PRELIMINARY PROXY MATERIALS
FOR SEC USE ONLY
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Notice of Special Meeting of Shareholders
To Be Held on October 30, 1997
To the Shareholders:
The Special Meeting of Shareholders of Elk Associates Funding Corporation
(the "Company") will be held at the offices of Stursberg & Veith, 405 Lexington
Avenue, Suite 4949, New York, New York on October 30, 1997 at 10:30 a.m. to
consider and act upon the following matters:
1. To consent to the Company's sale of up to four hundred sixty two
thousand (462,000) shares of the Company's common stock at $6.50 per share
representing a discount of __% from net asset value per share which was $_____
at August 31, 1997.
2. To consider and act upon such other matters as may properly come before
the meeting or any adjournment thereof.
Shareholders of record at the close of business on September 29, 1997 will
be entitled to notice of and to vote at the meeting. The stock transfer books of
the Company will remain open.
All shareholders are cordially invited to attend the meeting.
By Order of the Board of Directors
MARGARET CHANCE, Secretary
October 7, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER
TO ASSURE REPRESENTATION OF YOUR SHARES.
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Elk Associates Funding Corporation
747 Third Avenue - 4th Floor
New York, New York 10017
Proxy Statement for
Special Meeting of Shareholders
October 30, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Elk Associates Funding Corporation (the
"Company") for use at the Special Meeting of Shareholders to be held on October
30, 1997 and at any adjournment of that meeting. In considering whether or not
to have an adjournment, management will consider what is in the best interest of
the shareholders. All proxies will be voted as marked. Proxies marked as
abstaining (including proxies containing broker non-votes) on any matters to be
acted upon by shareholders will be treated as present at the meeting for
purposes of determining a quorum but will not be counted as votes cast on such
matters. Any proxy may be revoked by a shareholder at any time before it is
exercised by written or oral request to Margaret Chance, Secretary of the
Company. The date of mailing of this Proxy Statement is expected to be on or
about October 7, 1997.
The Board of Directors has fixed September 29, 1997 as the record date for
the determination of shareholders entitled to vote at the Special Meeting. At
the close of business on September 29, 1997 there were outstanding and entitled
to vote 1,283,600 shares of common stock (the "Common Stock") of the Company.
Each share is entitled to one vote.
The following table sets forth information concerning ownership of the
Company's Common Stock as of September 29, 1997 by each person known by the
Company to be the beneficial owner of more than five (5%) percent of the Common
Stock.
Percent of
Common Stock Common Stock
Name and Address Beneficially Owned Outstanding
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Gary C. Granoff(1)(2) 237,446 (3)(4) 18.49%
c/o Elk Associates
Funding Corporation
747 Third Ave.
4th Floor
New York, New York
Paul D. Granoff, M.D.(1) 89,630 (5) 6.98%
132 North Buckingham Drive
Aurora, Illinois
N. Henry Granoff(1) 80,649 (3)(6) 6.28%
2000 South Ocean Blvd
Palm Beach, Florida
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Marvin Sabesan 72,145 (9) 5.62%
188 Gannet Court
Manhasset, New York
Dan M. Granoff, M.D.(1) 95,130 (3)(8) 7.41%
1085 Creston Road
Berkeley, California
Alexander Nash, M.D. 72,600 (7) 5.66%
12 Ridgeway
Kings Point, New York
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(1) N. Henry Granoff is the father of Gary C., Dan M. and Paul D. Granoff.
(2) Gary Granoff may be deemed a "control person" of the Company within the
meaning of the 1940 Act.
(3) Excludes 10,900 shares owned by a charitable foundation of which N. Henry
Granoff, his wife Jeannette Granoff, Gary C. Granoff and Dan M. Granoff are
the trustees.
(4) Includes 25,218 shares held in various trusts of which Mr. Granoff is a
trustee and 6,000 shares held for the benefit of one of Mr. Granoff's sons,
with respect to which he is custodian. With respect to these 31,218 shares,
Mr. Granoff disclaims beneficial ownership for purposes other than Rule
13d-3 of the Securities Exchange Act of 1934, as amended. Excludes 7,537
shares owned directly by Mr. Granoff's wife as to which shares he disclaims
beneficial ownership. Also excludes 19,466 shares owned directly by Mr.
Granoff's children as to which shares he does not exercise any control and
disclaims beneficial ownership. Includes 72,875 shares held by a
corporation controlled by Mr. Granoff and 261 shares held by a corporation,
wholly-owned by Mr. Granoff. Excludes 22,800 shares held by various trusts
for the benefit of Mr. Granoff's children, of which shares Mr. Granoff
disclaims beneficial ownership until such time as 21,000 of such shares
revert to him.
(5) Includes 2,000 shares held by Dr. Paul Granoff directly, 77,630 held by
Granoff Family Partners Ltd. of which Dr. Granoff is a general partner, and
10,000 shares held by the Granoff Pediatric Associates Profit Sharing Plan.
Excludes 10,127 shares held by Dr. Paul Granoff's wife as to which shares
he disclaims beneficial ownership. Excludes 9,654 shares owned directly by
Dr. Granoff's children as to which shares he does not exercise any control
and disclaims beneficial ownership.
(6) Excludes 33,499 shares owned by Mr. Granoff's wife, as to which shares Mr.
Granoff disclaims beneficial ownership. Mr. Granoff's shares are registered
in the N. Henry Granoff Revocable Trust dated May 19, 1987.
(7) Includes 1,500 shares held by Alexander Nash, M.D. as custodian for his
daughter. Also includes 42,900 shares held by his wife, as to which shares
Alexander Nash, M.D. disclaims beneficial ownership.
(8) Excludes 12,000 shares owned directly by Dr. Granoff's children as to which
shares he does not exercise any control and disclaims beneficial ownership.
(9) Includes 21,387 shares held with his wife as joint tenants, 2,207 shares
held with one of his children as joint tenants, and 28,551 shares held by
his wife. Mr. Sabesan disclaims beneficial ownership as to the 28,551
shares held by his wife.
Except as otherwise indicated above, the persons listed in the above table
have voting and investment power with respect to their respective shares.
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All of the persons listed above, for as long as they continue to hold five
(5%) percent or more of the Company's outstanding Common Stock, will be deemed
"affiliated persons" of the Company, as such term is defined in the 1940 Act.
The following table sets forth information concerning ownership of the
Company's Common Stock as of September 29, 1997 by each existing director,
nominee to become a director and officer of the Company and by all directors and
officers of the Company as a group.
Percent of
Common Stock Common Stock
Name Beneficially Owned Outstanding
- ---- ------------------ -----------
*Gary C. Granoff(1) 237,446 (1) 18.49%
*Ellen M. Walker 31,374 (2) 2.44%
*Lee A. Forlenza 19,725 1.53%
*Margaret Cha 2,900 (3) (5)
*Silvia DiGirolamo None
Marvin Sabesan 72,145 (4) 5.62%
Herbert G. Kanarick 44,205 (6) 3.44%
Steven Etra 52,516 (7) 4.09%
Paul Creditor None
Allen Kaplan 5,000 (5)
Dan M. Granoff 95,130 (8) 7.41%
Alexander Nash 72,600 (9) 5.65%
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Officers and Directors 631,821 49.4%
of the Company as a
group (13 persons)
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* Messrs. Gary C. Granoff, Ms. Ellen Walker, Mr. Lee A. Forlenza, Ms.
Margaret Chance and Ms. Silvia DiGirolamo are each "interested persons"
with respect to the Company, as such term is defined in the 1940 Act.
(1) Gary C. Granoff, see Notes (3) and (4) on page 2.
(2) Includes 200 shares held by Ms. Walker as custodian for her son. Includes
22,800 shares held by various trusts of which Ms. Walker is a trustee and
as to which she disclaims beneficial ownership.
(3) Includes 200 shares held by Ms. Chance as custodian for her daughter.
(4) Includes 21,387 shares held by Mr. Sabesan and his wife as joint tenants,
2,207 shares held with one of his children as joint tenants, and 28,551
shares held by his wife. Mr. Sabesan disclaims beneficial ownership as to
the 28,551 shares held by his wife.
(5) Less than one (1%) percent.
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(6) Includes 200 shares held by Mr. Kanarick's wife, as to which shares he
disclaims beneficial ownership. Includes 44,005 shares owned by J. R.
Realty Corporation, a subsidiary of Murres Corporation, a majority of the
shares of which are owned by a trust of which Mr. Kanarick is the sole
trustee.
(7) Includes 29,022 shares held with his wife as joint tenants and 20,000
shares held by his wife.
(8) Dan M. Granoff, M.D., see Notes (1), (3) and (8) on page 2.
(9) Alexander Nash, M.D., see Note (7) on page 2.
Effective May 1, 1991, the Securities and Exchange Commission promulgated
new rules under Section 16 of the Securities Exchange Act of 1934. The Company
believes that during the preceding year its executive officers and directors
have complied with all Section 16 filings.
PROPOSAL NO. 1
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APPROVAL TO SELL COMMON STOCK BELOW NET ASSET VALUE
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Section 23(b) of the 1940 Act permits a registered closed-end investment
company to sell shares of common stock below its net asset value (1) in
connection with an offering to the holders of one or more classes of its capital
stock; (2) with the consent of a majority of its common stockholders; (3) upon
conversion of a convertible security in accordance with its terms; (4) upon the
exercise of any warrant outstanding on the date of enactment of the 1940 Act or
issued in accordance with the provisions of Section 18(d) of the 1940 Act; or
(5) under such other circumstances as the Securities and Exchange Commission may
permit by rules and regulations or orders for the protection of investors. The
net asset value of the Company's Common Stock on August 31, 1997 was $____ per
share, excluding the unamortized restricted capital account attributable to the
repurchase by the Company from the SBA of the Company's 3% Preferred Stock and
excluding retained earnings distributed to shareholders in September 1997. On
the same date, the closing bid quotation was $5.13 and the closing ask quotation
was $8.00, as reported by the National Quotation Bureau, Incorporated.
While the Company has no firm agreements or commitments to raise funds, the
Company's management is currently considering raising additional capital (i) to
be used in connection with the Company's business of making loans to finance
taxi medallions, taxicabs and related assets in New York City and other large
metropolitan areas such as Chicago, where the Company has experienced relatively
rapid growth in lending to owners of taxicabs, and (ii) to form and capitalize a
new parent company which would enable the new parent company to engage in a
broader range of business activities than is presently permitted to the Company
by virtue of the limitations imposed on the Company by the Small Business
Investment Company Act of 1958, as amended (the "1958 Act"). The new parent
company would initially operate as a closed-end management investment company
registered under the 1940 Act and would elect to be treated as a "regulated
investment company" under the Internal Revenue Code. In connection therewith, if
the Company's management determines to proceed, upon the completion of a
financing, to effectuate a share exchange between the new parent company and the
Company, subject to the approval of the Company's shareholders at that time, the
Company would thereafter become a wholly-owned subsidiary of the new parent
company and the shareholders of the Company would become the shareholders of the
new parent company in the same proportion as their share ownership in the
Company.
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The new parent company, in expanding its business activities, would be able
to diversify its investment activities to engage either directly or through
other subsidiaries in a broader range of business and investment activities,
either by expanding into new types of investments, or through acquisitions. The
Company's Board of Directors believes that the share exchange would benefit the
Company's shareholders. Any new subsidiaries could elect to operate as
Subchapter M companies under the Internal Revenue Code, subject to compliance
with the 1940 Act. All revenue derived from the activities of the new parent
company, the Company and any other subsidiary would benefit the holders of the
Company's shares who by virtue of the share exchange would become stockholders
of the new parent company. The Company's management anticipates that it would
use up to one-third of the proceeds of any future financing from the sale of
shares to form and capitalize the new parent company.
The Board of Directors of the Company believes that the Company needs the
flexibility to sell Common Stock below net asset value because of the difficulty
the Company may encounter if it is forced to sell shares of Common Stock at net
asset value which is well above the closing bid price of the Company's Common
Stock. Accordingly, the Board of Directors recommends that shareholders approve
the Company's right to sell up to 462,000 shares of Common Stock at a discount
from net asset value, such discount not to exceed _______ (__%) percent.
Shareholders should take note that the issuance of Common Stock below its
net asset value will cause an immediate dilution to present shareholders.
Assuming a net asset value of $_____ per share and assuming the sale of _____
shares at $ ____ per share (__% below net asset value at August 31, 1997), net
asset value after such issuance would be $_____ per share and present
shareholders would realize an immediate dilution of $____ per share (without
giving effect to expenses incurred in connection with the offering of such
additional shares.) However, the Company's Board of Directors will only issue
shares of Common Stock below net asset value if it believes that the expected
benefits to present shareholders from such issuance outweigh its dilutive
effects.
The affirmative vote of the holders of a "majority of the outstanding"
Common Stock (as defined in the 1940 Act) is required to allow the Company to
sell up to _____ shares of its Common Stock at a discount from its net asset
value. Such a "majority" is deemed to mean the lesser of (a) 67% of the shares
present in person or represented by proxy at a meeting at which more than 50% of
the outstanding shares are present or represented, or (b) more than 50% of the
outstanding shares.
The Directors recommend a vote FOR Proposal No. 1.
OTHER MATTERS
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The Board of Directors does not know of any other matters which may come
before the meeting. However, if any other matters are properly presented to the
meeting, it is the intention of the persons named in the accompanying proxy to
vote, or otherwise to act, in accordance with their judgment on such matters.
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All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone and
personal interview.
Deadline for Submission of Shareholder Proposals
Proposals of shareholders intended to be presented at the 1998 Annual
Meeting of Shareholders were to be received by the Company at its principal
executive offices not later than September 22, 1997 for consideration for
inclusion in the proxy statement for that meeting. Further, all shareholder
proposals must meet certain federal securities law requirements before they will
be included in the Company's 1998 proxy statement.
The Board of Directors invites shareholders to attend the Special Meeting.
Whether or not you plan to attend, you are urged to complete, date, sign and
return the enclosed proxy in the accompanying envelope. Prompt response will
greatly facilitate arrangements for the meeting, and your cooperation will be
appreciated. Shareholders who attend the meeting may vote their stock personally
even though they have sent in their proxies.
By Order of the Board of Directors
MARGARET CHANCE, Secretary
October 7, 1997
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PROXY FOR HOLDERS OF COMMON STOCK
Elk Associates Funding Corporation
The undersigned Common Shareholder of Elk Associates Funding Corporation
(the "Company") hereby constitutes and appoints Gary C. Granoff, Ellen M. Walker
and Margaret Chance, and each of them, singly, proxies and attorneys of the
undersigned, with full power of substitution to each, for and in the name of the
undersigned to vote and act upon all matters (unless and except as expressly
limited below) at the Special Meeting of Shareholders of the Company to be held
on October 30, 1997 at the offices of Stursberg & Veith, 405 Lexington Avenue -
Suite 4949, New York, New York, at 10:30 a.m., and at any and all adjournments
thereof, in respect of all Common Stock of the Company held by the undersigned
or in respect of which the undersigned would be entitled to vote or act, with
all the powers the undersigned would possess if personally present. All proxies
heretofore given by the undersigned in respect of said meeting are hereby
revoked.
PROPOSAL 1. To consent to the Company's sale of up to 462,000 shares of
Common Stock at a discount from net asset value, such discount
not to exceed ______ (__%) percent.
____FOR ____AGAINST ____ABSTAIN
(continued and to be signed on reverse side)
PROPOSAL 2. To consider such other matters as may properly come before the
meeting.
____FOR ____AGAINST ____ABSTAIN
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Specify desired action by checkmarks in the appropriate spaces. The Proxy will
be voted as specified. If no specification is made, the Proxy will be voted for
the nominees named in the Proxy Statement to represent the Common Shareholders
and in favor of Proposals 1 and 2. The persons named proxies have discretionary
authority, which they intend to exercise in favor of the proposals referred to
and according to their best judgment as to other matters which properly come
before the meeting.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE AS
SOON AS POSSIBLE.
Dated:__________________________
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(Signature of Shareholder)
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(Signature of Shareholder)
The signature(s) on this Proxy should
correspond exactly with the
shareholder's name as stencilled hereon.
In the case of joint tenants,
co-executors or co-trustees, both should
sign. Person(s) signing as Attorney,
Executor, Administrator, Trustee or
Guardian should provide full title.
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