-----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, To4gXya7tA5x7VFuJmrcCAB9ApXr7AbHmlYU/IZxcHY6gxKYZlLhfYoaIt6xUboK 5vDEWB+eznQAwkMfraoVyg== 0000950130-01-502373.txt : 20010614 0000950130-01-502373.hdr.sgml : 20010614 ACCESSION NUMBER: 0000950130-01-502373 CONFORMED SUBMISSION TYPE: POS462C PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20010613 EFFECTIVENESS DATE: 20010613 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDALLION FINANCIAL CORP CENTRAL INDEX KEY: 0001000209 STANDARD INDUSTRIAL CLASSIFICATION: FINANCE SERVICES [6199] IRS NUMBER: 043291176 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS462C SEC ACT: SEC FILE NUMBER: 333-62846 FILM NUMBER: 1660227 BUSINESS ADDRESS: STREET 1: 205 E 42ND ST STREET 2: STE 2020 CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2126823300 MAIL ADDRESS: STREET 1: 205 E 42ND ST STREET 2: STE 2020 CITY: NEW YORK STATE: NY ZIP: 10017 POS462C 1 dpos462c.txt POST-EFFECTIVE AMENDMENT As filed with the U.S. Securities and Exchange Commission on June 13, 2001 Registration No. 333-60080 Registration No. 333-62846 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM N-2 (CHECK APPROPRIATE BOX OR BOXES) REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [_] PRE-EFFECTIVE AMENDMENT NO. [_] POST-EFFECTIVE AMENDMENT NO. 1 ---------------- Medallion Financial Corp. (Exact Name of Registrant as Specified in Its Charter) 437 Madison Avenue, New York, New York 10022 (212) 328-2100 (Address and Telephone Number, Including Area Code, of Principal Executive Offices) ---------------- Alvin Murstein Chief Executive Officer Medallion Financial Corp. 437 Madison Avenue New York, New York 10022 (Name and Address of Agent for Service) ---------------- With Copies to: Christopher E. Manno, Esq. Dennis J. Block, Esq. Willkie Farr & Gallagher Cadwalader, Wickersham & Taft 787 Seventh Avenue 100 Maiden Lane New York, New York 10019 New York, New York 10038 (212) 728-8000 (212) 504-6000
---------------- 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 [_] ---------------- CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933 - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
Proposed Proposed Maximum Maximum Amount Offering Aggregate Amount of Title of Securities Being Price Offering Registration Being Registered Registered Per Unit Price Fee (1) - ------------------------------------------------------------------------------- Common Stock, $0.01 par value per share.......................... 4,140,000 $11.00 $45,540,000 - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
(1) The Registrant has previously paid a filing fee of $11,385. 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- . [X] This Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, as amended and the Securities Act Registration Statement number of the earlier effective registration statements are 333- 60080 and 333-62846. ---------------- 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. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXPLANATORY NOTE This post-effective amendment No. 1 has been filed pursuant to Rule 462(c) promulgated under the Securities Act of 1933, as amended (the "Securities Act") and relates to the Registration Statement on Form N-2 (File No. 333-60080) (the "Initial Registration Statement") and the Registration Statement on Form N-2 (File No. 333-62846) (the "Second Registration Statement"), filed pursuant to Rule 462(b) of the Securities Act. The Second Registration Statement was filed as a result of an increase in the aggregate maximum offering price as filed on the Initial Registration Statement. MEDALLION FINANCIAL CORP. 437 MADISON AVENUE NEW YORK, NEW YORK 10022 (800) 829-4867 STATEMENT OF ADDITIONAL INFORMATION June 12, 2001 This Statement of Additional Information (the SAI) relates to Medallion Financial Corp. (Medallion), and is not a prospectus. The Prospectus, dated June 12, 2001 (Prospectus), sets forth concisely certain information about Medallion that investors should know before investing and it should be read and retained for further reference. This SAI contains additional and more detailed information and should be read in conjunction with the balance of Medallion's registration statement. Copies of the Prospectus and additional copies of the SAI may be obtained without charge by writing or telephoning Medallion at the address and telephone number set forth above. The Prospectus and this SAI may omit certain of the information contained in the registration statement filed with the Securities and Exchange Commission (SEC), Washington, D.C. The registration statement may be obtained from the SEC upon payment of the fee prescribed, or inspected at the SEC's office at no charge. Neither the SEC nor any securities commission has approved or disapproved these securities or determined if the Prospectus is truthful or complete. Any representations to the contrary is a criminal offense. TABLE OF CONTENTS
Page ------ Investment Objectives and Policies................................. SAI-2 Management......................................................... SAI-4 Control Persons and Principal Stockholders......................... SAI-12 Federal Income Tax Considerations.................................. SAI-16
Item 17--Investment Objectives and Policies INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS Our investment objectives are to provide a high level of current income for our stockholders through quarterly distributions, consistent with preservation of capital, as well as long term growth of net asset value. We seek to achieve our investment objectives by maximizing net interest income and fee income from operations and expanding operations. There can be no assurance that we will achieve our investment objectives. Our only fundamental policies, that is, policies that cannot be changed without the approval of the holders of a majority of Medallion's outstanding voting securities, as defined under the Investment Company Act of 1940, as amended (the 1940 Act), are the restrictions described in the following seven paragraphs. A "majority of Medallion's outstanding voting securities" as defined under the 1940 Act means the lesser of (i) 67% of the shares represented at a meeting at which more than 50% of the outstanding shares are represented or (ii) more than 50% of the outstanding shares. The other policies and investment restrictions referred to in this prospectus, including our investment objectives, are not fundamental policies of Medallion and may be changed by Medallion's board of directors without stockholder approval. Unless otherwise noted, whenever an investment policy or limitation states a maximum percentage of Medallion's assets that may be invested in any security or other asset, or sets forth a policy regarding quality standards, such standard or percentage limitation will be determined immediately after and as a result of our acquisition of such security or other asset. Accordingly, any subsequent change in values, assets, or other circumstances will not be considered when determining whether the investment complies with our investment policies and limitations. Our fundamental policies are as follows: . We will at all times conduct our business so as to retain our status as a business development company under the 1940 Act. In order to retain that status, we may not acquire any assets (other than non- investment assets necessary and appropriate to its operations as a business development company) if, after giving effect to such acquisition, the value of our Qualifying Assets, amount to less than 70% of the value of our total assets. We believe that the securities we may acquire as well as any investments we may make, will generally be assets of the type listed in Section 55(a) of the 1940 Act as Qualifying Assets. . Medallion Funding Corp. (MFC), Medallion Capital, Inc. (Medallion Capital), Freshstart Venture Capital Corporation (Freshstart) and any subsidiaries of Medallion organized in the future that are Small Business Administration (SBA) licensees, may issue the maximum principal amount of subordinated SBA debentures and preferred stock permitted under the Small Business Investment Act of 1958 (SBIA) and SBA regulations. As a Small Business Investment Company (SBIC), MFC, Medallion Capital and Freshstart are not permitted to issue preferred stock to the SBA and the maximum principal amount of subordinated SBA debentures they are each permitted to issue is equal to 300% of their respective Leveragable Capital (generally non-SBA paid-in capital and paid-in surplus). See "Regulation" in the prospectus. In addition, SBA regulations also limit the aggregate principal amount of subordinated SBA debentures or "leverage" that SBICs under common control, such as the regulated investment company (RIC) subsidiaries, may have outstanding to no more than $105 million. At March 31, 2001, MFC had Leveragable Capital of $70.5 million and no subordinated SBA debentures outstanding. At March 31, 2001, Freshstart had Leveragable Capital of $6.12 million and $10.86 million of subordinated SBA debentures outstanding. Medallion Capital had Leveragable Capital of $9.7 million and $10.5 million of subordinated SBA debentures outstanding at March 31, 2001. MFC, Medallion Capital and Freshstart reserve the right to issue subordinated SBA debentures to the maximum extent permitted under the SBIA or SBA regulations. . We may borrow funds and issue "senior securities" to the maximum extent permitted under the 1940 Act. As a business development company, we may issue senior securities if, immediately after such issuance, the senior securities will have an asset coverage of at least 200%. Under the 1940 Act, subordinated debentures issued to or guaranteed by the SBA and preferred stock issued to the SBA by SAI-2 the RIC Subsidiaries may be considered senior securities issued by Medallion requiring asset coverage of 200%; however, pursuant to an exemptive order of the SEC, such debentures and preferred stock are exempt from the asset coverage requirements of the 1940 Act. . We will not (i) underwrite securities issued by others (except to the extent that we may be considered an "underwriter" within the meaning of the Securities Act of 1933, as amended, in the disposition of restricted securities); (ii) purchase or sell real estate or real estate mortgage loans unless acquired as a result of ownership of securities or other instruments (except that we may purchase and sell real estate or interests in real estate in connection with the orderly liquidation of investments or the foreclosure of mortgages held by Medallion); (iii) engage in short sales of securities; (iv) purchase securities on margin (except to the extent that it may purchase securities with borrowed money); (v) write or buy put or call options; or (vi) engage in the purchase or sale of commodities or commodity contracts, including futures contracts (except where necessary in working out distressed loan or investment situations). Medallion and the RIC subsidiaries may purchase interest rate caps and swaps covering up to 100% of their variable-rate debt. In addition, we may sponsor the securitization of loan portfolios. . Medallion and the RIC subsidiaries may originate loans and loans with equity features. To the extent permitted under SBA regulations, we may also make loans as permitted (i) under the 1996 Stock Option Plan; (ii) under the Non-employee Director Plan and plans providing for options for disinterested directors that might be adopted by Medallion in the future; and (iii) to officers and directors for the purchase of common stock. Medallion holds all of the outstanding common stock of the Founding Companies and may organize additional subsidiaries in the future. We may acquire restricted securities of small businesses. . Each RIC subsidiary shall not originate loans to, or invest in the securities of, any entity if, immediately after such loan or investment, more than 5% of the total assets of the RIC subsidiary originating such loan or making such investment (taken at current value) would be loaned to, or invested in the securities of such entity. Each RIC subsidiary shall not acquire more than 10% of the outstanding voting securities of any issuer, provided that this limitation does not apply to obligations issued or guaranteed as to interest and principal by the U.S. Government or its agencies or instrumentalities or to repurchase agreements secured by such obligations, and that up to 25% of each RIC subsidiary's total assets (at current value) may be invested without regard to this limitation. Medallion and the RIC subsidiaries shall lend or invest at least 25% of their total assets (taken at current value) to or in entities primarily engaged in the taxicab industry and shall not lend or invest more than 25% of their total assets (taken at current value) to or in entities primarily engaged in any other single industry. This limitation does not apply to obligations issued or guaranteed as to interest and principal by the U.S. Government or its agencies or instrumentalities or to repurchase agreements secured by such obligations or to bank money-market instruments. SAI-3 Item 18--Management MANAGEMENT Board of Directors The current members of the board of directors are as follows:
Director Expiration Name Age Position(s) Held With Medallion Since of Term ---- --- ------------------------------- -------- ---------- Alvin M. Murstein(*).... 66 Chairman, Chief Executive Officer and Director February 1996 2002 Andrew M. Murstein(*)... 36 President and Director October 1997 2004 Stanley Kreitman........ 68 Director February 1996 2003 David L. Rudnick........ 59 Director February 1996 2003 Mario M. Cuomo(*)....... 68 Director February 1996 2004 Frederick S. Hammer..... 63 Director October 1997 2004 Benjamin Ward........... 73 Director February 1996 2002
- -------- An asterisk (*) indicates an "interested person" as such term is defined in Section 2(a)(19) of the 1940 Act. The business and affairs of Medallion are managed under the direction of our board of directors. The board of directors is divided into three classes, each with a term of three years. Only one class of directors stands for election in any year. Messrs. Stanley Kreitman and David L. Rudnick are in the first class. Messrs. Andrew Murstein, Mario M. Cuomo and Frederick S. Hammer are in the second class and Messrs. Alvin Murstein and Benjamin Ward are in the third class. The board of directors has two committees, a Compensation Committee comprised of Messrs. Kreitman, Alvin Murstein and Ward and an Audit Committee comprised of Messrs. Kreitman, Rudnick and Ward. Messrs. Alvin Murstein, Andrew Murstein and Mario M. Cuomo are "interested persons" as such term is defined in Section 2(a)(19) of the 1940 Act. The non-employee directors will each be paid $10,000 for each year they serve and shall each receive $2,000 for the first board of directors meeting, per quarter, attended and $1,000 for attendance at any additional board of directors meetings that quarter, $250 for each telephonic board meeting and $1,000 for each committee meeting attended and are reimbursed for expenses relating thereto. The board of directors elects Medallion's officers who serve at the pleasure of the board of directors. As a business development company under the 1940 Act, a majority of our directors are required to be individuals who are not "interested persons" of Medallion. The current configuration of the Board is in compliance with the 1940 Act because it consists of four independent directors and only three directors who are deemed interested persons. The four independent directors have undertaken a review of all of the actions taken by the board (including themselves) while it was not in compliance with the 1940 Act's board composition requirements to determine whether to ratify such actions as being in the best interests of Medallion and its stockholders. There can be no assurance that the board will ratify such actions. In addition, we have commenced a search for an additional independent director and may also consider adding Andrew Murstein to the board upon the appointment of such independent director. Any newly appointed directors must stand for election at the next meeting of stockholders. SAI-4 Executive Officers of Medallion The current executive officers of Medallion are as follows:
Name Age Position(s) Held With Medallion ---- --- ------------------------------------------------ Alvin M. Murstein(*)...... 66 Chairman, Chief Executive Officer and Director Andrew M. Murstein(*)..... 36 President and Director Brian S. O'Leary(*)....... 55 Executive Vice President, Chief Operating Officer and Chief Credit Officer James E. Jack(*).......... 59 Chief Financial Officer and Executive Vice President Marie Russo(*)............ 76 Senior Vice President and Secretary Michael J. Kowalsky(*).... 60 Executive Vice President Conrad J. Isoldi(*)....... 57 Senior Vice President and Chief Administrative Officer Larry D. Hall(*).......... 47 Chief Accounting Officer and Assistant Treasurer Dean W. Ryan(*)........... 41 Senior Vice President
- -------- An asterisk (*) indicates an "interested person" as such term is defined in Section 2(a)(19) of the 1940 Act. Each officer's term extends until the first meeting of the board of directors following the next annual meeting of stockholders and until his or her successor is elected and qualified. Executive Officers of Medallion's Subsidiaries Medallion Funding Corp. Harvey Goldman has been the Senior Vice-President of MFC's Commercial Lending division since joining the company in September 1997. Prior to joining the company, Mr. Goldman was President of Asset Based Lending Corp. and also served simultaneously as Vice President of TLC Funding Corp., an SBIC firm, from September 1995 to September 1997. Mr. Goldman receive his B.S. in accounting from the City University of New York. Medallion Taxi Media, Inc. Michael Leible has been President of Media since February 1998. From 1978 to 1990, Mr. Lieble was a Vice President at Transportation Displays Inc. from 1978- 1990 and a Vice President at Metromedia's Outdoor division from 1966 to 1978. He has also been in the Outdoor Advertising business since 1966. Mr. Leible received a B.S. from New York University Undergraduate School and a Law Degree from New York Law School. Mary Pat Holt has been the Chief Operating Officer of Media since August of 1998, when her company Taxi Ads merged with Media. She formerly served as the President of Taxi Ads since its inception in 1993. Ms. Holt has also served as the Executive Director of the State of Louisiana for the Cystic Fibrosis Foundation. Prior to that position, Ms. Holt held the joint title of Office Manager and Cost Accounting Manager for a nationally recognized architectural firm in New Orleans for 13 years. Ms. Holt attended the University of New Orleans. Medallion Business Credit, LLC Gerald Grossman has been the President of Medallion Business Credit, LLC ("MBC"), the asset based lending division of Medallion, since September 1998. Prior to joining the company, Mr. Grossman headed the asset based division of Israel Discount Bank and Sterling National Bank as well as Continental Business Credit. Mr. Grossman received a B.A. in economics from Cornell University and a J.D. from New York University Law School. SAI-5 Connie Mitchko came to Medallion to serve as Senior Vice President of Medallion Business Credit in September 1998. Ms. Mitchko was Vice President of Continental Business Credit, a wholly-owned subsidiary of Continental Bank, Garden City, New York. Prior to her positions in commercial finance, she held positions of management with First Jersey National Bank, Automatic Data Processing and Donaldson, Lufkin & Jenrette. Ms. Mitchko attended Montclair State University. Medallion Capital, Inc. Thomas F. Hunt, Jr. is the President of Medallion Capital, Inc. Mr. Hunt practiced law at a law firm and subsequently acted as legal counsel for three companies. Mr. Hunt has been involved in over 100 venture capital investments and has served on the board of directors of numerous private and public companies. He has authored a handbook on venture capital investing and has frequently lectured on the subject before civic groups. Mr. Hunt has undergraduate and law degrees from the University of Tulsa. Dean R. Pickerell is Executive Vice President of Medallion Capital, Inc. Mr. Pickerell has held various controller and financial management positions and has been involved in the venture capital industry since 1985. He has served on the board of directors of numerous private and public companies. Mr. Pickerell has an undergraduate degree from Iowa State University and completed the course work for an MBA degree from Makato State University. Business Lenders, LLC Penn Ritter is an executive Vice President of Business Lenders, LLC and serves as chairperson for Hartford's SBA Advisory Council. A former clerk to the Connecticut House of Representatives, Ritter has played a key role in the recruitment of experienced lending teams in both Connecticut and in Business Lenders' markets (Providence, RI; New York; New Jersey; Chicago; Boston and Scottsdale, AZ). Mr. Ritter is a member of the Government Affairs Committee of the Greater Hartford Chamber of Commerce. Freshstart Venture Capital Corporation Alvin M. Murstein is the Chairman of the board of directors and Andrew Murstein is the President of Freshstart Venture Capital Corporation. SAI-6 Compensation of Directors and Executive Officers of Medallion The following table sets forth certain compensation information for (i) Medallion's Chief Executive Officer; (ii) its directors; and (iii) each of Medallion's four most highly compensated executive officers other than the Medallion's Chief Executive Officer, for the year ended December 31, 2000 (the Period) (collectively, the Compensated Persons). Medallion does not have a pension plan, but has established a 401(k) plan that provides matching contributions. Summary Compensation Table
Long-Term Compensation Annual Compensation Awards --------------------------------------- ------------ Securities Name and Principal Other Period Underlying Position Year Salary($) Bonus($) Compensation(1) Options(#) - ------------------ ---- --------- -------- --------------- ------------ Alvin M. Murstein........ 2000 330,000 60,000 3,166 -- Chairman and Chief Executive Officer 1999 300,000 50,000 3,166 125,000 1998 285,000 -- -- 25,000 Andrew M. Murstein....... 2000 330,000 125,000 -- -- President 1999 271,875 100,000 -- 125,000 1998 198,750 75,000 -- 25,000 Michael J. Kowalsky...... 2000 183,000 50,000 2,000 10,000 Executive Vice President 1999 172,000 100,000 3,200 25,000 1998 158,000 40,000 1,067 -- Daniel F. Baker.......... 2000 170,000 60,000 -- N/A Treasurer and Chief Financial Officer(3)(4) 1999 167,500 25,000 2,500 N/A 1998 150,000 50,000 -- N/A Brian S. O'Leary......... 2000 190,000 50,000 -- 16,667 Senior Vice President, Chief Credit Officer 1999 N/A N/A N/A N/A and Chief Operating Officer(5) 1998 N/A N/A N/A N/A
Long-Term Compensation Awards(2) -------------------------------- Director Fees($) Securities Underlying Options(#) ---------------- -------------------------------- Mario M. Cuomo, Director.... 18,750 -- Benjamin Ward, Director..... 33,750 -- David L. Rudnick, Director.. 33,750 9,000(3) Stanley Kreitman, Director.. 33,750 9,000(3) Frederick S. Hammer, Director................... 20,500 --
- -------- (1) Amounts received pursuant to the matching program under the Medallion's 401(k) Plan. (2) Options granted under the Non-employee Director Plan. The exercise price is $16.00. (3) These shares vest in three equal installments of 3,000 shares on the date of the 2001 annual meeting of Medallion's stockholders, the 2002 annual meeting of the Medallion's stockholders and the 2003 annual meeting of the Medallion's stockholders, respectively. (4) As of December 31, 2000, Mr. Baker is no longer employed by Medallion . (5) Brian S. O'Leary began working for Medallion on December 13, 1999. SAI-7
Pension or Retirement Benefits Accrued Total Compensation Aggregate as Part of from Medallion and Compensation Medallion's Medallion Complex Name, Position from Medallion Expenses Paid to Directors - -------------- -------------- ---------------- ------------------ Alvin M. Murstein, Chairman and Chief Executive Officer................... $393,166 N/A -- Andrew M. Murstein, President................. 455,000 N/A -- Michael J. Kowalsky, Executive Vice President.. 245,000 N/A -- Daniel F. Baker, Treasurer and Chief Financial Officer (1)............... 230,000 N/A -- Brian S. O'Leary, Senior Vice President and Chief Lending Officer........... 240,000 N/A -- Mario M. Cuomo, Director... 18,750 N/A 18,750 Stanley Kreitman, Director.................. 33,750 N/A 9,000 David L. Rudnick, Director.................. 33,750 N/A 9,000 Benjamin Ward, Director.... 33,750 N/A 33,750 Frederick S. Hammer, Director.................. 20,500 N/A 20,500
- -------- (1) As of December 31, 2000, Mr. Baker was no longer employed by Medallion. Options Granted to Executives The following table sets forth certain information regarding options granted during the Period by Medallion to the following Named Executive Officers: Aggregated Options Granted in the Period and Year-End Option Values
Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation Option Grants for Option Term(2) ---------------------------------------------------- ---------------------- Number of Securities Percent of Underlying Total Options Exercise or Base Options Granted to Price Expiration Name Granted(#) Employees ($/share)(1) Date 5%($) 10%($) - ---- ---------- ------------- ---------------- ---------- ---------- ----------- Michael J. Kowalsky..... 10,000 10.73% 14.50 6/1/2010 91,200 231,100 Brian S. O'Leary........ 16,667 17.89% 17.938 1/1/2010 147,200 320,300
- -------- (1) The exercise price of these options is equal to the fair market value of the Medallion's common stock on the date of grant, as determined by the Medallion's board of directors. (2) The dollar amounts under these columns are the result of calculations at the 5% and 10% rates set by the Commission and, therefore, are not intended to forecast possible future appreciation, if any, in the price of the underlying common stock. No gain to the optionees is possible without an increase in price of the underlying common stock, which will benefit all stockholders proportionately. SAI-8 Options Exercised by Executives The following table sets forth certain information concerning exercisable and unexercisable stock options held by the following Named Executive Officers in the Period: Aggregated Options Exercised in the Period and Year-End Option Values
Number of Securities Underlying Value of Unexercised In- Unexercised Options at The-Money Options at Shares December 31, 2000 December 31, 2000 Acquired Value ------------------------- ------------------------- on Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable -------------- ----------- ----------- ------------- ----------- ------------- Alvin M. Murstein....... N/A N/A 35,000 115,000 0 0(1) Andrew M. Murstein...... N/A N/A 35,000 115,000 0 0(1) Michael J. Kowalsky..... N/A N/A 45,456 35,000 164,778 1,250(2) Daniel F. Baker(5)...... 13,636 81,616 34,410 0 124,736 0(3) Brian S. O'Leary........ N/A N/A 0 16,667 0 0(4)
- -------- (1) Based on the difference between the closing price of the underlying shares of common stock on December 29, 2000, as reported by the NASDAQ National Market ($14.625) and the option exercise price ($29.25) with respect to 25,000 options (10,000 of which are exercisable at December 31, 2000) and the option exercise price ($17.25) with respect to 125,000 options (25,000 of which are exercisable). (2) Based on the difference between the closing price of the underlying shares of common stock on December 29, 2000, as reported by the NASDAQ National Market ($14.625) and the option exercise price ($11.00) with respect to 45,456 options (all of which are exercisable at December 31, 2000), the option exercise price ($18.75) with respect to 25,000 options (none of which are exercisable at December 31, 2000) and the option exercise price ($14.50) with respect to 10,000 options (none of which are exercisable at December 31, 2000). (3) Based on the difference between the closing price of the underlying shares of common stock on December 29, 2000, as reported by the NASDAQ National Market ($14.625) and the option exercise price ($11.00) with respect to 34,410 options. (4) Based on the difference between the closing price of the underlying shares of common stock on December 29, 2000, as reported by the NASDAQ National Market ($14.625) and the option exercise price of $17.938 with respect to 16,667 options. (5) As of December 31, 2000, Mr. Baker was no longer employed by Medallion. Employment Agreements In May 1996, Alvin M. Murstein and Andrew M. Murstein entered into employment agreements with Medallion, which were subsequently amended in May 1998. The agreements automatically renew each year for a new five-year term unless either party terminates the agreement. The agreements may be terminated by Medallion for (i) expiration of term; (ii) death; (iii) disability; or (iv) "cause" as defined in the agreements. The executive may terminate the agreement upon 90 days written notice or for "good reason" as defined in the agreement. Compensation upon termination depends upon the reason for the termination. The agreements provide that Alvin M. Murstein and Andrew M. Murstein shall receive an annual base salary of $300,000 and $250,000 respectively, which may be increased but not decreased. The agreements contain non-competition covenants from the executives in favor of Medallion. Michael J. Kowalsky entered into an employment agreement with Medallion which became effective in May 1996 and was renewed in May, 1999 for a three- year term. Under the agreement Mr. Kowalsky is entitled to a annual salary of at least $160,000. If the agreement is not renewed at the end of the three-year term, Mr. Kowalsky shall receive a severance payment. The agreement contains a non-competition covenant from Mr. Kowalsky in favor of Medallion. SAI-9 On May 1, 2001, James E. Jack entered into an employment agreement with Medallion for a three-year term which automatically renews absent notification of intent not to renew by either party. Mr. Jack shall receive a base salary of $262,500, $287,500, and $312,500, for the first, second and third years of employment, respectively. Mr. Jack is eligible to receive special bonuses based on certain performance criteria as set forth in the agreement. The agreement contains a non-competition covenant from the executive in favor of Medallion. Mr. Jack is entitled to a severance payment in the event that he is terminated "without cause" as defined in the agreement. Stock Option Plan Executive officer compensation also includes long-term incentives afforded by options to purchase shares of common stock under Medallion's Amended and Restated 1996 Stock Option Plan. The purposes of Medallion's stock ownership program are to (i) highlight and reinforce the mutuality of long-term interests between employees and the stockholders and (ii) to assist in the attraction and retention of critically important key executives, managers and individual contributors who are essential to Medallion's growth and development. The Medallions stock programs include long vesting periods to optimize the retention value of these options and to orient their executive officers to longer term success. Generally, stock options vest in equal annual installments over three to five years commencing on the first anniversary of the date of grant, and, if employees leave Medallion before these vesting periods, they forfeit the unvested portions of these awards. Medallion also makes annual grants of options which vest in one year. Except for executives with substantial holdings of Medallion's stock, the number of shares of common stock subject to option grants is generally intended to reflect the significance of the executive's current and anticipated contributions to Medallion. The exercise price of options granted by the Medallion is required under the 1940 Act to equal not less than 100% of the fair market value per share on the date of grant. Prior to determining the 1999 option grants to Medallion's executives, the board of directors considered the equity compensation policies of competitors and other companies, both privately held and publicly traded, with comparable capitalizations. The value realizable from exercisable options is dependent upon the extent to which Medallion's performance is reflected in the price of the Medallion's common stock at any particular point in time. However, the decision as to whether such value will be realized through the exercise of an option in any particular year is primarily determined by each individual within the limits of the vesting schedule and not by the board of directors. Non-Employee Directors Stock Option Plan In order to attract and retain highly qualified directors, and to ensure close identification of interests between non-interested directors and Medallion's stockholders, the board of directors of Medallion adopted and the stockholders approved the 1996 Director Stock Option Plan and the Amended and Restated 1996 Non-Employee Directors Stock Option Plan, (the Director Plan), which replaced the earlier plan. The Director Plan provides for the automatic grant of options to directors of Medallion who are not employees or officers, including interested persons, known as Eligible Directors. In accordance with the provisions of the 1940 Act, the automatic grant of options under the Director Plan did not occur until after the date of the approval of the Director Plan by the Commission. The Commission approved the Director Plan on April 12, 2000 (the Approval Date). The Director Plan provides that on the Approval Date, Medallion will grant an option to purchase 9,000 shares of common stock to each Eligible Director elected at the June 16, 1999 stockholder meeting. On the Approval Date, Medallion granted options consisting of a total of 9,000 shares of common stock at an option exercise price of $17.25 to Benjamin Ward. Under the Director Plan, Medallion will also grant an option to purchase 9,000 shares to each Eligible Director elected at an annual stockholder meeting after the Approval Date. If an Eligible Director is elected after the Approval Date by means other that an annual stockholder SAI-10 meeting, Medallion will grant an option to purchase 9,000 shares multiplied by a fraction representing the remaining portion of the Eligible Director's three- year term. In 2000, Medallion granted options consisting of a total of 18,000 shares of common stock at an option price of $16.00 to Stanley Kreitman and David Rudnick. The total number of shares which may be granted from time to time under the Director Plan is 100,000 shares. The Director Plan is administered by a committee of the board of directors comprised of directors who are not eligible for grants or awards of options under the Director Plan. The exercise price of options granted is not less than the fair market value of Medallion's common stock on the date of grant or if the stock is not quoted on the date of grant, the current net asset value of the common stock as determined in good faith by the members of the board of directors not eligible to participate in the Director Plan. Options become exercisable at each annual stockholder meeting. The number of shares which are exercisable is calculated by multiplying the number of shares in the option by a fraction which contains the number of whole months since the date of grant or the last stockholder annual meeting in the numerator, and the number of whole months for which the Eligible Director was elected in the denominator. To exercise options, the optionee must remain an Eligible Director. No option may be exercised more than five years after the date on which it is granted. The number of shares available for options, the number of shares subject to outstanding options and their exercise prices will be adjusted for changes in outstanding shares such as stock splits and combinations of shares. Shares purchased upon exercise of options, in whole or in part, must be paid for in cash or by means of unrestricted shares of common stock or any combination thereof. On December 31, 2000, 36,091 shares of common stock were reserved for future grants under the Director Plan. Options granted under the Director Plan will not be transferable other than by the laws of descent and during the optionee's life may be exercised only by the optionee. All rights to exercise options will terminate after the optionee ceases to be an Eligible Director for any reason, other than death, three months following the date such director ceases to be an Eligible Director. If the optionee dies before expiration of the option, his legal successors may have the right to exercise the option in whole or in part within one year of death. The Director Plan may be terminated at any time by the board of directors, and will terminate ten years after the effective date of the Director Plan. The board of directors may not materially increase the number of shares authorized under the Director Plan or materially increase the benefits accruing to participants under the Director Plan without the approval of the stockholders of the Company. 401(k) Plan Since 1996, Medallion has become a participating employer in the Medallion Funding Corp. 401(k) Investment Plan (the 401(k) Plan) which covers all full and part-time employees of Medallion who have attained the age of 21 and have a minimum of one-half year of service. Under the 401(k) Plan, an employee may elect to defer not less than 1.0% and no more than 15.0% of the total annual compensation that would otherwise be paid to the employee, provided, however, that employees' contributions may not exceed certain maximum amounts determined under Section 402(g) of the Code. Employee contributions are invested in various mutual funds, according to the directions of the employee. On September 1, 1998, Medallion elected to match employee contributions to the 401(k) Plan in an amount per employee of one-third of the first 6% of an employee's contribution. Code of Ethics We adopted a code of ethics under Rule 17j-1 of the 1940 Act in August 2000. The code of ethics limits the ability of personnel subject to the code of ethics to invest in securities, including securities that may be purchased or held by us. The code of ethics can be reviewed and copied at the Commission's Public Reference Room in Washington, D.C., and information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-202- 942-8090. The code of ethics is available on the EDGAR Database on the Commission's Internet site at http://www.sec.gov, and copies of the code of ethics may be obtained, after paying a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov, or by writing the Commission's Public Reference Section, Washington, D.C. 20549-0102. SAI-11 Item 19--Control Persons and Principal Holders of Securities CONTROL PERSONS AND PRINCIPAL STOCKHOLDERS The following table sets forth information, as of March 31, 2001, regarding the ownership of Medallion's common stock by (i) the persons known by Medallion to own more than five percent of its outstanding shares; (ii) all directors and nominees of Medallion; (iii) each of the executive officers of Medallion named in the Summary Compensation Table (the Named Executive Officers); and (iv) all directors and executive officers of Medallion as a group. The number of shares beneficially owned by each director or executive officer is determined under rules of the Commission and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has the sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days of March 30, 2001 through the exercise of any stock option or other right. Unless otherwise indicated, each person has sole investment and voting power (or shares such power with his or her spouse) with respect to the shares set forth in the following table. The inclusion herein of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of such shares.
Shares of Percentage of Common Stock Common Stock Name and Address Beneficially Owned Beneficially Owned ---------------- ------------------ ------------------ Alvin M. Murstein(1).................... Chairman, Chief Executive Officer and Director 1,405,000 9.62% 437 Madison Avenue, 38th Floor New York, NY 10022 Andrew M. Murstein(2)................... 1,315,000 9.01% President 437 Madison Avenue, 38th Floor New York, NY 10022 Michael J. Kowalsky(3).................. 45,456 * Executive Vice President 437 Madison Avenue, 38th Floor New York, NY 10022 Daniel F. Baker(3)(7)................... 34,410 * Treasurer and Chief Financial Officer 437 Madison Avenue, 38th Floor New York, NY 10022 Brian S. O'Leary(3)..................... 5,856 * Executive Vice President 437 Madison Avenue, 38th Floor New York, NY 10022 Frederick S. Hammer, Director(3)........ 4,651 * Inter-Atlantic Group 712 Fifth Avenue New York, NY 10022 Mario M. Cuomo, Director(3)............. 8,631 * Willkie Farr & Gallagher 787 Seventh Avenue New York, NY 10019
SAI-12
Shares of Percentage of Common Stock Common Stock Name and Address Beneficially Owned Beneficially Owned ---------------- ------------------ ------------------ Stanley Kreitman, Director(4)........... 11,178 * Manhattan Associates 375 Park Avenue, Suite 1606 New York, NY 10152 David L. Rudnick, Director(4)........... 19,178 * The Century Associates Group 365 West Passaic Street Rochelle Park, NJ 07662 Benjamin Ward, Director(3).............. 13,272 * Brooklyn Law School 250 Joralemon Street Brooklyn, NY 11201 All executive officers and directors as 2,862,332 19.60% a group................................ (10 persons)(5) Capital Guardian Trust Company(6)....... 1,670,500 11.44% 1100 Santa Monica Boulevard Los Angeles, CA 90025 J.P. Morgan Chase & Co.................. 729,602 5.0% 270 Park Avenue New York, NY 10022
- -------- * Less than 1.0%. (1) Includes 1,250,000 shares owned by the Alvin Murstein Second Family Trust of which Alvin M. Murstein is a trustee and beneficiary, 90,000 shares owned by Alvin M. Murstein directly and 65,000 shares issuable upon the exercise of outstanding options. (2) Includes 1,250,000 shares owned by the Andrew Murstein Family Trust, of which Andrew M. Murstein is a trustee and beneficiary, and 65,000 shares issuable upon the exercise of outstanding options. (3) Consists of shares issuable upon the exercise of outstanding options. (4) Consists of shares owned by the reporting person and shares issuable upon the exercise of outstanding options. (5) Includes (i) 1,250,000 shares owned by the Andrew Murstein Family Trust, (ii) 1,250,000 shares owned by the Alvin Murstein Family Trust, and (iii) 90,000 shares owned by Alvin M. Murstein directly. (6) The Capital Guardian Trust Company beneficially owns shares held by several affiliated investment management companies that beneficially own 1,670,500 shares of Common Stock. (7) As of December 31, 2000, Mr. Baker is no longer employed by the Company. SAI-13 Item 22--Tax Status FEDERAL INCOME TAX CONSIDERATIONS General The following summary of material federal income tax considerations is based on current law and does not purport to deal with all aspects of taxation that may be relevant to particular stockholders in light of their personal investment or tax circumstances, or to certain types of stockholders (including insurance companies, financial institutions, non-profit institutions, ERISA plans and broker-dealers) subject to special treatment under the federal income tax laws. Each prospective purchaser is advised to consult his or her own tax adviser regarding the specific tax consequences to him or her of the purchase, ownership and sale of the shares. We have elected and qualified to be taxed as a RIC under Sections 851 through 855 of the Code. We operate in a manner that permits us to satisfy the requirements for taxation as a RIC under the applicable provisions of the Code, but no assurance can be given that we will operate in a manner so as to remain qualified. The sections of the Code relating to qualification and operation as a RIC are highly technical and complex. The following sets forth the material aspects of the Code sections that govern the federal income tax treatment of a RIC and its stockholders. This summary is qualified in its entirety by the applicable Code provisions, rules and regulations thereunder, and administrative and judicial interpretations thereof. In brief, if certain detailed conditions of the Code are met, business development companies, such as Medallion, that otherwise would be treated for federal income tax purposes as corporations, are generally not taxed at the corporate level on their "investment company taxable income" that is currently distributed to stockholders. This treatment substantially eliminates the "double taxation" (i.e., taxation at both the corporate and stockholder levels) that generally results from the use of corporate investment vehicles. However, a RIC is generally subject to federal income tax at regular corporate rates on undistributed investment company taxable income. Furthermore, in order to avoid a 4% nondeductible federal excise tax on undistributed income and capital gains, we must distribute (or be deemed to have distributed) by December 31 of each year at least 98% of our ordinary income for such year, at least 98% of our capital gain net income (which is the excess of our capital gain over our capital loss and is generally computed on the basis of the one-year period ending on October 31 of such year) and any amounts that were not distributed in the previous calendar year and on which no income tax has been paid. If we fail to qualify as a RIC in any year, we will be subject to federal income tax as if we were a domestic corporation, and our stockholders will be taxed in the same manner as stockholders of ordinary corporations. In this event, we could be subject to potentially significant tax liabilities and the amount of cash available for distribution to our stockholders could be reduced. Requirements for Qualification The Code defines the term "RIC" to include a domestic corporation that has elected to be treated as a business development company under the 1940 Act and meets certain requirements. These requirements include that (a) Medallion derive at least 90% of its gross income for each taxable year from dividends, interest, interest payments with respect to securities loans and gains from the sale or other disposition of stocks or securities or foreign currencies, or other income derived from its business of investing in such stocks, securities or currencies; and (b) Medallion diversifies its holdings so that, at the close of each quarter of its taxable year, (i) at least 50% of the value of its total assets is represented by (A) cash, and cash items (including receivables), U.S. Government securities and securities of other RICs, and (B) other securities limited in respect of any one issuer to an amount not greater in value than 5% of the value of the total assets of Medallion SAI-14 and not more than 10% of the outstanding voting securities of such issuer; and (ii) not more than 25% of the value of Medallion's total assets is invested in the securities (other than U.S. Government securities or securities of other RICs) of any one issuer or of two or more issuers that are controlled by Medallion and which are engaged in the same, similar or related trades or businesses. In this regard, the failure of one or more of Medallion's RIC subsidiaries to continue to qualify as RICs could adversely affect Medallion's ability to satisfy the diversification requirements. The foregoing diversification requirements under the Code could restrict Medallion's expansion of its taxicab rooftop advertising business and its acquisition of additional medallion collateral appreciation participation loans. See "Risk Factors--The Internal Revenue Code's diversification requirements may limit our ability to expand our taxicab rooftop advertising business and to acquire additional medallion collateral appreciation loans." Furthermore, in order for Medallion to qualify as a RIC under the Code, it also must distribute to its stockholders in each taxable year at least 90% of (a) its investment company taxable income and (b) the excess of its tax-exempt interest income over certain disallowed deductions. Taxation of Medallion So long as we satisfy the above requirements, neither the investment company taxable income we distribute to stockholders nor any net capital gain that we distribute to stockholders subjects Medallion to federal income tax. Investment company taxable income and/or net capital gains that are retained by Medallion are subject to federal income tax at corporate income tax rates; provided, however, that to the extent that we retain any net long-term capital gains, we may designate them as "deemed distributions" and pay a tax thereon for the benefit of our stockholders. To the extent permitted, Medallion distributes to its stockholders for each of its taxable years substantially all of its investment company taxable income and may or may not distribute any capital gains. If we acquire debt obligations that were originally issued at a discount, or that bear interest rates that do not call for payments at fixed rates (or certain "qualified variable rates") at regular intervals over the life of the obligation, we will be required to include as interest income each year a portion of the "original issue discount" that accrues over the life of the obligation regardless of whether we receive the income, and we will be obligated to make distributions accordingly. As set forth above, Medallion must distribute at least 90% of its investment company taxable income to its stockholders in each taxable year in order to maintain its status as a RIC. Medallion may borrow funds, sell assets or take other actions to meet the distribution requirements. However, under the 1940 Act, we will not be permitted to make distributions to stockholders while senior securities are outstanding unless we meet certain asset coverage requirements. If we are unable to make the required distributions, we may fail to qualify as a RIC or may be subject to the nondeductible 4% excise tax. Furthermore, the SBA restricts the distributions that may be made to an amount equal to undistributed net realized earnings less the allowance for unrealized loan losses (which in the case of Medallion is included in unrealized depreciation). Taxation of Stockholders As long as we qualify as a RIC, distributions made to our taxable domestic stockholders out of current or accumulated earnings and profits (and not designated as capital gain dividends) will be taken into account as ordinary income. Distributions that are designated as capital gain dividends will be taxed as long-term capital gains (to the extent they do not exceed our actual net long-term capital gain for the taxable year) without regard to the period for which the stockholder has held its stock. Corporate stockholders however, are subject to tax on capital gain dividends at the same rate as ordinary income. To the extent that Medallion makes distributions in excess of current and accumulated earnings and profits, these distributions are treated first as a tax-free return of capital to the stockholder, reducing the tax basis of the stockholder's stock by the amount of such distribution (but not below zero), with distributions in excess of the stockholder's tax basis taxable as capital gains (if the stock is held as a capital asset). In addition, any dividends declared by Medallion in October, SAI-15 November or December of any year and payable to a stockholder of record on a specific date in any such month shall be treated as both paid by Medallion and received by the stockholder on December 31 of such year, provided that the dividend is actually paid by Medallion during January of the following calendar year. Stockholders may not include in their individual income tax returns any net operating losses or capital losses of Medallion. If we choose to retain and pay tax on any net capital gain rather than distribute such gain to our stockholders, we will designate such deemed distribution in a written notice to stockholders prior to the expiration of 60 days after the close of the taxable year. Each stockholder would then be treated for federal income tax purposes as if we had distributed to such stockholder the stockholder's pro rata share of the net long-term capital gain retained by Medallion and the stockholder had paid its pro rata share of the taxes paid by Medallion and reinvested the remainder in Medallion. In general, if a stockholder holds Medallion stock as a capital asset and sells such stock, such stockholder will recognize short-term capital gain or loss if such stock was held for one year or less (after applying certain holding period rules) and long-term capital gain or loss if such stock was held for more than one year. However, any capital loss arising from the sale or exchange of common stock held for six months or less (after applying certain holding period rules) generally will be treated as a long-term capital loss to the extent of the amount of capital gain dividends received. Backup Withholding We report to our domestic stockholders and to the Internal Revenue Service the amount of dividends paid during each calendar year and the amount of tax withheld, if any, with respect thereto. Under backup withholding rules, a stockholder may be subject to backup withholding at the rate of 31% with respect to dividends paid unless such stockholder (a) is a corporation or comes within certain other exempt categories and, when required, demonstrates this fact, or (b) provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding, and otherwise complies with applicable requirements of the backup withholding rules. A stockholder that does not provide us with its correct taxpayer identification number may also be subject to penalties imposed by the Internal Revenue Service. Any amount paid as backup withholding will be creditable against the stockholder's federal income tax liability. Other Tax Considerations Reinvestment Plan. Stockholders participating in the Reinvestment Plan will be deemed to have received the gross amount of any cash distributions which would have been paid by Medallion to such stockholders had they not elected to participate. These deemed distributions will be treated as actual distributions from Medallion to the participating stockholders and will retain the character and tax effect applicable to distributions from Medallion generally. Participants in the Reinvestment Plan are subject to federal income tax on the amount of the deemed distributions to the extent that such distributions represent dividends or gains, even though they receive no cash. Shares of common stock received under the Reinvestment Plan will have a holding period beginning with the day after the date of distribution, and a tax basis equal to their cost (which is the gross amount of the deemed distribution). See "Dividend Reinvestment Plan." State, Local and Foreign Taxes. Medallion and its stockholders may be subject to state, local or foreign taxation in various jurisdictions, including those in which it or they transact business or reside. The state, local and foreign tax treatment of Medallion and its stockholders may not conform to the federal income tax consequences discussed above. Consequently, prospective stockholders should consult their own tax advisers regarding the effect of state, local and foreign tax laws on an investment in the common stock of Medallion. SAI-16 Part C--Other Information 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............................................ $ 11,385 NASD fees....................................................... 5,055 Nasdaq additional listing fee................................... 35,000 Blue Sky fees and expenses...................................... -- Accounting fees and expenses.................................... 50,000 Legal fees and expenses......................................... 275,000 Printing and engraving fees..................................... 250,000 Registrar and transfer agent's fees............................. 3,500 Miscellaneous fees and expenses................................. 20,060 -------- Total......................................................... $650,000 ========
Item 27. Persons Controlled by or Under Common Control The following is a list of all the subsidiaries of Medallion:
Name Jurisdiction of Incorporation or Formation ---- ------------------------------------------ Medallion Funding Corp.......... New York Medallion Taxi Media, Inc....... New York Business Lenders, LLC........... Delaware Medallion Capital, Inc.......... Minnesota Medallion Business Credit, LLC.. Delaware Freshstart Venture Capital Corp........................... New York
C-1 [GRAPH] Medallion Financial Corp & Subsidiaries As of December 31, 2000 Medallion Financial Corp. Business Leaders LLC 100% Medallion Business Credit LLC 100% Medallion Capital, Inc. 100% Medallion Funding Corp. 100% Fresh start Venture Capital Corp. 100% Medallion Taxi Media, Inc. 100% FAP 100% Item 28. Number of Holders of Securities The following table sets forth the number of record holders of Medallion's common stock as of May 23, 2001.
Name of Class Number of Record Holders ------------- ------------------------ Common stock, $.01 par value per share.............. 191
C-2 SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and/or the Investment Company Act, the registrant has duly caused Post-Effective Amendment No. 1 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 13th day of June, 2001. Medallion Financial Corp. /s/ Alvin Murstein By: _________________________________ Alvin Murstein, Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, Post-Effective Amendment No. 1 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, Chief Executive June 13, 2001 ______________________________________ Officer (Principal Alvin Murstein Executive Officer) and Director /s/ James E. Jack Chief Financial Officer June 13, 2001 ______________________________________ and James E. Jack Executive Vice President */s/ Larry D. Hall Chief Accounting Officer June 13, 2001 ______________________________________ and Assistant Treasurer Larry D. Hall */s/ Andrew M. Murstein President and Director June 13, 2001 ______________________________________ Andrew M. Murstein */s/ Mario M. Cuomo Director June 13, 2001 ______________________________________ Mario M. Cuomo */s/ Frederick S. Hammer Director June 13, 2001 ______________________________________ Frederick S. Hammer */s/ Stanley Kreitman Director June 13, 2001 ______________________________________ Stanley Kreitman */s/ David L. Rudnick Director June 13, 2001 ______________________________________ David L. Rudnick */s/ Benjamin Ward Director June 13, 2001 ______________________________________ Benjamin Ward
/s/ Alvin M. Murstein *By: ____________________________ June 13, 2001 Alvin M. Murstein, Attorney-in-fact C-3 EXHIBIT INDEX
Exhibits Description -------- ----------- 2a.1 Medallion Financial Corp. (Medallion) Restated Certificate of Incorporation. Filed as Exhibit 2a to Medallion's Registration Statement on Form N-2 (File No. 333-1670) and incorporated by reference herein. 2a.2 Certificate of Amendment to Medallion Restated Certificate of Incorporation. Filed as Exhibit 3.1.1 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1998 (File No. 000-27812) and incorporated by reference herein. 2b. Medallion Restated By-Laws. Filed as Exhibit b to Medallion's Registration Statement on Form N-2 (File No. 333-1670) and incorporated by reference herein. 2d.1 Instruments defining the rights of holders of securities: See Medallion's Restated Certificate of Incorporation. Filed as 2a to Medallion's Registration Statement on Form N-2 (File No. 333-1670) and incorporated by reference herein. 2d.2 Instruments defining the rights of holders of securities. See Certificate of Amendment to Medallion Restated Certificate of Incorporation. Filed as Exhibit 3.1.1 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1998 (File No. 000-27812) and incorporated by reference herein. 2d.3 Instruments defining the rights of holders of securities. See Medallion Restated By-Laws. Filed as Exhibit b to Medallion's Registration Statement on Form N-2 (File No. 333-1670) and incorporated by reference herein. 2e. Medallion's Dividend Reinvestment Plan. Filed as Exhibit e to Medallion's Registration Statement on Form N-2 (File No. 333-1670) and incorporated by reference herein. 2h.1 Form of Underwriting Agreement. Previously filed. 2i.1 Medallion Amended and Restated 1996 Stock Option Plan. Filed as Exhibit 10.1 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1998 (File No. 000-27812) and incorporated by reference herein. 2i.2 Medallion's Amended and Restated 1996 Non-Employee Director Stock Option Plan. Filed as Exhibit A to Medallion's Application for an Amendment to the Commission Order approving the plan (File No. 812- 11800) and incorporated by reference herein. 2i.3 Medallion Funding Corp. 401k Savings Plan. Filed as Exhibit i.2 to Medallion's Registration Statement on Form N-2/A (File No. 333-1670) and incorporated by reference herein. 2i.4 First Amended and Restated Employment Agreement between Medallion and Alvin Murstein dated May 29, 1998. Filed as Exhibit 10.20 to Medallion's Annual Report on Form 10-K for the fiscal year ended December 31, 1998 (File No. 814-00188) and incorporated by reference herein. 2i.5 First Amended and Restated Employment Agreement between Medallion and Andrew Murstein dated May 29, 1998. Filed as Exhibit 10.20 to Medallion's Annual Report on Form 10-K for the fiscal year ended December 31, 1998 (File No. 814-00188) and incorporated by reference herein. 2i.6 Employment Agreement, between Medallion and Michael Kowalsky, dated March 29, 1999 (File No. 333-60080) and incorporated herein by reference. Previously filed. 2k.1 Agreement of Merger between Medallion, and Tri-Magna Corporation, dated December 21, 1995, as amended on February 22, 1996. Filed as Exhibit k3(i) to Medallion's Registration Statement on Form N-2 (file No. 333-1670) and incorporated by reference herein. 2k.2 Stock Purchase Agreement among Medallion Transportation Capital Corp., LNC Investment, Inc., Leucadia, Inc. and Leucadia National Corporation, dated February 12, 1996. Filed as Exhibit k1 to Medallion's Registration Statement on Form N-2 (File No. 333-1670) and incorporated by reference herein.
E-1
Exhibits Description -------- ----------- 2k.3 Asset Purchase Agreement between Medallion, and Edwards Capital Company, dated February 21, 1996. Filed as Exhibit k2 to Medallion's Registration Statement on Form N-2 (File No. 333-1670) and incorporated by reference herein. 2k.4 Amendment Number 2 to Agreement of Merger between and Tri-Magna Corporation, dated April 26, 1996. Filed as Exhibit k3(ii) to Medallion's Registration Statement on Form N-2 (File No. 333-1670) and incorporated by reference herein. 2k.5 Amendment Number 1 to Stock Purchase Agreement among Medallion, Transportation Capital Corp., LNC Investments, Inc., Leucadia, Inc. and Leucadia National Corporation dated April 30, 1996. Filed as Exhibit k(i) to Medallion's Registration Statement on Form N-2 (File No. 333-1670) and incorporated by reference herein. 2k.6 Amendment Number 1 to Asset Purchase Agreement between Medallion and Edwards Capital Company dated April 30, 1996. Filed as Exhibit k2(i) to Medallion's Registration Statement on Form N-2 (File No. 333-1670) and incorporated by reference herein. 2k.7 Agreement between Medallion Taxi Media, Inc. and Glenn Grumman dated July 25, 1996. Filed as Exhibit 10.2 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1996 (File No. 814-00188) and incorporated by reference herein. 2k.8 Agreement between Medallion Taxi Media, Inc. and Metropolitan Taxicab Board of Trade, Inc. dated March 6, 1997. Filed as Exhibit 10.37 to Medallion's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (File No. 000-27812) and incorporated by reference herein. 2k.9 Letter Agreement dated April 18, 1997 between Medallion Funding Corp. and The Chase Manhattan Bank relating to an interest rate cap transaction in the amount of $10,000,000. Filed as Exhibit 10.1 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1997 (File No. 814-09744) and incorporated by reference herein. 2k.10 Letter Agreement dated May 9, 1987 between Medallion Funding Corp. and Fleet National Bank, now known as Fleet Bank, N.A., ("Fleet") relating to an interest rate cap transaction in the amount of $10,000,000. Filed as Exhibit 10.2 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1997 (File No. 814- 09744) and incorporated by reference herein. 2k.11 Letter Agreement dated May 12, 1997 between Medallion Funding Corp. and Fleet relating to an interest rate cap transaction in the amount of $10,000,000. Filed as Exhibit 10.3 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1997 (File No. 814-09744) and incorporated by reference herein. 2k.12 Asset Purchase Agreement dated as of August 20, 1997 among Medallion, BLI Acquisition Co., LLC, Business Lenders, Inc., Thomas Kellogg, Gary Mullin, Penn Ritter and TriumphConnecticut, Limited Partnership (including all exhibits thereto--schedule omitted). Filed as Exhibit 10.2 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1997 (File No. 000-27812) and incorporated by reference herein. 2k.13 Amended and Restated Loan Agreement, dated as of December 24, 1997, by and among Medallion Funding Corp., the lenders party thereto Fleet, as Swing Line Lender, Administrative Agent and Collateral Agent and The Bank of New York as Documentation Agent with Fleet, as Arranger. Filed as Exhibit 10.50 to Medallion's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (File No. 812-09744) and incorporated by reference herein. 2k.14 Revolving Credit Noted dated December 24, 1997 in the amount of $30,000,000 from Medallion Funding Corp. payable to Fleet Bank National Association Filed as Exhibit 10.51 to Medallion's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (File No. 812-0974) and incorporated by reference herein.
E-2
Exhibits Description -------- ----------- 2k.15 Revolving Credit Note dated December 24, 1997 in the amount of $30,000,000 from Medallion Funding Corp. payable to The Bank of New York. Filed as Exhibit 10.52 to Medallion's Annual Report on From 10- K for the fiscal year ended December 31, 1997 (File No. 812-09744) and incorporated by reference herein. 2k.16 Revolving Credit Note dated December 24, 1997 in the amount of $30,000,000 from Medallion Funding Corp. payable to BankBoston, N.A. Filed as Exhibit 10.53 to Medallion's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (File No. 812-09744) and incorporated by reference herein. 2k.17 Revolving Credit Noted dated December 24, 1997 in the amount of $20,000,000 from Medallion Funding Corp. payable to Harris Trust and Savings Bank. Filed as Exhibit 10.54 to Medallion's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (File No. 812- 09744) and incorporated by reference herein. 2k.18 Revolving Credit Note dated December 24, 1997 in the amount of $20,000,000 from Medallion Funding Corp. payable to Bank Tokyo-- Mitsubishi Trust Company. Filed as Exhibit 10.55 to Medallion's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (File No. 812-09744) and incorporated by reference herein. 2k.19 Revolving Credit Note dated December 24, 1997 in the amount of $15,000,000 from Medallion Funding Corp. payable to Israel Discount Bank of New York. Filed as Exhibit 10.56 to Medallion's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (File No. 812-09744) and incorporated by reference herein. 2k.20 Revolving Credit Note dated December 24, 1997 in the amount of $15,000,000 from Medallion Funding Corp. payable to European American Bank. Filed as Exhibit 10.57 to Medallion's Annual Report on Form 10- K for the fiscal year ended December 31, 1997 (File No. 812-09744) and incorporated by reference herein. 2k.21 Revolving Credit Note dated December 24, 1997 in the amount of $15,000,000 from Medallion Funding Corp. payable to Bank Leumi USA. Filed as Exhibit 10.58 to Medallion's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (File No. 812-09744) and incorporated by reference herein. 2k.22 Revolving Credit Note dated December 24, 1997 in the amount of $20,000,000 from Medallion Funding Corp. payable to The Chase Manhattan Bank. Filed as Exhibit 10.59 to Medallion's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (File No. 812-09744) and incorporated by reference herein. 2k.23 Revolving Credit Note dated December 24, 1997 in the amount of $5,000,000 from Medallion Funding Corp. payable to Fleet Bank, National Association. Filed as Exhibit 10.60 to Medallion's Annual Report on From 10-K for the fiscal ended December 31, 1997 (File No. 812-09744) and incorporated by reference herein. 2k.24 Amended and Restated Security Agreement, dated as of December 24, 1997, between Medallion Funding Corp., as Debtor and Fleet, as Agent and Secured Party for the benefit of the Banks and Swing Line Lender signatory to the Amended and restated Loan Agreement, dated as of December 24, 1997, among Medallion Funding Corp., the banks signatory thereto, the Swing Line Lender, The Bank of New York as Documentation Agent and Fleet, as Arranger and Agent and the Holders of Commercial Paper issued by Medallion Funding Corp. Filed as Exhibit 10.61 to Medallion's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (File No. 812-09744) and incorporated by reference herein.
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Exhibits Description -------- ----------- 2k.25 First Amendment, dated as of February 5, 1998, to Amended and Restated Loan Agreement, dated as of December 24, 1997, by and among Medallion Funding Corp., the lenders party thereto, Fleet as Swing Line Lender, Administrative Agent and Collateral Agent and The Bank of New York as Documentation Agent with Fleet, as Arranger. Filed as Exhibit 10.62 to Medallion's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (File No. 812-09744) and incorporated by reference herein. 2k.26 Amendment No. 1, dated as of March 12, 1998, to Amended and Restated Security Agreement, dated as of December 24, 1997, between Medallion Funding Corp., and Debtor and Fleet, as Agent and secured Party for the benefit of the Banks and Swing Line Lender signatory to the Amended and Restated Loan Agreement, dated as of December 24, 1997, among Medallion Funding Corp., the banks signatory thereto, the Swing Line Lender, The Bank of New York as Documentation Agent and Fleet, as Arranger and Agent and the Holders of Commercial Paper issued by Medallion Funding Corp. Filed as Exhibit 10.63 to Medallion's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (File No. 812-09744) and incorporated by reference herein. 2k.27 Indenture of Lease, dated October 31, 1997, by and between Sage Realty Corporation, as Agent and Landlord, and Medallion, as Tenant. Filed as Exhibit 1064 to Medallion's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (File No. 812-09744) and incorporated by reference herein. 2k.28 Third Amendment, dated December 22, 1997, to Letter Agreement, dated as of December 1, 1996, between Medallion and Fleet. Filed as Exhibit 10.65 to Medallion's Annual Report on form 10-K for the fiscal year ended December 31, 1997 (File No. 812-09744) and incorporated by reference herein. 2k.29 Endorsement No. 3, dated December 22, 1997, to Revolving Credit Note dated December 1, 1996 in the amount of $6,000,000 from Medallion, payable to Fleet. Filed as Exhibit 10.66 to Medallion's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (File No. 812-09744) and incorporated by reference herein. 2k.30 (CE) Commercial Paper Dealer Agreement 4 (2) Program between Medallion Funding Corp., as issuer, and Smith Barney Inc., as dealer, dated as of March 13, 1998. Filed as Exhibit 10.1 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1998 (File No. 000-27812) and incorporated by reference herein. 2k.31 Agency Agreement, by and between Medallion Funding Corp. and Bank of Montreal Trust Medallion, dated as of March 13, 1998. Filed as Exhibit 10.2 to Medallion's Quarterly report on Form 10-Q for the quarterly period ended March 31, 1998 (File No. 000-27812) and incorporated by reference herein. 2k.32 Loan Agreement, dated as of July 31, 1998, by and among Medallion, the Lenders Party thereto, Fleet, as Agent and Swing Line Lender and Fleet, as Arranger (exhibits included). Filed as Exhibit 10.2 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1998 (File No. 814-00188) and incorporated by reference herein. 2k.33 Amended and Restated Loan Agreement by and among Medallion, Medallion Business Credit, LLC, the Lenders Party hereto, Fleet, as Agent and Swing Line Lender and Fleet, as Arranger, dated June 29, 1999. Filed as Exhibit 10.1 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999 (File No. 814-00188) and incorporated by reference herein. 2k.34 Medallion Funding Corp. $22,500,000 7.20% Senior Secured Notes, Series A Due June 1, 2004 Note Purchase Agreement, dated as of June 1, 1999. Filed as Exhibit 10.2 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999 (File No. 814- 00188) and incorporated by reference herein.
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Exhibits Description -------- ----------- 2k.35 Security Agreement between Medallion Funding Corp., as debtor, and Fleet, as Agent and secured party, for the benefit of the Travelers Insurance Medallion, the First Citicorp Life Insurance Medallion, Citicorp Life Insurance Medallion, Untied of Omaha Life Insurance Medallion and Companion Life Insurance Medallion dated June 1, 1999. Filed as Exhibit 10.3 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999 (File No. 814-00188) and incorporated by reference herein. 2k.36 Security Agreement between Medallion Funding Corp., as debtor, and Fleet, as Agent and secured party, for the benefit of The Bank and Swing Line Lender Signatory to the Amended and Restated Loan Agreement, dated as of June 29, 1999, among Medallion, Medallion Business Credit LLC, the Banks Signatory thereto, the Swing Line Lender and Fleet, as Arranger and Agent, dated as of June 29, 1999. Filed as Exhibit 10.4 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999 (File No. 814-00188) and incorporated by reference herein. 2k.37 Intercreditor Agreement, dated June 1, 1999, among Fleet Bank, N.A., as agent for an on behalf of the Banks, the Banks, the Senior Noteholders, Fleet, acting as collateral agent to the Senior Noteholders and Fleet as interecreditor collateral agent for the Senior Creditors. Filed as Exhibit 10.5 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999 (File No. 814-00188) and incorporated by reference herein. 2k.38 $5,000,000 Swing Line Note, dated June 29, 1999. Filed as Exhibit 10.6 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999 (File No. 814-00188) and incorporated by reference herein. 2k.39 $20,000,000 Revolving Credit Note No. 1, dated June 29, 1999. Filed as Exhibit 10.7 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999 (File No. 814-00188) and incorporated by reference herein. 2k.40 $15,000,000 Revolving Credit Note No. 2, dated June 29, 1999. Filed as Exhibit 10.8 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999 (File No. 814-00188) and incorporated by reference herein. 2k.41 $10,000,000 Revolving Credit Note No. 3, dated June 29, 1999. Filed as Exhibit 10.9 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999 (File No. 814-00188) and incorporated by reference herein. 2k.42 $10,000.000 Revolving Credit Note No. 4, dated June 29, 1999. Filed as Exhibit 10.10 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999 (File No. 814-00188) and incorporated by reference herein. 2k.43 $10,000,000 Revolving Credit No. No. 5, dated June 29, 1999. Filed as Exhibit 10.11 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999 (File No. 814-00188) and incorporated by reference herein. 2k.44 $5,000,000 Revolving Credit No. No. 6, dated June 29, 1999. Filed as Exhibit 10.12 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999 (File No. 814-00188) and incorporated by reference herein. 2k.45 $10,000,000 Revolving Credit No. No. 7, dated June 29, 1999. Filed as Exhibit 10.13 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999 (File No. 814-00188) and incorporated by reference herein. 2k.46 $10,000,000 Revolving Credit No. No. 8, dated June 29, 1999. Filed as Exhibit 10.14 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999 (File No. 814-00188) and incorporated by reference herein.
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Exhibits Description -------- ----------- 2k.47 $10,000,000 Revolving Credit No. 9, dated June 29, 1999. Filed as Exhibit 10.15 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999 (File No. 814-00188) and incorporated by reference herein. 2k.48 Commercial Paper Dealing Agreement dated as of July 30, 1999 between Medallion, and U.S. Bancorp Investments, Inc. Filed as Exhibit 10.1 to Medallion's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1999 (File No. 814-00188) and incorporated by reference herein. 2k.49 Amendment No. 1 to Second Amended and Restated Loan Agreement and Limited Waiver dated as of March 30, 2001, by and among Medallion, Medallion Business Credit, LLC, the lending institutions listed thereto, Fleet National Bank, as a Bank, as Swing Line Lender, and as Agent for the Banks. Filed as Exhibit 10.55 to Medallion's Quarterly Report on Form 10-K for the fiscal year ended December 31, 2000 (814- 00188) and incorporated by reference herein. 2k.50 Amendment No. 4 to Amended and Restated Loan Agreement and Limited Waiver dated as of March 30, 2001, by and among Medallion, Medallion Funding Corp., LLC, the lending institutions listed thereto, Fleet National Bank. as a Bank, as Swing Line Lender, and as Agent for the Banks. Filed as Exhibit 10.56 to Medallion's Annual Report on Form 10-K for the fiscal year ended December 31, 2000 (814-00188) and incorporated by reference herein. 2k.51 First Amendment Agreement, dated March 30, 2001 to Note Purchase Agreement, dated as of June 1, 1999, between Medallion Funding Corp., and each of the Purchasers named on the Schedule thereto. Filed as Exhibit 10.57 to Medallion's Annual Report on Form 10-K for the fiscal year ended December 31, 2000 (814-00188) and incorporated by reference herein. 2k.52 Employment Agreement, between Medallion and James E. Jack, dated May 1, 2001. Previously filed. *2l.1 Legal Opinion by Willkie Farr & Gallagher and a consent to use the legal opinion. 2n.1 Consent of Arthur Andersen LLP. Previously filed. 2o.1 Audited financial statements included in Medallion's Annual Report on Form 10-K for the fiscal year ending December 31, 2000 and unaudited financial statements included in Medallion's Report on Form 10-Q for the three months ended March 31, 2001. Previously filed. 2p.1 Subscription Agreement between the Alvin Murstein Second Family Trust and Medallion Financial Corp. Filed as Exhibit p.1 to Medallion's Registration Statement on Form N-2 (File No. 333-1670) and incorporated by reference herein. 2p.2 Subscription Agreement between the Andrew Murstein Family Trust and Medallion Financial Corp. Filed as Exhibit p.2 to Medallion's Registration Statement on Form N-2 (File No. 333-1670) and incorporated by reference herein. *2r.1 Ethics Code adopted by Medallion.
- -------- * Filed herewith. + To be filed on amendment. E-6 EX-2.L.1 2 dex2l1.txt OPINION LETTER OF WILLKIE FARR Exhibit 2l.1 [Willkie Farr & Gallagher letterhead] June 12, 2001 Medallion Financial Corp. 437 Madison Avenue New York, New York 10022 Ladies and Gentlemen: We have acted as counsel to Medallion Financial Corp., a corporation organized under the laws of the State of Delaware (the "Company"), in connection with the preparation of a registration statement on Form N-2 (the "Registration Statement") under the Securities Act of 1933, as amended, and the Investment Company Act of 1940, relating to an offering by the Company of up to 4,140,000 shares (the "Shares") of common stock, par value $0.01 per share, of the Company. We have examined and relied upon originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records, certificates and instruments relating to the Company as we have deemed relevant and necessary to the formation of the opinion hereinafter set forth. In such examination, we have assumed the genuineness and authenticity of all documents examined by us and all signatures thereon, the legal capacity of all persons executing such documents, the conformity to originals of all copies of documents submitted to us and the truth and correctness of any representations and warranties contained therein. Based upon and subject to the foregoing, we are of the opinion that the Shares have been duly and validly authorized and issued, and are fully paid and non- assessable. June 12, 2001 Page 2 This opinion letter is limited to the matters stated herein and no opinion is implied or may be inferred beyond the matters expressly stated. We consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to this firm appearing under the heading "Legal Matters" in the Prospectus. Very truly yours, /s/ Willkie Farr & Gallagher EX-2.R.1 3 dex2r1.txt CODE OF ETHICS Exhibit 2r.1 CODE OF ETHICS OF MEDALLION FINANCIAL CORPORATION This Code of Ethics has been adopted by Medallion Financial Corporation and each of its wholly-owned subsidiaries that are registered investment companies (together, the "Fund") in compliance with Rule 17j-1 (the "Rule") under the Investment Company Act of 1940, as amended (the "Act"), to - ----- establish standards and procedures for the detection and prevention of activities by which persons having knowledge of the investments and investment intentions of the Fund may abuse their fiduciary duties to the Fund and to deal with other types of conflict of interest situations to which the Rule is addressed. The Fund does not invest in securities (other than cash equivalents) except for securities of companies that, at the time of investment, it is considering acquiring ("Target Companies"). Consequently, this Code of Ethics is limited in its scope to address situations involving those officers of the Fund who have access to knowledge of the Fund's potential and actual investments in Target Companies. 1. General Prohibitions. --------------------- The specific provisions and reporting requirements of the Rule and this Code of Ethics are concerned primarily with those investment activities of Access Persons, defined below, who are associated with the Fund and who thus may benefit from or interfere with the purchase or sale of securities by the Fund. The Rule and Section 1, however, apply to all affiliated persons of the Fund ("Covered Persons"). - ----------------- The Rule makes it unlawful for Covered Persons to engage in conduct that is deceitful, fraudulent or manipulative, or that involves false or misleading statements, in connection with the purchase or sale of securities by an investment company. Accordingly, under the Rule and this Code of Ethics, no Covered Person shall use any information concerning the investments or investment intentions of the Fund, or his or her ability to influence such investments or investment intentions, for personal gain or in a manner detrimental to the interests of the Fund. In addition, no Covered Person shall, directly or indirectly, in connection with the purchase or sale of a "security held or to be acquired" (as defined below) by the Fund: (i) employ any device, scheme or artifice to defraud the Fund; (ii) make to the Fund any untrue statement of a material fact or omit to state to the Fund a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading; (iii) engage in any act, practice or course of business that operates or would operate as a fraud or deceit on the Fund; or (iv) engage in any manipulative practice with respect to the Fund. Policy on Insider Trading. The Fund prohibits any officer, director ------------------------- or employee from trading, either personally or on behalf of others, on material, non-public information or communicating material non-public information to others in violation of the law. This policy applies to all Covered Persons. Material, non-public information includes information about the Fund's intention to make a merger or acquisition proposal to another company. Information in the possession of a Covered Person that is material and non-public must be kept secure and should not be communicated to anyone who does not have a "need to know" in connection with accomplishing a particular transaction. Appropriate precautions should be taken to effect this, such as use of controls over the distribution of draft documents, use of code words, restricting access to computers containing confidential information, and control over support staff and others who may have access to confidential information. The Fund will maintain a Restricted List on which the Administrator will record the names of all companies with which the Fund is potentially contemplating engaging in a strategic corporate transaction. The Restricted List may include the names of a Target Company, its parents or affiliates or other affected companies. The affected securities will remain on the Restricted List until the Administrator is notified that the potential transaction has been dropped or completed. The Restricted List shall be made available to all Access Persons, other than the directors of the Fund that are not employees of the Fund. No Access Person may purchase or sell Securities on the Restricted List for his or her own account or any account in which he or she has a Beneficial Interest without the prior written approval of the Administrator. 2. General Principles. ------------------- This Code of Ethics acknowledges the general principles that Covered Persons: (i) owe a fiduciary obligation to the Fund; (ii) have the duty at all times to place the interests of Fund shareholders first; (iii) must conduct all personal securities transactions in such a manner as to avoid any actual or potential conflict of interest or abuse of an individual's position of trust and responsibility; and (iv) should not take inappropriate advantage of their positions in relation to the Fund. 3. Administration. --------------- The administration of this Code of Ethics shall be the responsibility of Brian O'Leary, who shall serve as the "Administrator" of this Code of Ethics. 4. Definitions. ------------ (a) "Access Person" means: ------------- (i) any officer or director of the Fund; (ii) any employee of the Fund (or of any company in a control relationship to the Fund) who, in connection with his or her regular functions or duties, makes, participates in or obtains information regarding the purchase or sale of Covered Securities by the Fund, or whose functions or duties relate to the making of any recommendations with respect to such purchases or sales; -2- (iii) any natural person in a control relationship to the Fund who obtains information concerning recommendations made for the purchase or sale of Covered Securities by the Fund. (b) "Affiliated Person" of another person means: ----------------- (i) any person directly or indirectly owning, controlling or holding with power to vote, five percent (5%) or more of the outstanding voting securities of such other person; (ii) any person 5% or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with power to vote, by such other person; (iii) any person directly or indirectly controlling, controlled by, or under common control with, such other person; (iv) any officer, director, partner, copartner, or employee of such other person; and (v) any investment adviser of the Fund. (c) "Beneficial Interest" means any interest by which an Access ------------------- Person or any member of his or her immediate family (relative by blood or marriage living in the same household) can directly or indirectly derive a monetary benefit from the purchase, sale (or other acquisition or disposition) or ownership of a Security, except such interests as the Administrator shall determine to be too remote for the purpose of this Code of Ethics. (A transaction in which an Access Person acquires or disposes of a Security in which he or she has or thereby acquires a direct or indirect Beneficial Interest will be referred to in this Code of Ethics as a "personal securities" ------------------- transaction or a transaction for the person's "own account"). ----------- (d) "Control" means the power to exercise a controlling influence ------- over the management or policies of a company (unless such power is solely the result of an official position with such company). Any person who owns beneficially, directly or through one or more controlled companies, more than twenty-five percent (25%) of the voting securities of a company shall be presumed to control such company. Natural persons shall be presumed not to be controlled persons. (e) "Covered Person" shall have the meaning set forth in Section 1 -------------- of this Code of Ethics. (f) "Covered Securities" means a Security on the Fund's Restricted ------------------ List, and any warrant for, option in, or Security immediately convertible into that Security. (g) "Independent Director" means any Director of the Fund who is not -------------------- an "interested person" (as defined in the Investment Company Act of 1940, as amended (the "1940 Act")) of the Fund who is also an employee of the Fund. -3- (h) "Investment Personnel" of the Fund means any person covered by -------------------- Section (a)(ii) or (iii). (i) "Security" or "security" includes all stock, debt obligations -------- and other instruments, including any warrant or option to acquire or sell a Security and financial futures contracts, but excludes securities issued by the U.S. government or its agencies, bankers, acceptances, bank certificates of deposit, commercial paper, repurchase agreements and shares of a mutual fund. References to a "security" in this Code of Ethics shall include any warrant for, option in, or Security immediately convertible into that Security. (j) A "Security held or to be acquired" by the Fund means any ------------------------------- Security that, within the most recent fifteen (15) days: (i) is or has been held by the Fund; or (ii) is being or has been considered for purchase by the Fund; and (iii) any option to purchase or sell, and any securities convertible into or exchangeable for any security described in (i) or (ii). 5. Prohibited Transactions. ----------------------- (a) General Prohibition. An Access Person may not effect a ------------------- personal securities transaction without prior written approval in accordance with Section 6 of this Code of Ethics if he or she knows or should have known at the time of entering into the transaction that: (i) the Fund has engaged in a transaction in the same Security within the last fifteen (15) days, or is engaging in a transaction or is going to engage in a transaction in the same Security in the next fifteen (15) days; or (ii) the Security is on the Restricted List. (b) Blackout Period. Investment Personnel may not effect a --------------- personal securities transaction on a day during which the Fund has a pending "buy" or "sell" order in that same Security until that order is executed or withdrawn. (c) Gifts. Investment Personnel may not accept any gift or other ----- thing of more than de minimis value from any person or entity that does business with or on behalf of the Fund. (d) Service as a Director. Investment Personnel may not serve on --------------------- the board of directors of any publicly traded company without prior written approval in accordance with Section 6 of this Code of Ethics. In the event such board service is approved, Investment Personnel must be excluded from making investment decisions on behalf of the Fund involving the subject company through the implementation of appropriate "Fire Wall" or other procedures. (e) Interested Transactions. Investment Personnel shall not ----------------------- recommend any securities transactions by the Fund without having disclosed his or her interest, if any, in such securities or the issuer thereof, including without limitation: (i) any direct or indirect ownership of any securities of such issuer; (ii) any contemplated transaction by such person in such securities; (iii) any position with such issuer or its affiliates; and -4- (iv) any present or proposed business relationship between such issuer or its affiliates and such person or any party in which such person has a significant interest. (f) Initial Public Offerings. Investment Personnel shall not ------------------------ acquire, directly or indirectly, beneficial ownership of any Securities in an initial public offering without the prior written approval of the Administrator who has been provided by such person with full details of the proposed transaction. In granting this prior approval, the Administrator shall take into consideration, among other factors, whether the investment opportunity should be reserved for the Fund and its shareholders and whether the opportunity is being offered to the Investment Personnel by virtue of his or her position with the Fund. Purchases of initial public offerings of volatile securities which are difficult to obtain, such as certain common stocks, will ordinarily not be approved. In contrast, purchases of generally available initial public offerings of less volatile securities (such as municipal bonds) in which the Fund does not customarily invest would usually be approved. (g) Private Placements. Investment Personnel shall not acquire, ------------------ directly or indirectly, beneficial ownership of any Securities in a private placement without the prior written approval of the Administrator who has been provided by such person with full details of the proposed transaction. In granting this prior approval, the Administrator shall take into consideration, among other factors, whether the investment opportunity should be reserved for the Fund and its shareholders and whether the opportunity is being offered to the Investment Personnel by virtue of his or her position with the Fund. Investment Personnel who have been authorized to acquire securities in a private placement are required to disclose that investment when they play a part in the Fund's subsequent consideration of an investment in the issuer. In such circumstances, the Fund's decision to purchase securities of the issuer will be subject to an independent review by Investment Personnel with no personal interest in the issuer. 6. Express Prior Approval. ----------------------- (a) Procedures. Except as provided in Section 7(a), advance ---------- clearance of each personal securities transaction covered by Section 5(a) or (i) any initial public offering or (ii) any private placement must be obtained from the Administrator. Transaction clearances must be obtained no more than three (3) days prior to the transaction. If the transaction is not effected within three (3) days of the date of clearance, a new clearance must be obtained. Clearance must be obtained in writing by completing and signing a form provided for that purpose by the Fund, which form shall set forth the details of the proposed transaction, and obtaining the signature of the Administrator. A copy of all completed clearance forms, with all required signatures, shall be retained by the Administrator. (b) Factors Considered. The Administrator may refuse to grant ------------------ clearance of a personal securities transaction in its sole discretion without being required to specify any reason for the refusal. Generally, the Administrator will consider the following factors, as applicable, in determining whether or not to clear a proposed transaction: (i) Whether the amount or nature of the transaction or person making it is likely to affect the price or market for the Security; -5- (ii) Whether the individual making the proposed purchase or sale is likely to benefit from purchases or sales being made or being considered by the Fund; Whether the Security proposed to be purchased or sold is one that would qualify for purchase or sale by the Fund; and (iv) Whether the transaction is nonvolitional on the part of the individual, such as receipt of a stock dividend or a sinking fund call. REQUESTS FOR CLEARANCE FOR TRANSACTIONS IN COVERED SECURITIES WILL GENERALLY BE DENIED. (c) Other Clearance. Advance clearance of service on the board of --------------- directors of a publicly traded company as required under Section 5(d) above must be obtained from the Administrator of the Code of Ethics. The Administrator may approve service on the board of directors of a publicly traded company if it is determined that such service is consistent with the interests of the Fund and its shareholders. 7. Exempt Transactions. -------------------- (a) No Influence or Control. Neither the prohibitions nor the ----------------------- preclearance or reporting requirements of this Code of Ethics shall apply to purchases, sales or other acquisitions or dispositions of Securities for an account over which the Covered Person or Access Person has no direct influence or control and does not exercise indirect influence or control. (b) Involuntary Transactions. Neither the prohibitions nor the ------------------------ preclearance requirements of this Code of Ethics shall apply to involuntary purchases or sales made by a Covered Person or an Access Person. (c) Automatic Dividend Reinvestment Plans. Neither the prohibitions ------------------------------------- nor the preclearance requirements of this Code of Ethics shall apply to purchases which are part of an automatic dividend reinvestment plan. (d) Issuer Distributions. Neither the prohibitions nor the -------------------- preclearance requirements of this Code of Ethics shall apply to purchases or other acquisitions or dispositions resulting from the exercise of rights acquired from an issuer as part of a pro rata distribution to all holders of a class of Securities of such issuer and the sale of such rights. (e) Approved Transactions. The prohibitions of this Code of Ethics --------------------- shall not apply to purchases, sales or other acquisitions or dispositions which receive the prior approval of the Administrator upon consideration of the factors stated in Section 6(b) above because: (i) their potential harm to the Fund is remote; (ii) they would be unlikely to affect a highly institutional market; or (iii) they are clearly not related economically to Securities being considered for purchase or sale by the Fund. 8. Reporting Requirements. ----------------------- The following reports must be filed with the Administrator of the Code of Ethics: -6- (a) Quarterly Reports. Within ten (10) days after the end of each ----------------- calendar quarter, each Access Person shall make a written report to the Administrator of this Code of Ethics of all transactions occurring in the quarter by which they acquired or disposed of a Beneficial Interest in any Security other than as provided in Section 7(a). Such report must contain the following information with respect to each reportable transaction: (i) date and nature of the transaction (purchase, sale or any other type of acquisition or disposition); (ii) title, interest rate and maturity date (if applicable), number of shares or principal amount of each Security and the price at which the transaction was effected; and (iii) the name of the broker, dealer or bank with or through which the transaction was effected; and (iv) the date that the report is submitted. Such report may contain a statement that the report is not to be construed as an admission that the person making it has or had any direct or indirect Beneficial Interest in any Security to which the report relates. The broker through which the transaction was effected shall be directed by the Access Person to supply to the Administrator, on a timely basis, duplicate confirmations and monthly brokerage statements for all securities accounts. An Access Person need not make a quarterly transaction report (under Section 8(a)) or an annual report (under Section 8(b)) if the report would duplicate information contained in broker trade confirmations or account statements received by the Fund with respect to the Access Person in the time period required by this Code, if all of the information required by the Code is contained in the broker trade confirmations or account statements. (b) Disclosure of Personal Holdings. Upon commencement of employment ------------------------------- and annually thereafter, each Access Person other than an Independent Director shall be required to disclose his or her current personal securities holdings. (c) Independent Directors. An Independent Director shall be required --------------------- to comply with Sections 6(a) and 8(a) above with respect to a transaction only if such person, at the time of that transaction knew, or in the ordinary course of fulfilling his or her official duties of a Director of the Fund should have known, that during the 15-day period immediately preceding the date of the transaction by such person, (i) the security such person purchased or sold is or was purchased or sold by the Fund or was being considered for purchase or sale by the Fund or (ii) the Fund is or was considering a strategic corporate transaction with the issuer of the security. (d) Certification of Compliance. Each Access Person is required to --------------------------- certify annually that he or she has read and understood the Fund's Code and recognizes that he or she is subject to such Code. Further, each Access Person is required to certify annually that he or she has complied with all the requirements of the Code and that he or she has disclosed or reported all personal securities transactions required to be disclosed or reported pursuant to the requirements of the Code. (e) Review by the Board of Directors. At least annually, the Fund's -------------------------------- management shall provide a written report to the Board of Directors containing: (i) Any changes made to existing procedures concerning Access Person's personal trading activities made during the past year; -7- (ii) Any recommended changes to the Fund's Code or procedures; (iii) A summary of issues arising under the Code or procedures since the last report, including information about any material violations with respect to the Fund's Code which occurred during the past year and any sanctions imposed in response to such material violations; and (iv) A certification that the Fund has adopted procedures reasonably necessary to prevent Access Persons from violating the Code. 6. Confidentiality of Fund Transactions. ------------------------------------- Until disclosed in a public report to shareholders or to the Securities and Exchange Commission in the normal course, all information concerning Securities being considered for purchase or sale by the Fund shall be kept confidential by all Access Persons and disclosed by them only on a "need to know" basis. It shall be the responsibility of the Administrator of this Code of Ethics to report any inadequacy found by him to the Board of Directors of the Fund or any committee appointed by the Board to deal with such information. 10. Sanctions. ---------- Any violation of this Code of Ethics shall be subject to the imposition of such sanctions as the Fund may deem appropriate under the circumstances to achieve the purposes of the Rule and this Code of Ethics, which sanctions may include suspension or termination of employment, a letter of censure and/or restitution of an amount equal to the difference between the price paid or received by the Fund and the more advantageous price paid or received by the offending person. Any profits realized on trades in violation of this Code of Ethics must be disgorged to the Fund. Sanctions for violation of this Code of Ethics by a Director of the Fund will be determined by a majority vote of its Directors who are not interested persons of the Fund. 11. Administration and Recordkeeping. --------------------------------- (a) Duties of the Administrator. The duties of the Administrator --------------------------- designated in accordance with Section 3 of this Code of Ethics shall include the following: (i) Continuous maintenance of a current list of the names of all Access Persons with an appropriate description of their title or employment; (ii) Providing each Access Person a copy of this Code of Ethics and informing them of their duties and obligations hereunder, and assuring that Covered Persons who are not Access Persons are familiar with applicable requirements of this Code of Ethics; (iii) Maintaining or supervising the maintenance of all records and reports required by this Code of Ethics; (iv) Preparing listings of all transactions effected by any Access Person within fifteen (15) days of the date on which the same Security was held, purchased or sold by the Fund; -8- (v) Maintaining the Restricted List and communicating its contents to all Access Persons; (vi) Determining whether any particular securities transaction should be exempted pursuant to the provisions of Section 7(f) of this Code of Ethics; (vii) Issuing either personally or with the assistance of counsel as may be appropriate, any interpretation of this Code of Ethics which may appear consistent with the objectives of the Rule and this Code of Ethics; (viii) Conducting such inspections or investigations as shall reasonably be required to detect and report, with his recommendations, any apparent violations of this Code of Ethics to the Board of Directors of the Fund or any committee appointed by them to deal with such information; and (ix) Submitting an annual report to the Directors of the Fund as required by Section 8(e). (b) Recordkeeping Requirements. The Administrator shall maintain, -------------------------- at the Fund's principal place of business, the following: (i) A copy of any Code of Ethics adopted pursuant to the Rule which has been in effect during the past five (5) years; (ii) A record of any violation of any such Code of Ethics and of any action taken as a result of such violation must be maintained in an easily accessible place for at least five (5) years after the end of the fiscal year in which the violation occurs; (iii) A copy of each report made by the Administrator under Section 8(e) within two (2) years from the end of the fiscal year of the Fund in which such report is made and for an additional three (3) years in a place which need not be easily accessible; (iv) A list of all persons who are, or within the past five (5) years have been, required to make reports pursuant to the Rule and any Code of Ethics in effect during the period or who are or were responsible for reviewing those reports during the period, must be maintained in an easily accessible place; and (v) A copy of each report made by an Access Person, including any information provided in lieu of such reports, must be maintained for at least five (5) years after the end of the fiscal year in which the report is given or the information is provided, the first two years in an easily accessible place. 12. Amendments and Modifications. ----------------------------- This Code of Ethics may not be amended or modified except in a written form which is specifically approved by majority vote of the directors of the Fund who are not interested persons of the Fund. -9- This Code of Ethics was adopted by the Board of Directors of the Fund, including a majority of such Directors who are not interested persons of the Fund, at a meeting held on August 28, 2000. /s/ Brian O'Leary ----------------- Brian O'Leary, Administrator -10- -----END PRIVACY-ENHANCED MESSAGE-----