Exhibit 10.3
CHASE
Dated: April 18, 1997
RATE CAP TRANSACTION
Medallion Funding Corporation
205 East 42nd Street, Suite 2020
New York, New York 10017
Attn: Mr. Daniel Baker
Fax: (212) 682-1668
RE: CHASE REFERENCE NO. IR6080
Ladies and Gentlemen:
The purpose of this letter agreement is to set forth the terms and
conditions of the rate cap transaction entered into between The Chase Manhattan
Bank ("Chase") and Medallion Funding Corporation (the "Counterparty") on April
17, 1997 (the "Rate Cap Transaction").
In consideration of the payment of the sum of USD 35,000 (the "Premium") by
the Counterparty to Chase at Chase's Account on April 21, 1997 and in
consideration of the promise by Chase to make payments to the Counterparty in
accordance with Section 2 hereof, the parties hereto agree as follows:
1. Definitions. The following terms shall have the following meanings:
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"Business Day" means any day which is both a New York Business Day and a
London Business Day.
"Calculation Period" means each period from and including one Payment Date
(or, in the case of the initial Calculation Period, the Effective Date) to but
excluding the next succeeding Payment Date (or, in the case of the final
Calculation Period, the Termination Date).
"Cap Rate" means 6.00 percent per annum.
"Chase's Account" means the account of Chase at The Chase Manhattan Bank,
Account No. 900-9-001364, Attention: Derivative Products.
"Counterparty's Account" means the account of ___________________________
___________________________.
"Designated Maturity" means 3 months.
"Effective Date" means April 21, 1997.
"Floating Rate" means, with respect to a Reset Date within each Calculation
Period, the rate determined by Chase to be (i) the per annum rate for deposits
in U.S. dollars for a period of the Designated Maturity which appears on the
Telerate Page 3750 Screen as of 11:00 a.m., London time, on the day that is two
London Business Days prior to that Reset Date (rounded upwards, if necessary, to
the nearest 1/100,000 of 1%); (ii) if such rate does not appear on the Telerate
Page 3750 Screen, the Floating Rate with respect to that Reset Date shall be the
arithmetic mean (rounded as aforesaid) of the offered quotations obtained by
Chase from the Reference Banks for deposits in U.S. dollars to leading banks in
the London interbank market as of approximately 11:00 a.m., London time, on the
date that is two London Business Days prior to that Reset Date; or (iii) if
fewer than two Reference Banks provide Chase with such quotations, the Floating
Rate shall be the rate per annum which Chase determines to be the arithmetic
mean (rounded as aforesaid) of the offered quotations which leading banks in New
York City selected by Chase are quoting in the New York interbank market on that
Reset Date for deposits in U.S. dollars to the Reference Banks or, if fewer than
two such quotations are available, to leading European and Canadian Banks.
"London Business Day" means any day on which banks are open for business in
London and on which dealings in deposits in U.S. dollars are transacted in the
London interbank market.
"New York Business Day" means any day on which banks are not required or
authorized by law to close in New York City.
"Notional Principal Amount" means USD 10,000,000.
"Payment Date" means the 21st day in July, October, January and April,
commencing on July 21, 1997 and ending on the Termination Date, provided that if
any such day is not a Business Day, such Payment Date shall be the next
succeeding Business Day, except that if such Payment Date would then fall in the
next calendar month, such Payment Date shall be the next preceding Business Day.
"Reference Banks" means four major banks in the London interbank market
selected by Chase.
"Reset Date" means the first day of each Calculation Period.
"Telerate Page 3750 Screen" means the display designated as "Page 3750" on
the Telerate Service (or such other page as may replace Page 3750 on that
service or such other service as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying British
Bankers' Association Interest Settlement Rates for U.S. Dollar deposits).
"Termination Date" means April 21, 1998.
2. Payments. Chase agrees, subject to the payment by the Counterparty to
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Chase of the Premium, to pay to the Counterparty on each Payment Date occurring
on or prior to
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the Termination Date, an amount equal to the product of (i) the amount by which
the Floating Rate exceeds the Cap Rate with respect to the Calculation Period
ending on or nearest such Payment Date, in each case as determined by Chase,
(ii) the Notional Principal Amount and (iii) the actual number of days in that
Calculation Period divided by 360. All payments to the Counterparty shall be
made by deposit to the Counterparty's Account. All payments to Chase shall be
made by deposit to Chase's Account.
3. Notices. Any notices hereunder (i) shall be in writing and hand-
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delivered or sent by first-class mail, postage prepaid, return receipt
requested, and shall be addressed to the intended recipient at its address set
forth on the signature page hereof or at such other address as such party shall
have last specified by notice to the other party and (ii) shall be effective (a)
if delivered by hand or sent by overnight courier, on the day it is delivered,
unless delivery is made after the close of business or on a day that is not a
Business Day, in which case such notice will be effective on the next Business
Day, or (b) if sent by certified or registered mail or the equivalent (return
receipt requested), three Business Days after dispatch.
4. Governing Law. This letter agreement shall be governed by and
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construed in accordance with the laws of the State of New York.
5. Assignments. Neither party shall have the right to assign its rights
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or obligations under this letter agreement without the prior written consent
of the other party.
6. Set-off Counterclaim. All payments under this letter agreement will be
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made without set-off or counterclaim, except that each party will have the right
to set-off, counterclaim or withhold payment in respect of any default by the
other party under this letter agreement or under any other agreement between the
parties.
7. Each Party's Reliance on its Own Judgment. Each party has entered into
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this Rate Cap Transaction solely in reliance on its own judgment. Neither party
has any fiduciary obligation to the other party relating to this Rate Cap
Transaction. In addition, neither party has held itself out as advising, or has
held out any of its employees or agents as having the authority to advise, the
other party as to whether or not the other party should enter into this Rate Cap
Transaction, any subsequent actions relating to this Rate Cap Transaction or any
other matters relating to this Rate Cap Transaction. Neither party shall have
any responsibility or liability whatsoever in respect of any advice of this
nature given, or views expressed, by it or any of such persons to the other
party relating to this Rate Cap Transaction, whether or not such advice is given
or such views are expressed at the request of the other party.
Please confirm that the foregoing correctly sets forth the terms and
conditions or our agreement by responding within ten (10) Business Days by
returning via facsimile an executed copy of this letter agreement to the
attention of Tania Montes De Oca (fax no. (718) 242-9262; telephone no. (718)
242-2619).
Duplicate hard copies of this letter agreement will be sent to you shortly.
Upon receipt, please execute both copies and return one to Chase to the address
indicated below.
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Chase is pleased to have concluded this transaction with you.
Very truly yours,
THE CHASE MANHATTAN BANK
By: /s/ Soumya Mahapatra
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Name: Soumya Mahapatra
Title: Operations Officer
Address for Notices:
4 Chase Metro Tech, 17th Floor
Brooklyn, NY 11245
Attention: Ms. Angela Barrow
Facsimile No: 718-242-9262
ACCEPTED AND AGREED:
MEDALLION FUNDING CORPORATION
By: /s/ Daniel Baker
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Name: Daniel Baker
Title: Treasurer
Address for Notices:
Attention: Mr. Daniel Baker
205 East 42nd Street, Suite 2020
New York, New York 10017
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