<PAGE>
UNITED STATES
SECURITIES EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Under the Securities Exchange Act of 1934
(Amendment No. _____ )*
MEDALLION FINANCIAL CORP.
(Name of Issuer)
COMMON STOCK, $.01 PAR VALUE
(Title of Class of Securities)
583928 10 6
(CUSIP Number)
STEVEN N. FARBER, ESQ.; PALMER & DODGE LLP;
ONE BEACON STREET, BOSTON, MA 02180; (617) 573-0234
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
MAY 29, 1996
(Date of Event which Requires Filing of this Statement
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ]
________________________
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following pages)
(Page 1 of 18 pages)
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SCHEDULE 13D
- ---------------------- ------------------
CUSIP NO. 583928 10 6 Page 2 of 18 Pages
- ---------------------- ------------------
- -------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
ALVIN MURSTEIN
- -------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
2 (b) [ ]
- -------------------------------------------------------------------------------
SEC USE ONLY
3
- -------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
PF -- PERSONAL FUNDS OF ALVIN MURSTEIN
OO -- FUNDS OF THE ALVIN MURSTEIN SECOND FAMILY TRUST
- -------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d)
5 or
2(e) [ ]
- -------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
UNITED STATES OF AMERICA
- -------------------------------------------------------------------------------
NUMBER OF SOLE VOTING POWER
7
SHARES 1,340,000/1/
-------------------------------------------------------------
BENEFICIALLY SHARED VOTING POWER
8
OWNED BY 0
-------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 1,340,000/1/
-------------------------------------------------------------
PERSON SHARED DISPOSITIVE POWER
10
WITH 0
- -------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,340,000/1/
- -------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
12
- -------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
16.2%
- -------------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
IN
- -------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
/1/ Includes 1,250,000 shares held by the Alvin Murstein Second Family Trust.
<PAGE>
SCHEDULE 13D
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CUSIP NO. 583928 10 6 Page 3 of 18 Pages
- ---------------------- ------------------
ITEM 1. SECURITY AND ISSUER
This statement on Schedule 13D (the "Statement") relates to shares of
common stock, par value $.01 per share (the "Common Stock") of Medallion
Financial Corp., a Delaware corporation, (the "Issuer"). The principal
executive offices of the Issuer are located at 205 East 42nd Street, Suite 2020,
New York, NY 10017.
ITEM 2. IDENTITY AND BACKGROUND
(a) Name:
Alvin Murstein
(b) Business Address:
Medallion Financial Corp.
205 East 42nd Street
Suite 2020
New York, NY 10017
(c) Principal Occupation:
Chief Executive Officer of the Issuer
(d),(e) Legal Proceedings:
During the last five years, Mr. Murstein: (i) has not been
convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors); and (ii) has not been a party to a
civil proceeding of a judicial or administrative body of
competent jurisdiction and, as a result of such proceeding, was
or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any
violation with respect to such laws.
(f) Citizenship:
Mr. Murstein is a citizen of the United States of America.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The 90,000 shares of Common Stock held directly by Mr. Murstein were
purchased with approximately $990,000 of personal funds; the shares of Common
Stock held by the Alvin Murstein Second Family Trust (the "Trust"), of which Mr.
Murstein is a trustee, were purchased with $2,000 of funds of the Trust.
<PAGE>
SCHEDULE 13D
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CUSIP NO. 583928 10 6 Page 4 of 18 Pages
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ITEM 4. PURPOSE OF TRANSACTION
The shares of Common Stock held directly by the Trust were purchased
in connection with the initial capitalization of the Issuer; the shares held
directly by Mr. Murstein were purchased in the Issuer's initial public offering
for investment purposes. Mr. Murstein has no present plans or proposals for
disposition of the shares beneficially owned by him or for acquisition of
additional shares. Mr. Murstein, however, expects to evaluate on a continuing
basis his and the Trust's goals and objectives, other business opportunities
available to them, and general economic and equity market conditions, as well as
the Issuer's business operations and prospects. Based on such evaluations, Mr.
Murstein may change his plans and intentions and may determine to sell or
otherwise dispose of some or all of the shares beneficially owned by him or to
acquire additional shares.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) As of the close of business on February 10, 1996, Mr. Murstein
was the beneficial owner of 1,340,000 shares of Common Stock.
Such shares constituted approximately 16.2% of the 8,250,000
shares of Common Stock outstanding at that time. Of these
shares, 90,000, or 1.1% of the outstanding shares, were held
directly by Mr. Murstein; the remaining 1,250,000 shares,
representing 15.1% of the Issuer's outstanding Common Stock, were
held in the Trust.
(b) Mr. Murstein has sole power to vote, or to direct the vote, and
to dispose, or to direct the disposition of, all shares of Common
Stock reported in this Statement as beneficially owned by him.
(c) Mr. Murstein has not effected any transactions in the Common
Stock during the last sixty days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS AGREEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
Pursuant to an Escrow Agreement and an Escrow Deposit and Maintenance
Agreement, the Trust has deposited 50,410 shares of Common Stock with an escrow
agent as security for certain payments from the Issuer to FMC Advisers, Inc.,
the sub-adviser to the Issuer (the "Sub-Adviser"). The number of shares subject
to escrow fluctuates inversely with the market value of the Common Stock and the
amount of fees paid over time by the Issuer to the Sub-Adviser. If the Sub-
Advisory Agreement terminates or does not renew prior to June 1, 1998, the Sub-
Adviser is entitled to receive from escrow a number of shares of Common Stock
equal in value to the amount of the difference between $450,000 and fees paid by
the Issuer to the Sub-Adviser to that date.
<PAGE>
SCHEDULE 13D
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CUSIP NO. 583928 10 6 Page 5 of 18 Pages
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit Index
Exhibit No. Description
----------- -----------
A Escrow Agreement
B Escrow Deposit and Maintenance Agreement
<PAGE>
SCHEDULE 13D
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CUSIP NO. 583928 10 6 Page 6 of 18 Pages
- ---------------------- ------------------
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Date: February 10, 1997
/s/ Alvin Murstein
-------------------------------
Alvin Murstein, individually
and as Trustee under the Alvin
Murstein Second Family Trust
The original statement shall be signed by each person on whose behalf the
statement is filed or his authorized representative. If the statement is signed
on behalf of a person by his authorized representative other than an executive
officer or general partner of the filing person, evidence of the
representative's authority to sign on behalf of such person shall be filed with
the statement, provided, however, that a power of attorney for this purpose
which is already on file with the Commission may be incorporated by reference.
The name and any title of each person who signs the statement shall be typed or
printed beneath his signature.
Note. Six copies of this statement, including all exhibits, should be filed with
the Commission.
Attention. Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001).
<PAGE>
Exhibit A
---------
ESCROW AGREEMENT
----------------
ESCROW AGREEMENT, dated May 29, 1996, among the Alvin Murstein Second
Family Trust, the Andrew Murstein Family Trust (each individually being referred
to herein as a "Trust" and collectively as the "Trusts"), FMC Advisers, Inc.
----- ------
(the "Sub-Adviser") and Palmer & Dodge L.L.P., as escrow agent (the "Escrow
----------- ------
Agent").
- -----
WITNESSETH:
WHEREAS, Medallion Financial Corp. (the "Company"), a Delaware corporation
-------
and the Sub-Adviser will enter into a Sub-Advisory Agreement (the "Sub-Advisory
------------
Agreement") of even date herewith, pursuant to which the Sub-Adviser is to
- ---------
provide the Company certain investment advisory services;
WHEREAS, Article 3 of the Sub-Advisory Agreement provides that the Company
shall pay the Sub-Adviser, in arrears, a monthly fee of $18,750;
WHEREAS, Article 8 of the Sub-Advisory Agreement provides that the Sub-
Advisory Agreement may be terminated without penalty on 60 days' prior written
notice by either party;
WHEREAS, the Sub-Adviser is unwilling to enter into the Sub-Advisory
Agreement unless (i) the Trusts deposit and maintain shares of common stock of
the Company (the "Common Stock") in escrow as provided herein as security in
------------
favor of the Sub-Adviser in the event the Sub-Advisory Agreement is terminated
or not renewed by the Company or the stockholders and (ii) the Trusts and the
Sub-Adviser enter into an Escrow Deposit and Maintenance Agreement (the "Deposit
-------
and Maintenance Agreement"); and
- -------------------------
WHEREAS, the Trusts have entered into such Deposit and Maintenance
Agreement and are willing to provide such security;
NOW THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
1. Deposit of Escrow Shares. Simultaneously with the execution and
------------------------
delivery of this Agreement, the Trusts are depositing with the Escrow Agent
Common Stock with an aggregate value of $1,800,000 (the "Initial Deposit")
---------------
against which the Sub-Adviser may make claims in accordance with this Agreement.
For purposes of the preceding sentence, such shares shall be valued at the price
such stock is offered to the public in the Company's initial public offering.
All shares deposited in the Initial Deposit together with all shares deposited
from time to time pursuant to Section 4 hereof, less any shares distributed
pursuant to Section 3 hereof shall be referred to herein as the "Escrow Shares".
-------------
The Escrow Shares
<PAGE>
shall be held in escrow in the name of the Escrow Agent or its nominee, subject
to the terms and conditions set forth herein. Unless and until the Escrow
Shares are returned to the Trusts or delivered to the Sub-Adviser pursuant to
the terms of this Agreement, the Escrow Agent shall vote each Escrow Share in
accordance with the written instructions of the party depositing such share.
2. Amounts Earned on Escrow Shares; Tax Matters. All amounts earned on
--------------------------------------------
each Escrow Share (dividends or other distributions) shall be distributed to the
party depositing such share when paid or distributed by the Company. The
parties agree that to the extent permitted by applicable law, including Section
468B(g) of the Internal Revenue Code of 1986, as amended, the Trusts will
include all amounts earned on the respective Escrow Shares contributed by them
in their gross income for federal, state and local income tax (collectively,
"Income Tax") purposes and pay any Income Tax resulting therefrom.
- -----------
3. Claims Against Escrow Shares.
----------------------------
3.1. At any time or times prior to the Termination Date (as defined in
Section 6 below) the Sub-Adviser may make a claim against the Escrow Shares for
amounts due under Section 3 of the Deposit and Maintenance Agreement. The Sub-
Adviser shall notify the Trusts and the Escrow Agent in writing of such claim.
Any such notice delivered to the Escrow Agent by the Sub-Adviser shall contain a
representation from the Sub-Adviser to the effect that the Sub-Adviser has
delivered a copy of such notice to the Trusts prior to or simultaneously with
its delivery to the Escrow Agent. If either of the Trusts shall dispute such
claim, the Trust disputing the claim shall give written notice thereof to the
other Trust, the Sub-Adviser and to the Escrow Agent within ten business days
after the date the Sub-Adviser's notice of claim was delivered to the Trusts, in
which case the Escrow Agent shall continue to hold the Escrow Shares in
accordance with the terms of this Agreement; otherwise, such claim shall be
deemed to have been acknowledged to be payable in shares out of the Escrow
Shares in the full amount thereof as set forth in the claim and the Escrow Agent
shall use its best efforts to pay such claim from the Escrow Shares to the Sub-
Adviser within three business days after expiration of said ten day period. The
Escrow Agent shall effect such payment of Escrow Shares to the Sub-Adviser by
surrendering such Escrow Shares to the Company's transfer agent (The First
National Bank of Boston (the "Transfer Agent"), 160 Royall Street, Canton, MA
--------------
02021) for transfer to the Sub-Adviser. If the amount of the claim exceeds the
aggregate value of the Escrow Shares, the Escrow Agent shall have no liability
or responsibility for any deficiency.
3.2. If either of the Trusts shall give notice to the Sub-Adviser and
the Escrow Agent pursuant to Section 3.1 disputing such claim, no distribution
of the Escrow Shares shall be made by the Escrow Agent to the Sub-Adviser with
respect to such claim until either: (i) such disputed claim has been resolved as
evidenced by a written notice executed by the Sub-Adviser and the Trusts
instructing the Escrow Agent to distribute the Escrow Shares or portion thereof;
or (ii) such dispute shall have been adjudicated in accordance with the
arbitration procedures described in Section 5 below.
3.3. At any time or times prior to the Termination Date, either of the
Trusts may make a claim on behalf of itself and the other Trust against the
Escrow Shares for
A-2
<PAGE>
amounts due under Section 2 of the Deposit and Maintenance Agreement. The claim
shall identify the total number of Escrow Shares to which it relates and the
relative proportions in which such shares shall be paid to the Trusts (which
shall equal the relative proportions in which they have deposited Escrow Shares
through the date of the claim). Such claiming Trust shall notify the Sub-
Adviser, the other Trust and the Escrow Agent in writing of such claim. Any
such notice delivered to the Escrow Agent by a Trust shall contain a
representation from such Trust to the effect that the Trust has delivered a copy
of such notice to the Sub-Adviser and the other Trust prior to or simultaneously
with its delivery to the Escrow Agent. If the Sub-Adviser or the other Trust
shall dispute such claim, or the relative proportions in which such shares shall
be paid, such party or parties shall give written notice thereof to the other
parties hereto within ten business days after the date such Trust's notice of
claim was delivered to the Sub-Adviser and the other Trust, in which case the
Escrow Agent shall continue to hold the Escrow Shares in accordance with the
terms of this Agreement; otherwise, such claim shall be deemed to have been
acknowledged to be payable in shares out of the Escrow Shares in the full amount
thereof as set forth in the claim and the Escrow Agent shall use its best
efforts to pay such claim by surrendering such Escrow Shares to the Transfer
Agent for transfer to the Trusts in the relative proportions specified in the
claim within three business days after expiration of said ten day period.
3.4. If the Sub-Adviser or the other Trust shall give notice to the
other parties hereto pursuant to Section 3.3 disputing such claim, no
distribution of the Escrow Shares shall be made by the Escrow Agent to the
Trusts with respect to such claim until either: (i) such disputed claim has been
resolved as evidenced by a written notice executed by the Sub-Adviser and the
Trusts instructing the Escrow Agent to distribute the Escrow Shares or portion
thereof; or (ii) such dispute shall have been adjudicated in accordance with the
arbitration procedures described in Section 5 below.
4. Deposit of Additional Escrow Shares. At any time or times following
-----------------------------------
the distribution of Escrow Shares to the Trusts pursuant to Section 3.3 or
Section 3.4 hereof and prior to the Termination Date the Trusts may be required
under Section 2 of the Deposit and Maintenance Agreement to redeposit in escrow
shares of Common Stock. All such shares shall be held subject to the terms of
this Agreement as Escrow Shares.
5. Disputed Claims. If the Escrow Agent has not received written notice
---------------
executed by the Sub-Adviser and the Trusts within 30 days after the Sub-Adviser
or either of the Trusts send notice disputing a claim to the effect that the
disputed claim has been resolved, the claim shall be referred to an arbitrator
chosen by agreement of the Trusts and the Sub-Adviser. If no agreement is
reached regarding selection of the arbitrator within 30 days after written
request from either party to the other, the Sub-Adviser or either of the Trusts
may submit the matter in dispute to the American Arbitration Association, to be
settled by arbitration in Boston, Massachusetts in accordance with the
commercial arbitration rules of such Association. The Sub-Adviser and the
Trusts agree to act in good faith to mutually select an arbitrator. The fees
and expenses of any arbitration shall be borne by the Sub-Adviser and the Trusts
in such proportions as shall be determined by the arbitrator, or if there is no
such determination, then such fees and expenses shall be borne equally by the
Sub-Adviser on the one hand and the Trusts on the other hand. In no event shall
the Escrow Agent be responsible for any fees or expenses of any party to any
arbitration proceeding.
A-3
<PAGE>
The determination of the arbitrator as to the amount, if any, of the claim that
is properly allowable shall be conclusive and binding upon the parties hereto
and judgment may be entered thereon in any court having jurisdiction thereof,
including, without limitation, any Superior Court in the Commonwealth of
Massachusetts. The Escrow Agent shall make payment of such claim, as and to the
extent allowed, to the Sub-Adviser and the Trusts, as the case may be, out of
the Escrow Shares within three business days following its receipt of a copy of
the arbitration award determination.
6. Termination. This Agreement shall terminate on the earlier of (i)
-----------
four years from the date hereof or (ii) the payment of a claim made pursuant to
Section 3.1 or Section 3.2 hereof (the "Termination Date"), provided that in the
----------------
case of clause (i) above, there are no outstanding claims as to which the Escrow
Agent has received notice pursuant to Section 3.1 hereof on or prior to the
Termination Date; otherwise this Agreement shall continue in effect until the
resolution of any such claim. On the Termination Date or as soon thereafter as
is practicable, the Escrow Agent shall distribute the Escrow Shares less the
amount of any outstanding claim specified in a notice of a claim delivered to
the Escrow Agent on or prior to the Termination Date. At such time thereafter
as any remaining claim hereunder has been resolved and the Escrow Agent has
received a written notice executed by the Sub-Adviser and the Trusts to that
effect (or a copy of an arbitration award pursuant to Section 5 to that effect)
and any amounts to be distributed to the Sub-Adviser in connection therewith
have been so distributed, the Escrow Agent shall distribute all of the remaining
Escrow Shares to the Trusts in the proportions in which they have deposited
Escrow Shares through the Termination Date.
7. The Escrow Agent.
----------------
7.1. Notwithstanding anything herein to the contrary, the Escrow Agent
shall promptly dispose of all or any part of the Escrow Shares as directed by a
writing jointly signed by the Sub-Adviser and the Trusts. The reasonable fees
and expenses of the Escrow Agent in connection with its execution and
performance of this Agreement shall be borne equally by the Sub-Adviser on the
one hand and the Trusts on the other hand. The Escrow Agent shall not be liable
for any act or omission to act under this Agreement, including any and all
claims made against the Escrow Agent as a result of its holding the Escrow
Shares in its own name, except for its own gross negligence or willful
misconduct. The Escrow Agent shall not be liable for, and the Sub-Adviser and
the Trusts shall jointly and severally indemnify the Escrow Agent against, any
losses or claims (including reasonable out of pocket expenses) arising out of,
any action taken or omitted in good faith hereunder or upon the advice of
counsel. The Escrow Agent may decline to act and shall not be liable for
failure to act if in doubt as to its duties under this Agreement. The Escrow
Agent may act upon any instrument or signature believed by it to be genuine and
may assume that any person purporting to give any notice or instruction
hereunder, reasonably believed by it to be authorized, has been duly authorized
to do so. The Escrow Agent's duties shall be determined only with reference to
this Agreement and applicable laws, and the Escrow Agent is not charged with
knowledge of or any duties or responsibilities in connection with any other
document or agreement, including, but not limited to, the Deposit and
Maintenance Agreement.
A-4
<PAGE>
7.2. The Escrow Agent shall have the right at any time to resign
hereunder by giving written notice of its resignation to the parties hereto, at
the addresses set forth herein or at such other address as the parties shall
provide, at least 30 days prior to the date specified for such resignation to
take effect. In such event the Trusts and the Sub-Adviser shall appoint a
successor escrow agent within said 30 days; if the Trusts and the Sub-Adviser
cannot agree upon a successor escrow agent within such period, the Escrow Agent
may appoint a successor escrow agent. Upon the effective date of such
resignation, the Escrow Shares together with all cash and other property then
held by the Escrow Agent hereunder shall be delivered by it to such successor
escrow agent or as otherwise shall be designated in writing by the Sub-Adviser
and the Trusts.
7.3. In the event that the Escrow Agent should at any time be
confronted with inconsistent or conflicting claims or demands by the parties
hereto, the Escrow Agent shall have the right to interplead said parties in any
court of competent jurisdiction and request that such court determine the
respective rights of such parties with respect to this Agreement and, upon doing
so, the Escrow Agent shall be released from any obligations or liability to
either party as a consequence of any such claims or demands.
7.4. The Escrow Agent may execute any of its powers or
responsibilities hereunder and exercise any rights hereunder, either directly or
by or through its agents or attorneys. Nothing in this Agreement shall be
deemed to impose upon the Escrow Agent any duty to qualify to do business or to
act as fiduciary or otherwise in any jurisdiction other than the Commonwealth of
Massachusetts. The Escrow Agent shall not be responsible for and shall not be
under a duty to examine, inquire into or pass upon the validity, binding effect,
execution or sufficiency of this Agreement or of any amendment or supplement
hereto.
8. Miscellaneous.
-------------
8.1. Notices. Any notice or other communication required or which
-------
may be given hereunder shall be in writing and shall be delivered personally,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage prepaid, and shall be deemed given when so delivered
personally, telexed, or sent by facsimile transmission or, if mailed, four days
after the date of mailing, as follows:
if to the Sub-Adviser, to:
FMC Advisers, Inc.
c/o Cohen, Pontani & Lieberman
551 Fifth Ave.
New York, NY 10176
Attn: Myron Cohen
A-5
<PAGE>
if to the Trusts, to:
Alvin Murstein Second Family Trust
c/o Medallion Financial Corp.
205 East 42nd Street, Suite 2020
New York, NY 10017
Attn: Alvin Murstein
and
Andrew Murstein Family Trust
c/o Medallion Financial Corp.
205 East 42nd Street, Suite 2020
New York, NY 10017
Attn: Andrew Murstein
if to the Escrow Agent, to:
Palmer & Dodge LLP
One Beacon Street
Boston, MA 02108
Attn: Steven N. Farber
Any party may by notice given in accordance with this Section to the other
parties designate another address or person for receipt of notice.
8.2. Entire Agreement. This Agreement has been executed and
----------------
delivered pursuant to the Deposit and Maintenance Agreement and as such contains
the entire agreement among the parties with respect to the subject matter hereof
and supersedes all prior agreements, written or oral, with respect thereto.
8.3. Waivers and Amendments. This Agreement may be amended,
----------------------
modified, superseded, canceled, renewed or extended, and the terms and
conditions hereof may be waived only by a written instrument signed by the
parties or, in the case of a waiver, the party waiving compliance. No delay on
the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any party
of any right, power or privilege hereunder, nor any single or partial exercise
of any right, power or privilege hereunder, preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder.
8.4. Governing Law. This Agreement shall be governed by and
-------------
construed, interpreted and enforced in accordance with the laws of the State of
Delaware.
A-6
<PAGE>
8.5. Assignment. This Agreement shall be binding upon and inure to
----------
the benefit of the parties and their respective successors and permitted
assigns. This Agreement is not assignable without the prior written consent of
the other parties hereto.
8.6. Further Assurances. Each of the parties shall execute such
------------------
documents and other papers and take such further actions as may be reasonably
required or desirable to carry out the provisions hereof and the transactions
contemplated hereby.
8.7. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8.8. Headings. The headings in this Agreement are for reference
--------
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
A-7
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
ALVIN MURSTEIN SECOND FAMILY TRUST
- ----------------------------------
/s/ Alvin Murstein
- ----------------------------
By: Alvin Murstein, Trustee
/s/ Amie Murstein
- ----------------------------
By: Amie Murstein
ANDREW MURSTEIN FAMILY TRUST
/s/ Andrew Murstein
- ----------------------------
By: Andrew Murstein, Trustee
/s/ Barbara Murstein
- ----------------------------
By: Barbara Murstein
FMC ADVISERS, INC.
/s/ Michael A. Miller
- ----------------------------
By: Michael A. Miller, President
PALMER & DODGE L.L.P., as Escrow Agent
/s/ Stanley Keller
- ----------------------------
By: Stanley Keller, a Partner
A-8
<PAGE>
Exhibit B
---------
ESCROW DEPOSIT AND MAINTENANCE AGREEMENT
----------------------------------------
THIS ESCROW DEPOSIT AND MAINTENANCE AGREEMENT (this "Agreement"), dated May
---------
29, 1996 is among the Alvin Murstein Second Family Trust, the Andrew Murstein
Family Trust (collectively, the "Trusts") and FMC Advisers, Inc. (the "Sub-
------ ---
Adviser").
- -------
WITNESSETH:
WHEREAS, the Sub-Adviser and Medallion Financial Corp. (the "Company") will
-------
enter into a Sub-Advisory Agreement (the "Sub-Advisory Agreement") at the
----------------------
closing of the Company's initial public offering (the "Closing"), in the form
-------
attached hereto as Exhibit A;
---------
WHEREAS, Article 3 of the Sub-Advisory Agreement provides that the Company
shall pay to the Sub-Adviser, in arrears, a monthly fee of $18,750;
WHEREAS, Article 8 of the Sub-Advisory Agreement provides that the Sub-
Advisory Agreement may be terminated without penalty on 60 days' prior written
notice by either party;
WHEREAS, the Sub-Adviser is unwilling to enter into the Sub-Advisory
Agreement unless (i) the Trusts deposit and maintain shares of common stock of
the Company (the "Common Stock") in escrow as provided herein as security in
------------
favor of the Sub-Adviser in the event the Sub-Advisory Agreement is terminated
or not renewed by the Company or its stockholders and (ii) the Trusts, the Sub-
Adviser and Palmer & Dodge as escrow agent (the "Escrow Agent"), enter into an
------------
Escrow Agreement (the "Escrow Agreement") at the Closing in the form attached
----------------
hereto as Exhibit B; and
---------
WHEREAS, the Trusts are willing to provide such security;
NOW THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
1. Deposit of Escrow Shares. The Trusts hereby agree that at the Closing
------------------------
they will deposit in escrow, in accordance with the terms of the Escrow
Agreement, Common Stock (the "Escrow Shares") with an aggregate value of
-------------
$1,800,000 (the "Initial Deposit"). For purposes of the preceding sentence, the
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Escrow Shares shall be valued at the price the Common Stock is offered to the
public in the Company's initial public offering.
2. Revaluation of Escrow Shares. Commencing September 30, 1996, and
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every December 31, March 31, June 30 and September 30 thereafter during the term
of the Escrow Agreement (each such date being a "Revaluation Date"), the Escrow
----------------
Shares shall be revalued. For purposes of each such revaluation, the Escrow
Shares shall be valued at the
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<PAGE>
per share closing price of the Common Stock as reported on the National
Association of Securities Dealers Automated Quotation System (as reported in The
Wall Street Journal) on such Revaluation Date. If such Revaluation Date is not
a day on which the closing price for the Common Stock is reported, then the
Revaluation Date shall be deemed to be the next preceding day on which the
closing price is reported. In the event that the value of the Escrow Shares is
greater than twice the amount of the fees remaining to be paid to the Sub-
Adviser for 48 months of service under the Sub-Advisory Agreement (i.e. $900,000
minus any fees already paid), upon the request of either of the Trusts, the
surplus Escrow Shares shall be released in accordance with the terms of the
Escrow Agreement to the Trusts in the proportions in which they have deposited
Escrow Shares through such Revaluation Date. In the event that the value of the
Escrow Shares is less than twice the amount of fees remaining to be paid to the
Sub-Adviser for 48 months of service under the Sub-Advisory Agreement the Trusts
shall deposit in escrow in accordance with the terms of the Escrow Agreement
that number of additional shares of Common Stock as will increase the value of
the Escrow Shares to twice the amount of such fees; provided, however, in no
event shall the Trusts be required at any time to deposit into or maintain in
escrow an aggregate number of shares that is greater than the aggregate number
of shares held by the Trusts as of the Closing.
3. Unpaid Fees. In the event that the Company or its stockholders
-----------
terminate or do not renew the Sub-Advisory Agreement during the first 48 months
of service for any reason other than (i) breach of the Sub-Advisory Agreement by
the Sub-Adviser or (ii) the Sub-Adviser's willful malfeasance, bad faith or
gross negligence, and through the date of such termination or failure to renew,
the Sub-Adviser has not received $900,000 in fees under the Sub-Advisory
Agreement, the Escrow Agent, in accordance with the terms of the Escrow
Agreement, shall assign to the Sub-Adviser Escrow Shares equal in value to the
amount of the difference between $900,000 and all fees paid through the
effective date of the termination or failure to renew the Sub-Advisory Agreement
within 30 days of the effective date of such termination or failure to renew
(the "Termination Date"). For purposes of the preceding sentence, the Escrow
----------------
Shares shall be valued at the per share closing price of the Common Stock as
reported on the National Association of Securities Dealers Automated Quotation
System (as reported in The Wall Street Journal) on the Termination Date. If the
Termination Date is not a day on which the closing price for the Common Stock is
reported, then the Termination Date shall be deemed to be the next preceding day
on which the closing price is reported. In the event that the value of the
Escrow Shares is less than the unpaid fees, the Sub-Adviser shall have no
further recourse against the Trusts. In the event that the value of the Escrow
Shares is greater than the unpaid fees, the Trusts shall be entitled to have
such surplus Escrow Shares released to the Trusts in the proportions in which
they have deposited Escrow Shares through the Termination Date.
4. Term. This Agreement shall continue in effect until the Escrow
----
Agreement is terminated or expires in accordance with its terms.
5. Remedies. The parties agree that in the event of any breach of any
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provision of this Agreement, the damage will be substantial, although difficult
to ascertain, and there can be no adequate remedy at law for such breach, and
therefore, upon any such breach or any threat thereof, the injured party shall
be entitled, in addition to all other rights and remedies it may have at law, to
specific performance, injunctive and other equitable relief.
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<PAGE>
The injured party shall be entitled to full indemnification from the breaching
party for any such breach, including, without limitation, attorneys' fees and
costs of suit. The obligations of the Trusts shall be joint and several.
6. Entire Agreement. This Agreement contains the entire agreement among
----------------
the parties with respect to the subject matter hereof and supersedes all prior
agreements, written or oral, with respect thereto.
7. Waivers and Amendments. This Agreement may be amended, modified,
----------------------
superseded, canceled, renewed or extended, and the terms and conditions hereof
may be waived only by a written instrument signed by the parties or, in the case
of a waiver, the party waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any right, power or
privilege hereunder, nor any single or partial exercise of any right, power or
privilege hereunder, preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder.
8. Governing Law. This Agreement shall be governed by, and construed,
-------------
interpreted and enforced in accordance with, the laws of the State of Delaware.
9. Assignment. This Agreement shall be binding upon and inure to the
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benefit of the parties and their respective successors and permitted assigns.
This Agreement is not assignable without the prior written consent of the other
parties hereto.
10. Further Assurances. Each of the parties shall execute such documents
------------------
and other papers and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated
hereby.
11. Counterparts. This Agreement may be executed by the parties hereto
------------
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
12. Headings. The headings in this Agreement are for reference purposes
--------
only and shall not in any way affect the meaning or interpretation of this
Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
ALVIN MURSTEIN SECOND FAMILY TRUST
/s/ Alvin Murstein
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By: Alvin Murstein, Trustee
/s/ Amie Murstein
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By: Amie Murstein
ANDREW MURSTEIN FAMILY TRUST
/s/ Andrew Murstein
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By: Andrew Murstein, Trustee
/s/ Barbara Murstein
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By: Barbara Murstein
FMC ADVISERS, INC.
/s/ Michael A. Miller
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By: Michael A. Miller, President
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