STANDARD FUNDING CORP, DEF 14A, 1999-05-14

STANDARD FUNDING CORP
DEF 14A, 1999-05-14
MISCELLANEOUS BUSINESS CREDIT INSTITUTION

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as Permitted by Rule 14a-6(3)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec.240.14a-11(c) or
Sec.240.14a-12

Standard Funding Corp.

(Name of Registrant as Specified In Its Charter) Payment of Filing Fee
(Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies: common stock
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined): Based on the average of the high and
low sales prices of the common stock of $ on the NASDAQ
SmallCap Market
(4) Proposed maximum aggregate value of transaction: $9,660,000
(5) Total fee paid: $1,912

[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.

(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.: Schedule 14A
(3) Filing Party: Standard Funding Corp.
(4) Date Filed: _________, 1999
Notes:

<PAGE>
[Standard Funding Letterhead]

May 14, 1999

Dear Standard Funding Corp. Shareholder:

You are cordially invited to attend a Special Meeting of the Shareholders
of Standard Funding Corp., to be held at the Holiday Inn, 215 Sunnyside
Boulevard, Plainview, New York 11803 on Tuesday, June 15, 1999 at 10:00 a.m.
local time.

At this meeting, you will be asked to authorize, approve and adopt an
Agreement and Plan of Merger (the "Merger Agreement") among Standing Funding
Corp. ("SFC"), Atlantic Bank of New York ("Atlantic Bank"), and Atlantic
Premium, Inc., ("Atlantic Premium") a wholly-owned subsidiary of Atlantic Bank.

Pursuant to the Merger Agreement, Atlantic Premium will be merged with and
into SFC (the "Merger") and for each share of SFC common stock you own, provided
you own 20% or less of SFC's issued and outstanding common stock at the time of
the Merger, you will receive $3.50 in cash. The $3.50 per share price represents
a 40% premium over the $2.50 per share closing market price of SFC's common
stock on January 27, 1999, which was the last full trading day before the
announcement of the proposed Merger. Shareholders owning more than 20%of the
outstanding common stock at the time of the Merger will receive $2.97479 per
share in cash and a note having a principal amount of $0.52521 per share. After
the Merger, SFC will be a subsidiary of Atlantic Bank.

The Board of Directors of SFC has unanimously approved and adopted the
Merger Agreement and believes that the proposed Merger is in the best interests
of SFC. Two shareholders have granted proxies to certain officers of Atlantic
Bank to vote their shares (approximately 44.8% of the aggregate number of shares
of SFC common stock outstanding) in favor of the authorization, approval and
adoption of the Merger and the Merger Agreement. The Board of Directors
unanimously recommends that you vote in favor of the authorization, approval and
adoption of the Merger and the Merger Agreement.

The attached notice of meeting and proxy statement explain the proposed
Merger and provide specific information concerning the Special Meeting. Please
read these materials carefully.

Whether or not you plan to attend the Special Meeting, I urge you to
complete, sign and promptly return the enclosed proxy card to ensure that your
shares will be voted at the meeting. The Merger is an important decision for SFC
and its shareholders. The Merger cannot be completed unless shareholders holding
two-thirds of the outstanding shares of SFC common stock approve the Merger
Agreement.

On behalf of the Board of Directors, I thank you for your support and urge
you to vote FOR authorization, approval and adoption of the Merger and the
Merger Agreement.

Sincerely,

Alan Karp
President
<PAGE>

STANDARD FUNDING CORP.
335 Crossways Park Drive
Woodbury, New York 11797

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, JUNE 15, 1999

A Special Meeting of Shareholders of SFC will be held at the Holiday Inn,
215 Sunnyside Boulevard, Plainview, New York 11803 on Tuesday, June 15, 1999, at
10:00 a.m., local time, to consider and act on the following matters:

1. The approval and adoption of the Agreement and Plan of Merger, dated as
of January 28, 1999, by and among SFC, Atlantic Bank and Atlantic Premium
pursuant to which Atlantic Premium will be merged with and into SFC (the
"Merger"). Atlantic Premium is a wholly-owned subsidiary of Atlantic Bank that
was formed solely to implement the Merger. If the Agreement and Plan of Merger,
is adopted by the shareholders and the other conditions to the Merger are
satisfied or waived, (x) for shareholders owning 20% or less of the common stock
as of the merger date, each share of SFC common stock will be converted into the
right to receive $3.50 in cash, and (y) for shareholders owning more than 20% of
the SFC common stock as of the merger date, each share of SFC common stock will
be converted into the right to receive $2.97479 in cash and $0.52521 in notes.
The amount of the notes are subject to reduction in certain events.

2. To transact such other matters as may properly come before the meeting
or any adjournment or postponement of the meeting.

Any shareholder who does not wish to accept the merger consideration of
$3.50 per share and who properly dissents from the proposed merger and complies
with the requirements of Sections 623 and 910 of the New York Business
Corporation Law will have the right to receive payment in cash for the fair
value of their shares of SFC common stock. The appraisal right is subject to a
number of restrictions and technical requirements described in the attached
proxy statement.

The close of business on May 7, 1999 has been fixed as the record date for
determination of the shareholders entitled to notice of and to vote at the
meeting or any adjournment or postponement of the meeting. Any shareholder will
be able to examine at the meeting a list of holders of record for any purpose
related to the Special Meeting. The list will be available at the offices of the
Secretary at Standard Funding Corp., 335 Crossways Park Drive, Woodbury, NY;
telephone: (516) 364-0200.

Shareholders may vote in person or by proxy. The proxy statement, which
explains the Merger in detail, and the accompanying proxy card are attached to
this notice. Holders of record of common stock at the close of business on May
7, 1999 will be entitled to vote at the meeting or any adjournment or
postponement thereof with respect to all matters described above. Please sign,
date and mail the enclosed proxy promptly using the enclosed postage-paid
envelope.

By Order of the Board of Directors
Thomas Catterson
Secretary
Woodbury, New York
May 14, 1999

WHETHER OR NOT YOU EXPECT TO ATTEND THE SFC MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN
ORDER TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE
PROXY CARD IS MAILED IN THE UNITED STATES.
<PAGE>

PROXY STATEMENT FOR SPECIAL MEETING OF SHAREHOLDERS OF
STANDARD FUNDING CORP.

The Boards of Directors of Atlantic Bank and SFC have approved a merger
agreement that would result in SFC becoming a wholly-owned subsidiary of
Atlantic Bank.

If the Merger is completed, SFC shareholders owning 20% or less of the
outstanding common stock on the effective date of the Merger will receive, for
each SFC share, $3.50 in cash. The two holders of more than 20% of the
outstanding common stock on the effective date of the Merger, Messrs. Alan J.
Karp and David E. Fisher, will receive $2.97479 per share in cash and a note in
the principal amount of $0.525021 per share. The amount of the notes is subject
to reduction in certain events. Each outstanding warrant or option of SFC shall
be converted into a right to receive cash equal to $3.50 per option or warrant
minus the per share exercise price of such option or warrant.

Shareholders of SFC are being asked, at the SFC special meeting of
shareholders being held on June 15, 1999, to authorize, approve and adopt the
Merger Agreement and the Merger. The Merger cannot be completed unless the
shareholders of SFC approve it.

This document gives you detailed information about the proposed Merger. SFC
has provided the information about SFC and Atlantic Bank has provided the
information about Atlantic Bank. Please see "Available Information" on page 39
for additional information about SFC which is on file with the Securities and
Exchange Commission.

This Proxy Statement and proxy are being mailed to shareholders of SFC on
or about May 14, 1999.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this Proxy Statement is truthful or complete. Any representation to the contrary
is a criminal offense.

The date of this Proxy Statement is May 14, 1999.

<PAGE>

TABLE OF CONTENTS

QUESTIONS AND ANSWERS ABOUT THE MERGER . . . . . . . . . . . . .1

SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
The Companies . . . . . . . . . . . . . . . . . . . . . . .2
SFC's Reasons for the Merger. . . . . . . . . . . . . . . .3
The SFC Special Meeting . . . . . . . . . . . . . . . . . .3
The Merger. . . . . . . . . . . . . . . . . . . . . . . . .3
Fairness Opinion. . . . . . . . . . . . . . . . . . . . . .6
Federal Income Tax Treatment. . . . . . . . . . . . . . . .6
Regulatory Matters. . . . . . . . . . . . . . . . . . . . .6
Financing the Merger. . . . . . . . . . . . . . . . . . . .6

VOTING AND PROXIES . . . . . . . . . . . . . . . . . . . . . . .7
Date, Time and Place of SFC Meeting . . . . . . . . . . . .7
Purpose . . . . . . . . . . . . . . . . . . . . . . . . . .7
Record Date and Outstanding Shares . . . . . . . . . . . .7
Vote Required . . . . . . . . . . . . . . . . . . . . . . .7
Atlantic Bank's Irrevocable Proxies . . . . . . . . . . . .7
Proxies . . . . . . . . . . . . . . . . . . . . . . . . . .7
Solicitation of Proxies; Expenses . . . . . . . . . . . . .8
Appraisal Rights. . . . . . . . . . . . . . . . . . . . . .8
Recommendation of SFC Board of Directors. . . . . . . . . .8

THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Background of the Merger. . . . . . . . . . . . . . . . . 9
SFC's Reasons for the Merger. . . . . . . . . . . . . . . 10
Opinion of Ladenburg Thalmann & Co., Inc. . . . . . . . . 11
Interests of Certain Persons. . . . . . . . . . . . . . . 14
Appraisal Rights. . . . . . . . . . . . . . . . . . . . . 15
Certain Federal Income Tax Consequences . . . . . . . . . 17
Regulatory Approvals. . . . . . . . . . . . . . . . . . . 18
Financing the Merger. . . . . . . . . . . . . . . . . . . 18

CERTAIN PROVISIONS OF THE MERGER AGREEMENT . . . . . . . . . . 18
Effective Time. . . . . . . . . . . . . . . . . . . . . . 18
Conversion of Shares, Options and Warrants. . . . . . . . 18
Representations and Warranties. . . . . . . . . . . . . . 19
Covenants, Transactions and Conduct of SFC's Business
Pending Merger. . . . . . . . . . . . . . . . . . . . .19
Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 21
Conditions to The Merger. . . . . . . . . . . . . . . . . 21
Termination . . . . . . . . . . . . . . . . . . . . . . . 23
Indemnification . . . . . . . . . . . . . . . . . . . . . 24

BUSINESS OF ATLANTIC BANK. . . . . . . . . . . . . . . . . . . 25
<PAGE>

BUSINESS OF SFC . . . . . . . . . . . . . . . . . . . . . . . 25
General . . . . . . . . . . . . . . . . . . . . . . . . . 25
Industry Background . . . . . . . . . . . . . . . . . . . 25
Insurance Premium Financing Services. . . . . . . . . . . 26
Sales and Marketing . . . . . . . . . . . . . . . . . . . 27
Regulation. . . . . . . . . . . . . . . . . . . . . . . . 28
Competition . . . . . . . . . . . . . . . . . . . . . . . 28
Personnel . . . . . . . . . . . . . . . . . . . . . . . . 29
Properties. . . . . . . . . . . . . . . . . . . . . . . . 29
Legal Proceedings . . . . . . . . . . . . . . . . . . . . 29

SELECTED HISTORICAL FINANCIAL DATA . . . . . . . . . . . . . . 30

FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . 31

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . 32
Results of Operations . . . . . . . . . . . . . . . . . . 32
Effective Income Tax Rate . . . . . . . . . . . . . . . . 33
Liquidity and Capital Resources . . . . . . . . . . . . . 33
New Accounting Pronouncements . . . . . . . . . . . . . . 35
Year 2000 Matters . . . . . . . . . . . . . . . . . . . . 35
Inflation . . . . . . . . . . . . . . . . . . . . . . . . 36

MARKET FOR SFC'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS 37

BENEFICIAL OWNERSHIP OF COMMON STOCK . . . . . . . . . . . . . 38

AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . 39

INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . . 39

OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . 39

ANNEX A AGREEMENT AND PLAN OF MERGER, INCLUDING EMPLOYMENT
AGREEMENTS AND VOTING AGREEMENTS . . . . . . . . . .A-1

ANNEX B FAIRNESS OPINION OF LADENBURG THALMANN & CO., INC. .B-1

ANNEX C NEW YORK BUSINESS CORPORATION LAW SECTIONS
623 AND 910C-1 . . . . . . . . . . . . . . . . . . .C-1

<PAGE>

QUESTIONS AND ANSWERS ABOUT THE MERGER

Q: What will I receive in the merger?

A: SFC shareholders owning 20% or less of outstanding SFC common stock on
the effective date of the Merger will receive $3.50 in cash for each
share of SFC common stock. SFC shareholders owning more than 20%, will
receive $2.97479 in cash and $0.52521 in notes for each share.

Q: Why is the Board of Directors recommending that I vote for the Merger
Agreement?

A: In the opinion of your board, the Merger is in the best interests of
SFC and its shareholders and the merger consideration is fair from a
financial point of view to SFC's shareholders. For the Merger to
occur, shareholders holding two-thirds of the outstanding shares of
SFC common stock must approve the Merger. To review the background and
the reasons for the Merger in greater detail, see page 3.

Q: What do I need to do now?

A: Please mail your signed proxy card in the enclosed return envelope as
soon as possible, so that your shares may be represented at the
Special Meeting.

Q: Should I send in my share certificates now?

A: No. After the Merger is complete, we will send you written
instructions for exchanging your share certificates.

Q: If my shares are held in "street name" by my broker, will my broker
vote my shares for me?

A: Your broker will vote your shares only if you provide instructions on
how to vote. You should follow the directions provided by your broker
regarding how to instruct your broker to vote your shares.

Q: May I change my vote after I have mailed my signed proxy card?

A: Yes. Just send in a later dated, signed proxy card before the Special
Meeting or attend the Special Meeting and vote.

Q: When do you expect the Merger to be completed?

A: We are working toward completing the Merger as quickly as possible. We
expect to complete the Merger by June 15, 1999.

Q: Will I recognize gain or loss on the transaction for federal income
tax purposes?

A: Yes. If the Merger is completed, you will recognize gain or loss for
federal income tax purposes. You are urged to consult your own tax
advisor to determine your particular tax consequences.

Q: What other matters will be voted on at the Special Meeting?

A: We do not expect to ask you to vote on any other matters at the
Special Meeting.
<PAGE>

SUMMARY

The following is a summary of certain information contained elsewhere in
this Proxy Statement. This summary does not contain a complete statement of all
material elements of the proposals to be voted on and is qualified in its
entirety by the more detailed information appearing elsewhere in this Proxy
Statement and in the information and documents annexed hereto.

The Companies

Standard Funding Corp.
335 Crossways Park Drive
Woodbury, New York 11797
(516) 364-0200

SFC is a financial services company engaged in the business of financing
the payment of insurance premiums. SFC offers financing of approximately 75% to
85% of an insurance premium to individual and commercial purchasers of property,
casualty and liability insurance who wish to pay their insurance premiums on an
installment basis. While many insurance carriers require advance payment of a
full year's premium, SFC allows the insured to spread the cost of the insurance
policy over time.

SFC finances insurance premiums without assuming the risk of loss borne by
insurance carriers. When the insured buys an insurance policy from an
independent insurance agent or broker who offers financing through SFC, the
insured generally pays a down payment of approximately 15% to 25% of the total
premium and signs a premium finance agreement for the balance. Under the terms
of SFC's standard form of financing contract, SFC is given the power to cancel
the insurance policy if there is a default in the payment on the finance
contract and to collect the unearned portion of the premium from the insurance
carrier. The down payment is set at a level designed, in the event of
cancellation of a policy, such that the return premium from the insurance
carrier is sufficient to cover the loan balance plus interest and other charges
due to SFC. To finance its insurance premium loans, SFC relies primarily on
proceeds of short-term lines of credit, subordinated debt, the issuance of
commercial paper and the sale of equity. SFC derives profit to the extent that
interest earned and fees charged generate income exceeding the interest expense
for borrowed funds and SFC's operating and selling expenses and provision for
possible credit losses.

Atlantic Bank of New York
960 Avenue of the Americas
New York, New York 10001
(212) 695-5400

Atlantic Bank of New York is a New York State-chartered commercial bank
with total assets of over $1.4 billion. Established in 1926, Atlantic ranks
among the top 25 banks serving the New York metropolitan area. A full-service
commercial bank, Atlantic Bank provides a comprehensive range of financial
services to businesses, real estate investors and consumers. It operates ten
branch offices in Manhattan, Queens, Brooklyn and Long Island, as well as a
branch office in Chicago. Atlantic Bank is a member of the global financial
network of the National Bank of Greece, one of the largest banks in Europe, with
assets in excess of $50 billion.

<PAGE>

Atlantic Premium, Inc.
960 Avenue of the Americas
New York, New York 10001
(212)

Atlantic Premium is a corporation recently organized by Atlantic Bank for
the purpose of effecting the Merger. Atlantic Premium has no material assets and
has not engaged in any activities except in connection with the Merger.

SFC's Reasons for the Merger

In reaching its decision to approve the Merger Agreement and to recommend
that SFC's shareholders vote to adopt the Merger Agreement, the SFC Board of
Directors considered a number of factors, including SFC's financial condition,
strategic alternatives to the proposed Merger, the relationship between the
value of the merger consideration and the recent trading prices of SFC common
stock, the strategic fit between Atlantic Bank and SFC, and the terms and
conditions of the Merger Agreement.

The SFC Special Meeting

Time, Date, Place and Purpose

A Special Meeting of Shareholders of SFC will be held at the Holiday Inn,
215 Sunnyside Boulevard, Plainview, New York 11803 on June 15, 1999 at 10:00
a.m., local time. The purpose of the SFC Meeting is to approve and adopt the
Merger Agreement and to transact any other business as may properly come before
the SFC Meeting or any postponements or adjournments thereof. See "Voting and
Proxies -- Date, Time and Place of SFC Meeting" and "-- Purpose."

Record Date and Vote Required

Only SFC shareholders of record at the close of business on May 7, 1999 are
entitled to notice of and to vote at the SFC Meeting. Pursuant to the New York
Business Corporation Law, the affirmative vote of the holders of two-thirds of
the SFC common stock outstanding as of the SFC Record Date is required to
approve and adopt the Merger Agreement. See "Voting and Proxies -- Vote
Required."

As of May 7, 1999, there were 321 shareholders of record of SFC common
stock and 2,760,000 shares of SFC common stock outstanding, each of which will
be entitled to cast one vote per share on each matter to be acted upon at the
SFC Meeting.

Atlantic Bank Irrevocable Proxies

Two officers and directors of SFC, Alan J. Karp and David E. Fisher,
President and Chief Financial Officer , respectively, have entered into voting
agreements and have granted irrevocable proxies to officers or agents of
Atlantic Bank to vote their shares (approximately 44.8% in the aggregate of the
outstanding SFC common stock) in favor of the approval and adoption of the
Merger Agreement. See "Voting and Proxies -- Atlantic Bank's Irrevocable
Proxies."

<PAGE>

Recommendation of SFC Board of Directors

SFC's Board of Directors has unanimously approved and adopted the Merger
Agreement and the transactions contemplated thereby and has determined that the
Merger is fair and in the best interests of SFC and its shareholders. After
careful consideration, the SFC Board unanimously recommends a vote in favor of
approval and adoption of the Merger Agreement. SFC shareholders should read this
Proxy Statement carefully prior to voting. See "The Merger -- SFC's Reasons for
the Merger" and "Voting and Proxies -- Recommendation of SFC Board of
Directors."

The Merger

Terms of the Merger

The Merger will be effective at the time the Certificate of Merger is filed
with the Secretary of State of the State of New York (the "Effective Time"). At
the Effective Time, Atlantic Premium will merge with and into SFC and SFC will
become a wholly-owned subsidiary of Atlantic Bank. In the Merger, for
shareholders owning 20% or less of SFC outstanding Common Stock, each share of
SFC common stock will be converted into the right to receive $3.50 in cash. For
the two SFC shareholders owning more than 20%, Messrs. Alan J. Karp and David E.
Fisher, each share of SFC common stock will be converted into the right to
receive $2.97479 per share in cash and $0.52521 in notes. The amount of the
notes is subject to reduction in certain events. Shares of SFC common stock
owned by holders who have exercised appraisal rights under New York law will not
be converted in the Merger. Each outstanding option or warrant to purchase SFC
common stock will be converted into the right to purchase and receive cash equal
to $3.50 per option or warrant minus the per share exercise price of such option
or warrant and minus any applicable withholding taxes. See "Certain Provisions
of the Merger Agreement Conversion of Shares and Options." The complete text of
the Merger Agreement is attached to this proxy statement as Annex A. Each
shareholder is urged to read the Merger Agreement in its entirety.

Effective Time of the Merger

The Merger is expected to close and the Effective Time is expected to be on
or about June 15, 1999, assuming all of the conditions to the Merger are met or
waived prior to that date. See "Certain Provisions of the Merger Agreement
Effective Time."

Exchange of SFC Stock Certificates

Promptly after the Effective Time, American Stock Transfer & Trust Company,
as SFC's disbursing agent, will deliver to each SFC shareholder of record a
letter of transmittal with instructions regarding how to surrender SFC share
certificates. YOU SHOULD NOT SURRENDER YOUR CERTIFICATES FOR SFC COMMON STOCK
UNTIL YOU RECEIVE THE LETTER OF TRANSMITTAL FROM THE DISBURSING AGENT. Holders
of options or warrants to purchase SFC stock will also receive instructions
regarding how to surrender their options or warrants. See "Certain Provisions of
the Merger Agreement -- Conversion of Shares, Options and Warrants."

No Solicitation by SFC

Until the earlier of the Effective Time of the Merger or termination of the
Merger Agreement pursuant to its terms, SFC has agreed not to, and SFC has
agreed to instruct its directors, officers, employees, investment banker or any
other agent, not to, directly or indirectly, solicit, initiate or encourage
inquiries or proposals with respect to, furnish any information relating to, or
participate in, continue or enter into any negotiations or discussions
concerning, any business combination with or the purchase of all or a portion of
the assets of, or any equity interest in SFC. Nothing, however, precludes SFC
from entering into its negotiations and disclosing information with respect to a
superior offer, as defined in the Merger Agreement, under certain conditions.
SFC has also agreed to immediately notify Atlantic Bank if any person inquires
or makes a proposal regarding any acquisition proposal and to as promptly as
practicable notify Atlantic Bank of the significant terms and conditions of any
such acquisition proposal. See "Certain Provisions of the Merger Agreement --
Covenants, Transactions and Conduct of SFC's Business Pending Merger" and " --
Termination."

<PAGE>

Market Price Data

SFC common stock is traded on the NASDAQ SmallCap Market under the symbol
"SFUN." On January 27, 1999, the last day before the execution of the Merger
Agreement, the closing price of SFC common stock as reported on the NASDAQ was
$2.50 per share. On May 7, 1999, the closing price of SFC common stock as
reported on the NASDAQ was $3 3/32. Following the merger, SFC common stock will
no longer be traded. There can be no assurance as to the actual price of SFC
common stock prior to, or at the Effective Time of the Merger, or in the event
the Merger is not consummated. See "Market for SFC's Common Equity and Related
Shareholder Matters."

Termination

The Merger Agreement may be terminated under certain circumstances,
including:

-- by mutual written consent of SFC and Atlantic Bank
authorized by their respective Boards of Directors;
-- by any party not in breach if certain conditions contained in the
Merger Agreement are not satisfied within the time contemplated by
the Merger Agreement; or
-- by either SFC or Atlantic Bank if the other party breaches certain
representations, warranties or covenants contained in the Merger
Agreement;
-- by either SFC or Atlantic Bank if the Merger is not consummated by
June 1, 1999 (with the right of either party to extend the date,
under certain terms and conditions contained in the Merger Agreement,
to July 1, 1999);
-- by SFC if it receives a bona fide superior offer from a third party
under certain terms and conditions contained in the Merger Agreement.

(See "Certain Provisions of the Merger Agreement - Termination")

Conditions to the Merger

Various conditions must be satisfied or waived prior to the consummation
of the Merger, including:
-- the Merger Agreement must be approved and adopted by the holders of
two-thirds of the SFC common stock;
-- there shall be no injunction, court order, or other legal restraint
trying to prevent the Merger; all applicable filings shall have been
made and all applicable regulatory approvals shall have been
obtained;
-- no statutes, rules, regulations or orders shall have been enacted
which make the completion of the Merger illegal; and
-- each party shall have received the written opinions of counsel
required by the Merger Agreement.

<PAGE>

In addition, SFC does not have to consummate the Merger unless the
following conditions are met or waived:
-- the representations and warranties of Atlantic Bank and Atlantic
Premium in the Merger Agreement shall be accurate in all material
respects as of the effective date of the Merger; and
-- Atlantic Bank and Atlantic Premium shall have performed in all
material respects the agreements and covenants contained in the
Merger Agreement.

Similarly, Atlantic Bank and Atlantic Premium do not have to consummate the
Merger unless the following conditions are met or waived:
-- the representations and warranties of SFC contained in the Merger
Agreement shall be accurate in all material respects as of the
effective date of the Merger;
-- SFC shall have performed in all material respects the agreements and
covenants required by the Merger Agreement;
-- all material consents, waivers, approvals, authorizations or orders
required to be received shall have been obtained;
-- there shall have been no material adverse effect, as defined in the
Merger Agreement, with respect to SFC;
-- holders of not more than 7.5% of the outstanding SFC common stock have
exercised dissenter's rights under Sections 623 and 910 of the
New York Business Corporation Law;
-- SFC shall have caused the committee administering its stock plan to
adopt resolutions offering holders the right to receive $3.50 in
cash on exercise of each option or warrant;
-- SFC shall have entered into employment agreements with Alan J. Karp
and David E. Fisher;
-- SFC's net worth and contracts receivable shall be at least $7,000,000
and $40,000,000, respectively, as of the last day of the month
immediately prior to the month in which the Merger is effective;
and
-- The holders of certain notes and other forms of debt shall have
agreed to allow such notes and debt to be prepaid by SFC.

See "Certain Provisions of the Merger Agreement Conditions to the Merger."

Interests of Certain Persons in the Merger

In considering the recommendation of the SFC Board with respect to the
Merger Agreement, holders of SFC common stock should be aware that certain
members of the SFC Board and certain executive officers of SFC have certain
interests in the Merger that are in addition to the interests of holders of SFC
common stock generally. See "The Merger Interests of Certain Persons."

Appraisal Rights

Holders of SFC common stock will be entitled to appraisal rights under the
New York Business Corporation Law in connection with the Merger. A holder of SFC
common stock who desires to pursue appraisal rights must (i) file a written
objection to the Merger Agreement with SFC before the taking of the
shareholders' vote on the Merger Agreement, (ii) refrain from voting in favor of
the Merger Agreement, and (iii) make written demand from the surviving
corporation for payment for the shareholder's shares, all in accordance with the
New York Business Corporation Law. Such appraisal rights are conditioned upon
not voting for the approval and adoption of the Merger Agreement. See "The
Merger Appraisal Rights."

<PAGE>
Fairness Opinion

Ladenburg Thalmann & Co., Inc. has delivered to the SFC Board its written
opinion, dated January 18, 1999, to the effect that, as of that date, the
consideration to be received by the holders of SFC common stock in the Merger
was fair from a financial point of view. The full text of the opinion of
Ladenburg Thalmann & Co., Inc., which sets forth assumptions made and matters
considered, is attached hereto as Annex B to this Proxy Statement, and is
incorporated herein by reference. Holders of SFC common stock are urged to, and
should, read such opinion in its entirety. See "The Merger Opinion of Ladenburg
Thalmann & Co., Inc." and Annex B hereto.

Federal Income Tax Treatment

A holder of SFC common stock generally will recognize gain or loss equal to
the difference between (i) the merger consideration received pursuant to the
Merger and (ii) the holder's adjusted tax basis in the SFC common stock. Any
gain or loss recognized should generally be capital gain or loss.

Each SFC shareholder is urged to consult such shareholder's own tax advisor
as to the specific tax consequences of the Merger to such shareholder. See "The
Merger Certain Federal Income Tax Consequences."

Regulatory Matters

The obligations of the parties to consummate the merger are subject to
certain regulatory approvals and consents, including consents under the New York
State Banking Law and the Massachusetts Banking Law and the expiration or
termination of the waiting period applicable to the consummation of the Merger
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"). See "The Merger - Regulatory Approvals."

Financing the Merger

Financing the Merger will require approximately $10,150,000 to pay the
merger consideration and to pay the fees and expenses in connection with the
merger. These funds are expected to be provided by Atlantic Bank from internally
available funds. See "The Merger Financing the Merger."

<PAGE>
VOTING AND PROXIES

Date, Time and Place of SFC Meeting

The SFC Meeting will be held at the Holiday Inn, 215 Sunnyside Boulevard,
Plainview, New York 11803 on June 15, 1999 at 10:00 a.m. local time.

Purpose

The purposes of the SFC Meeting are to approve and adopt the Merger and the
Merger Agreement and to transact such other matters as may properly come before
the SFC Meeting or any postponements or adjournments thereof.

Record Date and Outstanding Shares

Only shareholders of record of SFC common stock at the close of business on
May 7, 1999 (the "SFC Record Date") are entitled to notice of, and to vote at,
the SFC Meeting. As of the SFC Record Date, there were 321 shareholders of
record holding an aggregate of approximately 2,760,000 shares of SFC common
stock.

On or about May 14, 1999, a notice meeting the requirements of New York law
is being mailed to all shareholders of record as of the SFC Record Date.

Vote Required

Pursuant to the New York Business Corporation Law (the "NYBCL" or "NY
Corporation Law") and the SFC Certificate of Incorporation, as amended, the
affirmative vote of the holders of two-thirds of the SFC common stock
outstanding as of the SFC Record Date is required to approve and adopt the
Merger and the Merger Agreement. Each shareholder of record of SFC common stock
on the SFC Record Date will be entitled to cast one vote per share on each
matter to be acted upon at the SFC Meeting.

The representation, in person or by proxy, of at least a majority of the
outstanding shares of SFC common stock entitled to vote at the SFC Meeting is
necessary to constitute a quorum for the transaction of business. The effect of
an abstention and of a broker "non-vote" is the same as that of a vote "against"
the proposal.

Atlantic Bank's Irrevocable Proxies

In connection with the execution of the Merger Agreement, two officers and
directors of SFC, Alan J. Karp and David E. Fisher, have entered into voting
agreements and have granted irrevocable proxies to officers or agents of
Atlantic Bank to vote their shares of SFC common stock (which aggregate
1,237,600 shares, and represent approximately 44.8% of the outstanding common
stock of SFC) in favor of the approval and adoption of the Merger and the Merger
Agreement. The voting agreements include no solicitation provisions
substantially identical to the no solicitation provisions agreed to by SFC. The
voting agreements terminate on the earlier of the conversion of the shares of
common stock pursuant to the Merger Agreement or the termination of the Merger
Agreement in accordance with its terms. For more detailed information on the
voting agreement, reference is made to Annex A Merger Agreement and Voting
Agreements.

<PAGE>

Proxies

Each of the persons named as proxies for the SFC Meeting is an officer of
SFC. All shares of SFC common stock that are entitled to vote and are
represented at the SFC Meeting either in person or by properly executed proxies
received prior to or at the SFC Meeting and not duly and timely revoked will be
voted at the SFC Meeting in accordance with the instructions indicated on such
proxies. If no such instructions are indicated, such proxies will be voted for
the approval and adoption of the Merger and the Merger Agreement.

The SFC Board knows of no other matter to be presented at the SFC Meeting.
If any other matter upon which a vote may properly be taken should be properly
presented at the SFC Meeting, shares represented by all proxies received by SFC
will be voted with respect thereto in accordance with the judgment of the
persons named as proxies in the proxy.

Execution of a proxy does not in any way affect a shareholder's right to
attend the meeting and vote in person. Any proxy may be revoked by a shareholder
at any time before it is exercised by delivering a written revocation or a
later-dated proxy to the Secretary of SFC, or by attending the meeting and
voting in person. Any written notice of revocation or subsequent proxy should be
sent so as to be delivered to Standard Funding Corp., 335 Crossways Park Drive,
Woodbury, New York 11797, Attention: Secretary, or hand- delivered to the
Secretary of SFC, in each case at or before the taking of the vote at the SFC
Meeting.

Solicitation of Proxies; Expenses

All costs of solicitation of proxies for the SFC Meeting will be borne by
SFC. Brokers, custodians and fiduciaries will be requested to forward proxy
soliciting material to the owners of stock held in their names, and SFC will
reimburse them for their reasonable out-of-pocket costs. In addition, proxies
may also be solicited by certain directors, officers and employees of SFC
personally or by mail, telephone or telegraph following the original
solicitation. Such persons will not receive additional compensation for such
solicitation.

Appraisal Rights

Pursuant to the NY Corporation Law, and as described in greater detail in
the Notice of the Meeting and below, holders of SFC common stock will be
entitled to appraisal rights in connection with the Merger. A holder of SFC
common stock who desires to pursue appraisal rights must (i) file a written
objection to the Merger Agreement with SFC before the taking of the
shareholders' vote on the Merger Agreement, (ii) refrain from voting in favor of
the approval and adoption of the Merger or the Merger Agreement and (iii) make
written demand from the surviving corporation for payment for the shareholder's
shares, all in accordance with the NY Corporation Law. Such appraisal rights are
not conditioned upon voting against the Merger Agreement. See "The Merger
Appraisal Rights."

Recommendation of SFC Board of Directors

The SFC Board has unanimously approved and adopted the Merger Agreement and
the transactions contemplated thereby and has determined that the merger is fair
to, and in the best interests of, SFC and its shareholders. After careful
consideration, the SFC Board unanimously recommends a vote in favor of approval
and adoption of the Merger and the Merger Agreement.

<PAGE>
THE MERGER

The following discussion summarizes the proposed Merger and related
transactions. The following is not, however, a complete statement of all
provisions of the Merger Agreement and related agreements. Detailed terms of and
conditions to the Merger and certain related transactions are contained in the
Merger Agreement, a copy of which is attached to this Proxy Statement as Annex
A. Reference is also made to the other Annexes hereto. Statements made in this
Proxy Statement with respect to the terms of the merger and such related
transactions are qualified in their respective entireties by reference to the
more detailed information set forth in the Merger Agreement and the other
Annexes hereto. This section contains forward-looking statements that involve
risks and uncertainties. Actual results could differ materially from those
anticipated in these forward-looking statements as a result of a variety of
factors.

Background of the Merger

The terms of the Agreement are the result of arm's-length negotiations
between representatives and legal advisors of Atlantic Bank and SFC. The
following is a brief discussion of the background of those negotiations.

As early as January 1998, as a result of a decline in stock prices and the
need for additional financing, in order to maximize value for shareholders SFC
began to consider certain strategic alternatives including possible business
combinations with third parties.

In March 1998, a meeting was held at SFC's offices in which Messrs. Alan J.
Karp and David E. Fisher participated on behalf of SFC and Messrs. George Jarvis
and Michael Goldrick participated for Atlantic Bank. At this meeting, Mr. Karp
informed Messrs Jarvis and Goldrick that they were having discussions with
several interested parties with respect to business combinations.

On April 1, 1998, a meeting was held at SFC's offices in Woodbury, New York
where the mutual advantages to the strategic combination were considered by the
parties. Mr. Jarvis informed Messrs. Karp and Fisher that any potential
acquisition would have to be approved by Atlantic Bank's board and its parent's
board, National Bank of Greece, and that it would take sometime for a
determination as to whether to go forward with discussions.

On April 9, 1998, SFC received a letter from Atlantic Bank indicating that
the bank was prepared to consider an all cash offer to acquire SFC at a price in
the range of $4.00 to $4.50 per share. The letter indicated that it was strictly
a non-binding indication of possible interest, and that any formal offer would
follow a thorough due diligence review and the approval of both Atlantic Bank's
board and its parent's board.

On April 24, 1998, SFC engaged Ladenburg Thalmann & Co., Inc. ("Ladenburg
Thalmann") as its financial advisor in connection with the possible sale of SFC.
As a result of its engagement by SFC, Ladenburg, Thalmann, with SFC's
assistance, prepared a confidential information memorandum, conducted research
as to potential buyers, and had five confidentiality agreements signed by
potential buyers, including Atlantic Bank.

On June 23, 1998, SFC signed confidentiality agreements prepared by
Atlantic Bank.

<PAGE>

On July 1, 1998, a meeting was held at Atlantic Bank in New York, at which
Messrs. Peter Venetis, President, George Jarvis, Sr. Vice President, and Michael
Goldrick, Vice President, attended on behalf of Atlantic Bank and Messrs. Alan
Karp and David Fisher attended on behalf of SFC. Mr. Seth Lemler of Ladenburg,
Thalmann was also present. The meeting involved a discussion of the philosophies
and synergies between the two parties. At or about the same time, Atlantic Bank
commenced its due diligence of SFC pursuant to a written due diligence request.

On August 6, 1998, Mr. Lemler of Ladenburg Thalmann received a letter from
Mr. Thomas Sipple, Executive Vice President and Chief Financial Officer of
Atlantic Bank proposing an offer of $3.50 per share in cash and notes for all
the outstanding common stock of SFC. The proposal was for non-management
shareholders to receive all cash and management shareholders to receive one-half
in cash and one-half in notes. The notes would be paid over three years and were
to be based upon meeting certain performance standards to be agreed upon.

From August 6, 1998 through September 21, 1998, the parties held various
meetings in person and by telephone to further discuss a possible transaction
between SFC and Atlantic Bank.

On September 21, 1998, Mr. Lemler of Ladenburg Thalmann received a letter
from Atlantic Bank indicating that it had met with its parent's Board of
Directors and was proposing the following offer: a purchase price of no greater
than $3.25 per share, of which non-management would receive all cash and
management would receive 60% cash and 40% notes.

On November 5, 1998, Atlantic Bank revised its prior offer by submitting a
written term sheet to Messrs. Fisher and Karp providing, among other things, for
a cash price of $3.50 per share and decreasing the principal amount of the notes
to Messrs. Fisher and Karp from $750,000 to $650,000 in partial payment for
their shares.

On November 10, 1998, SFC and Atlantic Bank, through their legal counsel,
Blau, Kramer, Wactlar & Lieberman, P. C. ("Blau Kramer") and Kramer Levin
Naftalis & Frankel LLP ("Kramer Levin") began discussions relating to the
specific terms and conditions of the proposed transaction.

On November 20, 1998, a revised term sheet was received by Messrs. Karp and
Fisher from Mr. Jarvis providing for a purchase price of $3.50 per share. The
purchase price would be all cash to non-management and 81.5% in cash and 18.5%
in notes to Messrs. Karp and Fisher.

On December 1, 1998, Edward Kramer of Blau Kramer received a draft of the
proposed Merger Agreement, including, among other things, proposed employment
agreements and voting agreements to be executed by Messrs. Karp and Fisher.

Over the next seven weeks, representatives of Blau, Kramer and Kramer Levin
held several meetings by telephone or in person in which various terms of the
Merger Agreement, the voting agreements, and the employment agreements of
Messrs. Karp and Fisher were negotiated.

Concurrently with the negotiations with Atlantic Bank, Mr. Karp and/or Seth
Lemler were contacted by other third parties who expressed interest in a
strategic alliance with or acquisition of SFC.

On January 18, 1999, at a special meeting, the SFC board met to review the
proposed Merger Agreement. Messrs. Karp and Fisher also reviewed with the SFC
board their contacts with other third parties regarding a possible transaction.
Following such discussions, the SFC board approved the terms of the proposed
transaction with Atlantic Bank and approved and adopted the Merger Agreement. At
that meeting, the SFC board also considered the fairness opinion of Ladenburg
Thalmann.
<PAGE>

Between January 18, 1999 and January 29, 1999 representatives of Blau
Kramer and Kramer, Levin held several meetings by telephone to further discuss
and negotiate various terms and conditions to the Merger Agreement.

On January 29, 1999, the Merger Agreement was executed and delivered by the
parties and SFC and Atlantic Bank issued a joint press release announcing the
execution of the Merger Agreement.

SFC's Reasons for the Merger

The SFC Board has unanimously approved and adopted the Merger Agreement,
has determined unanimously that the Merger is fair and advisable and in the best
interests of SFC and its shareholders and recommends unanimously that holders of
SFC common stock vote FOR approval and adoption of the Merger and the Merger
Agreement.

In reaching its decision to approve and adopt the Merger Agreement and to
recommend that SFC's shareholders vote to approve and adopt the Merger and the
Merger Agreement, the SFC Board considered a number of factors, including the
following:

(i) Information with respect to the financial condition, results of
operations and business of SFC, and the influence of current industry,
economic and market conditions;

(ii) Strategic alternatives (including continuing the SFC business in
its present configuration on a stand-alone basis without significant
changes), none of which the SFC Board believed to be as favorable to the
holders of the shares of SFC common stock as the Merger;

(iii) The relationship of the value of the consideration offered to
the recent trading prices of SFC common stock and that the offer
represented a 37% premium over the closing price of SFC common stock on
January 15, 1999 (the last full trading day prior to consideration of the
Merger Agreement by the SFC Board);

(iv) The terms and conditions of the Merger Agreement, including
certain restrictions against SFC discussions with other potentially
interested companies and the fact that either party could terminate the
Merger Agreement if the merger is not consummated by June 1, 1999 (subject
to extension under certain conditions to July 1, 1999); and

(v) The opinion of Ladenburg, Thalmann & Co., Inc. as to the fairness
of the Merger to SFC shareholders from a financial point of view.

The SFC Board also considered certain potential risks relating to the
Merger, including but not limited to the risk that the Merger would not be
consummated, with resulting distraction in the interim to SFC's normal business
operations. The SFC Board believed, however, that these risks were outweighed by
the potential benefits to be realized from the Merger.

Based on this analysis, the SFC Board unanimously determined that the
Merger is fair to, and in the best interests of, SFC's shareholders. The
foregoing discussion of the information and factors considered by the SFC Board
is not intended to be exhaustive, and such information and factors were
considered collectively by the SFC Board in connection with its review of the
Merger Agreement and the transactions contemplated thereby. In view of the
variety of factors considered in connection with its evaluation of the Merger,
the SFC Board did not find it practicable to, and did not, quantify or otherwise
assign relative weights to the specific factors considered in reaching its
determination. In addition, individual members of the SFC Board may have given
different weights to different factors.
<PAGE>

The SFC Board recommends that SFC shareholders vote FOR the approval and
adoption of the Merger and the Merger Agreement.

Opinion of Ladenburg Thalmann & Co., Inc.

Ladenburg acted as financial advisor to SFC in connection with the Merger. As
part of its services, Ladenburg rendered to the SFC Board an opinion dated
January 18, 1999 (the "Ladenburg Opinion") as to the fairness, from a financial
point of view, of the merger consideration to be paid to the SFC shareholders
(other than any Large Holder, as defined below) by Atlantic Bank in the Merger.
As is more fully described in the Merger Agreement, upon consummation of the
Merger, each share of SFC's common stock, currently issued and outstanding, held
by a person that holds, in aggregate, 20% or less of SFC's issued and
outstanding common stock shall be converted into the right to receive $3.50 in
cash. The Merger Agreement further provides that each share of SFC's common
stock held by a person that holds, in aggregate, more than 20% of the issued and
outstanding common stock ("Large Holders") shall be converted into the right to
receive (i) $2.97479 in cash and (ii) Notes having an aggregate principal amount
equal to $0.52521.

On January 18, 1999, Ladenburg presented its opinion to the SFC Board that, as
of such date, the consideration to be received by the SFC shareholders in
connection with the Merger was fair, from a financial point of view, to the SFC
shareholders other than the Large Holders. There is no agreement in the Merger
Agreement or otherwise that the Ladenburg Opinion be updated to any date
subsequent to January 18, 1999.

The full text of the Ladenburg Opinion, which sets forth the assumptions
made, procedures followed, matters considered and limitations on the review
undertaken, is attached as Annex B to this Proxy Statement. Ladenburg has
consented to the use of and reference to its opinion in this Proxy Statement.
SFC shareholders are urged to read the Ladenburg Opinion carefully and in its
entirety.

The Ladenburg Opinion was prepared at the request of and for the information
of the SFC Board of Directors. No limitations were imposed by SFC on the scope
of the investigation or the procedures to be followed by Ladenburg in rendering
the Ladenburg Opinion. In connection with its engagement, Ladenburg requested to
and did approach and hold discussions with third parties to solicit indications
of interest in a possible acquisition of SFC. The Ladenburg Opinion is directed
only to the fairness of the merger consideration to be paid to SFC shareholders
from a financial point of view and does not constitute a recommendation to any
of the SFC shareholders as to how such shareholders should vote at the SFC
meeting. The summary of the Ladenburg Opinion set forth in this Proxy Statement
is qualified in its entirety by reference to the full text of the Ladenburg
Opinion. The Ladenburg Opinion does not address the relative merits of the
Merger or any other transactions or business strategies discussed by the SFC
Board as alternatives to the Merger or the decision of the SFC Board to proceed
with, or the effects of, the Merger.

In conducting its analysis, Ladenburg reviewed and considered such information
as it deemed necessary or appropriate for the purposes of stating its opinion
including, without limitation, the following: (i) the draft of the Merger
Agreement and a draft of each of the employment agreements in each case in the
form presented to SFC's Board; (ii) certain business and financial information
relating to SFC, provided by SFC, including the financial condition and results

<PAGE>

of operations of SFC, the historical financial performance of SFC and certain
projected financial information, provided by SFC; (iii) certain public filings
made by SFC with the Securities and Exchange Commission; and (iv) certain
publicly available market trading data and historical trading performance of SFC
common stock. In addition, Ladenburg conducted such other analyses and
examinations and reviewed and considered such other financial, economic and
market data as it deemed appropriate in arriving at its opinion. Ladenburg also
met with members of SFC's senior management to discuss, among other things, the
historical and prospective industry environment, their respective financial
condition and operating results, and the reasons for the transaction.

Overview of Analyses

Ladenburg used both qualitative and quantitative analyses and valuation
methods in connection with rendering the Ladenburg Opinion. The following
paragraphs summarize the significant analyses performed by Ladenburg in
rendering the Ladenburg Opinion, and when taken together, provide the basis for
the Ladenburg Opinion.

Qualitative Considerations

In addition to the quantitative analyses discussed below, Ladenburg considered
a number of qualitative factors related to the Merger. Ladenburg did not apply
valuation weightings to any of these qualitative factors. Among the positive
qualitative factors relating to the Merger, Ladenburg noted: (i) due to the all
cash merger consideration to be received by SFC shareholders, the merger
provides SFC shareholders with liquidity and eliminates ongoing business risk;
and (ii) SFC's stand-alone business projections show limited expected growth in
revenues and operating earnings due to SFC's difficulty in accessing equity and
subordinated capital on acceptable terms. Among the negative qualitative factors
relating to the Merger, Ladenburg noted the all cash consideration does limit
the ability of the SFC shareholders to participate in the potential share price
appreciation and the potential growth of both SFC on a stand-alone basis and the
post Merger company.

Quantitative Analyses

In developing its opinion, Ladenburg calculated a range of values for SFC
using four separate valuation approaches: (i) a Market Multiples Analysis based
upon comparable publicly traded-companies, (ii) an Acquisition Multiples
Analysis based upon acquisitions of comparable companies over the previous two
years, (iii) a Discounted Cash Flow Analysis, and (iv) a Takeover Premium
Analysis. Ladenburg also considered the historical trading price and volume of
SFC's common stock in developing its opinion.

<PAGE>

Market Multiples Analysis: The Market Multiples Analysis determines an
implied public market value by evaluating the public valuations of comparable
companies competing in similar industries using available public information. In
choosing comparable companies for SFC, Ladenburg examined four other companies
in the specialty finance industry including Allstate Financial Corp., KBK
Capital Corp., Medallion Financial Corp. and Pioneer Commercial Funding Corp. In
addition, Ladenburg considered the following three companies in the consumer
auto finance industry: Consumer Portfolio Services, Inc., First Investors
Financial Services, Inc. and TFC Enterprises, Inc.

The multiples used for the Market Multiples Analysis were derived by
dividing the public valuations of comparable companies by certain measures of
operating performance such as operating cash flow defined as pre tax income plus
depreciation and amortization, pre tax income, net income, projected earnings
per share ("EPS") as developed by certain research analysts and tangible book
value. Each of the multiples were derived by dividing the market value of the
common stock in the aggregate or per share, as appropriate, by each measure of
operating performance.

Ladenburg used these multiples to calculate a range of public market values
for SFC to develop an implied market multiple valuation. For each valuation
Ladenburg multiplied the entity's respective values by the appropriate median
multiples to arrive at equity value. Based on this analysis, the range of
implied per share equity value for SFC was $1.23 to $2.47.

Acquisition Multiples Analysis: The Acquisition Multiples Analysis applies
a similar methodology as the Market Multiples Analysis, but relies upon
multiples derived from merger and acquisition transactions involving target
companies similar to SFC. For purposes of this analysis, Ladenburg analyzed
comparable mergers and acquisitions with a total aggregate consideration between
$1.0 and $100.0 million in the specialty finance industry completed between
January 1, 1997 and December 18, 1998.

For all of the comparable merger and acquisition transactions, Ladenburg
derived median multiples using various financial measures, including operating
cash flow, defined as pre-tax income plus depreciation and amortization, pre-tax
income, net income and tangible book value. For purposes of this analysis, total
purchase price equaled the amount paid for the target's equity, and total
enterprise value equaled the purchase price, plus the target's outstanding
interest bearing indebtedness, less cash and cash equivalents purchased.

Similar to the Market Multiple Analysis, Ladenburg calculated an
acquisition multiple valuation for SFC by utilizing median acquisition multiples
to develop a valuation range. For valuations based on operating cash flow,
pre-tax income, net income and tangible book value, Ladenburg multiplied each of
SFC's respective financial measures by each measure's median multiple to arrive
at equity value. Based on this analysis, the range of implied per share equity
values for SFC was $1.67 to $5.06.

Discounted Cash Flow Analysis: The Discounted Cash Flow Analysis ("DCF
Analysis") derives enterprise values based on the present value of a company's
leveraged free cash flow over a five year period, plus the present value of a
company's total enterprise value in five years (the "Terminal Value"). The
leveraged free cash flows Ladenburg used for purposes of completing the DCF
Analysis were derived from projections for SFC provided to Ladenburg by SFC
management. For purposes of this analysis leveraged free cash flow equals net
income plus depreciation, less capital expenditures, plus any decreases or minus
any increases in working capital.

<PAGE>

Ladenburg developed the discount rate used to calculate the present value
of SFC's future free cash flow and Terminal Value by estimating SFC's cost of
equity ("COE"). To estimate SFC's COE, Ladenburg used the average annual stock
market return since its inception.

Ladenburg calculated the Terminal Value of SFC by applying a range of
multiples based on the Acquisition Multiples Analysis to SFC's operating cash
flow in the fifth year, the resulting value of which was then discounted to
present value. By adding the present value of (i) SFC's leveraged free cash
flows over the next five years and (ii) the Terminal Value, Ladenburg arrived at
a total equity value for SFC. Based on this analysis, the range of implied per
share equity values for SFC was $3.04 to $3.62.

Takeover Premium Analysis: The Takeover Premium Analysis examines recent
premiums paid in the acquisition of public companies. Premiums are defined, in
percentage terms, as the excess (or shortfall) of the per share purchase price
relative to the target's stock price prior to the announcement of the
transaction. The percentage premiums were applied by Ladenburg to SFC's average
stock price for the 30 days immediately preceding Ladenburg's presentation to
the SFC Board concerning the proposed merger to derive a range of per share
values for SFC. Based on this analysis, the range of implied per share equity
values for SFC was $2.32 to $2.54.

Limitations of Analyses

Although each of the analyses employed by Ladenburg in rendering the
Ladenburg Opinion is summarized above, the above summary does not purport to be
a complete description of Ladenburg's analyses and contains those aspects of
Ladenburg's analyses deemed most relevant. The preparation of a fairness opinion
involves various determinations as to the most appropriate and relevant
quantitative and qualitative methods of financial analyses and the application
of those methods to the particular circumstances and, therefore, such an opinion
is not readily susceptible to partial analysis or summary description.
Furthermore, in arriving at its opinion, Ladenburg did not attribute any
particular weight to any analysis or factor considered by it, but rather made
qualitative judgments as to the significance and relevancy of each analysis and
factor. Accordingly, Ladenburg believes that its analyses must be considered as
a whole and that considering any portion of such analyses and of the factors
considered, without considering all analyses and factors, could create a
misleading or incomplete view of the process underlying the Ladenburg Opinion.

SFC was advised by Ladenburg that in rendering its opinion, Ladenburg
assumed and relied upon the accuracy, completeness and fairness, without
assuming any responsibility for the independent verification of, all financial
and other information that was available to it from public sources, that was
provided to it by SFC or their respective advisors, or that was otherwise
reviewed by Ladenburg. With respect to financial forecasts, Ladenburg assumed
that they have been reasonably prepared reflecting the best currently available
estimates and judgments of the management of SFC as to the future financial
performance of SFC. Ladenburg was not requested to and did not analyze or give
any effect to the impact of any federal, state or local income taxes to SFC's
shareholders arising out of this transaction. Ladenburg has not made or been
provided with an independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of SFC. Ladenburg's opinion is necessarily
based upon information available to it, and financial, stock market, economic
and other conditions and circumstances existing and disclosed to it, as of the
date of the Ladenburg opinion. Ladenburg expressed no opinion as to the relative
merits of the Merger as compared to any alternative business strategies that
might exist for SFC or the effect of any other transaction in which SFC might
engage.

<PAGE>

The SFC Board selected Ladenburg as its financial advisor because Ladenburg
is a prominent investment banking firm with experience in transactions similar
to the Merger. Ladenburg, as part of its investment banking services, is
regularly engaged in the valuation of businesses and securities in connection
with mergers, acquisitions, underwritings, sales and distributions of listed and
unlisted securities, private placements and valuations for estate, corporate or
other purposes. Ladenburg has been retained by the SFC Board to render financial
advisory services to SFC in connection with the proposed Merger and will receive
a fee for such services, a majority of which is contingent upon the consummation
of the Merger. Ladenburg will also receive indemnification against certain
liabilities for the services rendered pursuant to this engagement. In the
ordinary course of business, Ladenburg actively trades securities for its own
account and for the accounts of our customers and, accordingly, may at any time
hold a long or short position in the equity securities of SFC.

Interests of Certain Persons

In considering the recommendations of the SFC Board with respect to the
Merger Agreement, SFC shareholders should be aware that certain members of the
management of SFC and the SFC Board of Directors have interests in the Merger
that are different from, or in addition to, the interests of the shareholders of
SFC generally. The SFC Board was aware of these interests and considered them,
among other matters, in approving and adopting the Merger Agreement.

Employment Agreements

Messrs. Karp and Fisher entered into employment agreements with SFC in July
1994, which provide for their full-time employment in executive capacities, with
successive one-year renewal terms unless terminated by either party upon ninety
(90) days written notice prior to the commencement of any renewal term. The
annual base salaries for Messrs. Karp and Fisher under these agreements is
$188,050 and $193,050, respectively. They also are entitled to receive an annual
performance bonus at the discretion of the Board of Directors or the Chief
Executive Officer and such other benefits as may be generally provided by SFC to
its executive employees. The agreements further provide that in the event SFC
terminates the agreement without cause, SFC is required to pay one year base
salary as severance.

Pursuant to the Merger Agreement, Messrs. Karp and Fisher will enter into
three year employment agreements with SFC at the time of the Merger in their
capacities of President and Executive Vice President, respectively, of SFC. The
employment agreements provide for annual base salaries of $250,000, additional
benefits generally available to executives, such as medical insurance and
automobile allowances, and incentive payments ranging between $50,000 and
$200,000 annually based upon specified levels of future performance of SFC. The
agreements further provide for a prorated offset against the $325,000 note
payable to each person in partial payment for his SFC shares in the event SFC
fails to meet performance levels on which their incentives are based. For more
detailed information concerning these employment agreements, shareholders are
urged to read the entire agreements which are annexed to the Merger Agreement as
exhibits A and B.

Indemnification Agreements with SFC Officers and Directors

Pursuant to the articles of incorporation and by-laws of SFC, SFC is
obligated to indemnify its current and former directors, officers and employees
(the "SFC Indemnified Parties") to the fullest extent permitted under applicable
law. SFC also maintains directors' and officers' liability insurance covering
the SFC Indemnified Parties in their capacities as directors and officers of
SFC. Upon consummation of the Merger, SFC will continue to be obligated to
indemnify the SFC Indemnified Parties to an extent no less favorable than the
SFC Indemnified Parties are currently indemnified by SFC for six years after the
consummation of the Merger. In addition, for a period of four years after the
consummation of the merger, Atlantic Bank will cause to be maintained officers'
and directors' liability insurance covering the SFC Indemnified Parties provided

<PAGE>

that only $12,000 annually (150% of the current premium) shall be required to be
expended). See "Certain Provisions of the Merger Agreement -- Indemnification"
for a description of provisions of the Merger Agreement relating to the
indemnification of current and former directors, officers and employees of SFC.

Prepayment of Existing Notes

A portion of the commercial paper and subordinated debt (22.9% and 13.7%,
respectively as at December 31, 1998) issued by SFC has been purchased by
officers, directors and affiliates of SFC. Such commercial paper and
subordinated debt has been issued at interest rates then prevailing in the
commercial paper and subordinated debt markets and on terms customary in such
markets. The maturity of such debt ranges from January 1,1999 to September 30,
2001. The maximum aggregate principal amount of commercial paper outstanding
held by the officers, members of the Board of Directors and affiliates of SFC at
any one time during 1996, 1997 and 1998 was $876,396, $804,957 and $784,761,
respectively. Interest expense incurred in connection with such commercial paper
amounted to $60,848, $57,284 and $52,216 in 1996, 1997 and 1998, respectively.
The maximum aggregate principal amount of subordinated debt outstanding held by
the officers, members of the Board of Directors and affiliates of SFC at any one
time during 1996, 1997 and 1998 was $650,000, $650,000 and $693,000,
respectively. Interest expense incurred in connection with such subordinated
debt amounted to $92,805, $91,500 and $96,338 in 1996, 1997 and 1998,
respectively. Pursuant to the terms of the Merger Agreement, all commercial
paper and subordinated debt issued by SFC to officers, directors and affiliates
of SFC will be prepaid in their entirety at the face amount thereof (plus
accrued interest).

Appraisal Rights

Section 910 of the NYBCL provides that any holder of SFC common stock as of
the SFC Record Date who has not voted in favor of the Merger Agreement has the
right, as an alternative to receiving the merger consideration set forth in the
Merger Agreement, to receive payment of the judicially determined "fair value"
of his or her shares as of the date prior to the SFC Meeting, as well as certain
other rights and benefits ("Appraisal Rights"), subject to Section 623 of the
NYBCL. The shareholders of record of SFC common stock which are eligible to, and
do, exercise their Appraisal Rights with respect to the Merger are referred to
herein as "SFC Dissenting Shareholders," and the shares of stock with respect to
which they exercise Appraisal Rights are referred to herein as "Dissenting
Shares." If a SFC shareholder has a beneficial interest in shares of SFC common
stock that are held of record in the name of another person, and such
shareholder desires to perfect whatever Appraisal Rights such beneficial
shareholder may have, such beneficial shareholder must act promptly to cause the
shareholder of record timely and properly to follow the steps summarized below.

Pursuant to the NYBCL, a shareholder of SFC may dissent from the proposed
corporate action to approve the Agreement and receive the right to an appraisal
of such shareholder's shares. If the Merger is consummated, the SFC Dissenting
Shareholders will be entitled, if they strictly comply with the provisions of
the NYBCL, to have the fair value of their shares judicially determined and paid
to them. The following discussion is not a complete statement of the NYBCL
relating to Appraisal Rights, and is qualified in its entirety by reference to
Sections 623 and 910 of the NYBCL, copies of which are attached to this Proxy

<PAGE>

Statement as Annex C and incorporated herein by reference. This discussion and
Sections 623 and 910 of the NY Corporation Law should be reviewed carefully by
any shareholder who wishes to exercise statutory Appraisal Rights or wishes to
preserve the right to do so, since failure to comply with the required
procedures will result in the loss of such rights. A shareholder of SFC who
votes for the adoption and approval of the Merger or the Merger Agreement will
be deemed to have waived his or her rights to exercise Appraisal Rights with
respect to all shares of SFC common stock held by such shareholder. Any holder
who is considering dissenting should consult his or her legal advisor.

1. A shareholder who wishes to assert his or her legal right to dissent
must file a written objection to the Merger with SFC either prior to the meeting
or at the meeting prior to the vote with respect to the approval of the Merger
Agreement. The objection must include a notice of the shareholder's election to
dissent with respect to all of his or her shares. A SFC Dissenting Shareholder
may not vote for the Merger and retain Appraisal Rights.

2. Within ten days of shareholder approval of the Merger, SFC must give
each SFC Dissenting Shareholder written notice by registered mail of such
approval.

3. A notice of election to dissent may be withdrawn by a SFC Dissenting
Shareholder at any time prior to his or her written acceptance of an offer made
by SFC or the surviving corporation, as the case may be; but not later than
sixty days after the Effective Time of the Merger.

4. At the time of filing an objection or within one month thereafter, a SFC
Dissenting Shareholder must submit the certificates representing the Dissenting
Shares to the surviving corporation or its transfer agent. A SFC Dissenting
Shareholder who fails to timely submit his or her share certificates may lose
Appraisal Rights.

5. No later than ninety days following the date of the approval of the
Merger, the surviving corporation shall make a written offer by registered mail
to each SFC Dissenting Shareholder to pay a specified price for Dissenting
Shares. Such offer must be accompanied by an advance payment for not less than
eighty percent of the value of the offer.

6. If the SFC Dissenting Shareholder rejects SFC's offer of payment, SFC
may, within twenty days of the expiration of any applicable time period,
institute a special proceeding in the Supreme Court of the State of New York to
determine the rights of SFC Dissenting Shareholders. If SFC does not initiate
any such action, any SFC Dissenting Shareholder who has rejected SFC's offer may
do so within the thirty days immediately following on behalf of himself and all
other SFC Dissenting Shareholders who have rejected SFC's offer. The failure to
initiate any such action within the period specified shall be deemed a waiver of
all Appraisal Rights.

7. Normally, the parties must bear their own costs and expenses in
connection with a judicial determination of dissenters' rights.

Certain Federal Income Tax Consequences

The following discussion summarizes the material federal income tax
consequences of the Merger to shareholders holding in the aggregate 20% or less
of SFC's issued and outstanding common stock. The discussion does not address
the federal income tax consequences of the Merger to large shareholders. The
discussion does not purport to consider all aspects of federal income taxation
which may be relevant to a shareholder, and the tax treatment of a shareholder
may vary according to the shareholder's situation. Certain shareholders
(including insurance companies, tax-exempt organizations, financial
institutions, broker-dealers, foreign corporations and persons who are not

<PAGE>

citizens or residents of the United States) may be subject to special rules not
discussed below. In addition, the discussion does not consider the effect of any
foreign, state or local tax laws. The discussion assumes that shareholders hold
their common stock as "capital assets" (generally property held for investment)
within the meaning of Section 1221 of the Internal Revenue Code of 1986, as
amended (the "Code"). Finally, shareholders should be aware that the conclusions
set forth in the following discussions could be affected by future legislation,
case law, or administrative interpretations, which could be applicable to
shareholders.

The receipt of cash in exchange for common stock pursuant to the Merger
will be a taxable transaction for U.S. federal income tax purposes. A
shareholder will generally recognize gain or loss for federal income tax
purposes in an amount equal to the difference between the amount of cash
received and such shareholder's adjusted tax basis in such shareholder's common
stock. Any gain or loss should generally be capital gain or loss.

Any gain or loss will be a long-term capital gain or loss if the
shareholder held the common stock for more than twelve (12) months at the
Effective Time of the Merger. In the case of individuals, the maximum long-term
capital gains tax rate is 20%. Any capital gain or loss will be short-term
capital gain or loss if the shareholder held the common stock for twelve (12)
months or less at the Effective Time of the Merger. In the case of individuals,
short-term capital gains are taxed at rates up to 39.6%. In the case of
corporate stockholders, capital gains and capital losses will be classified as
long-term if the holding period exceeds one year.

In the case of individuals, capital losses are allowed only to the extent
of capital gains plus the lesser of (i) $3,000 ($1,500 in the case of a married
individual filing a separate tax return) or (ii) the excess of capital losses
over such capital gains. Generally, excess capital losses of individual tax
payers may be carried forward indefinitely and used each year, subject to the
limitation described in the preceding sentence until the loss is exhausted. In
the case of corporate stockholders, capital losses are allowed only to the
extent of capital gains. Generally, a corporation may carry its excess capital
loss back three years or forward five years, subject to certain provisions of
the Code.

The receipt of the merger consideration may be subject, under certain
circumstances, to "backup withholding" at a 31% rate. This withholding generally
applies only if the shareholder (i) fails to furnish his or her social security
or other taxpayer identification number ("TIN") within a reasonable time after
the request therefor, (ii) furnishes an incorrect TIN, (iii) is notified by the
Internal Revenue Service that he or she has failed to report properly interest
or dividends, or (iv) fails, under certain circumstances, to provide a certified
statement, signed under penalty of perjury, that the TIN provided is the correct
number and that he or she is not subject to backup withholding. Amounts paid as
backup withholding (but not any applicable penalties) are creditable against a
shareholder's federal income tax liability.

The foregoing discussion may not apply to shareholders who acquire their
common stock pursuant to the exercise of employee stock options or other
compensation arrangements with SFC, who hold their common stock as part of a
straddle or other hedging transaction or who are otherwise subject to special
tax treatment. EACH SHAREHOLDER IS URGED TO CONSULT HIS, HER OR ITS TAX ADVISOR
WITH RESPECT TO THE TAX CONSEQUENCES OF THE MERGER, INCLUDING THE EFFECTS OF
APPLICABLE STATE, LOCAL OR OTHER TAX LAWS.

Regulatory Approvals

Transactions such as those contemplated by the Merger Agreement are
reviewed under the HSR Act, by the Antitrust Division of the United States
Department of Justice (the "DOJ") and the United States Federal Trade Commission
<PAGE>
(the "FTC") and by applicable state antitrust authorities to determine whether
they comply with applicable antitrust laws. Under the provisions of the HSR Act,
the Merger may not be consummated until such time as the applicable waiting
period requirements of the HSR Act have expired or been terminated. Each of
Atlantic Bank and SFC has filed notification reports with the DOJ and the FTC
under the HSR Act and the waiting period with respect to such filings expired on
May 12, 1999. SFC also is required to obtain consents to the Merger under the
New York State Banking Law and the Massachusetts Banking Law.

Financing the Merger

CERTAIN PROVISIONS OF THE MERGER AGREEMENT

The following is a summary of certain material provisions of the Merger
Agreement. The following summary does not purport to be complete and is
qualified in its entirety by reference to the Merger Agreement, a copy of which
is attached as Annex A to this Proxy Statement.

Effective Time

The Merger will become effective upon the filing of a Certificate of Merger
with the Secretary of State of New York. The closing date will occur as soon as
practicable (and in any event within two business days) following the approval
of the Merger by SFC's shareholders, and the satisfaction or waiver of all other
conditions to closing. Assuming all conditions to the Merger are met or waived
prior thereto, it is anticipated that the closing date and effective time of the
Merger will be on or about June 15, 1999.

Conversion of Shares, Options and Warrants

At the Effective Time of the Merger, Atlantic Premium will merge with and
into SFC and Atlantic Bank will own all of the capital stock of SFC. By virtue
of the Merger and without any action on the part of the holders thereof, for
shareholders owning 20% or less of SFC outstanding Common Stock each outstanding
share of SFC common stock will be converted into the right to receive $3.50 in
cash. For SFC shareholders owning more than 20% each share of SFC common stock
will be converted into the right to receive $2.97479 per share in cash and
$0.52521 in notes, which notes are subject to reduction in certain events. As of
the date of the proxy statement only Messrs. Karp and Fisher owned more than 20%
of SFC outstanding common stock. Shares of SFC common stock owned by holders who
have exercised appraisal rights under New York law will not be converted in the
Merger. Each outstanding option or warrant to purchase SFC common stock will be
converted into the right to purchase and receive cash equal to $3.50 per option
or warrant minus the per share exercise price of such option or warrant and
minus any amounts required for Federal and State withholding taxes.

At or before the Effective Time of the Merger, Atlantic Bank or Atlantic
Premium shall make available to American Stock Transfer & Trust Company, as
disbursing agent, sufficient funds to satisfy the obligations to holders of
shares of SFC common stock. Promptly after the Effective Time, the disbursing
agent shall mail to each record holder of shares of SFC common stock, a letter
of transmittal and instructions for use in surrendering certificates
representing shares of SFC common stock and receiving payment therefor.

<PAGE>

Representations and Warranties

The Merger Agreement contains various customary representations and
warranties by SFC concerning (i) organization, good standing and corporate
power, (ii) authorization of the Merger Agreement and related transactions,
(iii) capitalization, (iv) consents and approvals, (v) financial statements,
(vi) the absence of certain changes and events, (vii) no conflicts, (viii)
governmental authorization and compliance with applicable laws, (ix) tax
matters, (x) title to property, liens and encumbrances, (xi) material contracts,
(xii) litigation, (xiii) intellectual property, (xiv) relations with employees
and employee benefit plans, (xv) finders' fees, (xvi) disclosure of agreements,
events or occurrences which might have a material adverse effect, (xvii) the
absence of material misstatements or omissions in this proxy statement, (xviii)
interested party transactions, (xix) use of real property, (xx) accounts
receivable, (xxi) compliance with environmental laws, and (xxii) insurance.

The Merger Agreement contains various customary representations and
warranties by Atlantic Bank and Atlantic Premium concerning: (i) organization,
good standing and corporate power, (ii) authorization of the Agreement and
related transactions, (iii)consents and approvals, (iv) capitalization, (v) no
conflicts, (vi) litigation, (vii) finders, (viii) financial ability to perform,
and (ix) the absence of material misstatements or omissions in this proxy
statement concerning Atlantic Bank.

Covenants, Transactions and Conduct of SFC's Business Pending Merger

Conduct of SFC's Business

Pursuant to the Merger Agreement, SFC has agreed that until the earlier of
the termination of the Merger Agreement or the Effective Time of the Merger,
unless Atlantic Bank otherwise agrees in writing: (i) SFC shall conduct its
business only in the ordinary course of business consistent with past practice;
(ii) SFC shall use reasonable commercial efforts to preserve substantially
intact the business organization of SFC, to keep available the services of the
present officers, employees, agents and consultants of SFC and to preserve the
present relationships of SFC with governmental agencies, insurance brokers,
insurance companies, lenders, customers, suppliers and other persons with which
SFC has significant regulatory or business relations. In addition, except as
contemplated by the Merger Agreement, or otherwise agreed to in writing by
Atlantic Bank, and continuing until the earlier of the termination of the Merger
Agreement or the Effective Time of the Merger, SFC shall not directly or
indirectly do, or propose to do, the following:

(a) amend or otherwise change SFC's certificate of incorporation or bylaws;

(b) issue, sell, pledge, dispose of or encumber, or authorize the issuance,
sale, pledge, disposition or encumbrance of, any shares of capital stock of any
class or any options, warrants, convertible securities or other rights of any
kind to acquire any shares of capital stock, or any other ownership interest
(including, without limitation, any phantom interest) in SFC or any of its
affiliates (except for the issuance of shares of SFC common stock issuable upon
the exercise of outstanding warrants or outstanding stock options under SFC's
stock option plans.

(c) sell, pledge, dispose of or encumber any assets of SFC (except for (i)
sales of assets in the ordinary course of business and in a manner consistent
with past practice, (ii) dispositions of obsolete or worthless assets, and (iii)
sales of immaterial assets not in excess of $10,000);
<PAGE>

(d) (i) declare, set aside, make or pay any dividend or other distribution in
respect of any of its capital stock; (ii) split, combine or reclassify any of
its capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock; or (iii) amend the terms or change the period of exercisability
of, purchase, repurchase, redeem or otherwise acquire, any of its securities,
including, without limitation, shares of SFC common stock or any option,
warrant or right, directly or indirectly, to acquire shares of SFC common stock;

(e) (i) acquire (by merger, consolidation, or acquisition of stock or assets)
any corporation, partnership or other business organization or division thereof;
(ii) incur any indebtedness for borrowed money, except for borrowings and
reborrowing under SFC's existing credit facilities or issue any debt securities
or assume, guarantee (other than guarantees of bank debt of SFC's subsidiaries
under existing credit facilities entered into in the ordinary course of
business) or endorse or otherwise as an accommodation become responsible for,
the obligations of any person, or make any loans or advances, except in the
ordinary course of business consistent with past practice; (iii) authorize any
capital expenditures or purchases of fixed assets which are, in the aggregate,
in excess of $50,000; or (iv) enter into or amend any contract, agreement,
commitment or arrangement to effect any of the matters prohibited by this
paragraph (e).

(f) make any material change in the rate of compensation, commission, bonus or
other remuneration payable, or pay or agree or promise to pay, conditionally or
otherwise, any bonus, extra compensation, pension or severance or vacation pay,
to any director, officer, employee, salesman, broker or agent of SFC except in
the ordinary course of business consistent with prior practice and pursuant to
or in accordance with existing plans, or make any increase in or commitment to
increase any employee benefits, adopt or make any commitment to adopt any
additional employee benefit plan or make any contribution, other than regularly
scheduled contributions, to any employee benefit plan;

(g) take any action to change accounting practices, policies or procedures;

(h) make any material tax election inconsistent with past practice or settle
or compromise any material federal, state, local or foreign tax liability or
agree to an extension of a statute of limitations, except to the extent the
amount of any such settlement has been reserved for in existing financial
statements;

(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, contingent or otherwise) in excess of $10,000 per matter or
$50,000 in the aggregate, other than the payment, discharge or satisfaction in
the ordinary course of business consistent with past practice of liabilities
reflected or reserved against in SFC's existing financial statements or incurred
in the ordinary course of business and consistent with past practice; or

(j) take, or agree in writing or otherwise to take, any of the actions
described above or any action which would make any of the representations or
warranties of SFC contained in the Merger Agreement untrue or incorrect in any
material respect or prevent SFC from performing or cause SFC not to perform its
covenants therein.

Covenants

SFC has also entered into certain additional covenants and agreements,
including, but not limited to, the following:
<PAGE>

(a) To cause a meeting of its shareholders to be duly held as soon as
reasonably practicable for the purpose of voting on the approval and adoption of
the Merger Agreement.

(b) Until the termination of the Merger Agreement, SFC will not, and will not
permit any officer, director, employee, investment banker or other agent to,
directly or indirectly, (i) take any action to seek, initiate or solicit any
offer from any person, entity or group to acquire any shares of capital stock of
SFC, to merge or consolidate with SFC, or to otherwise acquire any significant
portion of the assets of SFC (a "Third Party Acquisition Offer"), or (ii) engage
in negotiations or discussions concerning a Third Party Acquisition Offer or the
business or assets of SFC with, or disclose financial information relating to
SFC to, or any confidential or proprietary trade or business information
relating to the business of SFC to, or afford access to the properties, books or
records of SFC to, any third party that may be considering a Third Party
Acquisition Offer; provided, however, that SFC may enter into any such
negotiations or discussions, disclose any such information or afford any such
access to any third party, if (A) the Board of SFC is advised by one or more of
its financial advisors and concludes in good faith that the third party has the
financial resources to consummate a Superior Acquisition, as defined in the
Merger Agreement, and the Board of SFC determines in good faith that the third
party is likely to submit a bona fide Third Party Acquisition Offer to
consummate a Superior Acquisition; (B) SFC has provided Atlantic Bank, as soon
as reasonably practicable and in any event prior to such discussions,
negotiations, disclosure or access, notice of SFC's intent to enter into such
discussions or negotiations to supply information and/or to provide access, the
identity of such third party and, as soon as reasonably practicable after such
terms are known by SFC, the terms of the Third Party Acquisition Offer; and (C)
such third party has signed and delivered to SFC a confidentiality agreement
substantially equivalent to the confidentiality agreement signed by Atlantic
Bank.

(c) To give Atlantic Bank and Atlantic Premium, and their respective counsel,
financial advisors, auditors and other authorized representatives, full access
to the offices, properties, employees, books and records of SFC and its
subsidiaries and all reasonable times upon reasonable notice. Atlantic Bank has
agreed to keep such information confidential in accordance with the terms of its
confidentiality agreement with SFC.

(d) To cause its existing employee plans to be amended, to the extent, if any,
reasonably requested by Atlantic Bank, for the purpose of permitting the
employee plans to continue to operate in conformity with ERISA and the Code
subsequent to the merger; and

(e) To cause the committee that administers SFC's equity incentive plan to
adopt resolutions providing that each outstanding option shall be converted into
the right to receive $3.50 per option minus the per share exercise price of such
option.

Expenses

All fees and expenses incurred in connection with the Merger Agreement and
the transactions contemplated thereby will be paid by the party incurring such
expenses. However, while SFC is responsible for the payment of its own expenses,
if the Merger is completed, Atlantic Premium and Atlantic Bank will indirectly
bear all the expense of SFC incurred in connection with the Merger.

Conditions to The Merger

The respective obligations of each party to the Merger Agreement to effect
the Merger are subject to the satisfaction at or prior to the Effective Time of

<PAGE>

the following conditions: (a) the Merger Agreement shall have been approved and
adopted by the requisite vote under applicable law by the shareholders of SFC;
(b) all waiting periods applicable to the consummation of the merger under the
HSR Act shall have expired or been terminated and all required consents shall
have been obtained; (c) there shall not have been instituted, pending or
threatened any suit, action or proceeding (or any investigation or other inquiry
that might result in such an action or proceeding) by or before any governmental
authority, administrative agency or court of competent jurisdiction, domestic or
foreign, nor shall there be in effect any judgment, decree or order of any
governmental authority, administrative agency or court of competent
jurisdiction, or any other legal restraint (i) preventing or seeking to prevent
consummation of the Merger, (ii) prohibiting or seeking to prohibit or limiting
or seeking to limit Atlantic Bank from exercising all material rights and
privileges pertaining to its ownership of SFC or the ownership or operation by
Atlantic Bank or any of its subsidiaries of all or a material portion of the
business or assets of Atlantic Bank or any of its subsidiaries, or (iii)
compelling or seeking to compel Atlantic Bank or any of its subsidiaries to
dispose of or hold separate all or any material portion of the business or
assets of Atlantic Bank or any of its subsidiaries (including SFC), as a result
of the Merger or the transactions contemplated by the Merger Agreement; (d)No
statute, rule, regulation or order shall have been enacted, entered, enforced or
deemed applicable to the Merger which makes the consummation of the Merger
illegal; (e) SFC shall have received the written opinions of Kramer Levin and
James Maxwell, Esq. in satisfactory form and Atlantic Bank and Atlantic Premium
have received the written opinion of Blau Kramer in satisfactory form.

The obligations of Atlantic Bank and Atlantic Premium to effect the Merger
are also subject to the following conditions:

(a) The representations and warranties of SFC contained in the Merger
Agreement that are qualified as to materiality shall be true and correct in all
respects as if made on and as of the effective time of the Merger and each of
the representations and warranties of SFC contained in the Merger Agreement that
is not so qualified shall be true and correct in all material respects as if
made on and as of the Effective Time of the Merger, except for (i) changes
contemplated by the Merger Agreement and (ii) those representations and
warranties which address matters only as of a particular date which shall be
certified by the chief executive officer and chief financial officer of SFC; (b)
SFC shall have performed or complied in all material respects with all
agreements and covenants required by the Merger Agreement to be performed or
complied with by it on or prior to the effective time, as certified by the chief
executive officer and chief financial officer of SFC; (c) All material consents,
waivers, approvals, authorizations or orders required to be obtained, and all
filings required to be made by SFC for the authorization, execution and delivery
of the Merger Agreement, the consummation by it of the transactions contemplated
by the Merger Agreement and the continuation in full force and effect of any and
all material rights, documents, agreements or instruments of SFC, including,
without limitation, all such consents required from governmental agencies, shall
have been obtained and made by SFC, except where failure to receive such
consents, waivers, approvals, authorizations, or orders would not have a
material adverse effect on SFC or Atlantic Bank; (d) There shall not have been,
since December 31, 1998 (i) any damage, destruction or loss, whether covered by

<PAGE>

insurance or not, that has had, or will have, a Material Adverse Effect (as
defined in the Merger Agreement); (ii) any suit, action, investigation, inquiry
or other proceeding by or before any court or governmental or other regulatory
or administrative agency or commission requesting an order, judgment or decree
(except those in which Atlantic Bank or Atlantic Premium is a plaintiff directly
or derivatively), which in the reasonable judgment of Atlantic Bank, would be
reasonably likely, if issued, to have a Material Adverse Effect, or (iii) any
other event or condition (financial or otherwise) of any character or any
operations or results of operations or results of operations that has had, or is
reasonably likely to have, a Material Adverse Effect; (e) The holders of not
more than 7.5% of the issued and outstanding SFC common stock shall have taken
such action prior to or at the time of the shareholders' vote as is necessary as
of that time to entitle them to the statutory dissenters' rights under
applicable New York law; (f) in accordance with its Equity Incentive Plan, SFC
shall have caused the committee that administers the plan to adopt a resolution
providing for the holders to receive $3.50 in cash upon the exercise of, and
payment of the exercise price for, any option under such plan; (g) SFC shall
have entered into the employment agreements with Alan J. Karp and David E.
Fisher in the form annexed as exhibits to the Merger Agreement; (h) As of the
last day of the month immediately prior to the month in which the Merger occurs,
SFC's net worth, calculated in accordance with GAAP, shall be no less than
$7,000,000; (i) As of the last day of the month immediately prior to the month
in which Merger occurs, SFC's net contracts receivable, calculated in accordance
with GAAP, shall be no less than $40,000,000; (j) The holders of all notes and
other forms of indebtedness of SFC (other than certain commercial paper
described in the Merger Agreement) shall have agreed to allow Atlantic Bank to
prepay or to cause SFC to prepay such notes and other indebtedness.

The obligation of SFC to effect the Merger is also subject to the following
conditions:

(a) The representations and warranties of Atlantic Bank and Atlantic Premium
contained in the Merger Agreement that are qualified as to materiality shall be
true and correct in all material respects as if made on and as of the effective
time of the Merger and each of the representations and warranties of Atlantic
Bank or Atlantic Premium contained in the Merger Agreement that is not so
qualified shall be true and correct in all material respects as if made on and
as of the Effective Time, except for (i) changes contemplated by the Merger
Agreement and (ii) those representations and warranties which address matters
only as of a particular date, which shall be certified by the chief executive
officer and chief financial officer of Atlantic Bank; (b) Atlantic Bank and
Atlantic Premium shall have performed or complied in all material respects with
all agreements and covenants required by the Merger Agreement to be performed or
complied with by them on or prior to the merger, and SFC shall have received a
certificate dated as of the merger date to such effect signed by the president
and chief financial officer of Atlantic Bank.

Termination

The Merger Agreement may be terminated at any time prior to the Effective
Date, notwithstanding approval by the shareholders of SFC: (a) by mutual written
consent duly authorized by the Boards of Directors of Atlantic Bank and SFC; or
(b) by either Atlantic Bank or SFC if the Merger shall not have been consummated
on or before June 1, 1999 (provided that the right to terminate the Merger
Agreement shall not be available to any party whose failure to fulfill any
obligation under the Merger Agreement has been the cause of or resulted in the
failure of the Merger to occur on before such date, and provided further that,
in the event the Merger would have occurred on or before such date except that
either (i) the condition as to prepayment of indebtedness has not been met by
such date, or (ii) the representations as to year 2000 compliance shall not be
true and correct in all material respects on such date, Atlantic Bank or SFC

<PAGE>

shall have the option to extend such date until July 1, 1999; or (c) by either
Atlantic Bank or SFC if a court of competent jurisdiction or governmental,
regulatory or administrative agency or commission, including, without
limitation, the New York State Banking Department, shall have issued a
nonappealable final order, decree or ruling or taken any other action having the
effect of permanently restraining, enjoining or otherwise prohibiting the Merger
(provided that this right to terminate shall not be available to any party who
has not complied with its obligations under the Merger Agreement to use its best
efforts to ensure that the Merger is consummated and such noncompliance
materially contributed to the issuance of any such order, decree or ruling or
the taking of such action; or (d) by either Atlantic Bank or SFC if the
requisite vote of the shareholders of SFC shall not have been obtained by May
27, 1999, or if the shareholders of SFC shall not have approved and adopted the
Merger and the Merger Agreement at SFC's shareholder's meeting; or (e) by
Atlantic Bank or SFC if any representation or warranty of SFC, or Atlantic Bank
and Atlantic Premium, respectively, set forth in the representations and
warranties of the Merger Agreement for the respective parties, as the case may
be, was untrue when made such that the conditions to the other party's
obligations under the Merger Agreement would not be satisfied (a "Terminating
Misrepresentation"); provided, however, that, if such Terminating
Misrepresentation is curable prior to May 27, 1999 by SFC or Atlantic Premium,
as the case may be, through the exercise of its commercially reasonable efforts,
and for so long as SFC or Atlantic Bank, as the case may be, continues to
exercise such commercially reasonable efforts, neither Atlantic Bank nor SFC,
respectively, may so terminate the Merger Agreement; or (f) by Atlantic Bank if
any representation or warranty of SFC shall have become untrue (a "Company
Terminating Change"), or by SFC if any representation or warranty of Atlantic
Bank and Atlantic Premium shall have become untrue (a "Parent Terminating
Change" and together with a Company Terminating Change, a "Terminating Change"),
in either case other than by reason of a Terminating Breach (as hereinafter
defined) in either case, such that the conditions to the other party's
obligations under the Merger Agreement would not be satisfied; provided,
however, that if such Terminating Change is curable prior to May 27, 1999 by SFC
or Atlantic Bank, as the case may be, through the exercise of its commercially
reasonable efforts, and for so long as SFC or Atlantic Bank, as the case may be,
continues to exercise such commercially reasonable efforts, neither Atlantic
Bank nor SFC, respectively, may so terminate the Merger Agreement; or (g) by
Atlantic Bank or SFC, as the case may be, upon the breach of any covenant or
agreement on the part of the other party, set forth in the Merger Agreement,
such that the conditions to the terminating party's obligations under the Merger
Agreement, would not be satisfied (a "Terminating Breach"); provided, however,
that, if such Terminating Breach is curable prior to May 27, 1999 by SFC or
Atlantic Bank, as the case may be, through the exercise of its commercially
reasonable efforts and for so long as SFC or Atlantic Bank, as the case may be,
continues to exercise such commercially reasonable efforts, neither Atlantic
Bank nor SFC, respectively, may so terminate the Merger Agreement; or (h) by
SFC, if SFC receives a bona fide Third Party Acquisition Offer which constitutes
a Superior Acquisition and which Third party Acquisition Offer the Board of
Directors of SFC accepts, approves or recommends; or (i) by Atlantic Bank or
Atlantic Premium, if the Board of Directors of SFC fails to call or hold a
special meeting of shareholders or to conduct the vote to approve and adopt the
Merger Agreement and the Merger at the special meeting or any adjournment
thereof or if the Board of Directors of SFC fails to recommend the Merger to
SFC's shareholders, withdraws or qualifies such recommendation or its approval
and adoption of the Merger Agreement once given or takes any position or action
that is inconsistent with such recommendation or accepts, recommends or approves
a Third Party Acquisition Offer.

Termination Fees

SFC shall pay Atlantic Bank a fee of $193,200 upon the termination of the
Merger Agreement where such termination occurs for any of the following reasons:
(x) by Atlantic Bank pursuant to its termination rights described in clause (i)
of the preceding paragraph; (y) by SFC upon acceptance, approval or
recommendation of a Third Party Acquisition Offer as described in clause (h) of
the preceding paragraph; or (z) by Atlantic Bank or SFC in the event the
required vote of SFC's shareholders is not obtained by May 27, 1999 as described
in clause (d) of the preceding paragraph.

<PAGE>

Upon termination of the Merger Agreement by either Atlantic Bank or SFC,
the respective parties may seek any and all remedies or damages available to
them under applicable law.

Indemnification

All rights to indemnification and exculpation existing in favor of any
present or former director, officer or employee of SFC as provided in SFC's
certificate of incorporation or by-laws shall survive the Merger for a period of
six years with respect to matters occurring at or prior to the Effective Date
and no action taken during such six-year period shall be deemed to diminish
these obligations. For a period of four years after the Effective Date, SFC also
shall be required to maintain directors' and officers' liability insurance in an
amount currently maintained by SFC with respect to claims arising from facts or
events which occurred before the Effective Date; provided, however, that in no
event shall be SFC be required to expend more than an amount per year equal to
150% of the current annual premium (which current annual premium for the policy
year ending September 2001 was approximately $8,000 in the aggregate) paid by
SFC for such existing insurance coverage.

Section 722 of the NYBCL provides for the indemnification of directors,
officers, employees and agents of a corporation and for persons who serve at its
request as directors, officers, employees or agents of another entity, provided
that such persons have acted in good faith for a purpose he or she reasonably
believed to be in or not opposed to the best interests of the corporation, in
addition, had no reasonable cause to believe his or her conduct was unlawful.

SFC's Certificate of Incorporation and Bylaws include a provision
eliminating the personal liability of directors to the extent permitted under
New York law.
<PAGE>

BUSINESS OF ATLANTIC BANK

BUSINESS OF SFC

General

SFC, incorporated in New York in 1978, is a financial services company
engaged in the business of financing the payment of insurance premiums. SFC
offers financing of approximately 75% to 85% of an insurance premium to
individual and commercial purchasers of property, casualty and liability
insurance who wish to pay their insurance premiums on an installment basis.
While many insurance carriers require advance payment of a full year's premium,
SFC allows the insured to spread the cost of the insurance policy over time.

SFC is licensed as an insurance premium finance company in 14 states and
authorized to transact business in three additional states that only require a
Certificate of Authority. SFC is in the process of obtaining a license as an
insurance premium financing company in three other states. Management estimates
that approximately 98% of SFC's outstanding receivables are commercial accounts
and approximately 2% are personal lines. At December 31, 1998, SFC had
approximately 18,200 active outstanding accounts.

SFC's marketing strategy is based on establishing and maintaining
relationships with insurance agents by offering a high degree of service. Senior
management is directly involved in SFC's marketing efforts which currently focus
on commercial accounts. SFC believes that these accounts provide higher returns
at lower risk than other sectors of the marketplace. SFC has four marketing
sales executives.

Industry Background

Premium finance companies are licensed to finance property, casualty and
liability insurance premiums for corporate and individual insured's that are
unable to or do not wish to pay an entire insurance premium in one lump sum. The
insured may be able to finance a premium with an affiliated company of the

<PAGE>

insurance carrier, if any, an independent premium finance company such as SFC, a
bank or other lending institution. Customarily, insurance agents utilize the
services of premium finance companies to assist in the sale of an insurance
policy to their customers. Upon the execution of a finance agreement with the
insured, the agent forwards the completed documents to a premium finance
company. The premium finance company then pays the premium in full to the
insurance carrier, agent, or broker. The premium finance company collects
principal and interest from the insured (borrower) in the form of an installment
payment. In the event the insured (borrower) defaults, SFC has the right to
cancel the insurance policy by mailing a notice of cancellation to the insurance
carrier. The insurance carrier is then required by state law to refund the gross
unearned premium in full to the finance company for the benefit of the insured.

Insurance Premium Financing Services

SFC offers financing to qualified purchasers of various types of insurance
policies including coverage for property, casualty and liability insurance, of
up to approximately 75% to 85% of the entire premium for such policies. SFC's
standard form of premium finance agreement discloses to the insured, among other
things: the price of the total premium; the amount of the cash down payment
made; the amount financed; the amount of the finance charge; the amount which
will be paid after the insured has made all payments as scheduled; the
applicable annual percentage rate charged; the fact that a late charge is due in
the event a payment is late; the insureds entitlement to a refund of part of the
finance charge in the event of prepayment by the insured; the grant of a
security interest in any and all unearned return premiums which may become
payable under the policy; and the insured's appointment of SFC as the
attorney-in-fact with authority to cancel the policy and to receive from the
insurance carrier the unearned portion of the premium. SFC's agreements
generally provide for monthly payments over a period of between seven to nine
months on a one-year policy.

Each insurance broker in SFC's referral network is provided with financing
kits. When an insured seeks premium financing, the broker completes (and has the
insured sign) SFC's form of premium finance agreement and collects a down
payment of approximately 15% to 25% of the total premium. The broker also signs
the contract to certify that the insurance policy has been issued and delivered
and warrants to the correctness of the information in the premium finance
agreement. The broker submits the original and one copy of the executed premium
finance agreement to SFC, along with its check or the insured's certified check
or money order for the down payment. Upon acceptance of the finance contract,
SFC issues a check payable to the insurance carrier, agent, or broker for the
total premium. SFC inputs all information into its computer system and sends a
payment book to the insured with the first payment due approximately 30 days
from the effective date of coverage. SFC gives notice to the carrier of its
interest in the policy and informs the carrier that any return premium must be
sent to SFC in the event of cancellation of the policy.

Although the insured is primarily liable on the finance contract, SFC does
not look solely to the insured's creditworthiness for payment. Rather, the
insured assigns to SFC its interest in any unearned premium in the financed
insurance policy as security for the loan and grants to SFC the power to cancel
the insurance policy and collect the unearned premium if there is a default in
payment on the finance contract. Thus, the unearned premiums held by the
insurance company provide a collateral source of payment on a delinquent finance
contract.

SFC endeavors to increase revenues by using its resources to finance as
many premiums as is practicable. From the inception of SFC's operations through
December 31, 1998, SFC has financed the premiums on more than 176,000 insurance
policies. SFC currently does business with more than 700 insurance brokers, more
than 500 insurance companies and had, during the year ended December 31, 1998,
average amounts originally financed of approximately $4,497 per finance
contract.

In order to minimize losses, SFC will not finance premiums unless the
insurance policy provides for the return of unearned premiums upon cancellation.
SFC generally requires policyholders to make loan payments sufficient to insure
that at all times the unearned premium available for refund will pay the loan
balance plus interest and other charges. Advance payment of approximately 15% to

<PAGE>

25% of the premium generally ensures such a margin. Any monies paid for
insurance coverage for periods after the cancellation date of a policy
constitute "unearned premiums" and must, under applicable state statutes, be
refunded to the insured. SFC's form of premium finance agreement provides that
all such refunds be remitted by the insurance carrier to SFC on behalf of the
insured. Before it forwards the refund to the insured (or to the broker on
behalf of the insured where state regulations require), SFC deducts all interest
earned, service and late charges due. In SFC's experience, the time periods
between the cancellation date and receipt of the refund of unearned premiums has
averaged between 60 and 120 days. There can be no assurances, however, that SFC
will be able to collect, or will not experience increasing delays in collecting,
such refunds in the future.

Upon receipt of the gross return premium from the insurance carrier, and
the crediting of this return to the insured's account, debit balances might
still be reflected in certain instances. The causes of such a situation include
improper disclosure of information to insurance agents on the insured's
application for insurance or clerical errors by SFC personnel. SFC uses its
in-house collection department in an attempt to collect such balances. If
in-house efforts are unsuccessful, the use of external collection attorneys is
initiated. Certain transactions are written with recourse against the producing
agent, broker or agency and/or offsetting reserves to a few selected insurance
producers.

SFC charges against income a general provision for possible credit losses
on finance receivables in such amounts as management deems appropriate.
Case-by-case direct write-offs, net of recoveries on finance receivables, are
charged to SFC's allowance for possible losses. The amount of such allowance is
reviewed periodically in light of economic conditions, the status of the
outstanding finance receivables and other factors. The following table sets
forth information concerning SFC's allowance for possible credit losses on
finance receivables and its loss experience for the years ended December 31,
1998 and 1997.
<TABLE>
<CAPTION>

Year Ended December 31,
-----------------------
1998 1997
----- -----
(Dollars in Thousands)

<S> <C> <C>
Allowance for credit losses at beginning of period $ 310 $ 300
Provision for credit losses during period 353 572
Charge offs during period (474) (607)
Amounts recovered during period 121 45
----- -----
Allowance for credit losses at end of period $ 310 $ 310
===== =====
Percentage of allowance for credit losses to
finance receivables outstanding at end of period .65% .72%
Percentage of net credit losses to finance
receivables liquidated during period .32% .60%

</TABLE>
SFC bears the credit risk of collections from insurance carriers. Upon a
carrier becoming insolvent and unable to pay claims to an insured or refund
unearned premiums upon cancellation of a policy to a finance company, each state
provides a state guaranty fund that will pay such refund, less a per claim
deductible in certain states. SFC seeks to diversify its financing activities
among a wide range of brokers and insurance carriers.

Sales and Marketing

SFC generates business through referrals from independent insurance agents
and brokers, and through its own sales efforts. Such brokers are associated with
various insurance companies. Insurance brokers may refer financing business to
an insurance premium financing company because such companies can assist them in

<PAGE>

servicing their clients, particularly where the insurance carrier does not offer
an installment payment option. Since SFC has no contracts with any brokers to
continue to refer business to SFC, there can be no assurance that brokers
presently directing financing business to SFC will continue to do so, or that
SFC will be able to locate and establish relationships with additional brokers.

SFC believes that it offers more flexibility with regard to late payments
and policy cancellations than affiliated companies of insurance carriers, banks
and other lending institutions, which generally subject a policy to automatic
cancellation on a designated date if a premium payment is late. It is SFC's
general policy to notify the broker immediately when any payment is past due,
thereby allowing the broker to arrange with the insured for payment and to
prevent cancellation of the policy. Under certain circumstances the grace period
can be extended, thereby avoiding cancellation of the policy and the loss of
part of the broker's commission which may result from such cancellation. No
assurances can be given that the affiliated companies of the insurance carriers,
banks and other lending institutions will not add greater flexibility to their
insurance financing business practices and, in the event this should occur,
there may be a material adverse effect on SFC's business operations.

Regulation

State statutes regulate SFC's operations, and regulations promulgated
thereunder, which provide for the licensing, administration and supervision of
premium finance companies. Such statutes and regulations impose significant
restrictions on the operation of SFC's business.

SFC is licensed as an insurance premium company in the States of New York,
New Jersey, Connecticut, Pennsylvania, Massachusetts, Maine, Delaware, Virginia
, Vermont, Illinois, New Hampshire, Maryland and in the District of Columbia.
SFC must renew its license to operate as a premium finance company each year in
every state except New Jersey which requires renewal every two years. SFC is
also subject to periodic examinations and investigations by state regulators.

State statutes and regulations impose minimum capital requirements, govern
the form and content of financing agreements and limit the interest and service
charges SFC may impose. The Commonwealth of Pennsylvania requires a minimum net
worth of $50,000. The State of New York requires that equity capital be equal to
at least 10% of outstanding loans and, in any event, not less than $1,500.

State statutes also prescribe notice periods prior to the cancellation of
policies for non-payment, limit delinquency and collection charges and govern
the procedure for cancellation of policies and collection of unearned premiums.

Changes in the regulation of SFC's activities, such as increased rate
regulation, could have an adverse effect on SFC's operations. The statutes do
not provide for automatic adjustments in the rates a premium finance company may
charge. Consequently, during periods of high prevailing interest rates on
institutional indebtedness and fixed statutory ceilings on rates SFC may charge
its insured's, SFC's ability to operate profitably could be adversely affected.
<PAGE>

Competition

SFC encounters intense competition from numerous other firms, including
companies affiliated with insurance carriers, independent insurance brokers who
offer premium finance services, banks and other lending institutions. Some of
SFC's competitors are larger and have greater financial and other resources and
are better known to consumers than SFC. In addition, there are few, if any,
barriers to entry in the event other firms, particularly insurance carriers and
their affiliates, seek to compete in this market.

The market for premium finance companies is two-tiered. The first tier is
that of national companies that are owned by insurance companies, banks, and
commercial finance companies. In this group are five companies that on a
combined basis finance over $9 billion per annum of premium finance agreements.
Management believes that one of these companies financed over $5 billion in
insurance premiums in 1998 and is a major competitor of SFC. The second tier is
comprised of smaller local companies and is highly fragmented. SFC believes that
it offers better service and more flexibility with regard to late payments and
policy cancellations than affiliates of insurance carriers, banks and other
lending institutions. SFC competes with these entities by emphasizing a high
level of knowledge of the insurance industry, flexibility in structuring
financing transactions and the timely purchase of qualifying contracts. SFC
believes that its commitment to account service also distinguishes it from its
competitors. It is SFC's general policy to notify the insurance agent when an
insured is in default and to assist in collection, if requested by the agent. To
the extent that affiliates of insurance carriers, banks, and other lending
institutions add greater service and flexibility to their financing practices in
the future, SFC's operations could be adversely affected. There can be no
assurance that SFC will be able to continue to compete successfully in its
markets.

Personnel

As of February 15, 1999, SFC's staff consisted of 33 employees (of whom 31
are full-time employees and two part-time employees), including four executive
officers, four sales and marketing representatives and 25 clerical and
administrative employees.

Properties

SFC's offices are located at 335 Crossways Park Drive, Woodbury, New York
11797. SFC leases (from a non-affiliated person) approximately 5,676 square feet
of office space at a cost of $8,967 per month under a five-year lease expiring
on the 31st day of May 2001.

Legal Proceedings

SFC is not a party to any material pending legal proceedings.

<PAGE>
SELECTED HISTORICAL FINANCIAL DATA

The following selected financial data should be read in conjunction with
SFC's Financial Statements and the Notes thereto and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included
elsewhere in this Proxy Statement. The information for the years ended December
31, 1994, 1995, 1996, 1997 and 1998 is derived from the audited financial
statements of SFC.
<TABLE>
<CAPTION>

Year Ended December 31,
------------------------------------------------------------
` 1994 1995 1996 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Net Interest Income
Finance Charge Income $3,573,678 $4,830,812 $5,670,276 $6,327,115 $7,110,534
Interest & Other Expenses on
Borrowing 1,067,577 1,445,375 1,927,372 2,530,859 2,908,066
Net Interest Income 2,506,101 3,385,437 3,742,904 3,796,256 4,202,468

Other Expenses
Operating Expenses 1,366,949 1,638,429 1,709,674 1,809,713 2,275,797
Selling Expenses 374,616 464,172 564,956 720,143 803,508
Provision for Possible Credit Losses 161,902 304,740 583,398 572,297 352,835
Total Other Expenses 1,903,467 2,407,341 2,858,028 3,102,153 3,432,140
Total Income from Operations 602,634 778,096 884,876 694,103 770,328
Other Expenses 275,250 0 0 0 0
Income Before Provision for
Income Taxes 327,384 778,096 884,876 694,103 770,328
Provision for Income Taxes 125,078 349,000 339,800 309,900 354,542
Net Income $202,306 $429,096 $545,076 $384,203 415,786
Per Share Data:
(1) Net Income (basic+diluted) $0.10 $0.16 $0.20 $0.14 $0.15
(2) Weighted Ave. Shares
Outstanding 2,118,082 2,760,000 2,760,000 2,760,000 2,760,000
BALANCE SHEET DATA:
Installment Loans Receivable
(Net) $18,652,120 $23,308,397 $31,828,236 $41,843,567 $46,505,191
Total Assets 19,119,099 24,801,045 32,634,602 42,938,730 47,634,718
Total Senior Debt 9,567,815 13,251,225 19,853,668 28,928,398 33,308,424
Total Subordinated Debt 2,640,000 4,765,000 4,913,000 5,003,000 5,053,000
Shareholders Equity 5,754,531 6,183,627 6,728,703 7,112,906 7,528,692

OTHER FINANCIAL DATA:
(1) Gross Number of Contracts
Booked 24,837 26,075 24,897 24,389 25,650
(2) Average Dollar Amount per
Contact $2,000 2,480 3,420 4,236 4,497
(3) Total Installment Loans
Financed $49,632,065 $64,685,837 $84,900,735 $103,320,694 $115,347,014
(4) Average Installment Loans
Receivable (net) $16,186,000 $20,980,000 $27,578,000 $40,270,000 $47,021,000
(5) Net Interest Income (Spread) $2,506,000 $3,185,000 $3,743,000 $3,796,000 $4,202,000
(6) Percentage of Spread to Average
Loans Receivable 15.5% 15.2% 13.6% 9.4% 8.9%
(7) Percentage of allowance for possible
credit losses to finance receivables
outstanding at end of period 0.78% 0.86% 0.91% 0.72% 0.65%
(8) Percentage of net credit losses to
finance receivables liquidated
during period 0.32% 0.41% 0.62% 0.60% 0.32%

</TABLE>
<PAGE>

FORWARD-LOOKING STATEMENTS

This proxy statement contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 which involve
risks and uncertainties. All statements other than statements of historical fact
contained herein are forward looking statements. When used herein, words such as
"anticipate," "expect," "believe," and "estimate" as they relate to SFC and its
management, identify forward-looking statements. Such forward-looking statements
reflect the current views, and are based upon the current beliefs, of SFC's
management. Actual results could differ materially from those contained in the
forward looking statements as a result of certain factors, including but not
limited to, the volume of insurance premiums financed by SFC, changes in legal
or regulatory requirements, competitive factors and pricing pressures and
general economic conditions.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Results of Operations

SFC derives profits to the extent that finance rates and fees charged
generate income exceeding SFC's cost of funds, operating and selling expenses
and provision for possible credit losses. SFC borrows funds from various
financial institutions in the wholesale market and from other sources and lends
such funds on a secured basis to individual and commercial purchasers of
property and casualty insurance. The cost of borrowed funds (interest expense)
constitutes by far the largest expense of SFC and to a large degree is beyond
the control of SFC. The difference between finance charge income and SFC's cost
of funds is sometimes referred to as net interest income or "spread." SFC's
"spread" is affected by changes in market interest rates, competitive conditions
and other factors. Presently, SFC's revolving credit agreement is on a variable
rate basis and all of its commercial paper and subordinated debt is on a fixed
rate basis. See "Liquidity and Capital Resources." While SFC's installment loans
receivable are all on a fixed rate basis, the rapid rate of turnover of SFC's
total loan portfolio, 3.1 times in both 1998 and 1997, and the short term to
maturity of its outstanding installment loans, with an average maturity of
approximately four months at December 31, 1998, help to reduce SFC's exposure to
interest rate fluctuations.

<PAGE>

The following table sets forth the spread that SFC has maintained for the
last two fiscal years, based upon average monthly receivable balances:
<TABLE>
<CAPTION>

Year Ended December 31,
-----------------------
1998 1997
---- ----
(Dollars in Thousands)

<S> <C> <C>
Average Installment Loans Receivable - net $47,021 $40,270
Net Interest Income (Spread) 4,202 3,796
% of Spread to Average Loans Receivable 8.9 9.4
</TABLE>

SFC is licensed as an insurance premium finance company in 14 states.
However, the majority of SFC's business is conducted in five states located in
the northeastern section of the United States.

The following table sets forth certain income statement items as a
percentage of total finance charge income:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1998 1997
---- ----
<S> <C> <C>
NET INTEREST INCOME:
Finance charge income and other 100.0% 100.0%
Less: Interest and other expenses on borrowings 40.9 40.0
----- -----
Interest income before provision for credit losses 59.1 60.0
Less: Provision for credit losses 5.0 9.0
----- -----

Net interest income 54.1 51.0
----- -----
OTHER EXPENSES:
Operating expenses 32.0 28.6
Selling expenses 11.3 11.4
----- -----
Total 43.3 40.0
----- -----
INCOME BEFORE PROVISION FOR INCOME TAXES 10.8 11.0
PROVISION FOR INCOME TAXES 5.0 4.9
----- -----

NET INCOME 5.8% 6.1%
===== =====
</TABLE>

Finance charge income increased by 12.38% to $7,110,534 in the year ended
December 31, 1998 from $6,327,115 for the year ended December 31, 1997 primarily
because of an increase in total installment loans financed. Total installment
loans financed increased 11.6% to $115,347,014 from $103,320,694 and the number
of contracts representing these loans increased 5.2% to 25,650 from 24,389.
SFC's average receivables for the year ended December 31, 1998 increased 16.8%
to $47,020,588 from $40,269,644 for the year ended December 31, 1997. Interest
expense for the year ended December 31, 1998 increased 14.9% to $2,908,066 from
$2,530,859 for the year ended December 31, 1997, an increase of $377,207. This
increase in interest expense is due primarily to the increased borrowing due to
the increase in average receivables. Operating and selling expenses increased by
21.7% to $3,079,305 in the year ended December 31, 1998 from $2,529,856 in the
year ended December 31, 1997. This increase was primarily attributable to
increases in salaries, commission, and certain other administrative expenses.
Due to the $783,419 increase in finance charge income, compared to only a
$377,207 increase in interest expense, there was a 10% increase in the "spread"
to $4,202,468 for the year ended December 31, 1998 from $3,796,256 for the year
ended December 31, 1997.

In 1998, SFC had gross write-offs of $473,957, of which $427,036
represented assigned risk automobile policies and $46,921 represented Commercial
policies. Management feels that with the curtailment of financing assigned risk
business in 1998, we have reduced the likelihood of large assigned risk
write-offs for the future. Management believes that's its reserves are
sufficient to cover losses inherent in the current portfolio.

The provision for credit losses decreased by 38.3% to $352,835 for the year
ended December 31, 1998 from $572,297 for the year ended December 31, 1997. Past
due amounts represent policies that SFC has canceled and is waiting to receive
return premiums, and include policies where the insurance carrier has credited
the return premium to the broker or agent who originated the policy and who
subsequently is required to forward such amount to SFC.
<PAGE>
Effective Income Tax Rate

The effective tax rate for fiscal 1998 was 46.0% compared to 44.6% for
fiscal 1997. The tax rate in both years was higher than the federal statutory
tax rate primarily as a result of the inclusion of state income taxes and
certain nondeductible expenses for income tax purposes.

Liquidity and Capital Resources

SFC's operations are dependent upon the continued availability of funds on
satisfactory terms and rates. SFC uses such funds principally to finance the
origination of installment loans under premium finance agreements. SFC obtains
required funds from a variety of sources, including internal generation of
funds, unsecured borrowings under lines of credit, direct issuance of commercial
paper, placement of subordinated debt and the sale of common equity.

As SFC increases the size of its business, it originates more installment
loans receivable than it collects, resulting in a larger outstanding balance of
installment loans receivable. For the years ended December 31, 1998 and 1997,
SFC originated installment loans receivable of $115,347,014 and $103,320,694
respectively, compared to installment loans collected for each period of
$110,332,555 and $93,509,063 respectively. The result was an increase in net
outstanding installment loan receivables to $46,505,191 from $41,843,567
respectively, at December 31, 1998 and 1997.

The growth in SFC's loan portfolio has been the single largest factor
influencing SFC's cash flow from operations. The determining factor influencing
the growth in the loan portfolio has been the extent to which SFC has been able
to leverage its capital into subordinated debt and then into short-term senior
debt. For years ended December 31, 1998 and 1997, net cash provided by operating
activities was $642,846 and $1,594,716 respectively, which amounts were
comprised primarily of net earnings, loss provisions, depreciation and
amortization and other changes in assets and liabilities. For the years ended
December 31, 1998 and 1997, net cash provided by financing activities was
$4,430,026 and $8,388,734 respectively, comprised primarily of proceeds from
bank notes and repayment of bank notes, proceeds from sales and repayments of
commercial paper, net proceeds of subordinated debt and the sale of accounts
receivable participation program.

SFC has no present plans related to significant capital expenditures but
does intend to add marketing locations in order to increase its volume of new
business. SFC does not expect that such additional marketing locations will
require any significant capital expenditures. SFC is not aware of any pending
legislation that would have a material effect on its capital requirements or
business prospects.

SFC is subject to minimum capital requirements imposed by certain of the
states in which it is licensed. In addition, SFC is prohibited from declaring or
paying any dividends on its capital stock (other than dividends payable solely
in shares of Common Stock) pursuant to one of SFC's subordinated debt
arrangements which matures on December 27, 2000.

<PAGE>

The sources of funds (other than internal generation of funds) that are
presently available or have been utilized by SFC are described below. Management
believes that the sources of funds presently available to SFC are adequate for
the conduct of its business at its present level for the next twelve months. To
the extent that SFC in the future expands its business and increases its total
installment receivables outstanding beyond its present levels of funding, which
may not be available or, if available, may not be on terms acceptable to SFC.

Lines of Credit. At December 31, 1998, SFC had a revolving credit agreement
with a consortium of banks aggregating $45,000,000, under which $29,900,000 was
outstanding. Amounts outstanding under this agreement bear interest at prime or
1.15% over LIBOR. SFC pays commitment fees to the consortium in connection with
this agreement. The borrowing is unsecured and there are no compensating balance
agreements. This revolving credit agreement expires January 2001, although there
can be no assurance that these lines will not be revoked, suspended or reduced
at any time. None of the banks in the consortium is contractually obliged to
renew any such line. During the years ended December 31, 1998 and 1997, the
maximum aggregate amount outstanding under these lines at any time was
$32,100,000 and $26,500,000, respectively.

Commercial Paper. SFC directly issues its own commercial paper with
maturities of up to 270 days, which is unsecured and is unrated by commercial
paper rating agencies. Commercial paper outstanding at December 31, 1998 bore
interest at fixed annual rates ranging from 5.5% to 6.7%. During the years ended
December 31, 1998 and 1997, the maximum outstanding commercial paper at any
month end was $3,626,650 and $2,481,337, respectively. Such commercial paper is
generally sold to officers of SFC and their affiliates and to non-affiliated
investors. SFC has obtained no commitments from any purchaser of its commercial
paper regarding additional or future purchases. It is SFC's policy to maintain
unused short-term bank lines of credit in an amount in excess of the amount of
commercial paper outstanding. The interest rate on SFC's commercial paper has
been and will continue to be determined by reference to prevailing interest
rates in the commercial paper market. SFC does not anticipate any change in the
level of financing provided by affiliates of SFC or any changes in the costs of
financing provided by such affiliates. There can be no assurance, however, that
such levels of financing will be maintained in the future.

Subordinated Debt. SFC has obtained unsecured senior subordinated debt in
the amount of $4,150,000 and unsecured junior subordinated debt of $903,000 from
outside investors. The notes bear interest at fixed rates from 10.00 to 14.25%
and are due from June 27, 1999 to December 31, 2003. The notes restrict SFC's
ability, among other things, to merge, pay dividends and permit its business to
be heavily concentrated with a single broker or agency. Several of the
underlying agreements also contain various covenants requiring SFC to meet
certain financial ratios and other restrictions on acquisitions and investments.
SFC may, at its option, prepay the loans in whole or in part. However, with
respect to several of the notes, SFC must reimburse the investors for any loss
of margin on reemployment of the funds so repaid. SFC does not currently
anticipate prepaying or otherwise refinancing its existing senior subordinated
debt prior to its maturity. In addition, SFC has obtained unsecured junior
subordinated debt from various investors. The interest rates are fixed and vary
in term. The following table indicates amounts, rates and maturity dates as at
December 31, 1998.
<TABLE>
<CAPTION>
Rate Due Date Amount
---- -------- ------
<S> <C> <C>
14.25% 06/30/2001 $ 810,000
14.00% 11/01/2000 500,000
14.00% 06/27/1999 400,000
14.00% 12/27/1999 400,000
14.00% 06/27/2000 400,000
14.00% 12/27/2000 1,000,000
12.50% 03/31/2001 510,000
12.00% 02/16/2001 50,000
11.25% 09/30/2001 43,000
10.95% 12/31/2003 850,000
10.00% 03/31/2002 90,000
----------
$5,053,000
==========
</TABLE>

Subordinated debt is generally sold to officers and directors of SFC and
their affiliates and to non-affiliated investors. SFC has obtained no
commitments from any holder of its subordinated debt regarding additional or
future purchases.

<PAGE>
Other Sources. In addition to the sources of funds described above, SFC has
transferred to banks participating interests in certain receivables under a
financing arrangement. The interest in these receivables have been transferred
on a pari passu basis without any recourse to SFC. As of December 31, 1998 there
was a zero balance with these institutions.

SFC continually engages in discussions with both current and prospective
lenders regarding obtaining increases in, extensions of or additions to, both
its short-term lines of credit, its subordinated borrowings and its
participation program. SFC is currently engaged in such discussions with several
lenders, but can give no assurance as to whether or when such discussions will
be favorably consummated.

New Accounting Pronouncements

Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income", and Statement of Financial Accounting Standards No. 131,
"Disclosures About Segments of an Enterprise and Related Information" have no
effect on the financial statements of SFC. SFC's management also believes that
Statement of Financial Accounting Standards No. 133, "Accounting For Derivative
Instruments and Hedging Activities" will have no material effect on the
financial statements of SFC at December 31, 1998.

Year 2000 Matters

The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of SFC's computer
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a system failure
or miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions invoices, or engage in
similar normal business activities.

In 1997, SFC initiated a conversion from its then existing accounting
software to programs that are year 2000 compliant. Management has determined
that the year 2000 issue will not pose significant operational problems for its
computer systems. SFC will utilize both internal and external resources to
reprogram, or replace, and test all of its operating software for Year 2000
modifications. SFC has retained a consulting firm to assist it in the conversion
of its operating systems. SFC anticipates completing the Year 2000 project
during the second quarter of 1999, which is prior to any anticipated impact on
its operating systems. The total cost of the Year 2000 project is estimated at
$25,000, of which $9,000 has been spent to date and is being funded through
operating cash flows. The total project cost is attributable to the
re-engineering of current software and such costs will be expensed as incurred.

The costs of the project and the date on which SFC believes it will
complete the Year 2000 modifications are based on management's best estimates,
which were derived utilizing numerous assumptions of future events, including
the continued availability of certain resources, third party modification plans
and other factors. However, there can be no guarantee that these estimates will
be achieved, and actual results could differ materially from those anticipated.
Specific factors that might cause such material delays or difficulties in
implementing the project include, but are not limited to, the availability and
cost of personnel trained in this area, the ability to locate and correct all
relevant computer codes, and similar uncertainties.

In the merger agreement with Atlantic Bank, SFC has ensured that any
software products or services owned, provided or otherwise developed by SFC, or
used in the conduct of its business as presently conducted and as it is expected
to be conducted after the date of the merger agreement, will, on the effective
date of the merger, provide, among other things, the following functionality:
(i) accurate processing of date-related information before, during and after
January 1, 2000, including accepting the date input, providing the date output,
and performing calculations on dates or portions of dates; (ii) accurate
functioning without interruption before, during and after January 1, 2000,
without any change in operation associated with the advent of the new century;
(iii) ability to respond to two-digit input in a way that resolves any ambiguity
as to century in a disclosed, defined and predetermined manner; and (iv) the
ability to store and provide output date information in ways that are
unambiguous as to the century.
<PAGE>

SFC has initiated formal communications with all of its significant vendors
and large customers to determine the extent to which SFC's interface systems are
vulnerable to those third parties' failure to remediate their own Year 2000
issues. There can be no guarantee that the systems of other companies on which
SFC's systems rely will be timely converted or that the failure to make such a
conversion will not have an adverse effect on SFC's systems.

However, there can be no guarantee that other companies upon which SFC
relies will be able to timely address their Year 2000 compliance issues, the
effects of which may have an adverse impact on SFC's results of operations. At
this stage of the process, SFC believes that it is difficult to specifically
identify the cause of the most reasonable worst case Year 2000 scenario.

A worst case Year 2000 scenario would be the failure of key vendors to have
corrected their own Year 2000 issues which could cause disruption of SFC's
operations and have a material adverse effect on SFC's financial condition. The
impact of such disruption cannot be estimated at this time. In the event SFC
believes that any of its key vendors are unlikely to be able to resolve their
Year 2000 issues, it will seek alternative sources.

Inflation

The moderate rate of U.S. inflation during the past two years has not
significantly affected SFC.

MARKET FOR SFC'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

SFC's common stock has been listed on the Nasdaq SmallCap Market under the
symbol "SFUN" and has traded publicly since August 9, 1994. The table below sets
forth, for the calendar periods indicated, the high and low bid prices per share
of common stock, as reported on the Nasdaq SmallCap Market. The quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commission,
and may not represent actual transactions.

<TABLE>
<CAPTION>
High Low
---- ----
<S> <C> <C>
1996
First Quarter $6-1/16 $4-3/4
Second Quarter 5 4-7/16
Third Quarter 4-7/16 3-3/4
Fourth Quarter 4-3/4 3-3/4

1997
First Quarter 5 4
Second Quarter 4-3/4 4-1/4
Third Quarter 4-1/2 4-1/4
Fourth Quarter 3-1/8 2-3/8

1998
First Quarter 2-7/8 2-3/8
Second Quarter 2-7/8 2-3/8
Third Quarter 2-3/4 1-3/8
Fourth Quarter 1-7/8 1-1/8

1999
First Quarter 3-3/16 1-3/4
Second Quarter (through May 7, 1999) 3-1/8 2-7/8

</TABLE>

There were approximately 321 shareholders of record of SFC's common stock
as of May 7, 1999. SFC has not declared or paid any dividends on its common
stock since its inception. It is the present intention of SFC to retain any
future earnings to provide funds for the operation and expansion of its
business. The prohibited from declaring or paying any dividends on its capital
stock (other than dividends payable solely in shares of its common stock)
pursuant to one of SFC's subordinated debt arrangements which matures on
December 27, 2000.

<PAGE>

BENEFICIAL OWNERSHIP OF COMMON STOCK

The following table sets forth as of April 30, 1999, information with
respect to (i) each person (including any "group" as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), known by SFC to be the beneficial owner of more than 5% of
SFC's common stock, its only class of voting securities, (ii) the ownership of
common stock by each current director, (iii) the ownership of common stock by
each executive officer and (iv) the ownership of common stock by all current
directors and executive officers of SFC as a group. Except as otherwise provided
in the footnotes to the table, the beneficial owners have sole voting and
investment powers as to all securities.

Name and Address of Amount and Nature of Percentage
Beneficial Owner Beneficial Ownership (1) of Class (1)
- ------------------- ------------------------ ------------

<S> <C> <C>
Alan J. Karp (2) 623,800 (3) 22.6% (3)

David E. Fisher (2) 623,800 (3) 22.6%(3)

Cambridge Management Corporation 170,000 6.2%
c/o Bernard G. Palitz
215 E. 68th Street, Apt 8-L
New York, NY 10021

James Faust (2) 5,000 (3) *

Joyce S. Karp (2) 7,000 (3) *

Richard Belz 13,500 (3)(4) *
c/o Redstone Securities, Inc.
101 Fairchild Avenue
Plainview, New York 11803

All Directors and executive
officers as a group (5 persons) 1,264,600 46.1%
- --------------------

<FN>
*Less than 1 percent.

(1) Except as described in the footnotes below, all of the above shareholders
were both the beneficial owners and shareholders of record of the shares
listed as of May 7, 1999.
(2) The address for Messrs. Karp, Fisher and Faust and Mrs. Karp is c/o
Standard Funding Corp., 335 Crossways Park Drive, Woodbury, New York 11797.
(3) Includes currently exercisable options to purchase 5,000 shares of Common
Stock at $4.375 per share under SFC's Equity Incentive Plan.
(4) Represents shares owned by Kathleen Belz, Richard Belz's wife.
</FN>

</TABLE>

<PAGE>

AVAILABLE INFORMATION

SFC is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended, and in accordance therewith, files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "SEC"). Such reports, proxy statements and other information may
be inspected and copied at the public reference facilities maintained by the SEC
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the SEC's regional offices located at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511 and at Seven World Trade Center
(13th Floor), New York, New York 10048. Copies of such material may be obtained
by mail from the Public Reference Section of the SEC at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The SEC
maintains a Web site that contains reports, proxy and information statements and
other materials that are filed through the SEC's Electronic Data Gathering,
Analysis and Retrieval system. This Web site can be accessed at
http://www.sec.gov.

INDEPENDENT AUDITORS

Deloitte & Touche LLP serves as SFC's independent auditors. A
representative of Deloitte & Touche LLP is expected to be present at the Special
Meeting, will have the opportunity to make a statement if he desires to do so,
and is expected to be available to respond to appropriate questions by
shareholders.

OTHER MATTERS

The Board of Directors does not intend to bring any other matters before
the Special Meeting and as of the date hereof does not know of any other matters
that may be brought before the Special Meeting. If any other matters should
properly come before the Special Meeting, the persons named in the enclosed
proxy as proxy appointees will have discretionary authority to vote the shares
of common stock thereby represented in accordance with their best judgment.

By Order of the Board of Directors,

Thomas Catterson
Secretary

<PAGE>
STANDARD FUNDING CORP.

INDEX TO FINANCIAL STATEMENTS

Page
----

Independent Auditors' Report F-2

Balance Sheet at December 31, 1998 F-3

Statements of Income for the years ended December 31, 1998 and 1997 F-4

Statements of Shareholders' Equity for the years ended December 31, 1998
and 1997 F-5

Statements of Cash Flows for the years ended December 31, 1998 and 1997 F-6

Notes to Financial Statements F-7

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of
Standard Funding Corp.
Woodbury, New York

We have audited the accompanying balance sheet of Standard Funding Corp.
(the "Company") as of December 31, 1998 and the related statements of income,
shareholders' equity and cash flows for each of the two years in the period then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects the financial position of Standard Funding Corp. at December 31, 1998
and the results of its operations and its cash flows for each of the two years
in the period then ended in conformity with generally accepted accounting
principles.

/s/ DELOITTE & TOUCHE LLP

Jericho, New York
March 5, 1999

F-2
<PAGE>

STANDARD FUNDING CORP.

BALANCE SHEET

<TABLE>
<CAPTION>
December 31,
1998
------------
<S> <C>
ASSETS
Cash $ 223,031
------------
Installment loans receivable under premium finance agreements 47,887,880
Less: Unearned interest (1,072,689)
Allowance for credit losses (310,000)
------------
Installment loans receivable under premium finance agreements - net (Note 2) 46,505,191
Due from officers (Note 3) 146,049
Property and equipment - net (Note 4) 228,102
Other assets 532,345
------------
Total $ 47,634,718
============

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Notes payable to financial institutions (Note 5) $ 29,900,000
Commercial paper issued (Note 5) 3,408,424
Amounts due to insurance companies 1,166,526
Accrued expenses and other 311,000
Deferred income taxes (Note 7) 267,076
------------
Total, exclusive of subordinated debt 35,053,026
Subordinated debt (Note 6) 5,053,000
------------
Total Liabilities 40,106,026
============

COMMITMENTS AND CONTINGENCIES (Notes 9 and 10)

SHAREHOLDERS' EQUITY (Note 8):
Preferred Stock, par value $.001 per share;
1,000,000 authorized, none issued --
Common Stock, par value $.001 per share; 4,000,000 authorized,
2,760,000 shares issued and outstanding 2,760
Additional paid-in capital 3,991,501
Retained earnings 3,534,431
------------
Total Shareholders' Equity 7,528,692
------------
Total $ 47,634,718
============
</TABLE>

See notes to financial statements.

F-3
<PAGE>

STANDARD FUNDING CORP.

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997
---- ----
<S> <C> <C>
NET INTEREST INCOME:
Finance charge income and other $7,110,534 $6,327,115
Less: Interest and other expenses on borrowings (Notes 2, 5, and 6) 2,908,066 2,530,859
---------- ----------
Interest income before provision for credit losses 4,202,468 3,796,256
Provision for credit losses (Note 2) 352,835 572,297
---------- ----------
Net Interest Income 3,849,633 3,223,959
---------- ----------
OTHER EXPENSES:
Operating expenses (Note 10) 2,275,797 1,809,713
Selling expenses 803,508 720,143
---------- ----------
Total 3,079,305 2,529,856
---------- ----------

INCOME BEFORE PROVISION FOR INCOME TAXES 770,328 694,103

PROVISION FOR INCOME TAXES (Note 7) 354,542 309,900
---------- ----------

NET INCOME $ 415,786 $ 384,203
========== ==========

NET INCOME PER SHARE :
BASIC AND DILUTED $ 0.15 $ 0.14
========== ==========

WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING (Note 1) 2,760,000 2,760,000
========== ==========
</TABLE>

See notes to financial statements.

F-4
<PAGE>

STANDARD FUNDING CORP.

STATEMENTS OF SHAREHOLDERS' EQUITY

For the Years Ended December 31, 1998 and 1997

<TABLE>
<CAPTION>
Preferred Stock Common Stock Additional
--------------- -------------------- Paid in Retained
Shares Amount Shares Amount Capital Earnings
------ ------ ------ ------ ------- --------

<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1997 -- -- 2,760,000 $ 2,760 $3,991,501 $2,734,442

Net Income -- -- -- -- -- 384,203
----- ----- ---------- ------- ---------- ----------

Balance, December 31, 1997 -- -- 2,760,000 2,760 3,991,501 3,118,645

Net Income -- -- -- -- -- 415,786
----- ----- ---------- ------- ---------- ----------

Balance, December 31, 1998 -- -- 2,760,000 $ 2,760 $3,991,501 $3,534,431
===== ===== ========== ======= ========== ==========
</TABLE>

See notes to financial statements.

F-5
<PAGE>

STANDARD FUNDING CORP.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 415,786 $ 384,203
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for possible credit losses 352,835 572,297
Deferred income taxes 75,049 (95,701)
Depreciation and amortization 173,426 112,631
Changes in assets and liabilities:
Due from officers and other assets (149,377) (229,610)
Accrued expenses and other amounts
due to insurance companies (224,873) 1,070,877
Funds due-accounts receivable participation program -- (219,981)
------------- -------------
Net cash provided by operating activities 642,846 1,594,716
------------- -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Installment loans receivable originated (115,347,014) (103,320,694)
Collections of installment loans receivable 110,332,555 93,509,063
Purchase of equipment (38,396) (101,368)
------------- -------------

Net cash used in investing activities (5,052,855) (9,912,999)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from accounts receivable participation program -- 4,153,656
Payment of accounts receivable participation program -- (4,929,652)
Proceeds from bank notes--net 3,400,000 8,900,000
Proceeds of commercial paper issued--net 980,026 174,730
Proceeds of subordinated debt 50,000 90,000
------------- -------------

Net cash provided by financing activities 4,430,026 8,388,734
------------- -------------
INCREASE IN CASH 20,017 70,451

CASH AT BEGINNING OF YEAR 203,014 132,563
------------- -------------

CASH AT END OF YEAR $ 223,031 $ 203,014
============= =============

SUPPLEMENTAL DISCLOSURES OF
CASH FLOWS INFORMATION:
Income taxes paid $ 225,416 $ 414,921
============= =============
Interest paid $ 2,818,778 $ 2,349,788
============= =============
</TABLE>

See notes to financial statements.

F-6
<PAGE>

STANDARD FUNDING CORP.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 1998 and 1997

1. SIGNIFICANT ACCOUNTING POLICIES

a. Business - Standard Funding Corp. (the "Company") is a financial
service Company engaged in the business of financing the payment of
insurance premiums. The Company finances substantially all forms of
property, casualty and liability insurance premiums on policies,
which are written through independent insurance agents, and brokers.

b. Revenue Recognition - Unearned interest on installment loans
receivable under premium finance agreements is recognized as income
using a method which approximates the results which would be
obtained using the interest method.

The Company has entered into agreements to transfer, on a
non-recourse basis, interests in its installment loans receivable
under premium finance agreements to financial institutions. The
differential of stated interest to be recorded over the course of
the finance period and interest to be paid to the financial
institution is recognized as interest expense over the course of the
outstanding transfer.

Loan processing costs incurred are deferred and amortized on the
straight-line method, which approximates the interest method, over
the term of the related installment loans receivable under premium
finance agreements. Cancellation fees and late charges are
recognized as income when received.

c. Allowance for Credit Losses - The balance in the allowance for
credit losses are based on management's assessment of risk in the
installment loan portfolio. The Company writes off receivables upon
determination that no further collections are probable based upon
historical activity and an understanding of collectability by type
of finance receivable.

d. Property and Equipment - Property and equipment is stated at cost.
Depreciation is provided on the straight-line basis over such
assets' estimated useful lives ranging from three to five years.
Leasehold improvements are amortized over the shorter of their
estimated useful lives or the remaining term of the lease.

e. Revenue and Credit Concentration - The Company receives
substantially all of its revenues from financing arrangements made
within New York, New Jersey, Connecticut, Pennsylvania, and
Massachusetts. These five states account for in excess of 95% of all
revenues. Accordingly, as of December 31, 1998, substantially all of
the Company's installment loans outstanding were from this
geographic region.

f. Income Taxes - The Company accounts for income taxes pursuant to
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" ("SFAS No. 109"). SFAS No. 109 requires recognition of
deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the Company's
financial statements or tax returns. Under this method, deferred tax
assets and liabilities are determined based on the differences
between the financial accounting and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which
the differences are expected to reverse.

g. Stock-based Compensation - The Company accounts for stock-based
awards to employees using the intrinsic value method in accordance
with APB No. 25, "Accounting for Stock Issued to Employees" ("APB
25").

F-7
<PAGE>

STANDARD FUNDING CORP.

NOTES TO FINANCIAL STATEMENTS--(Continued)

h. Fair Value of Financial Instruments - The following methods and
assumptions were used to estimate the fair value of each class of
financial instruments:

1. Cash and Notes Payable to Financial Institutions - The
carrying amount approximates fair value because of the short
maturity of these instruments.

2. Installment Loans Receivable Under Premium Finance Agreements,
Due From Officers, Commercial Paper, and Subordinated Debt -
The Company estimates the fair value of financial instruments
based upon interest rates available to the Company and by
comparison to quoted market prices. At December 31, 1998, the
fair value of the Company's financial instruments approximated
the carrying value.

i. Pervasiveness of Estimates - The preparation of financial statements
in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets, liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimates.

j. Impairment of Long-Lived Assets - In accordance with Statement of
Financial Accounting Standards No. 121, "Accounting For the
Impairment of Long-Lived Assets and For Long-Lived Assets To Be
Disposed Of" ("SFAS No. 121"), the Company reviews its long-lived
assets, including property and equipment, and other assets for
impairment whenever events or changes in circumstances indicate that
the carrying amount of the assets may not be fully recoverable. To
determine recoverability of its long-lived assets, the Company
evaluates the probability that future undiscounted net cash flows,
without interest charges, will be less than the carrying amount of
the assets. Impairment is measured at fair value. SFAS No. 121 had
no effect on the Company's financial statements.

k. Earnings Per Share - The Company adopted Financial Accounting
Standards No. 128 "Earnings per Share" ("SFAS No. 128") which
requires dual presentation of basic and diluted earnings per share
on the face of the income statement.

Basic earnings per share are based on the weighted average number of
shares of common stock outstanding during the period. Diluted
earnings per share are based on the weighted average number of
shares of common stock and common stock equivalents (options and
warrants) outstanding during the period, computed in accordance with
the treasury stock method. The effect of common stock equivalents
was antidilutive for 1998 and 1997, and accordingly, such common
stock equivalents were excluded from the weighted average number of
common shares for 1998 and 1997. There where 100,000 warrants and
58,525 stock options outstanding at December 31, 1998 and 1997.

l. New Accounting Pronouncements - Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" and Statement of
Financial Accounting Standards No. 131, "Disclosures About Segments
of an Enterprise and Related Information" have no effect on the
financial statements of the Company. The Company's management
believes that Statement of Financial Accounting Standards No. 133,
"Accounting For Derivative Instruments and Hedging Activities" will
have no material effect on the financial statements of the Company
at December 31, 1998.

m. Other Assets - The Company has capitalized costs associated with
issuance of subordinated debt and costs associated with securing a
line of credit with a constitution of banks. These deferred
financing costs are carried at cost less accumulated amortization
and are included in other assets. Amortization is provided on a
straight-line method over the life of the respective debt
agreements.

F-8
<PAGE>

2. INSTALLMENT LOANS RECEIVABLE UNDER PREMIUM FINANCE AGREEMENTS

Substantially all installment loans receivable under premium finance
agreements are repayable in less than one year. In the event of default by
a borrower, the Company is entitled to cancel the underlining insurance
policy financed and receive a refund for the unused term of such policy
from the insurance carrier.

In October 1996, the Company entered into an agreement with a financial
institution to transfer, on a non-recourse basis, a fifty percent interest
in certain designated installment loans receivable, not to exceed
$1,000,000 at any one point. This agreement was extended to a limit of
$2,000,000 in April 1997. The Company entered into similar financing
agreements with two additional financial institutions. The aggregate
borrowing limit for these agreements was $4,000,000 during 1997. Under
terms of these agreements, the Company remitted the financial
institution's share in monthly installment loans receivable collections.
Interest was payable monthly based upon the average outstanding balance
under this agreement at LIBOR (at the time of purchase) plus 200 or 225
basis points as stipulated in these agreements. Installment loans
receivable transferred under this agreement were zero for the year ended
December 31, 1998.

During 1997, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 125, "Accounting For Transfers and Servicing of
Financial Assets and Extinguishment of Liabilities" ("SFAS No. 125").
Installment loans receivable under this agreement were classified as
securitized loans payable. As of December 31, 1998 the Company had no
outstanding borrowings under these agreements. One of these agreements
with aggregate maximum borrowings of $2,000,000 expired on October 1998.
The agreements with the other financial institutions do not stipulate a
termination date.

A summary of activity in the allowance for possible credit losses is as
follows:
<TABLE>
<CAPTION>
December 31,
----------------------
1998 1997
---- ----
<S> <C> <C>
Balance, beginning of period $ 310,000 $ 300,000
Provision 352,835 572,297
Charge-offs--net of recoveries of $121,122
and $44,504, respectively (352,835) (562,297)
--------- ---------
Balance, end of period $ 310,000 $ 310,000
========= =========
</TABLE>

3. DUE FROM OFFICERS

Amounts due from officers bear interest at the prime lending rate (7.75%
at December 31, 1998) and have no specified maturity dates.

4. PROPERTY AND EQUIPMENT

Property and equipment - consisted of the following:
<TABLE>
<CAPTION>
December 31, 1998
-----------------

<S> <C>
Equipment including computer hardware and software $ 521,150
Office furniture and fixtures 159,503
Leasehold improvements 43,281
---------
723,934
Less accumulated depreciation and amortization (495,832)
---------
Property and equipment $ 228,102
=========
</TABLE>

5. NOTES PAYABLE AND COMMERCIAL PAPER ISSUED

a. Notes Payable to Financial Institutions - At December 31, 1998, the
Company had a revolving credit agreement with a consortium of banks
which aggregated $45,000,000. Borrowings under the agreement bear
interest at prime or the LIBOR rate (5.06% at December 31, 1998)
plus 1.15% above such rate and may contain certain commitment fees.
Interest rates during 1998 ranged from 6.18 to 8.50%. The
outstanding borrowings are unsecured and there are no compensating
balance arrangements. This revolving credit agreement expires
January 2001.

F-9
<PAGE>

STANDARD FUNDING CORP.

NOTES TO FINANCIAL STATEMENTS--(Continued)

b. Commercial Paper Issued - The commercial paper issued is privately
placed by the Company. The weighted average interest rate in effect
for outstanding obligations at December 31, 1998 was 6.24%. At
December 31, 1998, commercial paper outstanding held by the
principals of the Company and other related parties aggregated
approximately $1,774,762.

6. SUBORDINATED DEBT

Subordinated debt consists of the following:
<TABLE>
<CAPTION>
December 31, 1998
-----------------

<S> <C>
14% senior subordinated note (1) $2,200,000
14.25% junior subordinated note (2) 810,000
12.50% senior subordinated note (3) 510,000
14% senior subordinated note (3) 500,000
10% senior subordinated note (3) 90,000
12% junior subordinated note (3) 50,000
11.25% junior subordinated note (3) 43,000
10.95% senior subordinated note (3) 850,000
----------
$5,053,000
==========
<FN>
(1) The 14% senior subordinated note is payable in semi-annual
installments through December 27, 2000 and contains certain
covenants which restrict the Company's ability, among other things,
to merge, pay dividends and permit its business to be heavily
concentrated with a single broker or agency. In connection with the
proposed merger discussed in Note 11, the Company has received
waivers of default. In the event the prime rate as defined increases
to over 11%, the interest rate will increase on a pari passu basis.
The underlying agreement also contains various covenants requiring
the Company to meet certain financial ratios. Interest on this note
is due monthly.

(2) At December 31, 1998, subordinated debt with an aggregate principal
amount of $600,000 was held by the principal shareholders of the
Company. Interest on these notes is due semi-annually. There are no
covenants relating to this indebtedness.

(3) Interest on these subordinated notes is payable either monthly, or
semi-annually, as designated under the terms of each specific note.
There are no covenants relating to this indebtedness.
</FN>
</TABLE>
Subordinated debt outstanding at December 31, 1998 matures as follows:
<TABLE>
<CAPTION>
Year Ending December 31, Amount
------------------------ ------

<S> <C>
1999 800,000
2000 1,900,000
2001 1,413,000
2002 90,000
2003 850,000
----------
Total $5,053,000
==========
</TABLE>

F-10
<PAGE>

STANDARD FUNDING CORP.

NOTES TO FINANCIAL STATEMENTS--(Continued)

7. INCOME TAXES

The provision for income taxes consisted of the following components:

<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1998 1997
---- ----
<S> <C> <C>
Federal:
Current $ 207,622 $ 282,000
Deferred 55,772 (69,800)
--------- ---------
263,394 212,200
--------- ---------

State:
Current 71,871 123,600
Deferred 19,277 (25,900)
--------- ---------
91,148 97,700
--------- ---------
Total $ 354,542 $ 309,900
========= =========
</TABLE>
Deferred income taxes substantially consists of differences in the methods
in which the Company accounts for unearned interest and the allowance for
possible credit losses for income tax purposes compared with financial
reporting purposes.

The deferred tax assets and liabilities at December 31, 1998 consisted of
the following:
<TABLE>
<S> <C>
Assets:
Allowance for possible credit losses $ 126,944
---------

Liabilities:
Unearned interest (364,463)
Other (28,557)
---------
Total deferred tax liabilities (394,020)
---------
Net deferred income tax liability $(267,076)
=========
</TABLE>
A reconciliation of the differences between the federal statutory tax rate
of 34% and the Company's effective tax rate is as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1998 1997
---- ----

<S> <C> <C>
Federal statutory income tax rate 34.0% 34.0%
State income taxes, net of federal benefit 6.2 6.8
Permanent differences 5.1 5.2
Miscellaneous difference .7 (1.4)
---- ----
Effective income tax rate 46.0% 44.6%
==== ====
</TABLE>
8. SHAREHOLDERS' EQUITY

(a) Initial Public Offering

During August and September 1994, the Company consummated an initial
public offering of its common stock by selling 1,060,000 shares at $4.25
per share. Cash proceeds to the Company from this offering aggregated
approximately $3,593,000, net of aggregate issuance costs of approximately
$912,000. In addition, the Company issued 100,000 warrants at a purchase
price of $.001 per warrant to purchase common stock at $6.17 per share to
the underwriters' representatives. These warrants are exercisable for a
period of four years, commencing on August 8, 1995. No warrants have been
exercised as of December 31, 1998.

F-11
<PAGE>

STANDARD FUNDING CORP.

NOTES TO FINANCIAL STATEMENTS--(Continued)

(b) Stock Option Plan

The Company has an Equity Incentive Plan (the "Plan") that provides for
the grant of up to 250,000 shares of Common Stock in the form of stock
options (incentive and nonstatutory), stock appreciation rights,
performance shares, restricted stock, stock units and other stock-based
awards. Awards under the Plan can be granted to employees, consultants and
non-employee directors as determined by the Board of Directors. The
exercise price of all "incentive stock options" granted under the Plan
must be at least equal to the fair market value of the option shares on
the date of grant. The term of any incentive stock option granted under
the Plan may not exceed ten years.

During 1997, 58,525 options were granted to various officers, directors
and employees of the Company. These options are exercisable from the date
of grant and expire five years from the date of grant. No options were
granted under the Plan prior to 1997.

The weighted average remaining contractual life remaining on options
granted under the plan is 3.2 years. The weighted average exercise price
and fair value is $4.38. At December 31, 1998, 58,525 options are
exercisable. There have been no forfeitures of options to date.

As discussed in Note 1, the Company continues to account for its
stock-based awards using the intrinsic value method in accordance with APB
25 and its related interpretations. Accordingly, no compensation cost has
been recognized in the financial statements.

Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation", ("SFAS 123") requires the disclosure of pro
forma net income and earnings per share had the Company adopted the fair
value method as of the beginning of fiscal 1996. Under SFAS No. 123, the
fair value of stock-based awards to employees is calculated through the
use of option pricing models, even though such models were developed to
estimate the fair value of freely tradable, fully transferable options
without vesting restrictions, which significantly differ from the
Company's stock option awards. These models also require subjective
assumptions, including future stock price volatility and expected time to
exercise, which greatly affect the calculated values. The Company's
calculations were made using the Black-Scholes option pricing model with
the following weighted average assumptions for 1998: remaining life of
three years, stock volatility of 66 percent, risk free interest rate of
4.7 percent and no dividends during the expected term. The Company's
calculations are based on a multiple option valuation approach and
forfeitures are recognized as they occur. If compensation cost for the
Company's outstanding and vested stock options had been determined
consistent with SFAS No. 123, the Company's net income and earnings per
share would have been the pro forma amounts indicated below:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1998 1997
---- ----
<S> <C> <C>
Net Income:
As reported $ 415,786 $ 384,203
Pro forma $ 355,336 $ 312,348
Basic and Diluted EPS:
As reported .15 .14
Pro forma .13 .11

</TABLE>
(c) Capital Requirements

The Company is subject to minimum capital requirements imposed by certain
of the states in which it is licensed. The Commonwealth of Pennsylvania
requires an insurance premium finance company to have and maintain a
minimum net worth of $50,000. The State of New York requires that
insurance premium finance companies have and maintain equity capital equal
to at least 10% of outstanding receivables and, in any event, not less
than $1,500. In addition, the Company is prohibited from declaring or
paying any dividends on its capital stock (other than dividends payable
solely in shares of Common Stock) pursuant to a subordinated debt
arrangement.

F-12
<PAGE>

STANDARD FUNDING CORP.

NOTES TO FINANCIAL STATEMENTS--(Continued)

9. PENSION PLANS

The Company has a voluntary contribution pension plan which complies with
Section 401(k) of the Internal Revenue Code. The Plan permits employees to
make contributions to a pension trust, with a matching contribution by the
Company, at the rate of 20% for every dollar contributed up to 6% of the
employee's salary. For the years ended December 31, 1998 and 1997, the
Company contributed $52,000 and $44,000, respectively to the plan.

10. COMMITMENTS AND CONTINGENCIES

Lease Commitments - The Company is obligated under operating lease
commitments for its office facility and automobiles. Future minimum lease
payments and other lease related costs are as follows:
<TABLE>
<CAPTION>
Year Ending December 31, Amount
------------------------ ------
<S> <C>
1999 $114,878
2000 107,604
2001 44,835
--------
Total $267,317
========
</TABLE>

The facility lease requires payment of real estate taxes, insurance and
other related costs. Rent expense for the years ended December 31, 1998
and 1997 aggregated approximately $114,738 and $107,799, respectively.

Employment Agreements - The Company has employment agreements with two
officers/shareholders of the Company. Such agreements, as renewed in July
1998, provide for full-time employment to the Company from the officers in
return for aggregate officers' salary of $391,600 per year plus bonus and
other benefits. These contracts may be renewed on their anniversary date
for successive one-year terms. These agreements also contain clauses on
termination, severance and covenants not to compete after the date of
termination.

Litigation - The Company is a defendant in lawsuits arising in the
ordinary course of business. It is the opinion of management of the
Company that it has meritorious defenses against all outstanding claims
and that the outcome of such litigation will not have a significant
adverse effect on the Company's financial position or results of
operations. Further, management intends to vigorously defend all such
litigation.

11. SUBSEQUENT EVENT

On January 28, 1999, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") with Atlantic Bank and Atlantic Premium,
pursuant to which Atlantic Premium will be merged with the Company. For
each share of the Company's common stock, provided it is 20% or less of
the Company's issued and outstanding common stock at the time of the
Merger Agreement, shareholders will receive $3.50 in cash. Shareholders
owning more than 20% of the outstanding common stock at the time of the
Merger Agreement will receive $2.97479 per share in cash and a note having
a principal amount of $0.52521 per share. After the merger, the Company
will be a subsidiary of Atlantic Bank. The merger is subject to
shareholder and regulatory approval. The Company expects to consummate the
merger during the second quarter of 1999, assuming all of the conditions
to the merger, as outlined in the Merger Agreement, are met or waived
prior to that date.

* * * * *

F-13
<PAGE>

Annex A

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

ATLANTIC BANK OF NEW YORK

ATLANTIC PREMIUM, INC.

and

STANDARD FUNDING CORP.

Dated as of January 28, 1999

<PAGE>

TABLE OF CONTENTS

ARTICLE I

THE MERGER . . . . . . . . . . . . 1

SECTION 1.1 The Merger. . . . . . . . . . . . . . . . . 1
SECTION 1.2 Effective Time. . . . . . . . . . . . . . 2
SECTION 1.3 Effect of the Merger. . . . . . . . . . . . 2
SECTION 1.4 Certificate of Incorporation; By-Laws . . . 2
SECTION 1.5 Directors and Officers. . . . . . . . . . . 2
SECTION 1.6 Effect on Capital Stock . . . . . . . . . . 2
SECTION 1.7 Dissenters' Rights. . . . . . . . . . . . . 4
SECTION 1.8 Payment for Shares. . . . . . . . . . . . . 4
SECTION 1.9 No Further Rights or Transfers. . . . . . . 6
SECTION 1.10 Taking of Necessary Action; Further Action. 6
SECTION 1.11 Material Adverse Effect . . . . . . . . . . 7

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . . . 7

SECTION 2.1 Corporate Organization. . . . . . . . . . . 7
SECTION 2.2 Capitalization. . . . . . . . . . . . . . . 7
SECTION 2.3 Subsidiaries. . . . . . . . . . . . . . . . 8
SECTION 2.4 No Commitments to Issue Capital Stock.. . . 8
SECTION 2.5 Authorization; Execution and Delivery.. . . 8
SECTION 2.6 Governmental Approvals and Filings. . . . . 9
SECTION 2.7 No Conflict.. . . . . . . . . . . . . . . . 9
SECTION 2.8 SEC Filings . . . . . . . . . . . . . . . . 9
SECTION 2.9 Financial Statements; Absence of Undisclosed
Liabilities; Receivables. . . . . . . . . . 10
SECTION 2.10 [Intentionally Omitted] . . . . . . . . . . 11
SECTION 2.11 Absence of Changes. . . . . . . . . . . . . 11
SECTION 2.12 Tax Matters.. . . . . . . . . . . . . . . . 13
SECTION 2.13 Relations with Employees and Brokers. . . . 14
SECTION 2.14 Employee Benefits . . . . . . . . . . . . . 15
SECTION 2.15 Title to Properties.. . . . . . . . . . . . 19
SECTION 2.16 Compliance with Laws; Legal Proceedings.. . 19
SECTION 2.17 Finders.. . . . . . . . . . . . . . . . . . 20
SECTION 2.18 Intellectual Property . . . . . . . . . . . 20
SECTION 2.19 Insurance.. . . . . . . . . . . . . . . . . 21
SECTION 2.20 Contracts; etc. . . . . . . . . . . . . . . 21
SECTION 2.21 Permits, Authorizations, etc. . . . . . . . 23
SECTION 2.22 Environmental Matters.. . . . . . . . . . . 23
SECTION 2.23 Company Acquisitions. . . . . . . . . . . . 24
<PAGE>
SECTION 2.24 Books and Records . . . . . . . . . . . . . 24
SECTION 2.25 Interested Party Transactions . . . . . . . 24
SECTION 2.26 Certain Approvals . . . . . . . . . . . . . 25

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB. . . . . . . . . . 25

SECTION 3.1 Corporate Organization. . . . . . . . . . . 25
SECTION 3.2 Capitalization. . . . . . . . . . . . . . . 25
SECTION 3.3 Authorization; Execution and Delivery.. . . 25
SECTION 3.4 Governmental Approvals and Filings. . . . . 25
SECTION 3.5 No Conflict.. . . . . . . . . . . . . . . . 26
SECTION 3.6 No Legal Proceedings. . . . . . . . . . . . 26
SECTION 3.7 Finders.. . . . . . . . . . . . . . . . . . 26
SECTION 3.8 Financial Ability to Perform. . . . . . . . 26
SECTION 3.9 Proxy Statement . . . . . . . . . . . . . . 26

ARTICLE IV

COVENANTS, TRANSACTIONS AND CONDUCT OF
BUSINESS PENDING THE MERGER . . . . . . . . 27

SECTION 4.1 Conduct of Business by the Company Pending
the Merger. . . . . . . . . . . . . . . . . 27
SECTION 4.2 Shareholders' Meeting; Proxy Material . . . 29
SECTION 4.3 No Shopping . . . . . . . . . . . . . . . . 29
SECTION 4.4 Access to Information . . . . . . . . . . . 31
SECTION 4.5 Amendment of Company's Employee Plans . . . 31
SECTION 4.6 Stock Options and Warrants. . . . . . . . . 31
SECTION 4.7 Best Efforts. . . . . . . . . . . . . . . . 31
SECTION 4.8 Consents. . . . . . . . . . . . . . . . . . 31
SECTION 4.9 Public Announcements. . . . . . . . . . . . 32
SECTION 4.10 Notification of Certain Matters . . . . . . 32
SECTION 4.11 Indemnification . . . . . . . . . . . . . . 32
SECTION 4.12 Directors and Officers Liability Insurance. 32
SECTION 4.13 Employment Contracts. . . . . . . . . . . . 33
SECTION 4.14 Conveyance Taxes. . . . . . . . . . . . . . 33
SECTION 4.15 Repayment of Indebtedness . . . . . . . . . 34
SECTION 4.16 Keyman Life Insurance . . . . . . . . . . . 34

ARTICLE V

CONDITIONS TO THE MERGER. . . . . . . . . 33

SECTION 5.1 Conditions to Obligation of Each Party to
Effect the Merger . . . . . . . . . . . . . 33
SECTION 5.2 Additional Conditions to Obligations of Parent
and Merger Sub. . . . . . . . . . . . . . . 34
<PAGE>
SECTION 5.3 Additional Conditions to Obligation of the
Company . . . . . . . . . . . . . . . . . . 36

ARTICLE VI

TERMINATION. . . . . . . . . . . . 36

SECTION 6.1 Termination. . . . . . . . . . . . . . . . 36
SECTION 6.2 Effect of Termination. . . . . . . . . . . 38
SECTION 6.3 Fees and Expenses and Damages. . . . . . . 38

ARTICLE VII

GENERAL PROVISIONS. . . . . . . . . . 39

SECTION 7.1 Effectiveness of Representations,
Warranties and Agreements. . . . . . . . . 39
SECTION 7.2 Notices. . . . . . . . . . . . . . . . . . 39
SECTION 7.3 Certain Definitions. . . . . . . . . . . . 40
SECTION 7.4 Amendment. . . . . . . . . . . . . . . . . 41
SECTION 7.5 Waiver . . . . . . . . . . . . . . . . . . 41
SECTION 7.6 Headings; Construction . . . . . . . . . . 41
SECTION 7.7 Severability . . . . . . . . . . . . . . . 41
SECTION 7.8 Entire Agreement . . . . . . . . . . . . . 42
SECTION 7.9 Assignment; Merger Sub . . . . . . . . . . 42
SECTION 7.10 Parties in Interest. . . . . . . . . . . . 42
SECTION 7.11 Failure or Indulgence Not Waiver; Remedies
Cumulative . . . . . . . . . . . . . . . . 42
SECTION 7.12 Governing Law. . . . . . . . . . . . . . . 42
SECTION 7.13 Counterparts . . . . . . . . . . . . . . . 42
SECTION 7.14 WAIVER OF JURY TRIAL . . . . . . . . . . . 43

Exhibit 1.6(b) Form of Note . . . . . . . . . . . . . . . . .
Exhibit 4.6 Resolutions. . . . . . . . . . . . . . . . . .
Exhibit 5.2(j) Commercial Paper . . . . . . . . . . . . . . .
Exhibit A Form of Employment Agreement (Karp). . . . . .
Exhibit B Form of Employment Agreement (Fisher). . . . .
Exhibit C-1 Form of Kramer Levin Opinion . . . . . . . . .
Exhibit C-2 Form of James Maxwell, Esq. Opinion. . . . . .
Exhibit D Form of Blau Kramer Opinion. . . . . . . . . .
<PAGE>

AGREEMENT AND PLAN OF MERGER
----------------------------

AGREEMENT AND PLAN OF MERGER, dated as of January 28, 1999 (this
"Agreement"), among ATLANTIC BANK OF NEW YORK, a New York corporation
("Parent"), ATLANTIC PREMIUM, INC., a New York corporation and a direct,
wholly-owned subsidiary of Parent ("Merger Sub"), and STANDARD FUNDING CORP., a
New York corporation (the "Company").

W I T N E S S E T H:
- - - - - - - - - -

WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company
have each determined that it is advisable and in the best interests of their
respective shareholders for Parent to cause Merger Sub to merge with and into
the Company upon the terms and subject to the conditions set forth herein;

WHEREAS, in furtherance of such combination, the Boards of Directors
of Parent, Merger Sub and the Company have each approved the merger (the
"Merger") of Merger Sub with and into the Company in accordance with the
applicable provisions of the New York Business Corporation Law ("NYBCL"), and
upon the terms and subject to the conditions set forth herein; and

WHEREAS, pursuant to the Merger, each outstanding share (a "Share") of
the Company's Common Stock, par value $0.001 per share (the "Company Common
Stock"), subject to the provisions of Section 1.7, shall be converted into the
right to receive the Merger Consideration (as defined in Section 1.6(b)), upon
the terms and subject to the conditions set forth herein;

NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Merger Sub and the Company hereby agree as follows:

ARTICLE I

THE MERGER

SECTION 1.1 The Merger. (a) Effective Time. At the Effective Time (as
defined in Section 1.2), and subject to and upon the terms and conditions of
this Agreement and the NYBCL, Merger Sub shall be merged with and into the
Company, the separate corporate existence of Merger Sub shall cease, and the
Company shall continue as the surviving corporation. The Company as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "Surviving Corporation."
<PAGE>
(b) Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
6.1 and subject to the satisfaction or waiver of the conditions set forth in
Article V, the consummation of the Merger will take place as promptly as
practicable (and in any event within two business days) after satisfaction or
waiver of the conditions set forth in Article V at the offices of Kramer Levin
Naftalis & Frankel LLP, 919 Third Avenue, New York, New York, unless another
date, time or place is agreed to in writing by the parties hereto.

SECTION 1.2 Effective Time. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article V, the parties
hereto shall cause the Merger to be consummated by filing a certificate of
merger as contemplated by the NYBCL (the "Certificate of Merger"), together with
any required related certificates, with the Secretary of State of the State of
New York, in such form as required by, and executed in accordance with the
relevant provisions of, the NYBCL (the time of such filing being the "Effective
Time").

SECTION 1.3 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Certificate of Merger and
the applicable provisions of the NYBCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time (i) the Surviving
Corporation shall possess all the rights, privileges, immunities, powers and
purposes of Merger Sub and the Company, (ii) all the property, real and
personal, including subscriptions to shares, causes of action and every other
asset of Merger Sub and the Company shall vest in the Surviving Corporation
without further act or deed, and (iii) the Surviving Corporation shall assume
and be liable for all the liabilities, obligations and penalties of Merger Sub
and the Company.

SECTION 1.4 Certificate of Incorporation; By-Laws. (a) Certificate of
Incorporation. Unless otherwise determined by Parent prior to the Effective
Time, at the Effective Time the Certificate of Incorporation of the Company, as
in effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by the NYBCL and such Certificate of Incorporation.

(b) By-Laws. The By-Laws of the Company, as in effect immediately
prior to the Effective Time, shall be the By-Laws of the Surviving Corporation
until thereafter amended as provided by the NYBCL, the Certificate of
Incorporation of the Surviving Corporation and such By-Laws.

SECTION 1.5 Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and ByLaws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
<PAGE>
SECTION 1.6 Effect on Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of the Parent, Merger Sub, the
Company or the holders of any of the following securities:

(a) Conversion of Shares Held by Small Holders. Subject to the
provisions of Section 1.7, each Share of the Company Common Stock issued and
outstanding immediately prior to the Effective Time held by a Person that holds,
in the aggregate, shares of the Company Common Stock that represent 20% or less
of such issued and outstanding Company Common Stock (a "Small Holder") shall be
converted into the right to receive $3.50 in cash (the "Small Holder Cash
Consideration").

(b) Conversion of Shares Held by Large Holders. Subject to the
provisions of Section 1.7, each Share of the Company Common Stock issued and
outstanding immediately prior to the Effective Time held by a Person that holds,
in the aggregate, shares of the Company Common Stock that represent more than
20% of such issued and outstanding Company Common Stock (a "Large Holder") shall
be converted into the right to receive (i) $2.97479 in cash (the "Large Holder
Cash Consideration"), and (ii) Notes, dated the Effective Date and otherwise in
substantially the form set forth on Exhibit 1.6(b) hereto (the "Notes"), having
an aggregate principal amount equal to $0.52521 for each Share of the Company
Common Stock held by such Large Holder immediately prior to the Effective Time.
The Small Holder Cash Consideration, Large Holder Cash Consideration and Notes
are collectively referred to herein as the "Merger Consideration."

(c) Cancellation. Each share of the Company Common Stock held in the
treasury of the Company and each share of the Company Common Stock owned by
Parent, Merger Sub or any direct or indirect wholly owned subsidiary of the
Company or Parent immediately prior to the Effective Time shall, by virtue of
the Merger and without any action on the part of the holder thereof, cease to be
outstanding, be canceled and retired without payment of any consideration
therefor and cease to exist.

(d) Warrants and Options.

(i) Each warrant (a "Warrant") to purchase shares of the
Company Common Stock heretofore granted under any warrant agreement or
other arrangement with the Company shall be converted into a right to
purchase and receive, upon the basis and upon the terms and conditions
specified in such warrant agreement or other arrangement, in lieu of such
shares, the Small Holder Cash Consideration with respect to that same
number of shares.

(ii) Each option (an "Option") to purchase shares of the
Company Common Stock heretofore granted under any stock option or
compensation plan or other arrangement with the Company shall be converted
into a right to purchase and receive, upon the basis and upon the terms and
conditions specified in such option or compensation plan or other
arrangement, in lieu of such shares, the Small Holder Cash Consideration
with respect to that same number of shares.
<PAGE>
(e) No Liability. Neither Parent, Merger Sub nor the Company shall be
liable to any holder of Company Common Stock for any Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.

(f) Withholding Rights. Parent or the Disbursing Agent (as defined in
Section 1.8) shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of
Company Common Stock such amounts as Parent or the Disbursing Agent is required
to deduct and withhold with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the "Code") or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld by
Parent or the Disbursing Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the Shares in
respect of which such deduction and withholding was made by Parent or the
Disbursing Agent.

(g) Capital Stock of Merger Sub. Each share of common stock, $0.01 par
value, of Merger Sub issued and outstanding immediately prior to the Effective
Time shall be converted into and exchanged for 27,600 validly issued, fully paid
and nonassessable shares of common stock, $0.001 par value, of the Surviving
Corporation.

SECTION 1.7 Dissenters' Rights. Notwithstanding any provision of this
Agreement to the contrary, any shares of Company Common Stock outstanding
immediately prior to the Effective Time held by a holder who has demanded and
perfected the right, if any, for appraisal of those shares in accordance with
the provisions of Sections 623 and 910 of the NYBCL and as of the Effective Time
has not withdrawn or lost such right to such appraisal ("Dissenting Shares")
shall not be converted into or represent a right to receive Merger Consideration
pursuant to Section 1.6, but the holder shall only be entitled to such rights as
are granted by the NYBCL. If a holder of shares of Company Common Stock who
demands appraisal of those shares under the NYBCL shall effectively withdraw or
lose (through failure to perfect or otherwise) the right to appraisal, then, as
of the Effective Time or the occurrence of such event, whichever last occurs,
those shares shall be converted into and represent only the right to receive the
Small Holder Cash Consideration or the Large Holder Cash Consideration and
Notes, as the case may be, as provided in Section 1.6, without interest, upon
compliance with the provisions, and subject to the limitations, of Section 1.8.
The Company shall give Parent (a) prompt notice of any written demands for
appraisal of any shares of Company Common Stock, attempted withdrawals of such
demands, and any other instruments served pursuant to the NYBCL and received by
the Company relating to shareholders' rights of appraisal, and (b) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the NYBCL. The Company shall not, except with the prior
written consent of Parent, voluntarily make any payment with respect to any
demands for appraisal of Company Common Stock, offer to settle or settle any
such demands or approve any withdrawal of any such demands.

SECTION 1.8 Payment for Shares.

(a) At or before the Effective Time, Parent or Merger Sub shall
deposit in immediately available funds with any disbursing agent selected by
Parent and reasonably acceptable to the Company that is organized under the laws
<PAGE>
of the United States or any state of the United States with capital, surplus and
undivided profits of at least $500,000,000 (the "Disbursing Agent"), an amount
equal to the sum (rounded up or down to the nearest whole $.01, with $.005
rounded up to the nearest whole $.01) of (A) the product of (i) the number of
shares of Company Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares then held of record by Parent or Merger Sub or
any other direct or indirect subsidiary of Parent or the Company or by the Large
Holders), and (ii) the Small Holder Cash Consideration and (B) the product of
(x) the number of shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time held by the Large Holders, and (y) the
Large Holder Cash Consideration (such sum being hereinafter referred to as the
"Fund"). Out of the Fund, the Disbursing Agent shall, pursuant to irrevocable
instructions from the holders of Company Common Stock, make the payments
referred to in Sections 1.6(a) and 1.6(b), subject to the requirements of
paragraph (b) of this Section 1.8. At the request of the Surviving Corporation,
in its sole discretion at any time, but without any obligation to make any such
request, the Disbursing Agent also may make payments, in final discharge of any
obligations of the Surviving Corporation pursuant to Sections 623 and 910 of the
NYBCL, to holders of Company Common Stock who have exercised dissenters' rights
pursuant to Sections 623 and 910 of the NYBCL and have not subsequently
withdrawn or lost such rights as long as the payment from the Fund with respect
to any Dissenting Share does not exceed the Small Holder Cash Consideration or
the Large Holder Cash Consideration, as the case may be. The Disbursing Agent
may invest portions of the Fund as Parent or the Surviving Corporation directs,
provided that all such investments shall be held as cash or in obligations of or
guaranteed by the United States of America, in commercial paper obligations
receiving the highest rating from either Moody's Investors Service, Inc. or
Standard & Poor's Corporation, or in certificates of deposit, bank repurchase
agreements or bankers' acceptances of commercial banks with capital, surplus and
undivided profits exceeding $500,000,000 (collectively, "Permitted
Investments"), or in money market funds which are invested solely in Permitted
Investments. Any net profit resulting from, or interest or income produced by,
such investments shall be payable to the Surviving Corporation, and shall be
remitted from time to time by the Disbursing Agent upon the request of Parent or
the Surviving Corporation. Any amount remaining in the Fund after nine months
after the Effective Time may be refunded to the Surviving Corporation at its
option; provided, however, that the Surviving Corporation shall be liable for
any cash payments required to be made thereafter pursuant to Sections 1.6(a) and
1.6(b).

(b) As soon as practicable after the Effective Time, the Disbursing
Agent shall mail to each holder of record (other than Parent or Merger Sub or
any direct or indirect subsidiary of Parent or the Company) of a certificate or
certificates (a "Certificate" or "Certificates") which immediately prior to the
Effective Time represented issued and outstanding shares of Company Common Stock
(other than those holders who have exercised dissenters' rights pursuant to
Sections 623 and 910 of the NYBCL and have not subsequently withdrawn or lost
such rights), a form letter of transmittal (the "Letter of Transmittal") for
return to the Disbursing Agent, and instructions for use in effecting the
surrender of Certificates and to receive the Merger Consideration for each of
such holder's shares of Company Common Stock pursuant to Sections 1.6(a) and
1.6(b). The Letter of Transmittal shall specify that delivery shall be effected,
<PAGE>
and risk of loss shall pass, only upon proper delivery of such Certificate or
Certificates to the Disbursing Agent. The Disbursing Agent, as soon as
practicable following receipt of any such Certificate or Certificates together
with the Letter of Transmittal, duly executed, and any other items specified by
the Letter of Transmittal, shall (A) pay, by check or draft, to the Small
Holders, the sum (rounded up or down to the nearest whole $.01, with $.005
rounded up to the nearest whole $.01) of the amounts determined by multiplying
(i) the number of shares of Company Common Stock represented by the Certificate
or Certificates so surrendered and (ii) the Small Holder Cash Consideration and
(B) shall (i) deliver to the Large Holders Notes in aggregate principal amount
equal to the product of $0.525 and the number of shares of Company Common Stock
represented by the Certificate or Certificates so surrendered, and (ii) pay, by
check or draft, to the Large Holders the sum (rounded up or down to the nearest
whole $.01, with $.005 rounded up to the nearest whole $.01) of the amounts
determined by multiplying (x) the number of shares of Company Common Stock
represented by the Certificate or Certificates so surrendered and (y) the Large
Holder Cash Consideration. All of the foregoing payments and deliveries shall be
subject to any required withholding of taxes by the Surviving Corporation. No
interest will be paid or accrued on the cash payable upon the surrender of the
Certificate or Certificates. If payment is to be made to a person other than the
person in whose name the Certificates surrendered are registered, it shall be a
condition of payment that the Certificates so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that the person requesting
the payment shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of the Certificates
surrendered or establish to the satisfaction of the Surviving Corporation that
the tax has been paid or is not applicable.

(c) In the event any such Certificate or Certificates shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate or Certificates to have been lost, stolen or
destroyed, the amount to which such person would have been entitled under
Section 1.8(b) hereof but for failure to deliver such Certificate or
Certificates to the Disbursing Agent shall nevertheless be paid to such person,
provided that the Surviving Corporation may, in its reasonable discretion and as
a condition precedent to such payment, require such person to give the Surviving
Corporation a written indemnity agreement in form and substance reasonably
satisfactory to the Surviving Corporation and, if reasonably deemed advisable by
the Surviving Corporation, a bond in such sum as the Surviving Corporation may
direct as indemnity against any claim that may be had against Parent or the
Surviving Corporation with respect to the Certificate or Certificates alleged to
have been lost, stolen or destroyed.

SECTION 1.9 No Further Rights or Transfers. At and after the Effective
Time, all shares of Company Common Stock issued and outstanding immediately
prior to the Effective Time shall be canceled and cease to exist, and each
holder of a Certificate or Certificates that represented shares of Company
Common Stock issued and outstanding immediately prior to the Effective Time
shall cease to have any rights as a shareholder of the Company with respect to
the shares of Company Common Stock represented by such Certificate or
Certificates, except for the right to surrender such holder's Certificate or
Certificates in exchange for the payment provided pursuant to Sections 1.6(a)
and 1.6(b) or to perfect such holder's right to receive payment for such
holder's shares pursuant to Sections 623 and 910 of the NYBCL and Section 1.7
hereof if such holder has validly exercised and not withdrawn or lost such
holder's right to receive payment for such holder's shares pursuant to Section
<PAGE>
623 and 910 of the NYBCL, and no transfer of shares of Company Common Stock
issued and outstanding immediately prior to the Effective Time shall be made on
the stock transfer books of the Surviving Corporation.

SECTION 1.10 Taking of Necessary Action; Further Action. Each of
Parent, Merger Sub and the Company will take all such reasonable and lawful
action as may be necessary or appropriate in order to effectuate the Merger in
accordance with this Agreement as promptly as possible. If, at any time after
the Effective Time, any such further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
all the rights, privileges, immunities, powers and purposes, and all the
property, real and personal, including subscriptions to shares, causes of action
and every other asset of the Company and Merger Sub, the officers and directors
of the Company and Merger Sub immediately prior to the Effective Time are fully
authorized in the name of their respective corporations or otherwise to take,
and will take, all such lawful and necessary action.

SECTION 1.11 Material Adverse Effect. When used in connection with the
Company, the term "Material Adverse Effect" means any change, effect or
circumstance that, individually or when taken together with all other such
changes, effects or circumstances that have occurred prior to the date of
determination of the occurrence of the Material Adverse Effect, is or is
reasonably likely to be materially adverse to the business, operations, assets
(including intangible assets), condition (financial or otherwise), liabilities,
or results of operations of the Company. When used in connection with Parent and
Parent's Subsidiaries, the term "Material Adverse Effect" means any change,
effect or circumstance that, individually or when taken together with all other
such changes, effects or circumstances that have occurred prior to the date of
determination of the occurrence of the Material Adverse Effect, is or is
reasonably likely to be materially adverse to the business, operations, assets
(including intangible assets), condition (financial or otherwise), liabilities,
or results of operations of Parent and its Subsidiaries.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to Parent and Merger Sub
that, except as set forth in the written disclosure schedule delivered by the
Company to Parent (the "Company Disclosure Schedule"):

SECTION 2.1 Corporate Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and has all requisite corporate power and authority to own, operate and
lease its properties and assets as and where the same are owned, operated or
leased and to conduct its business as it is now being conducted. The Company is
in good standing and duly qualified or licensed as a foreign corporation to do
business in those jurisdictions listed in Section 2.1 of the Company Disclosure
Schedule, such jurisdictions being the only jurisdictions in which the location
<PAGE>
of the property and assets owned, operated or leased by the Company or the
nature of the business conducted by the Company makes such qualification or
licensing necessary, except where the failure to be so qualified or licensed
would not have a Material Adverse Effect. The Company has heretofore delivered
to Parent complete and correct copies of the Company's Certificate of
Incorporation and By-laws, as amended to and as in effect on the date hereof.

SECTION 2.2 Capitalization. (a) The authorized capital stock of the
Company consists of 4,000,000 shares of Company Common Stock and 1,000,000
shares of Preferred Stock, par value $0.001 per share. As of the date hereof,
2,760,000 shares of Company Common Stock and no shares of Preferred Stock are
issued and outstanding.

(b) All outstanding shares of Company Common Stock are validly issued and
outstanding, fully paid and nonassessable, and there are no preemptive or
similar rights in respect of the Company Common Stock. All shares of Company
Common Stock issuable upon the exercise of stock options and the Warrants will,
when issued in accordance therewith, be validly issued, fully paid and
nonassessable. All outstanding shares of Company Common Stock were issued in
compliance with all requirements of all applicable federal and state securities
laws.

(c) Section 2.2 of the Company Disclosure Schedule sets forth a complete
and correct list of (i) all stock options, including Stock Options granted under
the Company's Stock Option Plan, and (ii) all warrants to purchase any capital
stock of the Company, including the Warrants, indicating as to each holder
thereof, the number of shares of Company Common Stock or other securities
subject thereto and the exercisability, exercise price and termination date
therefor.

SECTION 2.3 Subsidiaries. The Company does not have, and never has
had, any Subsidiaries, and except as listed in Section 2.3(a) of the Company
Disclosure Schedule, there are no entities 10% or more of whose outstanding
voting securities or other equity interests are owned, directly or indirectly
through one or more intermediaries, by the Company.

SECTION 2.4 No Commitments to Issue Capital Stock. Except for the Stock
Options and the Warrants and as set forth in Section 2.4 of the Company
Disclosure Schedule, there are no outstanding options, warrants, calls,
convertible securities or other rights, agreements, commitments or other
instruments pursuant to which the Company is or may become obligated to
authorize, issue or transfer any shares of its capital stock or any other equity
interest. Except as set forth in Section 2.4 of the Company Disclosure Schedule,
there are no agreements or understandings in effect among any of the
shareholders of the Company or with any other Person and by which the Company is
bound with respect to the voting, transfer, disposition or registration under
the Securities Act of any shares of capital stock of the Company, except such
agreements or understandings that would not have a Material Adverse Effect or
will not affect the Company's ability to consummate the Merger or the other
transactions contemplated by this Agreement.
<PAGE>
SECTION 2.5 Authorization; Execution and Delivery. The Company has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all requisite
corporate action on the part of the Company, except that the Company's
shareholders are required to approve and adopt this Agreement. This Agreement
has been duly executed and delivered by the Company and, subject to such
shareholder approval, constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
the enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws generally affecting the rights of
creditors and subject to general equity principles (the "Exceptions"). The Board
of Directors of the Company has unanimously adopted this Agreement and
recommended that the shareholders of the Company approve and adopt this
Agreement and the Merger.

SECTION 2.6 Governmental Approvals and Filings. No approval, authorization,
consent, license, clearance or order of, declaration or notification to, or
filing or registration with, any governmental or regulatory authority is
required in order (a) to permit the Company to consummate the Merger or perform
its obligations under this Agreement, or (b) to prevent the termination of or a
material and adverse effect on any governmental right, privilege, authority,
franchise, license, permit or certificate of the Company to provide its services
or carry on its business ("Governmental Licenses"), or to prevent any material
loss or disadvantage to the Company's business, by reason of the Merger, except
for (i) filing and recording of the Certificate of Merger as required by the
NYBCL, (ii) filings and other required submissions under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (iii) those
filings required by the New York Banking Law that are set forth in Section 2.6
of the Company Disclosure Schedule (iv) those filings required by the
Massachusetts Bank Law that are set forth in Section 2.6 of the Company
Disclosure Schedule; (v) those filings with other state regulatory agencies
regulating insurance premium finance companies that are set forth in Section 2.6
of the Company Disclosure Schedule, and (vi) as is otherwise set forth in
Section 2.6 of the Company Disclosure Schedule.

SECTION 2.7 No Conflict. Subject to compliance with the Governmental
Licenses described in Section 2.6 of the Company Disclosure Schedule and
obtaining the other consents and waivers that are set forth and described in
Section 2.7 of the Company Disclosure Schedule (the "Private Consents"), neither
the execution, delivery and performance of this Agreement by the Company, nor
the consummation by the Company of the transactions contemplated hereby, will
(i) conflict with, or result in a breach or violation of, any provision of the
certificate of incorporation (or similar organizational document) or by-laws of
the Company; (ii) conflict with, result in a breach or violation of, give rise
to a default, or result in the acceleration of performance, or permit the
acceleration of performance, under (whether or not after the giving of notice or
lapse of time or both) any mortgages, pledges, claims, liens, security interests
or other restrictions or encumbrances of any kind or nature whatsoever
("Encumbrances"), or any note, bond, indenture, guaranty, lease, license,
agreement or other instrument, writ, injunction, order, judgment, decree,
statute, rule or regulation to which the Company or any of its properties or
assets is subject; (iii) give rise to a declaration or imposition of any
<PAGE>
Encumbrance upon any of the properties or assets of the Company; or (iv) impair
the Company's business or adversely affect any Governmental License necessary to
enable the Company to carry on its business as presently conducted, except, in
the case of clauses (ii), (iii) or (iv), for any conflict, breach, violation,
default, declaration, imposition or impairment that would not have a Material
Adverse Effect.

SECTION 2.8 SEC Filings. (a) The Company has filed all forms, reports
and documents required to be filed with the Securities and Exchange Commission
(the "SEC") since January 1, 1995 and has made available to Parent (i) its
Annual Reports on Form 10-KSB for the fiscal years ended December 31, 1995, 1996
and 1997; (ii) all proxy statements relating to the Company's meetings of
shareholders (whether annual or special) held since January 1, 1995; (iii) all
other reports or registration statements filed by the Company with the SEC; and
(iv) all amendments and supplements to all such reports and registration
statements filed by the Company with the SEC (collectively, the "Company SEC
Reports"). Except as disclosed in Section 2.8 of the Company Disclosure
Schedule, the Company SEC Reports (i) were prepared in accordance, and complied
as of their respective dates as to form in all material respects, with the
applicable requirements of the Securities Act or the Securities Exchange Act of
1934, as amended and the SEC's rules thereunder (the "Exchange Act"), as the
case may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The Company has filed with the SEC as exhibits to the
Company SEC Reports all agreements, contracts and other documents or instruments
required to be so filed, and such exhibits are correct and complete copies of
such agreements, contracts and other documents or instruments.

(b) The Proxy Statement (as defined in Section 4.2(b) hereof) will
not, at the time the Proxy Statement is mailed, contain any untrue statement of
a material fact, or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading and will not, at the
time of the meeting of shareholders to which the Proxy Statement relates or at
the Effective Time omit to state any material fact necessary to correct any
statement which has become false or misleading in any earlier communication with
respect to the solicitation of any proxy for such meeting; except that no
representation is made by the Company with respect to statements made or
incorporated by reference into the Proxy Statement based on information
furnished in writing to the Company by Parent specifically for use in the Proxy
Statement. The Proxy Statement will comply as to form in all material respects
with the requirements of the Exchange Act.

SECTION 2.9 Financial Statements; Absence of Undisclosed Liabilities;
Receivables. (a) The Company has heretofore delivered to Parent complete and
correct copies of the following financial statements (the "Company Financial
Statements"), all of which have been prepared from the books and records of the
Company in accordance with generally accepted accounting principles ("GAAP")
consistently applied and maintained throughout the periods indicated (except as
may be indicated in the notes thereto) and fairly present in all material
respects the financial condition of the Company as at their respective dates and
<PAGE>
the results of their operations and cash flows for the periods covered thereby,
except that unaudited interim results were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount:

(i) audited balance sheets at December 31, 1995,
December 31, 1996 and December 31, 1997 and audited statements of
income, cash flows and shareholders' equity of the Company for the
fiscal years then ended, audited by Deloitte & Touche LLP, independent
certified public accountants; and

(ii) unaudited balance sheet (the "Company Interim
Balance Sheet") of the Company as at September 30, 1998 (the "Company
Interim Balance Sheet Date") and statements of income and cash flows
for the three and nine months then ended.

Such statements of income do not contain any items of special or nonrecurring
revenue or income or any revenue or income not earned in the ordinary course of
business, except as expressly specified therein.

(b) Except as and to the extent reflected or reserved against on the
Company Interim Balance Sheet, and except for liabilities which will not have a
Material Adverse Effect, the Company did not have, as of the Company Interim
Balance Sheet Date, any liabilities, debts or obligations (whether absolute,
accrued, contingent or otherwise) of any nature that would be required as of
such date to have been included on a balance sheet prepared in accordance with
GAAP. Since the Company Interim Balance Sheet Date, the Company has not incurred
or suffered to exist any liability, debt or obligation (whether absolute,
accrued, contingent or otherwise), except liabilities, debt and obligations
incurred in the ordinary course of business, consistent with past practice, none
of which will have a Material Adverse Effect. Since the Company Interim Balance
Sheet Date, there has been no material adverse change in the business,
operations, assets (including intangible assets), condition (financial or
otherwise), liabilities, or results of operations of the Company and no event
has occurred which is reasonably likely to cause any such material adverse
change.

(c) All receivables of the Company (including installment loans
receivable under premium finance agreements and any other accounts receivable,
loans receivable and advances) which are reflected in the Company Interim
Balance Sheet, and all such receivables which have arisen thereafter and prior
to the Effective Time, have arisen or will have arisen only from bona fide
transactions in the ordinary course of business at the aggregate recorded
amounts.

SECTION 2.10 [Intentionally Omitted]

SECTION 2.11 Absence of Changes. Except as set forth in Section 2.11
of the Company Disclosure Schedule, since September 30, 1998 the Company has
conducted its business only in the ordinary course and has not:
<PAGE>
(a) recorded or accrued any item of revenue, except in the ordinary
course of business and consistent with prior practice;

(b) subjected to any Encumbrance or other restriction any of its
properties, business or assets except Encumbrances or other restrictions that
would not have a Material Adverse Effect;

(c) discharged or satisfied any Encumbrance, or paid any obligation or
liability, absolute, accrued, contingent or otherwise, whether due or to become
due, other than current liabilities shown on the Company's balance sheet as of
December 31, 1997 and current liabilities incurred since that date in the
ordinary course of business and consistent with prior practice;

(d) sold, transferred, leased to others or otherwise disposed of any
material properties or assets or purchased, leased from others or otherwise
acquired any material properties or assets except in the ordinary course of
business;

(e) cancelled or compromised any debt or claim or waived or released
any right of substantial value;

(f) terminated or received any notice of termination of any contract,
lease, license or other agreement or any Governmental License from any state
regulatory agency regulating insurance premium finance companies or otherwise,
or suffered any damage, destruction or loss (whether or not covered by
insurance) that would have a Material Adverse Effect;

(g) made any change in the rate of compensation, commission, bonus or other
remuneration payable, or paid or agreed or orally promised to pay, conditionally
or otherwise, any bonus, extra compensation, pension or severance or vacation
pay, to any director, officer, employee, salesman, distributor or agent of the
Company except in the ordinary course of business consistent with prior practice
and pursuant to or in accordance with plans disclosed in Section 2.14(a) of the
Company Disclosure Schedule that were in effect as of January 1, 1998;

(h) made any increase in or commitment to increase any employee benefits,
adopted or made any commitment to adopt any additional employee benefit plan or
made any contribution, other than regularly scheduled contributions, to any
Employee Benefit Plan, as defined in Section 2.14(a);

(i) lost the employment services of a senior manager or other employee of
equal or higher ranking;

(j) made any loan or advance to any Person other than travel and other
similar routine advances in the ordinary course of business consistent with past
practice, or acquired any capital stock or other securities of any other
corporation or any ownership interest in any other business enterprise;
<PAGE>
(k) instituted, settled or agreed to settle any material litigation, action
or proceeding before any court or governmental body relating to the Company or
its properties or assets;

(l) entered into any transaction, contract or commitment other than in the
ordinary course of business;

(m) changed any accounting practices, policies or procedures utilized in
the preparation of the Company Financial Statements;

(n) suffered any change, event or condition that, in any case or in the
aggregate, has had or is reasonably likely to result in a Material Adverse
Effect; or

(o) entered into any agreement or made any commitment to take any of the
types of action described in subparagraphs (a) through (m) of this Section 2.11.

SECTION 2.12 Tax Matters. (a) For purposes of this Agreement, "Tax" or
"Taxes" shall mean taxes, fees, levies, duties, tariffs, imposts and
governmental impositions or charges of any kind in the nature of (or similar to)
taxes, payable to any federal, state, local or foreign taxing authority,
including (without limitation) (i) income, franchise, profits, gross receipts,
ad valorem, net worth, value added, sales, use, service, real or personal
property, special assessments, capital stock, license, payroll, withholding,
employment, social security, workers' compensation, unemployment compensation,
utility, severance, production, excise, stamp, occupation, premiums, windfall
profits, transfer and gains taxes, and (ii) interest, penalties, additional
taxes and additions to tax imposed with respect thereto; and "Tax Returns" shall
mean returns, reports, and information statements with respect to Taxes required
to be filed with the Internal Revenue Service (the "IRS") or any other taxing
authority, domestic or foreign, including, without limitation, consolidated,
combined and unitary tax returns, including returns required in connection with
any Employee Benefit Plan (as defined in Section 2.14(a)).

(b) The Company hereby represents that, other than as disclosed in Section
2.12(b) of the Company Disclosure Schedule: The Company has timely filed all
United States federal income Tax Returns and all other material Tax Returns
required to be filed by it. All such Tax Returns are complete and correct in all
material respects (except to the extent a reserve has been established as
reflected in the Company Interim Balance Sheet). The Company has timely paid and
discharged all Taxes due in connection with or with respect to the periods or
transactions covered by such Tax Returns and has paid all other Taxes as are
due, except such as are being contested in good faith by appropriate proceedings
(to the extent that any such proceedings are required), and there are no other
Taxes that would be due if asserted by a taxing authority, except with respect
to which the Company is maintaining reserves unless the failure to do so would
not have a Material Adverse Effect. Except as does not involve or would not
result in liability to the Company that would have a Material Adverse Effect,
(i) there are no tax liens on any assets of the Company; (ii) the Company has
not granted any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax; (iii) no unpaid (or
unreserved) deficiencies for Taxes have been claimed, proposed or assessed by
any taxing or other governmental authority with respect to the Company; (iv)
there are no pending or threatened audits, investigations or claims for or
<PAGE>
relating to any liability in respect of Taxes of the Company; and (v) the
Company has not requested any extension of time within which to file any
currently unfiled Tax Returns. The accruals and reserves for Taxes (including
deferred taxes) reflected in the Company Interim Balance Sheet are in all
material respects adequate to cover all Taxes accruable through the date thereof
(including Taxes being contested) in accordance with GAAP. No written claim has
ever been made by a taxing authority in a jurisdiction where the Company does
not presently file Tax Returns that the Company is or may be subject to taxation
by that jurisdiction.

(c) The Company on behalf of itself hereby represents that, other than as
disclosed in Section 2.12(c) of the Company Disclosure Schedule, and other than
with respect to items the inaccuracy of which would not have a Material Adverse
Effect: (i) the Company is not obligated under any agreement with respect to
industrial development bonds or other obligations with respect to which the
excludability from gross income of the holder for federal or state income tax
purposes could be affected by the transactions contemplated hereunder; (ii) the
Company is not, or has not been, a United States real property holding
corporation (as defined in section 897(c)(2) of the Code) during the applicable
period specified in section 897(c)(1)(A)(ii) of the Code; (iii) the Company has
not filed or been included in a combined, consolidated or unitary return (or
substantial equivalent thereof) of any Person other than the Company; (iv) the
Company is not liable for Taxes of any Person other than the Company, or
currently under any contractual obligation to indemnify any Person with respect
to Taxes, or a party to any tax sharing agreement or any other agreement
providing for payments by the Company or any of its Subsidiaries with respect to
Taxes; (v) except entities the beneficial ownership of which is wholly owned by
the Company, the Company is not a party to any joint venture, partnership or
other arrangement or contract which could be treated as a partnership for United
States federal income tax purposes; (vi) the Company is not a party to any
agreement, contract, arrangement or plan that would result (taking into account
the transactions contemplated by this Agreement), separately or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of section 280G of the Code or would give rise to an excise tax under Sector
4999 of the Code (or any corresponding provision of state, local or foreign tax
law); (vii) the Company is not a "consenting corporation" under section 341(f)
of the Code or any corresponding provision of state, local or foreign law;
(viii) the Company has not made an election or is not required to treat any of
its assets as owned by another Person for federal income tax purposes or as
tax-exempt bond financed property or tax-exempt use property within the meaning
of section 168 of the Code (or any corresponding provision of state, local or
foreign law); (ix) the Company is not an investment company within the meaning
of section 368(a)(2)(F)(iii) of the Code; (x) the Company has withheld and paid
all Taxes required to have been withheld and paid in connection with any amounts
owing to any employee, independent contractor, creditor, shareholder or other
party; (xi) the Company has not agreed or is not required, as a result of a
change in method of accounting or otherwise, to include in taxable income any
material adjustment under Section 481 of the Code or any corresponding provision
of state, local or foreign law; and (xii) there are no private letter rulings in
respect of any Tax pending between the Company and any taxing authority.
<PAGE>
SECTION 2.13 Relations with Employees and Brokers. (a) Except as set forth
in Section 2.13(a) of the Company Disclosure Schedule:

(i) The Company has satisfactory relationships with its employees and with
the insurance brokers that introduce policyholders to the Company ("Brokers").

(ii) The Company is in compliance in all material respects with all
applicable laws respecting employment and employment practices, terms and
conditions of employment, and wages and hours, and the Company is not engaged in
any unfair labor practices.

(iii) No collective bargaining agreement with respect to the business of
the Company is currently in effect or being negotiated. The Company has no
obligation to negotiate any such collective bargaining agreement, and to the
knowledge of the Company there is no indication that the employees of the
Company desire to be covered by a collective bargaining agreement.

(iv) There are no strikes, slowdowns or work stoppages pending or, to the
Company's knowledge, threatened with respect to the employees of the Company,
nor has any such strike, slowdown or work stoppage occurred or, to the best of
the Company's knowledge, been threatened since January 1, 1996. There is no
representation claim or petition or complaint pending before the National Labor
Relations Board or any state or local labor agency and, to the best of the
Company's knowledge, no question concerning representation has been raised or
threatened since January 1, 1996 respecting the employees of the Company.

(v) There are no complaints or charges against the Company pending before
the National Labor Relations Board or any state or local labor agency and, to
the best of the Company's knowledge, no person or entity has threatened since
January 1, 1995 to file any complaint or charge against the Company or any of
its Subsidiaries with any such board or agency.

(vi) To the Company's knowledge, no charges with respect to or relating to
the business of the Company are pending before the Equal Employment Opportunity
Commission, or any state or local agency responsible for the prevention of
unlawful employment practices.

(vii) Since January 1, 1996, the Company has not received notice of the
intent of any federal, state, local, or foreign agency responsible for the
enforcement of labor or employment laws to conduct an investigation of the
Company, and to the Company's knowledge, no such investigation is in progress.

(viii) The Company has not made any statements or representations or
distributed any written material to any of its employees regarding continued
employment of such employees subsequent to the date hereof or the Closing Date.
<PAGE>
(b) Section 2.13(b) of the Company Disclosure Schedule contains a complete
and correct list of all employment, management or other consulting agreements
with any Persons employed or retained by the Company (including independent
consultants and commission agents), complete and correct copies of which have
been delivered to Parent.

SECTION 2.14 Employee Benefits. (a) Section 2.14(a) of the Company
Disclosure Schedule sets forth each employee benefit plan, policy, program,
practice, agreement, understanding, arrangement or commitment providing
compensation, benefits or perquisites of any kind to any current or former
officer, employee or consultant (or to any dependent or beneficiary thereof) of
the Company, which are now, or were within the past six years, maintained by,
contributed to by or with respect to which an obligation to contribute exists on
the part of the Company or any other trade or business, whether or not
incorporated, which, together with the Company, is treated as a single employer
under section 414 of the Code (such other trades or business, collectively,
"Related Persons") or with respect to which the Company or the Related Persons
has or may have any liability (whether direct, indirect, contingent or
otherwise, including, without limitation, a liability arising out of an
indemnification, guarantee, hold harmless or similar agreement) including,
without limitation, all material employment or consulting agreements, incentive,
bonus, deferred compensation, pension, profit sharing, vacation, holiday,
cafeteria, medical, disability, stock purchase, stock option, stock
appreciation, phantom stock, restricted stock or other stock-based compensation
plans, policies, programs, practices or arrangements and any "employee benefit
plan" within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended from time to time ("ERISA"), whether or not
subject to ERISA (each, an "Employee Benefit Plan" and together, the "Employee
Benefit Plans").

(b) Seller has provided to Parent or its counsel prior to the date hereof
true and complete copies of (i) any employment agreements and any procedures and
policies relating to the employment of employees of the Company and the use of
temporary employees, independent contractors or leased employees by the Company
(including summaries of any material procedures and policies that are
unwritten), (ii) plan instruments and amendments thereto for all Employee
Benefit Plans and related trust agreements, insurance and other contracts and
funding arrangements, summary plan descriptions, written descriptions of any
unwritten Employee Benefit Plans and summaries of material modifications, and
material communications distributed, or otherwise communicated, to the
participants of each Employee Benefit Plan or sent to or received (whether
orally or in writing) from any governmental authority (including, without
limitation, the Internal Revenue Service), (iii) the three most recent annual
reports on Form 5500 required to be filed with respect to any Employee Benefit
Plan (including all schedules thereto), (iv) where applicable, the most recent
(A) opinion or determination letter as to the qualification under Applicable
Benefits Law (including any special provisions relating to registered or
qualified plans including Sections 401 and 501 of the Code) of any Employee
Benefit Plan (and the latest IRS form 5300 or 5307, whichever is applicable,
filed with the IRS for each such Employee Benefit Plan), (B) audited financial
statements and (C) actuarial valuation reports. "Applicable Benefits Law" refers
to the legal requirements imposed by the United States, any political
subdivision thereof or any other jurisdiction that may apply to employee benefit
<PAGE>
plans (including any requirements enforced by the IRS with respect to employee
benefit plans intended to confer tax benefits on the Company or any of its
employees).

(c) No Employee Benefit Plan is, a "defined benefit plan" within the
meaning of section 3(35) of ERISA and the Company has no liability with respect
to any such plan. Neither the Company nor any of its Related Persons has ever
contributed to, or with drawn in a complete or partial withdrawal from, any
multiemployer plan (within the meaning of Subtitle E of Title IV of ERISA) or
incurred contingent liability under section 4204 of ERISA.

(d) No Employee Benefit Plan provides for benefits, including, without
limitation, medical or health benefits (through insurance or otherwise) or
provides for the continuation of such benefits or coverage for any participant
or any dependent or beneficiary of any participant after such participant's
retirement or other termination of employment (except (i) as may be required by
Applicable Benefits Law, (ii) retirement or death benefits under any employee
pension plan, (iii) disability benefits under any employee welfare plan that
have been fully provided for by insurance or otherwise, (iv) deferred
compensation benefits accrued as liabilities on the books of the Company; or (v)
benefits in the nature of severance pay). There has been no communication to any
employee that could reasonably be expected to promise or guarantee any such
employee any such benefits.

(e) Each Employee Benefit Plan (and each related trust, insurance contract
and fund) is in compliance in all material respects in form and in operation
with all applicable requirements of Applicable Benefits Law (including ERISA and
the Code), and is being administered in accordance with all relevant plan
documents to the extent consistent with Applicable Benefits Law, including,
without limitation, any special provisions relating to registered or qualified
plans with which any Employee Benefit Plan is intended to qualify (including,
without limitation, Sections 401 and 501 of the Code), and no condition exists
as a result of which the Parent, the Company or the Related Persons or any
fiduciary could be subject to any liability under any Applicable Benefits Law in
connection with any Employee Benefit Plan (including, without limitation,
Section 4972, 4975 or 4976 of the Code and Section 406, 502(i) and 502(l) of
ERISA). No Employee Benefit Plan is under investigation or audit by the
Department of Labor or Internal Revenue Service other than as part of a routine
tax audit of the Company. The Company is not aware of any actions, claims (other
than routine claims for benefits), lawsuits or arbitrations pending or, to the
knowledge of the Company, threatened with respect to any Employee Benefit Plan
(including against any fiduciary of any Employee Benefit Plan) and the Company
has no knowledge of any facts that could reasonably be expected to give rise to
any such actions, claims, lawsuits or arbitrations that could, individually or
in the aggregate, cause the Company to incur any material liability There has
been full compliance in all material respects with the notice and continuation
requirements of section 4980B of the Code and with sections 9801 through 9833 of
the Code and section 713 of ERISA applicable to any Employee Benefit Plan.

(f) No provision of any Employee Benefit Plan becomes effective in the
event of a change in control of the employer maintaining such Employee Benefit
Plan. The consummation of the Merger or any other transaction contemplated by
<PAGE>
this Agreement will not result in (i) any payment (including, without
limitation, severance, unemployment compensation, golden parachute or bonus
payments or otherwise) becoming due to any current or former director, officer,
employee or consultant of the Company, (ii) any increase in the amount of
compensation or benefits payable in respect of any current or former director,
officer, employee or consultant of the Company, or (iii) the acceleration of
vesting or time of payment of any material benefits or compensation payable in
respect of any current or former director, officer, employee or consultant of
the Company and the transactions contemplated by this Agreement will not result
in any payment or series of payments by the Company of a "parachute payment"
within the meaning of Section 280G of the Code. No employee or former employee
of the Company will be entitled to any severance benefits under the terms of any
Employee Benefit Plan solely by reason of the consummation of the Merger or any
other transaction contemplated by this Agreement.

(g) The Company has not communicated to employees or agreed to the creation
of any new employee benefit plan or, with respect to any existing Employee
Benefit Plan, any increase in benefits or new benefits or change in employee
coverage which would increase the expense of maintaining such Employee Benefit
Plan. No provision of any Employee Benefit Plan prohibits the employer
maintaining it from amending or terminating such Employee Benefit Plan at any
time and to the fullest extent that law permits.

(h) At no time since the organization of the Company has any entity (other
than the Company) been an "ERISA Affiliate" of the Company. "ERISA Affiliate"
means any trade or business, whether or not incorporated, which together with
the Company, is or was at any time during such period treated as a "single
employer" within the meaning of section 414(b), (c), (m) or (o) of the Code or a
part of the same "controlled group" as the Company within the meaning of section
4001 of ERISA. No leased employee (within the meaning of section 414(n) or (o)
of the Code) performs any services for the Company.

(i) All actions required to be taken on behalf of any Employee Benefit Plan
that is a stockholder of the Company, in order to effectuate the Merger or the
other transactions contemplated by this Agreement, shall have been duly
authorized by the appropriate fiduciaries of such Employee Benefit Plan, and
shall comply with the terms of such Employee Benefit Plan, ERISA and other
applicable laws.

(j) The fair market value of the assets of each funded Employee Benefit
Plan (or the insurance coverage of each Employee Benefit Plan funded through
insurance) equals or exceeds the accrued benefits thereunder through the
Effective Time according to the actuarial assumptions and valuations most
recently used to determine employer contributions to any such Employee Benefit
Plan and specified on Section 2.14(j) of the Company Disclosure Schedule. With
respect to each such Employee Benefit Plan, all payments due from the Company to
date have been made when due and all amounts properly accrued to date or as of
the Effective Time as liabilities of the Company which have not been paid have
been properly recorded on the books of the appropriate entity. With respect to
each Employee Benefit Plan that is funded wholly or partially through an
insurance policy, all premiums required to have been paid to date under the
insurance policy have been paid, all premiums required to be paid under the
insurance policy through the Effective Time will have been paid on or before the
Effective Time and, as of the Effective Time, there will be no liability of the
Company under any such insurance policy or ancillary agreement with respect to
<PAGE>
such insurance policy in the nature of a retroactive rate adjustment, loss
sharing arrangement or other actual or contingent liability arising wholly or
partially out of events occurring prior to the Effective Time.

(k) There are no complaints, charges or claims against the Company pending
or to the Company's knowledge threatened to be brought by or filed with any
governmental authority based on, arising out of, in connection with or otherwise
relating to the employment by the Company of any individual, including
individuals classified by the Company as independent contractors or "leased
employees" (within the meaning of section 414(n) of the Code), or the failure to
employ any individual, including any claim relating to employment
discrimination, equal pay, employee safety and health, immigration, wages and
hours or workers' compensation.

(l) The Company is in compliance in all material respects with all laws
(including any legal obligation to engage in affirmative action) relating to the
employment of former, current, and prospective employees, independent
contractors and "leased employees" (within the meaning of section 414(n) of the
Code) including all such laws relating to wages, hours, collective bargaining,
employment discrimination, immigration, disability, civil rights, safety and
health, workers' compensation and pay equity and has timely prepared and filed
all appropriate forms (including Immigration and Naturalization Service Form
I-9) required by any relevant governmental authority.

(m) Except as set forth on Section 2.14(m) of the Company Disclosure
Schedule, the Company is not a contractor or subcontractor with obligations
under any federal, state or local government contracts as result of any business
engaged in by the Business.

(n) No fact or condition exists as a result of which the Company may have
any material liability, whether absolute or contingent, including any
obligations under any Employee Plans, as a result of or related to any
misclassification of a person performing services for the Company as an
independent contractor rather than as an employee.

(o) There are no material liabilities, whether absolute or contingent, to
any employees relating to workers compensation benefits that are not fully
insured against by a bona fide third-party insurance carrier. With respect to
each workers' compensation arrangement that is funded wholly or partially
through an insurance policy or public or private fund, all premiums required to
have been paid to date under the insurance policy or fund have been paid, all
premiums required to be paid under the insurance policy or fund through the
Closing Date will have been paid on or before the Closing Date and, as of the
Closing Date, there will be no material Liability of the Company under any such
insurance policy, fund or ancillary agreement with respect to such insurance
policy or fund in the nature of a retroactive rate adjustment, loss sharing
arrangement or other actual or contingent liability arising wholly or partially
out of events occurring prior to the Closing Date.

(p) No Employee Benefit Plan is a plan, agreement or arrangement providing
for benefits in the nature of severance benefits, and the Company does not have
outstanding any liabilities with respect to any severance benefits available
under any Employee Benefit Plan.
<PAGE>
(q) Except as set forth on Section 2.14(q) of the Company Disclosure
Schedule, no Business employee participates in any Employee Benefit Plan,
program or arrangement that provides any benefits or provides for payments based
on or measured by the value of any equity security of or interest in the
Company.

SECTION 2.15 Title to Properties. Except as set forth in Section 2.15 of
the Company Disclosure Schedule, the Company has good and indefeasible title to
all of its properties and assets, free and clear of all Encumbrances, except
liens for taxes not yet due and payable and such Encumbrances or other
imperfections of title, if any, as do not materially detract from the value of
or interfere with the present use of the property affected thereby or which
would not have a Material Adverse Effect, and except for Encumbrances which
secure indebtedness reflected in the Company Interim Balance Sheet.

SECTION 2.16 Compliance with Laws; Legal Proceedings. (a) The Company is
not in violation of, or in default with respect to, any applicable statute,
regulation, ordinance, writ, injunction, order, judgment, decree or any
Governmental License, except where such violation or default does not have and
cannot reasonably be expected to have, a Material Adverse Effect.

(b) Except as set forth in Section 2.16(b) of the Company Disclosure
Schedule, there is no order, writ, injunction, judgment or decree outstanding
and no legal, administrative, arbitration or other governmental proceeding or
investigation pending or, to the best of the Company's knowledge, threatened,
and there are no claims (including unasserted claims of which the Company is
aware) against or relating to the Company or any of its properties, assets or
businesses or any of its officers, employees or directors that, (i) individually
or in the aggregate could have a Material Adverse Effect, or (ii) could have an
adverse affect on the Company's ability to perform its obligations under this
Agreement or any documents or agreements contemplated hereby.

SECTION 2.17 Finders. Except for Ladenburg Thalmann & Co. Inc. (whose fees
shall be paid by the Company and shall in the aggregate not exceed the amount
set forth in Section 2.17 of the Company Disclosure Schedule), no broker, finder
or investment advisor acted directly or indirectly for the Company in connection
with this Agreement or the Merger, and no broker, finder, investment advisor or
other Person is entitled to any fee or other commission, or other remuneration,
in respect thereof based in any way on any action, agreement, arrangement or
understanding taken or made by or on behalf of the Company.

SECTION 2.18 Intellectual Property. (a) The Company owns, or is licensed or
otherwise possesses legally enforceable rights to use, all patents, trademarks,
trade names, service marks, copyrights, and any applications therefor,
technology, know-how, trade secrets, computer software programs or applications
and tangible or intangible proprietary information or material and other
intellectual property rights that are used in the business of the Company as
currently conducted, except where the failure to do so would not have a Material
Adverse Effect.
<PAGE>
(b) Except as disclosed in Section 2.18(b) of the Company Disclosure
Schedule, or where such event does not and cannot reasonably be expected to have
a Material Adverse Effect: (i) the Company is not, nor will it be as a result of
the execution and delivery of this Agreement or the performance of its
obligations hereunder, in violation of any licenses, sublicenses and other
agreements as to which the Company is a party and pursuant to which the Company
is authorized to use any patents, trademarks, service marks or copyrights or
other intellectual property rights owned by others ("Company Third-Party
Intellectual Property Rights"); (ii) no claims with respect to the patents,
registered and unregistered trademarks and service marks, registered copyrights,
trade names and any applications therefor or other intellectual property rights
owned by the Company (the "Company Intellectual Property Rights"), any trade
secret material to the Company, or Company Third Party Intellectual Property
Rights to the extent arising out of any use, reproduction or distribution of
Company Third Party Intellectual Property Rights by or through the Company, are
currently pending or, to the Company's knowledge, have been threatened by any
Person; and (iii) the Company does not know of any valid grounds for any bona
fide claims (1) to the effect that the sale, licensing or use of any product or
service as now sold, licensed or used, or proposed for sale, license or use by
the Company infringes on any intellectual property rights of a third-party
including copyright, patent, trademark, service mark or trade secret; (2)
against the use by the Company of any intellectual property including
trademarks, trade names, trade secrets, copyrights, patents, technology,
know-how or computer software programs and applications used in the business of
the Company as currently conducted or as proposed to be conducted; (3)
challenging the ownership, validity or effectiveness of any of the Company
Intellectual Property Rights or other trade secret material to the Company; or
(4) challenging the license or legally enforceable right to use of Company Third
Party Intellectual Rights by the Company.

(c) To the Company's knowledge, there is no material unauthorized use,
infringement or misappropriation of any of the Company Intellectual Property
Rights by any third party, including any employee or former employee of the
Company.

(d) Set forth in Section 2.18(d) of the Company Disclosure Schedule is a
complete and accurate list of (i) all patents and patent applications owned by
the Company worldwide; (ii) all trademark and service mark registrations and all
trademark and service mark applications and all trade names owned by the Company
worldwide; (iii) all copyright registrations and copyright applications owned by
the Company worldwide; and (iv) all licenses owned by the Company in which the
Company is (A) a licensor with respect to any of the patents, trademarks,
service marks, trade names or copyrights listed in the Disclosure Schedule, or
(B) a licensee of any other person's patents, trade names, trademarks, service
marks or copyrights. The Company has made all necessary filings and recordations
to protect and maintain its interest in the patents, patent applications,
trademark and service mark registrations, trademark and service mark
applications, trade names, copyright registrations and copyright applications
and licenses set forth in the Disclosure Schedule, except where such failure to
file or record has not and could not reasonably be expected to have a Material
Adverse Effect.

(e) The Company shall ensure that any software products or services owned,
provided or otherwise developed by the Company, or used in the conduct of the
<PAGE>
Company's business as presently conducted and as it is expected to be conducted
after the date of this Agreement, whether in whole or in part, by or for the
Company, which incorporate any date- related information or otherwise process
any date-related information, will, on the Effective Date, provide, among other
things, the following functionality: (i) accurate processing of date- related
information before, during and after January 1, 2000, including accepting the
date input, providing the date output, and performing calculations on dates or
portions of dates; (ii) accurate functioning without interruption before, during
and after January 1, 2000 without any change in operation associated with the
advent of the new century; (iii) ability to respond to two-digit input in a way
that resolves any ambiguity as to century in a disclosed, defined and
predetermined manner; and (iv) the ability to store and provide output date
information in ways that are unambiguous as to the century.

SECTION 2.19 Insurance. Except as set forth in Section 2.19 of the Company
Disclosure Schedule, all material fire and casualty, general liability, business
interruption, product liability and other insurance policies maintained by the
Company is with reputable insurers, provide adequate coverage for all normal
risks incident to the Company's assets, properties and business operations and
are in character and amount at least equivalent to that carried by Persons
engaged in a business subject to the same or similar perils or hazards. The
Company has not since January 1, 1995 been denied or had revoked or rescinded
any policy of insurance.

SECTION 2.20 Contracts; etc. (a) Set forth on Section 2.20 of the Company
Disclosure Schedule is a complete and correct list of each of the following
agreements, leases and other instruments to which the Company is a party or by
which Company or any of its properties or assets are bound:

(i) each service or other similar type of agreement under which
services are provided by any other Person to the Company which is material
to the business of the Company;

(ii) each agreement that restricts the operation of the business
of the Company or the ability of the Company to retain employees or brokers
or to solicit customers or employees;

(iii) each operating lease (as lessor, lessee, sublessor or
sublessee) that is material to the Company taken as a whole of any real or
tangible personal property or assets;

(iv) each agreement under which services are provided by the
Company to any material customer;

(v) each agreement (including capital leases) under which any
money has been or may be borrowed or loaned or any note, bond, indenture or
other evidence of indebtedness has been issued or assumed (other than those
under which there remain no ongoing obligations of the Company), and each
guaranty of any evidence of indebtedness or other obligation, or of the net
worth, of any Person (other than endorsements for the purpose of collection
in the ordinary course of business);
<PAGE>
(vi) each partnership, joint venture or similar agreement;

(vii) each agreement containing restrictions with respect to the
payment of dividends or other distributions in respect of the Company's
capital stock; and

(viii) each agreement to make unpaid capital expenditures in
excess of $50,000.

A complete and correct copy of each written agreement, lease or other type of
document required to be disclosed pursuant to this Section 2.20(a) has been
delivered to Parent.

(b) Each agreement, lease or other type of document required to be
disclosed pursuant to Section 2.13, 2.14 or 2.20(a) or filed as an exhibit to
the Company's SEC Reports to which the Company is a party or by which the
Company or its properties or assets are bound (collectively, the "Company
Contracts"), except for Company Contracts, the loss of which would not have a
Material Adverse Effect, is valid, binding and in full force and effect and is
enforceable by the Company or such Subsidiary in accordance with its terms
except for the Exceptions. The Company is not (with or without the lapse of time
or the giving of notice, or both) in breach of or in default under any of the
Company Contracts, and, to the Company's knowledge, no other party to any of the
Company Contracts is (with or without the lapse of time or the giving of notice,
or both) in breach of or in default under any of the Company Contracts. No
existing or completed agreement to which the Company is a party is subject to
renegotiation with any governmental body.

SECTION 2.21 Permits, Authorizations, etc. Section 2.21 of the Company
Disclosure Schedule sets forth all Governmental Licenses and each other material
approval, authorization, consent, license, including the New York State Banking
Authority, order or other permit of all governmental agencies, whether federal,
state, local or foreign, necessary to enable the Company to own, operate and
lease its properties and assets as and where such properties and assets are
owned, leased or operated and to provide and carry on its business as presently
provided and conducted (collectively, the "Company Permits") or required to
permit the continued conduct of such business following the Merger in the manner
conducted on the date of this Agreement (and indicates in each case whether or
not the consent of any Person is required for the consummation of the
transactions contemplated hereby). The Company has all necessary Company Permits
of all governmental agencies, whether federal, state, local or foreign, all of
which are valid and in good standing with the issuing agencies and not subject
to any proceedings for suspension, modification or revocation, except to the
extent such failure to maintain such permits or be in good standing, or such
proceedings, would not have a Material Adverse Effect.

SECTION 2.22 Environmental Matters. (a) For purposes of this Agreement, the
capitalized terms defined below shall have the meanings ascribed to them below.

(i) "Environmental Law(s)" means all federal, state or local law
(including common law), statute, ordinance, rule, regulation, code, or
other requirement relating to the environment, natural resources, or public
or employee health and safety and includes, but is not limited to the
<PAGE>
Comprehensive Environmental Response Compensation and Liability Act
("CERCLA"), 42 U.S.C. Section 9601 et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et seq., the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 6901 et seq., the
Clean Water Act, 33 U.S.C. Section 1251 et seq., the Clean Air Act, 33
U.S.C. Section 2601 et seq., the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq., the Oil Pollution Act of 1990, 33 U.S.C. Section 2701
et seq., and the Occupational Safety and Health Act, 29 U.S.C. Section 651
et seq., as such laws have been amended or supplemented, and the
regulations promulgated pursuant thereto, and all analogous state or local
statutes and any applicable transfer statutes.

(ii) "Environmental Permits" means all approvals, authorizations,
consents, permits, licenses, registrations and certificates required by any
applicable Environmental Law.

(iii) "Hazardous Substance(s)" means, without limitation, any
flammable explosives, radioactive materials, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products
(including but not limited to waste petroleum and petroleum products),
methane, hazardous materials, hazardous wastes, pollutants, contaminants
and hazardous or toxic substances, as defined in or regulated under any
applicable Environmental Laws.

(iv) "Release" means any past or present spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing of a Hazardous Substance into the
Environment.

(b) Except for violations that do not and will not cause a Material
Adverse Effect, the Company has obtained all Environmental Permits that are
required for the lawful operation of its business. The Company (i) is in
compliance in all material respects with all terms and conditions of their
Environmental Permits and of any applicable Environmental Law, and (ii) has not
received written notice of any material violation by or claim against the
Company under any Environmental Law.

(c) There have been no Releases, or threatened Releases of any
Hazardous Substances into, on or under any of the properties owned or operated
(or formerly owned or operated) by the Company (including the costs of
investigation and remediation) under any applicable Environmental Law that would
have a Material Adverse Effect.

(d) The Company has not received any written notice of possible
liability as a potentially responsible party at any federal or state National
Priority List ("Superfund") site.

SECTION 2.23 Company Acquisitions. Section 2.23 of the Company
Disclosure Schedule hereto contains a complete and correct list of all
agreements ("Acquisition Agreements") since January 1, 1995, executed by the
Company pursuant to which the Company has acquired or agreed to acquire all or
any part of the stock or assets (including any customer list) of any Person. A
complete and correct copy of each of the Acquisition Agreements has been
delivered to Parent. The Company has no further obligation or liability under
<PAGE>
any of the Acquisition Agreements or as a result of the transactions provided
for therein, except as described in reasonable detail in Section 2.23 of the
Company Disclosure Schedule.

SECTION 2.24 Books and Records. All accounts, books, ledgers and
official and other records prepared and kept by the Company are complete in all
material respects, and there are no material inaccuracies or discrepancies
contained or reflected therein.

SECTION 2.25 Interested Party Transactions. Except as set forth in
Section 2.25 of the Company Disclosure Schedule or the Company SEC Reports,
since January 1, 1997 no event has occurred that would be required to be
reported as a Certain Relationship or Related Transaction, pursuant to Item 404
of Regulation S-K promulgated by the SEC.

SECTION 2.26 Certain Approvals. The Company's Board of Directors has
taken any and all necessary and appropriate action to render inapplicable to the
Merger and the other transactions contemplated by this Agreement Section 9.12 of
the NYBCL. No other state takeover statute or similar domestic or foreign
statute or regulation applies or purports to apply to the Merger or the other
transactions contemplated by this Agreement.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB

Each of Parent and Merger Sub hereby represents and warrants to the Company
that, except as set forth in the written disclosure schedule delivered by Parent
to the Company (the "Parent Disclosure Schedule"):

SECTION 3.1 Corporate Organization. Each of Parent and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization and has all requisite
corporate power and authority to own, operate and lease its properties and
assets as and where the same are owned, operated or leased and to conduct its
business as it is now being conducted. Each of Parent and Merger Sub is in good
standing and duly qualified or licensed as a foreign corporation to do business
in those jurisdictions in which the location of the property and assets owned,
operated or leased by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except where the failure to be so
qualified or licensed would not have a Material Adverse Effect. Each of Parent
and Merger Sub has heretofore delivered to the Company complete and correct
copies of its Certificate of Incorporation and By-laws, as amended to and as in
effect on the date hereof.

SECTION 3.2 Capitalization. The authorized capital stock of Merger Sub as
of the date hereof consists of 100 shares of common stock, par value $.01 per
share (the "Merger Sub Common Stock"). All 100 shares of the Merger Sub Common
Stock are issued and outstanding and owned beneficially and of record by Parent
as of the date hereof. Merger Sub has no subsidiaries, no material assets or
<PAGE>
liabilities (except pursuant to this Agreement) and was formed solely to
facilitate the Merger.

SECTION 3.3 Authorization; Execution and Delivery. Each of Parent and
Merger Sub has all requisite corporate power and authority to execute, deliver
and perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement by each of Parent and Merger Sub and the
consummation by Parent or Merger Sub of the transactions contemplated hereby
have been duly authorized by all requisite corporate action on the part of
Parent and Merger Sub. This Agreement has been duly executed and delivered by
Parent and Merger Sub and constitutes the legal, valid and binding obligation of
Parent and Merger Sub, enforceable against Parent and Merger Sub in accordance
with its terms, except for the Exceptions.

SECTION 3.4 Governmental Approvals and Filings. No approval, authorization,
consent, license, clearance or order of, declaration or notification to, or
filing or registration with, any governmental or regulatory authority that
currently regulates Parent or Merger Sub is required in order to permit Parent
or Merger Sub to consummate the Merger or perform its obligations under this
Agreement, except for (i) filing and recording of the Certificate of Merger as
required by the NYBCL, (ii) filings and other required submissions under the HSR
Act, (iii) the filings required pursuant to the New York Banking Law that are
set forth in Section 3.4 of the Parent Disclosure Schedule, (iv) approval of the
Bank of Greece, and (v) as is otherwise set forth in Section 3.4 of the Parent
Disclosure Schedule.

SECTION 3.5 No Conflict. Subject to compliance with any Governmental
Licenses described in Section 3.4 of the Parent Disclosure Schedule and
obtaining the consents and waivers that are set forth and described in Section
3.5 of the Parent Disclosure Schedule (the "Private Consents"), neither the
execution, delivery and performance of this Agreement by Parent or Merger Sub,
nor the consummation by Parent or Merger Sub of the transactions contemplated
hereby, will (i) conflict with, or result in a breach or violation of, any
provision of the certificate of incorporation (or similar organizational
document) or by-laws of Parent or Merger Sub; (ii) conflict with, result in a
breach or violation of, give rise to a default, or result in the acceleration of
performance, or permit the acceleration of performance, under (whether or not
after the giving of notice or lapse of time or both) any Encumbrance, note,
bond, indenture, guaranty, lease, license, agreement or other instrument, writ,
injunction, order, judgment, decree, statute, rule or regulation to which Parent
or Merger Sub or any of their respective properties or assets is subject; (iii)
give rise to a declaration or imposition of any Encumbrance upon any of the
properties or assets of Parent or Merger Sub; or (iv) impair Parent's business
or adversely affect any Governmental License necessary to enable Parent and
Merger Sub to carry on their business as presently conducted, except, in the
cases of clauses (ii), (iii) or (iv), for any conflict, breach, violation,
default, declaration, imposition or impairment that would not have a Material
Adverse Effect.

SECTION 3.6 No Legal Proceedings. Neither the execution and delivery of
this Agreement by Parent or Merger Sub, nor the consummation by Parent or Merger
Sub of the transactions contemplated hereby, are being challenged by or are the
<PAGE>
subject of any pending or, to the knowledge of Parent or Merger Sub, threatened
litigation or governmental investigation or proceeding as of the date of this
Agreement.

SECTION 3.7 Finders. Except for Keefe Bruyette & Woods, Inc., no broker,
finder or investment advisor acted directly or indirectly as such for Parent,
any Subsidiary of Parent or any stockholder of Parent in connection with this
Agreement or the Merger, and no broker, finder, investment advisor or other
Person is entitled to any fee or other commission, or other remuneration, in
respect thereof based in any way on any action, agreement, arrangement or
understanding taken or made by or on behalf of Parent, any Subsidiary of Parent
or any stockholder of the Parent.

SECTION 3.8 Financial Ability to Perform. Parent has or will at the time of
the consummation of the Merger have cash funds available sufficient to make all
cash payments required to be made for the Company Common Stock under this
Agreement and pay all fees and expenses related to the transaction contemplated
by the Agreement.

SECTION 3.9 Proxy Statement. None of the information supplied or to be
supplied in writing by Parent or Merger Sub specifically for inclusion in the
Proxy Statement will, at the time the Proxy Statement is mailed, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading and will
not, at the time of the meeting of shareholders to which the Proxy Statement
relates or at the Effective Time omit to state any material fact necessary to
correct any statement which has become false or misleading in any earlier
communication with respect to the solicitation of any proxy for such meeting.

ARTICLE IV

COVENANTS, TRANSACTIONS AND CONDUCT OF
BUSINESS PENDING THE MERGER

SECTION 4.1 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that during the period from the date of this
Agreement until the earlier of the termination of this Agreement or the
Effective Time, unless Parent shall otherwise agree in writing, (i) the Company
shall conduct its business only in the ordinary course of business consistent
with past practice; (ii) that the Company shall use reasonable commercial
efforts to preserve substantially intact the business organization of the
Company, to keep available the services of the present officers, employees,
agents and consultants of the Company and to preserve the present relationships
of the Company with governmental agencies, insurance brokers, insurance
companies, lenders, customers, suppliers and other Persons with which the
Company has significant regulatory or business relations. By way of
amplification and not limitation, except as contemplated by this Agreement, the
Company shall not, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Effective Time, directly or indirectly do, or propose to do, any of the
following:
<PAGE>
(a) amend or otherwise change the Company's Certificate of
Incorporation or By-Laws;

(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of
capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital
stock, or any other ownership interest (including, without limitation, any
phantom interest) in the Company or any of its Affiliates (except for the
issuance of shares of Company Common Stock issuable upon the exercise of
the Warrants pursuant to the Warrant Agreements or Stock Options under the
Company Stock Option Plans, which Warrants and Stock Options are
outstanding on the date hereof);

(c) sell, pledge, dispose of or encumber any assets of the Company
(except for (i) sales of assets in the ordinary course of business and in a
manner consistent with past practice, (ii) dispositions of obsolete or
worthless assets, and (iii) sales of immaterial assets not in excess of
$10,000);

(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock; (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; or (iii) amend the terms or
change the period of exercisability of, purchase, repurchase, redeem or
otherwise acquire, any of its securities, including, without limitation,
shares of Company Common Stock or any option, warrant or right, directly or
indirectly, to acquire shares of Company Common Stock;

(e) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof; (ii) incur any indebtedness for borrowed money, except
for borrowings and reborrowing under the Company's existing credit
facilities or issue any debt securities or assume, guarantee (other than
guarantees of bank debt of the Company's subsidiaries under existing credit
facilities entered into in the ordinary course of business) or endorse or
otherwise as an accommodation become responsible for, the obligations of
any Person, or make any loans or advances, except in the ordinary course of
business consistent with past practice; (iii) authorize any capital
expenditures or purchases of fixed assets which are, in the aggregate, in
excess of $50,000; or (iv) enter into or amend any contract, agreement,
commitment or arrangement to effect any of the matters prohibited by this
Section 4.1(e);

(f) make any material change in the rate of compensation, commission,
bonus or other remuneration payable, or pay or agree or promise to pay,
conditionally or otherwise, any bonus, extra compensation, pension or
severance or vacation pay, to any director, officer, employee, salesman,
broker or agent of the Company except in the ordinary course of business
consistent with prior practice and pursuant to or in accordance with plans
disclosed in Section 2.14(a) of the Company Disclosure Schedule that were
<PAGE>
in effect as of January 1, 1998, or make any increase in or commitment to
increase any employee benefits, adopt or make any commitment to adopt any
additional employee benefit plan or make any contribution, other than
regularly scheduled contributions, to any Employee Benefit Plan;

(g) take any action to change accounting practices, policies or
procedures (including, without limitation, procedures with respect to
revenue recognition, payments of accounts payable or collection of accounts
receivable);

(h) make any material tax election inconsistent with past practice or
settle or compromise any material federal, state, local or foreign Tax
liability or agree to an extension of a statute of limitations, except to
the extent the amount of any such settlement has been reserved for in the
financial statements contained in the Company SEC Reports filed with the
SEC prior to the date of this Agreement;

(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, contingent or otherwise) in excess of $10,000 per
matter or $50,000 in the aggregate, other than the payment, discharge or
satisfaction in the ordinary course of business and consistent with past
practice of liabilities reflected or reserved against in the Company
Financial Statements or incurred in the ordinary course of business and
consistent with past practice; or

(j) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.1(a) through (i) above, or any action which would
make any of the representations or warranties of the Company contained in
this Agreement untrue or incorrect in any material respect or prevent the
Company from performing or cause the Company not to perform its covenants
herein.

SECTION 4.2 Shareholders' Meeting; Proxy Material.

(a) The Company shall cause a meeting of its shareholders to be duly called
and held as soon as reasonably practicable after the execution of this Agreement
for the purpose of voting on the adoption of this Agreement (the "Company
Shareholder Meeting"). The Board of Directors of the Company shall recommend
approval and adoption of this Agreement and the Merger by the Company's
shareholders. The Company shall use its best efforts consistent with applicable
legal requirements to solicit proxies in connection with the Company Shareholder
Meeting called pursuant to this Section 4.2(a) and shall solicit such proxies in
favor of such approval and adoption and take all other action reasonably
necessary to attempt to secure the shareholder approval required to effect the
Merger under applicable law.

(b) The Company will prepare, and file with the SEC, a proxy statement,
together with a form of proxy, with respect to the shareholders meeting
described in Section 4.2(a) (such proxy statement, together with any amendments
thereof or supplements thereto, being herein called the "Proxy Statement"). The
Company (i) will use its best efforts to have the Proxy Statement cleared by the
<PAGE>
SEC as soon as reasonably practicable, if such clearance is required, (ii) will
as soon as reasonably practicable thereafter mail the Proxy Statement to
shareholders of the Company and (iii) will otherwise comply in all material
respects with all applicable legal requirements in respect of such meeting. The
Company shall notify Parent promptly of the receipt of any comments from the SEC
or its staff and any request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for additional information and will supply
Parent with copies of all correspondence between the Company and its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Proxy Statement or the Merger. Prior to filing the Proxy
Statement with the SEC, the Company shall provide reasonable opportunity for
Parent to review and comment upon the contents of the Proxy Statement and shall
not include therein any information to which counsel to Parent shall reasonably
object (unless counsel to the Company shall reasonably determine that such
information should be included consistent with applicable legal principles) or
omit therefrom any information which counsel to Parent shall reasonably request.
If at any time prior to the meeting of the shareholders of the Company
contemplated by this Section 4.2, any event relating to the Company or any of
its subsidiaries, officers or directors is discovered by the Company which
should be set forth in an amendment or supplement to the Proxy Statement, the
Company shall promptly so inform Parent. The Proxy Statement shall contain the
recommendation of the Board of Directors of the Company in favor of the Merger
and that the shareholders vote for and adopt the Merger and this Agreement.

SECTION 4.3 No Shopping.

(a) From the date hereof until the termination of this Agreement, the
Company will not, and will not permit any officer, director, employee,
investment banker or other agent to, directly or indirectly (i) take any action
to seek, initiate or solicit any offer from any person, entity or group to
acquire any shares of capital stock of the Company or its subsidiaries, to merge
or consolidate with the Company or its subsidiaries, or to otherwise acquire any
significant portion of the assets of the Company and its subsidiaries, taken as
a whole (a "Third Party Acquisition Offer"), or (ii) engage in negotiations or
discussions concerning a Third Party Acquisition Offer or the business or assets
of the Company or its subsidiaries with, or disclose financial information
relating to the Company or its subsidiaries, or any confidential or proprietary
trade or business information relating to the business of the Company or its
subsidiaries to, or afford access to the properties, books or records of the
Company or its subsidiaries to, any third party that may be considering a Third
Party Acquisition Offer; provided, however, that the Company may enter into any
such negotiations or discussions, disclose any such information or afford any
such access to any third party, if (A) the Board of Directors of the Company is
advised by one or more of its financial advisors and concludes in good faith
that the third party has the financial resources to consummate a Superior
Acquisition, as defined in paragraph (c) below, and the Board of Directors of
the Company determines in good faith that the third party is likely to submit a
bona fide Third Party Acquisition Offer to consummate a Superior Acquisition;
(B) the Company has provided Parent, as soon as reasonably practicable and in
any event prior to such discussions, negotiations, disclosure or access, notice
of the Company's intent to enter into such discussions or negotiations, to
supply information and/or to provide access, the identity of such third party
and, as soon as reasonably practicable after such terms are known by the
Company, the terms of the Third Party Acquisition Offer; and (C) such third
party has signed and delivered to the Company a confidentiality agreement
substantially equivalent to the Confidentiality Agreement in Section 4.4. The
<PAGE>
Company will immediately cease or cause to be terminated any existing
activities, discussions or negotiations with any parties conducted with respect
to any of the foregoing.

(b) The Company will orally notify Parent immediately, followed by prompt
written notice, of the receipt and the terms of any Third Party Acquisition
Offer from any person, entity or group, or of any request for information or
access, with respect to any Third Party Acquisition Offer, or any indication
from any person, entity or group that it or another person, entity or group is
considering making a Third Party Acquisition Offer or such a request, which
notice shall include the identity of the third party and will promptly update
the Company with respect to any developments with respect to such Third Party
Acquisition Offer.

(c) For purposes of this Agreement, a "Superior Acquisition" is a
transaction pursuant to which a tender offer is made to acquire all of the
outstanding Company Stock, or a merger, consolidation or a sale of substantially
all of the assets of the Company (to be followed by a complete liquidation of
the Company) occurs, which the Board of Directors of the Company concludes in
good faith (after consultation with its financial advisors and legal counsel),
taking into account all legal, financial, regulatory and other aspects of the
proposal and the Person making the proposal, (i) would, if consummated, result
in a transaction that is more favorable to the Company's shareholders (in their
capacities as shareholders), from a financial point of view, than the
transactions contemplated by this Agreement and (ii) is reasonably capable of
being completed.

SECTION 4.4 Access to Information. The Company will give Parent and Merger
Sub, and their respective counsel, financial advisors, auditors and other
authorized representatives, full access to the offices (including a work area
for the use of Parent and Merger Sub and their authorized representatives),
properties, employees, books and records of the Company and its subsidiaries at
all reasonable times upon reasonable notice, and will instruct the employees,
counsel, financial advisors and auditors of the Company and its subsidiaries to
cooperate in all reasonable respects with Parent and Merger Sub and each such
representative in its investigation of the business of the Company and its
subsidiaries, provided that no investigation pursuant to this Section 4.4 shall
affect any representation or warranty given by the Company to Parent or Merger
Sub hereunder. The Company will confer from time to time with Parent at Parent's
request to discuss the status of the operations of the Company and its
subsidiaries. Parent shall keep such information confidential in accordance with
the terms of the confidentiality letter, dated June 23, 1998 (the
"Confidentiality Letter"), between Parent and the Company.

SECTION 4.5 Amendment of Company's Employee Plans. The Company will,
effective at or immediately prior to the Effective Time, cause any Employee
Plans (as hereinafter defined) which it may have to be amended, to the extent,
if any, reasonably requested by Parent, for the purpose of permitting the
Employee Plans to continue to operate in conformity with ERISA and the Code
subsequent to the Merger.

SECTION 4.6 Stock Options and Warrants. In accordance with the Company's
Equity Incentive Plan (the "Plan"), the Company will, as soon as practicable
<PAGE>
after the execution of this Agreement, but in any event no later than March 1,
1999, cause the Committee that administers the Plan to adopt the resolutions set
forth on Exhibit 4.6 hereto pursuant to Section 12(g) of the Plan (the
"Resolutions").

SECTION 4.7 Best Efforts. Subject to the terms and conditions herein
provided, each of the Company, Parent and Merger Sub agrees to use its
commercially reasonable efforts consistent with applicable legal requirements to
take, or cause to be taken, all action, and to do, or cause to be done, all
things reasonably necessary or proper and advisable under applicable laws and
regulations to ensure that the conditions set forth in Article V are satisfied
and to consummate and make effective, in the most expeditious manner reasonably
practicable, the Merger and the other transactions contemplated by this
Agreement.

SECTION 4.8 Consents. Parent and the Company each shall use their
respective commercially reasonable efforts to obtain all material consents of
third parties and governmental authorities, and to make all governmental
filings, necessary for the consummation of the transactions contemplated by this
Agreement. Parent and the Company each shall as soon as practicable file (i) a
Pre-Merger Notification and Report Form under the Hart Scott Rodino Antitrusts
Improvements Act (the "HSR Act") with the Federal Trade Commission (the "FTC")
and the Antitrust Division of the Department of Justice (the "Antitrust
Division"), (ii) all filings required by the New York State Banking Law with the
New York State Banking Department, (iii) those filings required by the
Massachusetts Bank Law and shall use their respective best efforts to respond as
promptly as reasonably practicable to all inquiries received from the FTC or the
Antitrust Division, or from the New York State Banking Department, the
Massachusetts banking authorities, or any other relevant regulatory authority
for additional information or documentation.

SECTION 4.9 Public Announcements. Except as hereinafter provided in this
Section 4.9, Parent and the Company will consult with each other before issuing
any press release or otherwise making any public statements prior to the
Effective Time with respect to the Merger or the other transactions contemplated
hereby and shall not issue any such press release or make any such public
statement prior to receiving the consent of the other party, which consent will
not be unreasonably withheld or delayed. Nothing stated herein shall prohibit
any party from making a press release or other statement required by law or by
obligations pursuant to any listing agreement with any automated interdealer
quotation system if the party making the disclosure has first consulted with the
other parties hereto.

SECTION 4.10 Notification of Certain Matters. The Company will give prompt
notice, as soon as reasonably practicable, to Parent and Merger Sub of the
occurrence or non-occurrence of any event (i) which has had or is reasonably
likely to have a Material Adverse Effect, (ii) which has caused any
representation or warranty of the Company contained in this Agreement to be
untrue or inaccurate in any material respect or (iii) which has caused any
failure of the Company to comply in all material respects with or satisfy in all
material respects any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement; provided, however, that the delivery of
any notice pursuant to this Section 4.10 will not limit or otherwise affect the
remedies available under this Agreement to Parent or limit the rights of the
Company under this Agreement.
<PAGE>
SECTION 4.11 Indemnification. All rights to indemnification and exculpation
existing in favor of any present or former director, officer or employee of the
Company or any of its subsidiaries (an "Indemnified Party") as provided in the
Company's Certificate of Incorporation or By-Laws or the certificate or articles
of incorporation, by-laws or similar organizational documents or by-laws of any
of its subsidiaries as in effect on the date hereof shall survive the Merger for
a period of six years with respect to matters occurring at or prior to the
Effective Time and no action taken during such six-year period shall be deemed
to diminish the obligations set forth in this Section 4.11.

SECTION 4.12 Directors and Officers Liability Insurance. For a period of
four years after the Effective Time, the Surviving Corporation shall cause to be
maintained in effect either (i) the current policy of directors' and officers'
liability insurance maintained by the Company (provided that Parent or the
Surviving Corporation may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are no less
advantageous in any material respects to the indemnified parties thereunder)
with respect to claims arising from facts or events which occurred before the
Effective Time; provided, however, that in no event shall the Surviving
Corporation be required to expend pursuant to this Section 4.12 more than an
amount per year equal to 150% of the current annual premium (which current
annual premium for the policy year ending September 2001 the Company represents
and warrants to be approximately $8,000 in the aggregate) paid by the Company
for such existing insurance coverage (the "Cap"); and provided, further, that if
equivalent coverage cannot be obtained, or can be obtained only by paying an
annual premium in excess of the Cap, the Surviving Corporation shall only be
required to obtain as much coverage as can be obtained by paying an annual
premium equal to the Cap, or (ii) a run-off (i.e., "tail") policy or endorsement
with respect to the current policy of directors' and officers' liability
insurance covering claims asserted within three years after the Effective Time
arising from facts or events which occurred before the Effective Time.

SECTION 4.13 Employment Contracts. At the Effective Time, the Company shall
terminate, and cause Alan J. Karp and David E. Fisher to terminate, the existing
employment agreements of Alan J. Karp and David E. Fisher with the Company, and
the Company shall enter into the Employment Agreements with Alan J. Karp and
David E. Fisher substantially in the forms of Exhibits A and B hereto,
respectively (the "Employment Agreements).

SECTION 4.14 Conveyance Taxes. Parent and the Company shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees, and any similar taxes which become
payable in connection with the transactions contemplated hereby that are
required or permitted to be filed on or before the Effective Time and the
Surviving Corporation shall be responsible for the payment of all such taxes and
fees.

SECTION 4.15 Prepayment of Indebtedness. At the Effective Time, the Parent
shall prepay or cause the Surviving Corporation to prepay, including any
prepayment penalties in connection therewith, each of the notes and other forms
of indebtedness of the Company that is then prepayable.
<PAGE>
SECTION 4.16 Keyman Life Insurance. The Company shall obtain and maintain,
at its expense, "keyman" life insurance coverage on the lives of Alan J. Karp
and David E. Fisher, with either the Company or Parent as sole beneficiary, in
the amount of $1,000,000 for each such person, which insurance shall be issued
by an insurance company rated A minus or better by A. M. Best Co. Inc.

ARTICLE V

CONDITIONS TO THE MERGER

SECTION 5.1 Conditions to Obligation of Each Party to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of the following
conditions:

(a) Shareholder Approval. The Merger and this Agreement shall have
been approved and adopted by the requisite vote of the shareholders of the
Company;

(b) HSR Act; etc. All waiting periods applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated; all
consents required to be obtained under the New York State Banking Law and
the Massachusetts Bank Law, and from the Bank of Greece shall have been
obtained, and any waiting periods applicable to the consummation of the
Merger under such law shall have expired or been terminated.

(c) Governmental Actions. There shall not have been instituted,
pending or threatened any suit, action or proceeding (or any investigation
or other inquiry that might result in such an action or proceeding) by or
before any governmental authority, administrative agency or court of
competent jurisdiction, domestic or foreign, nor shall there be in effect
any judgment, decree or order of any governmental authority, administrative
agency or court of competent jurisdiction, or any other legal restraint (i)
preventing or seeking to prevent consummation of the Merger, (ii)
prohibiting or seeking to prohibit or limiting or seeking to limit Parent
from exercising all material rights and privileges pertaining to its
ownership of the Surviving Corporation or the ownership or operation by
Parent or any of its Subsidiaries of all or a material portion of the
business or assets of Parent or any of its Subsidiaries, or (iii)
compelling or seeking to compel Parent or any of its Subsidiaries to
dispose of or hold separate all or any material portion of the business or
assets of Parent or any of its Subsidiaries (including the Surviving
Corporation), as a result of the Merger or the transactions contemplated by
this Agreement;

(d) Illegality. No statute, rule, regulation or order shall be
enacted, entered, enforced or deemed applicable to the Merger which makes
the consummation of the Merger illegal;
<PAGE>
(e) Opinions of Counsel. The Company shall have received the written
opinions of Kramer Levin Naftalis & Frankel LLP and James Maxwell, Esq., in
the forms attached hereto as Exhibits C-1 and C-2, respectively. Parent and
Merger Sub shall have received the written opinion of Blau, Kramer, Wactler
& Lieberman, P.C. in the form attached hereto as Exhibit D.

SECTION 5.2 Additional Conditions to Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to effect the Merger are also subject
to the following conditions:

(a) Representations and Warranties. The representations and warranties
of the Company contained in this Agreement (including the Company
Disclosure Schedule) that are qualified as to materiality shall be true and
correct in all respects on and as of the Effective Time with the same force
and effect as if made on and as of the Effective Time and each of the
representations and warranties of the Company contained in this Agreement
(including the Company Disclosure Schedule) that is not so qualified shall
be true and correct in all material respects on and as of the Effective
Time with the same force and effect as if made on and as of the Effective
Time, except for (i) changes contemplated by this Agreement and (ii) those
representations and warranties which address matters only as of a
particular date (which shall have been true and correct as of such date and
Parent and Merger Sub shall have received a certificate to such effect
signed by the Chief Executive Officer and Chief Financial Officer of the
Company;

(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time, and Parent and Merger Sub shall have received
a certificate dated as of the Effective Time to such effect signed by the
Chief Executive Officer and Chief Financial Officer of the Company;

(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required
to be made, by the Company for the authorization, execution and delivery of
this Agreement, the consummation by it of the transactions contemplated
hereby and the continuation in full force and effect of any and all
material rights, documents, agreements or instruments of the Company,
including, without limitation, all such consents required from governmental
agencies, shall have been obtained and made by the Company, except where
the failure to receive such consents, waivers, approvals, authorizations or
orders would not have a Material Adverse Effect on the Company or Parent;

(d) Absence of Material Adverse Effect. There shall not have been,
since December 31, 1997 (i) any damage, destruction or loss, whether
covered by insurance or not, that has had, or will have, a Material Adverse
Effect; (ii) any suit, action, investigation, inquiry or other proceeding
by or before any court or governmental or other regulatory or
administrative agency or commission requesting an order, judgment or decree
(except those in which Parent or Merger Sub is a plaintiff directly or
derivatively) which, in the reasonable judgment of Parent, would be
<PAGE>
reasonably likely, if issued, to have a Material Adverse Effect; or (iii)
any other event or condition (financial or otherwise) of any character or
any operations or results of operations that has had, or is reasonably
likely to have, a Material Adverse Effect.

(e) Dissenting Shares. The holders of not more than 7.5% of the issued
and outstanding Company Common Stock shall have taken such action prior to
or at the time of the shareholders' vote as is necessary as of that time to
entitle them to the statutory dissenters' rights referred to in Section 1.7
hereof.

(f) Options and Warrants. In accordance with the Plan, the Company
shall have caused the Committee that administers the Plan to take action,
pursuant to Section 12(g) of the Plan to adopt the Resolutions.

(g) Employment Agreements. The Company and Alan J. Karp and David E.
Fisher shall have entered into the Employment Agreements.

(h) Company Net Worth. As of the last day of the month immediately
prior to the month in which the Effective Time occurs, the Company's net
worth, calculated in accordance with GAAP, shall be no less than
$7,000,000.

(i) Contracts Receivable. As of the last day of the month immediately
prior to the month in which Effective Time occurs, the Company's net
Contracts Receivable, calculated in accordance with GAAP, shall be no less
than $40,000,000.

(j) Prepayable Indebtedness. The holders of all notes and other forms
of indebtedness of the Company (other than the commercial paper set forth
on Schedule 5.2(j) hereto, any refundings of such commercial paper and any
other commercial paper having similar terms and conditions that may be
issued by the Company between the date of this Agreement and the Effective
Date pursuant to the terms of this Agreement (the "Commercial Paper"))
shall have agreed to allow Parent to prepay or to cause the Surviving
Corporation to prepay such notes and other indebtedness.

SECTION 5.3 Additional Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the following
conditions:

(a) Representations and Warranties. The representations and warranties
of Parent and Merger Sub contained in this Agreement (including the Parent
Disclosure Schedule) that are qualified as to materiality shall be true and
correct in all respects on and as of the Effective Time with the same force
and effect as if made on and as of the Effective Time and each of the
representations and warranties of Parent or Merger Sub contained in this
Agreement (including the Parent Disclosure Schedule) that is not so
qualified shall be true and correct in all material respects on and as of
the Effective Time with the same force and effect as if made on and as of
the Effective Time, except for (i) changes contemplated by this Agreement
and (ii) those representations and warranties which address matters only as
of a particular date and the Company shall have received a certificate to
<PAGE>
such effect signed by the Chief Executive Officer and the Chief Financial
Officer of Parent; and

(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by
them on or prior to the Effective Time, and the Company shall have received
a certificate dated as of the Effective Time to such effect signed by the
President and Chief Financial Officer of Parent.

ARTICLE VI

TERMINATION

SECTION 6.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time, notwithstanding approval thereof by the shareholders of
the Company or Parent:

(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and the Company; or

(b) by either Parent or the Company if the Merger shall not have been
consummated on or before June 1, 1999 (provided that the right to terminate
this Agreement under this Section 6.1(b) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of the Merger to occur on or before
such date, and provided further that, in the event that the Merger would
have occurred on or before such date except that either (i) the condition
set forth in Section 5.2(j) hereof has not been met by such date, or (ii)
the representations set forth in Section 2.18(e) shall not be true and
correct in all material respects on such date, Parent or the Company shall
have the option to extend such date until July 1, 1999); or

(c) by either Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission, including, without limitation, the New York State Banking
Department, shall have issued a nonappealable final order, decree or ruling
or taken any other action having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger (provided that the right to
terminate this Agreement under this Section 6.1(c) shall not be available
to any party who has not complied with its obligations under Section 4.7
and such noncompliance materially contributed to the issuance of any such
order, decree or ruling or the taking of such action); or

(d) by either Parent or the Company if the requisite vote of the
shareholders of the Company shall not have been obtained by May 27, 1999,
<PAGE>
or if the shareholders of the Company shall not have approved and adopted
the Merger and this Agreement at the Company Shareholders Meeting; or

(e) by Parent or the Company if any representation or warranty of the
Company, or Parent and Merger Sub, respectively, set forth in this
Agreement shall be untrue when made, such that the conditions set forth in
Section 5.2(a) or 5.3(a), as the case may be, would not be satisfied (a
"Terminating Misrepresentation"); provided, however, that, if such
Terminating Misrepresentation is curable prior to May 27, 1999 by the
Company or Parent, as the case may be, through the exercise of its
commercially reasonable efforts and for so long as the Company or Parent,
as the case may be, continues to exercise such reasonable efforts, neither
Parent nor the Company, respectively, may terminate this Agreement under
this Section 6.1(e); or

(f) by Parent if any representation or warranty of the Company shall
have become untrue such that the condition set forth in Section 5.2(a)
would not be satisfied (a "Company Terminating Change"), or by the Company
if any representation or warranty of Parent and Merger Sub shall have
become untrue such that the condition set forth in Section 5.3(a) would not
be satisfied (a "Parent Terminating Change" and together with a Company
Terminating Change, a "Terminating Change"), in either case other than by
reason of a Terminating Breach (as hereinafter defined); provided, however,
that if any such Terminating Change is curable prior to May 27, 1999 by the
Company or Parent, as the case may be, through the exercise of its
commercially reasonable efforts, and for so long as the Company or Parent,
as the case may be, continues to exercise such commercially reasonable
efforts, neither Parent nor the Company, respectively, may terminate this
Agreement under this Section 6.1(f); or

(g) by Parent or the Company upon a breach of any covenant or
agreement on the part of the Company or Parent, respectively, set forth in
this Agreement, such that the conditions set forth in Sections 5.2(b) or
5.3(b), as the case may be, would not be satisfied (a "Terminating
Breach"); provided, however, that, if such Terminating Breach is curable
prior to May 27, 1999 by the Company or Parent, as the case may be, through
the exercise of its commercially reasonable efforts and for so long as the
Company or Parent, as the case may be, continues to exercise such
commercially reasonable efforts, neither Parent nor the Company,
respectively, may terminate this Agreement under this Section 6.1(g); or

(h) by the Company, if the Company receives a bona fide Third Party
Acquisition Offer which constitutes a Superior Acquisition and which Third
Party Acquisition Offer the Board of Directors of the Company accepts,
approves or recommends; or

(i) by Parent or Merger Sub, if the Board of Directors of the Company
fails to call or hold a special meeting of shareholders or to conduct the
vote to approve and adopt this Agreement and the Merger at the special
meeting or any adjournment thereof or if the Board of Directors of the
Company fails to recommend the Merger to the Company's shareholders,
withdraws or qualifies such recommendation or its approval of this
<PAGE>
Agreement or the Merger once given or takes any position or action that is
inconsistent with such recommendation or accepts, recommends or approves a
Third Party Acquisition Offer.

SECTION 6.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 6.1, this Agreement shall forthwith become void
and there shall be no liability on the part of any party hereto or of any of its
Affiliates, directors, officers or shareholders except (i) as set forth in
Section 6.3 and Section 7.1, and (ii) nothing herein shall relieve any party
from liability for any breach hereof.

SECTION 6.3 Fees and Expenses and Damages. (a) Except as set forth in this
Section 6.3, all fees and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses, whether or not the Merger is consummated.

(b) The Company shall pay Parent a fee of $193,200 upon the termination of
this Agreement where such termination occurs for any of the following reasons:
(x) by Parent pursuant to Section 6.1(i); (y) by Company pursuant to 6.1(h); or
(z) by Parent or the Company pursuant to Section 6.1(d).

(c) Upon termination of this Agreement by either Parent or the Company, the
respective parties hereto may seek any and all remedies or damages available to
it under applicable law.

(d) The fee payable pursuant to Section 6.3(b) shall be paid within one
business day after a written demand for payment following the occurrence of any
of the events described in Section 6.3(b).

ARTICLE VII

GENERAL PROVISIONS

SECTION 7.1 Effectiveness of Representations, Warranties and Agreements.
(a) Except as otherwise provided in this Section 7.1, the representations,
warranties, covenants and agreements of each party hereto shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any other party hereto, any Person controlling any such party or any
of their officers, directors or representatives, whether prior to or after the
execution of this Agreement. The representations, warranties, covenants and
agreements in this Agreement shall terminate at the Effective Time or upon the
termination of this Agreement pursuant to Section 6.1, as the case may be,
except that the covenants and agreements set forth in Article I and Sections
4.11 and 4.12 shall survive the Effective Time and those set forth in Section
6.3 shall survive such termination. The Confidentiality Letter shall survive
termination of this Agreement as provided therein.
<PAGE>
(b) Any disclosure made with reference to one or more Sections of the
Company Disclosure Schedule or the Parent Disclosure Schedule shall be deemed
disclosed with respect to each other section therein as to which such disclosure
is relevant provided that such relevance is reasonably apparent. Disclosure of
any matter in the Company Disclosure Schedule or the Parent Disclosure Schedule
shall not be deemed an admission that such matter is material.

SECTION 7.2 Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made if and when delivered personally or by overnight courier to the
parties at the following addresses or sent by electronic transmission, with
confirmation received, to the telecopy numbers specified below (or at such other
address or telecopy number for a party as shall be specified by like notice):

(a) If to Parent or Merger Sub:

Atlantic Bank of New York
960 Avenue of the Americas
New York, NY 10001
Attention: George Jarvis
Telecopier No.: (212) 695-6907
Telephone No.: (212) 714-7389

and

James Maxwell, Esq.
Telecopier No.: (212) 967-2557
Telephone No.: (212) 714-7312

With a copy to:

Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
Telecopier No.: (212) 715-8000
Telephone No.: (212) 715-9100
Attention: Peter S. Kolevzon, Esq.

(b) If to the Company:

Standard Funding Corp.
335 Crossways Park Drive
Woodbury, NY 11797
Telecopier No.: (516) 364-8497
Telephone No.: (516) 364-0200
Attention: Alan Karp, President
<PAGE>
With a copy to:

Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 11753
Telecopier No.: (516) 822-4824
Telephone No.: (516) 822-4820
Attention: Edward I. Kramer, Esq.

SECTION 7.3 Certain Definitions. For purposes of this Agreement, the term:

(a) "Affiliate" means a Person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned Person;

(b) "Business Day" means any day other than a day on which banks in
New York are required or authorized to be closed;

(c) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of stock,
as trustee or executor, by contract or credit arrangement or otherwise;

(d) "Person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization other
entity or group (as defined in Section 13(d)(3) of the Exchange Act); and

(e) "Subsidiary" or "Subsidiaries" of any Person means any
corporation, partnership, limited liability company, or other legal entity
of which such Person, as the case may be (either alone or through or
together with any other subsidiary), owns, directly or indirectly, more
than 50% of the stock or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or
other governing body of such corporation or other legal entity.

SECTION 7.4 Amendment. This Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective Boards of Directors at any
time prior to the Effective Time; provided, however, that, after approval and
adoption of the Merger and this Agreement by the shareholders of the Company, no
amendment may be made which by law requires further approval by such
shareholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.

SECTION 7.5 Waiver. At any time prior to the Effective Time, any party
hereto may with respect to any other party hereto (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
<PAGE>
delivered pursuant hereto, or (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.

SECTION 7.6 Headings; Construction. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. In this Agreement (a) words
denoting the singular include the plural and vice versa, (b) "it" or "its" or
words denoting any gender include all genders, (c) the word "including" shall
mean "including without limitation," whether or not expressed, (d) any reference
to a statute shall mean the statute and any regulations thereunder in force as
of the date of this Agreement or the Effective Time, as applicable, unless
otherwise expressly provided, (e) any reference herein to a Section, Article,
Schedule or Exhibit refers to a Section or Article of or a Schedule or Exhibit
to this Agreement, unless otherwise stated, (f) when calculating the period of
time within or following which any act is to be done or steps taken, the date
which is the reference day in calculating such period shall be excluded and if
the last day of such period is not a Business Day, then the period shall end on
the next day which is a Business Day, and (g) any reference to a party's "best
efforts" or "reasonable efforts" shall not include any obligation of such party
to pay, or guarantee the payment of, money or other consideration to any third
party or to agree to the imposition on such party or its Affiliates of any
condition reasonably considered by such party to be materially burdensome to
such party or its Affiliates.

SECTION 7.7 Severability. (a) If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent reasonably
possible.

(b) The Company and Parent agree that the fees provided in Section 6.3(b)
are fair and reasonable in the circumstances. If a court of competent
jurisdiction shall nonetheless, by a final, non-appealable judgment, determine
that the amount of any such fee exceeds the maximum amount permitted by law,
then the amount of such fee shall be reduced to the maximum amount permitted by
law in the circumstances, as determined by such court of competent jurisdiction.

SECTION 7.8 Entire Agreement. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings (other than the
Confidentiality Letter), both written and oral, among the parties, or any of
them, with respect to the subject matter hereof, except as otherwise expressly
provided herein.

SECTION 7.9 Assignment; Merger Sub. This Agreement shall not be assigned by
operation of law or otherwise, except that all or any of the rights of Merger
Sub hereunder may be assigned to any direct, wholly-owned Subsidiary of Parent
<PAGE>
provided that no such assignment shall relieve the assigning party of its
obligations hereunder.

SECTION 7.10 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, including, without limitation, by way of subrogation, other than
Sections 4.11 and 4.12 (which are intended to be for the benefit of the
Indemnified Parties and may be enforced by such Indemnified Parties).

SECTION 7.11 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty, covenant or
agreement herein, nor shall any single or partial exercise of any such right
preclude other or further exercise thereof or of any other right. All rights and
remedies existing under this Agreement are cumulative to, and not exclusive of,
any rights or remedies otherwise available.

SECTION 7.12 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York
applicable to contracts executed and fully performed within the State of New
York.

SECTION 7.13 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.

SECTION 7.14 WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER SUB AND THE
COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED
UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.

[This space intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.

ATLANTIC BANK OF NEW YORK

By /s/
----------------------------------
Name: Thomas K. Sipple
Title: Executive Vice President & CFO

ATLANTIC PREMIUM, INC.

By /s/
----------------------------------
Name: Thomas K. Sipple
Title: President

STANDARD FUNDING CORP.

By /s/
----------------------------------
Name: Alan J. Karp
Title: President

<PAGE>
Exhibit A

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (this "Agreement") is made as of the ___ day of
___________, 1999, by and between Standard Funding Corp., a New York corporation
(the "Company"), and Alan J. Karp (the "Employee").

W I T N E S S E T H :

WHEREAS, immediately subsequent to the execution of this Agreement a
wholly-owned acquisition subsidiary ("Merger Sub") of Atlantic Bank of New York,
a New York banking corporation (the "Parent") is being merged (the "Merger")
with and into the Company, pursuant to an Agreement and Plan of Merger dated
January 28, 1999 (the "Merger Agreement"); and

WHEREAS, immediately prior to the consummation of the Merger, Employee is
employed as President of the Company and holds an approximately 22.4% interest
in the Company; and

WHEREAS, Employee's interest in the Company is being transferred to Parent
as a result of the Merger Agreement; and

WHEREAS, the Company wishes to ensure that it will continue to have the
benefits of Employee's services after the Merger on the terms and conditions
hereinafter set forth; and

WHEREAS, the Company and Employee acknowledge and agree that the retention
of Employee's services and Employee's agreement to enter into and adhere to the
noncompetition, nonsolicitation, and nondisclosure of proprietary information
provisions contained in this Agreement are critical reasons Parent, Merger Sub
and the Company entered into the Merger Agreement; and

WHEREAS, Employee desires to work for the Company on the terms and
conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the parties hereto agree as follows:
<PAGE>
1. Employment; Term. The Company hereby employs Employee, and Employee
hereby accepts employment with the Company, in accordance with and subject to
the terms and conditions set forth herein. The term of this Agreement shall
commence on the date hereof (the "Effective Date") and, unless earlier
terminated in accordance with Paragraph 5 hereof, shall terminate on
_________________, 2002 (the "Term"). The Company and Employee each warrant and
represent that they are free to enter into this Agreement and that by doing so
they will not breach or otherwise impair any other agreement with any person or
entity.

2. Employment

(a) During the Term, Employee shall serve as President of the
Company.

(b) Employee shall have such duties and responsibilities as are
customary for Employee's position and any other duties or responsibilities he
may reasonably be assigned by the Board of Directors of the Company.

(c) During the period Employee is employed by the Company,
Employee shall devote his full business time and best efforts to the business
and affairs of the Company, except as otherwise specifically permitted by the
Company.

3. Compensation

(a) The Company shall pay Employee a base salary (the "Base
Salary") of $250,000 per annum, payable monthly in accordance with the Company's
payroll practices or in such other manner as shall be agreeable to the Company
and Employee and subject to all legally required or customary withholdings.

(b) Employee shall be eligible to receive an annual bonus ranging
between -$50,000 and $200,000 for the calendar years 1999, 2000, and 2001
(prorated as to any partial years). The amount of Employee's bonus, if any,
shall be based on performance targets, as set forth in Schedule A. If Employee's
annual bonus is a positive amount, it shall be paid in accordance with the
Company's policies for its senior executives and at such times as annual bonuses
are generally paid to employees of the Company. Such amounts shall be subject to
all legally required or customary withholdings. If Employee's annual bonus is a
negative amount, the amount owed to the Company shall be deducted from the
principal amount then outstanding of that certain Adjustable Principal
Promissory Note issued on the date hereof by Parent to Employee in connection
with the Merger as partial consideration for Employee's interest in the Company
(the "Note"); provided, however, if a negative bonus is earned by Employee for
year 1999 and/or 2000 pursuant to this paragraph, the amount deducted from the
principal amount then outstanding of the Note as payment of the negative bonus
<PAGE>
shall be added back to the principal amount then outstanding of the Note if the
performance target of the Company, as set forth in Schedule A, for the calendar
year immediately following the year for which a negative bonus was earned is
exceeded by 15% or more.

(c) Employee shall be entitled to a special bonus of $250,000 if:
(i) the performance of the Company has exceeded the cumulative target, as set
forth in Schedule A, by 15% or more; and (ii) in each of the calendar years
1999, 2000, and 2001, the Company's performance has been at least 100% of the
target for that year, as set forth in Schedule A. If Employee is entitled to a
special bonus under this paragraph 3(c), it shall be paid in accordance with the
Company's policies for its senior executives and at such times as annual bonuses
for the year 2001 are generally paid to employees of the Company. Such bonus
shall be subject to all legally required or customary withholdings.

4. Benefits

(a) The Company agrees to pay Employee a car allowance of $800
per month, which will be considered taxable income, less legally required and/or
customary withholdings. The Company shall not be responsible for any additional
car- related expenses, including but not limited to insurance, mileage,
maintenance or repairs, and fuel expenses.

(b) It is contemplated that during the period of employment,
Employee may incur out-of-pocket expenses in connection with the performance of
his services hereunder, including customary and regular expenses incurred for
travel and entertainment related to the business of the Company. Accordingly,
the Company shall reimburse Employee for all reasonable out-of-pocket expenses
incurred by Employee in the performance of his duties hereunder upon submission
of reasonable documentation therefore in accordance with the Company's policies.

(c) Employee shall be entitled to participate in any and all
medical insurance, group health, disability insurance, pension, and other
benefit plans which are made generally available by the Company to its senior
executives; provided, however, that Employee shall not be entitled to
participate in any cash bonus or incentive compensation plan other than those
described in paragraph 3 hereof. The Company, in its sole discretion, may at any
time amend or terminate its benefit plans or programs, but such amendment or
termination shall not discriminate against Employee as compared to other senior
executives.

(d) Employee shall be entitled to receive four weeks of annual
paid vacation in accordance with the Company's vacation policy for its senior
executives. Employee shall be entitled to all paid holidays the Company makes
available to its employees.
<PAGE>
5. Termination. Employee's employment hereunder may be terminated prior to
the end of the Term under the following circumstances:

(a) Death. Employee's employment hereunder shall terminate upon
Employee's death.

(b) Total Disability. The Company may terminate Employee's
employment hereunder at any time after Employee becomes "Totally Disabled." For
purposes of this Agreement, Employee shall be "Totally Disabled" as of the
earlier of (i) the date Employee becomes entitled to receive long-term
disability benefits under the Company's long-term disability plan and (ii)
Employee's inability to perform the duties and responsibilities contemplated
under this Agreement for a period of more than 180 consecutive days due to
physical or mental incapacity. Such termination shall become effective five days
after the Company gives notice of such termination to Employee, or to his spouse
or legal representative, in accordance with Paragraph 9 hereof.

(c) Termination by the Company for Cause. The Company may
terminate Employee's employment hereunder for Cause at any time after providing
written notice to Employee. For purposes of this Agreement, the term "Cause"
shall mean any of the following: (i) the neglect or failure or refusal of
Employee to perform Employee's material duties hereunder (other than as a result
of total or partial incapacity due to physical or mental illness); (ii) the
willful and substantial engaging by Employee in misconduct which is injurious to
the Company, monetarily or otherwise; (iii) perpetration of an intentional and
knowing fraud against or affecting the Company or any customer, client, agent,
or employee thereof; (iv) conviction (including conviction on a nolo contendere
plea) of a felony or any crime involving, in the good faith judgment of the
Company, fraud, dishonesty or moral turpitude; (v) the willful breach of a
covenant set forth in Paragraph 7 hereof; or (vi) any material breach of this
Agreement; provided however that a termination pursuant to clauses (i), (ii), or
(vi) hereof shall not become effective unless such neglect, failure, misconduct,
or breach is capable of being cured and Employee fails to cure such neglect,
failure, misconduct, or breach within 30 days after written Notice from the
Company.

Notwithstanding the foregoing, a termination for Cause shall not be
deemed effective unless and until the Employee has first received written notice
specifying in reasonable detail the reasons for the Company's intention to
terminate him for Cause, and has been afforded ten (10) days to submit a written
response to the Company's Board of Directors. Upon receipt of a timely response
from the Employee, the Board, within seven (7) days of receipt of the response,
will determine if there is a sufficient basis for a termination for Cause. The
foregoing is a procedural requirement only and the determination of the Board
may be challenged by the Employee in an appropriate forum.
<PAGE>
(d) Termination by the Company Without Cause. The Company may
terminate Employee's employment hereunder at any time for any reason or no
reason.

(e) Termination by Employee for Good Reason. Employee may
terminate his employment hereunder if (i) the Company effects a material
diminution of Employee's duties or changes his title, as specified in Section 2
of this Agreement, (ii) the Company requires that Employee's office be located
outside a 10- mile radius of Woodbury, New York at any time prior to May 31,
2001, unless muutally agreeable; or the Company requires that the Employee's
office be located in any area other than Manhattan, Queens or Long Island at any
time after May 31, 2001; or (iii) the Company materially breaches this
Agreement, including, but not limited to, failure to pay the compensation or
provide the medical benefits required by Paragraph 3 of this Agreement, and such
breach is injurious to Employee; provided however that a termination pursuant to
clauses (i) or (iii) hereof shall not become effective unless the Company fails
to cure such breach or material diminution within 30 days after Employee gives
the Company written Notice of such breach or material diminution.

6. Compensation Following Termination Prior to the End of the Term. In
the event that Employee's employment hereunder is terminated prior to the end of
the Term, Employee shall be entitled only to the following compensation and
benefits upon such termination:

(a) Termination by Reason of Death or Total Disability, by the
Company for Cause, or by Employee Without Good Reason. In the event that
Employee's employment is terminated prior to the expiration of the Term by
reason of Employee's death or Total Disability or for Cause pursuant to
Paragraph 5(a), 5(b), or 5(c) hereof, respectively, or by Employee without Good
Reason, as defined in Paragraph 5(e) hereof, the Company shall pay the following
amounts to Employee (or Employee's spouse or estate, as the case may be):

i. any accrued but unpaid Base Salary (as determined pursuant to
Paragraph 3(a) hereof) for services rendered to the date of
termination;

ii. any accrued but unpaid expenses required to be reimbursed
pursuant to Paragraph 4(b) hereof; and

iii. any vacation accrued to the date of termination.

The benefits to which Employee and/or his family may be entitled upon
termination pursuant to the plans, programs, and arrangements referred to in
Paragraph 4(c) hereof shall be determined and paid in accordance with the terms
of such plans, programs, and arrangements.
<PAGE>
(b) Termination by the Company Without Cause or Termination by
Employee for Good Reason. In the event that Employee's employment is terminated
by the Company without Cause or by Employee for Good Reason pursuant to
Paragraph 5(d) or 5(e) hereof, the Company shall pay the following amounts to
Employee:

i. any accrued and unpaid Base Salary (as determined pursuant to
Paragraph 3(a) hereof) for services rendered to the date of
termination;

ii. any accrued but unpaid expenses required to be reimbursed
pursuant to Paragraph 4(b) hereof;

iii. any vacation accrued to the date of termination;

iv. lump sum payment equal to the total amount of Base Salary
Employee would have earned from the date of termination until the
expiration of the Term (as determined under Paragraph 3(a)
hereof); and

v. a prorated bonus, based on the number of days the employee worked
during the year in which the Employee is terminated and the
Company's performance in that year, and paid at such time as the
Employee would have been paid but for such termination. In
addition, within ten (10) days of such termination the Employee
shall be paid an amount equal to $75,000 divided by 12 ($6,250)
multiplied by the number of months remaining on the initial Term
of the Agreement. For example, if the Employee commenced
employment on April 1, 1999 and was terminated on September 30,
1999 (6 months), and the Company's performance warrants a
$100,000 bonus for 1999, the Employee would be entitled to a
bonus based on the Company's performance in 1999 of $50,000. In
addition, since 30 months would remain on the Agreement, within
ten (10) days of his termination the Employee would be entitled
to $187,500 ($75,000 o 12 x 30).

The benefits to which Employee and/or his family may be entitled upon
termination pursuant to the plans, programs, and arrangements referred to in
Paragraph 4(c) hereof shall be determined and paid in accordance with the terms
of such plans, programs, and arrangements, except that the Company shall, with
respect to any major medical and all other health, accident, and disability
plans for which Employee, or his spouse or legal representative, elects
continuation in accordance with COBRA, reimburse Employee for payment of
premiums related to the maintenance of such plans for a period of three months
following termination. The Company's obligation to pay such premiums, however,
shall cease upon Employee's employment by any individual or entity.
<PAGE>
(c) Termination of Employment -- Effect on Note.

i. If Employee's employment is terminated by the Company for
Cause or by Employee without Good Reason less than one year after the Effective
Date, the Company shall not be obligated to make any payment of principal of the
Note and all unpaid and future interest shall be waived. If Employee's
employment is terminated by the Company for Cause or by Employee without Good
Reason less than two years but one or more years after the Effective Date, the
Company shall be obligated to pay only 33.3% of the principal of the Note and
all unpaid and future interest shall be waived. If Employee's employment is
terminated by the Company for Cause or by Employee without Good Reason two or
more years after the Effective Date but before the expiration of the Term, the
Company shall be obligated to pay only 66.7% of the principal of the Note and
all unpaid and future interest shall be waived.

ii. If Employee's employment is terminated by the Company
without Cause or by Employee for Good Reason, the Company shall immediately pay
all monies, including principal and interest, that are due and owing on the
Note.

iii. If Employee's employment terminates due to Death or
Total Disability, the Company shall remain obligated to pay the principal of the
Note and neither unpaid nor future interest shall be waived.

(d) No Other Benefits or Compensation. Except as may be provided
under this Agreement or under the terms of any incentive compensation, employee
benefit, or fringe benefit plan applicable to Employee at the time of the
termination of Employee's employment prior to the end of the Term, Employee
shall have no right to receive any other compensation, or to participate in any
other plan, arrangement, or benefit, with respect to any future period after
such termination.

7. Noncompetition and nonsolicitation; Nondisclosure of Proprietary
Information; Surrender of Records

7.1 Noncompetition; Nonsolicitation.

Employee acknowledges and recognizes the highly competitive
nature of the Company's business and that access to the Company's confidential
records and proprietary information renders him special and unique within the
Company's industry. In consideration of the payment by the Company to Employee
of amounts that may hereafter be paid to Employee pursuant to this Agreement
(including, without limitation, pursuant to Paragraph 3 hereof) and of the
payments to Employee in connection with the sale of his interest in the Company
pursuant to the Merger Agreement, Employee agrees that during the Term and
during the Covered Time, Employee will not compete with any business the Company
<PAGE>
conducted at any time during Employee's employment with the Company and will not
engage, directly or indirectly, in any business that engages in the insurance
premium finance business in any of the states in which the Company does business
at the time Employee seeks to engage in such business.

If the Employee is terminated without Cause or terminates
his employment for Good Reason, the foregoing paragraph will only prohibit the
Employee from competing with the Company in states in which the Company
conducted business at the time of his termination.

In further consideration of the payment by the Company to
Employee of amounts that may hereafter be paid to Employee pursuant to this
Agreement (including, without limitation, pursuant to Paragraph 3 hereof) and of
the payments to Employee in connection with the sale of his interest in the
Company pursuant to the Merger Agreement, Employee agrees that during the Term
and during the Covered Time he shall not (i) directly or indirectly solicit or
attempt to solicit any of the employees, brokers, agents, consultants or
representatives of the Company to terminate his, her, or its relationship with
the Company; (ii) directly or indirectly solicit or attempt to solicit any of
the employees, brokers, agents, consultants or representatives of the Company to
become employees, brokers, agents, representatives or consultants of any other
person or entity; or (iii) directly or indirectly solicit or attempt to solicit
any customer, vendor or distributor of the Company, or any insurance broker with
which the Company does or has done business during the Covered Time, with
respect to any product or service being furnished, made, sold or leased by the
Company.

During the Term and during the Covered Time, Employee agrees
that upon the earlier of Employee's (a) negotiating with any Competitor (as
defined below) concerning the possible employment of Employee by the Competitor,
(b) receiving an offer of employment from a Competitor, or (c) becoming employed
by a Competitor, Employee will (x) immediately provide notice to the Company of
such circumstances and (y) provide copies of Paragraph 7 hereof to the
Competitor. Employee further agrees that the Company may provide notice to a
Competitor of Employee's obligations under this Agreement, including without
limitation Employee's obligations pursuant to Paragraph 7 hereof. For purposes
of this Agreement, "Competitor" shall mean any entity (other than the Company)
that engages, directly or indirectly, in the insurance premium finance business
in any state in which the Company does business at the time employee seeks to
engage in such business.

Employee understands that the provisions of this Paragraph
7.1 may limit his ability to earn a livelihood in a business similar to the
business of the Company but nevertheless agrees and hereby acknowledges that the
consideration provided under this Agreement, including any amounts or benefits
<PAGE>
provided under Paragraph 3 hereof and the Merger Agreement, is sufficient to
justify the restrictions contained in such provisions. In consideration thereof
and in light of Employee's education, skills and abilities, Employee agrees that
he will not assert in any forum that such provisions prevent him from earning a
living or otherwise are void or unenforceable or should be held void or
unenforceable.

For purposes of paragraph 7 or this paragraph 7.1 hereof,
the "Covered Time" shall mean the twenty-four month period immediately following
the expiration of the Term or the twenty-four month period immediately following
the date Employee's employment with the Company terminates for whatever reason,
whichever is later. Notwithstanding the foregoing, if the Employee's employment
is terminated without Cause or the Employee terminates his employment for Good
Reason, the "Covered Time" shall mean the twelve month period immediately
following the expiration of the Term or the twelve month period immediately
following the date Employee's employment with the Company terminates, whichever
is later.

7.2 Proprietary Information. Employee acknowledges that during the course
of his employment with the Company he will necessarily have access to and make
use of proprietary information and confidential records of the Company. Employee
covenants that he shall not during the Term or at any time thereafter, directly
or indirectly, use for his own purpose or for the benefit of any person or
entity other than the Company, nor otherwise disclose, any proprietary
information to any individual or entity, unless such disclosure has been
authorized in writing by the Company or is otherwise required by law. Employee
acknowledges and understands that the term "proprietary information" includes,
but is not limited to: (a) the software products, programs, applications, and
processes utilized by the Company; (b) the name and/or address of any customer,
vendor, or affiliate of the Company or any information concerning the
transactions or relations of any customer, vendor, or affiliate of the Company
with the Company or any of its partners, shareholders, principals, directors,
officers, employees, or agents; (c) any information concerning any product,
technology, or procedure employed by the Company but not generally known to its
customers, vendors, or competitors, or under development by or being tested by
the Company but not at the time offered generally to customers or vendors; (d)
any information relating to the Company's computer software, computer systems,
pricing or marketing methods, sales margins, cost of goods, cost of material,
capital structure, operating results, borrowing arrangements, or business plans;
(e) any information which is generally regarded as confidential or proprietary
in any line of business engaged in by the Company; (f) any business plans,
budgets, or advertising or marketing plans; (g) any information contained in any
of the Company's written or oral policies and procedures or manuals; (h) any
<PAGE>
information belonging to customers, vendors, or affiliates of the Company or any
other person or entity which the Company has agreed to hold in confidence; and
(i) all written, graphic, and other material relating to any of the foregoing.
Employee acknowledges and understands that information that is not novel or
copyrighted or patented may nonetheless be proprietary information. The term
"proprietary information" shall not include information generally available to
and known by the public or information that is or becomes available to Employee
on a non-confidential basis from a source other than the Company or the
Company's partners, shareholders, principals, directors, officers, employees, or
agents (other than as a result of a breach of any obligation of
confidentiality).

7.3 Confidentiality and Surrender of Records. Employee shall not during the
Term or at any time thereafter (irrespective of the circumstances under which
Employee's employment by the Company terminates), except as required by law or
as is necessary for the performance of Employee's duties, directly or indirectly
publish, make known, or in any fashion disclose any confidential records to, or
permit any inspection or copying of confidential records by any individual or
entity, nor shall he retain, and will deliver promptly to the Company, any of
the same following termination of his employment hereunder for any reason or
upon request by the Company. For purposes of this paragraph 7, "confidential
records" means all correspondence, memoranda, files, manuals, books, lists,
financial, operating, or marketing records, magnetic tape, or electronic or
other media or equipment of any kind which may be in Employee's possession or
under his control or accessible to him which contain any proprietary
information. All confidential records shall be and remain the sole property of
the Company during the Term and thereafter.

7.4 No Other Obligations. Employee represents that he is not precluded or
limited in his ability to undertake or perform the duties described herein by
any contract, agreement, or restrictive covenant. Employee covenants that he
shall not employ the trade secrets or proprietary information of any other
person in connection with his employment by the Company.

7.5 Confidentiality. Employee agrees to keep confidential the terms of this
Agreement. This provision does not prohibit Employee from providing this
information to his attorneys or accountants for purposes of obtaining legal or
tax advice or as otherwise required by law. The Company shall not disclose the
terms of this Agreement except as necessary in the ordinary course of its
business or as required by law.

7.6 Enforcement. Employee acknowledges and agrees that, by virtue of his
position, his services, and access to and use of confidential records and
proprietary information, any violation by him of any of the undertakings
contained in this Paragraph 7 would cause the Company immediate, substantial,
and irreparable injury for which it has no adequate remedy at law. Accordingly,
<PAGE>
Employee agrees and consents to the entry of an injunction or other equitable
relief by a court of competent jurisdiction restraining any violation or
threatened violation of any undertaking contained in this Paragraph 7 without
any requirement that the Company prove damages or post any bond. Rights and
remedies provided for in this Paragraph 7 are cumulative and shall be in
addition to rights and remedies otherwise available to the parties hereunder or
under any other agreement or applicable law.

8. Key Man Insurance. Employee recognizes and acknowledges that the
Company or its affiliates may seek and purchase one or more policies providing
key man life insurance with respect to Employee, the proceeds of which would be
payable to the Company or such affiliate. Employee hereby consents to the
Company or its affiliates seeking and purchasing such insurance and will provide
such information, undergo such medical examinations (at the Company's expense),
execute such documents, and otherwise take any and all actions reasonably
necessary or desirable in order for the Company or its affiliates to seek,
purchase, and maintain in full force and effect such policy or policies.

9. Notices. Any notice, consent, request, or other communication made
or given in accordance with this Agreement shall be in writing and shall be
deemed to have been duly given when actually received, or, if mailed, three days
after mailing by registered or certified mail, return receipt requested, to
those listed below at their following respective addresses or at such other
address or person's attention as each may specify by notice to the others:

To the Company:

Atlantic Bank of New York
960 Avenue of the Americas
New York, NY 10001
Attention: Michael Protono
(212) 714-7565
James Maxwell, Esq.
(212) 714-7312

With a copy to:

Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
(212) 715-9100
Attention: Kevin B. Leblang, Esq.
<PAGE>
To Employee:

Standard Funding Corp.
335 Crossways Park Drive
Woodbury, NY 11797
(212) 364-0200
Attention: Alan J. Karp

With a copy to:

Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 1175
(516) 822-4820

10. Assignability; Binding Effect. This Agreement is a personal contract
calling for the provision of unique services by Employee, and Employee's rights
and obligations hereunder may not be sold, transferred, assigned, pledged, or
hypothecated. In the event of any attempted assignment or transfer of rights
hereunder by Employee contrary to the provisions hereof (other than as may be
required by law), the Company will have no further liability for payments
hereunder. The rights and obligations of the Company hereunder will be binding
upon and run in favor of the successors and assigns of the Company.

11. Complete Understanding; Amendment; Waiver. This Agreement constitutes
the complete understanding between the parties with respect to the employment of
Employee and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof,
and no statement, representation, warranty, or covenant has been made by either
party with respect thereto except as expressly set forth herein. This Agreement
shall not be altered, modified, amended, or terminated except by a written
instrument signed by each of the parties hereto. Any waiver of any term or
provision hereof, or of the application of any such term or provision to any
circumstances, shall be in writing signed by the party charged with giving such
waiver. Waiver by either party hereto of any breach hereunder by the other party
shall not operate as a waiver of any other breach, whether similar to or
different from the breach waived. No delay on the part of the Company or
Employee in the exercise of any of their respective rights or remedies shall
operate as a waiver thereof, and no single or partial exercise by the Company or
Employee of any such right or remedy shall preclude other or further exercise
thereof.

12. Severability. If any provision of this Agreement or the application of
any such provision to any party or circumstances shall be determined by any
court of competent jurisdiction to be invalid or unenforceable to any extent,
the remainder of this Agreement, or the application of such provision to such
person or circumstances other than those to which it is so determined to be
invalid or unenforceable, shall not be affected thereby, and each provision
hereof shall be enforced to the fullest extent permitted by law. To the extent
<PAGE>
that a court of competent jurisdiction determines that Employee breached any
undertaking in Paragraph 7, the Company's obligations to make payments hereunder
shall immediately cease, provided that the Company shall be liable for such
payments in the event that the determination of such court is overturned or
reversed by any higher court. If the final judgment of a court of competent
jurisdiction declares that any item or provision hereof is invalid or
unenforceable, the parties hereto agree that the court making the determination
of invalidity or unenforceability shall have the power, and is hereby requested,
to reduce the scope, duration or area of the term or provision, to delete
specific words or phrases, and to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed.

13. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the Company, and unless
clearly inapplicable, all references herein to the Company shall be deemed to
include any successors. In addition, this Agreement shall be binding upon and
inure to the benefit of the Employee and his heirs, executors, legal
representatives and assigns; provided, however, that the obligations of Employee
hereunder may not be delegated without the prior written approval of the Board
of Directors of the Company.

14. Successor Company. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform as if no such
succession had taken place.

15. Survivability. The provisions of this Agreement which by their
terms call for performance subsequent to termination of Employee's employment
hereunder, or of this Agreement, shall so survive such termination.

16. Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to agreements made and to be wholly performed within that State,
without regard to its conflict of laws provisions. Any action to enforce this
Agreement must be brought in a court situated in the City of New York and the
parties hereby consent to the jurisdiction of courts situated in New York.
<PAGE>
17. Counterparts. This Agreement may be executed in two counterparts,
and by different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.

18. Titles and Captions. All paragraph titles or captions in this
Agreement are for convenience only and in no way define, limit, extend, or
describe the scope or intent of any provision hereof.

19. Governing Law; Consent to Jurisdiction; Jury Trial Waiver;
Attorneys' Fees. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to agreements made and to be
wholly performed within that State, without regard to its conflict of laws
provisions.

20. Arbitration; Jury Trial Waiver. Any dispute, controversy or claim
arising out of or in connection with this Agreement or the employment of
Employee by the Company shall be determined and settled by expedited arbitration
in Nassau County or New York County, in the State of New York, conducted by the
American Arbitration Association (the "AAA") in accordance with the then
existing rules, regulations, practices and procedures of the AAA. Any decision
in such arbitration shall be final, conclusive and binding upon the parties to
the arbitration and may be enforced by the judgment and order of the Supreme
Court of the State of New York for New York County or for Nassau County, and the
parties hereto waive any objection to such jurisdiction or venue in any such
proceeding commenced in such court. This provision does not prevent or prohibit
the Company from seeking injunctive relief from a court of competent
jurisdiction in an action to enforce any of the provisions of paragraph 7 of
this Agreement.

Without limiting the effect or enforceability of the foregoing
paragraph, the parties expressly and knowingly waive any right to a jury trial
in the event any action arising under or in connection with this Agreement or
Employee's employment with the Company is litigated or heard in any court.

[Remainder of Page Intentionally Blank]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement as of the date first above written.

STANDARD FUNDING CORP.

By:________________________________
Name:
Title:

-----------------------------------
Alan J. Karp
<PAGE>
Schedule A to Employment Agreement

INCENTIVE COMPENSATION
----------------------
($000)

1999 2000 2001 2002
---- ---- ---- ----

Incentive Earnings Before Taxes and
Compensation Percentage Goodwill Performance
- ------------ ---------- -------------------------
<S> <C> <C> <C> <C> <C>
75%
- -50 1,002 2,052 3,034 3,034
85%
- -25 1,136 2,326 3,439 3,439
90%
- -12.5 1,203 2,463 3,641 3,641
95%
- -0- 1,270 2,600 3,843 3,843
- --------------------------------------------------------------------------------
100%
40 Target Performance 1,337 2,737 4,046 4,046
- --------------------------------------------------------------------------------
107.5%
70 1,437 2,942 4,349 4,349
115%
125 1,537 3,148 4,653 4,653
120%
169 1,604 3,284 4,855 4,855
125%
200 1,671 3,421 5,057 5,057

</TABLE>
Incentive Compensation will be pro-rated in 1999 and in 2002. Performance will
be inclusive of all accruals for Base Salary, Incentive Compensation, and
Special Bonus (see Section 3(a), 3(b) and 3(c)). Earnings Before Taxes and
Goodwill for 1999 shall not include:
<PAGE>
(i) the following one-time merger-related charges:

(a) pre-payment penalties,
(b) write-off of deferred financing costs,
(c) fee to Ladenberg Thalmann & Co., Inc., as disclosed on the
Company Disclosure Schedule to the Merger Agreement (the "Company
Disclosure Schedule"),
(d) up to $135M of fees (plus out of pocket disbursements) of
Blau, Kramer, Wactlar & Lieberman, P.C. in connection with the
Merger,
(e) other items not to exceed $150M;

(ii) intra-corporate management fees and similar charges for services
provided except that intra-corporate management fees and similar
charges for services provided up to $25M shall be so included.

Earnings Before Taxes and Goodwill for 2000, 2001 and 2002 shall not include
intra-corporate management fees and similar charges for services rendered except
that intra-corporate management fees and similar charges for services provided
up to $35M, $50M and $50M, respectively, shall be so included.

In computing Earnings Before Taxes and Goodwill, (i) the Company shall be
operated in substantially the same manner as prior to the date of this Agreement
with respect to pricing, purchasing and marketing, and such computation shall
include additional costs incurred to implement additional operations, programs,
products or services, or changes to current operations, programs, products or
services (collectively, "Additional Operations") only if Parent in good faith
shall deem such Additional Operations to be in the best interests of the Company
and the President of the Company shall consent to such Additional Operations,
which consent shall not be unreasonably withheld, and (ii) funding rates for
loans made by Atlantic Bank of New York to the Company shall be at LIBOR plus
50bp.

For purposes of this Agreement, the phrase "intra-corporate management fees and
similar charges" shall not include accounting, legal, regulatory and other
management services that the Company currently obtains from third parties to the
extent they are provided by the Bank at rates not materially higher than those
that could be obtained on an arms-length basis in the open market.

Employee agrees that his Incentive Compensation shall be reduced, equally with
that of David E. Fisher, up to a total of $30,000 for the two of them combined,
to the extent of any fees, disbursements and other expenses actually incurred by
Parent or the Company by reason of the failure of the representations in Section
2.14(e) of the Merger Agreement to be true and complete as of the date of the
Merger Agreement or the date hereof.
<PAGE>
Exhibit B

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (this "Agreement") is made as of the ___ day of
___________, 1999, by and between Standard Funding Corp., a New York corporation
(the "Company"), and David E. Fisher (the "Employee").

W I T N E S S E T H :

WHEREAS, immediately prior to the consummation of the Merger, Employee is
employed as Executive Vice President of the Company and holds an approximately
22.4% interest in the Company; and

WHEREAS, Employee's interest in the Company is being transferred to Parent
as a result of the Merger Agreement; and

WHEREAS, the Company wishes to ensure that it will continue to have the
benefits of Employee's services after the Merger on the terms and conditions
hereinafter set forth; and

WHEREAS, Employee desires to work for the Company on the terms and
conditions hereinafter set forth.

2. Employment

(a) During the Term, Employee shall serve as Executive Vice
President of the Company.

3. Compensation

4. Benefits

(a) Death. Employee's employment hereunder shall terminate upon
Employee's death.

Notwithstanding the foregoing, a termination for Cause shall not be
deemed effective unless and until the Employee has first received written notice
specifying in reasonable detail the reasons for the Company's intention to
terminate him for Cause, and has been afforded ten (10) days to submit a written
response to the Company's Board of Directors. Upon receipt of a timely response
<PAGE>
from the Employee, the Board, within seven (7) days of receipt of the response,
will determine if there is a sufficient basis for a termination for Cause. The
foregoing is a procedural requirement only and the determination of the Board
may be challenged by the Employee in an appropriate forum.

(d) Termination by the Company Without Cause. The Company may
terminate Employee's employment hereunder at any time for any reason or no
reason.

i. any accrued but unpaid Base Salary (as determined pursuant to
Paragraph 3(a) hereof) for services rendered to the date of
termination;

ii. any accrued but unpaid expenses required to be reimbursed
pursuant to Paragraph 4(b) hereof; and

iii. any vacation accrued to the date of termination.

The benefits to which Employee and/or his family may be entitled upon
termination pursuant to the plans, programs, and arrangements referred to in
<PAGE>
Paragraph 4(c) hereof shall be determined and paid in accordance with the terms
of such plans, programs, and arrangements.

(b) Termination by the Company Without Cause or Termination by
Employee for Good Reason. In the event that Employee's employment is terminated
by the Company without Cause or by Employee for Good Reason pursuant to
Paragraph 5(d) or 5(e) hereof, the Company shall pay the following amounts to
Employee:

i. any accrued and unpaid Base Salary (as determined pursuant to
Paragraph 3(a) hereof) for services rendered to the date of
termination;

ii. any accrued but unpaid expenses required to be reimbursed
pursuant to Paragraph 4(b) hereof;

iii. any vacation accrued to the date of termination;

iv. lump sum payment equal to the total amount of Base Salary
Employee would have earned from the date of termination until the
expiration of the Term (as determined under Paragraph 3(a)
hereof); and

The benefits to which Employee and/or his family may be entitled upon
termination pursuant to the plans, programs, and arrangements referred to in
Paragraph 4(c) hereof shall be determined and paid in accordance with the terms
of such plans, programs, and arrangements, except that the Company shall, with
respect to any major medical and all other health, accident, and disability
plans for which Employee, or his spouse or legal representative, elects
continuation in accordance with COBRA, reimburse Employee for payment of
premiums related to the maintenance of such plans for a period of three months
following termination. The Company's obligation to pay such premiums, however,
shall cease upon Employee's employment by any individual or entity.
<PAGE>
(c) Termination of Employment -- Effect on Note.

iii. If Employee's employment terminates due to Death or
Total Disability, the Company shall remain obligated to pay the principal of the
Note and neither unpaid nor future interest shall be waived.

7. Noncompetition and nonsolicitation; Nondisclosure of Proprietary
Information; Surrender of Records

7.1 Noncompetition; Nonsolicitation.

Employee acknowledges and recognizes the highly competitive
nature of the Company's business and that access to the Company's confidential
records and proprietary information renders him special and unique within the
Company's industry. In consideration of the payment by the Company to Employee
of amounts that may hereafter be paid to Employee pursuant to this Agreement
(including, without limitation, pursuant to Paragraph 3 hereof) and of the
payments to Employee in connection with the sale of his interest in the Company
<PAGE>
pursuant to the Merger Agreement, Employee agrees that during the Term and
during the Covered Time, Employee will not compete with any business the Company
conducted at any time during Employee's employment with the Company and will not
engage, directly or indirectly, in any business that engages in the insurance
premium finance business in any of the states in which the Company does business
at the time Employee seeks to engage in such business.

Employee understands that the provisions of this Paragraph
7.1 may limit his ability to earn a livelihood in a business similar to the
business of the Company but nevertheless agrees and hereby acknowledges that the
consideration provided under this Agreement, including any amounts or benefits
provided under Paragraph 3 hereof and the Merger Agreement, is sufficient to
justify the restrictions contained in such provisions. In consideration thereof
<PAGE>
and in light of Employee's education, skills and abilities, Employee agrees that
he will not assert in any forum that such provisions prevent him from earning a
living or otherwise are void or unenforceable or should be held void or
unenforceable.

7.2 Proprietary Information. Employee acknowledges that during the course
of his employment with the Company he will necessarily have access to and make
use of proprietary information and confidential records of the Company. Employee
covenants that he shall not during the Term or at any time thereafter, directly
or indirectly, use for his own purpose or for the benefit of any person or
entity other than the Company, nor otherwise disclose, any proprietary
information to any individual or entity, unless such disclosure has been
authorized in writing by the Company or is otherwise required by law. Employee
acknowledges and understands that the term "proprietary information" includes,
but is not limited to: (a) the software products, programs, applications, and
processes utilized by the Company; (b) the name and/or address of any customer,
vendor, or affiliate of the Company or any information concerning the
transactions or relations of any customer, vendor, or affiliate of the Company
with the Company or any of its partners, shareholders, principals, directors,
officers, employees, or agents; (c) any information concerning any product,
technology, or procedure employed by the Company but not generally known to its
customers, vendors, or competitors, or under development by or being tested by
the Company but not at the time offered generally to customers or vendors; (d)
any information relating to the Company's computer software, computer systems,
pricing or marketing methods, sales margins, cost of goods, cost of material,
capital structure, operating results, borrowing arrangements, or business plans;
(e) any information which is generally regarded as confidential or proprietary
in any line of business engaged in by the Company; (f) any business plans,
<PAGE>
budgets, or advertising or marketing plans; (g) any information contained in any
of the Company's written or oral policies and procedures or manuals; (h) any
information belonging to customers, vendors, or affiliates of the Company or any
other person or entity which the Company has agreed to hold in confidence; and
(i) all written, graphic, and other material relating to any of the foregoing.
Employee acknowledges and understands that information that is not novel or
copyrighted or patented may nonetheless be proprietary information. The term
"proprietary information" shall not include information generally available to
and known by the public or information that is or becomes available to Employee
on a non-confidential basis from a source other than the Company or the
Company's partners, shareholders, principals, directors, officers, employees, or
agents (other than as a result of a breach of any obligation of
confidentiality).

7.6 Enforcement. Employee acknowledges and agrees that, by virtue of his
position, his services, and access to and use of confidential records and
proprietary information, any violation by him of any of the undertakings
contained in this Paragraph 7 would cause the Company immediate, substantial,
<PAGE>
and irreparable injury for which it has no adequate remedy at law. Accordingly,
Employee agrees and consents to the entry of an injunction or other equitable
relief by a court of competent jurisdiction restraining any violation or
threatened violation of any undertaking contained in this Paragraph 7 without
any requirement that the Company prove damages or post any bond. Rights and
remedies provided for in this Paragraph 7 are cumulative and shall be in
addition to rights and remedies otherwise available to the parties hereunder or
under any other agreement or applicable law.

To the Company:

Atlantic Bank of New York
960 Avenue of the Americas
New York, NY 10001
Attention: Michael Protono
(212) 714-7565
James Maxwell, Esq.
(212) 714-7312

With a copy to:

Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
(212) 715-9100
Attention: Kevin B. Leblang, Esq.
<PAGE>
To Employee:

Standard Funding Corp.
335 Crossways Park Drive
Woodbury, NY 11797
(212) 364-0200
Attention: David E. Fisher

With a copy to:

Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 1175
(516) 822-4820

12. Severability. If any provision of this Agreement or the application of
any such provision to any party or circumstances shall be determined by any
court of competent jurisdiction to be invalid or unenforceable to any extent,
the remainder of this Agreement, or the application of such provision to such
person or circumstances other than those to which it is so determined to be
<PAGE>
invalid or unenforceable, shall not be affected thereby, and each provision
hereof shall be enforced to the fullest extent permitted by law. To the extent
that a court of competent jurisdiction determines that Employee breached any
undertaking in Paragraph 7, the Company's obligations to make payments hereunder
shall immediately cease, provided that the Company shall be liable for such
payments in the event that the determination of such court is overturned or
reversed by any higher court. If the final judgment of a court of competent
jurisdiction declares that any item or provision hereof is invalid or
unenforceable, the parties hereto agree that the court making the determination
of invalidity or unenforceability shall have the power, and is hereby requested,
to reduce the scope, duration or area of the term or provision, to delete
specific words or phrases, and to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed.

13. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of the Company, and unless clearly
inapplicable, all references herein to the Company shall be deemed to include
any successors. In addition, this Agreement shall be binding upon and inure to
the benefit of the Employee and his heirs, executors, legal representatives and
assigns; provided, however, that the obligations of Employee hereunder may not
be delegated without the prior written approval of the Board of Directors of the
Company.

14. Successor Company. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform as if no such succession
had taken place.

15. Survivability. The provisions of this Agreement which by their terms
call for performance subsequent to termination of Employee's employment
hereunder, or of this Agreement, shall so survive such termination.

18. Titles and Captions. All paragraph titles or captions in this
Agreement are for convenience only and in no way define, limit, extend, or
describe the scope or intent of any provision hereof.

[Remainder of Page Intentionally Blank]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement as of the date first above written.

STANDARD FUNDING CORP.

By:________________________________
Name:
Title:

-----------------------------------
David E. Fisher

<PAGE>
Schedule A to Employment Agreement

INCENTIVE COMPENSATION
----------------------
($000)

1999 2000 2001 2002
---- ---- ---- ----

(ii) intra-corporate management fees and similar charges for services
provided except that intra-corporate management fees and similar
charges for services provided up to $25M shall be so included.

This Voting Agreement (this "Agreement"), dated as of January 28,
1999, by and between Atlantic Bank of New York, a New York corporation
("Parent"), and Alan J. Karp ("Seller").

WHEREAS, concurrently herewith, Parent, Atlantic Premium, Inc. (the
"Merger Sub"), a New York corporation and wholly-owned subsidiary of Parent, and
Standard Funding Corp. (the "Company"), a New York corporation, are entering
into an Agreement and Plan of Merger, of even date herewith (the "Merger
Agreement"), pursuant to which the Merger Sub will be merged with and into the
Company (the "Merger"). Capitalized terms used but not otherwise defined herein
shall have the meaning ascribed to them in the Merger Agreement; and

WHEREAS, as of the date hereof, Seller owns beneficially and of record
618,800 shares of the common stock, $.001 par value per share of the Company
(the "Shares"); and

WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and the Purchaser have required that Seller agree, and Seller
hereby agrees, to enter into the agreements set forth herein;

NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration given to each party hereto, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Agreement to Vote. Seller hereby agrees that, during the time this
Agreement is in effect, at any meeting of the shareholders of the Company,
however called, Seller shall (a) vote the Shares in favor of the Merger; (b)
vote the Shares against any action or agreement that would result in a breach of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement; and (c) vote the Shares against any
action or agreement (other than the Merger Agreement or the transactions
contemplated thereby) that would impede, interfere with, delay, postpone or
attempt to discourage the Merger, including, but not limited to: (i) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company or any of its subsidiaries; (ii) any
sale or transfer of a material amount of assets of the Company or any of its
subsidiaries or a reorganization, recapitalization or liquidation of the Company
or any of its subsidiaries; (iii) any change in the management or board of
directors of the Company, except as otherwise agreed to, in writing, by Parent;
(iv) any material change in the present capitalization or dividend policy of the
Company; or (v) any other material change in the Company's corporate structure
or business.
<PAGE>
1.1 Grant of Irrevocable Proxy; Appointment of Proxy.

(i) Seller hereby irrevocably grants to, and appoints, James Maxwell,
Esq., and George Jarvis, or either of them, in their respective capacities as
officers or directors of Parent, and any individual who shall hereafter succeed
to any such office or directorship of Parent, and each of them individually, as
Seller's proxy and attorney-in-fact (with full power of substitution and
resubstitution), for and in the name, place and stead of Seller, to vote the
Shares in favor of the Merger and other transactions contemplated by the Merger
Agreement, against any Third Party Acquisition Offer and otherwise as
contemplated by Section 1 of this Agreement.

(ii) Seller represents that any proxies heretofore given in respect of
the Shares are revocable, and that any such proxies are hereby revoked.

(iii) Seller understands and acknowledges that Parent is entering into
the Merger Agreement in reliance upon Seller's execution and delivery of this
Agreement. Seller hereby affirms that the irrevocable proxy set forth in this
Section 1.1 is given in connection with the execution of the Merger Agreement,
and that such irrevocable proxy is given to secure the performance of the duties
of Seller under this Agreement. Seller hereby further affirms that the
irrevocable proxy is coupled with an interest and may under no circumstances be
revoked. Seller hereby ratifies and confirms all that such irrevocable proxy may
lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is
executed and intended to be irrevocable in accordance with the provisions of
Section 609 of the New York Business Corporation Law.

(iv) Seller hereby agrees that in the event that he is not the record
holder of any of the Shares, he will as soon as practicable after the date
hereof take all steps necessary to ensure that the record holder of such Shares
(the "Record Holder") shall grant to and appoint James Maxwell, Esq. and George
Jarvis or either of them, in their respective capacities as officers or
directors of Parent, and any individual who shall hereafter succeed to any such
office or directorship of Parent, and each of them individually, as such Record
Holder's proxy and attorney-in-fact (with full power of substitution and
resubstitution), for and in the name, place and stead of such Record Holder, to
vote the Shares in favor of the Merger and other transactions contemplated by
the Merger Agreement, against any Third Party Acquisition Offer and otherwise as
contemplated by Section 1 of this Agreement (the "Record Holder's Proxy").
Seller hereby irrevocably and appoints James Maxwell, Esq., and George Jarvis,
or either of them, in their respective capacities as officers or directors of
Parent, and any individual who shall hereafter succeed to any such office or
directorship of Parent, and each of them individually, as Seller's
<PAGE>
attorney-in-fact (with full power of substitution and resubstitution), for and
in the name, place and stead of Seller, to take any action necessary to obtain
such Record Holder's Proxy, or to direct such Record Holder to vote such Shares
in favor of the Merger and other transactions contemplated by the Merger
Agreement, against any Third Party Acquisition Offer and otherwise as
contemplated by Section 1 of this Agreement.

1.2 No Inconsistent Arrangements. Seller hereby covenants and agrees that,
except as contemplated by this Agreement and the Merger Agreement, he shall not
(i) transfer (which term shall include, without limitation, any sale, gift,
pledge or other disposition), or consent to any transfer of, any or all of the
Shares or any interest therein; (ii) enter into any contract, option or other
agreement or understanding with respect to any transfer of any or all of the
Shares or any interest therein; (iii) grant any proxy, power-of-attorney or
other authorization in or with respect to the Shares; (iv) deposit the Shares
into a voting trust or enter into a voting agreement or arrangement with respect
to the Shares; or (v) take any other action that would in any way restrict,
limit or interfere with the performance of his obligations hereunder or the
transactions contemplated hereby or by the Merger Agreement or which would make
any representation or warranty of Seller hereunder untrue or incorrect.

1.3 No Solicitation. Seller hereby agrees that Seller shall not, and shall
not permit or authorize any of his Seller's affiliates, representatives or
agents to, directly or indirectly, solicit, engage in discussions or negotiate
with, or provide or disclose any information to, any corporation, partnership,
person or other entity or group (other than Parent, the Purchaser or any of
their affiliates or representatives) concerning any actual or potential Third
Party Acquisition Offer or enter into any agreement, arrangement or
understanding requiring the Company to abandon, terminate or fail to consummate
the Merger or any other transactions contemplated by the Merger Agreement.
Seller is not currently involved in, and has no knowledge of or will immediately
terminate any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any actual or potential Third Party
Acquisition Offer. From and after the execution of this Agreement, Seller shall
immediately advise Parent, in writing, of the receipt, directly or indirectly,
of any inquiries, discussions, negotiations or proposals relating to a Third
Party Acquisition Offer, and will identify the offeror and furnish to Parent a
copy of any such proposal or inquiry, if it is in writing, or a written summary
of any oral proposal or inquiry relating to such Third Party Acquisition Offer.
Seller shall promptly advise Parent, in writing, of any development relating to
such proposal, including, without limitation, the results of any discussions or
negotiations with respect thereto. Any action taken by the Company or any member
of the Board of Directors of the Company including, if applicable, Seller acting
in such capacity, in accordance with Section 4.3 of the Merger Agreement shall
be deemed not to violate this Section 1.3.
<PAGE>
1.4 Reasonable Efforts. Subject to the terms and conditions of this
Agreement, Seller hereby agrees to use all reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Merger Agreement. From time to time, at the Parent's request and without
further consideration, Seller shall execute and deliver such additional
documents and take all such further action as Parent or Merger Sub deem
necessary or desirable to consummate and make effective the transactions
contemplated by this Agreement and the Merger Agreement. Seller shall promptly
consult with Parent and provide any necessary information and material with
respect to all filings made by Seller with any governmental entity in connection
with this Agreement and the Merger Agreement and the transactions contemplated
hereby and thereby.

1.5 Waiver of Appraisal Rights. Seller hereby waives any rights of
appraisal, rights to receive the "fair value" of his Shares, or rights to
dissent from the Merger that Seller may have.

1.6 Employment Agreement. Seller agrees that, at the Closing under the
Merger Agreement, he will enter into an Employment Agreement with the Surviving
Corporation, in substantially the form of Exhibit (A) to the Merger Agreement.

2. Expiration. This Agreement and Seller's obligations hereunder shall
terminate on the earlier of the conversion of the Shares at the Effective Time
pursuant to the Merger Agreement or the termination of the Merger Agreement in
accordance with its terms.

3. Representation and Warranties. Seller hereby represents and warrants to
Parent as follows:

(a) Title. Seller has good and valid title to the Shares, free and
clear of any lien, pledge, charge, encumbrance or claim of whatever nature
and, upon the consummation of the Merger, Seller will deliver good and
valid title to the Shares, free and clear of any lien, charge, encumbrance
or claim of whatever nature.

(c) Power; Binding Agreement. Seller has the legal capacity, power and
authority to enter into and perform all of his obligations under this
Agreement. The execution, delivery and performance of this Agreement by
Seller will not violate any other agreement to which Seller is a party
including, without limitation, any voting agreement, shareholders agreement
or voting trust. This Agreement has been duly and validly executed and
delivered by Seller and constitutes a valid and binding agreement of
Seller, enforceable against Seller in accordance with its terms except for
the Exceptions.

(d) No Conflicts. Other than in connection with or in compliance with
the provisions of the Exchange Act, the HSR Act, the Governmental Licenses
and the Private Consents, no authorization, consent or approval of, or
filing with, any court or any public body or authority is necessary for the
consummation by Seller of the transactions contemplated by this Agreement.
The execution, delivery and performance of this Agreement by Seller and the
consummation by him of the transactions contemplated hereby will not
constitute a breach, violation or default (or any event which, with notice
or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in
a right of termination or acceleration under, or result in the creation of
any lien, encumbrance, pledge, charge or claim upon any of the properties
or assets of Seller under, any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument to which Seller is a
party or by which his properties or assets are bound.

(e) No Finder's Fees. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial adviser's
or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of Seller,
other than Ladenburg Thalmann & Co., Inc. whose fees shall not exceed the
number set forth in Section 2.17 of the Company Disclosure Schedule.
<PAGE>
4. Additional Shares. Seller hereby agrees, while this Agreement is in
effect, promptly to notify Parent of the number of any new shares of equity
securities of the Company acquired by Seller, if any, after the date hereof.
Seller agrees that such new shares shall be voted in the same manner and subject
to the same conditions as the Shares as provided for in this Agreement.

5. [Intentionally omitted]

6. Miscellaneous.

6.1 Entire Agreement; Assignment. This Agreement, together with the
Merger Agreement and the Exhibits and Schedules thereto and the Employment
Agreement (i) constitutes the entire agreement between the parties with respect
to the subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (ii) shall not be assigned by operation of law or
otherwise, provided that Parent may assign its rights and obligations hereunder
to any direct or indirect wholly owned subsidiary of Parent.

6.2 Amendments. This Agreement may not be modified, amended, altered
or supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.

6.3 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given by hand
delivery, telegram, telex or telecopy or by any courier service, such as Federal
Express, providing proof of delivery. All communications hereunder shall be
delivered to the respective parties at the following addresses:

If to Seller:

Standard Funding Corp.
335 Crossways Park Drive
Woodbury, NY 11797
Attention: Alan J. Karp
Telecopier: (516) 364-8497

copy to Seller's Counsel:

Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 11753
Attention: Edward I. Kramer
Telecopier: (516) 822-4824

<PAGE>
If to Parent:

Atlantic Bank of New York
960 Avenue of the Americas
New York, NY 10001
Attention: James Maxwell
Telecopier No.: (212) 967-7312

and

Attention: George Jarvis
Telecopier No.: (212) 695-6907

copy to:

Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Attention: Peter S. Kolevzon, Esq.
Telecopier No.: (212) 715-8000

or to such other address, person's attention or telecopier number as the person
to whom notice is given may have previously furnished to the others, in writing,
in the manner set forth above.

6.4 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.

6.5 Specific Performance. Seller recognizes and acknowledges that a
breach by him of any covenants or agreements contained in this Agreement will
cause Parent to sustain damages for which it would not have an adequate remedy
at law for money damages, and therefore Seller agrees that in the event of any
such breach Parent shall be entitled to the remedy of specific performance of
such covenant and agreement and injunctive and other equitable relief in
addition to any other remedy to which it may be entitled, at law or in equity,
without the posting of any bond and without proving that damages would be
inadequate.

6.6 Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original, but both of which shall
constitute one and the same Agreement.

6.7 Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.

6.8 Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
<PAGE>
6.9 WAIVER OF JURY TRIAL. EACH OF PARENT AND SELLER HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.

[Remainder of Page Intentionally Blank]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement as of the date first above written.

ATLANTIC BANK OF NEW YORK

By:________________________________
Name:
Title:

-----------------------------------
Alan J. Karp

<PAGE>
VOTING AGREEMENT
----------------

This Voting Agreement (this "Agreement"), dated as of January 28,
1999, by and between Atlantic Bank of New York, a New York corporation
("Parent"), and David E. Fisher ("Seller").

WHEREAS, as of the date hereof, Seller owns beneficially and of record
618,800 shares of the common stock, $.001 par value per share of the Company
(the "Shares"); and

(ii) Seller represents that any proxies heretofore given in respect of
the Shares are revocable, and that any such proxies are hereby revoked.

(iv) Seller hereby agrees that in the event that he is not the record
holder of any of the Shares, he will as soon as practicable after the date
hereof take all steps necessary to ensure that the record holder of such Shares
(the "Record Holder") shall grant to and appoint James Maxwell, Esq. and George
Jarvis or either of them, in their respective capacities as officers or
directors of Parent, and any individual who shall hereafter succeed to any such
office or directorship of Parent, and each of them individually, as such Record
Holder's proxy and attorney-in-fact (with full power of substitution and
resubstitution), for and in the name, place and stead of such Record Holder, to
vote the Shares in favor of the Merger and other transactions contemplated by
the Merger Agreement, against any Third Party Acquisition Offer and otherwise as
contemplated by Section 1 of this Agreement (the "Record Holder's Proxy").
Seller hereby irrevocably and appoints James Maxwell, Esq., and George Jarvis,
or either of them, in their respective capacities as officers or directors of
<PAGE>
Parent, and any individual who shall hereafter succeed to any such office or
directorship of Parent, and each of them individually, as Seller's
attorney-in-fact (with full power of substitution and resubstitution), for and
in the name, place and stead of Seller, to take any action necessary to obtain
such Record Holder's Proxy, or to direct such Record Holder to vote such Shares
in favor of the Merger and other transactions contemplated by the Merger
Agreement, against any Third Party Acquisition Offer and otherwise as
contemplated by Section 1 of this Agreement.

1.4 Reasonable Efforts. Subject to the terms and conditions of this
Agreement, Seller hereby agrees to use all reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Merger Agreement. From time to time, at the Parent's request and without
further consideration, Seller shall execute and deliver such additional
documents and take all such further action as Parent or Merger Sub deem
necessary or desirable to consummate and make effective the transactions
contemplated by this Agreement and the Merger Agreement. Seller shall promptly
consult with Parent and provide any necessary information and material with
respect to all filings made by Seller with any governmental entity in connection
with this Agreement and the Merger Agreement and the transactions contemplated
hereby and thereby.

1.5 Waiver of Appraisal Rights. Seller hereby waives any rights of
appraisal, rights to receive the "fair value" of his Shares, or rights to
dissent from the Merger that Seller may have.

3. Representation and Warranties. Seller hereby represents and warrants to
Parent as follows:

(b) Ownership of Shares. On the date hereof, the Shares are owned of
record and beneficially by Seller and, on the date hereof, the Shares
constitute all of the shares or equity securities of the Company owned of
record or beneficially by Seller. Seller has sole voting power and sole
power of disposition with respect to all of the Shares, with no
restrictions, subject to applicable state and federal securities laws, on
Seller's rights of disposition pertaining thereto.
<PAGE>
(c) Power; Binding Agreement. Seller has the legal capacity, power and
authority to enter into and perform all of his obligations under this
Agreement. The execution, delivery and performance of this Agreement by
Seller will not violate any other agreement to which Seller is a party
including, without limitation, any voting agreement, shareholders agreement
or voting trust. This Agreement has been duly and validly executed and
delivered by Seller and constitutes a valid and binding agreement of
Seller, enforceable against Seller in accordance with its terms except for
the Exceptions.

5. [Intentionally omitted]

6. Miscellaneous.

6.2 Amendments. This Agreement may not be modified, amended, altered
or supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.

If to Seller:

Standard Funding Corp.
335 Crossways Park Drive
Woodbury, NY 11797
Attention: David E. Fisher
Telecopier: (516) 364-8497

copy to Seller's Counsel:

Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 11753
Attention: Edward I. Kramer
Telecopier: (516) 822-4824

<PAGE>
If to Parent:

Atlantic Bank of New York
960 Avenue of the Americas
New York, NY 10001
Attention: James Maxwell
Telecopier No.: (212) 967-7312

and

Attention: George Jarvis
Telecopier No.: (212) 695-6907

copy to:

Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Attention: Peter S. Kolevzon, Esq.
Telecopier No.: (212) 715-8000

or to such other address, person's attention or telecopier number as the person
to whom notice is given may have previously furnished to the others, in writing,
in the manner set forth above.

6.6 Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original, but both of which shall
constitute one and the same Agreement.

6.9 WAIVER OF JURY TRIAL. EACH OF PARENT AND SELLER HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.

[Remainder of Page Intentionally Blank]

<PAGE>

IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement as of the date first above written.

ATLANTIC BANK OF NEW YORK

By:________________________________
Name:
Title:

-----------------------------------
David E. Fisher

<PAGE>

Annex B

January 18, 1999

The Board of Directors of
Standard Funding Corporation
335 Crossways Park Drive
Woodbury, New York 11797

Ladies and Gentlemen:

You have engaged us pursuant to an engagement letter, dated April 24, 1998
(the "Engagement Letter"), between Standard Funding Corporation (the "Company")
and Ladenburg Thalmann & Co. Inc. ("Ladenburg"). Specifically, as part of its
services pursuant to the Engagement Letter, Ladenburg has been requested to
render our opinion as to whether or not the consideration to be paid to the
stockholders of the Company (other than any Large Holder (as defined herein)) in
connection with the proposed merger between the Company and a wholly owned
acquisition subsidiary of Atlantic Bank of New York, Inc. ("Atlantic") is fair,
from a financial point of view, to such stockholders of the Company.

The draft of the Agreement and Plan of Merger, dated as of January 6, 1999
(the "Merger Agreement"), by and among Atlantic and the Company provides each
share of the Company's Common Stock, currently issued and outstanding, held by a
person that holds, in aggregate, 20% or less of the Company's issued and
outstanding Common Stock shall be converted into the right to receive $3.50 cash
("Small Holder Consideration"). The Merger Agreement further provides that each
share of the Company's Common Stock held by a person that holds, in aggregate,
more than 20% of the issued and outstanding Common Stock (a "Large Holder")
shall be converted into the right to receive (i) $2.97479 in cash and (ii) Notes
having an aggregate principal amount equal to $.052521 ("Large Holder
Consideration"). Small Holder Consideration together with the Large Holder
Consideration is the total consideration to Standard Funding Shareholders (the
"Merger Consideration").

In conducting our analysis, Ladenburg reviewed and considered such
information as we deemed necessary or appropriate for the purposes of stating
our opinion including, without limitation, the following: (i) the draft of the
Merger Agreement and a draft of each of the Employment Agreements in each case
in the form presented to you; (ii) certain business and financial information
relating to Standard Funding, provided by Standard Funding, including the
financial condition and results of operations of Standard Funding, the
historical financial performance of Standard Funding and certain projected
financial information, provided by Standard Funding; (iii) certain public
filings made by Standard Funding with the Securities and Exchange Commission;
and (iv) certain publicly available market trading data and historical trading
performance of Standard Funding common stock. In addition, we conducted such
other analyses and examinations and reviewed and considered such other
financial, economic and market data as we deemed appropriate in arriving at our
opinion. Ladenburg also met with members of senior management of the Company to
discuss, among other things, the historical and prospective industry
environment, their respective financial condition and operating results, and the
reasons for the transaction.

In connection with our engagement, we were requested to approach, and hold
discussions with, third parties to solicit indications of interest in a possible
acquisition of the Company.

In rendering our opinion, we have assumed and relied upon the accuracy,
completeness and fairness, without assuming any responsibility for the
independent verification of, all financial and other information that was
available to us from public sources, that was provided to us by the Company or
their respective advisors, or that was otherwise reviewed by us. With respect to
financial forecasts, we have assumed that they have been reasonably prepared
reflecting the best currently available estimates and judgments of the
management of the Company as to the future financial performance of the Company.
We also assumed, with the Company's consent, that the final terms of the Merger
Agreement reviewed by us in draft form will not vary materially from the drafts
of such documents provided to us. We were not requested to and did not analyze
or give any effect to the impact of any federal, state or local income taxes to
the Company's stockholders arising out of this transaction. We have not made or
been provided with an independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of the Company, and we do not assume any
responsibility for verifying any of the information reviewed by us. Our opinion
is necessarily based upon information available to us, and financial, stock
market, economic and other conditions and circumstances existing and disclosed
to us, as of the date hereof. We express no opinion as to the relative merits of
this transaction as compared to any alternative business strategies that might
exist for the Company or the effect of any other transaction in which the
Company might engage.

In conducting our investigation and analyses and in arriving at our opinion
expressed herein, we have taken into account such accepted financial and
investment banking procedures and considerations as we have deemed relevant,
including the following: (i) historical revenues, operating earnings, net income
and capitalization of the Company and certain other publicly held companies in
businesses we believe to be comparable to the Company; (ii) acquisition
multiples that have historically been paid for other companies in businesses we
believe to be comparable to the Company; (iii) projected revenues, operating
earnings and net income of the Company in a discounted cash flow analysis; (iv)
the premium per share to be paid by Atlantic for the Common Stock of the Company
as compared to the premium per share paid by acquirers of public targets since
January 1, 1996; (v) the current financial and market position and results of
operations of the Company; and (vi) the general condition of the securities
market and other economic conditions.

In rendering our opinion, we have assumed that this transaction will comply
with all applicable federal, state and local laws and will not result in the
breach or cancellation of any contracts or other agreements that are material to
the Company.

Ladenburg, as part of its investment banking services, is regularly engaged
in the valuation of businesses and securities in connection with mergers,
acquisitions, underwritings, sales and distributions of listed and unlisted
securities, private placements and valuations for estate, corporate or other
purposes. Ladenburg has been retained by the Board of Directors of the Company
to render financial advisory services to the Company in connection with the
proposed Transaction and will receive a fee for such services, a majority of
which is contingent upon the consummation of the Transaction. Ladenburg will
also receive indemnification against certain liabilities for the services
rendered pursuant to this engagement.

In the ordinary course of business, we actively trade securities for our
own account and for the accounts of our customers and, accordingly, may at any
time hold a long or short position in the equity securities of the Company.

Our advisory services and the opinion expressed herein are provided for the
information of the Board of Directors of the Company in its evaluation of the
proposed transaction. Our opinion may not be published or otherwise used or
referred to, nor shall any public reference to Ladenburg Thalmann & Co. Inc. be
made, without our prior written consent.

Based upon and subject to the foregoing, our experience as investment
bankers, our work as described above and other factors we deemed relevant, we
are of the opinion that, as of the date hereof, the Merger Consideration to be
received by the stockholders (other than any Large Holder) of the Company, upon
consummation of the merger, is fair, from a financial point of view, to such
stockholders.

Very truly yours,

/s/ Ladenburg Thalmann & Co. Inc.
LADENBURG THALMANN & CO. INC.

<PAGE>
Annex C

NEW YORK BUSINESS CORPORATION LAW -- SECTIONS 623 AND 910

623 PROCEDURE TO ENFORCE SHAREHOLDER'S RIGHT TO RECEIVE PAYMENT FOR SHARES.
- (a) A Shareholder intending to enforce his right under a section of this
chapter to receive payment for his shares if the proposed corporate action
referred to therein is taken shall file with the corporation, before the meeting
of shareholders at which the action is submitted to a vote, or at such meeting
but before the vote, written objection to the action. The objection shall
include a notice of his election to dissent, his name and residence address, the
number and classes of shares as to which he dissents and a demand for payment of
the fair value of his shares if the action is taken. Such objection is not
required from any shareholder to whom the corporation did not give notice of
such meeting in accordance with this chapter or where the proposed action is
authorized by written consent of shareholders without a meeting.

(b) Within ten days after the shareholders' authorization date, which term
as used in this section means the date on which the shareholders' vote
authorizing such action was taken, or the date on which such consent without a
meeting was obtained from the requisite shareholders, the corporation shall give
written notice of such authorization or consent by registered mail to each
shareholder who filed written objection or from whom written objection was not
required, excepting any shareholder who voted for or consented in writing to the
proposed action and who thereby is deemed to have elected not to enforce his
right to receive payment for his shares.

(c) Within twenty days after the giving of notice to him, any shareholder
from whom written objection was not required and who elects to dissent shall
file with the corporation a written notice of such election, stating his name
and residence address, the number of classes of shares as to which he dissents
and a demand for payment of the fair value of his shares. Any shareholder who
elects to dissent from a merger under section 905 (Merger of subsidiary
corporation) or paragraph (c) of section 907 (Merger or consolidation of
domestic and foreign corporations) or from a share exchange under paragraph (g)
of section 913 (Share exchanges) shall file a written notice of such election to
dissent within twenty days after the giving to him of a copy of the plan of
merger or exchange or an outline of the material features thereof under section
905 or 913.

(d) A shareholder may not dissent as to less than all of the shares, as to
which he has a right to dissent, held by him of record, that he owns
beneficially. A nominee or fiduciary may not dissent on behalf of any beneficial
owner as to less than all of the shares of such owner, as to which such nominee
or fiduciary has a right to dissent, held of record by such nominee or
fiduciary.

(e) Upon consummation of the corporate action, the shareholder shall cease
to have any of the rights of a shareholder except the right to be paid the fair
value of his shares and any other rights under this section. A notice of
election may be withdrawn by the shareholder at any time prior to his acceptance
in writing of an offer made by the corporation, as provided in paragraph (g),
but in no case later than sixty days from the date of consummation of the
corporate action except that if the corporation fails to make a timely offer, as
provided in paragraph (g), the time for withdrawing a notice of election shall
be extended until sixty days from the date an offer is made. Upon expiration of
such time, withdrawal of a notice of election shall require the written consent
of the corporation. In order to be effective, withdrawal of a notice of election
must be accompanied by the return to the corporation of any advance payment made
to the shareholder as provided in paragraph (g). If a notice of election is
withdrawn, or the corporate action is rescinded, or a court shall determine that
the shareholder is not entitled to receive payment for his shares, or the
shareholder shall otherwise lose his dissenter's rights, he shall not have the
right to receive payment for his shares and he shall be reinstated to all his
<PAGE>
rights as a shareholder as of the consummation of the corporate action,
including any intervening preemptive rights and the right to payment of any
intervening dividend or other distribution or, if any such rights have expired
or any such dividend or distribution other than in cash has been completed, in
lieu thereof, at the election of the corporation, the fair value thereof in cash
as determined by the board as of the time of such expiration or completion, but
without prejudice otherwise to any corporate proceedings that may have been
taken in the interim.

(f) At the time of filing the notice of election to dissent or within one
month thereafter the shareholder of shares represented by certificates shall
submit the certificates representing his shares to the corporation, or to its
transfer agent, which shall forthwith note conspicuously thereon that a notice
of election has been filed and shall return the certificates to the shareholder
or other person who submitted them on his behalf. Any shareholder of shares
represented by certificates who fails to submit his certificates for such
notation as herein specified shall, at the option of the corporation exercised
by written notice to him within forty-five days from the date of filing of such
notice of election to dissent, lose his dissenter's rights unless a court, for
good cause shown, shall otherwise direct. Upon transfer of a certificate bearing
such notation, each new certificate issued therefor shall bear a similar
notation together with the name of the original dissenting holder of the shares
and a transferee shall acquire no rights in the corporation except those which
the original dissenting shareholder had at the time of the transfer.

(g) Within fifteen days after the expiration of the period within which
shareholders may file their notices of election to dissent, or within fifteen
days after the proposed corporate action is consummated, whichever is later (but
in no case later than ninety days from the shareholders' authorization date),
the corporation or, in the case of a merger or consolidation, the surviving or
new corporation, shall make a written offer by registered mail to each
shareholder who has filed such notice of election to pay for his shares at a
specified price which the corporation considers to be their fair value. Such
offer shall be accompanied by a statement setting the aggregate number of shares
with respect to which notices of election to dissent have been received and the
aggregate number of holders of such shares. If the corporate action has been
consummated, such offer shall also be accompanied by (1) advance payment to each
such shareholder who has submitted the certificates representing his shares to
the corporation, as provided in paragraph (f), of an amount equal to eighty
percent of the amount of such offer, or (2) as to each shareholder who has not
yet submitted his certificates a statement that advance payment to him of an
amount equal to eighty percent of the amount of such offer will be made by the
corporation promptly upon submission of his certificates. If the corporate
action has not been consummated at the time of the making of the offer, such
advance payment or statement as to advance payment shall be sent to each
shareholder entitled thereto forthwith upon consummation of the corporate
action. Every advance payment or statement as to advance payment shall include
advise to the shareholder to the effect that acceptance of such payment does not
constitute a waiver of any dissenters' rights. If the corporate action has not
been consummated upon the expiration of the ninety day period after the
shareholders' authorization date, the offer may be conditioned upon the
consummation of such action. Such offer shall be made at the same price per
share to all dissenting shareholders of the same class, or if divided into
series, of the same series and shall be accompanied by a balance sheet of the
corporation whose shares the dissenting shareholder holds as of the latest
available date, which shall not be earlier than twelve months before the making
of such offer, and a profit and loss statement or statements for not less than a
twelve month period ended on the date of such balance sheet or, if the
corporation was not in existence throughout such twelve month period, for the
portion thereof during which it was in existence. Notwithstanding the foregoing,
the corporation shall not be required to furnish a balance sheet or profit and
loss statement or statements to any shareholder to whom such balance sheet or
profit and loss statement or statements were previously furnished, nor if in
connection with obtaining the shareholders' authorization for or consent to the
proposed corporate action the shareholders were furnished with a proxy or
<PAGE>
information statement, which included financial statements, pursuant to
Regulation 14A or Regulation 14C of the United States Securities and Exchange
Commission. If within thirty days after the making of such offer, the
corporation making the offer and any shareholder agree upon the price to be paid
for his shares, payment therefor shall be made within sixty days after the
making of such offer or the consummation of the proposed corporate action,
whichever is later, upon the surrender of the certificates for any such shares
represented by certificates.

(h) The following procedure shall apply if the corporation fails to make
such offer within such period of fifteen days, or if it makes the offer and any
dissenting shareholder or shareholders fail to agree with it within the period
of thirty days thereafter upon the price to be paid for their shares:

(1) The corporation shall, within twenty days after the
expiration of whichever is applicable of the two periods last mentioned,
institute a special proceeding in the supreme court in the judicial
district in which the office of the corporation is located to determine the
rights of dissenting shareholders and to fix the fair value of their
shares. If, in the case of merger or consolidation, the surviving or new
corporation is a foreign corporation without an office in this state, such
proceeding shall be brought in the county where the office of the domestic
corporation, whose shares are to be valued, was located.

(2) If the corporation fails to institute such proceeding within
such period of twenty days, any dissenting shareholder may institute such
proceeding for the same purpose not later than thirty days after the
expiration of such twenty day period. If such proceeding is not instituted
within such thirty day period, all dissenter's rights shall be lost unless
the supreme court, for good cause shown, shall otherwise direct.

(3) All dissenting shareholders, excepting those who, as provided
in paragraph (g), have agreed with the corporation upon the price to be
paid for their shares, shall be made parties to such proceeding, which
shall have the effect of an action quasi in rem against their shares. The
corporation shall serve a copy of the petition in such proceeding upon each
dissenting shareholder who is a resident of this state in the manner
provided by law for the service of a summons, and upon each nonresident
dissenting shareholder either by registered mail and publication, or in
such other manner as is permitted by law. The jurisdiction of the court
shall be plenary and exclusive.

(4) The court shall determine whether each dissenting
shareholder, as to whom the corporation requests the court to make such
determination, is entitled to receive payment for his shares. If the
corporation does not request any such determination or if the court finds
that any dissenting shareholder is so entitled, it shall proceed to fix the
value of the shares, which, for the purposes of this section, shall be the
fair value as of the close of business on the day prior to the
shareholders' authorization date. In fixing the fair value of the shares,
the court shall consider the nature of the transaction giving rise to the
shareholder's right to receive payment for shares and its effects on the
corporation and its shareholders, the concepts and methods then customary
in the relevant securities and financial markets for determining fair value
of shares of a corporation engaging in a similar transaction under
comparable circumstances and all other relevant factors. The court shall
determine the fair value of the shares without a jury and without referral
to an appraiser or referee. Upon application by the corporation or by any
shareholder who is a party to the proceeding, the court may, in its
discretion, permit pretrial disclosure, including, but not limited to,
disclosure of any expert's reports relating to the fair value of the shares
whether or not intended for use at the trial in the proceeding and
notwithstanding subdivision (d) of section 3101 of the civil practice law
and rules.
<PAGE>
(5) The final order in the proceeding shall be entered against
the corporation in favor of each dissenting shareholder who is a party to
the proceeding and is entitled thereto for the value of his shares so
determined.

(6) The final order shall include an allowance for interest at
such rate as the court finds to be equitable, from the date the corporate
action was consummated to the date of payment. In determining the rate of
interest, the court shall consider all relevant factors, including the rate
of interest which the corporation would have had to pay to borrow money
during the pendency of the proceeding. If the court finds that the refusal
of any shareholder to accept the corporate offer of payment for his shares
was arbitrary, vexatious or otherwise not in good faith, no interest shall
be allowed to him

(7) Each party to such proceeding shall bear its own costs and
expenses, including the fees and expenses of its counsel and of any experts
employed by it. Notwithstanding the foregoing, the court may, in its
discretion, apportion and assess all or any part of the costs, expenses and
fees incurred by the corporation against any or all of the dissenting
shareholders who are parties to the proceeding, including any who have
withdrawn their notices of election as provided in paragraph (e), if the
court finds that their refusal to accept the corporate offer was arbitrary,
vexatious or otherwise not in good faith. The court may, in its discretion,
apportion and assess all or any part of the costs, expenses and fees
incurred by any or all of the dissenting shareholders who are parties to
the proceeding against the corporation if the court finds any of the
following: (A) that the fair value of the shares as determined materially
exceeds the amount which the corporation offered to pay; (B) that no offer
or required advance payment was made by the corporation; (C) that the
corporation failed to institute the special proceeding within the period
specified therefor; or (D) that the action of the corporation in complying
with its obligations as provided in this section was arbitrary, vexatious
or otherwise not in good faith. In making any determination as provided in
clause (A), the court may consider the dollar amount or the percentage, or
both, by which the fair value of the shares as determined exceeds the
corporate offer.

(8) Within sixty days after final determination of the
proceeding, the corporation shall pay to each dissenting shareholder the
amount found to be due him, upon surrender of the certificate for any such
shares represented by certificates.

(i) Shares acquired by the corporation upon the payment of the agreed value
therefor or of the amount due under the final order, as provided in this
section, shall become treasury shares or be cancelled as provided in section 515
(Reacquired shares), except that, in the case of a merger or consolidation, they
may be held and disposed of as the plan of merger or consolidation may otherwise
provide.

(j) No payment shall be made to a dissenting shareholder under this section
at a time when the corporation is insolvent or when such payment would make it
insolvent. In such event, the dissenting shareholder shall, at his option:

(1) Withdraw his notice of election, which shall in such event be
deemed withdrawn with the written consent of the corporation; or

(2) Retain his status as a claimant against the corporation and, if
it is liquidated, be subordinated to the rights of creditors of the
corporation, but have rights superior to the non-dissenting shareholders, and
if it is not liquidated, retain his right to be paid for his shares, which
right the corporation shall be obliged to satisfy when the restrictions of
the paragraph do not apply.
<PAGE>
(3) The dissenting shareholder shall exercise such option under
subparagraph (1) or (2) by written notice filed with the corporation within
thirty days after the corporation has given him written notice that payment
for his shares cannot be made because of the restrictions of this paragraph.
If the dissenting shareholder fails to exercise such option as provided, the
corporation shall exercise the option by written notice given to him within
twenty days after the expiration of such period of thirty days.

(k) The enforcement by a shareholder of his right to receive payment for his
shares in the manner provided herein shall exclude the enforcement by such
shareholder of any other right to which he might otherwise be entitled by virtue
of share ownership, except as provided in paragraph (e), and except that this
section shall not exclude the right of such shareholder to bring or maintain an
appropriate action to obtain relief on the ground that such corporate action
will be or is unlawful or fraudulent as to him.

(l) Except as otherwise expressly provided in this section, any notice to be
given by a corporation to a shareholder under this section shall be given in the
manner provided in section 605 (Notice of meetings of shareholders).

(m) This section shall not apply to foreign corporations except as provided
in subparagraph (e)(2) of section 907 (Merger or consolidation of domestic and
foreign corporations). (Last amended by Ch. 117, L. '86, eff. 9-1-86.)
<PAGE>
910 RIGHT OF SHAREHOLDER TO RECEIVE PAYMENT FOR SHARES UPON MERGER OR
CONSOLIDATION, OR SALE, LEASE, EXCHANGE OR OTHER DISPOSITION OF ASSETS, OR SHARE
EXCHANGE. - (a) A shareholder of a domestic corporation shall, subject to and by
complying with section 623 (Procedure to enforce shareholder's right to receive
payment for shares), have the right to receive payment of the fair value of his
shares and the other rights and benefits provided by such section, in the
following cases:

(1) Any shareholder entitled to vote who does not assent to the taking of an
action specified in clauses (A), (B) and (C).

(A) Any plan of merger or consolidation to which the corporation is a
party; except that the right to receive payment of the fair value of his
shares shall not available:

(i) To a shareholder of the parent corporation in a merger
authorized by section 905 (Merger of parent and subsidiary
corporation), or paragraph (c) of section 907 (Merger or consolidation
of domestic and foreign corporations); or

(ii) To a shareholder of the surviving corporation in a merger
authorized by this article, other than a merger specified in
y subclause (i), unless such merger effects one or more of the changes
specified in subparagraph (b)(6) of section 806 (Provisions as to
certain proceedings) in the rights of the shares held by such
shareholder; or

(iii) Notwithstanding subclause (ii) of this clause, to a
shareholder for the shares of any class or series of stock, which
shares or depository receipts in respect thereof, at the record date
fixed to determine the shareholders entitled to receive notice of the
meeting of shareholders to vote upon the plan of merger or
consolidation, were listed on a national securities exchange or
designated as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers,
Inc.

(B) Any sale, lease, exchange or other disposition of all or
substantially all of the assets of a corporation which requires shareholder
approval under section 909 (Sale, lease, exchange or other disposition of
assets) other than a transaction wholly for cash where the shareholders'
approval thereof is conditioned upon the dissolution of the corporation and
the distribution of substantially all its net assets to the shareholders in
accordance with their respective interests within one year after the date
of such transaction.

(C) Any share exchange authorized by section 913 in which the
corporation is participating as a subject corporation; except that the
right to receive payment of the fair value of his shares shall not be
available to a shareholder whose shares have not been acquired in the
exchange or to a shareholder for the shares of any class or series of
stock, which shares or depository receipt in respect thereof, at the record
date fixed to determine the shareholders entitled to receive notice of the
meeting of shareholders to vote upon the plan of exchange, were listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association of
Securities Dealers, Inc.

(2) Any shareholder of the subsidiary corporation in a merger authorized by
section 905 or paragraph (c) of section 907, or in a share exchange authorized
by paragraph (g) of section 913, who files with the corporation a written notice
of election to dissent as provided in paragraph (c) of section 623.

(3) Any shareholder, not entitled to vote with respect to a plan of merger
or consolidation to which the corporation is a party, whose shares will be
cancelled or exchanged in the merger or consolidation for cash or other
consideration other than shares of the surviving or consolidated corporation or
another corporation. (Last amended by Ch. 449, L. '97, eff. 2-22-98 and Ch.
17,L.'98, eff. 2-22-98.)

<PAGE>

STANDARD FUNDING CORP.
335 Crossways Park Drive
Woodbury, New York 11797

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby (1) acknowledges receipt of the notice of the
Special Meeting of Shareholders of Standard Funding Corp., a New York
Corporation (the "Corporation"), to be held on June 15, 1999, at 10:00 A.M.,
local time ("Special Meeting") at the Holiday Inn, 215 Sunnyside Boulevard,
Plaiunview, New York 11803, and the Proxy Statement in connection therewith, and
(2) appoints Alan J. Karp and David E. Fisher as proxies, each with the power to
act alone and to appoint his substitute, and hereby authorizes them to represent
and vote, as designated below, all the shares of common stock in the corporation
which the undersigned is entitled to vote as of May 7, 1999, the record date, at
the Special Meeting or any adjournment thereof, upon the matter referred to
below, and upon any and all other matters which properly may be brought before
the meeting.

The Board of Directors unanimously recommends a vote "FOR" Proposal 1.

Please mark your votes as indicated [X]

PLEASE SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.

1. PROPOSAL TO APPROVE AND ADOPT THE AGREEMENT AND PLAN OF MERGER, DATED AS
OF JANUARY 28, 1999, BY AND AMONG STANDARD FUNDING CORP., ATLANTIC BANK OF
NEW YORK AND ATLANTIC PREMIUM, INC., AND THE TRANSACTIONS CONTEMPLATED
THEREBY.

FOR AGAINST ABSTAIN
[ ] [ ] [ ]

2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.

This Proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, the shares
represented by this Proxy will be voted FOR item 1.

Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as an attorney, or as executor,
administrator, trustee or guardian, please give full title. If a corporation,
please sign in full corporate name by president or other authorized officer. If
a partnership, please sign in partnership name by authorized person.

----------------------- Signature

----------------------- Signature if held
jointly

Dated: _______________________, 1999