive Stock Option because his ownership of stock of the Company or its parent or subsidiary corporations exceeds the limitations set forth in Section 422(b)(6) of the Code unless such option price is at least 110% of the current market value of the Common Stock on the date of grant. To the extent permitted by law, the Compensation Committee may in its discretion permit the option price to be paid in whole or in part by a note or in installments or with shares of Common Stock of the Company or such other lawful consideration as the Compensation Committee may determine. 6. Term of Option and Dates of Exercise. ------------------------------------ (a) Exercisability. The Compensation Committee shall determine the term -------------- of all Options, the time or times that Options are exercisable and whether they are exercisable in installments, provided that the term of each Option granted under the Plan shall not exceed a period of ten years from the date of its grant, and provided further that no Incentive Stock Option shall be granted to any individual who is ineligible to be granted such Option because his ownership of stock of the Company or its parent or subsidiary corporations exceeds the limitations set forth in Section 422(b)(6) of the Code unless the term of his Incentive Stock Option does not exceed a period of five years from the date of its grant. In the absence of such determination, the Option shall be exercisable at any time or from time to time, in whole or in part, during a period of ten years from the date of its grant or, in the case of an Incentive Stock Option, the maximum term of such Option. (b) Effect of Disability, Death or Termination of Employment. The -------------------------------------------------------- Compensation Committee shall determine the effect on an Option of the disability, death, retirement or other termination of employment of an optionee and the extent to which, and during the period which, the optionee's estate, legal representative, guardian, or beneficiary on death may exercise rights thereunder. Any beneficiary on death shall be designated by - 3 - the optionee, in the manner determined by the Compensation Committee, to exercise rights of the optionee in the case of the optionee's death. (c) Other Conditions. The Compensation Committee may impose such ---------------- conditions with respect to the exercise of Options, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable. (d) Withholding. The optionee shall pay to the Company, or make provision ----------- satisfactory to the Compensation Committee for payment of, any taxes required by law to be withheld in respect of any Options under the Plan no later than the date of the event creating the tax liability. In the Compensation Committee's discretion, such tax obligations may be paid in whole or in part in shares of Common Stock, including shares retained from the exercise of the Option creating the tax obligation, valued at the fair market value of the Common Stock on the date of delivery to the Company as determined in good faith by the Compensation Committee. The Company and any parent corporation or subsidiary corporation of the Company (as defined in Sections 424(e) and (f), respectively, of the Code) may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to the optionee. (e) Amendment of Options. The Compensation Committee may amend, modify or -------------------- terminate any outstanding Option, including substituting therefor another Option of the same or different type, changing the date of exercise or realization and converting an Incentive Stock Option to a Nonstatutory Stock Option, provided that the optionee's consent to such action shall be required unless the Compensation Committee determines that the action, taking into account any related action, would not materially and adversely affect the optionee. 7. Non-transferability. ------------------- Options granted under the Plan shall not be transferable by the holder thereof otherwise than by will or the laws of descent and distribution or, in the case of a Nonstatutory Stock Option, to the extent consistent with qualifying for the exemption provided by Rule 16b-3 under the Exchange Act, pursuant to a qualified domestic relations order, and shall be exercisable, during the holder's lifetime, only by him or her or such permitted transferee. 8. No Right to Employment. ---------------------- No persons shall have any claim or right to be granted an Option, and the grant of an Option shall not be construed as giving an optionee the right to continued employment. The Company expressly reserves the right at any time to dismiss an optionee free from any liability or claim under the Plan, except as specifically provided in the applicable Option. - 4 - 9. No Rights as a Shareholder. -------------------------- Subject to the provisions of the applicable Option, no optionee or any person claiming through an optionee shall have any rights as a shareholder with respect to any shares of Common Stock to be distributed under the Plan until he or she becomes the holder thereof. 10. Amendment or Termination. ------------------------ The Board of Directors of the Company may amend, suspend or terminate the Plan or any portion thereof at any time, subject to any shareholder approval that the Board of Directors determines to be necessary or advisable, provided that the Participant's consent will be required for any amendment, suspension or termination that would adversely affect the rights of the Participant under any outstanding Options. 11. Stockholder Approval. -------------------- The Plan is subject to approval by the stockholders of the Company by the affirmative vote of the holders of a majority of the shares of capital stock of the Company entitled to vote thereon and present or represented at a meeting duly held in accordance with the laws of the State of Delaware, or by any other action that would be given the same effect under the laws of such jurisdiction, which action in either case shall be taken within twelve (12) months from the date the Plan was adopted by the Board of Directors. In the event such approval is not obtained, all Options granted under the Plan shall be void and without effect. 12. Governing Law. ------------- The provisions of the Plan shall be governed by and interpreted in accordance with the laws of the State of Delaware. - 5 - EX-99.2I.2 8 401-K INVESTMENT PLAN REGIONAL PROTOTYPE STANDARDIZED 401(k) PLAN ADOPTION AGREEMENT #01-002 Sponsored By COLEMAN CONSULTING CORPORATION Adopted By MEDALLION FUNDING CORP. Regional Prototype Standardized 401(k) Plan Adoption Agreement #01-002 Table of Contents
I. Basic Information Page 1 - -------------------------------------------------------------------------------- I.A. Plan Information........................................ Page 1 I.B. Information Relating to Plan Officials.................. Page 1 II. Plan Definitions Page 3 - -------------------------------------------------------------------------------- II.A. Compensation............................................ Page 3 II.B. Service Definitions..................................... Page 4 II.C. Retirement Dates........................................ Page 5 III. Operative Plan Provisions Page 6 - -------------------------------------------------------------------------------- III.A. Eligibility............................................. Page 6 III.B. Contributions........................................... Page 8 III.C. Allocation of Employer Contributions.................... Page 11 III.D. Investment of Accounts.................................. Page 15 III.E. Vesting Provisions for Employer Contributions:.......... Page 16 III.F. Benefits may be paid in the following forms:............ Page 18 III.G. Life Insurance.......................................... Page 18 III.H. Timing of Distributions................................. Page 19 III.I. Timing of Forfeiture Allocation......................... Page 20 IV. Miscellaneous Provisions Page 20 - -------------------------------------------------------------------------------- IV.A. Loans to Participants................................... Page 20 IV.B. Hardship Withdrawals.................................... Page 21 IV.C. In Service Withdrawals:................................. Page 22 IV.D. Controlling State Law:.................................. Page 22 V. Adoption Page 22 - --------------------------------------------------------------------------------
REGIONAL PROTOTYPE STANDARDIZED 401(k) PLAN ADOPTION AGREEMENT #01-002 The Employer referred to in Section I.B hereof, hereby adopts this Plan and Trust, a copy of which is attached hereto, as of the Effective Date specified herein, to provide retirement and pre-retirement benefits for its Employees. Note to Employer: Failure to complete the Adoption Agreement properly may result in disqualification of the Plan. I. Basic Information I.A. Plan Information 1. This plan shall be known as the Medallion Funding Corp. 401(k) -------------------------------- Savings Plan. ---------------------------------------------------------------- 2. This Trust shall be known as the Medallion Funding Corp. 401(k) ------------------------------- Savings Plan Trust. ---------------------------------------------------------------- 3. This Plan is a: [ ] a. Newly Adopted Plan [X] b. An Amendment and restatement of the Medallion Funding -------------------- Corporation Profit Sharing Retirement Plan and Trust -------------------------------------------------------- which was effective on April 1, 1984. --------------------------------- 4. The Effective Date of this Plan is April 1, 1994. ----------------------------- 5. The Restatement Effective Date of the Plan is May 29, 1996. ------------------ 6. The Plan number shall be 002. --------------------------------------- 7. The Plan Year shall be: [X] a. the 12 consecutive month period ending on each March 31. --------- [ ] b. initially the period commencing on _______________ and ending on _________________, and thereafter the 12 consecutive month period ending on each _______________. I.B. Information Relating to Plan Officials 1. The name of the Employer is Medallion Funding Corp.. ------------------------------------ ---------------------------------------------------------------- a. Address 205 East 42nd Street ----------------------------------------------------- street address New York , New York , 10017 ------------------- ------------------------- ------------- city state zip b. Telephone No. (212) 682-3300 --------------------------- c. Business Code No. 6742 ----------------------- d. Date Business Started -------------------------- e. Type of Entity: [X] Corporation [ ] Partnership [ ] Sole Proprietorship [ ] S Corporation [ ] other ____________________ 2. The following additional Employers adopt the Plan as Participating Employers: a. Medallion Financial Corp. --------------------------------------------------------------- b. Medallion Media Corp. --------------------------------------------------------------- c. Edwards Capital Company --------------------------------------------------------------- d. Transportation Capital Corp. --------------------------------------------------------------- e. --------------------------------------------------------------- f. --------------------------------------------------------------- g. --------------------------------------------------------------- h. --------------------------------------------------------------- i. --------------------------------------------------------------- j. --------------------------------------------------------------- 3. Employer is a member of: [X] Controlled Group [ ] Affiliated Service Group [ ] Not Applicable 4. Employer's Fiscal Year is 12 months ending: March 31 ---------------------- month & day 5. Employer's I.D. No.: 11-2523716 ------------------------- 6. The Employer hereby designates the following Trustee(s): a. Alvin Murstein -------------------------------------------------------------- b. -------------------------------------------------------------- c. -------------------------------------------------------------- d. -------------------------------------------------------------- e. -------------------------------------------------------------- f. -------------------------------------------------------------- g. -------------------------------------------------------------- h. -------------------------------------------------------------- i. -------------------------------------------------------------- j. -------------------------------------------------------------- 7. The Employer hereby designates the following as Plan Administrator: [X] a. Employer [ ] b. Name: (If not completed, the Employer shall be designated) Address 205 East 42nd Street ----------------------------------------------------- street address New York , New York , 10017 -------------------- -------------------------- ----------- city state zip Telephone No.: (212) 682-3300 --------------------------------- 8. The Employer hereby designates the following as the Retirement Committee, to act on behalf of the Plan Administrator (leave blank if no Retirement Committee is appointed): a. -------------------------------------------------------------- b. -------------------------------------------------------------- c. -------------------------------------------------------------- d. -------------------------------------------------------------- e. -------------------------------------------------------------- II. Plan Definitions II.A. Compensation 1. a. Compensation shall include the items specified in Section 2.18 of the Plan. If indicated below, Compensation shall also include the following additional items of remuneration paid or accrued from the Employer: (the employer may include any amount contributed pursuant to a salary reduction agreement which is not includable in the gross income of the employee under Section 125, 402(a)(8), 402(h) or 403(b) of the code): [ ] (i) --------------------------------------------------- [ ] (ii) --------------------------------------------------- b. As this is a Standardized Plan, no items may be excluded from Compensation. 2. Compensation shall mean all of each Participant's: a. [X] (i) W-2 Earnings, or [ ] (ii) "415" Compensation which is actually paid to the Participant during: b. [X] (i) the Plan Year. [ ] (ii) the Employer's Fiscal Year ending with or within the Plan Year. [ ] (iii) the Limitation year ending with or within the Plan Year. [ ] (iv) the Calendar Year ending with or within the Plan Year. 3. For Plan purposes, maximum Compensation shall be: [ ] a. $ (not to exceed maximum allowed under Code Section 401(a)(17), i.e. $200,000 in 1989 and adjusted by the Secretary of the Treasury for cost of living increases). [X] b. Maximum allowed under Section 401(a)(17). 4. For the first year of a new Participant, for the purpose of determining Employer Contributions (other than Salary Reduction Contributions) to be made on behalf of such new Participant and for testing under Sections 401(k) and 401(m), Compensation shall include Compensation earned: [ ] a. Only from the date of his entry into the Plan. [X] b. During the entire Plan Year in which he becomes a Participant. II.B. Service Definitions 1. The Limitation Year of the Plan shall be: [X] a. Plan Year [ ] b. -------------------------------------------------------- 2. The Computation Period for vesting and breaks in service and benefit accruals shall be: [X] a. Plan Year [ ] b. --------------------------------------------------------- (If no period is specified in either of the above two categories, the Plan Year shall be selected). 3. If this option is selected then Section 2.17 of the Plan is revised so that the Computation Period for eligibility purposes shall be successive anniversaries of the Employee's Employment Commencement Date. [ ] This option is selected. 4. The Employer elects pursuant to Section 2.39(f) of the Plan to count Hours of Service based on the following equivalencies: [X] a. Actual hours of employment. [ ] b. Forty-five (45) hours for weekly pay period. [ ] c. Ninety (90) hours for each bi-weekly pay period. [ ] d. One hundred ninety (190) hours for each monthly pay period. [ ] e. On the basis of the elapsed time method. (If no option is selected actual hours of employment shall be counted). 5. The Anniversary Date shall be: March 31 ---------------------------------- (If not specified, the Anniversary Date shall be the last day of Plan Year.) 6. Service for vesting and eligibility purposes with the following predecessor Employers shall be: [ ] a. Excluded. [ ] b. Included from __________________________ (fill in date). [ ] c. Included for such years a qualified retirement plan was maintained by such Employer from _______________________ _________________ (fill in date). Name of predecessor Employer(s): (i) ------------------------------------------------------ (ii) ------------------------------------------------------ (iii) ------------------------------------------------------ II.C. Retirement Dates 1. The Normal Retirement Date shall be: [X] a. Age 65 [ ] b. The later of Age __________ or the ____________ anniversary of the Participant's: [ ] Entry Date; [ ] Employment; [ ] But in no event later than Age ____________________. Instructions: Age may not exceed 65 in (b). Anniversary may not exceed the fifth Anniversary of the Participant's Entry Date into the Plan. [ ] c. Age _____________________ (may not exceed 65.) 2. The Early Retirement Date shall be: [ ] a. _______ Years prior to Normal Retirement Date, but not prior to the Participant's original Entry Date. [ ] b. The later of: Age ___________________ ; or the completion of: [ ] Years of Service; [ ] Years of Participation. [ ] c. Age ______________. [X] d. There shall be no Early Retirement Date. 3. Normal Retirement Date Rounding. A Participant shall become eligible to receive his normal retirement benefits on the: [ ] a. PLAN ANNIVERSARY NEAREST the attainment of his Normal Retirement Date. [ ] b. FIRST DAY OF THE MONTH FOLLOWING the attainment of his Normal Retirement Date. [X] c. EXACT DATE the Participant actually attains his Normal Retirement Date (e.g. his 65th birthday or exactly 5 years from his employment). [ ] d. PLAN ANNIVERSARY FOLLOWING the attainment of his Normal Retirement Date. [ ] e. FIRST DAY OF THE MONTH COINCIDENT WITH OR FOLLOWING the attainment of his Normal Retirement Date. III. Operative Plan Provisions III.A. Eligibility 1. Classes of Employees eligible to participate shall be all employees of an Affiliated Employer with the following exclusions: [X] a. Employees whose employment is covered by a collective bargaining agreement for which retirement benefits have been the subject of good faith bargaining. [X] b. Non-Resident Aliens with no United States Income. 2. Employees shall be eligible to participate after attaining the following Age: [X] a. 21 (Not to exceed Age 21) ------ [ ] b. No minimum age requirement. 3. Service Requirements shall be: [X] a. Completion of One Years of Service not to exceed (1) year. ------- [ ] b. Completion of __________ Months of employment, not to exceed twelve (12) months, regardless of number of hours worked and computed from the Employee's Employment Commencement Date. 4. Entry Date(s) shall be: [ ] a. SINGLE ENTRY FOLLOWING. The first day of the Plan Year following satisfaction of the requirements of Section III.A hereof (use only with six month service requirement and minimum age requirement cannot exceed 20-1/2). [ ] b. SINGLE ENTRY NEAREST. The first day of the Plan Year nearest satisfaction of the requirements of III.A hereof. [ ] c. SINGLE ENTRY RETROACTIVE. The first day of the Plan Year coincident with or preceding the date on which an Employee satisfies the requirements of Section III.A. hereof. [X] d. DUAL ENTRY. The first day of the Plan Year and the six (6) month anniversary thereof following the date on which an Employee satisfies the requirements of Section III.A. hereof. [ ] e. SIX MONTH ENTRY DATE. Exactly six (6) months following the date on which an Employee satisfies the requirements of Section III.A. hereof. [ ] f. MONTHLY ENTRY. The first day of each calendar month following the date on which an Employee satisfies the requirements of Section III.A. hereof. [ ] g. QUARTERLY ENTRY. The first day of the Plan Year and the quarterly anniversaries thereof following the date on which an Employee satisfies the requirements of Section III.A. hereof. [ ] h. PAYROLL PERIOD ENTRY. The first day of the payroll period following the date on which an Employee satisfies the requirements of Section III.A. hereof. 5. Special Entry Rules (omit if inapplicable) - all persons who are: [ ] a. Employees on ________________ shall commence participation and/or may commence salary reductions, as the case may be, hereunder on ______________________________________________. [ ] b. Participants in the __________________________________________ Plan on _______________________________________ shall commence participation hereunder on _________________________________. (This provision will not be used to exclude Employee otherwise eligible to participate). III.B. Contributions 1. The following Types of Contributions may be made to the Plan: [ ] a. Non-matching Employer Contributions [ ] b. Qualified Non-Elective Employer Contributions [ ] c. Matching Employer Contributions [ ] d. Qualified Matching Employer Contributions [X] e. Salary Reduction Contributions [ ] f. Other Employee Contributions 2. The Non-Matching Employer Contributions subject to the requirements of Article IV. of the Plan each year shall be: [ ] a. A discretionary amount as determined by the Employer. [ ] b. An amount equal to [ ] (i) _____________% of its net profits [ ] (ii) __________% of its net profits in excess of $__________ [ ] (iii) ________% of covered payroll for the year in reference. 3. The Qualified Non-Elective Employer Contributions, subject to the requirements of Article IV. of the Plan each year shall be: [ ] a. A discretionary amount elected by the Employer. [ ] b. An amount equal to [ ] (i) _______% of its net profits [ ] (ii) _______% of its net profits in excess of $__________ [ ] (iii) _______% of covered payroll for the year in reference. [ ] (iv) _______% of covered payroll of non-highly compensated employees for the year in reference. [ ] (v) in an amount sufficient to satisfy the discrimination tests under Code Section 401(k)(3) and 401(m)(2) test for the year in reference. 4. The Matching Employer Contributions subject to the requirements of Article IV of the Plan each year shall be: (omit if inapplicable) [ ] a. ________% of each Employee's "salary reduction" contribution. [ ] b. ________% of the Employee's "salary reduction" contribution up to the first ________% of salary deferral, plus ________% of the excess "salary reduction." (e.g. 50% of salary reduction up to the first 2% of salary deferral, plus 25% of salary reduction in excess of the 2% salary deferral.) [ ] c. For Employees whose Compensation is: [ ] (i) not more than $_________, _________% of the Employee's "salary reduction" contribution. [ ] (ii) not more than $_________ but greater than $_________, __________% of the Employee's "salary reduction" contribution. [ ] (iii) greater than $_________, _________% of the Employee's "salary reduction" contribution. [ ] d. Matching based on _______ years of service (maximum 2 years). For employees with years of service less than specified above, % of his "salary reduction." For employees with years of service equal to or greater than specified above, __________% of his "salary reduction." [ ] e. A discretionary percentage of the employee's "salary reduction" as elected by the Employer. [ ] Matching Contribution Limit: [ ] Only salary reductions up to ___________% of compensation will be matched. [ ] Contribution for each employee shall not exceed $__________. 5. Qualified Matching Employer Contributions if the Plan provides full and immediate vesting for employer matching contributions, the Employer deems all matching Employer Contributions: [ ] a. To Be Qualified Employer Matching Contributions. [ ] b. Not To Be Qualified Employer Matching Contributions. 6. Salary Reduction Contributions: a. shall be permitted in the following percentages of compensation (not to exceed $7,000 as adjusted): [x] (i) 1%, 2%, 3%, 4%, 5%, 6%, 7%, 8%, 9%, 10%, 11%, 12%, 13%, 14%, 15%. [ ] (ii) 2%, 4%, 6%, 8%, 10%, 12%, 14%, 15%. [ ] (iii) _____%, _____%, _____%, _____%, _____%, _____%, _____%, _____%, _____%, _____%, _____%, _____%. [ ] (iv) in any percentage or flat dollar amount selected by each participant, up to __________% (not to exceed 25%) of the Participant's annual Compensation. b. Employees may change their rate of contribution at the following intervals: [ ] (i) the first day of each payroll period. [ ] (ii) the first day of each month. [ ] (iii) the first day of each plan year. [X] (iv) the first day of July (fill in month) and quarterly ---- anniversaries thereof. [ ] (v) the first day of _____________ (fill in month) and six month anniversaries thereof. c. An Employee who terminates Salary Reduction Contributions, other than for hardship, may not make another Salary Reduction Contribution until: [X] (i) the next change date specified above in Section III.B.6.b. [ ] (ii) one year from the termination of contributions. [ ] (iii) the first day of the next Plan Year. 7. Other Employee Contributions: a. "After Tax" Participant Contributions: [ ] (i) Shall be permitted. [X] (ii) Shall not be permitted. b. Rollover Contributions: [X] (i) Shall be permitted. [ ] (ii) Shall not be permitted. 10 c. Transfer Contributions from other tax-qualified plans: [X] (i) Shall be permitted. [ ] (ii) Shall not be permitted. III.C. Allocation of Employer Contributions 1. The following Participants are eligible to share in the allocation of Non-Matching Employer Contributions each year: (Check all that applies.) [ ] a. All participants who completed __________ (not to exceed 501) hours of service [ ] b. For the 1989 plan year only: [ ] (i) All Participants who completed one thousand (1000) hours of service and who are employed on the last day of the Plan Year. [ ] (ii) All Participants who completed one thousand (1000) hours of service. [ ] c. All participants who: [ ] (i) have died; [ ] (ii) have retired after reaching their Normal Retirement Date; [ ] (iii) became disabled during the Plan Year regardless of the number of hours worked. 2. Non-matching Employer Contributions shall be allocated among the Participants specified in the Section III.C.I. hereof as follows: [ ] a. NON-INTEGRATED ALLOCATION: In the proportion that the Participant's Compensation bears to total Compensation of the Participants eligible under Section III.C.I. [ ] b. INTEGRATED ALLOCATION: The integrated allocation procedure described in Section 6.2 of the Plan based on the following: [ ] 1. Fixed Excess Allowance Percentage [ ] (i) Excess Allowance Percentage: __________% (not less than 3% and not greater than 5.7%) The integration level is: [ ] (a) Taxable Wage Base as of the beginning of the plan year (e.g. $48,000 for 1989) [ ] (b) _________% of Taxable Wage Base (not to exceed 20%) [ ] (c) $__________ (not to exceed $10,000) [ ] (d) greater of $10,000 or 20% of Taxable Wage Base 11 [ ] (ii) Excess Allowance Percentage: __________% (not less than 3% and not greater than 5.4%) Integration Level: ___________% of Taxable Wage Base (must be greater than 80% and less than 100%) [ ] (iii) Excess Allowance Percentage: __________% (not less than 3% and not greater than 4.3%) Integration Level: ____________% of Taxable Wage Base (not to exceed 80%) OR: [ ] 2. Floating Excess Allowance Percentage Excess Allowance Percentage equals one of the three percentages depending on the ratio of the integration level amount to the Taxable Wage Base as of the beginning of the plan year.
================================================================================ When integration level as a % of the TWB is Excess Allow. Percentage - -------------------------------------------------------------------------------- 100% 5.7% - -------------------------------------------------------------------------------- greater than 80% and less than 100% 5.4% - -------------------------------------------------------------------------------- greater than 20% but not greater than 80% 4.3% - -------------------------------------------------------------------------------- less than or equal to 20% (or $10,000 if greater) 5.7% ==============================================================================
Integration Level: $_____________ (not to exceed the Taxable Wage Base as of beginning of Plan Year e.g. $48,000 in 1989 and $51,300 in 1990). 3. Qualified Non-Elective Employer Contributions shall be allocated as follows: [ ] a. Among the Participants specified in III.C.1 hereof in the proportion that each such Participant's Compensation bears to the total Compensation of Participants eligible under III.C.1. [ ] b. Among those Participant's specified as III.C.1 hereof who are Non-Highly Compensated for such year in the proportion that each such Participant's Compensation bears to the total Compensation of all such Non-Highly Compensated Participants eligible under III.C.I. [ ] c. Among all such Non-Highly Compensated Employees who participated in the Plan during the year regardless of the provisions of III.C.1. hereof, in the proportion such Compensation bears to the total Compensation of all such Participants. [ ] d. Among all such Non-Highly Compensated Employees who are Participants in the plan on the last day of the plan year, in proportion such Compensation bears to the total Compensation of all such Participants. 4.a. Forfeitures from non-Matching Employer Contributions shall be allocated in the following manner: [ ] i. To reduce Non-Matching Employer Contributions. [ ] ii. In the same manner as Non-Matching Employer Contributions. [ ] iii. In the same manner as Non-Matching Employer Contributions; except that only Participants who were employed on the last day of the Plan Year shall share in its allocation. [ ] iv. To reduce the Matching Contribution. Note: Matching Contribution forfeitures always used to reduce Matching Contributions. b. Forfeitures of Excess of Aggregate Contributions shall be: [ ] i. Applied to reduce employer contributions [ ] ii. Allocated, after all other forfeitures under the plan, to each participant's Matching Contribution account in the ratio which each participant's Compensation for the Plan Year bears to the total Compensation of all participants for such Plan Year. Such forfeitures will not be allocated to the account of any Highly Compensated Employee. 5. Valuation Date [ ] a. For Allocation of Gains and Losses: [ ] Monthly [X] Quarterly [ ] Semi-Annually [ ] Annually [ ] b. For the purpose of determining whether the plan is Top-Heavy: [X] (i) as of last day of the Plan Year [ ] (ii) _________________________ (Fill in date) 6. In the event the Employer maintains a defined benefit pension plan, the following shall apply with respect to Code Section 415 and shall supersede any contrary provisions of the Plan or this Adoption Agreement: [X] a. Contributions hereunder shall be reduced to the extent necessary to prevent violation of Code Section 415. [ ] b. Benefits under such other defined benefit plan shall be restricted to the extent necessary to prevent a violation of Code Section 415. [ ] c. The following language shall apply: ----------------------------- ----------------------------------------------------------------- ----------------------------------------------------------------- ----------------------------------------------------------------- 7. In the event the Employer also maintains a defined benefit pension plan, the following interest rate and mortality assumptions shall be used to compute the top-heavy ratio: Before After Retirement Retirement Interest Rate: __________% __________% Mortality Table: [ ] none The following table: [ ] same as table __________________ used after retirement __________________ 8. In the event the Employer maintains a defined benefit pension plan the following shall apply with respect to Code Section 416 and shall supersede any contrary provisions of the Plan or this Adoption Agreement: [ ] a. Top heavy minimum contributions shall be made under this Plan. [ ] b. Top heavy minimum accruals shall be made under such other defined benefit plan maintained by the employer. [ ] c. ----------------------------------------------------------------- ----------------------------------------------------------------- ----------------------------------------------------------------- ----------------------------------------------------------------- 9. Matching Employer Contributions shall be contributed and allocated: [ ] a. Immediately upon contributions by the Participant. [ ] b. As of each plan valuation date. [ ] c. Annually. [ ] d. Annually among those Participants who are employed on the last day of the plan year. 10. The Average Actual Contribution Percentage test shall be satisfied: a. [X] 1. By distribution of Excess Aggregate Contributions in accordance with Section 5.4(c) of the plan, or [ ] 2. By additional contributions Qualified non-Elective Contributions and Qualified Matching Contributions in accordance with Section 5.4(f) of the plan. and b. [X] 1. Shall take into account Salary Reduction Contributions or [ ] 2. Shall not take into account Salary Reduction Contributions 11. Participants who claim Excess Elective Deferrals for the preceding taxable year must submit their claims in writing to the plan administrator by February 15 -------------------------------------------------------- (specify a date before April 15). 12. MINIMUM CONTRIBUTION UNDER TOP-HEAVY PLAN. Pursuant to Section 11.4 of the Plan, Key Employees shall be: [X] a. excluded from the top heavy minimum [ ] b. included for the top heavy minimum III.D. Investment of Accounts 1. Separate Investment Funds [ ] a. Shall not be permitted. [X] b. Shall be permitted. 2. A Self Directed Fund [ ] a. Shall not be permitted. [X] b. Shall be permitted. 3. In the event a Self Directed Fund is available the following restrictions shall apply: [ ] a. None. [ ] b. A minimum investment of $__________ shall be required. [ ] c. Other restrictions required by the Committee and applied uniformly shall be: Self-direction only for salary reduction ----------------------------------------- contributions ------------------------------------------------------------- 4.a. In the event separate investment funds are permitted hereunder, Participants shall be permitted to change allocations among investment funds at the following intervals: New Existing Contributions Accounts (i) [ ] [ ] daily (ii) [ ] [ ] the first day of each payroll period. (iii) [ ] [ ] the first day of each month. (iv) [X] [ ] the first day of July (fill in month) ---- and each quarterly anniversary thereof. (v) [ ] [ ] the first day of (fill in month) ---- and the six (6) month anniversary thereof. b. For Existing Accounts, transfers will be based upon the value of their accounts at the close of business: [X] a. on the previous day which shall be a Valuation Date for the purposes of the Plan. [ ] b. on the most recent Valuation Date hereunder. 5. In the event separate investment funds are permitted hereunder, Participants may allocate their account between investment funds as follows: [X] a. In increments of 10%. [ ] b. In increments of 25%. [ ] c. In increments of 1%. [ ] d. In increments of ____________%. [ ] e. In increments of any amount chosen by the Participant. III.E. Vesting Provisions for Employer Contributions: 1. Benefits under the Plan shall vest according to the following schedule: NOTE: (If the Employer has elected in Section III.B.5. of the Adoption Agreement that all Matching Contributions are Qualified Matching Contributions, the Employer must choose 100% vesting of Matching Contributions.)
Employer Non-Matching Matching Employer Contributions Contributions a. [ ] [ ] 100% immediate vesting b. [ ] [ ] Completed Years Percentage of Service Vested less than three (3).....................0% three (3) but less than four (4).......20% four (4) but less than five (5)........40% five (5) but less than six (6).........60% six (6) but less than seven (7)........80% after seven (7) years.................100% c. [ ] [X] Completed Years Percentage of Service Vested less than two (2).......................0% two (2) but less than three (3)........20%
three (3) but less than four (4).......40% four (4) but less than five (5)........60% five (5) but less than six (6).........80% after six (6) years...................100% d. [ ] [ ] Completed Years Percentage* of Service Vested less than one (1).....................___% one (1) but less than two (2).........___% two (2) but less than three (3).......___% three (3) but less than four (4)......___% four (4) but less than five (5).......___% five (5) but less than six (6)........___% six (6) but less than seven (7).......___% after seven (7) years.................___%
* must be at least as rapid as a seven year graduated schedule as in III.E.b. 2. In years in which the Plan is a Top Heavy Plan, benefits shall vest according to the following schedule: a. [ ] [ ] Completed Years Percentage of Service Vested less than three (3).....................0% after three (3).......................100% b. [ ] [X] Completed Years Percentage of Service Vested less than two (2).......................0% two (2) but less than three (3)........20% three (3) but less than four (4).......40% four (4) but less than five (5)........60% five (5) but less than six (6).........80% after six (6) years...................100%
3. Years of Service to be excluded for vesting purposes (leave blank if no exclusions for vesting purposes): [ ] a. Years of Service prior to age eighteen (18). [ ] b. Years of Service prior to the Effective Date of the Plan or a predecessor Plan. [ ] c. Years of Service after a five (5) year Break in Service (which exceeds the Participant's aggregate years of service) in calculating vesting before such Break in Service. NOTE: If this is a plan of a predecessor employer, service must include service with such predecessor employer. III.F. Benefits may be paid in the following forms: [X] 1. Installments not to exceed: [ ] a. five (5) years. [ ] b. ten (10) years. [ ] c. twenty (20) years. [X] d. life expectancy of the Participant and/or designated beneficiary. [X] 2. A lump sum payment [ ] 3. An annuity for the life of the Participant. [ ] 4. An annuity for the life of the Participant with a term certain guarantee. [ ] 5. An annuity for the life of the Participant with survivorship payments, i.e.: [ ] a. Joint & 100% survivor annuity [ ] b. Joint & 75% survivor annuity [ ] c. Joint & 50% survivor annuity [ ] d. Joint & 66-2/3% survivor annuity Note: If 3, 4, or 5 is selected, the Plan will be subject to the Joint & Survivor Annuity rules. III.G. Life Insurance 1. Life insurance shall be purchased in the following amounts: [X] a. None. [ ] b. % (not to exceed 49.9% if whole life and 25% if a term or universal life) of the annual Employer Contribution hereunder. [ ] c. % (not to exceed 99.9% if whole life and 50% if a term or universal life) of the annual Employer Matching Contribution (Use only with matching contributions of less than or equal to 100% of employee "salary reduction"). [ ] d. In an amount selected by the Participant. 2. The following Participants shall be eligible to receive life insurance, in the event Section III.G.l.b. or Section III.G.l.c. has been selected: a. Participants who have completed; [ ] (i) __________ Years of Service. [ ] (ii) __________ Years of Participation. 18 b. Participants who have attained Age ___________, but who have not attained Age ___________. 3. Insurance purchased hereunder shall contain the following additional features: [ ] a. Type: [ ] (i) Term or universal life [ ] (ii) Whole Life [ ] b. Minimum policy size: $___________________. [ ] c. Maximum policy size: $___________________. [ ] d. Waiver of Premium. [ ] e. Insurance purchase date: 4. The following contributions may be applied towards the purchase of life insurance. [ ] a. Employer matching contributions. [ ] b. Employer non-matching contributions. [ ] c. Salary reduction. [ ] d. After tax participant contributions. [ ] e. None. III.H. Timing of Distributions 1. Subject to the requirements of Article XII of the Plan distributions shall commence on: [ ] a. As soon as practicable after the Participant's termination of employment. [ ] b. After the Participant has incurred a ___________ (not to exceed 5) year Breaks-in-Service. [ ] c. After the ____________________ month anniversary of the date on which the Participant terminated employment. [ ] d. As soon as practicable following the end of the Plan Year in which the Participant terminated employment. [X] e. Within 60 days (not to exceed 75) following the end of the -- Plan Year in which the Participant terminated. [ ] f. As soon as practicable after the Participant's termination of employment, except that amounts in excess of $___________ shall be distributed upon attainment of Normal Retirement Date. [ ] g. Within _______ days (not to exceed 75) after the valuation date immediately following the Participant's termination of employment. 2. In the event the Employer has selected either b, c or f of Section H.l., distribution on behalf of Participants who have died or become disabled shall: [ ] a. Become payable immediately. [ ] b. Become payable in the same manner as applied to terminated employees. III.I. Timing of Forfeiture Allocations. After a distribution or deemed distribution, Forfeitures shall be reallocated: [ ] 1. Not applicable. (All employer contributions are fully vested or are used to reduce contributions) [X] 2. Immediately as of each anniversary date. [ ] 3. As of the anniversary date following ________ (not to exceed 5) consecutive one year Breaks-in-Service. IV. Miscellaneous Provisions. IV.A. Loans to Participants. [ ] 1. Shall not be permitted. 2. [X] a. Shall be permitted up to the maximum specified in Section 13.3(d)(iv) of the Plan. [ ] b. Shall be permitted up to the following limit: For a participant with a vested Account balance [ ] (i) in excess of $20,000, up to _____________% (not to exceed 50%) of his vested balance, and [ ] (ii) of $20,000 or less, up to _____________% (not to exceed 100%) of his vested balance. Note: A Participant with a vested balance in excess of $20,000 may NOT have an outstanding loan of more than $50,000 while a Participant with a vested balance of $20,000 or less may NOT have an outstanding loan of more than $10,000. 3. As long as his total outstanding loan will not exceed the limits specified in Section IV.C.2.a and b. above, the minimum loan a Participant may apply for is $ 1,000 (not to -------- exceed $1,000). 20 4. In accordance with the requirements of Section 408(b)(1) of ERISA that a loan bear a reasonable rate of interest (providing a return equivalent to commercial rates), loan interest rate shall be: a. For loans with durations of 5 years or less: [X] (i) based on commercial banks' prime rate. [ ] (ii) based on commercial banks' prime rate plus ________% per year. [ ] (iii) based on plan's rate of return on its fixed income fund. [ ] (iv) based on __________________________. b. If checked, loans which will be used to acquire a Participant's principal residence shall be allowed; and the repayment period for this type of loan may exceed 5 years. Interest rates to be used in conjunction with mortgages shall be: [ ] (i) same as loans with durations of 5 years or less. [X] (ii) based on commercial banks' prime rate. [ ] (iii) based on commercial banks' prime rate plus _________% per year. [ ] (iv) based on ____________________________________. 5. The loan interest shall be modified to reflect the current economic conditions: [ ] a. every quarter. [ ] b. every month. [X] c. every time a new loan is granted. 6. Loan repayments will be made: [ ] a. every quarter. [X] b. every month. [ ] c. every pay period through salary reduction. IV.B. Hardship Withdrawals. In the event of a financial hardship the Plan Administrator: [ ] 1. Shall not permit Hardship withdrawal. [ ] 2. Shall permit Participant withdrawals up to ________% of his vested Non Matching Employer Contribution account. [ ] 3. Shall permit Participant withdrawals up to ________% of his Salary Reduction Contribution. [X] 4. Shall permit a Participant to withdraw any portion of his Non-Matching Employer Contribution Account or Salary Reduction Account. Note: Hardship withdrawals are limited based on a Participant's immediate and heavy financial needs as provided in Section 12.9 of the Plan. IV.C. In Service Withdrawals: [X] 1. Shall not be permitted. [ ] 2. Distribution of vested Employer Contributions shall be permitted provided that such contributions have been in the Plan for at least two (2) years (per Revenue Ruling 71-295). [ ] 3. Shall be permitted for a Participant who is 100% vested and has attained age 59- 1/2. IV.D. Controlling State Law: The laws of the state of New York shall control this plan, except -------- as preempted by Federal law. V. Adoption A. An Employer who has ever maintained or who later adopts any plan (including a welfare benefit fund, as defined in section 419(e) of the Code, which provides postretirement medical benefits allocated to separate accounts for key employees, as defined in Section 419A(d)(3) of the Code, or an individual medical account, as defined in section 415(1)(2) of the code in addition to this plan may not rely on the notification letter issued by the National or District Office of the Internal Revenue Service as evidence that this plan is qualified under section 401 of the Internal Revenue Code. In addition, the employer may not rely on the notification letter issued by the National or District Office of the Internal Revenue Service as evidence that the plan is qualified under section 401 of the Code if the employer employs a leased employee who receives or has ever received contributions, forfeitures, or benefits under a plan maintained or ever maintained by a leasing organization, other than a safe-harbor money purchase plan described in section 414(n)(5) of the Code, that are attributable to services performed for the employer. If the employer who adopts or maintains multiple plans or who may not rely on this notification letter pursuant to the preceding sentence wishes to obtain reliance that his or her plan(s) is/are qualified, application for a determination letter should be made to the appropriate Key District Director of Internal Revenue. B. The Employer after consultation with his attorney hereby adopts this Plan and Trust by its execution of this Adoption Agreement and agrees to be bound by its terms. The Employer agrees to the adoption of the Plan by the Participating Employers set forth in Section I.B.2. hereof. IN WITNESS WHEREOF, the parties have set their hands this day of ____ of ___________________, 19___. Signed for the Employer By: Alvin Murstein ----------------------------------------------- Signature: , Title: -------------------------------------- ------------------ a. Trustee's Signature: ------------------------------------------------------- b. Trustee's Signature: ------------------------------------------------------- c. Trustee's Signature: ------------------------------------------------------- d. Trustee's Signature: ------------------------------------------------------- e. Trustee's Signature: ------------------------------------------------------- f. Trustee's Signature: ------------------------------------------------------- e. Trustee's Signature: ------------------------------------------------------- f. Trustee's Signature: ------------------------------------------------------- g. Trustee's Signature: ------------------------------------------------------- h. Trustee's Signature: ------------------------------------------------------- i. Trustee's Signature: ------------------------------------------------------- j. Trustee's Signature: ------------------------------------------------------- Participating Employer(s): a. Signature: , Title: --------------------------------- ------------------------ b. Signature: , Title: --------------------------------- ------------------------ c. Signature: , Title: --------------------------------- ------------------------ d. Signature: , Title: --------------------------------- ------------------------ e. Signature: , Title: --------------------------------- ------------------------ f. Signature: , Title: --------------------------------- ------------------------ g. Signature: , Title: --------------------------------- ------------------------ h. Signature: , Title: --------------------------------- ------------------------ i. Signature: , Title: --------------------------------- ------------------------ j. Signature: , Title: --------------------------------- ------------------------ This Adoption Agreement may only be used in conjunction with the Profit Sharing/401(k) Basic Plan Document #01. This plan is a Regional Prototype sponsored by: COLEMAN CONSULTING CORPORATION (212)629-8940 Attn: CYRIL J. COLEMAN, III. ONE PENN PLAZA NEW YORK, NY 10119 Use of this Prototype is subject to the Sponsor's approval who will notify the Employer of any amendments or the termination of this Plan. The Employer agrees to notify the Sponsor of any change in address. Sponsor hereby approves Employer's use of this Regional Prototype. Signed for the Sponsor By: CYRIL J. COLEMAN, III. ------------------------------------------------------ Signature: , Title: EXECUTIVE ------------------------------- ------------------------------ Date: ---------------------------- REGIONAL PROTOTYPE PROFIT SHARING/401(k) PLAN AND TRUST AGREEMENT Basic Plan Document # 01 Sponsored By COLEMAN CONSULTING CORPORATION Table of Contents ARTICLE I - NATURE OF THE PLAN 1.1 Statement of Purpose 1.2 Intention to Conform to Statute 1.3 Effective Date ARTICLE II - DEFINITIONS 2.1 "Account" or "Accrued Benefit" 2.2 "Administrator" 2.3 "Adoption Agreement" 2.4 "Affiliated Employer" 2.5 "Age" 2.6 "Aggregation Group" 2.7 "Alternate Payee" 2.8 "Anniversary Date" 2.9 "Annual Addition" 2.10 "Annuity Starting Date" 2.11 "Beneficiary" 2.12 "Board of Directors" 2.13 "Breaks-In-Service" 2.14 "Code" or "IRC" 2.15 "Collective Bargaining Agreement" 2.16 "Committee" 2.17 "Computation Period" 2.18 "Compensation" 2.19 "Defined Benefit Fraction" 2.20 "Defined Contribution Fraction" 2.21 "Determination Date" 2.22 "Determination Year" 2.23 "Early Retirement Date" 2.24 "Effective Date" 2.25 "Elective Deferrals" 2.26 "Eligible Employee" 2.27 "Employee" 2.28 "Employee Contributions" 2.29 "Employer" 2.30 "Employer Contribution Account" 2.31 "Employment Commencement Date" 2.32 "Entry Date" 2.33 "ERISA" 2.34 "Excess Aggregate Contributions" 2.35 "Excess Elective Deferrals" 2.36 "Family Member" 2.37 "415 Compensation" 2.38 "Highly Compensated Employee" 2.39 "Hour of Service" 2.40 "Insurer" 2.41 "Investment Fund" 2.42 "Key Employee" 2.43 "Leased Employee" 2.44 "Limitation Year" 2.45 "Look-Back Year" 2.46 "Matching Contribution" 2.47 "Named Fiduciary" 2.48 "Net Profits" 2.49 "Non-Key Employee" 2.50 "Non-Matching Employer Contributions" 2.51 "Normal Retirement Age" 2.52 "Normal Retirement Date" 2.53 "Owner-Employee" 2.54 "Participant" 2.55 "Participant Contribution Account" 2.56 "Participating Employer" 2.57 "Period of Severance" 2.58 "Plan or Plan and Trust" 2.59 "Plan Administrator" 2.60 "Plan Year" 2.61 "Qualified Employer Matching Contribution" 2.62 "Qualified Domestic Relations Order" 2.63 "Qualified Joint and Survivor Annuity" 2.64 "Qualified Non-Elective Employer Contributions" 2.65 "Qualified Pre-Retirement Survivor Annuity" 2.66 "Required Beginning Date" 2.67 "Restatement Effective Date" 2.68 "Salary Reduction Account" 2.69 "Self Employed Person" 2.70 "Separate Investment Fund" 2.71 "Spouse" 2.72 "Super Top Heavy Plan" 2.73 "Top Heavy Plan" 2.74 "Total Disability" 2.75 "Trustees" 2.76 "Trust Fund" 2.77 "Valuation Date" 2.78 "Year(s) of Service" ARTICLE III - ELIGIBILITY AND PARTICIPATION 3.1 Eligible Employee Status 3.2 Commencement of Participation 3.3 Administrative Requirements 3.4 Re-Employment of Participant 3.5 Change in Employment Status 3.6 Inactive Participants ARTICLE IV - EMPLOYER CONTRIBUTIONS 4.1 Determination of Amount of Non-Matching Contributions 4.2 Determination of Amount of Matching Contributions 4.3 Determination of Amount of Qualified Non-Elective Contributions 4.4 Determination of Amount of Qualified Matching Employer Contributions 4.5 Payment of Contributions 4.6 Duty of the Trustees 4.7 Contingent Nature of Contributions 4.8 Refund of Company Contributions ARTICLE V - EMPLOYEE & SALARY REDUCTION CONTRIBUTIONS, ADP & ACP TESTS 5.1 Employee Contributions Generally 5.2 Salary Reduction Contributions 5.3 Limitations Applicable to Salary Reduction Contribution 5.4 Limitation on Employee Contributions and Matching Contributions 5.5 Aggregation for Purposes of the Actual Deferral Percentage Test and Actual Average Contribution Percentage Test 5.6 Multiple Use Limitations 5.7 The Committee 5.8 Voluntary After-Tax Contributions 5.9 Rollover Contributions 5.10 Deductible Employee Contributions ARTICLE VI - ALLOCATION OF CONTRIBUTIONS AND FORFEITURES 6.1 Determination of Participants Eligible to Share in Allocation in Non-Matching Employer Contributions and Qualified Non-Elective Contributions 6.2 Allocation of Non-Matching Employer Contributions 6.3 Allocation of Employer Matching Contributions 6.4 Allocation of Forfeitures 6.5 Transfer of Participants 6.6 Annual Additions Limitations 6.7 One Point Four/One Point Two Five Limitations 6.8 Adjustments to One Point Four/One Point Two Five Limitations for Top Heavy Plans 6.9 Limitation on Allocations 6.10 Manner of Reduction when Employer Maintains a Defined Benefit Plan 6.11 Short Limitation Year ARTICLE VII - ALLOCATION OF INVESTMENT RESULTS 7.1 Valuation of the Trust Fund 7.2 Crediting of Investment Results - Trust Fund Investment 7.3 Crediting of Investment Results - Segregated Accounts/ Separate Investments Funds ARTICLE VIII - BENEFITS PAYABLE UPON RETIREMENT 8.1 Normal and Late Retirement Benefit 8.2 Early Retirement Benefit 8.3 Disability Benefit 8.4 Determination of Total Disability 8.5 Eligibility for Post Normal Retirement Age Benefit 8.6 Employer's Consent ARTICLE IX- BENEFITS PAYABLE UPON DEATH 9.1 Pre-Retirement Death Benefit 9.2 Post-Retirement Death Benefit 9.3 Death Benefits of Terminated Vested or Terminated Participants 9.4 Beneficiary Designations 9.5 Automatic Spousal Designation 9.6 Qualified Pre-Retirement Survivor Annuity 9.7 Failure of Beneficiary Designation ARTICLE X- BENEFITS PAYABLE UPON TERMINATION 10.1 Employer Contributions 10.2 Determination of Years of Service for Vesting Purposes 10.3 Forfeiture of Non-Vested Benefits 10.4 Accelerated Vesting for Top Heavy Plans 10.5 Employee Contributions and Salary Reduction Contributions 10.6 Statutory Vesting Requirement 10.7 Amendment of Vesting Schedule ARTICLE XI - TOP HEAVY PROVISIONS 11.1 Generally 11.2 Determination of Top Heavy Status 11.3 Top Heavy Rules and Definitions 11.4 Top Heavy Requirements ARTICLE XII - FORM AND MANNER OF BENEFIT DISTRIBUTIONS 12.1 Standard Form of Distribution 12.2 Optional Forms of Benefit Payments 12.3 Statutory Restriction on Lump Sum Payments 12.4 Commencement of Benefit Payments 12.5 Qualified Pre-Retirement Survivor Annuity ARTICLE XII - FORM AND MANNER OF BENEFITS DISTRIBUTIONS 12.6 Qualified Joint and Survivor Annuities 12.7 Payments Prior to Breaks-In-Service 12.8 Payments Pursuant to Qualified Domestic Relations Orders 12.9 Hardship Withdrawal ARTICLE XIII - TRUST PROVISIONS 13.1 Establishment of Trust 13.2 Rights, Duties and Obligations of the Trustees 13.3 Investment of the Trust Fund 13.4 Accounts to be Kept and Rendered by the Trustees 13.5 Exclusive Benefit ARTICLE XIV - POLICIES 14.1 Purchase of Policies 14.2 Procedure for Purchase 14.3 Requirements Concerning the Purchase of Policies 14.4 Incidental Benefit Limitations 14.5 Non-Insurable Participants 14.6 Participant Provided Benefits 14.7 Protection of Insurer ARTICLE XV - ADMINISTRATION OF THE PLAN 15.1 Appointment of Plan Administrator 15.2 Manner of Acting 15.3 Disqualification to Act 15.4 Authority and Responsibility of Plan Administrator 15.5 Requests for Documentation 15.6 Removal or Resignation 15.7 Failure to Appoint Plan Administrator 15.8 Compensation 15.9 Allocation of Responsibilities 15.10 Delegation to Retirement Committee 15.11 Bonding 15.12 Indemnification ARTICLE XVI - CLAIMS PROCEDURES 16.1 Claim for Benefits 16.2 Disposition of Claim 16.3 Claims Review Procedure 16.4 Conclusiveness of Determination ARTICLE XVII - AMENDMENT, TERMINATION AND MERGER 17.1 Employer's Right Reserved 17.2 Amendments to Cover Additional Employers 17.3 Effect of Terminations ARTICLE XVII - AMENDMENT, TERMINATION AND MERGER 17.4 Suspension or Discontinuance of Employer Contributions 17.5 Allocation Upon Termination of Trust 17.6 Merger and Consolidation 17.7 Withdrawal of a Participating Employer 17.8 If the employer's plan fails to attain or retain qualification, such plan will no longer participate in this Regional prototype plan and will be considered an individually designed plan 17.9 The Regional Prototype sponsor may amend any part of the plan ARTICLE XVIII - MISCELLANEOUS PROVISIONS 18.1 Controlling State Law 18.2 Disputes 18.3 Gender and Number 18.4 Headings and Subheadings 18.5 Heirs, Assigns and Representatives 18.6 No Contract of Employment 18.7 Treatment of Owner-Employees Under the Plan 18.8 Non-Alienation of Benefits 18.9 Notices and Deliveries 18.10 Payments to Persons under Legal Disability 18.11 Severability of Provisions 18.12 Service of Process 18.13 Title to Trust Assets ARTICLE I - NATURE OF THE PLAN 1.1 Statement of Purpose This Plan has been prepared for the purpose of providing a savings plan for the exclusive benefit of Eligible Employees of any Participating Employer. Any Employer may adopt this Plan and Trust, provided that such Employer and the Trustee designated by such Employer executes an Adoption Agreement and agrees to conform to and abide by all of the terms and provisions of this Plan and Trust. 1.2 Intention to Conform to Statute The Plan and Trust are intended to qualify as a profit sharing plan and trust under Sections 401(a), 401(k) and 501(a) of the Internal Revenue Code of 1986 as those sections may be amended from time to time. 1.3 Effective Date The Effective Date of this Plan shall be the date set forth in Section I.A.4. of the Adoption Agreement. The Restatement Effective Date, if any, shall be the date set forth in Section I.A.5. of the Adoption Agreement. -1- ARTICLE II - DEFINITIONS 2.1 "Account" or "Accrued Benefit" shall mean the entire interest of a Participant in the Trust Fund including forfeitures, appreciation, depreciation and if applicable, the cash surrender value of any Policies maintained by the Plan on his life. A Participant's Account shall include his Employer Contribution Account, his Participant Contribution Account, and his Salary Reduction Account. 2.2 "Administrator" shall mean the Plan Administrator as defined in Article II, Section 2.59 hereof. 2.3 "Adoption Agreement" shall mean the agreement entered into by the Employer and the Trustee adopting this Plan and Trust and setting forth certain provisions of this Plan as specified therein. 2.4 "Affiliated Employer" shall mean: (a) in the event the Plan provides benefits on behalf of an Owner- Employee (within the meaning of Section 401(c) of the Code): The Employer and any unincorporated entity or partnership under common control with the Employer within the meaning of Section 401(d)(1)(B) of the Code and as further described in Article XVIII, Section 18.7; and (b) in all other events: the Employer and any corporation, partnership or other unincorporated entity which forms a controlled group of corporations, a group of trades or businesses under common control, or an affiliated service group with the Employer, within the meaning of Sections 414(b), 414(c) and 414(m) of the Code, and where applicable Sections 415(h) and 414(o) of the Code. 2.5 "Age" shall mean actual age attained by a person as of his most recent birthday. 2.6 "Aggregation Group" shall mean each plan of the Affiliated Employer, whether or not terminated, in which a Key Employee is or was a participant and each other plan of the Affiliated Employer which enables any plan in which a Key Employee is a participant to meet the requirements of Sections 401(a)(4) or 410 of the Code. The Employer may treat any plan of an Affiliated Employer as being part of the Aggregation Group if such group would continue to meet the requirements of Sections 401(a)(4) and 410 (permissive Aggregation Group) with such plan being taken into account. 2.7 "Alternate Payee" shall mean any spouse, former spouse, child or other dependent of a Participant who is recognized as having a right to receive all or any portion of the benefits payable hereunder with respect to such Participant in accordance with Articles XII and XVIII hereof. -2- 2.8 "Anniversary Date" shall mean the last day of the Plan Year unless otherwise specified in Section II.B.5. of the Adoption Agreement. 2.9 "Annual Addition" shall mean for each Participant, in any Limitation Year, an amount so determined in accordance with Article VI of this Plan. 2.10 "Annuity Starting Date" shall mean the first day of the first period for which an amount is payable as an annuity, or in the case of a benefit not payable in the form of an annuity, the first day on which all events have occurred which entitle the Participant to such benefit. 2.11 "Beneficiary shall mean any individual, individuals, estate or trust designated by a Participant, Plan Administrator or pursuant to Section 206(d)(3)(J) of ERISA to receive benefits on behalf of a Participant. 2.12 "Board of Directors" shall mean: (a) in the case of corporation: the Board of Directors (or sole director) of the Employer, or of a Participating Employer, as the case may be; and (b) in the case of a Partnership or Sole proprietorship: the general partners or the sole proprietor, as the case may be. 2.13 "Breaks-ln-Service" Unless Elapsed Time is selected in Section II B.4.e. of the Adoption Agreement, shall mean an applicable Computation Period in which an Employee fails to complete an aggregate of five hundred (500) Hours of Service with any Affiliated Employer. If Elapsed Time is selected, Breaks-in-Service is a Period of Severance of at least twelve (12) consecutive months. 2.14 "Code" or"IRC" shall mean the Internal Revenue Code of 1986 as amended from time to time. 2.15 "Collective Bargaining Agreement" shall mean an agreement between the Employer and employee representatives if retirement benefits were the subject of good faith bargaining. Employee representatives does not include any organization more than half of whose members are employees who are owners, officers and executives of the Employer. 2.16 "Committee" shall mean the committee members appointed pursuant to Article XV, Section 15.10 hereof and specified in Section I.B.8 of the Adoption Agreement. -3- 2.17 "Computation Period" shall mean: (a) with respect to eligibility: (i) the initial twelve (12) consecutive months beginning on the Employee's Employment Commencement Date; and (ii) subsequent Plan Years beginning with the Plan Year which begins in the period specified in (i) above regardless of whether the Employee is entitled to be credited with 1,000 Hours of Service during that period; or (iii) successive anniversaries of the Employee's Employment Commencement Date if specified in Section II.B.3. of the Adoption Agreement; and (b) with respect to vesting, breaks in service, and accruals: the Plan Year unless otherwise specified in Section II.B.2. of the Adoption Agreement. 2.18 "Compensation" shall mean: Unless otherwise elected by the Employer under the Adoption Agreement, Compensation is defined as wages within the meaning of section 3401(a) of the Code and all other payments of compensation to the employee by the employer (in the course of the employer's trade or business) for which the employer is required to furnish the employee a written statement under sections 6041(d), 6051(d) and 6052 of the Code, determined without regard to any rules under section 3401(a) that limit the remuneration included in wages based on the nature or location of the employment or the services performed. As elected by the Employer in the Adoption Agreement, compensation shall mean: (a) in the case of an Employee: the total non-deferred renumeration paid to an Employee during the period specified in Section II.A.2.b. of the Adoption Agreement as reported on his W-2 (if Section II.A.2.a.(i) of the Adoption Agreement is selected) for such period including all compensation within the meaning of Code Section 415(c)(3) unless otherwise specified in Section II.A.l.b. of the Adoption Agreement which do not exceed the limitations in Article XI, Section 11.4, subsection (c) hereof as adjusted pursuant to Code Section 415(d) (which limitation shall be applicable to all employees for Plan years beginning after December 31, 1988), but excluding non-cash renumeration, and contributions on behalf of the Employee to this or any other employee benefit plan (except for elective contributions to this or any other employee benefit plan pursuant to a Salary Reduction Agreement and which is not includable in the Employee's income pursuant to Code Section 125, 402(a)(8), 402(h) or 403(b)) unless otherwise elected in Section II.A.1 of the Adoption Agreement; (b) Compensation shall mean total 415 Compensation actually paid to an Employee during the period specified in Section II.A.2.b. of the Adoption Agreement (if Section II.A.2.a.(ii) of the Adoption Agreement is selected); and (c) in the case of a Self-Employed Person: earned income as defined in Section 401(c)(2) of the Code in the trade or business for which the plan is established for which personal services of the individual are a material income-producing factor, but excluding any non-cash renumeration and contributions to this or any other retirement and/or fringe benefit plan to the extent deductible under Code Section 404 (except for elective contributions to this or any other employee benefit plan). For taxable years beginning after December 31, 1989, net earnings shall be determined by reducing such earnings by the deduction permitted under Code Section -4- 164(f). Compensation taken into account under the Plan for the first Plan Year beginning on or after January 1, 1989, shall not exceed $200,000 as determined in Section 11.4(c) of the Plan. (d) In addition to other applicable limitations set forth in the plan, and not withstanding any other provision in the plan to the contrary, for plan years beginning on or after January 1, 1994, the annual compensation of each employee taken into account under the plan shall not exceed the OBRA '93 annual compensation limit. The OBRA '93 annual compensation limit is $150,000, as adjusted by the Commissioner for increases in the cost of living in accordance with section 401(a)(17)(B) of the Internal Revenue Code. The cost-of- living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which compensation is determined (determination period) beginning in such calendar year. If a determination period consists of fewer than 12 months, the OBRA '93 annual compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is 12. For plan years beginning on or after January 1, 1994, any reference in this plan to the limitation under section 401(a)(17) of the Code shall mean the OBRA '93 annual compensation limit set for in this provisions. If compensation for any prior determination period is taken into account in determining an employee's benefits accruing in the current year, the compensation for that prior determination period is subject to the OBRA '93 annual compensation limit in effect for that prior determination period. For this purpose, for determination periods beginning before the first day of the first plan year beginning on or after January 1, 1994, the OBRA '93 annual compensation limit is $150,000. 2.19 "Defined Benefit Fraction" shall mean for each Participant, for any Limitation Year, a fraction so determined in accordance with Article VI of this Plan. 2.20 "Defined Contribution Fraction" shall mean for each Participant, for any Limitation Year, a fraction so determined in accordance with Article VI of this Plan. 2.21 "Determination Date" shall mean, for any Plan Year, the date so determined in accordance with Article XI of this Plan. 2.22 "Determination Year" shall mean the applicable Plan Year. 2.23 "Early Retirement Date" shall mean the date specified in Section II.C.2. of the Adoption Agreement. 2.24 "Effective Date" shall have the meaning set forth in Section I.A.4. of the Adoption Agreement. -5- 2.25 "Elective Deferrals" shall mean any salary reduction contributions made to the Plan. With respect to any taxable year of the Employer, a participant's Elective Deferral is the sum of all employer contributions made on behalf of such participant pursuant to an election to defer under any qualified cash or deferred arrangement as described in section 401(k) of the Code, any simplified employee pension cash or deferred arrangement as described in Section 402(h)(1)(B), any eligible deferred compensation plan under Section 457, any plan as described under Section 501(c)(18), and any employer contributions made on the behalf of a participant for the purchase of an annuity contract under Section 403(b) pursuant to a salary reduction agreement. Elective deferrals shall not include any deferrals properly distributed as excess annual additions. 2.26 "Eligible Employee" shall mean an Employee who has satisfied the requirements set forth in Sections III.A.I., III.A.2. and III.A.3. of the Adoption Agreement. 2.27 "Employee" shall mean either: (a) a person who performs services for an Affiliated Employer in the employer-employee relation; (b) a person who is a Leased Employee with respect to an Affiliated Employer within the meaning of Code Sections 414(n) and 414(o) and this Article II; or (c) a person who is a self-employed individual (within the meaning of Section 401(c)(1) of the Code) with respect to an Affiliated Employer. 2.28 "Employee Contributions" shall mean after-tax Employee Contributions as elected in Section III.B.7.a.(i) of the Adoption Agreement. 2.29 " Employer" shall mean the corporation, partnership, association or sole proprietorship set forth in Section I.B.1. of the Adoption Agreement. 2.30 "Employer Contribution Account" shall mean that portion of a Participant's Account attributable to Participating Employer contributions (including Matching Contributions) and the earnings and accretions attributable to such contributions. 2.31 "Employment Commencement Date" shall mean the date on which an Employee first performs an Hour of Service on behalf of an Affiliated Employer or, if applicable, the date on which an Employee first performs an Hour of Service after his most recent Breaks-In- Service that has resulted in cancellation of his previous Years of Service. 2.32 "Entry Date" shall mean each date set forth in Section III.A.4. of the Adoption Agreement which shall be the date on which the Employee commences participation. -6- 2.33 "ERISA" shall mean the Employee Retirement Income Security Act of 1974 (P.L. 93- 406) as it presently exists or as it may hereafter be amended from time to time. 2.34 "Excess Aggregate Contributions" shall mean, with respect to any Plan Year, the excess of: a. the aggregate Employee Contributions, Matching Contributions, Qualified Matching Contributions and Qualified Non-Elective Contributions (if applicable) taken into account in computing the Actual Contribution Percentage (ACP) of Highly Compensated Employees for such Plan Year, but shall not include Matching Contributions that are forfeited either to correct Excess Aggregate Contributions or because the contributions to which they relate are Excess Deferrals. b. the maximum percentage of such contributions permitted by the ACP test (determined by reducing contributions made on behalf of Highly Compensated Employees in order of their Contribution Percentages beginning with the highest of such percentages). Such determination shall be made after first determining Excess Elective Deferrals pursuant to Section 5.3(e) and then determining Excess Contributions pursuant to Section 5.4(b). 2.35 "Excess Elective Deferrals" shall mean those Elective Deferrals that are includable in a Participant's gross income under Section 402(g) of the Code to the extent such Participant's Elective Deferrals for a taxable year exceed the dollar limitation under such Code section. Excess Elective Deferrals shall be treated as Annual Additions under the Plan, unless such amounts are distributed no later than April 15th following the close of this participant's taxable year. 2.36 "Family Member" shall mean family member as defined in Section 414(q)(6) of the Code. 2.37 "415 Compensation" shall mean the Participant's earned income, wages, salaries, and fees for professional services actually rendered in the course of employment with an employer maintaining the Plan (including, but not limited to, commissions paid to salesmen, compensation for service on the basis of a percentage of profits, commissions or insurance premiums, tips and bonuses), which for any Limitation Year are actually paid or includable in gross income in a Limitation Year but excluding: (a) contributions made by the Employer to a plan of deferred compensation which are not included in the Employee's gross income for the taxable year in which contributed; (b) contributions made to a "simplified employee pension" (within the meaning of Section 408 of the Code) to the extend such contributions are deductible by the Employee; (c) amounts realized from exercise of a non-qualified stock option; (d) amounts realized when restricted stock or property held by the Employee either becomes freely transferable or is no longer subject to risk of forfeiture; (e) any distributions from a plan of deferred compensation; (f) amounts realized from the sale or exchange of stock acquired under a qualified stock option; -7- (g) contributions made by the Employer towards the purchase of an annuity (whether or not under a salary reduction agreement) pursuant to Section 403(b) of the Code (whether or not excludable from gross income); or (h) any other amounts which received special tax benefits. 2.38 "Highly Compensated Employee" shall mean (a) An Employee who performs services for an Affiliated Employer during the applicable Determination Year and who during the Look-Back Year either: (i) received Compensation from an Affiliated Employer in excess of $75,000 (as adjusted pursuant to Code Section 415(d)); (ii) received Compensation from an Affiliated Employer in excess of $50,000 (as adjusted pursuant to Code Section 415(d)) and such Employee was among the twenty percent (20%) who received the highest Compensation from an Affiliated Employer, or (iii) The Employee was an officer of an Affiliated Employer and either received Compensation in excess of fifty percent (50%) of the current limitation imposed by Code Section 415(b)(1)(A), or in the event no officers of any Affiliated Employer received Compensation in excess of the foregoing limit, the most highly compensated officer, or (b) Employees who are five percent (5%) owners (within the meaning of Code Section 416(i)) of an Affiliated Employer at any time during the Look-Back Year or the Determination Year or Employees described in Section 2.38(a) who are one of the 100 Employees who received the most compensation from the Employer during the Determination Year, or (c) A Highly Compensated former Employee who: (i) separated from the service (or who was deemed to have separated) of all Affiliated Employers prior to the Determination Year; (ii) performed no services for an Affiliated Employer during the Determination Year, and was a Highly Compensated Employee (who was actively employed) during either his year of separation from service, or any Determination Year ending on or after his fifty-fifth (55th) birthday. (d) Any other Employee deemed to be highly compensated under Code Section 414(q) and the Treasury Regulation thereunder. (e) If an Employee is a family member (spouse, lineal ascendants and descendants and their spouses of the Employee or former Employee) of a Key Employee as defined in Section 11.3(c)(iii) or of a Highly Compensated Employee who is one of the ten (10) most highly compensated Employees ranked on the basis of Compensation paid by the Employer during the Determination Year or Look-Back Year, then the family member and such Key Employee shall be aggregated and compensation and plan contributions and benefits shall be aggregated for the purpose of determining if an Employee is a Highly Compensated Employee. -8- 2.39 "Hour of Service" shall mean: (a) Each hour for which an Employee (including those persons treated as employees pursuant to Code Section 414(n)) is paid or entitled to be paid currently or as a back pay award irrespective of mitigation of damages, by any Affiliated Employer (including any other entity required to be aggregated pursuant to Code Section 414(o) and regulations thereunder) for the performance of duties provided, however, that all hours shall be credited in the Computation Period in which the work was performed or to which the back pay award relates; and (b) Each hour for which an Employee is paid or is entitled to payment due to vacation, holiday, illness, incapacity, disability, lay off, jury duty, military duty, maternity or paternity leave or leave of absence, but not periods for which payments are made or due: (i) Under a plan maintained solely for the purpose of compliance with Worker's Compensation, Unemployment Compensation, disability insurance laws; or (ii) Solely as reimbursement for medical expenses incurred by the Employee provided, however, that no more than five hundred one (501) Hours of Service be credited to an Employee during a single continuous period during which the Employee performs no duties, except in the case where the Employee is on leave of absence due to illness, injury or disability; (c) Each hour for which an Employee is absent from work because of: (i) pregnancy, (ii) the birth of a child of the Employee, (iii) the placement of a child with the Employee in connection with the adoption of the child by the Employee, or (iv) the need for care of the child during the period immediately following the birth or placement for adoption, but solely for the purpose of determining whether a Breaks-In-Service has occurred for participation and vesting. (d) (i) The Employee shall be credited with the number of hours which otherwise would have been credited but for such absence under subsection (c), unless said number of hours cannot be determined, in which case eight (8) hours per working day shall be credited. (ii) Total hours credited pursuant to subsections (c) and (d) shall not exceed five hundred one (501) hours. (iii) Hours pursuant to subsections (c) and (d) shall be credited in the Computation Period in which the absence pursuant to subsections (c) and (d) begins if such hours would prevent an Employee from incurring a Breaks-In-Service, or in any other case in the following computation period. (iv) No credit shall be given pursuant to subsections (c) and (d) unless the Employee furnishes the Plan Administrator with information, as it may reasonably be required to establish the length of and reasons for the absence, or the Plan Administrator has access to such relevant information. -9- (e) Hours of Service shall be determined in accordance with Department of Labor Regulations, Sections 2530.200-2(b) and (c) which are incorporated herein by reference. (f) Hours of Service may be credited at the rate of forty-five (45) hours for each week, ninety-five (95) hours for each semi-monthly pay period or one hundred ninety (190) hours for each monthly pay period in which an Employee is credited with one (1) Hour of Service, if so elected by the Employer in Section II.B.4. of the Adoption Agreement. (g) Notwithstanding the above, if an Employer has selected use of the elapsed time method of credited service in Section II.B.4.e. of the Adoption Agreement, Hour of Service shall mean each hour for which an employee is paid or entitled to payment for the performance of duties with the employer. 2.40 "Insurer" shall mean any legal reserve insurance company from which any policies may be acquired in accordance with the terms of the Plan. 2.41 "Investment Fund" shall mean that portion of the Trust Fund consisting of all monies not applied under Policies. 2.42 "Key Employee" shall mean, for any Plan Year, a Participant or Beneficiary so determined in accordance with Article XI of this Plan. 2.43 "Leased Employee" shall mean any person (not otherwise an employee of an Affiliated Employer) who pursuant to an agreement between the Affiliated Employer (as recipient) and any other person (as "leasing organization") has performed services for an Affiliated Employer or other "related person" (within the meaning of Code Section 414(n)(6)) on a substantially full time basis for at least one year of a type historically performed by employees in the business field of the Affiliated Employer, except if all of the following conditions are satisfied: (a) Such Employee is covered by a money purchase pension plan providing: (i) a non-integrated Employer Contribution of not less than ten percent (10%) of Compensation (as defined in Code Section 415(c)(3) and without regard to any salary reduction agreement); (ii) immediate participation; and (iii) immediate nonforfeitability of Employer Contributions. (b) Leased Employees do not constitute more than twenty (20%) percent of the non-highly compensated work force of all Affiliated Employers. 2.44 "Limitation Year" shall mean the consecutive twelve (12) month period selected in Section II.B.I. of the Adoption Agreement unless otherwise elected by resolution of the Board of Directors of the Employer. -10- 2.45 "Look-Back Year" shall mean the twelve (12) month period immediately preceding the applicable Determination Year. 2.46 "Matching Contribution" shall mean Employer contributions as elected in Section III.B.4. of the Adoption Agreement that are allocated to a Participant's Account by reason of the Participant's Salary Reduction Contribution. Such contributions may be forfeited if the contributions to which they relate are Excess Deferrals, Excess Contributions or Excess Aggregate Contributions. In cases where Matching Contributions are forfeited for the foregoing reasons, such contributions will be disregarded when performing the ADP test of Section 5.4. 2.47 "Named Fiduciary" shall mean the Employer, the Trustees and the Plan Administrator, provided, however, that the above named (or any member of a group constituting any of the above named) shall only be considered fiduciaries to the extent of each of their powers, duties and responsibilities as set forth under the terms of this Plan. 2.48 "Net Profits" shall mean the sum of the net earnings of a Participating Employer (or an "Affiliated Group" as defined in Section 1504 of the Code), as the case may be, at the close of its taxable year as determined for Federal Income Tax purposes determined in accordance with generally accepted accounting principles. 2.49 "Non-Key Employee" shall have the meaning so ascribed in Article XI of this Plan. 2.50 "Non-Matching Employer Contributions" shall mean Employer contributions as elected in Section III.B.2. of the Adoption Agreement. 2.51 "Normal Retirement Age" shall mean the earlier of: (a) a Participant's Normal Retirement Date; or (b) the later of: (i) the date on which the Participant attains Age sixty-five (65); or (ii) the fifth (5th) anniversary of the first day of the Plan Year in which he commences participation; or (c) any mandatory retirement age enforced by the Employer. 2.52 "Normal Retirement Date" shall mean the date specified in Section II.C.1. of the Adoption Agreement. 2.53 "Owner-Employee" shall mean an individual who is a sole proprietor or who is a partner owning more than ten percent (10%) of either the capital or profits of the partnership. -11- 2.54 "Participant" shall mean any person who is or was an Eligible Employee and who has been admitted to participation in accordance with the terms of the Plan. 2.55 "Participant Contribution Account" shall mean that portion of a Participant's Account as is attributable to after-tax Employee Contributions, rollover contributions or transfer contributions, if any, as provided under the terms of the Plan, and all earnings and accretions attributable to such Employee contributions. 2.56 "Participating Employer" shall mean the Employer and any Affiliated Employer who, with the consent of the Employer, formally adopts the Plan by completing Section I.B.2. of the Adoption Agreement. 2.57 "Period of Severance" shall mean a continuous period of time during which the Employee is not employed by the Employer beginning when the Employee retires, quits or is discharged, or if earlier, the 12 month anniversary of the date on which the Employee was otherwise first absent from service, provided that in the case of an individual who is absent from work for maternity or paternity reasons, the 12-consecutive month period beginning on the first anniversary of the first date of such absence shall not constitute a Breaks In Service. For purposes of this paragraph, an absence from work for maternity or paternity reasons shall have the same meaning as in Section 2.39(c) of the Plan. 2.58 "Plan" or "Plan and Trust" shall mean the Plan as herein set forth, as it may be amended from time to time which shall be known by the name set forth in Section I.A.1. of the Adoption Agreement. 2.59 "Plan Administrator" shall mean any individual, individuals, corporate entity, or other organization or combination of any of the above designated in Section I.B.7. of the Adoption Agreement, or in the absence of such designation, the Employer. 2.60 "Plan Year" shall mean the twelve (12) consecutive month period set forth in Section I.A.7. of the Adoption Agreement. 2.61 "Qualified Employer Matching Contribution" shall mean Employer contributions as elected in Section III.B.5. of the Adoption Agreement that the Participant may not elect to receive in cash until distributed from the plan that are non-forfeitable when made and that may not be distributed prior to separation from service, death, or disability, unless the contributions to which they relate are related to Excess Deferrals, Excess Contributions or Excess Aggregate Contributions. In such cases, the Qualified Employer Matching Contributions may be forfeited. Such Qualified Matching Contributions, if forfeited shall be disregarded when performing the ACP test of Section 5.4. -12- 2.62 "Qualified Domestic Relations Order" shall mean any judgment, decree or order (including approval of a property settlement agreement) made pursuant to a state domestic relations law: (a) which relates to the provision of child support, alimony payments or marital property rights; (b) which creates or recognizes the existence of an Alternate Payee's right to receive all or any portion of the benefits payable with respect to a Participant; and (c) which otherwise satisfies the requirements of Section 414(p) of the Code and the Regulations thereunder. 2.63 "Qualified Joint and Survivor Annuity" shall mean, in the case of a married Participant, the amount of an immediate annuity for the life of the Participant with a fifty percent (50%) survivor's annuity for the life of the Spouse which is payable during the joint lives of the Participant and the Spouse that can be purchased with the Participant's vested Account, and in the case of an unmarried Participant, the amount of annuity for life that can be purchased with the Participant's vested Account. 2.64 "Qualified Non-Elective Employer Contributions" shall mean Employer Contributions as elected in Section III.B.3. of the Adoption Agreement that the Participant may not elect to receive in cash until distributed from the Plan, that are non-forfeitable when made and that may not be distributed prior to separation from service, death or disability. 2.65 "Qualified Pre-Retirement Survivor Annuity" shall mean a survivor annuity for the life of Participant's surviving Spouse which can be purchased with fifty percent (50%) of the Participant's Account as of the date of his death. 2.66 "Required Beginning Date" shall mean: (a) In the case of those Participants who attain age seventy and one-half (70 1/2) after December 31, 1988: The April 1 of the calendar year following the calendar year in which the Participant attains age seventy and one-half (70 1/2). (b) In the case of those Participants who attain age seventy and one-half (70 1/2) prior to January 1, 1988 who are not five percent (5%) owners (within the meaning of Code Section 416(i)): The April 1 following the later of: (i) the calendar year in which the Participant attains age seventy and one-half (70 1/2); or; (ii) the calendar year in which the Participant retires. (c) In the case of those Participants who attain age seventy and one-half (70 1/2) after December 31, 1987 but prior to January 1, 1989 who are not five percent (5%) owners (within the meaning of Code Section 416(i)): April 1, 1990. -13- (d) In the case of those Participants who attain age seventy and one-half (70 1/2) prior to January 1, 1988 and were five percent (5%) owners during any Plan Year beginning after December 31, 1979: The April 1 following the later of: (i) the calendar year in which the Participant attains age seventy and one-half (70 1/2); or (ii) the earlier of: (A) the calendar year in which the Participant retires; or (B) the calendar year containing the last day of the Plan Year in which the Participant becomes a five percent (5%) owner. (e) The determination of five percent (5%) ownership shall be made under Section 416(i) regardless of whether the Plan is top-heavy and shall apply to any Participant who is a five percent (5%) owner at any time during the Plan Year ending with or within the calendar year in which such owner attains age sixty-six and one-half (66 1/2) or any subsequent Plan Year. 2.67 "Restatement Effective Date" shall have the meaning ascribed in Section I.A.5. of the Adoption Agreement. 2.68 "Salary Reduction Account" shall mean that portion of a Participant's Account attributable to "salary reduction" contributions as provided under the terms of the Plan, and all earnings and accretions attributable to such "salary reduction" contributions. 2.69 "Self Employed Person" shall mean an individual who has earned income (within the meaning of Code Section 401(c)(2)) from the trade or business for which the Plan is established, or would have such income if such trade or business had net profits. 2.70 "Separate Investment Fund" If selected by the Employer in Section III.D.1. of the Adoption Agreement, shall mean, the various separate funds offered for investment. In addition, if elected by the Employer in Section III.D.2. and D.3. of the Adoption Agreement, the Participant may choose to direct the investments in his Account as a self-directed account. 2.71 "Spouse" shall mean Spouse or Surviving Spouse of the Participant, provided that a former Spouse will be deemed the Spouse and the current Spouse will not be deemed the Spouse to the extent provided under a Qualified Domestic Relations Order. 2.72 "Super Top Heavy Plan" shall mean, for any Plan Year, a Plan so determined in accordance with Article XI hereof. 2.73 "Top Heavy Plan" shall mean, for any Plan Year, a Plan so determined in accordance with Article XI hereof. -14- 2.74 "Total Disability" shall mean a medically determinable physical or mental impairment which is expected to result in death or to be a long continued duration and which prevents the Participant from engaging in his normal and customary duties. 2.75 "Trustees" shall mean the individual, individuals, corporate entity or other group designated pursuant to Section I.B.6. of the Adoption Agreement. 2.76 "Trust Fund" shall mean assets or property held by the Trustees (or any nominee thereof) under the terms of the Plan and Trust. 2.77 "Valuation Date" shall mean the close of business on: (a) the last day of the Plan Year, or (b) any other date selected pursuant to Section III.C.5. of the Adoption Agreement. 2.78 "Year(s) of Service" shall mean the number of applicable Computation Periods in which an Employee accrues one thousand (1,000) Hours of Service according to the terms of the Plan with respect to vesting and eligibility, that have not been excluded pursuant to the terms of the Plan. For purposes of eligibility, an Employer who has not selected Section II.B.3. of the Adoption Agreement will credit an Employee who accrues one thousand (1,000) Hours of Service during both the initial twelve month Computation Period and the Plan Year beginning in the initial twelve month Computation Period, with two (2) Years of Service. Notwithstanding the above, where an Employer has elected use of the elapsed time method of credited service, for purposes of determining an Employee's initial or continued eligibility to participate in the Plan or the non- forfeitable interest in the Participant's Account balance derived from Employer contributions, an Employee will receive credit for the aggregate of all time period(s) commencing with the Employee's first day of employment or reemployment and ending on the date a Breaks in Service begins. The first day of employment or reemployment is the first day the Employee performs an Hour of Service. An Employee will also receive credit for any Period of Severance of less than twelve (12) consecutive months. Fractional periods of a year will be expressed in terms of days. -15- ARTICLE III - ELIGIBILITY AND PARTICIPATION 3.1 Eligible Employee Status An Employee shall be an Eligible Employee on the date on which he satisfies the requirements set forth in both Sections III.A.1., III.A.2. and III.A.3. of the Adoption Agreement. 3.2 Commencement of Participation An Eligible Employee shall enter the Plan, subject to any administrative requirements set forth herein, on the Entry Date specified in Section III.A.4. of the Adoption Agreement relating to his completion of the service requirement set forth in Section III.A.3. of the Adoption Agreement. Notwithstanding the foregoing, all Employees on the date specified in Section III.A.5. of the Adoption Agreement shall commence their participation hereunder on the date specified therein. 3.3 Administrative Requirements The Plan Administrator may require the Employee to supply information and to complete such forms as reasonably required and, in its sole discretion, may delay an Employee's entrance into the Plan until his compliance with this requirement, and in the event a "salary reduction" contribution is permitted pursuant to Section III.B.6. of the Adoption Agreement, the Employee shall be required to complete a salary reduction agreement prior to his entry into the Plan. 3.4 Re-Employment of Participant If a Participant experiences an interruption in his employment with all Affiliated Employers and is subsequently re-employed he shall be eligible to enter or reenter the Plan immediately upon reemployment. 3.5 Change in Employment Status An Employee otherwise eligible who was previously not eligible to enter the Plan because he was not an Eligible Employee shall begin participation immediately upon becoming an Eligible Employee. 3.6 Inactive Participants If a Participant subsequently becomes ineligible under Section 3.1 hereunder, but is still employed by an Affiliated Employer he shall become an inactive Participant and shall no longer be eligible to make salary reduction contributions, nor receive Employer contributions to the extent provided in Article IV hereof. -16- ARTICLE IV - EMPLOYER CONTRIBUTIONS 4.1 Determination of Amount of Non-Matching Contributions Each Participating Employer shall contribute to the Trust Fund on account of its Employees for each Plan Year in the manner set forth in Section III.B.2. of the Adoption Agreement. No contribution shall be accepted by the Trust under this Section 4.1 unless it is deductible under Section 404 of the Code. 4.2 Determination of Amount of Matching Contributions Each Participating Employer shall contribute to the Trust Fund on account of its Employees in the amounts determined by Section III.B.4. of the Adoption Agreement. 4.3 Determination of Amount of Qualified Non-Elective Contributions Each Participating Employer shall contribute to the Trust Fund on account of its Employees in the amounts determined by Section III.B.3. of the Adoption Agreement. 4.4 Determination of Amount of Qualified Matching Employer Contributions If the Employer has selected Section III.B.5 of the Adoption Agreement, all Employer Matching Contributions are deemed to be Qualified Matching Employer Contributions. 4.5 Payment of Contributions Each Participating Employer shall make full payment of its contribution to the Trustees no later than the due date of its federal income tax return (including extensions thereof) for the fiscal year with respect to which such contribution is made. 4.6 Duty of the Trustees The Trustees shall have no duty to enforce payment of any contribution of any Participating Employer. 4.7 Contingent Nature of Contributions Contributions made to the Trust Fund are expressly contingent upon their deductibility for federal income tax purposes and the maintenance of the qualified status of the Plan to the extent that loss of said qualified status would deprive a Participating Employer of the deduction taken for said contribution. 4.8 Refund of Company Contributions In the event of: (a) initial disqualification of the Plan provided the application for determination relating to initial qualifications is filed by the due date of the Participating Employers return for the taxable year in which the Plan is adopted; or (b) disallowance of a deduction; or (c) denial of continued qualification (to the extent a Participating Employer would be deprived of a deduction), or -17- (d) mistake of fact, that portion of the contribution which is disallowed or contributed by mistake of fact may be returned to the Participating Employer which made said contribution to the extent permitted under Section 403(c) of ERISA and Section 401(a)(2) of the Code. Return of contributions pursuant to (b), (c) or (d) of this Section 4.8 shall be made within one (1) year of the date of disallowance of deduction, date of denial of continuing qualification or date of payment of the mistaken portion of the contribution, as the case may be. -18- ARTICLE V - EMPLOYEE & SALARY REDUCTION CONTRIBUTIONS; ADP & ACP TESTS 5.1 Employee Contributions Generally (a) Non-Forfeitability - All Employee contributions and earnings thereon shall be fully vested at all times. (b) Accounting - All Employee contributions shall be allocated to a Participant's Participant Contribution Account, or to a Participant's Salary Reduction Account, as the case may be. 5.2 Salary Reduction Contributions (a) Each Participant shall be permitted to make salary reduction contributions, in lieu of cash compensation, in one of the percentages of his Compensation set forth in Section III.B.6.a. of the Adoption Agreement, as a condition of his participation hereunder, not to exceed (when taken together with all of the Participant's other "salary reduction" contributions) $7,000 (as adjusted pursuant to Code Section 402(g)) per calendar year. Plans acquiring such contributions are deemed to contain an arrangement pursuant to Code Section 401(k). (b) All salary reduction contributions to the Plan shall be made through salary withholding. Contributions withheld shall be paid to the Trustees by an Employer as soon as practicable thereafter. (c) A Participant may increase or decrease the rate of his salary reduction contributions at such times permitted under Section III.B.6.b. of the Adoption Agreement by delivering an amended withholding authorization to the Committee within a reasonable period prior to the effective date of his change of rate. Notwithstanding the above, a Participant may authorize any additional salary reduction contribution needed to maximize his salary reduction upon 30 days notice to the committee. (d) A Participant may reduce his salary reduction contributions to zero by delivering an amended withholding authorization to the Committee at such times permitted under Section III.B.6 of the Adoption Agreement. (e) In the event a Participant ceases his salary reduction contributions, effective with the date of such cessation, he shall become an inactive Participant until such time as he resumes active participation by resuming his contributions to the Plan. A Participant who becomes an inactive Participant may not resume salary reduction contributions until the date selected in Section III.B.6.c of the Adoption Agreement. (f) Except upon separation from service, total disability or death, a Participant may not withdraw any contribution which has been allocated to his Salary Reduction Account before he attains age fifty-nine and one-half (59-1/2), except in the event of a severe financial hardship if hardship withdrawals are permitted pursuant to Section IV.B. of the Adoption Agreement. Determination of a severe financial hardship shall be made by the Committee in its sole discretion. A distribution made on account of severe financial hardship shall not exceed the amount required to meet the immediate financial need of the Employee as described in Section 12.9 of the Plan. The Committee may issue administrative regulations to govern the application of this Subsection (f). -19- 5.3 Limitations Applicable to Salary Reduction Contribution (a) Actual Deferral Percentage Test before January 1, 1987. (i) For Plan Years beginning before January 1, 1987, the Actual Deferral Percentage of Highly Compensated Employees (as defined in subsection (ii) hereof) shall not exceed the lesser of: (A) the sum of Actual Deferral Percentage on behalf of all other Participants plus three (3) percentage points; or (B) the Actual Deferral Percentage on behalf of all other Participants multiplied by two and one-half (2.5), except in the event that the Actual Deferral Percentage on behalf of the group of Highly Compensated Employees does not exceed the Actual Deferral Percentage on behalf of all other Participants multiplied by one and one-half (1.5). (ii) The Actual Deferral Percentage for a specified group of Participants shall be the average of the ratios (separately calculated for each Participant) of: (A) the amount of before-tax contributions for the Plan Year in reference to (B) the Participant's Compensation for such Plan Year. (iii) For purposes of this Subsection, a Highly Compensated Employee is any Employee who receives greater compensation than two- thirds (2/3) of all Participants during such Plan Year. For this purpose, compensation shall mean the Employee's annual rate of compensation (including all items of compensation set forth in Article II) as of the last day of the most recent prior Plan Year. (b) Actual Deferral Percentage Test after December 31, 1986. (i) For Plan Years beginning after December 31, 1986, the Actual Deferral Percentage (ADP) of tax-deferred contributions of Highly Compensated Employees eligible to participate shall not exceed the lesser of: (A) 200% of the Actual Deferral Percentage of the tax deferred contributions for all other Employees eligible to participate; or (B) the Actual Deferral Percentage of all other Employees plus two (2) percentage points; provided that in the alternative, the ADP on behalf of Highly Compensated Employees may exceed the ADP on behalf of all other Employees by no more than 125%. (ii) The term "Actual Deferral Percentage" for a specified group of Employees for a Plan Year shall be the average of the ratios (separately calculated for each Employee) of: (A) the amount of Employer Contributions and Salary Reduction contributions (including: (1) Excess Elective Deferrals, but excluding Elective Deferrals that are taken into account in the Average Contribution Percentage test, provided the ADP test is satisfied both with or without such exclusion, and -20- (2) at the election of the Employer, Qualified Non-Elective Contributions and Qualified Matching Contributions), actually paid to the Trust on behalf of the Employee for such Plan Year on or before the last day of the Plan Year immediately following the Plan Year to which the contributions relate; to: (B) the Employee's Compensation for such Plan Year (whether or not the Employee was a Participant for the entire Plan Year). If a Participant makes no Employee contributions, the ratio for that Participant will equal zero. The term "Highly Compensated Employee" shall have the same meaning as under Section 414(q) of the Code. (Note: For Plan Years beginning after December 31, 1987 at the election of the Employer, the Compensation taken into account may be limited to the compensation received by the employee while he is a plan participant). (c) Leveling to meet the ADP test If a limitation or amendment becomes necessary pursuant to section 5.3(a) or (b) above, such limitation or amendment will be made by reducing the percentage and distributing to the Employee electing the highest percentage of tax-deferred contributions until the tests of (a) or (b) are met or until such Participant's salary reduction election is reduced to the same percentage level as the Participant who is the Highly Compensated Employee electing the second highest percentage of salary reduction contributions. If further limitations are required, then both such Participants' salary reductions shall be distributed until the tests of (a) or (b) are met or until the two Participants' salary deferred elections are reduced to the same percentage level as the Participant who is the Highly-Compensated Employee electing the third highest percentage of salary reduction contributions, and such limitations or amendments shall continue to be made in a similar manner from the Participants who are Highly- Compensated Employees making the highest percentage salary deferrals to the lowest until the tests of (a) or (b) are satisfied. The Employer shall have the right to include the Qualified Non-Elective Employer Contributions for purposes of meeting the limitation under this subsection. The amount of the reduction, plus any income and minus any loss allocatable thereto, shall be distributed no later than the last day of each Plan Year to Participants to whose accounts such amounts were allocated for the preceding Plan Year. If such amounts are distributed more than 2 1/2 months after the last day of the Plan Year in which such excess amounts arose, a ten percent (10%) excise tax will be imposed on the Employer maintaining the Plan with respect to such amounts. Excess Elective Deferrals of participants who are subject to the family aggregation rules shall be allocated among the family members in the same proportion to the Elective Deferrals (and amounts treated as Elective Deferrals) of each family member that is combined to determine the combined ADP. (d) Determination of Income or Loss The reduction shall be adjusted for any income or loss up to the date of distribution. The income or loss allocatable is the sum of: (1) income or loss allocatable to the participant's Salary Reduction account (and, if applicable, the Qualified Non-Elective Contribution account or the Qualified Matching Contributions account or both) for the Plan Year multiplied by a fraction, the numerator of which is the amount of the reduction for the year and the denominator is the participant's account balance attributable to Salary Reductions (and Qualified -21- Non-Elective Contributions or Qualified Matching Contributions, or both, if any of such contributions are included in the Actual Average Percentage test) without regard to any income or loss occurring during such Plan Year; and (2) ten percent (10%) of the amount determined under (1) multiplied by the number of whole calendar months between the end of the Plan Year and the date of distribution, counting the month of distribution if distribution occurs after the 15th of such month. (e) Excess Elective Deferrals A Participant may assign to this Plan any Excess Elective Deferrals made during the taxable year of the Participant by notifying the Plan Administrator on or before the date specified in Section III.C.ll the Adoption Agreement of the amount of the Excess Elective Deferrals to be assigned to the Plan. A participant is deemed to notify the Plan Administrator of any Excess Elective Deferrals that arise by taking into account only those Elective Deferrals made to this plan and any other plans of the sponsor. Notwithstanding any other provision of the Plan, Excess Elective Deferrals, plus any income and minus any loss allocatable thereto, shall be distributed no later than April 15 to any Participant to whose Account Excess Elective Deferrals were assigned for the preceding year and who claims Excess Elective Deferrals for such taxable year. Determination of Income or Loss: Excess Elective Deferrals shall be adjusted for any income or loss up to the date of distribution. The income or loss allocatable to Excess Elective Deferrals is the sum of: (1) income or loss allocatable to the Participant's Salary Reduction Contribution Account for the taxable year multiplied by a fraction, the numerator of which is such Participant's Excess Elective Deferrals for the year and the denominator is the Participant's Account balance attributable to Salary Reduction Contributions without regard to any income or loss occurring during such taxable year; and (2) ten percent (10%) of the amount determined under (1) multiplied by the number of whole calendar months between the end of the participant's taxable year and the date of distribution, counting the month of distribution if distribution occurs after the 15th of such month. (f) Return of Contribution to Participant If a Participant is prevented from making a portion of his salary reduction contribution due to a permissible limitation, revocation or amendment by the Employer, such portion shall be considered taxable income to the Participant in the tax year for which the contribution was made, and after appropriate taxes have been withheld shall be returned to the Participant. 5.4 Limitation on Employee Contributions and Matching Contributions (a) Actual Contribution Percentage after December 31, 1986. (i) For Plan Years beginning after December 31, 1986, the Actual Average Contribution Percentage (ACP) (as defined in subsection (ii) hereof) of Employee Contributions, Qualified Matching Contributions and Qualified Non-Elective Contributions (if elected in Section III.B.3. of the Adoption Agreement) of Highly Compensated Employees shall not exceed the lesser of: -22- (A) 200% of the Actual Average Contribution Percentage of Employee Contributions and Matching Contributions for all other Employee's eligible to participate, or (B) the Actual Average Contribution Percentage of all other Employees plus two (2) percentage points; provided that in the alternative, the ACP on behalf of Highly Compensated Employees may exceed the ACP on behalf of all other Employees by no more than 125%. (ii) The term "Actual Average Contribution Percentage" for a specified group of Employees for a Plan Year shall be the average of the ratios (separately calculated for each Employee) of: (A) the amount of Employee Contributions, Matching Contributions, Qualified Matching Contributions and Qualified Non-Elective Contributions actually paid to the Trust on behalf of an Employee for such Plan Year; to (B) the Employee's Compensation for such Plan Year whether or not the Employee was a Participant for the entire Plan Year. If a Participant makes no Salary Reduction Contribution, the ratio for that Participant will equal zero. (Note: For Plan Years beginning after December 31, 1987 and before January 1, 1992, at the election of the Employer, the Compensation taken into account may be limited to the compensation received by the employee while he is a Plan Participant). (b) Leveling to meet the ACP test If because of the above limitations a reduction of contributions on behalf of Highly Compensated Employees becomes necessary pursuant to Section 5.4 (a), such reduction of contributions will be made by forfeiting or distributing on a pro-rata basis from the Employee Contribution Account, Matching Contribution Account, Qualified Matching Contribution Account and if applicable, the Qualified Non- Elective Contribution Account or Salary Deferral Account or both, from the Employee contributing the highest percentage of contributions until the test of (a) is met or until such Participant's Contribution is reduced to the same percentage level as the Participant who is the Highly-Compensated Employee contributing the second highest percentage of such contributions. If further limitations are required, then both such Participants' contribution percentages shall be reduced until the test of Section 5.4(a) is met or until the two Participants' contributions are reduced to the same percentage level as the Participant who is the Highly-Compensated Employee contributing the third highest percentage of such contributions, and such limitations or amendment shall continue to be made in a similar manner from the Participants who are Highly-Compensated Employees making the highest percentage contributions to the lowest until the test of Section 5.4(a) is satisfied. The Employer shall have the right to include the Qualified Matching Contributions for purposes of meeting the limitation under this subsection. If a Participant is prevented from making a portion of his contributions due to a permissible limitation, revocation or amendment by the Employer, such portion shall be considered taxable income to the Participant in the tax year for which the contribution was made, and after appropriate taxes have been withheld shall be returned to the Participant. (c) Distribution of Excess Aggregate Contribution Notwithstanding any other provision of this Plan, Excess Aggregate Contributions, plus any income and minus any loss allocatable thereto, shall be forfeited, if forfeitable, or if not forfeitable, distributed no later than the last day of each Plan Year to Participants to whose -23- accounts such Excess Aggregate Contributions were allocated for the preceding Plan Year. Excess Aggregation Contributions of participants who are subject to the family member aggregation rules shall be allocated among the family member in proportion to the Employee and Matching Contributions (or amounts treated as Matching Contributions) of each family member that is combined to determine the combined ACP. Determination of Income or Loss: The amount of the reduction or limitation under Section 5.4(b) shall be an Excess Aggregate Contribution which shall be adjusted for any income or loss up to the date of distribution. The income or loss allocatable to the Excess Aggregate Contributions is the sum of: (i) the income or loss allocatable to the Participant's Employee Contribution account, Matching Contribution account (if any, and if all amounts therein are not used in the Actual Deferral Percentage test) and, if applicable, Qualified Non-elective Contribution account and Salary Reduction account for the Plan Year multiplied by a fraction, the numerator of which is such participant's Excess Aggregate Contributions for the year and the denominator of which is the Participant's account balance(s) attributable to Employee Contributions, Matching Contributions, Qualified Matching Contributions and Salary Reduction Contributions without regards to any income or loss occurring during such Plan Year; and (ii) ten percent (10%) of the amount determined under (i) multiplied by the number of whole calendar months between the end of the Plan Year and the date of distribution, counting the month of distribution if distribution occurs after the 15th of such month. (d) Forfeitures of Excess Aggregate Contributions Forfeitures of Excess Aggregate Contributions may either be reallocated to the accounts of Non-Highly Compensated Employees or applied to reduce Employer Contributions, as elected by the Employer in Section III.C.4.B. of the Adoption Agreement. (e) Allocation of Excess Aggregate Contributions Excess Aggregate Contributions shall be allocated to Participants who are subject to the family member aggregation rules of Section 414(q)(6) of the Code in the manner prescribed by the regulations. If such Excess Aggregate Contributions are distributed more than 2 1/2 months after the last day of the Plan Year in which such excess amounts arose, a ten percent (10%) excise tax will be imposed on the Employer maintaining the Plan with respect to those amounts. Excess Aggregate Contributions shall be treated as Annual Additions under the Plan. (f) Alternative Leveling to Meet the ACP Test Notwithstanding the provisions of Section 5.4(c), if an Employer so elects in Section III.C.10 of the Adoption Agreement, the Actual Average Contribution Percentage Test of Section 5.4(a) will be met by increasing (1) the Qualified Non-Elective Contributions allocated in accordance with Section III.C.3. of the Adoption Agreement, or (2) the Qualified Matching Contributions allocated in proportion to the salary deferrals of all Non-Highly Compensated Employees who are Participants in the Plan and employed as of the end of the Plan Year. The Employer shall have the right to include such contributions for purposes of meeting the Actual Average Contributions Percentage test. -24- (g) Timing of Contributions for purposes of the ACP test For purposes of the ACP test defined in Section 5.4(a), Employee Contributions are considered to have been made in the Plan Year in which contributed to the Trust Fund. Matching Contributions and Qualified Non-Elective Contributions are considered to have been made for a Plan Year if made no later than the end of the twelve-month period beginning on the day after the close of the Plan Year. 5.5 Aggregation for Purposes of the Actual Deferral Percentage Test and Actual Average Contribution Percentage Test. (a) Aggregation of Contributions for Highly Compensated Employees The ADP or ACP for any Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have Salary Reduction Contributions (and Qualified Non-Elective Contributions or Qualified Matching Contributions, or both, if treated as Elective Deferrals for purposes of the ADP test) allocated to his or her Accounts under two or more plans described in Section 401(a) of the Code or two or more plans described in Section 401(k) of the Code, that are maintained by the Affiliated Employer, shall be determined as if such contributions were made under a single arrangement. If a Highly Compensated Employee participates in two or more plans described in Section 401(k) of the Code that have different Plan Years, all such arrangements ending with or within the same calendar year shall be treated as a single arrangement. (b) Aggregation of Plans In the event that this Plan satisfies the requirements of Sections 401(k), 401(m), 401(a)(4), or 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Sections of the Code only if aggregated with this Plan, then this section shall be applied by determining the ADP and/or ACP of Employees as if all such plans were a single plan. For Plan Years beginning after December 31, 1989, plans may be aggregated in order to satisfy Section 401(k) or Section 401(m) of the Code only if they have the same Plan Year. (c) Aggregation of Family Members For purposes of determining the ADP or ACP of a Participant who is a five-percent (5%) owner or one of the ten most highly-paid Highly Compensated Employees, the (i) A) Salary Reduction Contributions of a Participant (and Qualified Non-Elective Contributions or Qualified Matching Contributions, or both, if treated as Salary Reduction Contributions for purposes of the ADP test); or B) Employee Contributions, Matching Contributions and Qualified Matching Contributions of a Participant (to the extent not taken into account for the ADP test) used for the ACP test; and (ii) Compensation of such Participant shall include such Contributions and Compensation for the Plan Year of Family Members. Family Members, with respect to such Highly Compensated Employees, shall be disregarded as separate Employees in determining the ADP and ACP both for Participants who are non-Highly Compensated Employees and for Participants who are Highly Compensated Employees. -25- 5.6 Multiple Use Limitations If... one or more Highly Compensated Employees participates in both a CODA and a Plan subject to the ACP test maintained by the Affiliated Employer and the sum of the ADP and ACP of those Highly Compensated Employees subject to either or both of these tests exceeds the sum of: (i) 125 percent (125%) of the greater of: a) the ADP of the non-Highly Compensated Employees for the Plan Year; or b) the ACP of the non-Highly Compensated Employees for the Plan Year beginning with or within the Plan Year for which the ADP test was performed; and (ii) two plus the lesser of such ADP or such ACP (but in no event exceeding 200 percent (200%) of such ADP or such ACP) then... the ACP of those Highly Compensated Employees also subject to the ADP test will be reduced (beginning with such Highly Compensated Employee whose ACP is the highest) so that the limit is not exceeded. The amount of the reduction shall be treated as an Excess Aggregate Contribution. The ADP and ACP of the Highly Compensated Employees are determined after any corrections required to meet the ADP and ACP tests. Multiple use does not occur if both the ADP and ACP of the Highly Compensated Employees does not exceed 1.25 multiplied by the ADP and ACP of the non-Highly Compensated Employees. "Lesser," is substituted for "greater" at "(i)" above, and "greater" is substituted for "lesser" after "two plus the" in "(ii)" if it would result in a larger sum of (i) and (ii). 5.7 The Committee shall monitor the application of Sections 5.3, 5.4, 5.5 and 5.6. The Employer shall maintain records to demonstrate compliance with the Sections. The Plan Administrator shall periodically inform the Highly Compensated Employees of the maximum percentage that will be permitted to be allocated to their Salary Reduction Accounts in a manner to permit said Employees to change their salary reduction agreements within a reasonable time prior to the end of the Plan Year. For this purpose, the Trustees may round down the maximum percentage to the largest integer permitted under Section 401(k) of the Code. 5.8 Voluntary After-Tax Contributions (a) Permissibility Voluntary after-tax contributions shall be permitted if such option is selected pursuant to Section III.B.7.a. of the Adoption Agreement, at the sole discretion of the Plan Administrator and if permitted shall be subject to such administrative regulations as may be promulgated by the Plan Administrator. (b) Maximum Limitation In no event shall a Participant be permitted to make voluntary contribution which shall either: (i) cause his aggregate voluntary contributions to all qualified plans maintained by all Affiliated Employers to exceed ten percent (10%) of his aggregate Compensation during his years of employment with any Affiliated Employer; or (ii) cause the limitations on allocations set forth in Article VI to be exceeded. -26- (c) Withdrawal A Participant may withdraw the entire value of his accumulated voluntary contributions (including all earnings, additions and accretions thereto) upon written notice to the Plan Administrator, subject to any administrative regulations as may be promulgated by the Plan Administrator from time to time, and if applicable, to the requirements of Article XII, Section 12.6 hereof. 5.9 Rollover Contributions (a) Permissibility Rollover contributions may be accepted if such option is selected pursuant to Section III.B.7.b. of the Adoption Agreement only upon such terms and conditions as may be provided under administrative regulations set forth by the Plan Administrator, provided, however, that no funds shall be accepted as a rollover contribution if acceptance of said funds adversely affects the qualified status of the Plan or Trust Fund under the Code. (b) Evidence of Source of Rollover Funds The Plan Administrator, at its sole discretion, may require the Participant to provide such evidence as it deems necessary to determine that the rollover funds originate from a source which may be rolled over to the Plan without adversely affecting its qualified status. (c) Types of Rollovers Accepted Subject to the requirements of this Section, rollover contributions from the following types of plans may be accepted: (i) those received by a Participant directly from a plan which is qualified under Section 401(a) of the Code; (ii) those received by a Participant from an Individual Retirement Account which consists only of rollover contributions as provided in Section 408(d)(3) of the Code; (iii) those received by a Participant from an employee annuity described in Section 403(b) of the Code; (iv) a transfer of funds directly from the trustee of a plan which is qualified under Section 401(a) of the Code; provided, however, that such direct transfers shall be accepted only as specified in Section III.B.7.c. of the Adoption Agreement. (d) Withdrawal A Participant may withdraw his rollover contributions (including earnings and appreciation) in the same manner provided for the withdrawal of voluntary after-tax contributions. (e) Direct Rollover of Eligible Distributions. General Rule. The subsection applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the plan to the contrary that would otherwise limit a distributee's election under this Article, a distributed may elect, at the time and in the manner prescribed by the plan administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributes in a direct rollover. -27- (f) Direct Rollover of Eligible Distributions. Definitions. (i) Eligible rollover distribution: An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributed except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributed or the joint lives (or joint life expectancies) of the distributee and the distributors designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under section 401(a)(9) of the Code; and the portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). (ii) Eligible retirement plan: An eligible retirement plan is an individual retirement account described in section 408(a) of the Code, an individual retirement annuity described in section 408(b) of the Code, an annuity plan described in section 403(a) of the Code, or a qualified trust described in section 401(a) of the Code, that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity. (iii) Distributee: A distributed includes an employee or former employee. In addition, the employee's or former employee's surviving spouse and the employee's or former employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in section 414(p) of the Code, are distributees with regard to the interest of the spouse or former spouse. (iv) Direct rollover: A direct rollover is a payment by the plan to the eligible retirement plan specified by the distributee. 5.10 Deductible Employee Contributions The Plan will not accept deductible employee contributions which are made for a taxable year beginning after December 31, 1986. Contributions made prior to that date will be maintained in a separate account which will be nonforfeitable at all times. The account will share in the gains and losses of the Trust in the same manner as described in Section 7.2 of the Plan. No part of the deductible voluntary contribution account will be used to purchase life insurance. Subject to Section 12.5 and Section 12.6 (if applicable), the Participant may withdraw any part of the deductible voluntary contribution account by making a written application to the Plan Administrator. -28- ARTICLE VI - ALLOCATION OF CONTRIBUTIONS AND FORFEITURES The Plan Administrator will separately credit contributions, distributions and forfeitures to the respective bookkeeping account of each separate type of Contribution (e.g., Employer Matching Contribution, Non-Matching Employer Contribution, etc.). 6.1 Determination of Participants Eligible to Share of Allocation of Non- Matching Employer Contributions and Qualified Non-Elective Contributions The Plan Administrator shall determine, as of the last day of each Plan Year, each Participant (or former Participant) who is eligible to receive an allocation of NonMatching Employer Contributions in accordance with the Adoption Agreement or an allocation of Qualified Non-Elective Contributions in accordance with Section III.C.3. of the Adoption Agreement. 6.2 Allocation of Non-Matching Employer Contributions Subject to the Annual Addition limitations and the One Point Four/One Point Two Five limitations as more particularly set forth in this Article VI, Non-Matching Employer Contributions from each Participating Employer shall be allocated to the Account of each Participant (or former Participant) who is eligible to receive an allocation in the manner set forth in the Adoption Agreement. INTEGRATED ALLOCATION OF NON-MATCHING EMPLOYER CONTRIBUTIONS: If an integrated allocation is selected in Section III.C.2.b. of the Adoption Agreement, the Non-Matching Employer Contributions for the Plan Year and forfeitures, if applicable, will be allocated to Participants' accounts as follows: STEP ONE: Contributions and forfeitures, if applicable, will be allocated to each Participant's Account in the ratio that each Participant's total Compensation bears to all Participants' total compensation, but not in excess of three percent (3%) of each Participant's Compensation. STEP TWO: After the allocation in Step One any remaining portion will be allocated to each Participant's Account in the ratio that each Participant's Compensation for the Plan Year in excess of the integration level bears to the excess compensation of all Participants, but not in excess of three percent (3%). STEP THREE: After the allocation in Step Two any remaining portion will be allocated to each Participant's Account in the ratio that the sum of each Participant's total Compensation and compensation in excess of the integration level bears to the sum of all Participants total Compensation and Compensation in excess of the integration level, but not in excess of the profit-sharing maximum excess allowance percentage selected in Section III.C.2.c. of the Adoption Agreement less three percent (3%). STEP FOUR: Any remaining portion will be allocated to each Participant's Account in the ratio that each participant's total Compensation for the Plan Year bears to all Participants' total compensation for that year. If in any year the Plan is not a Top-Heavy Plan, STEP ONE and STEP TWO above shall be disregarded and allocations shall be made in accordance with STEP THREE and STEP FOUR above without regard to the three percent (3%) reduction of STEP THREE. The integration level shall be equal to the Taxable Wage Base or such lesser amount elected by the Employer in the Adoption Agreement. The Taxable Wage Base is the maximum amount of earnings which may be considered wages for a year under Section 3121(a)(1) of the Code in effect as of the beginning of the Plan Year. Qualified Non-Elective Contributions shall be allocated in accordance with Section III.C.3 of the Adoption Agreement. -29- 6.3 Allocation of Employer Matching Contributions Subject to the Annual Addition limitations and the One Point Four/One Point Two Five limitations as more particularly set forth in this Article VI, Employer Matching contributions from a Participating Employer shall be allocated to the account of each Participant (or former Participant) who made a salary reduction contribution to the Plan, in the amount which the Employer is required to match such salary reduction contribution pursuant to Section III.B.4. of the Adoption Agreement and as required in accordance with Section III.C.9. of the Adoption Agreement. 6.4 Allocation of Forfeitures Forfeitures (including forfeitures of Matching Contributions other than Excess Aggregate Contributions) shall be allocated in the manner set forth in Section III.C. of the Adoption Agreement, provided that such forfeitures shall be allocated among the Employees of the Participating Employer who employed the Participant. 6.5 Transfer of Participants In the event of the transfer of a Participant between Participating Employers, the nonmatching contribution of each Participating Employer shall be allocated to his Employer Contribution Account to the extent he received Compensation from the Participating Employer during the Plan Year. 6.6 Annual Additions Limitations In no event shall an allocation be made to a Participant's Account in any defined contribution plan (as defined in Section 414(i) of the Code) for any Limitation Year which shall cause his Annual Addition to exceed the lesser of: (a) twenty-five percent (25%) of the Participant's 415 Compensation (excluding amounts contributed for medical benefits within the meaning of Section 401(h) or 419A(f)(2) of the Code that are treated as Annual Additions); or (b) the greater of: (i) thirty thousand dollars ($30,000); or (ii) one fourth (l/4) of the current maximum dollar limitation for defined benefit plans. For purposes of this Plan, the Annual Addition on behalf of a Participant in any Limitation Year is equal to the sum of: (a) All Employer Contributions allocated to his Account under this Plan or any other defined contribution plan (as defined under Section 414(i) of the Code) maintained by an Affiliated Employer; and (b) The Participant's contributions to all qualified plans (within the meaning of Section 401(a) of the Code) except that Employee Contributions made on account of Limitation Years beginning on or before January 1, 1987 shall be determined in accordance with the law in effect prior to such date; and (c) The forfeitures allocated to his Account; and (d) Contributions allocated to any individual medical account within the meaning of Code Section 415(a) after March 31, 1984 by an Affiliated Employer; and -30- (e) Contributions allocated to any separate account of a Key Employee welfare benefit fund (within the meaning of Code Section 419(e)) after December 31, 1985 under a Plan maintained by an Affiliated Employer; and (f) Any excess amount applied under Section 6.9 in the Limitation Year to reduce Employer Contributions. 6.7 One Point Four/One Point Two Five Limitations In no event shall an allocation be made to the Account of a Participant for any Limitation Year which shall cause the sum of the Participant's Defined Benefit Fraction and the Participant's Defined Contribution Fraction to exceed one (1). (a) A Participant's Defined Benefit Fraction is a fraction: (1) The numerator of which is the Participant's projected annual benefit (i.e., the annual retirement benefit adjusted to an actuarially equivalent straight life annuity if expressed in a form other than a straight life annuity or qualified joint and survivor annuity) to which the Participant would be entitled under the terms of the Plan assuming: (a) the Participant will continue employment until Normal Retirement Age (or current age, if later), and (b) the Participant's Compensation for the current Limitation Year and all other relevant factors used to determine benefits under the Plan will remain constant for all future Limitation Years provided under all defined benefit plans (as defined in Section 414(j) of the Code) (whether or not terminated) maintained by an Affiliated Employer; (2) Except as modified by Subsection 3 hereof, the denominator of which is the lesser of: (i) the projected annual benefit (as defined in (a) above) of the Participant if such plan provided the maximum benefit permitted under Section 415(b) of the Code multiplied by one and four-tenths (1.4); and (ii) the maximum dollar limitation which may be considered under Code Section 415(b)(1)(A) (as adjusted by Code Section 415(d)(1)) multiplied by one and one-quarter (1.25). (3) In the event an Employee was a Participant as of the first day of the first Limitation Year beginning after December 31, 1986, in a defined benefit plan maintained by an Affiliated Employer which plan was in existence of May 6, 1986 and satisfied individually and when aggregated with all other such plans the requirements of Code Section 415 for all Limitation Years beginning before January 1, 1987, the denominator of the Participant's Defined Benefit Fraction shall not be less than one hundred twenty five percent (125%) of the Participant's Accrued Benefit under all such defined benefit plans as of the last Limitation Year beginning before January 1, 1987, disregarding any amendments to such plan after May 5, 1986. In addition, the numerator shall be reduced in accordance with Tefra Section 235(g)(3) and Defra 713(a). -31- (b) A Participant's Defined Contribution Fraction is a fraction: (1) Except as modified by Subsection (3) hereof, the numerator of which is the sum of the Annual Additions (as defined under Section 415(c)(2) of the Code) made to: (i) the Participant's Account under all defined contribution plans (as defined in Section 414(i) of the Code) (whether or not terminated); (ii) employee contributions defined benefit pension plans (within the meaning of Code Section 414(j)); (iii) contributions to welfare benefit funds (within the meaning of Code Section 419(e)); and (iv) contributions to individual medical accounts (within the meaning of Code Section 415(1)(2)) maintained by all Affiliated Employers; (2) The denominator of which is the lesser of: (i) the sum of the maximum amount of Annual Additions that could have been made on behalf of the Participant in accordance with Section 415(c) of the Code for each year of his employment with an Affiliated Employer or any predecessor entity for which service is recognized pursuant to Section II.B.6.c. of the Adoption Agreement multiplied by one and four-tenths (1.4); and (ii) the maximum amount of Annual Additions that could have been made to the Participant's Account pursuant to Code Section 415(c)(1)(A) (as adjusted by Code Section 415(d)(1)) multiplied by one and one quarter (1.25). (3) In the event an Employee was a Participant in a defined contribution plan (within the meaning of Code Section 414(i)) maintained by an Affiliated Employer (which plan was in existence on May 6,1986) on the end of the first day of the Limitation Year beginning after December 31, 1986, the numerator of the Defined Contribution Fraction shall be adjusted if the sum of this fraction and the Defined Benefit Fraction would otherwise exceed 1.0 under the terms of the Plan. The excess of the sum of the fraction (calculated as of the end of the last Limitation Year beginning after January 1, 1987 and computed in accordance with Code Section 415(a) in effect for Limitation Years beginning after December 31, 1986 but disregarding any plan amendments made after May 6, 1986) over 1.0 times the denominator of the Defined Contribution Fraction shall reduce the numerator of the Defined Contribution Fraction so that the Defined Contribution Fraction equals one (1.0). In addition, the numerator shall be reduced in accordance with Tefra Section 235(g)(3) and Defra 713(a). 6.8 Adjustments to One Point Four/One Point Two Five Limitations for Top Heavy Plans (a) Reduced One Point Four/One Point Two Five Limitations If, during any Limitation Year in which the Plan is a Top Heavy Plan, a Participant participates in both a defined contribution plan (as defined in Section 414(i) of the Code) and a defined benefit plan (as defined in Section 414(j) of the Code) maintained by an Affiliated Employer, the denominator of the Participant's Defined Contribution Fraction and Defined Benefit Fraction shall be calculated by substituting "1.0" for "1.25" each place it appears in Section 6.7 above. -32- (b) Exceptions to Applicability This Section 6.8 shall not apply for any Plan Year if: (i) The top heavy ratio determined under Section 11.2, Subsections (a) and (b) does not exceed ninety percent (90%) for the Plan Year in reference; and (ii) The minimum contribution allocated to the Account of each Non-Key Employee who is otherwise eligible to receive a contribution was one percent (1%) greater than the required minimum contribution allocated under Section 11.4, Subsection (b). 6.9 Limitation on Allocations (a) Employee Participating Only in This Plan (1) If the Participant does not participate in, and has never participated in, another qualified plan maintained by an Affiliated Employer or a welfare benefit fund, as defined in Section 419(e) of the Code maintained by the Employer, or an individual medical account, as defined in Section 415(1)(2) of the Code, maintained by the Affiliated Employer, which provides an Annual Addition, the amount of Annual Addition which may be credited to the Participant's Account for any Limitation Year will not exceed the lesser of the maximum permissible amount or any other limitation contained in this Plan. If the Employer Contribution that would otherwise be contributed or allocated to the Participant's Account would cause the Annual Addition for the Limitation Year to exceed the maximum permissible amount, the amount contributed or allocated will be reduced so that the Annual Addition for the Limitation Year will equal the maximum permissible amount. (2) Prior to determining the Participant's actual Compensation for the Limitation Year, the Employer may determine the maximum permissible amount for a Participant on the basis of a reasonable estimation of the Participant's Compensation for the Limitation Year, uniformly determined for all Participants similarly situated. (3) As soon as it is administratively feasible after the end of the Limitation Year, the maximum permissible amount for the Limitation Year will be determined on the basis of the Participant's actual Compensation for the Limitation Year. (4) If pursuant to Subsection (a)(3) or as a result of the allocation of forfeitures, there is an excess amount, the excess will be disposed of as follows: (i) Any nondeductible voluntary employee contributions, to the extent they would reduce the excess amount, will be returned to the Participant; (ii) If after the application of paragraph (4)(i) an excess amount still exists, and the Participant is covered by the Plan at the end of the Limitation Year, the excess amount in the Participant's Account will be used to reduce Employer Contributions (including any allocation of forfeitures) for such Participant in the next Limitation Year, and each succeeding Limitation Year if necessary; (iii) If after the application of paragraph (4)(i) an excess amount still exists, and the Participant is not covered by the Plan at the end of the Limitation Year, the excess amount will be held unallocated in a suspense account. The suspense account will be applied to reduce future Employer Contributions (including allocation of any forfeitures) for all remaining Participants in the next Limitation Year, and each succeeding Limitation Year if necessary; -33- (5) If a suspense account is in existence at any time during the Limitation Year pursuant to this Section, it will not participate in the allocation of the Trust's investment gains and losses. (b) Employer Participating in this and another Master or Prototype Defined Contribution Plan (1) This Section applies if, in addition to this Plan, the Participant is covered under another qualified master or prototype defined contribution plan, welfare benefit fund, as defined in Section 419(e) of the Code or an individual medical account, as defined in Section 415(1)(2) of the Code, maintained by the Affiliated Employer, which provides an Annual Addition during any Limitation Year. The Annual Addition which may be credited to a Participant's Account under this Plan for any such Limitation Year will not exceed the maximum permissible amount reduced by the Annual Addition credited to a Participant's account under the other plans and welfare benefit funds for the same Limitation Year. If the Annual Addition with respect to the Participant under other defined contribution plans and welfare benefit funds maintained by the Affiliated Employer are less than the maximum permissible amount and the Employer Contribution that would otherwise be contributed or allocated to the Participant's Account under this Plan would cause the Annual Addition for the Limitation Year to exceed this limitation, the amount contributed or allocated will be reduced so that the Annual Addition under all such plans and funds for the Limitation Year will equal the maximum permissible amount. If the Annual Addition with respect to the Participant under such other defined contribution plan and welfare benefit funds in the aggregate are equal to or greater than the maximum permissible amount, no amount will be contributed or allocated to the Participant's Account under this Plan for the Limitation Year. (2) Prior to determining the Participant's actual Compensation for the Limitation Year, the Employer may determine the maximum permissible amount for a Participant in the manner described in Subsection (a)(2). (3) As soon as it is administratively feasible after the end of the Limitation Year, the maximum permissible amount for the Limitation Year will be determined on the basis of the Participant's actual Compensation for the Limitation Year. (4) If, pursuant to Subsection (b)(3) or as a result of the allocation of forfeitures, a Participant's Annual Addition under this Plan and such other plans would result in an excess amount for a Limitation Year, the excess amount will be deemed to consist of the Annual Addition last allocated, except that Annual Addition attributable to a welfare benefit fund or individual medical account will be deemed to have been allocated first regardless of the actual allocation date. (5) If an excess amount was allocated to a Participant on an allocation date of this Plan which coincides with an allocation date of another plan, the excess amount attributed to this Plan will be the product of: (a) the total excess amount allocated as of such date, times: (b) the ratio of: (i) the Annual Addition allocated to the Participant for the Limitation Year as of such date under this Plan to -34- (ii) the total Annual Addition allocated to the Participant for the Limitation Year as of such date under this and all the other qualified master or prototype defined contribution plans. (6) Any excess amount attributed to this Plan will be disposed in the manner described in Subsection (a)(4). (c) Employer participating in this Plan and another non-Master or Prototype Defined Contribution plan If the Participant is covered under another qualified defined contribution plan maintained by the Affiliated Employer which is not a master or prototype plan, Annual Addition which may be credited to the Participant's Account under this Plan for any Limitation Year will be limited in accordance with Subsections (b)(1) through (b)(6) as though the other plan were a master or prototype plan unless the Employer provides other limitations in the Adoption Agreement. 6.10 Manner of Reduction when Employer Maintains a Defined Benefit Plan Contributions under this Plan shall be reduced to the extent possible to satisfy the limitations set forth in Section 6.7 hereof before reductions are made in any defined benefit plan (within the meaning of Section 414(j) of the Code) maintained by any Affiliated Employer unless otherwise specified in Section III.C.6. of the Adoption Agreement. 6.11 Short Limitation Year If a short Limitation Year is created because of an amendment changing the Limitation Year to a different 12-consecutive month period, the maximum permissible amount will not exceed the defined contribution dollar limitation multiplied by the following fraction: Number of months in the short limitation year --------------------------------------------- 12 -35- ARTICLE VII - ALLOCATION OF INVESTMENT RESULTS 7.1 Valuation of the Trust Fund The Trust Fund shall be valued at the close of business on the last day of Plan Year, or on the valuation period specified in Section III.C.5(b) of the Adoption Agreement except in the case where Separate Investment Funds are permitted pursuant to Section III.D.I. of the Adoption Agreement in which case the Trust Fund and each Separate Investment Fund shall be valued on the last day of the Plan Year, or on the date specified in Section I- II.C.5(b) of the Adoption Agreement, to be known as Valuation Date. Valuation shall be at fair market value. 7.2 Crediting of Investment Results - Trust Fund Investment results shall be credited in the following manner: First: The Plan Administrator shall determine which Accounts (or portions of Accounts) are eligible to share in the Plan's earnings and appreciation. Any separate investment Funds or Accounts that have been segregated pursuant to Article XIII hereof shall not share in the earnings and appreciation of the Trust Fund. Second: The value of each Account which is to share in the earnings and appreciation of the Trust Fund shall be determined as of the most recent prior Valuation Date, excluding the value of any policies. Third: The value of each Account which is to share in the earnings and appreciation of the Trust Fund shall be adjusted for: (a) the amount of premiums paid, and dividends received on account of any policies maintained on behalf of the Participant; and (b) any withdrawals or distributions made from or additions made to the Account since the most recent previous Valuation Date. Fourth: The adjusted values of all Accounts which are to share in the earnings and appreciation of the Trust Fund shall be aggregated. Fifth: The fair market value of the Trust Fund shall be computed as of the applicable Valuation Date. For this purpose, the cash value of any policies, separate investment funds, and segregated accounts shall not be considered. Sixth: The earnings and appreciation of the Trust Fund shall be determined first by subtracting the value of all items that do not constitute earnings of the Trust Fund (such as advance contributions, withdrawals and transfers) from the fair market value as computed above. Then the difference from the adjusted fair market value of the Trust Fund assets and the aggregate value of the Participant Accounts as determined in the fourth paragraph of this Section 7.2 shall be determined. Said amount shall constitute the earnings and appreciation of the Trust Fund. For this purpose the Plan Administrator may ratably allocate earnings to accounts which contain funds deposited or withdrawn since the last Valuation Date. Seventh: The earnings and appreciation as determined above shall be credited (or debited) to the Accounts which are to share in the earnings and appreciation of the Trust Fund in the ratio that each Account or portion thereof bears to the aggregate value of such Accounts as determined in the fourth paragraph of this Section 7.2. -36- Eighth: The cash value of any Policies held by the Trust Fund and the value of any segregated accounts or separate investment funds shall be reallocated to those Participants' Accounts. 7.3 Crediting of Investment Results - Segregated Accounts/Separate Investment Funds To the extent a segregated account or Separate Investment Fund (including a self-directed account) has been separately invested by the Trustees, all accretions and earnings attributable to said Account since the most recent prior Valuation Date shall be credited (or debited) to said Account less all identifiable separate expenses incurred in the operation of said Account or fund. In the event two or more Participants' Accounts are jointly invested by the Trustees in a segregated Account or Separate Investment Fund, the earnings and appreciation shall be allocated between said Accounts in a manner consistent with allocation of the earnings of the entire Trust Fund as set forth in this Article VII. -37- ARTICLE VIII - BENEFITS PAYABLE UPON RETIREMENT 8.1 Normal and Late Retirement Benefit A Participant who retires on or after his Normal Retirement Date shall be entitled to receive one hundred percent (100%) of his Account as of the Valuation Date coincident with or immediately preceding payment. 8.2 Early Retirement Benefit In the event an Early Retirement Date has been selected in Section II.C.2 of the Adoption Agreement, a Participant who retires on his Early Retirement Date shall be entitled to receive one hundred percent (100%) of his Account as of the Valuation Date coincident with or immediately preceding payment. 8.3 Disability Benefit A Participant who has suffered a Total Disability shall be entitled to receive one hundred percent (100%) of his Account as of the last day of the month coincident with or immediately preceding payment. 8.4 Determination of Total Disability The Plan Administrator shall have the sole authority to determine a Participant's eligibility for a Total Disability and, in its discretion, may require submission of appropriate medical evidence by the Participant as may be necessary to make said determination. 8.5 Eligibility for Post Normal Retirement Age Benefit A Participant who remains in the employ of a Participating Employer after reaching his Normal Retirement Date shall continue to receive an allocation of Employer Contributions to his Account, provided he continues to satisfy the requirements thereof as applicable to all other Participants. 8.6 Employer's Consent It is the intention of each Participating Employer to require its Employees to retire at the earliest age permitted under applicable state and federal age discrimination laws unless consent of the Board of Directors of the Participating Employer is granted in writing. Nothing contained in this Plan shall be construed as granting an Employee the right to remain in the employ of any Participating Employer beyond such time as required by applicable law. -38- ARTICLE IX - BENEFITS PAYABLE UPON DEATH 9.1 Pre-Retirement Death Benefit Upon the death of a Participant, his Spouse or his beneficiary shall be entitled to receive one hundred percent (100%) of his Account as of the Valuation Date immediately preceding payment, including any of the proceeds of any policies which are received by the Trustee on account of the death of said Participant, unless the Participant has previously made an election to receive benefits as a life annuity or any portion of the Participant's Account is attributable to transfer contributions within the meaning of Section 401(a)(11)(B)(ii)(II) of the Code, in which case, the provisions of Sections 9.5 and 9.6 shall apply, in which case, the remaining fifty percent (50%) of his Account shall be paid to his Beneficiary. 9.2 Post-Retirement Death Benefit Upon the death of a former Participant who has retired under the terms of the Plan there shall be no death benefit payable to his Beneficiary except for the balance of payments yet to be made in accordance with a previously selected method of payment by the Participant prior to his death. In the event the Participant has not selected a method of distribution, the benefit payable to his Beneficiary shall be determined as if the benefit were a pre-retirement death benefit as provided in Section 9.1 hereof. 9.3 Death Benefits of Terminated Vested or Terminated Participants There shall be no death benefit payable on account of the death of a terminated Participant who has no vested interests in his Account. The Plan Administrator, however, shall cause a Participant's termination benefit (determined in accordance with Article X hereof) to be payable to his Beneficiary as soon as practicable after his death. 9.4 Beneficiary Designations Subject to the provisions hereof, each Participant shall have the right to designate one or more direct and/or contingent Beneficiaries. Said designation shall not be effective unless it is made on a form provided by the Plan Administrator, duly executed by the Participant and received by the Plan Administrator. A Participant may change his Beneficiary from time to time by executing an amended beneficiary designation form. 9.5 Automatic Spousal Designation Unless the Plan provides for acceptance of transfer contributions within the meaning of Section 401(a)(11)(B)(iii)(III) of the Code or permits payment of benefits as a life annuity (which shall be signified by an affirmative election pursuant to either Section III.F.3., III.F.4. or III.F.5. of the Adoption Agreement) and the Participant does not elect payment of his benefits in the form of a life annuity, the Plan shall pay the Participant's entire Account upon his death to his surviving spouse regardless of any contrary designation of Beneficiaries made by the Participant, provided, however, that the Participant may designate another Beneficiary if such designation complies with the requirements of Section 417(a)(2)(A) of the Code and Article XII, Sections 12.5 and 12.6; hereof. 9.6 Qualified Pre-Retirement Survivor Annuity In the event the Plan provides for acceptance of certain transferred contributions (within the meaning of Section 401(a) (ll)(B)(iii)(III) of the Code) or permits payment of benefits as a life annuity (which shall be signified by an affirmative election pursuant to either Section III.F.3., III.F.4. or III.F.5. of the Adoption Agreement) death benefits which become payable shall be paid as follows: In the case of a transfer contribution, the funds so transferred, including any appreciation, depreciation interest, -39- accretions or declarations or in the case of election of a life annuity payment, the Participant's entire Account, shall be paid the Participant's surviving spouse in the form of a Qualified Pre-Retirement Survivor's Annuity as more particularly set forth in Section 12.5 hereof, regardless of any contrary designation of Beneficiaries made by the Participant, provided, however, that the Participant may designate a Beneficiary other than his spouse or another form of payment if such designation complies with the requirements of Section 417(a)(2)(A) of the Code and Article XII Section 12.5 hereof. 9.7 Failure of Beneficiary Designation In the event that a Participant fails to deliver a properly executed beneficiary designation form to the Plan Administrator or in the event that all the designated Beneficiaries predecease the Participant, the Plan Administrator shall direct the Board of Trustees to pay any benefit due in accordance with this Article according to the following priorities: (a) Surviving spouse; (b) Lineal descendants, per stirpes; (c) Surviving parents; (d) Participant's estate. Each priority class shall share equally among other members of the class but to the exclusion of the members of the subsequent classes. -40- ARTICLE X - BENEFITS PAYABLE UPON TERMINATION 10.1 Employer Contributions A Participant who voluntarily or involuntarily terminates his employment with all Affiliated Employers for any reason other than his Normal or Early Retirement, or by reason of death or disability in accordance with the terms of the Plan, shall be entitled to receive the respective percentages of his Employer Contribution Account (including Matching Contributions) as of the Valuation Date coincident with or immediately preceding the date upon which said benefits become payable, (further adjusted for contributions and withdrawals through the date of payment) in accordance with the respective schedules selected in Section III.E. of the Adoption Agreement. 10.2 Determination of Years of Service for Vesting Purposes For vesting purposes, the term Years of Service shall include all periods of employment with an Affiliated Employer except for the periods specified in Section III.E.3. of the Adoption Agreement but shall include such predecessor service specified in Section II.B.6. of the Adoption Agreement. 10.3 Forfeiture of Non-Vested Benefits After a Participant terminates service and receives a distribution of his vested Account Balance, he shall forfeit the non-vested portion of his Account Balance. Where a Participant who is zero percent vested in his Account balances terminates service, a distribution of his vested Account balance will be deemed and he shall forfeit the non-vested portions of his Account balance. Said forfeited amount shall be reallocated in the manner set forth in Article IV hereof. Notwithstanding the foregoing, a nonvested Participant who incurs less than five (5) consecutive one-year Breaks-in- Service and who subsequently returns to the employ of an Affiliated Employer shall be recredited with any amount forfeited in accordance with Article XII, Section 12.7. 10.4 Accelerated Vesting for Top Heavy Plans In the event a Plan is a Top Heavy Plan during a Plan Year, a Participant's non-forfeitable interest shall be no less favorable than the Top Heavy Vesting Schedule provided in Section III.E.2. of the Adoption Agreement. 10.5 Employee Contributions and Salary Reduction Contributions A Participant shall have a one hundred percent (100%) vested interest, at all times, in his Participant Contribution Account and Salary Reduction Account. This Section 10.5 shall not be construed as permitting or requiring employee contributions. No forfeiture will be deemed to occur solely as a result of an employee's withdrawal of employee contributions. 10.6 Statutory Vesting Requirement Notwithstanding any other provision contained in this Article X, a Participant shall be entitled to a one hundred percent (100%) interest in his Employer Contribution Account upon the attainment of his Normal Retirement Age. 10.7 Amendment of Vesting Schedule (a) Except as may be specifically permitted under law, no amendment of the vesting schedule shall cause a Participant to be deprived of any current portion of his Account. -41- (b) If the vesting schedule of this Plan is directly or indirectly amended by any subsequent amendment, the Plan Administrator may give each Participant who has completed five (5) Years of Service (or three (3) Years of Service for Participants who have completed one (1) or more Hours of Service in a Plan Year beginning after December 31, 1988) an opportunity to have his vested percentage determined without regard to said amendment. Said election shall be in writing and shall be irrevocable. The period during which the election may be made shall commence with the date the amendment is adopted or deemed to be made and shall end on the latest of: (i) 60 days after the amendment is adopted; (ii) 60 days after the amendment becomes effective; or (iii) 60 days after the Participant is issued written notice of the amendment by the Employer or Plan Administrator. (c) In the event that the Plan Administrator does not provide an election as outlined in this Section 10.7(b), it shall be assumed that each Participant who would have been entitled to make such an election shall be deemed to have elected to receive benefits determined in accordance with the vesting schedule which produces the largest non- forfeitable interest on behalf of the Participant at the time it is actually applied. (d) The change from a top heavy to a non-top heavy vesting schedule shall be considered an amendment within the meaning of this Section 10.7. -42- ARTICLE XI - TOP HEAVY PROVISIONS 11.1 Generally Notwithstanding anything contained in the Adoption Agreement or herein to the contrary, if the Plan is a Top Heavy Plan as determined pursuant to Section 416 of the Code for any Plan Year beginning after December 31, 1983, the provisions of Section 11.4 hereof shall automatically become effective and shall supersede any contrary provision of the Plan. 11.2 Determination of Top Heavy Status For purposes of this Article XI: (a) The Plan is a Top Heavy Plan if, as of the Determination Date, the aggregate of the Accounts and individual calculated present values of Accrued Benefits of all Key Employees under the Plan and any other plans in the Aggregation Group exceeds sixty percent (60%) of the aggregate of the Accounts and individually calculated present values of Accrued Benefits of all Employees under the Plan and any other plans in the Aggregation Group, as determined in accordance with the provisions of Section 416(g) of the Code. (b) The Plan is a Super Top Heavy Plan if, as of the Determination Date, the Plan would meet the test specified in Section 11.2, Subsection (a) above for being a Top Heavy Plan if ninety percent (90%) were substituted for sixty percent (60%) in each place it appears. (c) For purposes of the calculations in (a) and (b) above, the following account balances and accrued benefits must be taken into account: (i) If an Affiliated Employer maintains one or more defined contribution plans (including any Simplified Employee Pension Plan) and the Affiliated Employer has not maintained any defined benefit plan which during the 5-year period ending on the determination date(s) has or has had accrued benefits, the account balances of all Key Employees or for all Employees as of the Determination Date(s) (including any part of any account balance distributed in the 5-year period ending on the determination date(s)), both computed in accordance with Section 416 of the Code and the Regulations thereunder, must be respectively increased to reflect any contribution not actually made as of the Determination Date, but which is required to be taken into account on that date under Section 416 of the Code and the Regulations thereunder. (ii) If the Affiliated Employer maintains one or more defined contribution plans (including any Simplified Employee Pension Plan) and the Affiliated Employer maintains or has maintained one or more defined benefit plans which during the 5-year period ending on the Determination Date(s) has or has had any accrued benefits, the sum of account balances under the aggregated defined contribution plan or plans for all Key Employees, determined in accordance with (i) above, and the present value of accrued benefits under the aggregated defined benefit plan or plans for all Key Employees or for all Employees as of the Determination Date(s), all determined in accordance with Section 416 of the Code and the Regulations thereunder must be respectively increased for any distribution of an accrued benefit made in the five-year period ending on the determination date. (iii) For purposes of (i) and (ii) above the value of account balances and the present value of accrued benefits will be determined as of the most recent valuation date that falls within or ends with the 12-month period ending on the determination date, except as provided in Section 416 of the Code and the Regulations thereunder for the first and -43- second Plan Years of a defined benefit plan. The account balances and accrued benefits of a participant (1) who is not a Key Employee but who was a Key Employee in a prior year, or (2) who has not been credited with at least one hour of service with any Affiliated Employer maintaining the Plan at any time during the 5-year period ending on the Determination Date will be disregarded. The calculation under (a) and (b), and the extent to which distributions, rollovers, and transfers are taken into account will be made in accordance with Section 416 of the Code and the Regulations thereunder. Deductible Employee Contributions will not be taken into account for purposes of the calculations in (a) and (b) above. When aggregating plans the value of account balances and accrued benefits will be calculated with reference to the Determination Dates that fall within the same calendar year. The accrued benefit of a participant other than a Key Employee shall be determined under the uniform accrual method for all plans maintained by the Affiliated Employer, or if no such method exists, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional rule of Section 411(b)(1)(C) of the Code. 11.3 Top Heavy Rules and Definitions (a) The determination of whether the Plan is a Top Heavy Plan shall be made after aggregating all other plans of all Affiliated Employers which may be aggregated at the discretion of the Plan Administrator pursuant to Section 416(g)(2)(A)(ii) of the Code if such permissive Aggregation Group thereby eliminates the top heavy status of any plan within such permissive Aggregation Group. (b) For purposes of determining whether the Plan is a Top Heavy Plan for a particular Plan Year, the Determination Date is the last day of the preceding Plan Year (or, in the case of the first Plan Year of a Plan, the last day of the first Plan Year). (c) For purposes of determining whether the Plan is a Top Heavy Plan, Key Employee shall mean any Employee or Former Employee (including a Beneficiary of such Employee) who at any time during the Plan Year containing the Determination Date or any of the four (4) preceding Plan Years is: (i) An officer of the Employer or any Affiliated Employer with 415 Compensation in excess of one-half (1/2) times the dollar limit on Annual Additions to a qualified defined benefit plan as announced by the Secretary of the Treasury pursuant to Section 415(b)(1)(A) of the Code. In no event shall more than fifty (50) Employees or, if less, the greater of three (3) or ten percent (10%) of all Employees be treated as Key Employees under this Subsection; (ii) One of the ten (10) Employees with 415 Compensation in excess of the dollar limit on Annual Additions to a qualified defined contribution plan as announced by the Secretary of the Treasury pursuant to Section 415(c)(1)(A) and owning the largest interest of the Employer or any Affiliated Employer, provided, however, that if two (2) Employees have the same interest in the Employer, the Employee having the greater 415 Compensation from the Employer shall be treated as having a larger interest; (iii) An Employee owning more than five percent (5%) of the outstanding stock of the Employer or any Affiliated Employer or stock possessing more than five percent (5%) of the total combined voting power of all stock of the Employer or any Affiliated Employer; or (iv) A person with 415 Compensation from the Employer or any Affiliated Employer of more than one hundred fifty thousand dollars ($150,000) and owning one percent -44- (1%) or more of the outstanding stock of the Employer or any Affiliated Employer or stock possessing more than one percent (1%) of the total combined voting power of all stock of the Employer or any Affiliated Employer. (v) For purposes of (i) and (iv) 415 Compensation shall include amounts contributed by the Affiliated Employer pursuant to a salary reduction agreement which are excludable from the Employee's gross income under Section 125, Section 402(a)(8), Section 402(h) or Section 403(b) of the Code. (d) For purposes of determining the percentage of ownership of the Employer and any Affiliated Employer, the constructive ownership rules of Section 416(i)(1)(B) and (C) and Section 318 of the Code shall be applicable and the rules of Sections 414(b), (c) and (m) shall not be applicable. (e) For purposes of determining whether the Plan is a Top Heavy Plan, Non- Key Employee shall mean any Employee (including a Beneficiary of such Employee) who is not a Key Employee. (f) For purposes of determining whether the Plan is a Top Heavy Plan, the accrued benefit and the account of any individual who has not received any compensation from any Employer maintaining the Plan (other than benefits under the Plan) during the five (5) year period ending on the Determination Date shall not be taken into account. (g) Present values of accrued benefits of any defined benefit plan maintained by any Affiliated Employer shall be calculated in accordance with the election specified in Section III.C.7. of the Adoption Agreement. 11.4 Top Heavy Requirements (a) Minimum Vesting Requirements A Participant will have a fully-vested interest in Employer Contributions according to the top heavy vesting schedule set forth in Section III.E.2. of the Adoption Agreement. (b) Minimum Contribution Requirements The minimum Employer Contribution which shall be made on behalf of any Participant who is a Non-Key Employee and shall be made on behalf of all Participants if so elected in Section III.C.12. of the Adoption Agreement for any Plan Year in which the Plan is a Top Heavy Plan shall not be less than three percent (3%) of such Participant's 415 Compensation, regardless of whether the Participant was credited with one thousand (1000) Hours of Service. The minimum contribution requirements set forth hereinabove shall be reduced in the following circumstances: (i) The percentage minimum contribution required hereunder shall in no event exceed the percentage contribution made for the Key Employee for whom such percentage is the highest for the Plan Year after taking into account contributions or benefits under other qualified plans in this Plan's Aggregation Group as provided pursuant to Section 416(c)(2)(B)(ii) of the Code; and (ii) In the event a Non-Key Employee also participates in a defined benefit plan maintained by an Affiliated Employer, a minimum contribution of five percent (5%) of his 415 Compensation shall be contributed on his behalf unless: (i) this Plan is ever frozen in which case such defined benefit plan shall provide required minimum accruals under Code Section 416; or -45- (ii) if the Plan Administrator makes an affirmative election to provide an alternate method in which case either: (A) In accordance with Section III.C.8 of the Adoption Agreement contributions hereunder shall be comparable (within the meaning of Rev. Rul. 81-202 or any subsequent pronouncement which modifies or supersedes it) to the required minimum accruals in the defined benefit plan; or (B) the minimum benefit provided under such defined benefit plan shall be offset by contributions hereunder, in accordance with actuarial assumptions specified in such defined benefit plan. (iii) the Participating Employer has provided in the Adoption Agreement that the minimum allocation or benefit will be met in the other plan or plans. (c) Maximum Compensation Limitation The Compensation of each Participant under the Plan for such Plan Year shall not exceed the first two hundred thousand dollars ($200,000) of such Participant's Compensation, provided, however, that such dollar limitation shall be adjusted to take into account any adjustments made by the Secretary of the Treasury pursuant to Section 415(d) of the Code. The rules of Section 414(q)(6) of the Code shall apply except for purposes of determining Compensation treated as Compensation of a Participant, only Compensation paid to the Spouse and lineal descendants of the participants (who have not attained age 19 before the close of the year) shall be considered. This limitation - does not apply for purposes of applying Section 415(e) in Section 6.7 of the Plan under One Point Four/One Point Two Five Limitations. (d) Adjustments to Maximum Benefit Limitations The maximum contribution allocatable to the Account of a Participant shall be adjusted in accordance with Article VI, Section 6.9 hereof. -46- ARTICLE XII - FORM AND MANNER OF BENEFIT DISTRIBUTIONS 12.1 Standard Form of Distribution Where the Plan does not provide benefits in the form of a life annuity, the Participant does not elect payment in the form of a life annuity and no portion of the Participant's Account Balance is attributable to transfer contributions within the meaning of Section 401(a)(11)(B)(iii)(II) of the Code, the standard form of distribution shall be a single lump sum payment of a Participant's entire vested interest in the Trust Fund. If the Participant dies before distribution, the Participant's Account Balance will be paid to the Participant's Spouse but if there is no Spouse or the Spouse cannot be located or the Spouse has consented in a manner consistent with Section 12.5 or 12.6 after receipt of Notice under Section 12.5(d) or Section 12.6(d), then to the Participant's designated Beneficiary. In all other instances, the standard form of distribution shall be in the form of a Qualified Joint and Survivor Annuity or a Qualified Pre-retirement Survivor Annuity. 12.2 Optional Forms of Benefit Payments (a) Generally Subject to the requirements of Section 12.5 and Section 12.6 hereof, a Participant or Beneficiary shall be permitted to receive benefits in an alternate form as selected in Section III.F. of the Adoption Agreement, subject to any regulations set forth by the Plan Administrator. (b) Options Permitted Subject to the requirements of Section 12.5 and 12.6, the following options shall be permitted if so designated in the Adoption Agreement: (i) periodic payments of substantially equal amounts for a period which does not exceed the Participant's and/or the designated Beneficiary's life expectancy; (ii) a lump sum payment which may include policies in lieu of cash; (iii) a Qualified Joint and Survivor Annuity; (iv) a monthly annuity for the Participant's life; (v) a monthly annuity for the Participant's life, with a fixed number of guaranteed payments; (vi) a monthly annuity for the Participant's life with a survivorship pension to the Participant's Beneficiary; (vii) a combination of currently available forms of payment. (c) Options Not Permitted The following payment options shall not be permitted by the Plan Administrator: (i) an option which permits a Participant or Beneficiary to receive only interest earned on the value of his Account ("interest only" option); -47- (ii) for calendar years beginning before January 1, 1989, where the Participant's Spouse is not designated as beneficiary or contingent annuitant, any option under which more than fifty percent (50%) of the actuarial value (determined as of the date benefits commence) is paid to a person other than the Participant. 12.3 Statutory Restriction on Lump Sum Payments Where an Account is immediately distributable, no lump sum payment in excess of (or which at the time of any prior distribution exceeded) three thousand five hundred dollars ($3,500.00), including Participant contributions, shall be made to a Participant without his consent, and if the Plan provides for payment of annuities or the Account includes transfer contributions under Section 401(a)(ii)(B)(iii)(II), the consent of his Spouse. Consent of the Participant and Spouse shall be made in accordance with Section 12.6. In addition, the Plan Administrator must notify the Participant and Spouse of the right to defer payment until the Account Balance is no longer immediately distributable. Notwithstanding the above, consent shall not be required to the extent a distribution is necessary to satisfy Section 401(a)(9) or Section 415 of the Code or is distributed to the Participant or transferred to another deferred contribution plan other than a Section 4975(e) (employee stock ownership plan) of an Affiliated Employer where the Plan is terminated and does not offer an annuity option (purchased from a commercial provider). An Account Balance is immediately distributable if any part of the Account Balance could be distributed before the participant attains or would have attained the later of Normal Retirement Age or age 62. The requirements of consent to distributions made before the first day of the first Plan Year beginning after December 31, 1988, do not apply to the portion of the Participants vested Account balance attributable to accumulated deductible Employee Contributions. 12.4 Commencement of Benefit Payments (a) Upon the Participant's Death (i) Generally- Death Benefits - Benefit payments pursuant to Article IX hereof shall commence as soon as practicable after the Participant's death but may be deferred upon the request of a beneficiary. (ii) Generally - Retirement and Termination Benefits - The Plan Administrator, may accelerate the payment of any other form of retirement or termination benefit in the event of a Participant's death. (iii) Minimum Required Distributions (A) Death before Commencement of Benefits - In the event a Participant dies on or after the first day of the Plan Year beginning after December 31, 1984, but before commencement of benefits hereunder, his entire beneficial interest in the Plan must be distributed by the December 31st coincident or next following the fifth (5th) anniversary of the date of his death, except: (1) Spousal Beneficiary - if the Participant's designated Beneficiary is the Participant's surviving spouse, any remaining portion of such interest shall be distributed to the surviving spouse; (a) beginning no later than the later of 1) December 31 coincident with or next following the date on which the Participant would have attained age seventy and one- half (70-1/2) or 2) December 31 of the -48- calendar year immediately following the calendar year in which the Employee died; and (b) payable over the life of such surviving spouse for a period not extending beyond the life expectancy of such surviving spouse. If such surviving spouse dies prior to receiving a distribution pursuant to this Subsection 12.4(a)(iii)(A) such surviving spouse shall be treated as if he or she were the Participant for purposes of distributing the Participant's remaining interest under the Plan. (2) Non-Spousal Beneficiary - if the Participant's designated Beneficiary is not the Participant's surviving spouse, any remaining portion of such interest shall be distributed: (a) beginning no later than the December 31 coincident with or next following the one (I) year anniversary of the Participant's death; and (b) payable over the life of such designated Beneficiary or over a period not extending beyond the life expectancy of such Beneficiary. (B) Death after Commencement of Benefits - In the event a Participant dies after the commencement of benefits has begun and before his entire interest has been distributed to him, the remaining portion of such interest shall be distributed at least as rapidly as under the method of distribution being used as of the date of death. (b) Retirement, Disability and Termination Benefits (i) Earliest Commencement Date - Except in the case of a Hardship Withdrawal as may be provided in this Article XII, payment of retirement, disability or termination benefits shall not commence prior to a Participant's termination of employment with all Affiliated Employers, or retirement. (ii) Latest Commencement Date - Subject to the provisions of Subsections (b)(iv) and (b)(v) hereof, payment of benefits may not commence later than the sixtieth (60th) day after the latest of the close of the Plan Year following: (A) The date the Participant reaches his Normal Retirement Date or attains Age sixty-five (65), whichever shall first occur; or (B) The fifth (5th) anniversary of the date in which the Participant commenced participation in the Plan; or (C) The date the Participant terminates employment with all Affiliated Employers; or the Participant and/or his Spouse fail to consent to a distribution of a benefit requiring such consent unless the Participant elects otherwise. Notwithstanding the foregoing, the failure of a Participant and Spouse to consent to a distribution while a benefit is immediately distributable, within the meaning of Section 12.3 of the Plan, shall be deemed to be an election to defer commencement of payment of any benefit sufficient to satisfy this Section. (iii) Early Retirement Commencement Date - Notwithstanding any other provision in this Section 12.4 -49- to the contrary, a Participant who has met the service requirement in order to entitle him to satisfy the provisions for an Early Retirement Benefit, if any has been selected pursuant to Section II.C.2. of the Adoption Agreement, shall be entitled to commencement of his benefits not later than the date upon which he satisfies the age requirement for such Early Retirement (as provided in Section II.C.2 of the Adoption Agreement) despite the fact that he may have terminated his employment prior to attainment of such age requirement. (iv) Minimum Required Distributions - Except as provided in Subsections (C) and (D) hereof, the entire interest of a participant who commences participation after the Plan Year beginning December 31, 1984 shall be distributed to him either: (A) by a time not later than the Required Beginning Date; or (B) commencing not later than the Required Beginning Date and continuing over a period not extending beyond the life expectancy of such Participant or the joint life expectancies of such Participant and his designated Beneficiary as of the date his benefits commence, consisting of an amount not less than the quotient obtained by dividing the value of the Participant's Account by the applicable life expectancy; provided that the second payment shall be made within the same calendar year as payments commence, and succeeding payments be made before December 31 of each succeeding year. (C) For calendar years beginning after December 31, 1988, similar distributions shall not be less than the quotient obtained by dividing the value of the Participant's Account by the lesser of: (1) the Participants life expectancy; or (2) the life expectancy of the Participant and his spouse, where such life expectancies are determined by use of the expected return multiples set forth in Tables V and VI of Treasury Regulation 1.72-9 which shall be recalculated annually. (D) Notwithstanding the above, any Participant (including a five percent (5%) owner (within the meaning of Section 416 (i) of the Code) who made a written deferral election under Section 242(b) of the Tax Equity and Fiscal Responsibility Act of 1982 shall be entitled to receive his distribution in accordance with the method of distribution specified in such election provided that the method of distribution complies with the Code Section 401(a)(9) in effect prior to amendment by the Deficit Reduction Act of 1984. (E) The additional requirements of Section 401(a)(9) of the Code and the Regulations thereunder including the minimum distribution incidental benefit requirement of Section 401(a)(9) - 2 of the Proposed Treasury Regulations are incorporated into the Plan by reference and will govern distribution of benefits hereunder. The provisions reflecting Section 401(a)(9) of the Code override any distribution options in the Plan inconsistent with Section 401 (a)(9). -50- (v) Plan Administrator's Discretion - Subject to the requirements set forth in this Section 12.4, the time which benefit payments are to commence shall be determined by the Plan Administrator, to be applied on a uniform basis. The Plan Administrator shall be entitled to accelerate payments if it determines that such acceleration is necessary to comply with Section 401(a)(9) of the Code, the Regulations thereunder and Section 12.6 hereof. The Plan Administrator, at its discretion, may issue administrative regulations from time to time to govern the application of this Section 12.4. 12.5 Qualified Pre-Retirement Survivor Annuity (a) Notwithstanding the provisions of Sections 12.1 and 12.2 hereof, in the event a Participant (who has elected to receive benefits in the form of a life annuity) dies before the Annuity Starting Date, his benefit shall be paid in the form of a Qualified Pre-retirement Survivor Annuity unless he elects out of that form of benefit and his Spouse has consented thereto; (b) The entire vested portion of a Participant's Account (whether vested before or at death) attributable to Employer and Employee contributions, rollover contributions, proceeds of life insurance contracts or transfer contributions within the meaning of Code Section 401(a) (Il)(B)(iii)(III) shall be paid as specified in Subsection (a) above; (c) The portion of a Participant's account otherwise subject to (a) and (b) above shall be reduced by any amounts used to repay the Participant's loans to which spousal consent was obtained; (d) A waiver of the Qualified Pre-retirement Survivor Annuity form of benefit (in favor of an alternate form or beneficiary) must be made in writing on forms provided by the Plan Administrator after the Participant receives notice under Section 12.5(f), must be signed by the Participant and his Spouse and must be witnessed by a notary public or plan representative. The waiver must designate the specific beneficiary or class of beneficiaries and the form of benefit payment which may not be changed without spousal consent unless the Spouse expressly permits later changes without further consent. The Spouse's consent must acknowledge the effect of the election and shall be valid only with respect to such Spouse. Where it is established that there is no Spouse or that the Spouse cannot be located, a waiver of the benefit will be deemed a revocation of a prior waiver and may be made by a Participant without consent of the Spouse at any time prior to the commencement of benefits. The number of revocations is unlimited. (e) The election period with regard to elections and spousal consent shall commence on the first day of the Plan Year in which the Participant attains age thirty-five (35) and ends on the date of the Participant's death. If a Participant separates from the service of an Employer prior to the first day of the Plan Year in which he attains age thirty-five (35), with respect to benefits accrued prior to separation, the election period shall begin on the date of separation and the notice required under Section 12.5(f) below shall begin not earlier than one year before separation nor later than one year after separation. Pre-age 35 waiver: A Participant who will not yet attain age 35 as of the end of any current Plan Year may make a special qualified election to waive the Qualified Pre-retirement Survivor Annuity for the period beginning on the date of such election and ending on the first day of the Plan Year in which the Participant will attain age 35. Such election shall not be valid unless the Participant receives a written explanation of the Qualified Pre-retirement Survivor Annuity in such terms as are comparable to the explanation required under Section 12.5(f). Qualified Pre-retirement Survivor Annuity coverage will be automatically reinstated as of the first day of the Plan Year in which the Participant attains age 35. Any new waiver on or after such date shall be subject to the full requirements of this Article. -51- (f) The Plan Administrator shall provide each Participant with the following written information by mail or personal delivery before the latest of: the period beginning with the first day of the Plan Year in which the Participant attains age 32 and ending with the close of the Plan Year in which the Participant attains age thirty-five (35); a reasonable period after a Participant enters the Plan (but not earlier than one year before nor later than one year after the Participant enters the Plan); or a reasonable time after the survivor benefit provisions of this Section become applicable to the Participant (but not earlier than one year before nor later than one year after the provisions of this Section become applicable). Notwithstanding the above, notice must be provided within a reasonable period ending after separation from service in the case of a Participant who separates from service before attaining age 35. Such notice shall contain: (i) a non-technical description of a Qualified Pre-retirement Survivor Annuity; (ii) the Participant's right to make and the effect of an election to waive the Qualified Pre-retirement Survivor Annuity form of benefit; (iii) the rights of a Participant's Spouse; and (iv) the right to make, and the effect of, a revocation of a previous election to waive the Qualified Pre-retirement Survivor Annuity. 12.6 Qualified Joint and Survivor Annuities (a) Notwithstanding the provisions of Sections 12.1 and 12.2 hereof, in the event a Participant elects payment of benefits in the form of a life annuity, said benefit shall be paid as a Qualified Joint and Survivor Annuity, unless an optional form is elected within the ninety (90) day period ending on the Annuity Starting Date. The Participant may elect to have such annuity distributed upon attainment of the earliest retirement age under the Plan. (b) Any portion of Participant's account attributable to transfer contributions within the meaning of Section 401(a)(11)(B)(iii)(III) shall be paid as specified in Subsection (a) above. (c) A waiver of a Qualified Joint and Survivor Annuity (in favor of an alternate form or beneficiary) must be made in writing on forms provided by the Plan Administrator after the Participant receives notice under Section 12.6(d), must be signed by the Participant and his Spouse and must be witnessed by a notary public or plan representative. The waiver must designate the specific beneficiary or class of beneficiaries and the form of benefit payment which may not be changed without spousal consent unless the Spouse expressly permits later changes without further consent. The Spouse's consent must acknowledge the effect of the election and shall be valid only with respect to such Spouse. Where it is established that there is no Spouse or that the Spouse cannot be located, a waiver of the benefit will be deemed a revocation of a prior waiver, such waiver may be made by a Participant without consent of the Spouse at any time prior to the commencement of benefits. The number of revocations is unlimited. (d) The Plan administrator shall provide each Participant with the following written information by mail or personal delivery no less than thirty (30) days and no more than the ninety (90) day period provided in Subsection (a) hereof: (i) a non-technical description of a Qualified Joint and Survivor Annuity; (ii) the Participant's right to make and the effect of an election to waive the Qualified Joint and Survivor Annuity; (iii) the rights of a Participant's Spouse; and -52- (iv) the right to make, and the effect of, a revocation of a previous election to waive the Qualified Joint and Survivor Annuity. (e) If a distribution is one to which sections 401 (a)(11) and 417 of the Internal Revenue Code do not apply, such distribution may commence less than 30 days after the notice required under section 1.411(a)- 11(c) of the Income Tax Regulations is given, provided that: (1) the plan administrator clearly informs that the participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option), and (2) the participant, after receiving the notice, affirmatively elects a distribution. 12.7 Payments Prior to Breaks-ln-Service (a) Forfeitures Immediately as of the last day of each Plan Year - If the employer elects to provide that after a distribution or deemed distribution, forfeitures shall be reallocated immediately as of the last day of each Plan Year pursuant to Section III.I.2. of the Adoption Agreement and in accordance with Article VI hereof, the following provision shall apply: In the event a Participant receives a payment of the entire vested portion of his Employer Contribution Account, the non-vested portion will be treated as a forfeiture. For purposes of this Section, if the value of a Participant's vested Employer Contribution Account is zero, he shall be deemed to have received a distribution of such vested Employer Contribution Account. If the Participant elects to have distributed in accordance with the requirements of Section 12.3 less than the entire vested portion of his Employer Contribution Account, the part of the nonvested portion that will be treated as a forfeiture to be reallocated is the total nonvested portion multiplied by a fraction, the numerator of which is the amount of the distribution and the denominator is the total value of the vested Employer Contribution Account. As of the Plan Year following a number of years of consecutive one-year Breaks If the Employer elects to provide that after a distribution or deemed distribution, forfeitures shall be reallocated as of the last day of each Plan Year following a number of years of consecutive one-year Breaks-in- Service pursuant to Section III.I.3. of the Adoption Agreement, the following provision shall apply: In the event a Participant receives a payment of all or part of his Employer Contribution Account at a time when he is less than one hundred percent (100%) vested in said Employer Contribution Account, the amount in excess of his vested percentage shall be allocated to a separate account until the Participant incurs the Breaks-in-Service selected in the Adoption Agreement at which time said forfeited amount shall be reallocated in accordance with Article VI hereof. The separate account will be established for the Participant's interest in the Plan as of the time of the distribution, and at any relevant time the Participant's nonforfeitable portion of the separate account will be equal to an amount ("X") determined by the formula: X = P(AB + (R x D)) - (R x D) -53- For purposes of applying the formula: P is the nonforfeitable percentage at the relevant time, AB is the Account balance at the relevant time, D is the amount of the distribution, and R is the ratio of the Account balance at the relevant time to the Account balance after distribution. (b) Return to Employment In the event a Participant who receives a distribution as provided in Subsection (a) above returns to the employ of an Affiliated Employer prior to incurring five (5) consecutive one-year Breaks-In-Service, said Participant shall be entitled to have his Employer Contribution Account restored to the amount prior to his distribution, less the amount of the distribution. (c) Determination of Vested Amount After Prior Distribution In the event any Participant who has received a distribution at any time prior to five (5) consecutive one-year Breaks-In-Service shall subsequently incur five (5) consecutive one-year Breaks-In-Service, the amount distributed from his Account shall not be less than the difference between: (i) the product of: (A) his current vested percentage, and (B) the sum of the amount of the Participant's Account and the amount of the prior distribution; and (ii) the amount of the previous distribution. 12.8 Payments Pursuant to Qualified Domestic Relations Orders Upon receipt of any court order relating to the benefit payable to a Participant hereunder, the Plan Administrator shall: a) notify the Participant and the Alternate Payee(s) of the receipt of such order and the Plan's procedures for determining the qualified status of such order; and b) segregate in a separate account in the Plan or in an escrow account the amount payable to the Alternate Payee(s) pursuant to such order. Within eighteen (18) months of receipt of such order, the Plan Administrator shall determine whether the order is a Qualified Domestic Relations Order, pursuant to written administrative procedures adopted in accordance with Sections 414(p)(6) and (7) of the Code. If such order is a Qualified Domestic Relations Order, the Plan Administrator shall pay the segregated amount plus interest to the Alternate Payee(s) entitled thereto in the manner required by such Qualified Domestic Relations Order. 12.9 Hardship Withdrawal (a) If Section IV.B.2., IV.B.3. or IV.B.4. of the Adoption Agreement has been selected by the Employer, the Plan Administrator, in its sole discretion, may permit a Participant to withdraw a portion of his Employer Account or Salary Reduction Account for the purpose of enabling the Participant to meet an unusual hardship or financial emergency such as, but not limited to: (1) withdrawals from the Salary Reduction Account portion of the Employer Account in Plans Years beginning before December 31, 1988, and withdrawals commencing from the Non-Matching Employer Contribution portion of Employer Account in any Plan Year, -54- (i) accident or illness, (ii) purchase or preservation of a house, and/or (iii) educational expenses; and (2) for withdrawals from the Salary Reduction Account for Plans Years beginning after December 31, 1988, the following are the only financial needs considered immediate and heavy: (i) expenses incurred or necessary for medical care, described in I.R.C. Section 213(d) of the employee, employee's spouse or dependents, (ii) payment of tuition and related educational fees for the next 12 months of post-secondary education for the employee, the employee's spouse, children or dependents, (iii) the purchase (excluding mortgage payments) of a principal residence for the employee, or (iv) the need to prevent the eviction of the employee from, or a foreclosure on the mortgage of, the employee's principal residence. (b) The Plan Administrator shall permit Hardship Withdrawals only after the Participant has withdrawn his entire Participant Contribution Account and the maximum permitted amount of his Salary Reduction Account. To be eligible for a Hardship Withdrawal under Article 12.9(a)(2), the Participant must have an immediate and heavy financial need and must lack other available resources. Such hardship distributions are subject to the spousal consent requirements of Section 401(a)(11) and 417 of the Code and may not exceed the amount of an immediate and heavy financial need (including amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from distributions). (c) Withdrawals shall be limited to the greater of the vested portion or the non-integrated portion of his Employer Contribution Account. Withdrawals from the Salary Reduction Account may not include that portion of the account attributable to earnings and accretions accrued after December 31, 1988. (d) A Participant may not make Elective Deferrals or Employee Contributions to this or any other Plan of the Employer for a period of twelve months after the receipt of the hardship distribution. (e) A Participant may not make Elective Deferrals to this or any other Plan of the Employer for the taxable year of the Employee immediately following the year of the hardship distribution in excess of $7,000 (as adjusted pursuant to Sections 402(g) of the Code) less the amount of Elective Deferrals for the taxable year of the hardship distribution. -55- ARTICLE XIII - TRUST PROVISIONS 13.1 Establishment of Trust (a) Appointment of Trustees The Trustees shall consist of one (I) or more individuals, partnerships, corporations or combination thereof as chosen by the Employer in Section I.B.6. of the Adoption Agreement. The Employer may change the number of said group at any time. The Trustees shall be Named Fiduciaries for the purpose of managing the Trust Fund for - purposes of Section 402(a)(1) of ERISA. (b) Acceptance of Trust Each Trustee hereby accepts the Trust created hereunder and agrees to perform the duties on his part to be performed pursuant to this Plan and Trust. (c) Corpus of the Trust Fund The Trustees shall receive any contributions paid to them in cash or in other property presently acceptable to them. All contributions so received together with any earnings, profits, increments, additions thereto and appreciation thereon, less any disbursements authorized herein shall constitute and be called the Trust Fund. (d) Control of Trust Fund The Trustees shall take control and manage the Trust Fund and shall hold, invest, and reinvest the same together with the income thereof. All contributions received by the Trustees in accordance with the terms of the Plan and the earnings and accretions thereto, without distinction between income and principal, shall constitute and shall be held and administered as a single fund and the Trustees shall not be required to segregate or invest separately any share of any Participant's account except as otherwise required by the Plan but may do so in accordance with this Section. (e) Title to Trust Assets The Trustees shall have title to the assets of the Trust Fund. The Employer shall have no right, title, interest or claim to said Trust Fund except as permitted under the terms of Article IV, Sections 4.4 and 4.5 hereof. (f) Segregated Accounts, Separate Investment Funds and Annuities The Trust Fund shall be deemed to also include such segregated accounts, Separate Investment Funds or annuity contracts or policies which may be purchased by the Trustees for the purpose of providing benefits to a Participant, Beneficiary or group thereof, notwithstanding the fact that such segregated account may not share in the earnings, profits, increments or appreciation of the balance of the Trust Fund. 13.2 Rights, Duties and obligations of the Trustees (a) Manner of Acting The Trustees, except when there is a single Trustee, shall exercise any discretion or authority granted hereunder through a majority of its members in office at the time. Such exercise may be by a vote at a meeting or in writing without a meeting. -56- (b) Non-Disqualification of Interested Parses A Participant, Beneficiary, or person who is otherwise interested in the Trust Fund shall not be disqualified from voting or acting upon any matter relating to this Trust Agreement. The power of the Trustees or any member thereof to act hereunder shall not be restricted, and no transaction or decision involving this Trust Fund shall be deemed invalidated in any way by reason of any personal or beneficial interest in the Trust Fund that any Trustee may have with respect to such transaction or decision, including any sale or exchange of trust property to or with any Trustee in another capacity, including another corporation, partnership or other business in which they, or any of them, may have a personal interest as stockholder, officer, director, partner or otherwise, regardless of any conflict of interest, provided, however, that nothing herein contained shall permit the Trustees or any Trustee to engage in any activity which would constitute a "prohibited transaction" within the meaning of Part 4 of Title I of ERISA or Section 4975 of the Code. (c) Standard of Care The Trustees shall discharge their duties with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, and shall diversify the investments of the Trust Fund so as to minimize the risk of large losses unless, under the circumstances, it is clearly not prudent to do so. (d) Compensation and Expenses The Trustees shall not be compensated for their services as such unless otherwise agreed by said Trustees and the Employer in writing. Said compensation, if any, may be paid by the Employer and to the extent not paid by the Employer shall be payable as an expense from the Trust Fund. All expenses reasonably incurred by the Trustees in connection with the performance of their duties and in respect of the assets or operations of the Trust Fund including, but not limited to, taxes of any nature, fees, salaries, compensation, counsel and accounting fees may be paid by the Employer. To the extent not paid by the Employer, said expenses shall be paid from the Trust Fund as expenses thereof. (e) Liability of the Board of Trustees (i) Reliance on other Fiduciaries - The Trustees shall not be answerable nor incur any liability for any action taken pursuant to any written direction or request from the Plan Administrator or the Employer. Evidence of action with regard to the Plan shall be by resolution of the Board of Directors certified by the Secretary or Assistant Secretary of the Employer, or resolution of a majority of the members of the group constituting the Plan Administrator as the case may be. The Trustees shall be fully protected in acting upon any resolution, certificate, or paper believed by it to be genuine and to be signed or presented by the proper person or persons and the Trustees shall be under no duty to make investigation or inquiry as to any statement contained in any such writing but may accept the same as conclusive evidence of the truth and accuracy of the statements contained therein. (ii) Reliance on Delegates - Either the Employer or the Plan Administrator may duly authorize a delegate to make determinations or perform actions, either specifically or generally, in this regard. Upon the appointment of a delegate by either the Employer or the Plan Administrator, the Trustees shall be fully -57- protected in assuming that said delegate is duly authorized in acting, unless otherwise informed by the Employer or Plan Administrator. (iii) Liability of Successor - No successor Trustee shall be held liable or accountable in any manner for the acts of its predecessor or predecessors. (iv) Responsibility for Adequacy of Trust Fund - No Trustee shall be responsible for the adequacy of the Trust Fund to meet and discharge any payments or liabilities under the Plan or for any loss, damage or depreciation of the Trust Fund in connection with its exercise of discretion hereunder, except when due to its own breach of trust committed in bad faith or intentionally or with reckless indifference to the interest of Participants and Beneficiaries or in violation of the fiduciary standards as set forth in Part 4 of Title I of ERISA or Section 4975 of the Code. (f) Indemnification of the Trustees Each Trustee shall be indemnified by the Employer for all costs, expenses, including attorneys' fees, claims or liability actually and necessarily incurred in connection with any claims or litigation by reason of the Trustees having followed written instructions of the Employer or the Plan Administrator. No such indemnification shall apply where litigation is occasioned by the fault of the Trustees, or is in connection with a violation of ERISA, and any subsequent statutes of similar purpose. Any such indemnification shall apply only after full recovery has been made under any insurance contract protecting the Trustees with respect to each litigation and in no event exceed the difference between the costs, expenses and liability determined by such litigation and the amounts payable by such insurance, had this provision not been in effect. (g) Resignation or Removal of Trustees (i) The Trustees and each Trustee shall serve until death, resignation or removal by the Employer. (ii) Any Trustee may resign upon written notice to the Employer or be removed by delivery of a certified copy of a resolution of the Board of Directors to that effect. (iii) Said removal or resignation shall be effective sixty (60) days from the date of delivery of such written notice or resolution unless a different time is specified by the Employer. (iv) The Employer may remove any Trustee and fill vacancies however arising at its pleasure except there shall be at least one Trustee at all times. Appointment of successor Trustees shall take effect upon delivery to the Trustees (and the removed members thereof) of an instrument so appointing the successor(s) and an instrument of acceptance executed by such successor(s). (v) Any successor Trustee shall become vested with all funds, powers, rights, duties, obligations, privileges and immunities as the Trustees have hereunder as if it had been originally appointed. (vi) In the event there are no remaining Trustees for whatever reason and the Employer fails to appoint successor Trustees within thirty (30) days after the effective date of the resignation or removal or death or incapacity of all of the Trustees, any court of competent jurisdiction of the state under whose law the Plan is to be construed may, -58- while such failure continues, appoint successor Trustees upon application therefore by any Participant or Beneficiary hereunder, or by any removed Trustees. 13.3 Investment of the Trust Fund (a) Authority of Trustees The Trustees shall have full authority and responsibility for investment of the Trust Fund, subject to the limitations set forth herein. (b) Investment Powers of the Trustees The Trustees in investing the Trust Fund shall not be restricted to securities commonly known as legal investments for trust funds, regardless of any statutes or rules of law limiting the investments of trustees or trust funds. The Trustees shall have the same power to invest funds as any individual of full legal competence has with regard to his own funds, including the right to deal with the Employer, provided, however, that nothing herein shall permit any Trustee to engage in any activity which would constitute a "prohibited transaction" within the meaning of Part 4 of Title I of ERISA or Section 4975 of the Code. Without limiting the generality of the foregoing, the Trustees at such times, places and prices and under such terms, conditions and circumstances (including public and private sales and transactions) as in its discretion they deem advisable may, subject to the restrictions referred to above, but shall not be required: (i) To buy, sell, sell short, purchase on margin, exchange, pledge, encumber, and otherwise acquire, dispose of, trade and deal in secured and unsecured bonds and notes (whether unmatured, due, past due, or defaulted), common and preferred, voting and nonvoting stock (regardless of dividend or earnings record), warrants, options, puts, calls, straddles, spreads, voting trust certificates, equipment trust and receivers certificates, fractional oil and gas and mineral interests, timber rights, and all other forms of private and governmental securities (both foreign and domestic) including securities of the Employer. The Trustees are specifically empowered to invest in securities of the Employer, or any Affiliated Employer to the extent of ten (10%) percent of the Trust Fund, unless a different percentage is specified by resolution of the Board of Directors, provided, however, that the Trust Fund shall not hold any employer security which is not a qualifying employer security as provided in Section 407(a)(5) of ERISA; (ii) To buy, sell, exchange, mortgage, encumber, hold, manage, repair, control, lease or license for any term (even though such term extends beyond the duration of the Plan or Trust Agreement, or commences in the future) and otherwise acquire, dispose of, trade and deal in all forms of tangible and intangible real and personal property, wherever located, including, without limitation, real estate, including real property and related personal property leased to the Employer or any Affiliated Employer, but only to the extent permitted under Section 407(a) of ERISA, leaseholds, machinery and equipment, senior and junior mortgages and liens, accounts receivable, conditional sales contracts, rental purchase agreements and other forms of agreement evidencing indebtedness (whether fixed or contingent), patents, copyrights, trademarks, trade secrets, and other industrial and intellectual property, bills of exchange, notes, trade acceptances, commodities and futures; (iii) To make investments which entail risk or with the principal aim of obtaining capital appreciation rather than security of investment and current income; -59- (iv) To borrow, raise or lend monies and guarantee payment of any obligation for the purposes of the Trust Fund, in such amounts and upon such terms and conditions as the Trustees in their absolute discretion may deem advisable and for any such monies so borrowed to issue their promissory note as Trustees and to secure the repayment thereof by pledging or mortgaging all or any part of the Trust Fund; (v) To buy, sell, exchange, mortgage, encumber, hold, manage, acquire, dispose of or otherwise trade or deal in all types of business ventures in all lines of endeavor, including, without limitation, exploration for and extraction of oil, gas and other minerals and natural resources, manufacturing, wholesale and retail trade, exporting and importing, brokerage, factoring, transportation, communication and hotels; (vi) To cause any investment in the Trust Fund to be registered in, or transferred into, its name as Trustees or in the name of its nominee or nominees or to retain them unregistered or in form permitting transfer by delivery, but the books and records of the Trustees shall at all times show that all such investments are part of the Trust Fund, and the Trustees shall cause the indicia of ownership to be maintained within the jurisdiction of the dis trict courts of the United States; (vii) To retain in cash or in banks and keep unproductive of income or appreciation such part or all of the Trust Fund as it may deem adv isable; (viii) To amortize any premium paid or discount received; (ix) To vote (or refrain from voting) stock and securities, either in person or by proxy, and otherwise consent to, or request, par ticipate in, protest, and oppose any action by the issuer; (x) To give general or special proxies and powers of attorney with or without power of substitution or revocation; (xi) To participate in, consent to, protest, oppose and take any other action in connection with and receive and retain any securities resulting from any reorganization, recapitalization, financial readjustment, consolidation, merger, spin-off, split-offs, foreclosure, bankruptcy, assignment, liquidation, dissolution, sale, lease, encumbrance or other disposition of assets of any issuer, the securities of which are held or acquired by the Trustees; (xii) To deposit securities in voting trusts with protective creditors, stockholders or other committees or with any trustee or depository designated thereby; (xiii) To exercise, sell or permit to lapse any subscription or conversion privileges; (xiv) To abandon property which it deems inadvisable to retain; (xv) To determine what is principal and what is income and whether and what part of any cost, charge, tax, expense or liability should be charged against principal or income; (xvi) To concentrate investments where prudent to do so; (xvii) To make joint investments with other trusts, persons, firms or corporations, buy, sell, exchange, mortgage, encumber, hold, manage, acquire, dispose of or otherwise trade or deal in undivided and fractional interests in real and personal property and enter into joint operation, exploration, development and oth er agreements with co-owners of -60- undivided or fractional interests in such property and with owners of interests in property adjacent to or in the vicinity of property owned by the Trust Fund; (xviii) To invest and reinvest all or any part of the Fund through the medium of any common, collective or commingled trust fund maintained by the Trustee, or an affiliate of the Trustee, as the same may have heretofore been or hereafter be established or amended, which consists solely of the assets of employee benefit accounts which are either qualified under the provision Section 401(a) or satisfy the requirements of Section 408 or 414(d) and are exempt under the provisions of Section 408(e) or 501(a) of the Internal Revenue Code of 1986, as such sections may be from time to time amended or renumbered; and during such period of time as an investment through any such medium shall exist the Declaration of Trust as such fund shall constitute a part of the Trust Agreement; (xix) To settle, compromise or submit to arbitration any claims, debts or damages due or owing to or from the Trust Fund, commence or defend suits or legal or administrative proceedings, and represent the Trust Fund in all suits and legal and administrative proceedings; (xx) The Trustee may appoint an investment manager, who is registered as an investment advisor under the Investment Advisors Act of 1940, to invest all or a portion of the investments. The investment manager shall be paid by the Trustee such reasonable compensation as agreed upon in writing by the Trustee and Investment Manager. The Investment Manager's compensation and expenses shall be charge against the Trust Fund to the extent not pa id by the Trustee within a reasonable period of time; (xxi) To apply for and procure from insurance companies selected by the Trustees such Contracts as the Trustees shall deem proper for carrying out the purposes of the Plan; to exercise at any time or from time to time whatever rights and privileges may be granted under such Policies; to collect, receive and settle from the proceeds of all such Policies as and when entitled to do so under the provisions thereof; to make policies loans provided that such loans and repayments thereof are in proportion for all Participants and deal with such Policies in any manner that may be necessary or desirable to carry out and effectuate the terms and provisions of the Plan, provided, however, that any Policies shall be purchased in amounts specified by the Plan Administrator but in no event to cause the death benefit to exceed the incidental benefit limitations set forth herein; (xxii) To renew or extend or participate in the renewal or extension of any mortgage upon such terms as may be deemed advisable, and to agree to a reduction in the rate of interest on any mortgage or to any other modification or change in the terms of any mortgage or of any guarantee pertaining thereto in any manner and to any extent that may be deemed advisable for the protection of the Trust Fund or the preservation of the value of the investment; to waive any default, whether in the performance of any covenant or condition of any mortgage or in the performance of any guarantee, or to enforce any such default in such manner and to such extent as may be deemed advisable; to exercise and enforce any and all rights of foreclosure, to bind in property on foreclosure, to take a deed in lieu of foreclosure with or without paying a consideration therefore, and in connection therewith, to release the obligation on the bond secured by such mortgage; and to exercise and enforce in any action, suit or proceeding at law or in equity any rights or remedies in respect to any mortgage or guarantee; (xxiii) To make, execute, acknowledge, and deliver any and all documents of transfer and conveyance and any and all other instruments and do all other acts, although not -61- specifically mentioned herein, that may be necessary or appropriate to carry out the powers herein granted for the purpose of this Trust. (c) Segregated Accounts Upon the request of the Plan Administrator, the Trustees shall establish segregated accounts in which to place, hold and invest the following classes of funds: (i) voluntary or mandatory contributions received from Participants; (ii) funds received from a Participant which constitute a rollover contribution within the meaning of IRC Sections 408(d)(3), 402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8), 405(d)(3) or 409(b)(3)(C); (iii) funds received directly from the Trustee of another qualified plan on behalf of a Participant as permitted under law; (iv) the value of the vested portion of the Accrued Benefit of any terminated Participant; (v) the Account Balance of any Participant who so directs the investment of his account (Separate Investment Funds) pursuant to the terms of the Plan; (vi) funds which may become payable to an Alternate Payee(s) pursuant to a Qualified Domestic Relations Order. Any funds segregated by the Trustees shall not participate in the earnings and appreciation of the Trust Fund, and shall be invested separately by the Trustees. In the event the Plan provides for Participant directed accounts or Separate Investment Funds authorized under Subsection (e) hereof and Section III.D.I. and 2. of the Adoption Agreement, the Trustees shall invest same separately or, if applicable, in accordance with the Participant's directions. This Subsection shall not be construed as permitting the segregation of assets in any manner not authorized under the terms of the Plan. The Trustees shall be required to segregate amounts that may become payable pursuant to a Qualified Domestic Relations Order during a determination of such order's qualified status in accordance with Section 414(p) of the Code. (d) Loans to Participants Loans to Participants may be permitted as investments of the Trust Fund if so provided in Section IV.A.2. of the Adoption Agreement subject to the following limitations: (i) Approval - Each loan must be approved by the Trustees and the Plan Administrator upon written application of the Participant. In reviewing any loan application, the Trustees and the Plan Administrator shall utilize uniform, nondiscriminatory policies and shall not make loans available to Highly Compensated Employees on a more favorable basis than made available to other employees. (ii) Security - The security provided by the Participant must be adequate in the opinion of the Trustees. The security may consist solely of the Participant's vested interest in the Plan and the interest of the Participant's Spouse in his account (in which case the amount of the loan shall not exceed 50% of the Participant's vested interest) and/or may be in the form of other security such as a mortgage or security agreement. In the event the security is given in the form of a mortgage or security agreement, the Trustees may in its discretion, lodge a record of said mortgage or security agreement by filing same or, if applicable, a Uniform Commercial Code -62- financing statement, in the public offices of the state, county or municipality where such notices are customarily filed. (iii) Terms and Conditions - Loans shall not be made from the Trust Fund on terms and conditions more favorable to the Participant than could be obtained by the Participant from a recognized financial institution such as a bank or credit union at the time the loan was made. To the extent such Account Balance which served as security for a loan is subject to the requirements of Code Section 401(a)(11)(B), loans shall be made only upon consent of the Participant's Spouse to be given under the same manner provided in Article XII, Section 12.5 hereof. Consent shall be obtained no earlier than the beginning of the 90-day period that ends on the date on which the loan is to be secured. On renegotiation, extension, renewal or revision of the loan, a new consent shall be required. All loans shall be made in accordance with applicable state usury laws. No distributions shall be made to a Participant, his spouse or Beneficiary until all loans are repaid in full. (iv) Limitations on Non-taxable Amount - In no event shall a loan be made to a Participant which exceeds the lesser of: (A) fifty thousand dollars ($50,000) (reduced by the excess of the highest outstanding loan balance of the Participant during the twelve (12) month period immediately preceding the date of the loan over the outstanding balance of loans from the Plan on the date the loan was made); or (B) one-half (1/2) of the nonforfeitable portion of the Participant's Account, but in no event less than ten thousand dollars ($10,000). Said loan must be amortized in level monthly or quarterly payments and shall not be repayable, by its terms, for a period exceeding five (5) years except if the loan is used to acquire the principal residence of the Participant. (v) Restrictions Applicable to Owner-Employees - No loans shall be made to any owner-employee (within the meaning of Section 401(c)(3) of the Code); or to a shareholder employee (within the meaning of Section 1379 of the Code as in effect on the day before enactment of the Subchapter S Revision Act of 1982). (vi) Default - In the event of default, foreclosure on the note and attachment of security will not occur until a distributable event occurs under the Plan. (e) Self-directed Funds If elected pursuant to Section III.D.2. of the Adoption Agreement, a Participant, upon proper advance written notice, may elect to have all or any portion of the amount credited to his Account invested in one or more of those investment funds. Each such fund shall be invested in either a portfolio of funds selected by the Trustees meeting the objectives inherent in the nature of the fund selected or in a mutual fund meeting - such objectives. (f) Rules relating to Separate Investment Funds (1) An election made by a Participant pursuant to this Subsection (f) hereof shall be filed with the Trustees in writing on a form which they prescribe, provided, however, that elections may not be made at times other than permitted pursuant to Section III.D.4. of the Adoption Agreement. -63- Any such election made by a Participant shall remain in effect until another valid election has been made by the Participant. (2) In the event that a Participant fails to file an election, such Participant's Account shall be invested in a short term liquid asset investment. (3) Whenever, in the sole discretion of the Trustees, transfers between funds pursuant to the provisions of this Section would require the liquidation of assets at a time or in a manner which would not be prudent considering the purposes for which the Plan was established and the interests of all Plan Participants, the Trustees shall have the right to prescribe uniform, nondiscriminatory rules prohibiting or limiting the amount which a Participant may transfer. (4) The Trustees shall not be liable for any loss, damage or depreciation of a Participant's Account to the extent such Participant has elected to direct the Trustees to invest any portion of his Participant Account. 13.4 Accounts to be Kept and Rendered by the Trustees (a) Records to be kept by the Trustees The Trustees shall keep detailed and accurate records and accounts of all investments, receipts, disbursements and other transactions made with respect to the Trust Fund as well as any additional records that may be required by law or government regulation or as may be agreed upon by the Trustees and the Plan Administrator. (b) Availability of Records A11 books and records maintained by the Trustees shall be available for inspection by any person designated by the Employer or by the Plan Administrator at reasonable times. (c) Written Reports to be Filed by the Board of Trustees Not later than seven (7) months after each Valuation Date the Trustees shall file with the Employer a written statement setting forth all investments, receipts and disbursements, and other transactions effected by it since the last Valuation Date and containing an exact description of all securities and property purchased and sold, and the cost or the net proceeds of sale, and showing the securities and property and investments held on such Valuation Date and the cost and value thereof as carried on its books. The written statement shall include the value of any asset which is valued at other than fair market value, if requested by the Plan Administrator. Such written statement, after being filed with the Employer, shall be available for inspection by any Participant or Beneficiary during normal business hours of the Employer until ten (10) months after the Valuation Date. (d) Conclusiveness of Report In the absence of filing in writing with the Trustees by the Employer of an exception or objection to any such account within sixty (60) days, the Employer shall be deemed to have approved such account and in such case, except as required by law, the Trustees shall be relieved of all matters and things set forth in such account as though such account had been settled by decree of competent jurisdiction. Except as required by law, no person other than the Employer may require an accounting or may bring any action against the Trust Fund or Trustees to require an accounting. -64- (e) Written Reports to be Filed Upon Removal of Trustee In the event of such removal or resignation of the Trustees, the replaced Trustees shall, within sixty (60) days from the effective date of such removal or resignation, file with the Employer and Plan Administrator a written statement and report of its accounts and proceedings covering the period from its last statement and report to the effective date of such removal or resignation in the manner provided in this Section 13.4 relating to books and records) and said statement and report shall have the same effect as if delivered pursuant to this Section 13.4. 13.5 Exclusive Benefit No part of the corpus or income of the Trust may be used for other than the exclusive benefit of Participants. -65- ARTICLE XIV - POLICIES 14.1 Purchase of Policies The Plan Administrator shall purchase policies on the lives of the Participants specified in Section III.G.2. of the Adoption Agreement in the manner and amounts set forth in Section III.G.I. of the Adoption Agreement. 14.2 Procedure for Purchase In the event Section III.G.I. of the Adoption Agreement has provided for the purchase of policies, the Trustees, upon direction from the Plan Administrator, shall purchase policies ratably on behalf of all Participants. All policies shall have an issue date specified in Section III.G.3.e. of the Adoption Agreement. However, no provision of this Article XIV shall be construed as creating a right to an insured death benefit on behalf of any Participant or Beneficiary until and unless a policy on his life has actually been purchased, and a Participant's death benefit shall only include proceeds of policies in force on the date of his death. 14.3 Requirements Concerning the Purchase of Policies Unless otherwise specified in Section III.G.3. of the Adoption Agreement, all policies purchased hereunder shall conform to the following requirements: (a) Legal Reserve Carrier All policies purchased by the Trustee shall be purchased from a legal reserve life insurance company. (b) Premiums All premiums shall be paid from the Trust Fund and charged to the Account of the Participant for whose benefit the policy is held. If at any time, the premium on a policy is not paid, the Trustee shall pay premiums by policy loan or shall elect an alternative option permitted under the terms of the policy. (c) Dividends All dividends, refunds or proceeds of any nature received under a policy may be applied in such manner permitted by the Insurer. Any dividends or credits earned on insurance contracts will be allocated to the Participant's Account derived from Employer Contributions for whose benefit the contract is held. (d) Uniformity The Trustees shall purchase policies to be as nearly uniform in nature as possible with respect to basic options, cash surrender values and other material features. (e) Ownership The Trustee shall be the owner and beneficiary of all policies purchased hereunder and shall be entitled to exercise all incidents of ownership. The policy shall provide that proceeds will be payable to the Trustee who shall be required to pay the proceeds in accordance with the distribution provisions of the Plan. -66- (f) Disposition of Policies Subject to the terms of Sections 12.5 and 12.6, all policies purchased shall be surrendered or sold to the Participant who is insured under the policy (for its cash surrender value, if any) as soon as practicable after the Participant ceases employment with all Affiliated Employers or at such time when continued maintenance of such policies would cause a violation of the incidental benefit limitations set forth in this Article XIV or under Treasury Regulation 1.401-l(b)(l)(i), provided, however, that the settlement options provided in said policy do not differ materially from those provided under Article XII of this Plan. The Plan provisions shall control in the event of a conflict between the terms of the policy and the terms of the Plan. Any contract distributed must be non-transferable. (g) Supplemental Benefits Agreements for supplemental benefits, including waiver of premium or additional indemnity benefits, may be purchased if available from the Insurer if the additional cost of said benefits is charged to the Participant's Account, and the limitations set forth in Section 14.4 are not violated. 14.4 Incidental Benefit Limitations The aggregate amount of the premiums paid for ordinary life insurance contracts (contracts that provide for both non-decreasing death benefits and non-increasing premium) maintained on behalf of a Participant plus two (2) times the aggregate amount of premiums paid on term insurance and universal life insurance contracts maintained on behalf of a Participant shall not exceed fifty percent (50%) of the aggregate contributions and forfeitures which have been allocated to the Participant's Employer Contribution Account as of the most recent Anniversary Date. The premiums paid for ordinary life insurance contracts must in any event be less than fifty percent (50%) of the aggregate Employer Contribution allocated to the Participant's Employer Contribution Account. 14.5 Non-lnsurable Participants In the event a Participant who is entitled to insured death benefits is not insurable or not insurable at standard rates, the Trustees may, in their sole discretion, provide benefits under one of the following methods: (a) entirely through the Trust Fund (without providing any insured death benefits on behalf of the Participant); or (b) through the purchase of annuity contracts; or (c) through the purchase of policies in reduced face amounts (based upon the amounts purchasable with the premium that would be required to purchase the necessary face amount of insurance if the Participant was insurable at standard rates). 14.6 Participant Provided Benefits If provided in Section III.D.2. of the Adoption Agreement, a Participant shall have the right to direct a portion of his Employer Contribution Account or his Participant Contribution Account to purchase policies, provided, however, that such purchase shall not cause the limitations set forth in Section 14.4 to be violated. -67- 14.7 Protection of Insurer (a) Insurance Carrier Not a Party No Insurer from which the Trustees procure a policy shall be deemed to be a party to this Plan. (b) Reliance Upon Action of Trustees Any Insurer shall be fully protected in relying upon the written direction or certification of the Trustees or Plan Administrator. The Insurer shall not be responsible to see that the actions of any Trustee or the Plan Administrator are authorized under the terms of the Plan, nor shall it be obliged to see to the distribution or further application of monies paid by the Trustees. The Insurer shall be entitled to rely upon a notice, certification, direction or other communication duly executed by any party acting as a Trustee or the Plan Administrator according to the latest written information received at the Insurer's home office. -68- ARTICLE XV - ADMINISTRATION OF THE PLAN 15.1 Appointment of Plan Administrator The Plan Administrator shall consist of one (I) or more persons, partnerships, or corporations or combinations thereof who shall be appointed by the Employer by action of its Board of Directors and who shall be set forth in Section I.B.7. of the Adoption Agreement. The Plan Administrator shall constitute a Named Fiduciary as provided in Section 402(a)(1) of ERISA. 15.2 Manner of Acting The Plan Administrator, except when it consists of a single corporation, shall exercise its discretion or authority through a majority vote of those members in office at the time. Such exercise may be by vote at a meeting or in writing without a meeting. Any entity who is part of a group who together comprise the Plan Administrator may perform any act necessary including the promulgation of administrative regulations and filing of government reports. No person need inquire into the propriety of any act of the Plan Administrator evidenced by an instrument bearing the signature of any individual (or individual properly acting on behalf of another organization) who is part of the group who together comprise the Plan Administrator. 15.3 Disqualification to Act No individual (or individual acting on behalf of a partnership or corporation) who is part of the group who together comprise the Plan Administrator shall be disqualified from voting or acting on any matter relating to the Plan because he is also a Participant, Beneficiary, Trustee, officer, director or shareholder of any Affiliated Employer. 15.4 Authority and Responsibility of Plan Administrator The Plan Administrator shall have the following duties and responsibilities: (a) To maintain records concerning Participants and Beneficiaries including personal data, records of employment, participation, allocations to Accounts and eligibility therefore; (b) To prepare and furnish any forms and information which is required to be distributed to Participants under law and/or the terms of the Plan; (c) To prepare and file all forms and other information which is required to be filed with any government agency as required by law, regulations and/or by the terms of this Plan; (d) To provide directions to the Trustee concerning purchase of life insurance, funding policies, amounts, method and timing of benefit payments and any other data or instructions that may be reasonably required or requested by the Trustee; (e) To promulgate and set forth administrative regulations concerning the operation of the Plan as specifically required under the terms of the Plan or as may be required by circumstances, provided said regulations are not inconsistent with the terms of the Plan; (f) To construe and interpret provisions of the Plan and to correct defects and supply omissions as may be required from time to time; (g) To provide and implement the proper operation of the Plan, provided, however, the Plan Administrator shall not be liable to any party by virtue of acting or refraining from - acting in -69- accordance with the advice of said advisors. Compensation for such services, to the extent not paid by a Participating Employer, shall be payable as an expense of the Plan. 15.5 Requests for Documentation The Plan Administrator, before deciding the eligibility for benefits of a Participant or Beneficiary, in its discretion, may require submission of proper documentation of age, death, disability or any other item as it deems necessary for the administration of the Plan. 15.6 Removal or Resignation The Plan Administrator or any member of the group who together comprise the Plan Administrator may be removed at the pleasure of the Employer by action of its Board of Directors or may resign by written notice to the Employer. Said removal or resignation shall be effective sixty (60) days after delivery of such notice to the other party unless some other date is designated by the Employer. After removal or resignation the Employer may appoint a successor Plan Administrator or member of the group who together constitute the Plan Administrator. 15.7 Failure to Appoint Plan Administrator If no individual or organization has been appointed to the group, or if there are no remaining members of the group, the Employer shall be deemed to be the Plan Administrator. 15.8 Compensation The Plan Administrator shall perform his duties without compensation, provided, however, that all expenses reasonably incurred by the Plan Administrator, to the extent not paid by a Participating Employer, shall be payable as an expense of the Plan. 15.9 Allocation of Responsibilities Members of the group comprising the Plan Administrator may agree among themselves to specifically allocate or delegate specific responsibilities, duties or obligations to one (I) or more members of said group, in which event the other members of the group shall not be liable for any action taken with respect to such allocated responsibilities, duties or obligations to the extent permitted by Section 405(c) of ERISA. 15.10 Delegation to Retirement Committee If the Employer is designated as the Plan Administrator hereunder it may, at its sole discretion, make a revocable delegation of its responsibilities, duties and obligations to a Retirement Committee by naming a committee of not less than two (2) persons who shall be set forth in Section I.B.8. of the Adoption Agreement. In the event a Retirement Committee is so designated, it shall act on behalf of the Employer as if each member thereof was a member of the group constituting the Plan Administrator and shall have all the rights and authority attendant thereto, except that said Retirement Committee shall act on behalf of the Employer which shall be formally designated as Plan Administrator. 15.11 Bonding The Plan Administrator shall arrange to be bonded in an amount only to the extent required under applicable law. -70- 15.12 Indemnification The Employer shall indemnify the Plan Administrator for any expenses and liabilities reasonably incurred in connection with or as a result of performance of its duties, unless it shall be adjudged to be grossly negligent or guilty of willful misconduct. The Employer may provide for indemnification of the Plan Administrator through insurance in addition to, or in lieu of, its obligation to indemnify the Plan Administrator. -71- ARTICLE XVI - CLAIMS PROCEDURES 16.1 Claim for Benefits It is anticipated that the Plan Administrator will administer the Plan in such a manner as to provide benefits without requiring Participants to file claims, however, any Participant or Beneficiary who at any time believes he is entitled to payment of a benefit under the Plan may apply for said benefit on a form supplied by the Plan Administrator. The Plan Administrator may within thirty (30) days require the Participant to submit such additional information as the Plan Administrator deems necessary to determine the validity of the Participant's claim. 16.2 Disposition of Claim Written notice of the disposition of the claim shall be given to the Participant or Beneficiary within ninety (90) days after the claim for benefits (or any additional information requested by the Plan Administrator) is submitted. If the claim is denied, in whole or in part, the Plan Administrator shall furnish the following to the Participant or Beneficiary: (a) The specific reasons for the denial with references to the Plan, administrative regulations of the Plan Administrator and/or the law as appropriate; (b) A description of any additional material necessary for the Participant or Beneficiary to perfect his claim and why such information is necessary; (c) An explanation of the Plan's claim review procedure. If the Participant or Beneficiary fails to request review of a full or partial denial of benefits within sixty (60) days of his notice thereof, except as required by law, his claim shall be deemed conclusively denied. 16.3 Claims Review Procedure Any Participant or Beneficiary who desires further review of a claim denied, in whole or in part, shall file a written request for reconsideration with the Plan Administrator within sixty (60) days after receipt of a written denial. The Plan Administrator, in its sole discretion, may convene a hearing on reasonable notice to all parties or may make its decision solely based upon any written evidence submitted by the Participant or Beneficiary. For this purpose, the Plan Administrator may request such additional evidence from the Participant or Beneficiary as it deems necessary. The Plan Administrator shall file written notice of his decision concerning the review with the Participant or Beneficiary within sixty (60) days thereafter. Said decision shall contain the specific reasons for said decision, with appropriate references to the Plan, the law, and/or to administrative regulations set forth by the Plan Administrator. 16.4 Conclusiveness of Determination Except as required by law, the Participant or Beneficiary shall be conclusively bound by the final decision rendered by the Plan Administrator, unless he notifies the Plan Administrator within ninety (90) days of his intention to commence legal proceedings and actually commences such legal proceedings within one hundred eighty (180) days after such final decision. -72- ARTICLE XVII - AMENDMENT, TERMINATION AND MERGER 17.1 Employer's Right Reserved While it is the intention of the Employer to continue the Plan indefinitely and to make recurring and substantial contributions to the Trust Fund, pursuant to the terms of the Plan, the Employer reserves the right to amend, modify or terminate the Plan or to suspend contributions of all Participating Employers at any time, subject to the following limitations: (a) The Employer may: (1) change the choice of options in the Adoption Agreement, (2) add overriding language in the Adoption Agreement when such language is necessary to satisfy Section 415 or Section 416 of the Code because of the required aggregation of multiple plans, and (3) add certain model amendments published by the Internal Revenue Service which specifically provide that their adoption will not cause the Plan to be treated as individually designed. An Employer that amends the Plan for any other reason, including a waiver of the minimum funding requirement under Section 412(d) of the Code, will no longer participate in this Regional Prototype Plan and will be considered to have an individually designed plan. (b) No amendment enlarging the duties or responsibilities of the Trustees shall be made without their consent; (c) Except as specially permitted under law, no amendment, merger or termination shall decrease the value of the Account of a Participant or Beneficiary as of the effective date of the amendment, merger or termination; (d) No amendment, merger or termination shall deprive a Participant or Beneficiary currently receiving or entitled to receive benefits of any benefits so designated as of the effective date of the amendment; (e) No amendment, merger or termination shall provide for diversion of any part of the Trust Fund other than for the exclusive benefit of Participants or Beneficiaries, except as permitted by law; (f) No amendment shall deprive a Participant of an accrued benefit or eliminate an optional form of benefit in violation of Section 411(d)(6) of the Code or Section 204(g)(1) of ERISA. Notwithstanding the preceding sentence, a Participant's Account Balance may be reduced to the extent permitted under Section 412(c)(8) of the Code. For purposes of this paragraph, a Plan Amendment which has the effect of decreasing a Participant's Account Balance or eliminating an optional form of benefit, with respect to benefits attributable to service before the amendment shall be treated as reducing an accrued benefit. Furthermore no amendment to the Plan shall have the effect of decreasing a Participant's vested percentage determined without regard to such amendment as of the later of the date such amendment is adopted or the date it becomes effective. -73- 17.2 Amendments to Cover Additional Employers The Employer shall have the right, in its discretion, to amend the Plan to render eligible for participation hereunder the Employees of any other organization (whether a sole proprietorship, partnership or corporation). 17.3 Effect of Terminations (a) Full Vesting All Participants affected by a full or partial termination of this Plan or permanent cessation of contributions shall be one hundred percent (100%) vested in their Accounts as of the effective date of such full or partial termination. An amendment shall not be considered a partial termination unless so required under law and/or Regulations in order to enable the Plan to continue to meet the requirements of Section 401(a) of the Code. (b) Continuation of Trust In the event this Plan is terminated, the Employer shall instruct the Trustee to liquidate the Trust Fund and to pay over all monies due Participants and Beneficiaries as soon as practicable thereafter in accordance with the provisions of Article XVII hereof Section 17.5 and Article XII hereof. 17.4 Suspension or Discontinuance of Employer Contributions In the event contributions to the Trust Fund are temporarily suspended by any Participating Employer, the only effect upon the operation of the Plan shall be as follows: (a) If contributions are ever permanently suspended by written resolution of the Board of Directors, the Plan shall be deemed to have been terminated as of the effective date of such resolution; (b) In the event that a temporary suspension of contributions is made permanent by a resolution of the Board of Directors, subsequent termination of the Plan or action by the Internal Revenue Service, the effective date of said termination shall be the last day of the Plan Year following the last Plan Year in which any Participating Employer failed to make a substantial contribution to the Plan from available Net Earnings; (c) In the event that all remaining Participating Employers dissolve for any reason (except by virtue of acquisition of said Participating Employers' assets by another company which assumes all liabilities and obligations hereunder and shall be substituted as the Employer hereunder), such dissolution shall be deemed a permanent discontinuance of contributions and termination hereunder. (d) The termination of this Plan by a Participating Employer or the withdrawal of a Participating Employer from this Plan shall not affect the continuance of this Plan and Trust with respect to other Participating Employer. 17.5 Allocation Upon Termination of Trust In the event of a dissolution of the Trust Fund, it shall be liquidated in the following manner: (a) A11 expenses of the Trust Fund shall be paid; -74- (b) A11 Forfeiture Suspense Accounts shall be reallocated to the Accounts of the Participants from whose Accounts the forfeitures originated or, at the discretion of the Plan Administrator, allocated in another equitable manner; (c) The Trust Fund shall be valued as provided in Article VII hereof and the earnings and appreciation shall be allocated to all remaining Accounts in a manner consistent therewith; (d) A11 remaining unallocated suspense accounts shall be allocated to Participant's Accounts as if they were Employer Contributions; (e) Distributions shall be made to Participants based upon the value of their Accounts as determined in this Section 17.5. 17.6 Merger and Consolidation In the event that this Plan is merged, consolidated with, or transfers its assets and/or liabilities to another plan, each Participant shall be entitled to a benefit (if the surviving plan was then terminated immediately after the merger, consolidation or transfer) which is equal to or greater than the benefit said Participant would be entitled to if this Plan was terminated immediately before said merger, consolidation or transfer. 17.7 Withdrawal of a Participating Employer A Participating Employer may at any time withdraw from participation in the Plan and Trust upon certification by the Employer, the Plan Administrator and the Trustees that such Participating Employer intends to continue the Plan and Trust as a separate plan and trust for its Employees. In such event, the Plan Administrator shall determine the amounts credited or creditable to the Account of each of the Participants or their Beneficiaries in that portion of the Trust Fund allocatable to the Employees of such Participating Employer and shall direct the Trustees to deliver any such amounts, in cash or in kind, to the trustee or trustees of such separate plan and trust. A withdrawing Employer that does not adopt another Regional Prototype Plan is considered to have an individually designed plan. Prior to any such delivery, the withdrawing Participating Employer shall certify that such separate plan and trust meets the applicable requirements of Section 401(a) of the Code. The Plan Administrator and the Trustees shall be entitled to rely conclusively upon any certification made by a Participating Employer pursuant to this Section 17.7. 17.8 If the Employer's Plan fails to attain or retain qualification, such Plan will no longer participate in this Regional Prototype Plan and will be considered an individually designed plan. 17.9 The Regional Prototype sponsor may amend any part of the plan. In the case of the mass submitter, the mass submitter shall amend the Plan on behalf of the sponsor. -75- ARTICLE XVIII - MISCELLANEOUS PROVISIONS 18.1 Controlling State Law To the extent not preempted by federal law, this Plan shall be construed and enforced according to the laws of the State set forth in Section IV.D. of the Adoption Agreement. 18.2 Disputes If a dispute arises as to the proper recipient of any payment or delivery of any Policies, the Trustee in its sole discretion, may withhold such payment or delivery until the dispute is settled by the parties concerned or final adjudication by a court of competent jurisdiction. 18.3 Gender and Number Except as otherwise clearly indicated by the context, words in the masculine gender shall be deemed to include the feminine gender and vice versa. Words in the singular form shall be deemed to include the plural form and vice versa. 18.4 Headings and Subheadings The titles, headings and subheadings in this Plan are inserted for administrative convenience only and shall not be considered in the construction of any of the Plan provisions. 18.5 Heirs, Assigns and Representatives This Plan and its terms shall be binding and conclusive upon the heirs, executors, administrators, successors and assigns of all the parties hereto including each Participant and Beneficiary. 18.6 No Contract of Employment Neither participation in the Plan, establishment of the Plan or any modification thereof, creation of any account or fund (whether nonforfeitable or forfeitable), nor payment of any benefit shall give any Participant or Employee the right to be retained in the employ of any Participating Employer. 18.7 Treatment of Owner-Employees Under the Plan If this Plan provides contributions or benefits for one or more Owner- employees who control both the business for which this Plan is established and one or more other trades or businesses, this Plan and the plan established for other trades of businesses must, when looked at as a single plan, satisfy Sections 401(a) and (d) of the Code for the Employees of this and all other trades or businesses. If the Plan provides contributions or benefits for one or more Owner- employees who control one or more other trades or businesses, the Employees of the other trades or businesses must be included in a plan which satisfies Sections 401(a) and (d) and which provides contributions and benefits not less favorable than provided for Owner-employees under this Plan. If an individual is covered as an Owner-employee under the plans of two or more trades or businesses which are not controlled and the individual controls a trade or business, then the contributions or benefits of the Employees under the plan of the trades or businesses which are controlled must be as favorable as those provided for him under the most favorable plan of the trade or business which is not controlled. -76- For purposes of the preceding paragraphs, an Owner-employee, or two or more Owner employees, will be considered to control a trade or business if the Owner-employee, or two or more Owner-employees together: (1) own the entire interest in an unincorporated trade or business, or (2) in the case of a partnership, own more than fifty percent (50%) of either the capital interest or the profits interest in the partnership. For purposes of the preceding sentence, an Owner-employee, or two or more Owner-Employees shall be treated as owning any interest in a partnership which is owned, directly or indirectly, by a partnership which such Owner- employee, or such two or more Owner-Employees, are considered to control within the meaning of the preceding sentence. 18.8 Non-Alienation of Benefits (a) Except as otherwise provided in Subsections (b) and (c) hereof, none of the payments, benefits or rights of any Participant shall be subject to the claim of any creditor, and shall not be subject to attachment, garnishment, trustee's process, or any other legal process available to any creditor of such Participant. (b) No Participant or Beneficiary shall have the right to alienate, anticipate, commute, pledge, encumber or assign any of the benefits or payments which he may expect to receive under the terms of this Plan, except that a loan to a Participant from the Trust Fund, to the extent permitted hereunder, shall not be considered an alienation of benefits. The Trustee shall have a lien upon the borrower's Account to the extent of the entire unpaid amount of said loan plus collection costs and interest. (c) Distributions to an Alternate Payee(s) pursuant to a Qualified Domestic Relations Order which provides for the creation, assignment or recognition of a right to any benefit payable with respect to a Participant hereunder shall be made in accordance with administrative regulations adopted by the Plan Administrator in accordance with Article XII hereof. 18.9 Notices and Deliveries All notices hereunder shall be made in writing. Any notices or deliveries to the Trustee, Plan Administrator or any Participating Employer shall be directed to the address set forth in Section I.B. of the Adoption Agreement. 18.10 Payments to Persons under Legal Disability Any benefit payable to or for the benefit of any person under a legal disability, including, without limitation, minority or incompetency, shall be paid to said person's legal guardian, Beneficiary or to the person who, in the judgement of the Plan Administrator, reasonably appears to be providing for the care and custody of such person. 18.11 Severability of Provisions If any provision or portion of a provision of this Plan is held to be invalid or unenforceable, such invalidity or unenforceability shall not affect the balance of the Plan. The Plan shall be construed and enforced as if such provision had not been included, provided, however, this Plan shall be reformed only to the extent necessary so that it complies with applicable law. -77- 18.12 Service of Process The Employer and each Trustee is designated as a party for service of legal process. 18.13 Title to Trust Assets No Participant or Beneficiary shall have any right to, or interest in, any assets of the Trust Fund other than as provided under the terms of this Plan. All payments of benefits shall be made from the Trust Fund and no claim shall be made upon the Employer or any other person for such payments. -78- EX-99.2I.3 9 NON-EMPLOYEE DIRECTOR STOCK OPTION This Plan was approved by the Board of Directors on May __, 1996. This Plan was approved by the Stockholders on May __, 1996. This Plan was approved by the Securities and Exchange Commission on ________ __, 199__. MEDALLION FINANCIAL CORP. NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN This Non-Employee Director Stock Option Plan dated ________ ___, 1996 (the "Plan") governs options to purchase Common Stock, $0.01 par value (the "Common ---- ------ Stock"), of Medallion Financial Corp. (the "Company") granted on or after the - ----- ------- date hereof by the Company to members of the Board of Directors (the "Board") of ----- the Company who are not also employees, officers or interested persons (as defined in Section 2 below) of the Company. The purpose of the Plan is to attract and retain qualified persons to serve as Directors of the Company and to encourage ownership of stock of the Company by such Directors so as to provide additional incentives to promote the success of the Company. 1. Administration of the Plan. -------------------------- Grants of stock options (individually referred to herein as an "Option" and ------ collectively as "Options") under the Plan shall be automatic as provided in ------- Section 6 hereof. However, all questions of interpretation with respect to the Plan and Options granted under it shall be determined by a committee (the "Committee") consisting of the Directors of the Company who are not eligible to - ---------- participate in the Plan, and such determination shall be final and binding upon all persons having an interest in the Plan. 2. Persons Eligible to Participate in the Plan. ------------------------------------------- Members of the Board who are not also employees, officers or interested persons (as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended (the "1940 Act")) of the Company shall be eligible to participate in -------- the Plan ("Eligible Directors"). ------------------ 3. Shares Subject to the Plan. -------------------------- (a) Number of Shares. The aggregate number of shares of Common Stock of ---------------- the Company which may be optioned under this Plan is 100,000 shares. In the event of a stock dividend, split-up, combination or reclassification of shares, recapitalization or other similar capital change relating to the Common Stock, the maximum aggregate number and kind of shares or securities of the Company as to which Options may be granted under this Plan and as to which Options then outstanding shall be exercisable, and the exercise price of such Options, shall be appropriately adjusted by the Committee (whose determination shall be conclusive) so as to preserve the value of the Option. (b) Effect of Certain Transactions. In order to preserve an Eligible ------------------------------ Director's rights under an Option in the event of a change in control of the Company, the Committee in its discretion may, on the Date of Grant (as defined in Section 6(b) below) or at any time thereafter, take one or more of the following actions: (i) provide for the acceleration of any time period relating to the exercise or payment of the Option, (ii) provide for payment to the Eligible Director of cash or other property with a fair market value equal to the amount that would have been received upon the exercise or payment of the Option had the Option been exercised or paid upon the change in control, (iii) adjust the terms of the Option in a manner determined by the Committee to reflect the change in control, (iv) cause the Option to be assumed, or new rights substituted therefor, by another entity, or (v) make such other provision as the Committee may consider equitable to the Eligible Director and in the best interests of the Company. (c) Restoration of Shares. If any Option expires or is terminated --------------------- unexercised or is forfeited for any reason, the shares subject to such Option, to the extent of such expiration, termination or forfeiture, shall again be available for granting pursuant to Options under the Plan. (d) Reservation of Shares. The Company shall at all times while the Plan --------------------- is in force reserve such number of shares of Common Stock as will be sufficient to satisfy the requirements of the Plan. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares. 4. Types of Options. ---------------- All Options granted under this Plan shall be non-statutory options not entitled to special tax treatment under Section 422 of the Internal Revenue Code of l986, as amended. - 2 - 5. Form of Options. --------------- Options granted hereunder shall be evidenced by a writing delivered to the optionee specifying the terms and conditions thereof and containing such other terms and conditions not inconsistent with the provisions of the Plan as the Committee considers necessary or advisable to achieve the purposes of the Plan or comply with applicable tax and regulatory laws and accounting principles. 6. Grant of Options and Option Terms. --------------------------------- (a) Initial Grant of Options. On the date of the approval of the Plan (the ------------------------ "Approval Date") by the Securities and Exchange Commission in accordance with ------------- the 1940 Act, each of the following Directors shall automatically be granted Options to purchase the number of shares of Common Stock determined by dividing $100,000 by the Current Market Value (as defined in Section 6(c) below) multiplied by the fraction indicated opposite each Director's name (the "Initial ------- Grants") provided each such Director is serving on the Company's Board as an - ------ Eligible Director on the Approval Date: Name of Director Fraction - ----------------------- -------- Stanley Kreitman 1/3 David L. Rudnick 1/3 Mario M. Cuomo 2/3 Benjamin Ward 1 (b) Automatic Grant of Options. At each annual meeting of the -------------------------- stockholders of the Company after the Approval Date, each Eligible Director elected or re-elected at such meeting to a three year term shall automatically be granted upon such election an Option to purchase the number of shares of Common Stock determined by dividing $100,000 by the Current Market Value of the Common Stock on the date of such election. In addition, upon the election of an Eligible Director other than at an annual meeting of stockholders (whether by the Board or the stockholders and whether to fill a vacancy or otherwise), each such Eligible Director shall automatically be granted an Option to purchase that number of shares that is determined by (A) dividing $100,000 by the Current Market Value of the Common Stock on the date of election and (B) multiplying the resulting quotient by a fraction, the numerator of which shall equal the number of whole months remaining in the newly elected Director's term and the denominator of which shall be 36. For example, if an Eligible Director is elected to an 18 month term of office and an Eligible Director elected to a full three year term of office would have received an Option to - 3 - purchase 10,000 shares of Common Stock, then the Eligible Director elected to the 18 month term would receive an Option to purchase 5,000 shares of Common Stock. After the Initial Grants have been made, all subsequent grants of Options to Eligible Directors upon their election to the Board shall be referred to as "Automatic Grants". The "Date of Grant" for the Initial Grants shall be ---------------- ------------- the Approval Date and the Date of Grant for the Automatic Grants shall be the date of election or re-election as an Eligible Director, as the case may be. No Options shall be granted hereunder after ten years from the date on which this Plan was initially approved and adopted by the Board. (c) Exercise Price. The price at which shares may from time to time -------------- be optioned shall be determined by the Committee, provided that such price shall not be less than the current market value (the "Current Market Value") of the -------------------- Common Stock on the date of grant, or if no such market value exists, then the current net asset value of the Common Stock as determined in good faith by the Committee. To the extent permitted by law, the Committee may in its discretion permit the option price to be paid in whole or in part by a note or in installments or with shares of Common Stock of the Company or such other lawful consideration as the Committee may determine. (d) Term of Option. The term of each Option granted under this Plan -------------- shall be five years from the Date of Grant. (e) Period of Exercise. Options granted under this Plan as either ------------------ Initial Grants or Automatic Grants at an annual meeting of stockholders shall become exercisable with respect to one third of such shares of Common Stock covered by such Option on the date of each annual stockholders meeting following the Date of Grant, so long as the optionee remains an Eligible Director. Options granted under this Plan as Automatic Grants other than at an annual meeting of stockholders shall become exercisable at each annual meeting of stockholders with respect to that number of shares that is determined by multiplying the number of shares covered by such Option by a fraction, the numerator of which shall equal the number of whole months elapsed since the most recent to have occurred of either (i) the Date of Grant or (ii) the last annual meeting of stockholders and the denominator shall be the number of whole months for which such Director was elected. For example, in the example in Section 6(b) above, 1,667 of such Director's Options would become exercisable at the first annual stockholders meeting following the Date of Grant and the remaining 3,333 Options would become exercisable at the second annual stockholders meeting following the Date of Grant. Notwithstanding the foregoing, in the event that the Company holds an annual meeting of stockholders in 1996, such meeting shall not cause any Options under the Plan to become exercisable. Directors holding exercisable Options under this Plan who cease to be Eligible Directors for any reason, other than death, may exercise - 4 - the rights they had under such Options at the time they ceased being an Eligible Director for three months following the date on which such Director ceased to be an Eligible Director, provided, however, no additional Options held by such Directors shall become exercisable thereafter. Upon the death of a Director, those entitled to do so under the Director's will or the laws of descent and distribution shall have the right, at any time within twelve months after the date of death, to exercise in whole or in part any rights which were available to the Director at the time of his or her death. Options granted under the Plan shall terminate, and no rights thereunder may be exercised, after the expiration of five years from their Date of Grant. (f) Method of Exercise and Payment. Options may be exercised only by ------------------------------ written notice to the Company at its executive offices accompanied by payment of the full exercise price for the shares of Common Stock as to which they are exercised. The exercise price shall be paid in cash or by check or by the surrender of unrestricted shares of Common Stock or by any combination of the foregoing. Upon receipt of such notice and payment, the Company shall promptly issue and deliver to the optionee (or other person entitled to exercise the Option) a certificate or certificates for the number of shares as to which the exercise is made. (g) Non-transferability. Options granted under this Plan shall not be ------------------- transferable by the holder thereof otherwise than by will or the laws of descent and distribution, and shall be exercisable, during the holder's lifetime, only by him or her. 7. Limitation of Rights. -------------------- (a) No Right to Continue as a Director. Neither the Plan, nor the ---------------------------------- granting of an Option or any other action taken pursuant to the Plan, shall constitute an agreement or understanding, express or implied, that the Company will retain an optionee as a Director for any period of time or at any particular rate of compensation. (b) No Stockholders' Rights for Options. No Director shall have any ----------------------------------- rights as a stockholder with respect to the shares covered by his or her Option until the date he or she exercises such Option and pays the Option price to the Company, and no adjustment will be made for dividends or other rights for which the record date is prior to the date such Option is exercised and paid for. - 5 - 8. Amendment or Termination. ------------------------ The Board may amend, suspend or terminate the Plan or any portion thereof at any time, subject to any shareholder approval that the Board determines to be necessary or advisable, provided that the Participant's consent will be required for any amendment, suspension or termination that would adversely affect the rights of the Participant under any outstanding Options. 9. No Fractional Shares. All grants of Options shall be rounded to the -------------------- nearest whole share and no Options representing fractional shares shall be issued. 10. Governing Law. ------------- The provisions of the Plan shall be governed by and interpreted in accordance with the laws of the State of Delaware. - 6 - EX-99.2J 10 CUSTODIAL SERVICES AGREEMENT AGREEMENT FOR STOCK TRANSFER SERVICES between MEDALLION FINANCIAL CORPORATION and THE FIRST NATIONAL BANK OF BOSTON This Agreement sets forth the terms and conditions under which The First National Bank of Boston ("Bank of Boston") will serve as Sole Transfer Agent and Registrar for the Common Stock of Medallion Financial Corporation. A. TERM The term of this Agreement shall befor a period of three (3) years, commencing from the effective date of this Agreement. _________, 1996. B. FEE FOR STANDARD SERVICES For standard services as stated in Section D provided by Bank of Boston under tis Agreement. Medallion Financial Corporation will be charged as follows: ----------------------------------------------------------------------- $ 900.00 Monthly Administrative Fee* $ 1.00 Per Dividend Reinvestment Transaction ----------------------------------------------------------------------- C. FEE FOR PREFERRED OFFERING For the Initial Public Offering services provided by the Bank of Boston under this Agreement, Medallion Financial Corporation will be charged as follows: $2,500.00 Minimum One-Time Administrative Fee Includes the Following Services: Base Administrative Services ---------------------------- includes the conversion of existing shareholder records, administrative coordination relative to the offering, attendance at closing, and issuance of up to 250 stock certificates in connection with the initial offering. Additional stock certificates issued at $1.50 each. Medallion Financial Corporation Page 2 D. STANDARD SERVICES Bank of Boston agrees to provide the following services to Medallion Financial Corporation in accordance with the standard fees set forth in Section B hereinabove. Account Maintenance: 1. Annual administrative services as Transfer Agent 2. Annual administrative services as Registrar 3. Maintaining shareholder accounts, including processing of new accounts 4. Posting and acknowledging address changes and processing other routine file maintenance adjustments 5. Posting all transactions, including debit and credit certificates to the stockholder file 6. Researching and responding to all stockholder inquiries 7. Safekeeping of Treasury Shares in connection with Stock Option Issuances Certificate Issuance: 8. Certificate issuance, cancellation and registration 9. Daily Transfer Reports 10. Processing window items, mail items and all legal transfers 11. Combining certificates into large denominations 12. Processing Indemnity Bonds and replacing lost certificates 13. Maintaining stop-transfers, including the placing and removing of same 14. Processing Employee Stock Options 15. Processing Restricted Transfers Mailing, Reporting and Miscellaneous Services: 16. On-line inquiry to shareholder base via a PC 17. Addressing and enclosing Quarterly Reports, three(3) per annum for registered shareholders 18. Preparing two (2) full Statistical Reports to reflect shareholder base by geographic residence code, class code, and share group one (1) per annum 19. Preparing a full stockholder list, one (1) per annum 20. Coding "multiple" accounts at a singe household to suppress mailing of reports to same 21. BKB's 800# for Investor Relations Annual Meeting Services: 22. Preparing a full stockholder list as the Annual Meeting Record Date 23. Administrative coordination in connection with Proxy Material Distribution Medallion Financial Corporation Page 3 Annual Meeting Services (Cont'd): 24. Addressing proxy cards 25. Enclosing proxy card along with notice and statement, return envelope and Annual Report via Bipak envelope 26. Receving, opening and examining returned proxies 27. Writing in connection with unsigned or improperly executed proxies 28. Providing summary reports on status of tabulation on a daily basis 29. Responding to inquiries as to whether specific accounts have yet voted 30. Tabulating returned proxies to include up to four (4) proposals, excess to be billed at $ 0.30 per account, per proposal 31. Preparing a final Annual Meeting List reflecting how each account has voted on each proposal 32. Paying and reconciling Broker Order invoices 33. Attending Annual Meeting as Inspector of Election Dividend Services: As Dividend Disbursing Agent and Paying Agent (checks to be drawn on The First National Bank of Boston and funds immediately available in-house on mailing date). Bank of Boston will perform the following dividend related services: 34. Preparing and mailing quarterly dividends (check includes address change feature) with an additional enclosure with each dividend check 35. Preparing a hardcopy dividend list as of each dividend record date 36. Preparing and filing Federal Information Returns (Form 1099) of dividends paid in a year and mailing a statement to each stockholder 37. Preparing and filing State Information Returns of dividends paid in a year to stockholders resident within such state 38. Preparing and filing annual withholding return (Form 1042) and payments to the government of income taxes withheld from Non-Resident Aliens 39. Replacing lost dividend checks 40. Providing photocopies of cancelled checks when requested 41. Reconciling paid and outstanding checks 42. Coding "undeliverable" accounts to suppress mailing dividend checks to same 43. Processing and recordkeeping of accumulated uncashed dividends 44. Furnishing requested dividend information to stockholders 45. Performing the following duties as required by the Interest and Dividend Tax Compliance Act of 1983: . Withholding tax from shareholder account not in compliance with the provisions of the Act . Reconciling and reporting taxes withheld, including additional 1099 reporting requirements to the Internal Revenue Service . Responding to shareholder inquiries regarding the Regulations Medallion Financial Corporation Page 4 . Mailing to new accounts who have had taxes withheld, to inform them of procedures to be followed to curtail subsequent back-up withholding . Annual mailing to pre-1984 accounts which have not yet been certified . Performing shareholder file adjustments to reflect certification of accounts Dividend Reinvestment Services: As Administrator of your Dividend Reinvestment Plan ("DRP"), Bank of Boston will perform the following DRP related services: 46. Reinvestment and/or cash investment transactions of Dividend Reinvestment Plan participating accounts 47. Preparing and mailing a dividend reinvestment detailed statement with an additional enclosure to each Dividend Reinvestment Plan participant 48. Preparing and mailing a cash investment detailed statement with an additional enclosure to each Dividend Reinvestment participant 49. Maintaining DRP accounts and establishing new participant accounts 50. Processing termination requests 51. Processing withdrawal requests 52. Supplying summary reports for each reinvestment/investment to Medallion Financial Corporation 53. Certificate depository 54. Handing shareholder inquiries concerning the Plan 55. Preparing and mailing Form 1099 to participants and related filings with the IRS 56. Preparing a Dividend Reinvestment Journal four (4) per annum E. * LIMITATIONS The fees as stated in Section B include: . The issuance and registration of 1,000 certificates per annum (2,000 in the first year of the agreement); excess will be billed at 1.50 each. . The processing of up to 75 stock options per annum: excess will be billed at 7.50 each. . Maintaining up to 2,000 shareholder accounts: in excess to be billed $4.00 per account, per annum F. CONVERSION OF RECORDS Bank of Boston agrees to convert stockholder records as provided on the stockholder masterfile tape. Manual conversion of records and subsequent conversion of additional information including, but not limited to, uncashed or returned dividend check information of certificate detail not included on tape will be priced by appraisal. Medallion Financial Corporation Page 5 G. ITEMS NOT COVERED Items not included in the fees set forth in this Agreement for "Standard Services" such as payment of a stock dividend or any services associated with a special project are to be billed separately, on an appraisal basis. Services required by legislation or regulatory fiat which become effective after the date of this Agreement shall not be a part of the Standard Services and shall be billed by appraisal. All out-of-pocket expenses such as telephone line charges associated with toll-free telephone call, overprinting of proxy card, postage, insurance, stationary, facsimile charges, excess material disposal, etc. will be filled as incurred. Overtime charges will be assessed in the event of late delivery of material for mailings to shareholders unless the mail date is rescheduled. Such material includes, but is not limited to: proxy statements, annual and quarterly reports, dividend enclosure and news releases. Receipt of material for mailing to shareholders by Bank of Boston's Mail Unit must be in accordance with Shareholder Services Schedule of Required Material Delivery Time Frames. All services not specifically covered under this Agreement will be billed by appraisal, as applicable. H. BILLING DEFINITION OF ACCOUNT MAINTENANCE For billing purposes, number of accounts will be based on open accounts on file at beginning of each billing period, plus any new accounts added during that period. I. TERMINATION This Agreement is terminable by thirty (30) days written notice by either party. If this Agreement is terminated there will be a termination charge of 25% of the fees billed during the preceding twelve (12) months (minimum charge $6,000.00). This charge will cover the coordination of Bank of Boston's termination process and the cost of transferring Medallion Financial Corporation's records to a successor Transfer Agent or to Medallion Imperial Corporation. Upon expiration of this Agreement, without termination by either party. It shall continue in effect from month to month on the same terms unless and until either party terminates by (30) days written notice to the other or until a new agreement superseding the within Agreement has been executed. J. PAYMENT FOR SERVICES It is agreed that invoices will be rendered and payable on a monthly basis. Each billing period will, therefor, be on one (1) month duration. Medallion Financial Corporation Page 6 K. CONFIDENTIALITY The information contained in this Agreement is confidential and proprietary in nature. By receiving this Agreement, Medallion Financial Corporation agrees that none of its directors, officers, employees, or agents without the prior written consent of Bank of Boston, will divulge, furnish or make accessible to any third party, except as permitted by the next sentence, any part of this Agreement or information in connection therewith which has been or may be made available to it. In this connection, Medallion Financial Corporation agrees that it will limit access to the Agreement and such information to only those officers or employees with responsibilities for analyzing the Agreement and to such independent consultants hired expressly for the purpose of assisting in such analysis. In addition, Medallion Financial Corporation agrees that any persons to whom such information is properly disclosed shall be informed of the confidential nature of the Agreement and the information relating thereto, and shall be directed to treat the same appropriately. L. ASSIGNABILITY The Bank may, without further consent on the part of the Company, subcontract for the performance hereof with any entity with which the Bank is affiliated, which entity is duly registered as a transfer agent pursuant to Section 17A (c) (1) of the Securities Exchange Act of 1934 provided however, that the Bank shall be as fully responsible to the Company for the acts and omissions of any subcontractor as it is for its own acts and omissions. M. CONTRACT ACCEPTANCE In witness whereof, the parties hereto have caused this Agreement to be executed by their respective officers, hereunto duly agreed and authorized, as of the effective date of this Agreement. THE FIRST NATIONAL BANK OF BOSTON MEDALLION FINANCIAL CORPORATION By:/s/ [SIGNATURE ILLEGIBLE] By:/s/ DANIEL F. BAKER ---------------------------- --------------------------- Title: Vice President Title: Vice President ------------------------- ------------------------ Date: 2/18/96 Date: 4/25/96 -------------------------- -------------------------- EX-99.2K.1I 11 AMEND NO. 1 TO STOCK PURCHASE AMENDMENT NUMBER 1 TO STOCK PURCHASE AGREEMENT This Amendment Number 1 to Stock Purchase Agreement is entered into this 30th day of April, 1996 by and between Medallion Financial Corp. ("MFC"), a --- Delaware corporation, and Transportation Capital Corp., a New York corporation ("TCC"), LNC Investments, Inc., a Delaware corporation and the sole stockholder --- of TCC (the "Stockholder"), Leucadia, Inc., a New York Corporation ("Leucadia") ----------- -------- and Leucadia National Corporation, a New York Corporation ("Leucadia -------- National")(TCC, the Stockholder, Leucadia and Leucadia National being - -------- collectively referred to herein as the "Leucadia Parties"). Reference is hereby ---------------- made to the Stock Purchase Agreement dated February 12, 1996 (the "Purchase -------- Agreement"), pursuant to which MFC will acquire all of the outstanding capital - --------- stock of TCC. Capitalized terms used in this Amendment that are not defined herein shall have the same meanings as contained in the Purchase Agreement. MFC and the Leucadia Parties desire to amend the Purchase Agreement in order to extend certain times for performance set forth in Section 1.4 and Section 8.1 (d) of the Purcahse Agreement. Accordingly, in consideration of the mutual promises and covenants contained in the Purchase Agreement, as amended hereby, MFC and the Leucadia Parties hereby agree as follows: 1. The date "March 31, 1996" in Section 1.4 is hereby deleted and replaced with "June 30, 1996". 2. The date "May 31, 1996" in subparagraph (d) of Section 8.1 is hereby deleted and replaced with "June 30, 1996". Entire Agreement. The Purchase Agreement, as amended hereby, remains in ---------------- full force and effect and embodies the entire agreement and understanding between the parties thereto with respect to the subject matter hereof and supersedes all prior agreements and understandings relating to such subject matter. Counterparts. This Amendment may be executed simultaneously in any ------------ number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 1 IN WITNESS WHEREOF, the parties hereto have executed this Amendment under seal as of the day and year first above written. MEDALLION FINANCIAL CORP. By: /s/ Andrew Murstein ---------------------- TRANSPORTATION CAPITAL CORP. By: /s/ Mark Hornstein --------------------- LNC INVESTMENTS, INC. By: /s/ Mark Hornstein --------------------- LEUCADIA, INC. By: /s/ Mark Hornstein --------------------- LEUCADIA NATIONAL CORPORATION By: /s/ Mark Hornstein --------------------- 2 EX-99.2I 12 AMEND NO.1 ASSET PURCHASE AGREEMENT AMENDMENT NUMBER 1 TO ASSET PURCHASE AGREEMENT This Amendment Number 1 to Asset Purchase Agreement is entered into this 30th day of April, 1996 by and between Medallion Financial Corp. ("MFC"), a --- Delaware corporation, and Edwards Capital Company ("Edwards"), a New York ------- limited partnership. Reference is hereby made to the Asset Purchase Agreement dated February 21, 1996 between MFC and Edwards (the "Purchase Agreement"), ------------------ pursuant to which MFC shall purchase the Purchased Assets of Edwards. Capitalized terms used in this Amendment that are not defined herein shall have the same meanings as contained in the Purchase Agreement. MFC and Edwards desire to amend the Purchase Agreement in order to extend certain times for performance set forth in Section 1.10 and 8.1 of the Purchase Agreement. Accordingly, in consideration of the mutual promises and covenants contained in the Purchase Agreement, as amended hereby, MFC and Edwards hereby agree as follows: 1. The date "April 30, 1996" in Section 1.10 is hereby deleted and replaced with "June 14, 1996". 2. The date "April 30, 1996" in subparagraph (v) of Section 8.1 is hereby deleted and replaced with "June 14, 1996". Entire Agreement. The Purchase Agreement, as amended hereby, remains in ---------------- full force and effect and embodies the entire agreement and understanding between the parties thereto with respect to the subject matter hereof and supersedes all prior agreements and understandings relating to such subject matter. Counterparts. This Amendment may be executed simultaneously in any ------------ number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Amendment under seal as of the day and year first above written. MEDALLION FINANCIAL CORP. By: /s/ Andrew Murstein ---------------------- EDWARDS CAPITAL COMPANY By: HARVARD SERVICING CORP. its sole General Partner By: /s/ Edward M. Abramson ----------------------- EX-99.2K.5 13 SCHEDULE OF PROMISSORY NOTE Schedule of Promissory Notes from Edwards Capital Company --------------------------------------------------------- payable to Israel Discount Bank of New York ------------------------------------------- Supplying the variable terms and conditions of the Promissory Notes -------------------------------------------------------------------
Date Amount Due Interest Rate - --------------------- -------- ------------- -------------- (a) April 29, 1996 $300,000 June 28, 1996 6.86875% (b) April 22, 1996 $350,000 June 21, 1996 6.86875% (c) April 12, 1996 $150,000 June 11, 1996 6.90% (d) April 10, 1996 $450,000 June 10, 1996 6.90% (e) April 3, 1996 $250,000 June 3, 1996 6.8375%
EX-99.2K.7 14 SCHEDULE OF SECURED NOTES Schedule of Secured Notes from Edwards Capital Company ------------------------------------------------------ payable to Sterling National Bank & Trust Company of New York ------------------------------------------------------------- Supplying the variable terms and conditions of the Secured Notes ----------------------------------------------------------------
Date Amount Due Interest Rate ---- ------ --- ------------- (a) May 3, 1996 $250,000 June 3, 1996 6.9375% (b) April 24, 1996 $150,000 June 24, 1996 6.96875%
EX-99.2K.8 15 PROMISSORY NOTE DATED JULY 31, 1993. NatWest Bank August 14, 1995 Michael Kowalsky Edwards Capital Company 2 Park Avenue New York, NY 10016 Dear Michael: I am pleased to inform you that NatWest Bank N.A. has approved the renewal of a $5,000,000 secured line of credit for Edwards Capital Company. The line will be available through July 31, 1996. Borrowings will be subject to the usual credit factors being favorable at the time of each request for an advance. As a further condition to this line of credit, Edwards Capital Company agrees to furnish NatWest with quarterly financial statements as well as a certified annual financial statement. Edwards Capital also agrees to allow NatWest to perform periodic examinations of their books, records and operation. The cost of such examination to be borne by NatWest. Edwards Capital can borrow, at its option, at the rate that NatWest announces as its "Prime" rate, LIBOR plus 160 basis points, or at a rate quoted as NatWest's Cost of Funds plus 160 basis points. Interest will be calculated on the basis of actual days elapsed divided by 360. In the event of "Prime" rate loans, interest will be due monthly and will be debited from your account. If you are in agreement with these terms, please have the enclosed copy of this letter signed and returned. I have also enclosed an Endorsement to our existing Promissory Note reflecting this renewal. Please sign and return one copy to me. NatWest is very happy to make this facility available and we look forward to a continued excellent relationship. Accepted: Sincerely yours, Edwards Capital Company NatWest Bank N.A. By: Harvard Servicing Corp. General Partner /s/ Richard J. Miller Vice President /s/ Edward M. Abramson President ENDORSEMENT NO. 2 - ----------------- The undersigned, EDWARDS CAPITAL COMPANY (the "Borrower"), and NATWEST BANK, N.A. (formerly National Westminster Bank USA, hereinafter called the "Bank") hereby agree that the Promissory Note of the Borrower in favor of the Bank dated July 31, 1993 (the "Note") to which this Endorsement No. 1 is attached is hereby amended as follows: The Note is hereby modified as follows: A. The references to "July 31, 1995" in the first paragraph of the Note are modified to read "July 31, 1996". B. The reference to "July 31, 1995" in the second paragraph on page 2 of the Note is modified to read "July 31, 1996". Except as expressly amended by this Endorsement all the terms and conditions of the Note to which this Endorsement No. 2 is attached shall continue in full force and effect. This Endorsement shall be as of July 31, 1995. EDWARDS CAPITAL COMPANY By: Harvard Servicing Corp. General Partner By: /s/ Edward M. Abramson ------------------------- President NATWEST BANK N.A. By: /s/ Richard J. Miller ------------------------ Vice President Dated: As of July 31, 1995 -2- $5,000,000 July 31, 1993 FOR VALUE RECEIVED, EDWARDS CAPITAL COMPANY, a New York Limited Partnership ("Borrower"), promises to pay to the order of NATIONAL WESTMINSTER BANK USA ("Bank") at the office of the Bank located at 175 Water Street, New York, New York 10038 or at such other place as the holder hereof may direct in writing, in lawful money of the United States of America,and in immediately available funds, the principal amount of Five Million Dollars ($5,000,000), or, if less than such principal amount, the aggregate unpaid principal amount of all loans made by the Bank to the Borrower as shown on the schedule attached to and made part of this Note, on the maturity dates set forth on such schedule. The Borrower further agrees to pay interest at said office in like money, from the date hereof on the unpaid principal amount hereof outstanding from time to time (computed on the basis of a 360 days year for actual days elapsed) at a rate per annum for each loan hereunder equal to either (i) the Bank's Prime Rate (the rate established from time to time by the Bank as its prime rate), and which rate shall be adjusted for changes in the Prime Rate effective on the date on which a change in the Prime Rate occurs, or (ii) such other rate of interest as may otherwise be agreed upon and set forth on the attached schedule. The applicable rate shall be fixed at the time each loan is made. Any loan with an applicable interest rate based upon the Prime Rate (a "Prime Rate Loan") shall be payable on July 31, 1994 and any loan with an applicable interest rate as otherwise agreed upon (an "Agreed Rate Loan") shall have such maturity date as may be agreed upon and set forth in the attached schedule but in no event later than July 31, 1994. Each loan made hereunder shall be in a minimum amount of $100,000. Any Prime Rate Loan made hereunder may be prepaid at any time in whole or in part together with interest on the amount prepaid to the date of prepayment without premium or penalty. Interest on each Prime Rate Loan shall be payable on the last business date of each calendar month, and on the date such loan becomes due, and payable (whether at the stated maturity thereof, by acceleration or otherwise). Interest on each Agreed Rate Loan shall be payable on the date of maturity of such loan (whether at the stated maturity thereof, by acceleration or otherwise). Whenever any unpaid principal amount of a loan made hereunder shall become due and payable (whether at the stated maturity thereof,m by acceleration or otherwise) interest thereon shall thereafter be payable on demand at a rate per annum equal to 2% above the Bank's Prime Rate (the "Default Rate") at the time of any such maturity adjusted daily for changes in the Prime Rate provided, however, that no interest payable hereunder shall be in excess of the maximum permitted under any applicable law. Notwithstanding the foregoing, if any principal amount of a loan made hereunder shall become due and payable at its stated maturity date, then, so long as no Event of Default has occurred hereunder (other than non-payment of principal on the stated maturity date), interest on such principal amount shall continue to be payable at a rate per annum equal to the Bank's Prime Rate, instead of the Default Rate, unless and until 90 days after the date notice is given by Bank to Borrower that Bank does not intend to grant any extensions or renewals of this Note. -3- The Borrower shall give the Bank notice of each request for a loan hereunder setting forth the amount thereof, the interest rate on which such loan is to be based, the Business Day on which it is to be made and the maturity date thereof. Such notice may be written or oral, but if oral, it shall thereafter be confirmed promptly in a writing or telex delivered by the Borrower to the Bank. The Borrower hereby expressly authorizes the Bank to record on the attached schedule the amount and date of each loan made hereunder, the rate of interest thereon, the maturity date thereof and the date and amount of each payment of principal. All such notations shall be presumptive as to the correctness thereof. In no event shall the Bank be obligated to make any loans to the Borrower hereunder, except that, if any loans made hereunder shall mature prior to July 31, 1994, then, provided no Event of Default has occurred hereunder, Bank shall be obligated to make a loan to Borrower, in the amount of such matured loans, at the time of such maturity. If payment of principal or interest hereunder becomes due on a day which is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall be included in computing interest in connection with such payment. As used herein, "Business Day" shall mean any day other than a Saturday, Sunday or day which shall be in the City of New York a legal holiday or day on which banking institutions are authorized or required by law to close. If the Bank determines that the effect of any applicable law or governmental regulation, guideline or order or any change therein or in the interpretation thereof by any governmental authority charged with the administration thereof (such as, for example, a change in official reserve requirements which the Bank is required to maintain in respect of loans or deposits or other funds procured for funding such loans) is to increase the cost to the Bank of making or maintaining Agreed Rate Loans hereunder or to reduce the amount of any payment or principal or interest receivable by the Bank, then the borrower will pay to the Bank on demand such additional amounts as the Bank may determine to be required to compensate the Bank for such additional cost or reduction. Any additional payment under this clause will be computed from the 30th day after the date on which Bank shall give Borrower notice that such additional costs have to be borne by the Bank. For the purpose of this clause the determination of the Bank shall be conclusive if made reasonably and in good faith. The Borrower hereby indemnifies the Bank against any loss or expense (including, without limitation, loss of anticipated profit) which the Bank may sustain or incur as a consequence of (a) the failure of the borrower to borrow an Agreed Rate Loan after agreement shall have been reached on the amount, interest rate and the maturity date thereof or (b) the receipt of recovery by the Bank, whether by acceleration or otherwise, of all or any part of an Agreed Rate Loan prior to the maturity date thereof. The amount to be paid by the Borrower to the Bank in order to so indemnify the Bank for any loss occasioned by any of the events described in the preceding sentence, and as liquidated damages therefor, shall be equal to the excess, discounted to its present value as of the date paid to the Bank, of (i) the amount of interest which otherwise would have accrued on the principal amount so received, recovered or not borrowed during the period (the "Indemnity Period") commencing -4- with the date of such receipt, recovery or failure to borrow to the maturity date for such Agreed Rate Loan at the rate of interest applicable to such loan (or the rate of interest agreed to in the case of a failure to borrow) provided for herein (prior to default) over (ii) the amount of interest which would be earned by the Bank during the Indemnity Period if it invested the principal amount so received, recovered or not borrowed at the rate per annum determined by the Bank (in the exercise of its reasonable judgment) as the rate it would bid in the London interbank market for a deposit of Eurodollars in an amount approximately equal to such principal amount for a period of time comparable to the Indemnity Period. A certificate as to any additional amounts payable pursuant to this paragraph setting forth the basis and method of determining such amounts shall be conclusive, absent manifest error, as to the determination by the Bank set forth therein if made reasonably and in good faith. The Borrower shall pay any amounts so certified to it by the Bank within 10 days of receipt of any such certificate. The Borrower represents and warrants that: 1) it is a limited partnership duly organized and existing under the laws of the State of New York and is duly qualified to do business and is in good standing in every state where the failure to qualify would materially and adversely affect the financial condition of the borrower; 2) the execution, issuance and delivery of this Note by the borrower are within its partnership powers and have been duly authorized, and the Note is valid, binding and enforceable in accordance with its terms, and is not in violation of the terms of the borrower's Agreement of Limited Partnership and does not result in the breach of or constitute a default under any indenture, agreement or undertaking to which the borrower is a party or by which it or its property may be bound or affected and, to the best of the Borrower's knowledge, is not in violation of law; 3) Financial statements of the borrower dated as of December 31, 1992 heretofore furnished to the Bank are complete and correct and fairly represent the financial condition of the borrower as of such date and the results of its operations for the period ending on such date, and since such date no material adverse change in the financial condition of the borrower has occurred; 4) No Event of Default has occurred or is outstanding and no event has occurred which with the giving of notice or the lapse of time or both would constitute an Event of Default; 5) The Borrower shall not use any part of the proceeds of any Loan hereunder to purchase or carry any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System or to extend credit to others for the purpose of purchasing or carrying any margin stock; 6) On the occasion of each loan hereunder all representations and warranties contained herein or otherwise made in writing in connection herewith shall be true and correct and with the same force and effect as though such representations and warranties had been made on and as of the date of the making of such loan. The Borrower agrees to furnish to the Bank within 90 days after the last day of each of its fiscal years, the consolidated and consolidating balance sheets of the borrower and its Subsidiaries as at such last day of the fiscal year and statements of income and retained earnings and cash flows for such fiscal year each prepared in accordance with generally accepted accounting principles consistently applied and certified by a firm of independent certified public accountants satisfactory to the Bank; and within 60 days after the close of each of the first three quarters of each fiscal year consolidated and consolidating balance sheets, statements of income and retained earnings and cash flows of the borrower and its Subsidiaries as of the last day of and for such quarter and for the period of the fiscal year -5- ended as of the close of the particular quarter, all such quarterly statements to be in reasonable detail. The Borrower will also, with reasonable promptness, furnished such other data as may be reasonably requested by the Bank, including, but not limited to, detailed schedules of all delinquent loans and all non- performing loans, which schedules shall be furnished simultaneously with the annual and quarterly financial statements furnished in accordance with this paragraph. As collateral security for the payment of any and all sums owing under this Note and all other obligations direct or contingent, joint, several or independent, of the Borrower now or hereafter existing, due or to become due to, or held, or to be held by, the Bank, which obligations have been created directly to Bank, the borrower hereby grants to the Bank a lien on and security interest in any and all deposits or other sums at any time credited by or due from the Bank to the borrower, whether in regular or special depository accounts or otherwise, and any and all monies, securities and other property of the borrower, and the proceeds thereof, now or hereafter held or received by or in transit to the Bank from or for the borrower, whether for safekeeping, custody, pledge, transmission, collection or otherwise, and any such deposits, sums, monies, securities and other property, may at any time after the occurrence of any Event of Default be set-off, appropriated and applied by the Bank against any of the aforesaid obligations whether or not such obligations are then due or are secured, whether or not such collateral held by the Bank is considered to be adequate and with respect to all collateral security the Bank shall have all the rights and remedies available to it under the Uniform Commercial Code of New York and other applicable law. Such lien and security interest shall be subject to the rights of Borrower's other lenders set forth in the Intercreditor Agreement entered into by Bank. Upon the occurrence of any of the following specified events of default (each an "Event of Default"): 1) Default in any payment of principal of or interest when due which shall continue for more than 3 days or default in payment of any other sums payable under this Note which shall continue for more than 30 days; 2) Default in the due payment of the Borrower's indebtedness for borrowed money or in observance or performance of any covenant or condition contained in any agreement or instrument evidencing, securing, or relating to any of such indebtedness (after giving effect to any applicable grace or cure period) which shall continue for more than 30 days; or 3) Default in the observance or performance of any other agreement of the Borrower set forth herein which shall continue for more than 30 days; or 4) Any representation or warranty made by the borrower herein or in any certificate furnished by the Borrower pursuant to the provisions hereof, proves untrue in any material respect; or 5) the Borrower becomes insolvent or bankrupt, is generally not paying its debts as they become due, or makes an assignment for the benefit of creditors, or a trustee or receiver is appointed for the borrower or for any part of the properties of the borrower with or without the consent of the borrower and, if not consented to by the Borrower, is not discharged within 75 days, or bankruptcy, reorganization, liquidation or similar proceedings are instituted by or against the borrower with or without the Borrower's consent and, if not consented to by the borrower, is not dismissed within 75 days, or a writ or warrant of attachment or similar process shall be issued against any party of the property of the borrower and is not dismissed within 75 days; or 6) the Bank shall have determined, in the exercise of its reasonable discretion, that one or more conditions exist or events have occurred which have resulted in a material adverse change in the business, properties or -6- financial condition of the borrower; then in any such event, and at any time thereafter, the Bank may without notice, declare the principal and the accrued interest in respect of all loans under this Note to be, whereupon the Note shall become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived by the Borrower. The Borrower agrees to pay on demand all of the Bank's costs and expenses, including reasonable counsel fees, in connection with collection of any sums due to the Bank and enforcement of its rights under this Note. No modification or waiver of any provision of this Note and no consent by the Bank to any departure therefrom by the borrower shall be effective unless such modification or waiver shall be in writing and signed by a duly authorized officer of the Bank,and the same shall then be effective only for the period and on the conditions and for the specific instances specified in such writing. No failure or delay by the Bank in exercising any right, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any rights, power or privilege. This Note shall be construed in accordance with and governed by the laws of the State of New York. The General Partners of the borrower shall not personally be liable on this Note and the Bank shall look solely to the borrower and its assets for satisfaction of any claim, liability, expense, action, judgment or other matter arising hereunder or on account hereof. This Note shall supersede and replace that certain $5,000,000 note of the Borrower in favor of the Bank dated October 26, 1992, as amended, and all outstanding indebtedness under such prior note shall be deemed to be evidenced by this Note and shall be payable on the maturity dates set forth on the Schedule attached to this Note. All accrued and unpaid interest on the aforesaid prior note shall be payable on the next applicable dates on which interest is payable pursuant to this Note. EDWARDS CAPITAL COMPANY By: Harvard Servicing Corp. General Partner By: /s/ Edward M. Abramson ------------------------- President - -7- PROMISSORY NOTE EDWARDS CAPITAL COMPANY TO NATIONAL WESTMINSTER BANK USA LOAN AND REPAYMENT SCHEDULE
==================================================================================== Date of Interest Maturity Principal Date of Principal Interest Date Advance Rate Date Payment Principal Balance Payment Interest Payment Paid - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ ====================================================================================
-8- ENDORSEMENT NO. 1 ----------------- The undersigned, EDWARDS CAPITAL COMPANY (the "Borrower"), and NATIONAL WESTMINSTER BANK USA (the "Bank") hereby agree that the Promissory Note of the Borrower in favor of the Bank dated July 31, 1993 (the "Note") to which this Endorsement No. 1 is attached is hereby amended as follows: The Note is hereby modified as follows: A. The reference to "July 31, 1994" in the first paragraph of the Note is modified to read "July 31, 1995". B. The reference to "July 31, 1994" in the second paragraph on page 2 of the Note is modified to read "July 31, 1995". Except as expressly amended by this Endorsement all the terms and conditions of the Note to which this Endorsement No.1 is attached shall continue in full force and effect. This Endorsement shall be effective as of July 31, 1994. EDWARDS CAPITAL COMPANY By: Harvard Servicing Corp. General Partner By: /s/ Edward M. Abramson ------------------------- NATIONAL WESTMINSTER BANK USA By: /s/ Charles Thomas, V.P. --------------------------- EX-99.2K.17 16 TERM NOTE DATED SEPTEMBER 29, 1995 NATWEST BANK N.A. TERM NOTE $3,231,900 Office: 175 Water Street September 29, 1995 Address: New York, NY 10038 On April 1, 1996 or on such earlier date as TRI-MAGNA CORPORATION (the "Borrower") receives the proceeds of its initial public offering of common stock currently scheduled for December 1995, the Borrower promises to pay to the order of NATWEST BANK N.A. (the "Bank") at the office of the Bank located at the place first above stated or such other place as the holder hereof may from time to time appoint in writing, in lawful money of the United States of America in immediately available funds, the principal sum of Three Million Two Hundred Thirty One Thousand Nine Hundred ($3,231,900) Dollars. The Borrower also promises to pay interest (computed on the basis of a 360 day year for actually days elapsed) at said office in like money on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity on the last day of each month, commencing October 31, 1995 and upon the payment in full of this Note at a rate equal to the Prime Rate (the rate established from time to time by the Bank as its "prime rate"), which interest rate shall change when and as the Prime Rate changes. If any payment of principal or interest becomes due on a day on which the banks in New York, New York, are required or permitted by law to remain closed, such payment may be made on the next succeeding business day on which such banks are open, and such extensions shall be included in computing interest in connection with such payment. The Borrower further agrees that after the stated or any accelerated maturity hereof this Note shall bear interest at a rate of 2% per annum in excess of the rate hereinbefore provided, payable on demand. In no event shall interest be payable hereunder in excess of the maximum rate of interest permitted under applicable law. In consideration of the granting of the loan evidenced by this Note, the Borrower hereby agrees as follows: 1. Prepayment. The Borrower may prepay this Note in whole or in part ---------- without premium or penalty. Each prepayment shall be made together with interest accrued thereon to and including the date of prepayment. 2. Representations and Warranties. The Borrower hereby represents and ------------------------------ warrants to the Bank that: a. The Borrower is duly organized, validly existing and in good standing under the laws of the state of its incorporation and is qualified to do business and in good standing under the laws of each state where its failure to so qualify would have a material adverse effect on the business, operations, property or other condition of the borrower. b. This Note has been duly authorized, executed and delivered and constitutes the valid and legally binding obligation of the Borrower, enforceable in accordance with its terms. c. The execution and delivery of this Note, and performance hereunder, will not violate any provision of the law. d. There are no actions or proceedings pending before any court or governmental authority, bureau or agency, with respect to or threatened against or affecting the Borrower, or any Subsidiary, which if determined adversely would have a material adverse effect on the business, the assets or the financial condition of the Borrower or any Subsidiary. As used herein, the term "Subsidiary" or "Subsidiaries" means any corporation or corporations of which the Borrower, alone, or the borrower and/or one or more of its Subsidiaries, owns, directly or indirectly, at least a majority of the securities having ordinary voting power for the election of directors. e. Neither the Borrower nor any Subsidiary is in default under, or in violation of, any term of, any agreement, ordinance, resolution, decree, bond, note, indenture, order or judgment to which it is a party or by which it is bound, or by which any of the properties or assets owned by or used in the conduct of its business is affected, which default or violation may have a material adverse effect on the business, the assets or the financial condition of the Borrower or any Subsidiary. The operations of the Borrower and each Subsidiary comply in all respects with all laws, ordinances and regulations applicable to them. f. Neither the Borrower nor any Subsidiary is a party to or bound by, nor are any of the properties or assets owned by it or used in the conduct of its business affected by, any agreement, ordinance, resolution, decree, bond, note, indenture, order or judgment, or subject to any charter or other corporate restriction, which materially and adversely affects the business, assets or financial condition of the Borrower or of any Subsidiary. g. All balance sheets, profit and loss statements and other financial information heretofore furnished to the Bank are true, correct and complete and present fairly the financial condition of the Borrower and its Subsidiaries as at the dates thereof and for the periods covered thereby, including contingent liabilities of every kind, which financial condition has not materially adversely changed since the date of the most recently dated balance sheet of the Borrower heretofore furnished to the Bank. h. No part of the proceeds of the loan which is evidenced by this Note will be used directly or indirectly for the purpose of purchasing or carrying, or for payment in full or in part or indebtedness which was incurred for the purpose of purchasing or carrying, any margin stock as such term is defined in Section 221.3 of Regulation U of the Board of Governors of the Federal Reserve System. i. The Borrower and its Subsidiaries are in compliance in all material respects with the Employee Retirement Income Security Act of 1974 ("ERISA") and all rules and regulations thereunder. Neither the Borrower nor any of its Subsidiaries has any unfunded vested liability under any type of plan described in Section 3021(a) of ERISA ("Plan") and no reportable event, as set forth in Section 4043(b) of ERISA, has occurred or is continuing with respect to any Plan. j. Each of the Borrower and its Subsidiary, Medallion Funding Corp. referred to in Section 3(b) hereof is an "investment company" as defined in, and is subject to regulation under, the Investment Company Act of 1940; provided that neither such Act nor any such regulation prohibits the Loan evidenced by this Note, requires any consent to the Loan evidenced hereby which has not been obtained or requires any action prior or subsequent to the making of such Loan on the part of the Borrower or Medallion Funding Corp. which, if not taken may affect the enforceability hereof. 3. Affirmative Covenants. The Borrower will, and with respect to the --------------------- agreements set forth in Subsections 3(a) through 3(f) hereof, will cause each Subsidiary to: a. with respect to its properties, assets and business, maintain insurance against loss or damage, to the extent that property, assets and businesses of similar character are usually so insured by companies similarly situated and operating like properties, assets or businesses with insurance companies believed by the borrower to be responsible; b. duly paid and discharge all taxes or other claims which might become a lien upon any of its property except to the extent that such items are being in good faith appropriately contested; c. maintain, preserve and keep its properties in good repair, working order and condition, and make all reasonable repairs, replacements, additions, betterments and improvements thereto; d. conduct its business in substantially the same manner and in substantially the same field as such business is now carried on and conducted; e. comply with all statutes, rules and regulations and maintain its corporate existence; f. permit the Bank to make or cause to be made, inspections and audits of any books, records and papers of the Borrower and to make extracts therefrom at all such reasonable times and as often as the Bank may reasonably require; g. use the proceeds of the loan evidenced by this Note for the following purposes and for no other purpose: purchase of $9,234,000 (face value) of the preferred stock of Medallion Funding Corp., a subsidiary of the Borrower, from the Small Business Administration; i) immediately give notice to the Bank that an Event of Default has occurred or that an event which, with the giving of notice or lapse of time, or both, would constitute an Event of Default, has occurred and specifying the action which the Borrower has taken and proposes to take with respect thereto. 4. Negative Covenants. The Borrower will not, and will not permit any ------------------ Subsidiary to: a. enter into any merger or consolidation or liquidate, windup or dissolve itself or sell, transfer or lease or otherwise dispose of all or any substantial part of its assets, (other than sales in the ordinary course of business) or acquire by purchase or otherwise the business or assets of, or stock of another corporation; except that any Subsidiary may merge into or consolidate with any other Subsidiary which is wholly-owned by the Borrower, and any Subsidiary which is wholly-owned by the Borrower may merge with or consolidate into the Borrower provided that the Borrower is the surviving corporation; b. create, assume or permit to exist, any mortgage, pledge, lien or encumbrance of or upon or security interest in, any of its property or assets now owned or hereafter acquired except (i) mortgages, liens, pledges and security interests in favor of the Bank; (ii) other liens, charges and encumbrances incidental to the conduct of its business or the ownership of its property and assets which were not incurred in connection with the borrowing of money or the obtaining of advances or credit and which do not materially impair the use thereof in the operation of its business; and (iii) liens for taxes or other governmental charges which are not delinquent or which are being contested in good faith and for which a reserve shall have been established in accordance with generally accepted accounting principles; c. (i) terminate any Plan so as to result in any material liability to The Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (the "PBGC"), (ii) engage in or permit any person to engage in any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1954, as amended) involving any Plan which would subject the Borrower to any material tax, penalty or other liability, (iii) incur or suffer to exist any material "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, involving any Plan, or (iv) allow or suffer to exist any event of condition, which presents a material risk of incurring a material liability to the PBGC by reason of termination of any Plan. d. sell, discount or otherwise dispose of notes, accounts receivable or other obligations owing to the Borrower, with or without recourse, except for the purpose of collection in the ordinary course of business; or sell any asset pursuant to an arrangement to thereafter lease such asset from the purchaser thereof. 5. Collateral Security. a. As collateral security for the payment of any ------------------- and all sums owing under this Note and all other obligations, direct or contingent, joint, several or independent, of the borrower now or hereafter existing, due or to become due to, or held, or to be held by, the Bank, whether created directly or acquired by assignment or otherwise (all of such obligations, including this Note, are hereinafter called the "Obligations"), the Borrower hereby grants to the Bank a lien on and security interest in any and all deposits or other sums at any time credited by or due from the Bank to the Borrower, whether in regular or special depository accounts or otherwise, and any and all monies, securities and other property of the Borrower, and the proceeds thereof, now or hereafter held or received by or in transit to the Bank from or for the borrower, whether for safekeeping, custody, pledge, transmission, collection or otherwise, and any such deposits, sums, monies, securities and other property, may at any time after the occurrence of any Event of Default be set-off, appropriated and applied by the Bank against any of the Obligations whether or not such Obligations are then due or are secured by any collateral, or, if they are so secured, whether or not such collateral held by the Bank is considered to be adequate and with respect to all collateral security the Bank shall have the rights and remedies available to it under the Uniform Commercial Code of New York and other applicable law. b. Payment of this Note is also secured by and the Borrower hereby grants to the Bank a security interest in and delivers to the Bank herewith, all of the issued and outstanding capital stock of Medallion Funding Corp. including the common stock to be issued to the borrower in replacement of the preferred stock to be purchased with the proceeds of the Loan evidenced by this Note and referred to in Section 3(g) hereof. 6. Events of Default. If any one or more of the following events ("Events ----------------- of Default") shall occur, the entire unpaid balance of the principal of and interest on the Obligations shall immediately become due and payable: a. Failure to make any payment of principal or interest in respect of any of the Obligations when due; or b. Failure to observe any of the agreements of the Borrower contained in Sections 4 or 5 hereof; or, c. Failure by the respective parties hereunder or thereunder to perform any other term, condition or covenant of this Note or any other agreement, instrument or document delivered pursuant hereto or in connection herewith or therewith, which shall remain unremedied for a period of 15 days after notice thereof shall have been given by the Bank to the Borrower; or, d. (i) Failure to perform any term, condition or covenant of any bond, note, debenture, loan agreement, indenture, guaranty, trust agreement, mortgage or other instrument or agreement in connection with the borrowing of money or the obtaining of advances or credit to which the Borrower or any Subsidiary is a party or by which is bound, or by which any of its properties or assets may be affected (a "Debt Instrument"), so that, as a result of any such failure to perform, the indebtedness included therein or secured or covered thereby is declared due and payable prior to the date on which such indebtedness would otherwise become due and payable; or, (ii) any event or condition referred to in any Debt Instrument shall occur or fail to occur, so that, as a result thereof, the indebtedness included therein or secured or covered thereby is declared due and payable prior to the date on which such indebtedness would otherwise become due and payable; or, (iii) any indebtedness included in any Debt Instrument or secured or covered thereby is not paid when due; or e. Any representation or warranty made in writing to the Bank in this Note or in connection with the making of the loan evidenced hereby or any certificate, statement or report made in compliance with this Note, shall have been false in any material respect when made; or f. An order for relief under the Federal Bankruptcy Code as now or hereafter in effect, shall be entered against the Borrower or any Subsidiary; or the Borrower or any Subsidiary shall become insolvent, generally fail to pay its debts as they become due, make an assignment for the benefit of creditors, file a petition in bankruptcy, be adjudicated insolvent or bankrupt, petition or apply to any tribunal for the appointment of a receiver or any trustee for it or a substantial part of its assets, or shall commence any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; or if there shall have been filed any such petition or application, or any such proceeding shall have been commenced against it, which remains undismissed for a period of thirty days or more; or the Borrower or any Subsidiary or endorser or guarantor hereof by any act or omission shall indicate its consent to approval of or acquiescence in any such petition, application or proceeding or the appointment of a receiver of or any trustee for it or any substantial part of any of its properties, or shall suffer any such receivership or trusteeship to continue undischarged for a period of third days or more; or, g. Any judgment against the Borrower or any Subsidiary or any attachment, levy or execution against any of its properties for any amount shall remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a period of sixty days or more; or, h. The Bank shall have determined, in its sole discretion, that one or more conditions exist or events have occurred which may result in a material adverse change in the business, properties or financial condition of the Borrower. 7. Payments. All payments by the Borrower on account of principal, -------- interest, or any other sum due hereunder, shall be made in lawful money of the United States of America in immediately available funds. The Bank may charge any account of the Borrower maintained at any office of the Bank for any such amount due hereunder. If any payment of principal or interest becomes due on a day on which the banks in New York, New York, are required or permitted by law to remain closed, such payment may be made on the next succeeding business day on which such banks are open, and such extensions shall be included in computing interest in connection with such payment. 8. Miscellaneous. ------------- a. All agreements, representations and warranties made herein shall survive the delivery of this Note. The Borrower waives trial by jury, set-off and counterclaim of any nature or description in any litigation in any court with respect to, in connection with, or arising out of, this Note or any instrument or document delivered pursuant hereto or the validity, protection interpretation, collection or enforcement hereof. b. No modification or waiver of or with respect to any provision of this Note, or consent to any departure by the Borrower from any of the terms or conditions to any departure by the Borrower from any of the terms or conditions hereof, shall in any event be effective unless it shall be in writing and signed by the Bank, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on the borrower in any case shall, of itself, entitle it to any other or further notice or demand in similar or other circumstances. c. Each and every right granted to the Bank hereunder or under any other document delivered hereunder or in connection herewith, or allowed it by law or equity, shall be cumulative and may be exercised from time to time. No failure on the part of the Bank or the holder of this Note to exercise, and no delay in exercising, any right shall operate as a waiver thereof, nor shall any single or partial exercise of any right preclude any other or future exercise thereof or the exercise of any other right. d. In the event that this Note is placed in the hands of an attorney for collection by reason of any default hereunder, the Borrower agrees to pay reasonable attorney's fees so incurred. The Borrower promises to pay all expenses of any nature as soon as incurred whether in or out of court and whether incurred before or after this Note shall become due at its maturity date or otherwise and costs which the Bank may deem necessary or proper in connection with the satisfaction of the indebtedness or the administration, supervision, preservation, protection (including but not limited to maintenance of adequate insurance) of or the realization upon the collateral. e. The Borrower hereby waives presentment, demand for payment, protest, notice of protest, notice of dishonor, and any and all other notices or demands except as otherwise expressly provided for herein. f. All accounting terms not otherwise defined in this Note shall have the meanings ascribed thereto under generally accepted accounting principles. g. This Note and any other agreements, documents and instruments executed and delivered pursuant to or in connection with the Obligations contain the entire agreement between the parties relating to the subject matter hereof and thereof. The undersigned is not relying on any oral representations, agreements or commitments of the Bank or of any officer, employee, agent or representative thereof. 9. Notices. All notices, requests and other communications pursuant to ------- this Note shall be in writing, either by letter (delivered by hand or sent by certified mail, return receipt requested) or telegram, addressed as follows: (a) if to the Borrower: Tri-Magna Corporation 205 East 42nd Street New York, New York 10017 Attn: Daniel F. Baker Vice President - Finance and, (b) if to the Bank: NatWest Bank N.A. 175 Water Street New York, New York 10038 Attn: National Markets Group Finance Companies Any notice, request or communication hereunder shall be deemed to have been given when deposited in the mails, postage prepaid, addressed as aforesaid. Any party may change the person or address to whom or which the notices are to be given hereunder, but any such notice shall be effective only when actually received by the party to whom it is addressed. 10. Governing Law; Severability. This Note and the rights and obligations --------------------------- of the parties shall be construed and interpreted in accordance with the laws of the state of New York and the Borrower consents to the jurisdiction of the courts of New York in any action brought to enforce any rights of the Bank under this Note. The provisions of this Note are severable and if any clause or provision shall be held invalid or unenforceable in whole or in part in any Jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or any part thereof, in such jurisdiction and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision in this Note in any jurisdiction. TRI-MAGNA CORPORATION By: /s/ Alvin Murstein -------------------- By: /s/ Daniel Baker, Vice President ----------------------------------- ENDORSEMENT ----------- and --- AMENDMENT NO. 1 --------------- The Undersigned Tri-Magna Corporation (the "Borrower") and NATWEST BANK N.A. (formerly National Westminster Bank USA, and hereinafter referred to as the "Bank") hereby amend the Term Note dated September 29, 1995, made by the Borrower to the order of the Bank, in the principal amount of $3,231,900 (the "Term Note") as hereinafter set forth. The Term Note matures on April 1, 1996, on which date the entire unpaid principal balance of $3,231,900 together with all interest accrued and unpaid thereon is due and payable. In accordance with the request of the Borrower, the Borrower and the Bank have agreed to extend the maturity of the Term Note from April 1, 1996 to May 31, 1996. Accordingly, the Term Note is hereby amended to the extent that the date "April 1, 1996" set forth at the beginning of the first sentence thereof is deleted, and the date "May 31, 1996" substituted therefor. Except as expressly amended by this Endorsement and Amendment No. 1, all the terms and conditions of the Term Note shall continue in full force and effect. This Endorsement and Amendment No. 1 is dated, and shall be effective as of March 30, 1996. TRI-MAGNA CORPORATION By: /s/ Daniel Baker, V.P. --------------------------- NATWEST BANK N.A. By: /s/ Amy G. Josephson, V.P. ------------------------------- EX-99.2K.18 17 TERM NOTE TERM NOTE $2,000,000.00 July 16, 1990 FOR VALUE RECEIVED, MEDALLION FUNDING CORP. (the "Borrower") promises to pay to the order of NATIONAL WESTMINSTER BANK USA (the "Bank') at the office of the Bank located at 175 Water Street, New York, New York or such other place as the holder hereof may from time to time appoint in writing, in lawful money of the United States of America in immediately available funds, the principal sum of Two Million Dollars ($2,000,000.00) on July 16, 1993. The Borrower also promises to pay interest (computed on the basis of a 360 day year for actual days elapsed) at said office in like money on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity quarterly on the last day of each March, June, September and December, commencing on December 31, 1989, and on the maturity hereof, at the rate of 10.30% per annum. If any payment of principal or interest becomes due on a day on which the banks in New York, New York are required or permitted by law to remain closed, such payment may be made on the next succeeding business day on which such banks are open, and such extensions shall be included in computing interest in connection with such payment. The Borrower further agrees that this Note shall bear interest after any stated or accelerated maturity hereof at a rate 2% per annum in excess of the rate established from time to time by the Bank as its prime rate, payable on demand. In no event shall interest be payable hereunder in excess of the maximum rate of interest permitted under applicable law. In consideration of the granting of the loan evidenced by this Note, the Borrower hereby agrees as follows: 1. Fees. The Borrower agrees to pay to the Bank a fee in the amount of ---- $10,000.00 simultaneously with the execution and delivery of this Note. 2. Indemnity. The Borrower hereby indemnifies the Bank against any loss --------- or reasonable expenses which the Bank may sustain or incur as a consequence of any default in payment of the principal amount of the loan evidenced by this Note or any part thereof or interest accrued thereon or any other amount due hereunder, or as a consequence of the occurrence of any default hereunder with respect to the loan, or as a consequence of the receipt or recovery by the Bank of all or any part of the loan other than on the maturity date thereof. Such loss and expenses shall be limited to loss or expenses sustained or incurred in liquidating or employing deposits from third parties acquired to effect or maintain such loan or any part thereof and computed substantially in accordance with the formula set forth on the exhibit attached hereto. For the purpose of this paragraph the determination by the Bank of such losses and reasonable expenses shall be conclusive if made reasonably and in good faith. 3. Representations and Warranties. The Borrower hereby represents and ------------------------------ warrants to the Bank that: (a) The Borrower is duly organized, validly existing and in good standing under the laws of the state of its incorporation and is qualified to do business and in good standing under the laws of each state where its failure to so qualify would have a material adverse effect on the business, operations, property or other condition of the Borrower. (b) This Note has been duly authorized, executer and delivered and constitutes the valid and legally binding obligation of the Borrower, enforceable in accordance with its terms. (c) The execution and delivery of this Note, and performance hereunder, will not violate any provision of law. (d) There are no actions or proceedings pending before any court or governmental authority, bureau or agency, with respect to or threatened against or affecting the Borrower, or any Subsidiary, which if determined adversely would have a material adverse effect on the business, the assets or the financial condition of the Borrower or any Subsidiary. As used herein, the term "Subsidiary" or "Subsidiaries" means any corporation or corporations of which the Borrower, alone, or the Borrower and/or one or more of its Subsidiaries, owns, directly or indirectly, at least a majority of the securities having ordinary voting power for the election of directors. (e) Neither the Borrower nor any Subsidiary is in default under, or in violation of, any term of, any agreement, ordinance, resolution, decree, bond, note, indenture, order or judgment to which it is a party or by which it is bound, or by which any of the properties or assets owned by or used in the conduct of its business is affected, which default or violation may have a material adverse effect on the business, the assets or the financial condition of the Borrower or any Subsidiary. The operations of the Borrower and each Subsidiary comply in all material respects with all laws, ordinances and regulations applicable to them. (f) Neither the Borrower nor any Subsidiary is a party to or bound by, nor are any of the properties or assets owned by it or used in the conduct of its business affected by, any agreement, ordinance, resolution, decree, bond, note, indenture, order or judgment, or subject to any charter or other corporate restriction, which materially and adversely affects the business, assets or financial condition of the Borrower or of any Subsidiary. (g) All balance sheets, profit and loss statements and other financial information heretofore furnished to the Bank are true, correct and complete and present fairly the financial condition of the Borrower and its Subsidiaries as at the dates thereof and for the periods covered thereby, including contingent liabilities of every kind, which financial condition has not materially adversely changed since the date of the most recently dated balance sheet of the Borrower heretofore furnished to the Bank. (h) No part of the proceeds of the loan which is evidenced by this Note will be used directly or indirectly for the purpose of purchasing or carrying, or for payment in full or in part of indebtedness which was incurred for the purpose of purchasing or carrying, any margin stock as such term is defined in Sec. 221.3 of Regulation U of the Board of Governors of the Federal Reserve System. -2- (i) The Borrower and its Subsidiaries are in compliance in all material respects with the Employee Retirement Income Security Act of 1974 ("ERISA") and all rules and regulations thereunder. Neither the Borrower nor any of its Subsidiaries has any unfunded vested liability under any type of plan described in Section 4021(a) of ERISA ("Plan") and no reportable event, as set forth in Section 4043(b) of ERISA, has occurred or is continuing with respect to any Plan. 4. Financial Statements. The Borrower shall deliver to the Bank: -------------------- (a) Annually, as soon as available, but in any event within 120 days after the last day of each of its fiscal years, consolidated and consolidating balance sheets of the Borrower and its Subsidiaries, as at such last day of the fiscal year, and consolidated and consolidating statements of income and retained earnings and statement of cash flows, for such fiscal year, each prepared in accordance with generally accepted accounting principles consistently applied, in reasonable detail, such consolidated statements to be certified without qualification by a firm of independent certified public accountants satisfactory to the Bank, except a qualification substantially similar to the qualification made by Arthur Anderson and Company in the Borrower's certified financial statement for the fiscal year ended March 31, 1987. (b) As soon as available, but in any event within 70 days after the end of each of its first three fiscal quarterly periods, the consolidated and consolidating balance sheets of the Borrower and its Subsidiaries as of the last day of such quarter, and consolidated and consolidating statements of income and retained earnings and statement of cash flows, for such quarterly period and the portion of the fiscal year through such date, all in reasonable detail, each such statement to be signed by the President or Treasurer of the Borrower and stated by the President or Treasurer that to the best of his or her knowledge are true and correct and have been prepared in accordance with generally accepted accounting principles consistently applied (subject to year-end audit adjustments). (c) At the same time as it delivers the financial statements required under the provisions of subsection 4(a), a copy of the most recent Robert Morris Associates commercial financing questionnaire prepared by the Borrower. (d) At the same time as it delivers the financial statements required under the provisions of subsection 4(b), a Robert Morris delinquency report for all loans made by the Borrower, including the principal balance outstanding thereunder, substantially in the form of the last such delinquency report heretofore furnished to the Bank. (e) Promptly after a written request therefor, such other financial data or information as the Bank may reasonably request from time to time. (f) At the same time as it delivers the financing statements required under the provisions of subsections 4(a) and 4(b), a certificate signed by the President or Treasurer of the Borrower, to the effect that no Event of Default hereunder or under any other agreement to which the Borrower or any Subsidiary is a party or by which it is bound, or by which any of its properties or assets may be affected, and no event which, with the giving of notice or the lapse of time, or both, would constitute such an Event of Default, has occurred. -3- 5. Affirmative Covenants. The Borrower will, and with respect to the --------------------- agreements set forth in Subsections 5(a) through 5(f) hereof, will cause each Subsidiary to: (a) with respect to its properties, assets and business, maintain insurance against loss or damage, to the extent that property, assets and businesses of similar character are usually so insured by companies similarly situated and operating like properties, assets or businesses with insurance companies believed by the Borrower to be responsible; (b) duly pay and discharge all taxes or other claims which might become a lien upon any of its property except to the extent that such items are being in good faith appropriately contested; (c) maintain, preserve and keep its properties in good repair, working order and condition, and make all reasonable repairs, replacements, additions, betterments and improvements thereto; (d) conduct its business in substantially the same manner and in substantially the same fields as described in Section 5(g) hereof; (e) comply in all material respects with all statutes, rules and regulations and maintain its corporate existence; (f) permit the Bank to make or cause to be made, inspections and audits of any books, records and papers of the Borrower and to make extracts therefrom at all such reasonable times and as often as the Bank may reasonably require; (g) use the proceeds of the loan evidenced by this Note for the purpose of financing receivables, making loans and conducting other activities relating to the foregoing; (h) maintain at all times consolidated tangible net worth in an amount not less than $17,000,000 ("tangible net worth" to be equal to the sum of capital surplus, earned surplus and capital stock minus loans more than 120 days past due on a contractual basis which are in excess of the allowance for losses); (i) maintain at all times a ratio of total unsubordinated debt to consolidated tangible net worth plus subordinated debt of not more than 1.5 to 1; (j) maintain at all times a ratio of net income plus interest expense divided by interest expense of not less than 1.35 to 1; and (k) immediately give notice to the Bank that an Event of Default has occurred or that an event which, with the giving of notice or lapse of time, or both, would constitute an Event of Default, has occurred and specifying the action which the Borrower has taken and proposes to take with respect thereto. -4- 6. Negative Covenants. The Borrower will not, and will not permit any ------------------ Subsidiary to: (a) enter into any merger or consolidation or liquidate, windup or dissolve itself or sell, transfer or lease or otherwise dispose of all or any substantial part of its assets, (other than sales of participations in loans in the ordinary course of business and with respect to which the participant obtains no greater rights than the Borrower) or acquire by purchase or otherwise the business or assets of, or stock of another corporation; except that any Subsidiary may merge into or consolidate with any other Subsidiary which is wholly-owned by the Borrower, and any Subsidiary which is wholly-owned by the Borrower may merge with or consolidate into the Borrower provided that the Borrower is the surviving corporation; (b) lend or advance money, credit or property to or invest in (by capital contribution, loans, purchase or otherwise) any firm, corporation, or other person except loans, advances and extensions of credit in the ordinary course of business and investments in United States Government obligations and certificates of deposit of any banking institution with combined capital and surplus of at least $200,000,000; (c) create, assume or permit to exist, any mortgage, pledge, lien or encumbrance of or upon or security interest in, any of its property or assets now owned or hereafter acquired except (i) mortgages, liens, pledges and security interests in favor of the Bank and in favor of any other entities who are parties to an Inter-Creditor Agreement with the Bank; (ii) other liens, charges and encumbrances incidental go the conduct of its business or the ownership of its property and assets which were not incurred in connection with the borrowing of money or the obtaining of advances or credit and which do not materially impair the use thereof in the operation of its business; and (iii) liens for taxes or other governmental charges which are not delinquent or which are being contested in good faith and for which a reserve shall have been established in accordance with generally accepted accounting principles; (d) assume, endorse, be or become liable for or guarantee the obligations of any person in excess of $200,000 in the aggregate for all such obligations except by the endorsement of negotiable instruments for deposit or collection in the ordinary course of business; (e) declare or pay any dividends on its capital stock (other than dividends payable solely in shares of its own common stock), or purchase, redeem, retire or otherwise acquire any of its capital stock at any time outstanding, if (i) an Event of Default, or an event which, with the giving of notice or the lapse of time, or both, would constitute such an Event of Default, has occurred or (ii) such action will result in an Event of Default hereunder; (f) permit loan concentrations by types of business (determined in accordance with the Standard Industrial Classification promulgated by the Office of Management and Budget) in excess of 20% of the Borrower's total outstanding loans, except loans made to owners of taxicab medallions; and (g) (i) terminate any Plan so as to result in any material liability to The Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA -5- (the "PBGC"), (ii) engage in or permit any person to engage in any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1954, as amended) involving any Plan which would subject the Borrower to any material tax, penalty or other liability, (iii) incur or suffer to exist any material "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, involving any Plan, or (iv) allow or suffer to exist any event of condition, which presents a material risk of incurring a material liability to the PBGC by reason of termination of any Plan. 7. Events of Default. If any one or more of the following events ("Events ----------------- of Default") shall occur, the entire unpaid balance of the principal of and interest on the loan evidenced by this Note shall immediately become due and payable: (a) Failure to make any payment of principal payable hereunder when due; or, (b) Failure to make any Payment of interest or any other amounts due hereunder within five days after the same shall become due; or, (c) Failure to observe any of the agreements of the Borrower contained in Sections 5 or 6 hereof; or, (d) Failure by the respective parties hereunder or thereunder to perform any other term, condition or covenant of this Note or any other agreement, instrument or document delivered pursuant hereto or in connection herewith or therewith, which shall remain unremedied for a period of 15 days after notice thereof shall have been given by the Bank to the Borrower; or, (e) (i) Failure to perform any term, condition or covenant of any bond, note, debenture, loan agreement, indenture, guaranty, trust agreement, mortgage or other instrument or agreement in connection with the borrowing of money or the obtaining of advances or credit to which the Borrower or any Subsidiary is a party or by which it is bound, or by which any of its properties or assets may be affected (a "Debt Instrument"), so that, as a result of any such failure to perform the indebtedness included therein or secured or covered thereby may be declared due and payable prior to the date on which such indebtedness would otherwise become due and payable, provided, however, that a default by the Borrower under Section 6.15 (entitled Ratio of Total Unsubordinated Liabilities to Net Assets Plus Subordinated Debt) of a certain Standby Credit and Term Note Agreement between the Borrower and Chemical Bank dated April 16, 1986 shall not be deemed to be an Event of Default hereunder until Chemical Bank shall have declared the indebtedness evidenced by such agreement to be due and payable by reason of such default; or, (ii) any event or condition referred to in any Debt Instrument shall occur or fail to occur, so that, as a result thereof the indebtedness included therein or secured or covered thereby may be declared due and payable prior to the date on which such indebtedness would otherwise become due and payable; or, -6- (iii) any indebtedness included in any Debt Instrument or secured or covered thereby is not paid when due (after giving effect to any applicable grace period); or (f) Any representation or warranty made in writing to the Bank in this Note or in connection with the making of the loan evidenced hereby or any certificate, statement or report made in compliance with this Note, shall have been false in any material respect when made; or (g) An order for relief under the Federal Bankruptcy Code as now or hereafter in effect shall be entered against the borrower or any Subsidiary; or the Borrower or any Subsidiary shall become insolvent, generally fail to pay its debts as they become due, make an assignment for the benefit of creditors, file a petition in bankruptcy, be adjudicated insolvent or bankrupt, petition or apply to any tribunal for the appointment of a receiver or any trustee for it or a substantial part of its assets, or shall commence any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; or if there shall have been filed any such petition or application, or any such proceeding shall have been commenced against it, which remains undismissed for a period of sixty days or more; or the Borrower or any Subsidiary or endorser or guarantor hereof by any act or omission shall indicate its consent to approval of or acquiescence in any such petition, application or proceeding or the appointment of a receiver of or any trustee for it or any substantial part of any of its properties, or shall suffer any such receivership or trusteeship to continue undischarged for a period of thirty days or more; or, (h) Any judgment against the Borrower or any Subsidiary or any attachment, levy or execution against any of its properties for an amount in excess of $100,000 shall remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a period of sixty days or more. 8. Interest Adjustment. Notwithstanding anything to the contrary ------------------- contained in this Note, the rate of interest payable on this Note shall never exceed the maximum rate of interest permitted under applicable law. If at any time the rate of interest otherwise prescribed herein shall exceed such maximum rate, and such prescribed rate is thereafter below such maximum rate, the prescribed rate shall be increased to the maximum rate for such period of time as is required so that the total amount of interest received by the Bank is that which would have been received by the Bank, except for the operation of the first sentence of this Section 8. 9. Miscellaneous. ------------- (a) All agreements, representations and warranties made herein shall survive the delivery of this Note. The Borrower waives trial by jury, set-off and counterclaim in any litigation in any court with respect to, in connection with, or arising out of, this Note or any instrument or document delivered pursuant hereto or the validity, protection, interpretation, collection or enforcement hereof. (b) No modification or waiver of or with respect to any provision of this Note, or consent to any departure by the Borrower from any of the terms or conditions hereof, shall in any event be effective unless it shall be in writing and signed by the Bank, and then such -7- waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on the Borrower in any case shall, of itself, entitle it to any other or further notice or demand in similar or other circumstances. (c) Each and every right granted to the Bank hereunder or under any other document delivered hereunder or in connection herewith, or allowed it by law or equity, shall be cumulative and may be exercised from time to time. No failure on the part of the Bank or the holder of this Note to exercise, and no delay in exercising, any right shall operate as a waiver thereof, nor shall any single or partial exercise of any right preclude any other or future exercise thereof or the exercise of any other right. (d) In the event that this Note is placed in the hands of an attorney for collection by reason of any default hereunder, the Borrower agrees to pay reasonable attorney's fees so incurred. The Borrower promises to pay all expenses of any nature as soon as incurred whether in or out of court and whether incurred before or after this Note shall become due at its maturity date or otherwise and costs which the Bank may deem necessary or proper in connection with the satisfaction of the indebtedness. (e) The Borrower hereby waives presentment, demand for payment, protest, notice of protest, notice of dishonor, and any or all other notices or demands except as otherwise expressly provided for herein. (f) All accounting terms not otherwise defined in this Note shall have the meanings ascribed thereto under generally accepted accounting principles. 10. Notices. All notices, requests and other communications pursuant to ------- this Note shall be in writing, either by letter (delivered by hand or sent by certified mail, return receipt requested) or telegram, addressed as follows: (a) if to the Borrower: Medallion Funding Corp. 205 East 42nd Street Suite 2020 New York, New York 10017 Attn: Alvin Murstein, President and, (b) if to the Bank: National Westminster Bank USA 175 Water Street New York, New York 10038 Attn: Barbara A. Wenner, Assistant Vice President -8- Any notice, request or communication hereunder shall be deemed to have been given when deposited in the mails, postage prepaid, addressed as aforesaid. Any party may change the person or address to whom or which the notices are to be given hereunder, but any such notice shall be effective only when actually received by the party to whom it is addressed. 11. Governing Law. This Note and the rights and obligations of the ------------- parties shall be construed and interpreted in accordance with the laws of the State of New York and the Borrower consents to the jurisdiction of the courts of New York in any action brought to enforce any rights of the Bank under this Note. MEDALLION FUNDING CORP. By /s/ Alvin Murstein ------------------- (Title) By /s/ Myron Cohen ---------------- (Title) -9- ENDORSEMENT and AMENDMENT NO. 3 --------------- The undersigned, MEDALLION FUNDING CORP. (the "Borrower") and NATWEST BANK N.A. (formerly National Westminster Bank, USA, and hereinafter referred to as "NATWEST") hereby amend the Term Note dated July 16, 1990, made by the Borrower to the order of the Bank, as amended by Amendment No. 1 dated as of March 27, 1992, and Amendment No. 2 dated as of July 16, 1993 in the principal amount of $2,000,000 (the "Term Note") as hereinafter set forth. The Term Note matures on July 16, 1995 on which date the entire unpaid principal balance of $2,000,000 together with all interest accrued and unpaid thereon is due and payable. In accordance with the request of the Borrower, the Borrower and the Bank have agreed to extend the maturity of the Term Note from July 16, 1995 to July 31, 1997 and to change the rate of interest applicable thereto during such extension from 5.88% per annum to 7.50% per annum. Accordingly, the Term Note is hereby amended to the extent that: (a) the date, "July 16, 1995" set forth at the end of the first sentence thereof is deleted, and the date "July 31, 1997" is substituted therefor and (b) the interest rate of "5.88% per annum" set forth at the end of the second sentence thereof is deleted and the rate "7.50% per annum" is substituted therefor. Except as expressly amended by this Endorsement and Amendment No. 3, all the terms and conditions of the Term Note shall continue in full force and effect. This endorsement and Amendment No. 3 is dated, and shall be effective, as of July 16, 1995. MEDALLION FUNDING CORP. By /s/ Daniel Baker ----------------- NATWEST BANK N.A. By /s/ Richard J. Miller ---------------------- -10- Endorsement and Amendment No. 2 --------------- The undersigned, MEDALLION FUNDING CORP., (the "Borrower") and NATIONAL WESTMINSTER BANK USA ("NatWest") hereby amend the Term Note dated July 16, 1990, made by the Borrower to the order of the Bank, as amended by Amendment No. 1 dated as of March 27, 1992, in the principal amount of $2,000,000 (the "Term Note") as hereinafter set forth. The Term Note matures on July 16, 1993 on which date the entire unpaid principal balance of $2,000,000 together with all interest accrued and unpaid thereon is due and payable. In accordance with the request of the Borrower, the Borrower and the bank have agreed to extend the maturity of the Term Note from July 16, 1993 to July 16, 1995 and to change the rate of interest applicable thereto during such extension from 10.30% per annum to 5.88% per annum. Accordingly, the Term Note is hereby amended to the extent that: (a) the date "July 16, 1993" set forth at the end of the first sentence thereof is deleted, and the date "July 16, 1995" is substituted therefor and (b) the interest rate of "10.30% per annum" set forth at the end of the second sentence thereof is deleted and the rate "5.88% per annum" is substituted therefor. Except as expressly amended by this Endorsement and Amendment No. 2, all the terms and conditions of the Term Note shall continue in full force and effect. This Endorsement and Amendment No. 2 is dated, and shall be effective, as of July 16, 1993. MEDALLION FUNDING CORP. By: /s/ Alvin Murstein ---------------------- NATIONAL WESTMINSTER BANK USA By: /s/ Richard J. Miller, V.P. ------------------------------ AMENDMENT NUMBER ONE, dated as of March 27, 1992, to the Term Note, dated July 16, 1990, from MEDALLION FUNDING CORP. (the "Borrower") to the order of NATIONAL WESTMINSTER BANK USA (the "Bank"), in the principal amount of Two Million Dollars (the "Term Note"). WHEREAS, the Borrower, the Bank, as a bank and as Agent, and certain other banks that are signatory thereto (the "Other Banks") have entered into a Loan Agreement, dated as of March 27, 1992 (as the same may be amended or supplemented from time to time, the "Loan Agreement"), providing for revolving credit loans (the "Revolving Credit Loans") and term loans (the "Term Loans") not to exceed the amounts provided in the Loan Agreement. WHEREAS, it is a condition precedent to the obligation of the Bank and the Other Banks to make such Revolving Credit Loans and Term Loans that the Borrower agree to amend the Term Note pursuant to the terms set forth herein. NOW, THEREFORE, in consideration of the Bank's and the Other Bank's willingness to make such Revolving Credit Loans and Term Loans, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Borrower and the Bank hereby covenant and agree as follows: 1. Section 4 is hereby amended by deleting the text thereof in its entirety and substituting in its place the following: "4. Affirmative Covenants. The Borrower covenants and agrees that, until --------------------- the Term Note together with interest and all other indebtedness of the Borrower owed to the Bank thereunder are paid in full and all of the Borrower's obligations thereunder are terminated, Borrower will, unless specifically waived in writing by the Required Banks (as such term is defined in the Loan Agreement): (a) provide to the Bank all of the information required to be provided to the Agent or the Banks (as such terms are defined in the Loan Agreement) pursuant to Section 6.1 of the Loan Agreement, in all cases within the time periods and in accordance with all of the terms and conditions of such Section 6.1. (b) comply with and abide by all of the terms, covenants and conditions set forth in Sections 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.10, 6.12, 6.13, 6.14 and 6.15 of the Loan Agreement, and such Sections, and the definitions of all terms utilized in such Sections, are hereby incorporated herein in full by reference. (c) upon the request of the Bank, at Borrower's cost and expense, duly execute and deliver, or cause to be duly executed and delivered, to the Bank such further instruments, and do and cause to be done such further acts as may be reasonably necessary and proper in the opinion of the Bank to carry out more effectually the provisions and purposes of the Term Note and the Borrower Security Agreement (as such term is defined in the Loan Agreement)." 2. Section 5 is hereby amended by deleting the text thereof in its entirety and substituting in its place the following: "5. Financial Covenants. The Borrower covenants and agrees that, -------------------- until the Term Note, together with interest and all other indebtedness of the Borrower owed to the Bank thereunder are paid in full and the Borrower's obligations thereunder are terminated, the Borrower will not suffer or permit, without the prior written consent of the Required Banks, any of the circumstances set forth in Sections 7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8 or 7.9 of the Loan Agreement, and such Sections and the definitions of all terms utilized in such Sections, are hereby incorporated herein in full by reference." 3. Section 6 is hereby amended by deleting the text thereof in its entirety and substituting in its place the following: "6. Negative Covenants. The Borrower covenants and agrees that, ------------------- until the Term Note, together with interest and all other indebtedness of the Borrower owed to the Bank thereunder are paid in full and the Borrower's obligations thereunder are terminated, Borrower will not create, suffer or permit, without the prior written consent of the Required Banks, any of the circumstances set forth in Sections 8.1, 8.2, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 8.9, 8.10, 8.11, 8.12, 8.13 or 8.14 of the Loan Agreement, and such Sections, are hereby incorporated herein in full by reference." 4. Section 7 of the Term Note is hereby amended by adding thereto a new subsection (i), which shall read as follows: "(i) if a Default or Event of Default (as such terms are defined in the Loan Agreement) shall occur or have been declared under the Loan Agreement and such Default or Event of Default shall not have been remedied within the grace or cure period, if any, as may be provided therefor." 5. A new Section 12 shall be added to the Term Note, which shall read as follows: "11. Security. This Term Note is one of the "NatWest Existing Term --------- Notes" referred to in the Loan Agreement and is secured as provided therein." 6. Except as specifically amended hereby, all terms and provisions of the Term Note shall remain unchanged and in full force and effect. IN WITNESS WHEREOF, the Borrower and the Bank have caused this Amendment Number One to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. MEDALLION FUNDING CORP. By:/s/ Alvin Murstein ---------------------------- Title: President /s/ Daniel F. Baker ---------------------------- Title: V.P., Finance NATIONAL WESTMINSTER BANK USA By: /s/ Thomas J. Levy ---------------------------- Title: Vice President EX-99.2K.30 18 EMPLOYEE AGREEMENT-ALVIN MURSTEIN EMPLOYMENT AGREEMENT -------------------- THIS EMPLOYMENT AGREEMENT dated ________ ___, 1996, is between Medallion Financial Corp., a Delaware corporation with its principal place of business at 205 East 42nd Street, Suite 2020, New York, NY 10017 (the "Company"), and Alvin Murstein residing at 6 Sandpiper Court, Old Westbury, NY 11568 (the "Executive"). WHEREAS, the Executive is presently employed by the Company as the Chief Executive Officer of the Company; WHEREAS, the Board of Directors of the Company (the "Board") desires to ----- provide for the continued employment of the Executive, which the Board believes is in the best interests of the Company and its shareholders, and the Executive is willing to commit himself to serve the Company, on the terms and conditions herein provided; NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties hereto hereby agree as follows: The Company agrees to employ the Executive, and the Executive agrees to serve the Company, on the terms and conditions set forth herein. 1. Title; Capacity. The Executive shall serve as Chief Executive Officer --------------- of the Company and shall be based at the Company's headquarters in New York City. The Executive hereby accepts such employment and agrees to undertake the duties and responsibilities inherent in such position and such other duties and responsibilities as the Board or its designee shall from time to time reasonably assign to him. The Executive agrees to abide by the rules, regulations, instructions, personnel practices and policies of the Company and any changes therein which may be adopted from time to time by the Company. The Company further agrees to use its best efforts to cause the Executive to be nominated as a member of the Board and a member of the Executive Committee (if such a committee is created). 2. Term of Employment. The Company agrees to employ the Executive, and ------------------ the Executive agrees to serve the Company for a period commencing on ________ ___, 1996 (the "Commencement Date") and continuing for five years thereafter ----------------- (such period, including all extensions thereto, to be collectively referred to as the "Employment Period"), unless otherwise terminated pursuant to the terms ----------------- hereof. The Employment Period shall automatically renew annually for a new five-year term unless prior to the end of the first year of each five-year term, either the Company or the Executive provides notice to the other party to this Agreement of its intention not to extend the Employment Period beyond the then current five-year term. Any notice given pursuant to this Section shall be provided in accordance with the terms of Section 8.1 hereof and shall be provided not later than 30 days prior to the end of such one-year period. 3. Compensation and Benefits. ------------------------- 3.1 Salary. The Company shall pay the Executive, in monthly ------ installments, an annual base salary of $250,000 for the one-year period commencing on the Commencement Date. Such salary shall be subject to adjustment thereafter as determined by mutual agreement between the Board and the Executive. 3.2 Bonus and Fringe Benefits. The Executive shall be entitled to ------------------------- participate in all bonus and benefit programs or plans that the Company establishes -2- and makes available to its employees to the extent that the Executive's position, tenure, salary, and other qualifications make him eligible to participate. 3.3 Reimbursement of Expenses. The Company shall reimburse the ------------------------- Executive for all reasonable travel, entertainment and other expenses incurred or paid by the Executive in connection with, or related to, the performance of his duties, responsibilities or services under this Agreement, upon presentation by the Executive of documentation, expense statements, vouchers and/or such other supporting information as the Company may reasonably request, provided, however, that the amount -------- ------- available for such travel, entertainment and other expenses may be fixed in advance by the Board. 3.4 Insurance. The Executive shall be entitled to health insurance --------- coverage, term life insurance and long term disability insurance to the extent that the Executive's position, tenure, salary, age, health and other qualifications make him eligible to participate. 3.5 Vacation. The Executive shall be entitled to six weeks paid -------- vacation per year. 4. Employment Termination. The employment of the Executive by the ---------------------- Company pursuant to this Agreement may be terminated under the following circumstances: 4.1 Expiration of Term. Expiration of the Employment Period in ------------------ accordance with Section 2. 4.2 Death. Upon the death of the Executive. ----- 4.3 Disability. If, as a result of the Executive's incapacity due to ---------- physical or mental illness, the Executive shall have failed to perform the services contemplated under this Agreement for a period of 270 consecutive days, or a total of at least 300 -3- calendar days during any 365-day period, or a determination of disability shall have been made by a physician satisfactory to both the Executive and the Company, provided that if the Executive and the Company do not agree on a physician, the Executive and the Company shall each select a physician and these two together shall select a third physician whose determination as to disability shall be binding on both parties. 4.4 Cause. The Company may terminate the Executive's employment ----- hereunder for Cause. For purposes of this Agreement, the Company shall have "Cause" to terminate the Executive's employment hereunder in the ----- event: (i) the Executive shall have willfully failed and continued to fail substantially to perform the duties (other than any failure resulting from the Executive's incapacity due to physical or mental illness or any actual or anticipated failure after the issuance by him of a Notice of Termination, as defined in Section 4.6), for 30 days after a written demand for performance is delivered to the Executive on behalf of the Company which specifically identifies the manner in which it is alleged that the Executive has not substantially performed his duties; provided that the Company's economic performance or -------- failure to meet any specific projection shall not, in and of itself, constitute "Cause"; or ----- (ii) the Executive shall have engaged in (A) any material misappropriation of funds, properties or assets of the Company, it being understood that "material" for these purposes shall take into -------- account both the amount of funds, properties or assets misappropriated and the circumstances thereof (including the intent of the Executive in connection therewith) or (B) -4- any malicious damage or destruction of any property or assets of the Company, whether resulting from the Executive's wilful actions or omissions or the Executive's gross negligence; or (iii) the Executive shall (A) have been convicted of a crime involving moral turpitude or constituting a felony or (B) entered a plea of nolo contendere to any such crime, either of which has had a material adverse effect upon the business of the Company; or (iv) the Executive shall have (A) materially breached his obligations under Section 6 hereof or (B) breached any of the other material provisions of this Agreement and such breach shall remain uncured by the Executive within 30 days following receipt of notice from the Company specifying such breach. 4.5 Termination by the Executive. The Executive may terminate his ---------------------------- employment hereunder (i) upon 90 days written notice or (ii) for Good Reason (as defined below). For purposes of this Agreement, "Good Reason" shall exist if there is ----------- a Change in Control (as defined below) of the Company and one or more of the following events shall have occurred (without the Executive's express written consent): (a) the assignment to the Executive of any duties inconsistent with his status as Chief Executive Officer of the Company, his removal from the position of Chief Executive Officer of the Company, or a substantial alteration in the nature or status of his responsibilities from those in effect immediately prior to the Change in Control; -5- (b) a reduction by the Company of the Executive's annual base salary in effect on the date immediately prior to the Change in Control; (c) the relocation of the Company's principal executive offices to a location outside mid-town New York City or a requirement that the Executive shall be based anywhere other than the Company's principal executive offices except for required travel on the Company's business to an extent substantially consistent with his business travel obligations prior to the Change in Control; (d) the failure by the Company to continue in effect any bonus plan in which the Executive was participating immediately prior to the Change in Control; or (e) the failure by the Company to continue to provide the Executive with benefits at least as favorable as those enjoyed by him under any of the Company's pension, life insurance, medical, health and accident, disability, deferred compensation or savings plans in which he was participating at the time of the Change in Control, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits or deprive him of any material fringe benefit enjoyed by him at the time of the Change in Control, or the failure by the Company to provide the Executive with the number of paid vacation days to which he was entitled at the time of the Change in Control. -6- For purposes of this Agreement, a "Change in Control" of the Company ----------------- shall mean a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended. 4.6 Notice of Termination. Any termination of the Executive's --------------------- employment by the Company or by the Executive (other than termination pursuant to Section 4.2) shall be communicated by Notice of Termination to the other party hereto. For purposes of this Agreement, a "Notice of --------- Termination" shall mean a written notice which shall indicate the specific ----------- termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances which provide a basis for termination of the Executive's employment under the provision so indicated. 4.7 Date of Termination. "Date of Termination" shall mean (i) if the ------------------- ------------------- Executive's employment is terminated pursuant to Section 4.1, the date on which the Employment Period expires pursuant to Section 2, (ii) if the Executive's employment is terminated pursuant to Section 4.2, the date of the Executive's death, (iii) if the Executive's employment is terminated pursuant to Section 4.3, 30 days after the Notice of Termination is given (provided that the Executive shall not have returned to the performance of his duties on a full-time basis during such 30 day period), (iv) if the Executive's employment is terminated pursuant to Section 4.4 or subsection (i) of Section 4.5, the date specified in the Notice of Termination, provided that in the case of a Section 4.4 termination it is at least 30 days subsequent to the date of the issuance of such Notice of Termination and in the case of a subsection (i) of Section 4.5 termination it is at least 90 days subsequent to the date of the issuance of such -7- Notice of Termination, (v) if the Executive's employment is terminated pursuant to subsection (ii) of Section 4.5, the date specified in such Notice of Termination, and (vi) if the Executive's employment is terminated other than as provided herein, the date specified in the Notice of Termination, provided that it is at least 30 days subsequent to the date of the issuance of such Notice of Termination. 5. Compensation Upon Termination. ----------------------------- 5.1 If the Executive's employment is terminated under the provisions of Sections 4.1, 4.4 or subsection (i) of Section 4.5, the Company shall pay to the Executive his full salary, bonus and benefits through the Date of Termination. 5.2 If the Executive's employment is terminated by the Executive's death under the provisions of Section 4.2, the Company shall pay to the Executive's estate the Executive's full salary, bonus and benefits to the Executive through the Date of Termination. 5.3 If the Executive's employment is terminated under the provisions of Section 4.3, the Company shall pay to the Executive his full salary, bonus and benefits through the Date of Termination. During any period that the Executive fails to perform his duties hereunder as a result of disability (as defined in Section 4.3), the Executive shall continue to receive his full salary, bonus and benefits through the Date of Termination. 5.4 If the Company shall terminate the Executive's employment other than as provided herein or the Executive shall terminate his employment pursuant to subsection (ii) of Section 4.5, then: (i) The Company shall pay the Executive his full salary, bonus and benefits through the Date of Termination. -8- (ii) Subject to subsection (iv) of this Section 5.4, in lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination, the Company shall pay as severance pay to the Executive an amount equal to the remainder of the salary, bonus and value of the fringe benefits which the Executive would be entitled to receive for the balance of the Employment Period. (iii) The Company shall pay all other damages to which the Executive may be entitled as a result of such termination, including damages for any and all legal fees and expenses incurred by him as a result of such termination. (iv) In the event that (A) any payment or benefit received or to be received by the Executive in connection with a Change in Control of the Company or the termination of the Executive's employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company) (collectively referred to herein as "Severance Payments") would not be deductible (in whole or part) as a ------------------- result of section 280G of the Internal Revenue Code of 1986, as amended, (the "Code") by the Company, an affiliate or other person ---- making such payment or providing such benefit and (B) it shall be determined that the net amount retained by the Executive, after deduction of the excise tax imposed by section 4999 of the Code and any federal, state and local income and employment taxes on the Severance Payments, does not exceed 110% of the net amount retained by the Executive after applying the limitations of this subsection (iv) of Section 5.4 and after deduction of any federal, state and local income and employment taxes on the -9- Severance Payments as so reduced, the Severance Payments shall be reduced until no portion of the Severance Payments is not deductible, or the Severance Payments are reduced to zero. For purposes of this limitation (i) no portion of the Severance Payments the receipt or enjoyment of which the Executive shall have effectively waived in writing prior to the date of payment of the Severance Payments shall be taken into account, (ii) no portion of the Severance Payments shall be taken into account which in the opinion of tax counsel selected by the Company's independent auditors and acceptable to the Executive does not constitute a "parachute payment" within the meaning of ----------------- section 280G(b)(2) of the Code, (iii) the Severance Payments shall be reduced only to the extent necessary so that the Severance Payments (other than those referred to in clauses (i) or (ii)) in their entirety constitute reasonable compensation for services actually rendered within the meaning of section 280G(b)(4) of the Code or are otherwise not subject to disallowance as deductions, in the opinion of the tax counsel referred to in clause (ii); and (iv) the value of any non-cash benefit or any deferred payment or benefit included in the Severance Payments shall be determined by the Company's independent auditors in accordance with the principles of sections 280G(d)(3) and (4) of the Code. For purposes of determining the income taxes on the Severance Payments, the Executive shall be deemed to pay federal income tax at the highest marginal rate of federal income taxation in the calendar year in which the Severance Payments are to be made and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence -10- on the Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. 6. Proprietary Information and Developments. ---------------------------------------- 6.1 Proprietary Information. ----------------------- (i) The Executive agrees that all information and know how, whether or not in writing, of a private, secret or confidential nature concerning the Company's business or financial affairs (collectively, "Proprietary Information") is and shall be the exclusive property of ----------------------- the Company. By way of illustration, but not limitation, Proprietary Information may include inventions, products, processes, methods, techniques, projects, developments, plans, research data, financial data, personnel data, and lists of borrowers, advertisers, fleet and taxi owners. The Executive will not disclose any Proprietary Information to others outside the Company or use the same for any unauthorized purposes without written approval by the Board, either during or after his employment, unless and until such Proprietary Information has become public knowledge without fault by the Executive. (ii) The Executive agrees that all files, letters, memoranda, reports, records, data, sketches, drawings, or other written, photographic, or other tangible material containing Proprietary Information, whether created by the Executive or others, which shall come into his custody or possession, shall be and are the exclusive property of the Company to be used by the Executive only in the performance of his duties for the Company. (iii) The Executive agrees that his obligation not to disclose or use information, know-how and records of the types set forth in subsection (i) and -11- (ii) above, also extends to such types of information, know-how, records and tangible property of borrowers, advertisers, fleet and taxi owners or other third parties who may have disclosed or entrusted the same to the Company or to the Executive in the course of the Company's business. 6.2 Other Agreements. The Executive hereby represents that he is not ---------------- bound by the terms of any agreement with any previous employer or other party to refrain from using or disclosing any trade secret or confidential or proprietary information in the course of his employment with the Company or to refrain from competing, directly or indirectly, with the business of such previous employer or any other party. The Executive further represents that his performance of all the terms of this Agreement and as an employee of the Company does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired by him in confidence or in trust prior to his employment with the Company. 7. Non-Competition, Non-Solicitation. --------------------------------- 7.1 Non-solicitation of Employees. The Executive agrees that during ----------------------------- the term of the Executive's employment with the Company and for a period of one year after the termination of the Executive's employment with the Company for any reason, the Executive shall not directly recruit, solicit or otherwise induce or attempt to induce any employees of the Company to leave the employment of the Company. 7.2 Non-competition. The Executive agrees that during the term of --------------- the Executive's employment with the Company and for a period of one year after the termination of the Executive's employment with the Company for any reason, the Executive shall not directly or indirectly, except as a passive investor in publicly held companies and except for investments held at the date hereof, engage in competition -12- with the Company or any of its subsidiaries, or own or control any interest in, or act as director, officer or employee of, or consultant to, any firm, corporation or institution directly engaged in competition with the Company or any of its subsidiaries; provided the Company or one of its subsidiaries are actively engaged in such business at the time the Executive's employment by the Company is terminated. 8. Miscellaneous. ------------- 8.1 Notices. All notices required or permitted under this Agreement ------- shall be in writing and shall be deemed effective upon personal delivery or upon deposit in the United States Post Office, by registered or certified mail, postage prepaid, addressed to the other party at the address shown above, or at such other address or addresses as either party shall designate to the other in accordance with this Section 8.1. 8.2 Pronouns. Whenever the context may require, any pronouns used in -------- this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns and pronouns shall include the plural, and vice versa. 8.3 Entire Agreement. This Agreement constitutes the entire ---------------- agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement. 8.4 Amendment. This Agreement may be amended or modified only by a --------- written instrument executed by both the Company and the Executive. 8.5 Governing Law. This Agreement shall be construed, interpreted ------------- and enforced in accordance with the laws of the State of Delaware. 8.6 Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of both parties and their respective successors and assigns, including any corporation with which or into which the Company may be merged or which may succeed to -13- its assets or business, provided, however, that the obligations of the Executive are personal and shall not be assigned by him. 8.7 Waivers. No delay or omission by the Company in exercising any ------- right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion. 8.8 Captions. The captions of the sections of this Agreement are for -------- convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement. 8.9 Severability. In case any provision of this Agreement shall be ------------ invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby. -14- IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set forth above. MEDALLION FINANCIAL CORP. By: ------------------------------- Title: ---------------------------- EXECUTIVE ---------------------------------- Andrew Murstein -15- EX-99.2K.31 19 EMPLOYMENT AGREEMENT-ANDREW MURSTEIN EMPLOYMENT AGREEMENT -------------------- THIS EMPLOYMENT AGREEMENT dated ________ ___, 1996, is between Medallion Financial Corp., a Delaware corporation with its principal place of business at 205 East 42nd Street, Suite 2020, New York, NY 10017 (the "Company"), and Andrew ------- Murstein residing at 920 Park Avenue, Apt 15D, New York, NY 10028 (the "Executive"). --------- WHEREAS, the Executive is presently employed by the Company as the President of the Company; WHEREAS, the Board of Directors of the Company (the "Board") desires to ----- provide for the continued employment of the Executive, which the Board believes is in the best interests of the Company and its shareholders, and the Executive is willing to commit himself to serve the Company, on the terms and conditions herein provided; NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties hereto hereby agree as follows: The Company agrees to employ the Executive, and the Executive agrees to serve the Company, on the terms and conditions set forth herein. 1. Title; Capacity. The Executive shall serve as President and Chief --------------- Operating Officer of the Company and shall be based at the Company's headquarters in New York City. The Executive hereby accepts such employment and agrees to undertake the duties and responsibilities inherent in such position and such other duties and responsibilities as the Board or its designee shall from time to time reasonably assign to him. The Executive agrees to abide by the rules, regulations, instructions, personnel practices and policies of the Company and any changes therein which may be adopted from time to time by the Company. The Company further agrees to use its best efforts to cause the Executive to be nominated as a member of the Board and a member of the Executive Committee (if such a committee is created). 2. Term of Employment. The Company agrees to employ the Executive, and ------------------ the Executive agrees to serve the Company for a period commencing on ________ ___, 1996 (the "Commencement Date") and continuing for five years thereafter ----------------- (such period, including all extensions thereto, to be collectively referred to as the "Employment Period"), unless otherwise terminated pursuant to the terms ----------------- hereof. The Employment Period shall automatically renew annually for a new five-year term unless prior to the end of the first year of each five-year term, either the Company or the Executive provides notice to the other party to this Agreement of its intention not to extend the Employment Period beyond the then current five-year term. Any notice given pursuant to this Section shall be provided in accordance with the terms of Section 8.1 hereof and shall be provided not later than 30 days prior to the end of such one-year period. 3. Compensation and Benefits. ------------------------- 3.1 Salary. The Company shall pay the Executive, in monthly ------ installments, an annual base salary of $155,000 for the one-year period commencing on the Commencement Date. Such salary shall be subject to adjustment thereafter as determined by mutual agreement between the Board and the Executive. 3.2 Bonus and Fringe Benefits. The Executive shall be entitled to ------------------------- participate in all bonus and benefit programs or plans that the Company establishes -2- and makes available to its employees to the extent that the Executive's position, tenure, salary, and other qualifications make him eligible to participate. 3.3 Reimbursement of Expenses. The Company shall reimburse the ------------------------- Executive for all reasonable travel, entertainment and other expenses incurred or paid by the Executive in connection with, or related to, the performance of his duties, responsibilities or services under this Agreement, upon presentation by the Executive of documentation, expense statements, vouchers and/or such other supporting information as the Company may reasonably request, provided, however, that the amount -------- ------- available for such travel, entertainment and other expenses may be fixed in advance by the Board. 3.4 Insurance. The Executive shall be entitled to health insurance --------- coverage, term life insurance and long term disability insurance to the extent that the Executive's position, tenure, salary, age, health and other qualifications make him eligible to participate. 3.5 Vacation. The Executive shall be entitled to six weeks paid -------- vacation per year. 4. Employment Termination. The employment of the Executive by the ---------------------- Company pursuant to this Agreement may be terminated under the following circumstances: 4.1 Expiration of Term. Expiration of the Employment Period in ------------------ accordance with Section 2. 4.2 Death. Upon the death of the Executive. ----- 4.3 Disability. If, as a result of the Executive's incapacity due to ---------- physical or mental illness, the Executive shall have failed to perform the services contemplated under this Agreement for a period of 270 consecutive days, or a total of at least 300 -3- calendar days during any 365-day period, or a determination of disability shall have been made by a physician satisfactory to both the Executive and the Company, provided that if the Executive and the Company do not agree on a physician, the Executive and the Company shall each select a physician and these two together shall select a third physician whose determination as to disability shall be binding on both parties. 4.4 Cause. The Company may terminate the Executive's employment ----- hereunder for Cause. For purposes of this Agreement, the Company shall have "Cause" to terminate the Executive's employment hereunder in the ----- event: (i) the Executive shall have willfully failed and continued to fail substantially to perform the duties (other than any failure resulting from the Executive's incapacity due to physical or mental illness or any actual or anticipated failure after the issuance by him of a Notice of Termination, as defined in Section 4.6), for 30 days after a written demand for performance is delivered to the Executive on behalf of the Company which specifically identifies the manner in which it is alleged that the Executive has not substantially performed his duties; provided that the Company's economic performance or -------- failure to meet any specific projection shall not, in and of itself, constitute "Cause"; or ----- (ii) the Executive shall have engaged in (A) any material misappropriation of funds, properties or assets of the Company, it being understood that "material" for these purposes shall take into -------- account both the amount of funds, properties or assets misappropriated and the circumstances thereof (including the intent of the Executive in connection therewith) or (B) -4- any malicious damage or destruction of any property or assets of the Company, whether resulting from the Executive's wilful actions or omissions or the Executive's gross negligence; or (iii) the Executive shall (A) have been convicted of a crime involving moral turpitude or constituting a felony or (B) entered a plea of nolo contendere to any such crime, either of which has had a material adverse effect upon the business of the Company; or (iv) the Executive shall have (A) materially breached his obligations under Section 6 hereof or (B) breached any of the other material provisions of this Agreement and such breach shall remain uncured by the Executive within 30 days following receipt of notice from the Company specifying such breach. 4.5 Termination by the Executive. The Executive may terminate his ---------------------------- employment hereunder (i) upon 90 days written notice or (ii) for Good Reason (as defined below). For purposes of this Agreement, "Good Reason" shall exist if there is ----------- a Change in Control (as defined below) of the Company and one or more of the following events shall have occurred (without the Executive's express written consent): (a) the assignment to the Executive of any duties inconsistent with his status as President or Chief Operating Officer of the Company, his removal from the position of President or Chief Operating Officer of the Company, or a substantial alteration in the nature or status of his responsibilities from those in effect immediately prior to the Change in Control; -5- (b) a reduction by the Company of the Executive's annual base salary in effect on the date immediately prior to the Change in Control; (c) the relocation of the Company's principal executive offices to a location outside mid-town New York City or a requirement that the Executive shall be based anywhere other than the Company's principal executive offices except for required travel on the Company's business to an extent substantially consistent with his business travel obligations prior to the Change in Control; (d) the failure by the Company to continue in effect any bonus plan in which the Executive was participating immediately prior to the Change in Control; or (e) the failure by the Company to continue to provide the Executive with benefits at least as favorable as those enjoyed by him under any of the Company's pension, life insurance, medical, health and accident, disability, deferred compensation or savings plans in which he was participating at the time of the Change in Control, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits or deprive him of any material fringe benefit enjoyed by him at the time of the Change in Control, or the failure by the Company to provide the Executive with the number of paid vacation days to which he was entitled at the time of the Change in Control. -6- For purposes of this Agreement, a "Change in Control" of the Company ----------------- shall mean a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended. 4.6 Notice of Termination. Any termination of the Executive's --------------------- employment by the Company or by the Executive (other than termination pursuant to Section 4.2) shall be communicated by Notice of Termination to the other party hereto. For purposes of this Agreement, a "Notice of --------- Termination" shall mean a written notice which shall indicate the specific ----------- termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances which provide a basis for termination of the Executive's employment under the provision so indicated. 4.7 Date of Termination. "Date of Termination" shall mean (i) if the ------------------- ------------------- Executive's employment is terminated pursuant to Section 4.1, the date on which the Employment Period expires pursuant to Section 2, (ii) if the Executive's employment is terminated pursuant to Section 4.2, the date of the Executive's death, (iii) if the Executive's employment is terminated pursuant to Section 4.3, 30 days after the Notice of Termination is given (provided that the Executive shall not have returned to the performance of his duties on a full-time basis during such 30 day period), (iv) if the Executive's employment is terminated pursuant to Section 4.4 or subsection (i) of Section 4.5, the date specified in the Notice of Termination, provided that in the case of a Section 4.4 termination it is at least 30 days subsequent to the date of the issuance of such Notice of Termination and in the case of a subsection (i) of Section 4.5 termination it is at least 90 days subsequent to the date of the issuance of such -7- Notice of Termination, (v) if the Executive's employment is terminated pursuant to subsection (ii) of Section 4.5, the date specified in such Notice of Termination, and (vi) if the Executive's employment is terminated other than as provided herein, the date specified in the Notice of Termination, provided that it is at least 30 days subsequent to the date of the issuance of such Notice of Termination. 5. Compensation Upon Termination. ----------------------------- 5.1 If the Executive's employment is terminated under the provisions of Sections 4.1, 4.4 or subsection (i) of Section 4.5, the Company shall pay to the Executive his full salary, bonus and benefits through the Date of Termination. 5.2 If the Executive's employment is terminated by the Executive's death under the provisions of Section 4.2, the Company shall pay to the Executive's estate the Executive's full salary, bonus and benefits to the Executive through the Date of Termination. 5.3 If the Executive's employment is terminated under the provisions of Section 4.3, the Company shall pay to the Executive his full salary, bonus and benefits through the Date of Termination. During any period that the Executive fails to perform his duties hereunder as a result of disability (as defined in Section 4.3), the Executive shall continue to receive his full salary, bonus and benefits through the Date of Termination. 5.4 If the Company shall terminate the Executive's employment other than as provided herein or the Executive shall terminate his employment pursuant to subsection (ii) of Section 4.5, then: (i) The Company shall pay the Executive his full salary, bonus and benefits through the Date of Termination. -8- (ii) Subject to subsection (iv) of this Section 5.4, in lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination, the Company shall pay as severance pay to the Executive an amount equal to the remainder of the salary, bonus and value of the fringe benefits which the Executive would be entitled to receive for the balance of the Employment Period. (iii) The Company shall pay all other damages to which the Executive may be entitled as a result of such termination, including damages for any and all legal fees and expenses incurred by him as a result of such termination. (iv) In the event that (A) any payment or benefit received or to be received by the Executive in connection with a Change in Control of the Company or the termination of the Executive's employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company) (collectively referred to herein as "Severance Payments") would not be deductible (in whole or ------------------ part) as a result of section 280G of the Internal Revenue Code of 1986, as amended, (the "Code") by the Company, an affiliate or other ---- person making such payment or providing such benefit and (B) it shall be determined that the net amount retained by the Executive, after deduction of the excise tax imposed by section 4999 of the Code and any federal, state and local income and employment taxes on the Severance Payments, does not exceed 110% of the net amount retained by the Executive after applying the limitations of this subsection (iv) of Section 5.4 and after deduction of any federal, state and local income and employment taxes on the -9- Severance Payments as so reduced, the Severance Payments shall be reduced until no portion of the Severance Payments is not deductible, or the Severance Payments are reduced to zero. For purposes of this limitation (i) no portion of the Severance Payments the receipt or enjoyment of which the Executive shall have effectively waived in writing prior to the date of payment of the Severance Payments shall be taken into account, (ii) no portion of the Severance Payments shall be taken into account which in the opinion of tax counsel selected by the Company's independent auditors and acceptable to the Executive does not constitute a "parachute payment" within the meaning of ----------------- section 280G(b)(2) of the Code, (iii) the Severance Payments shall be reduced only to the extent necessary so that the Severance Payments (other than those referred to in clauses (i) or (ii)) in their entirety constitute reasonable compensation for services actually rendered within the meaning of section 280G(b)(4) of the Code or are otherwise not subject to disallowance as deductions, in the opinion of the tax counsel referred to in clause (ii); and (iv) the value of any non-cash benefit or any deferred payment or benefit included in the Severance Payments shall be determined by the Company's independent auditors in accordance with the principles of sections 280G(d)(3) and (4) of the Code. For purposes of determining the income taxes on the Severance Payments, the Executive shall be deemed to pay federal income tax at the highest marginal rate of federal income taxation in the calendar year in which the Severance Payments are to be made and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence -10- on the Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. 6. Proprietary Information and Developments. ---------------------------------------- 6.1 Proprietary Information. ----------------------- (i) The Executive agrees that all information and know how, whether or not in writing, of a private, secret or confidential nature concerning the Company's business or financial affairs (collectively, "Proprietary Information") is and shall be the exclusive property of ----------------------- the Company. By way of illustration, but not limitation, Proprietary Information may include inventions, products, processes, methods, techniques, projects, developments, plans, research data, financial data, personnel data, and lists of borrowers, advertisers, fleet and taxi owners. The Executive will not disclose any Proprietary Information to others outside the Company or use the same for any unauthorized purposes without written approval by the Board, either during or after his employment, unless and until such Proprietary Information has become public knowledge without fault by the Executive. (ii) The Executive agrees that all files, letters, memoranda, reports, records, data, sketches, drawings, or other written, photographic, or other tangible material containing Proprietary Information, whether created by the Executive or others, which shall come into his custody or possession, shall be and are the exclusive property of the Company to be used by the Executive only in the performance of his duties for the Company. (iii) The Executive agrees that his obligation not to disclose or use information, know-how and records of the types set forth in subsection (i) and -11- (ii) above, also extends to such types of information, know-how, records and tangible property of borrowers, advertisers, fleet and taxi owners or other third parties who may have disclosed or entrusted the same to the Company or to the Executive in the course of the Company's business. 6.2 Other Agreements. The Executive hereby represents that he is not ---------------- bound by the terms of any agreement with any previous employer or other party to refrain from using or disclosing any trade secret or confidential or proprietary information in the course of his employment with the Company or to refrain from competing, directly or indirectly, with the business of such previous employer or any other party. The Executive further represents that his performance of all the terms of this Agreement and as an employee of the Company does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired by him in confidence or in trust prior to his employment with the Company. 7. Non-Competition, Non-Solicitation. --------------------------------- 7.1 Non-solicitation of Employees. The Executive agrees that during ----------------------------- the term of the Executive's employment with the Company and for a period of one year after the termination of the Executive's employment with the Company for any reason, the Executive shall not directly recruit, solicit or otherwise induce or attempt to induce any employees of the Company to leave the employment of the Company. 7.2 Non-competition. The Executive agrees that during the term of --------------- the Executive's employment with the Company and for a period of one year after the termination of the Executive's employment with the Company for any reason, the Executive shall not directly or indirectly, except as a passive investor in publicly held companies and except for investments held at the date hereof, engage in competition -12- with the Company or any of its subsidiaries, or own or control any interest in, or act as director, officer or employee of, or consultant to, any firm, corporation or institution directly engaged in competition with the Company or any of its subsidiaries; provided the Company or one of its subsidiaries are actively engaged in such business at the time the Executive's employment by the Company is terminated. 8. Miscellaneous. ------------- 8.1 Notices. All notices required or permitted under this Agreement ------- shall be in writing and shall be deemed effective upon personal delivery or upon deposit in the United States Post Office, by registered or certified mail, postage prepaid, addressed to the other party at the address shown above, or at such other address or addresses as either party shall designate to the other in accordance with this Section 8.1. 8.2 Pronouns. Whenever the context may require, any pronouns used in -------- this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns and pronouns shall include the plural, and vice versa. 8.3 Entire Agreement. This Agreement constitutes the entire ---------------- agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement. 8.4 Amendment. This Agreement may be amended or modified only by a --------- written instrument executed by both the Company and the Executive. 8.5 Governing Law. This Agreement shall be construed, interpreted ------------- and enforced in accordance with the laws of the State of Delaware. 8.6 Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of both parties and their respective successors and assigns, including any corporation with which or into which the Company may be merged or which may succeed to -13- its assets or business, provided, however, that the obligations of the Executive are personal and shall not be assigned by him. 8.7 Waivers. No delay or omission by the Company in exercising any --- ------- right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion. 8.8 Captions. The captions of the sections of this Agreement are for -------- convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement. 8.9 Severability. In case any provision of this Agreement shall be ------------ invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby. -14- IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set forth above. MEDALLION FINANCIAL CORP. By: -------------------------- Title: ----------------------- EXECUTIVE ----------------------------- Andrew Murstein -15- EX-99.2.1 20 CONSENT OF PALMER & DODGE LLP [LETTERHEAD OF PALMER & DODGE LLP APPEARS HERE] Telephone: (617) 573-0100 Facsimile: (617) 227-4420 May 17, 1996 Medallion Financial Corp. 205 East 42nd Street New York, NY 10017 Dear Sirs: We are rendering this opinion in connection with the Registration Statement on Form N-2 (the "Registration Statement") filed by Medallion Financial Corp. (the "Company") with the Securities and Exchange Commission under the Securities Act of 1933, as amended. The Registration Statement relates to up to 5,750,000 of shares of the Company's Common stock, $0.01 par value (the "Shares"). We understand that the Shares are to be offered and sold in the manner described in the Registration Statement. We have acted as your counsel in connection with the preparation of the Registration Statement. We are familiar with the proceedings of the Board of Directors in connection with the authorization, issuance and sale of the Shares (the "Resolutions"). We have examined such other documents as we consider necessary to render this opinion. Based upon the foregoing, we are of the opinion that the Shares have been duly authorized and, when issued and delivered by the Company against payment therefor at the price to be determined pursuant to the Resolutions, will be validly issued, fully paid and non-assessable. The foregoing opinion is limited to the General Corporation Law of the State of Delaware, and we are expressing no opinion as to the effect of the laws of any other jurisdiction. We have relied as to certain matters on information obtained from public officials, officers of the Company and other sources believed by us to be responsible. We hereby consent to the filing of this opinion as a part of the Registration Statement and to the reference to our firm under the caption "Validity of the Shares" in the Prospectus filed as part thereof. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act. Very truly yours, /s/ Palmer & Dodge LLP EX-99.2N.1 21 CONSENT OF ARTHUR ANDERSEN LLP [ARTHUR ANDERSEN LLP Letterhead] CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the inclusion in this registration statement on Form N-2 of our report dated February 21, 1996, on our audit of the balance sheet of Medallion Financial Corp., and to all references to our Firm included in Pre-Effective Amendment No. 2 to registration statement File No. 333-1670. /s/ARTHUR ANDERSEN LLP ARTHUR ANDERSEN LLP Boston, Massachusetts May 17, 1996 EX-99.2N.2 22 CONSENT TO ARTHUR ANDERSEN LLP [ARTHUR ANDERSEN LLP Letterhead] CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the inclusion in this registration statement on Form N-2 of our report dated March 14, 1996, on our audit of the financial statements of Transportation Capital Corp. and to all references to our Firm included in Pre-Effective Amendment No. 2 to registration statement File No. 333-1670. /s/ ARTHUR ANDERSEN LLP ARTHUR ANDERSEN LLP Boston, Massachusetts May 17, 1996 EX-99.2N.3 23 CONSENT OF ARTHUR ANDERSEN [ARTHUR ANDERSEN LLP Letterhead] CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the inclusion in this registration statement on Form N-2 of our report dated March 14, 1996, on our audit of the financial statements of Edwards Capital Company and to all references to our Firm included in Pre-Effective Amendment No. 2 to this registration statement File No. 333-1670. /s/ ARTHUR ANDERSEN LLP ARTHUR ANDERSEN LLP Boston, Massachusetts May 17, 1996 EX-99.2N.4 24 CONSENT OF ARTHUR ANDERSEN [ARTHUR ANDERSEN LLP Letterhead] CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the inclusion in this registration statement on Form N-2 of our report dated March 15, 1996, on our audit of the financial statements of Tri-Magna Corporation and Subsidiaries and to all references to our Firm included in Pre-Effective Amendment No. 2 to registration statement File No. 333-1670. /s/ ARTHUR ANDERSEN LLP ARTHUR ANDERSEN LLP Boston, Massachusetts May 17, 1996 EX-99.2N.5 25 CONSENT OF COOPERS & LYBRAND CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the inclusion in this registration statement on Form N-2 (File No. 333-1670) of our report dated October 24, 1995, on our audits of the financial statements and financial statement schedules of Transportation Capital Corp. We also consent to the reference to our firm under the caption "Experts". /s/ COOPERS & LYBRAND L.L.P. New York, NY May 17, 1996 EX-99.2N.6 26 CONSENT OF FRIEDMAN, ALPREN [Friedman Alpren & Green LLP Letterhead] CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use in this Form N-2 of our report dated January 28, 1995 included in or made a part of this registration statement. /s/ FRIEDMAN ALPREN & GREEN LLP New York, New York May 20, 1996 EX-99.2P.1 27 SUBSCRIPTION AGREEMENT SUBSCRIPTION AGREEMENT FOR SHARES OF COMMON STOCK OF MEDALLION FINANCIAL CORP. (For Institutional Investors) Gentlemen: The undersigned understands that Medallion Financial Corp., a Delaware corporation (the "Company"), is offering for sale 200 shares of Common Stock, par value $0.01 per share (the "Shares"), at a price of $10.00 per share. 1. Subscription. Subject to the terms and conditions hereof, the ------------ undersigned hereby irrevocably agrees to purchase the number of Shares set forth opposite its name below and with this subscription delivers a check in the amount of the total purchase price therefor. 2. Acceptance of Subscription. It is understood and agreed that the -------------------------- Company shall have the right to accept or reject this subscription in whole or in part and that the same shall be deemed to be accepted only when it is signed by the Company. Subscriptions need not be accepted in the order received, and Shares may be allocated in the event of oversubscription. 3. Representations, Warranties and Covenants of the Undersigned. The ------------------------------------------------------------ undersigned hereby represents and warrants to and covenants with the Company and with each officer, employee and agent of the Company that: (a) The undersigned is a trust duly organized and validly existing under the laws of the State of New York. The purchase by the undersigned of the number of Shares set forth below for the purchase price per share specified above has been duly authorized by all action necessary under the trust agreement or other governing documents of the undersigned. (b) The undersigned is able to bear the economic risks of this investment, and consequently, without limiting the generality of the foregoing, is able to hold the Shares for an indefinite period of time and has a sufficient net worth to sustain a loss of its entire investment in the Company in the event such loss should incur. (c) The undersigned has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Company. The undersigned recognizes that its investment in the Company involves a high degree of risk which may result in the loss of the total amount of its investment. (d) The undersigned is aware that it must bear the economic risk of its investment in the Company for an indefinite period of time because the Shares have not been registered under the Securities Act of 1933 (the "Act") as amended, or under the securities laws of any state, and, therefore, cannot be sold unless they are subsequently registered under the Act and any applicable state securities laws or an exemption from registration is available, and further that the Company is under no obligation and does not propose to attempt to register the Shares. (e) The undersigned is acquiring the Shares for its own account for investment and not with a view to or for sale in connection with any distribution or resale thereof. The undersigned has not offered or sold any portion of the Shares and has no present intention of dividing the Shares with others or of reselling or otherwise disposing of any portion of the Shares either currently or after the passage of a fixed or determinable period of time or upon the occurrence or nonoccurrence of any predetermined event or circumstance. (f) The undersigned understands and agrees that the following restrictions and limitations are applicable to its purchase and any resales, pledges, hypothecations or other transfers of the Shares: (i) The undersigned agrees that the Shares shall not be sold, transferred, pledged, or otherwise disposed of unless they are registered under the Act and all applicable state securities laws or an exemption from such registration is available. (ii) A legend will be placed on any certificate(s) or other document(s) evidencing the Shares in substantially the following form: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE "ACT") AND MAY NOT BE TRANSFERRED BY THE HOLDER EXCEPT (1) AS PART OF AN OFFERING DESCRIBED IN AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING SAID SHARES OR (2) AFTER RECEIPT BY THE CORPORATION OF AN OPINION OF COUNSEL, SATISFACTORY IN FORM AND SUBSTANCE TO IT, THAT SUCH TRANSFER MAY BE ACCOMPLISHED UNDER AN EXEMPTION CONTAINED IN THE ACT WITHOUT VIOLATION OF SECTION 5 THEREOF. THE SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AND RESTRICTED BY THE PROVISIONS OF A SUBSCRIPTION AGREEMENT DATED OCTOBER 23, 1995 BETWEEN THE STOCKHOLDER NAMED ON THE FACE OF THIS CERTIFICATE AND THE CORPORATION. A COPY OF THE SUBSCRIPTION AGREEMENT MAY BE OBTAINED FROM THE OFFICE OF THE SECRETARY OF THE CORPORATION UPON WRITTEN REQUEST WITHOUT CHARGE. 2 (iii) Stop transfer instructions have been or may be placed with respect to the Shares so as to restrict the resale, pledge, hypothecation or other transfer thereof. (iv) The legend and stop transfer instructions described in subparagraphs (ii) and (iii) above will be placed on or with respect to any new certificate(s) or other document(s) issued upon presentment by the undersigned of certificate(s) or other document(s) for transfer. (g) The undersigned acknowledges that it has been advised that Rule 144 promulgated under the Act is not currently applicable to the Shares and further acknowledges that the Company will not be obligated to make the filings and reports, or make available publicly the information, which is a condition to the availability of such Rule 144. (h) The undersigned acknowledges that it has had the opportunity to meet with officers and directors of the Company, and to have said officials answer any questions regarding the terms and conditions of this particular investment, and all such questions have been answered to its full satisfaction. (i) The undersigned has received no representations from the Company, its employees or agents, and in making its decision to become an investor has relied solely upon its independent investigations made by the undersigned without assistance of the Company, its employees, or agents. 4. Representations and Warranties of the Company. The Company hereby --------------------------------------------- represents and warrants to the undersigned that: (a) The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted and as proposed to be conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure so to qualify would have a material adverse effect on its business or properties. (b) No consent, approval, order or authorization of, or registration, qualification, designation, declaration, or filing with, any federal, state, or local governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Subscription Agreement, except for such filings as may be necessary pursuant to the Act, as amended, and applicable state securities laws, and establishment of such exemptions thereunder as required. 3 (c) There is no action, suit, proceeding or investigation pending or currently threatened against the Company which questions the validity of this Subscription Agreement or the right of the Company to enter into it, or to consummate the transactions contemplated hereby, or which might result, either individually or in the aggregate, in any material adverse changes in the assets, condition, affairs or prospects of the Company, financially or otherwise, or any change in the current equity ownership of the Company, nor is the Company aware that there is any basis for the foregoing. (d) The Company has all requisite corporate power and authority to enter into this Subscription Agreement and to issue and sell the Shares as contemplated hereby. The execution, delivery and performance of this Subscription Agreement and the issuance and sale of the Shares as contemplated hereby have been duly authorized by all requisite corporate action on the part of the Company. This Subscription Agreement has been duly executed and delivered by the Company and (assuming the due authorization, execution and delivery hereof by the undersigned purchaser) is a valid and binding obligation of the Company. The execution, delivery and performance of this Subscription Agreement and the issuance and sale of the Shares as contemplated hereby will not: (i) violate any provisions of law applicable to the Company; (ii) with or without the giving of notice and/or the passage of time, conflict with or result in the breach of any provision of the Articles of Organization or Bylaws of the Company or any material instrument, license, agreement or commitment to which the Company is a party or by which any of its assets or properties are bound; or (iii) constitute a violation of any order, judgment or decree to which the Company is a party or by which any of its assets or properties are bound. (e) The Shares when issued and delivered in accordance with the terms hereof, will be duly and validly issued, fully paid and nonassessable. (f) The authorized capital stock of the Company consists of 3,000 shares of Common Stock, and no shares are held in the treasury. Except as contemplated by this Agreement, the Company does not have any shares of its capital stock issued or outstanding and does not have any outstanding subscriptions, options, warrants, rights or other agreements or commitments obligating the Company to issue shares of its capital stock. 4 IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement as a sealed instrument as of the 23rd day of October, 1995. Number of Shares Total Purchase Purchased: 100 Price: $1,000 ALVIN MURSTEIN SECOND FAMILY TRUST By: /s/ Alvin Murstein ------------------------ Alvin Murstein, Trustee By: /s/ Amie Murstein ----------------------- Amie Murstein, Trustee Accepted MEDALION FINANCIAL CORP. By: /s/ Andrew Murstein -------------------------- Andrew Murstein, President Date: October 23, 1995 5 EX-99.2P.2 28 SUBSCRIPTION AGREEMENT SUBSCRIPTION AGREEMENT FOR SHARES OF COMMON STOCK OF MEDALLION FINANCIAL CORP. (For Institutional Investors) Gentlemen: The undersigned understands that Medallion Financial Corp., a Delaware corporation (the "Company"), is offering for sale 200 shares of Common Stock, par value $0.01 per share (the "Shares"), at a price of $10.00 per share. 1. Subscription. Subject to the terms and conditions hereof, the ------------ undersigned hereby irrevocably agrees to purchase the number of Shares set forth opposite its name below and with this subscription delivers a check in the amount of the total purchase price therefor. 2. Acceptance of Subscription. It is understood and agreed that the -------------------------- Company shall have the right to accept or reject this subscription in whole or in part and that the same shall be deemed to be accepted only when it is signed by the Company. Subscriptions need not be accepted in the order received, and Shares may be allocated in the event of oversubscription. 3. Representations, Warranties and Covenants of the Undersigned. The ------------------------------------------------------------ undersigned hereby represents and warrants to and covenants with the Company and with each officer, employee and agent of the Company that: (a) The undersigned is a trust duly organized and validly existing under the laws of the State of New York. The purchase by the undersigned of the number of Shares set forth below for the purchase price per share specified above has been duly authorized by all action necessary under the trust agreement or other governing documents of the undersigned. (b) The undersigned is able to bear the economic risks of this investment, and consequently, without limiting the generality of the foregoing, is able to hold the Shares for an indefinite period of time and has a sufficient net worth to sustain a loss of its entire investment in the Company in the event such loss should incur. (c) The undersigned has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Company. The undersigned recognizes that its investment in the Company involves a high degree of risk which may result in the loss of the total amount of its investment. (d) The undersigned is aware that it must bear the economic risk of its investment in the Company for an indefinite period of time because the Shares have not been registered under the Securities Act of 1933 (the "Act") as amended, or under the securities laws of any state, and, therefore, cannot be sold unless they are subsequently registered under the Act and any applicable state securities laws or an exemption from registration is available, and further that the Company is under no obligation and does not propose to attempt to register the Shares. (e) The undersigned is acquiring the Shares for its own account for investment and not with a view to or for sale in connection with any distribution or resale thereof. The undersigned has not offered or sold any portion of the Shares and has no present intention of dividing the Shares with others or of reselling or otherwise disposing of any portion of the Shares either currently or after the passage of a fixed or determinable period of time or upon the occurrence or nonoccurrence of any predetermined event or circumstance. (f) The undersigned understands and agrees that the following restrictions and limitations are applicable to its purchase and any resales, pledges, hypothecations or other transfers of the Shares: (i) The undersigned agrees that the Shares shall not be sold, transferred, pledged, or otherwise disposed of unless they are registered under the Act and all applicable state securities laws or an exemption from such registration is available. (ii) A legend will be placed on any certificate(s) or other document(s) evidencing the Shares in substantially the following form: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE "ACT") AND MAY NOT BE TRANSFERRED BY THE HOLDER EXCEPT (1) AS PART OF AN OFFERING DESCRIBED IN AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING SAID SHARES OR (2) AFTER RECEIPT BY THE CORPORATION OF AN OPINION OF COUNSEL, SATISFACTORY IN FORM AND SUBSTANCE TO IT, THAT SUCH TRANSFER MAY BE ACCOMPLISHED UNDER AN EXEMPTION CONTAINED IN THE ACT WITHOUT VIOLATION OF SECTION 5 THEREOF. THE SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AND RESTRICTED BY THE PROVISIONS OF A SUBSCRIPTION AGREEMENT DATED OCTOBER 23, 1995 BETWEEN THE STOCKHOLDER NAMED ON THE FACE OF THIS CERTIFICATE AND THE CORPORATION. A COPY OF THE SUBSCRIPTION AGREEMENT MAY BE OBTAINED FROM THE OFFICE OF THE SECRETARY OF THE CORPORATION UPON WRITTEN REQUEST WITHOUT CHARGE. 2 (iii) Stop transfer instructions have been or may be placed with respect to the Shares so as to restrict the resale, pledge, hypothecation or other transfer thereof. (iv) The legend and stop transfer instructions described in subparagraphs (ii) and (iii) above will be placed on or with respect to any new certificate(s) or other document(s) issued upon presentment by the undersigned of certificate(s) or other document(s) for transfer. (g) The undersigned acknowledges that it has been advised that Rule 144 promulgated under the Act is not currently applicable to the Shares and further acknowledges that the Company will not be obligated to make the filings and reports, or make available publicly the information, which is a condition to the availability of such Rule 144. (h) The undersigned acknowledges that it has had the opportunity to meet with officers and directors of the Company, and to have said officials answer any questions regarding the terms and conditions of this particular investment, and all such questions have been answered to its full satisfaction. (i) The undersigned has received no representations from the Company, its employees or agents, and in making its decision to become an investor has relied solely upon its independent investigations made by the undersigned without assistance of the Company, its employees, or agents. 4. Representations and Warranties of the Company. The Company hereby --------------------------------------------- represents and warrants to the undersigned that: (a) The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted and as proposed to be conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure so to qualify would have a material adverse effect on its business or properties. (b) No consent, approval, order or authorization of, or registration, qualification, designation, declaration, or filing with, any federal, state, or local governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Subscription Agreement, except for such filings as may be necessary pursuant to the Act, as amended, and applicable state securities laws, and establishment of such exemptions thereunder as required. 3 (c) There is no action, suit, proceeding or investigation pending or currently threatened against the Company which questions the validity of this Subscription Agreement or the right of the Company to enter into it, or to consummate the transactions contemplated hereby, or which might result, either individually or in the aggregate, in any material adverse changes in the assets, condition, affairs or prospects of the Company, financially or otherwise, or any change in the current equity ownership of the Company, nor is the Company aware that there is any basis for the foregoing. (d) The Company has all requisite corporate power and authority to enter into this Subscription Agreement and to issue and sell the Shares as contemplated hereby. The execution, delivery and performance of this Subscription Agreement and the issuance and sale of the Shares as contemplated hereby have been duly authorized by all requisite corporate action on the part of the Company. This Subscription Agreement has been duly executed and delivered by the Company and (assuming the due authorization, execution and delivery hereof by the undersigned purchaser) is a valid and binding obligation of the Company. The execution, delivery and performance of this Subscription Agreement and the issuance and sale of the Shares as contemplated hereby will not: (i) violate any provisions of law applicable to the Company; (ii) with or without the giving of notice and/or the passage of time, conflict with or result in the breach of any provision of the Articles of Organization or Bylaws of the Company or any material instrument, license, agreement or commitment to which the Company is a party or by which any of its assets or properties are bound; or (iii) constitute a violation of any order, judgment or decree to which the Company is a party or by which any of its assets or properties are bound. (e) The Shares when issued and delivered in accordance with the terms hereof, will be duly and validly issued, fully paid and nonassessable. (f) The authorized capital stock of the Company consists of 3,000 shares of Common Stock, and no shares are held in the treasury. Except as contemplated by this Agreement, the Company does not have any shares of its capital stock issued or outstanding and does not have any outstanding subscriptions, options, warrants, rights or other agreements or commitments obligating the Company to issue shares of its capital stock. 4 IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement as a sealed instrument as of the 23rd day of October, 1995. Number of Shares Total Purchase Purchased: 100 Price: $1,000 ANDREW MURSTEIN FAMILY TRUST By: /s/ Andrew Murstein ------------------------- Andrew Murstein, Trustee By: /s/ Barbara Murstein ------------------------ Barbara Murstein, Trustee Accepted MEDALION FINANCIAL CORP. By: /s/ Alvin Murstein ------------------------ Alvin Murstein, Chairman Date: October 23, 1995 5 -----END PRIVACY-ENHANCED MESSAGE-----