Document:

Exhibit

Exhibit 10.3
NEWTEK BUSINESS SERVICES CORP.
_____________________________

Employment Agreement with
Michael A. Schwartz
_____________________________

PREAMBLE.  This EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of the 1st day of April 2018 (the “Effective Date”), by and between NEWTEK BUSINESS SERVICES CORP. (the “Company”) and MICHAEL A. SCHWARTZ (the “Executive”).
WHEREAS, the Executive is currently employed by the Company as Chief Legal Officer, Chief Compliance Officer and Corporate Secretary; and
WHEREAS, the parties desire by this writing to set forth the employment relationship of the Company and the Executive as of the Effective Date.
NOW, THEREFORE, it is AGREED as follows:
1.    Defined Terms
When used anywhere in the Agreement, the following terms shall have the meaning set forth herein.
(a)    “Board” shall mean the Board of Directors of the Company.
(b)    “Change in Control” shall mean any one of the following events:  (i) the acquisition of ownership, holding or power to vote more than 25% of the Company’s voting shares by any person or persons acting as a “group” (within the meaning of Section 13(d) of the Securities Exchange Act of 1934), (ii) the acquisition of the ability to control the election of a majority of the Board by any person or persons acting as a “group” (within the meaning of Section 13(d) of the Securities Exchange Act of 1934), (iii) the acquisition of a controlling influence over the management or policies of the Company by any person or by persons acting as a “group” (within the meaning of Section 13(d) of the Securities Exchange Act of 1934), or (iv) during any period of two consecutive years, individuals (the “Continuing Directors”) who at the beginning of such period constitute the Board (the “Existing Board”) cease for any reason to constitute at least two-thirds thereof, provided that any individual whose election or nomination for election as a member of the Existing Board was approved by a vote of at least two-thirds of the Continuing Directors then in office shall be considered a Continuing Director. For purposes of defining Change in Control, the term “person” refers to an individual or a corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or any other form of entity not specifically listed herein. Notwithstanding the foregoing, a Change in Control as defined in this Section 1(b) shall not be treated as a Change in Control for purposes of this Agreement unless it constitutes a “change in control event” within the meaning of Section 1.409A-3(i)(5) of the Treasury Regulations promulgated under section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) (the “Treasury Regulations”).
(c)     “Common Stock” shall mean shares of the Company’s common stock, par value $0.02 per share.
(d)     “Good Reason” shall mean any of the following events, which has not been consented to in advance by the Executive in writing during the term of the Agreement: (i) the requirement that the Executive move his personal residence, or perform his principal executive functions, more than fifty (50) miles from his primary office as of the Effective Date; (ii) a material reduction in the Executive’s Annual Base Compensation as the same may be increased from time to time; (iii) the failure by the Company to continue to provide the Executive with compensation and benefits provided for on the Effective Date, as the same may be increased from time to time, or with benefits 

substantially similar to those provided to him under any of the Executive benefit plans in which the Executive now or hereafter becomes a participant, or the taking of any action by the Company which would directly or indirectly reduce any of such benefits or deprive the Executive of any material fringe benefit enjoyed by him; (iv) the assignment to the Executive of duties and responsibilities that constitute a material diminution from those associated with his position on the Effective Date;  or (v) a material diminution or reduction in the Executive’s responsibilities or authority (including reporting responsibilities) in connection with his employment with the Company.
(e)    “Just Cause” shall mean the Executive’s willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, conviction for a felony, or material breach of any provision of this Agreement.  No act, or failure to act, on the Executive’s part shall be considered “willful” unless Executive has acted, or failed to act, with an absence of good faith and without a reasonable belief that Executive’s action or failure to act was in the best interests of the Company. 
2.    Employment.  The Executive is employed as Chief Legal Officer, Chief Compliance Officer and Corporate Secretary of the Company.  The Executive shall render such administrative and management services for the Company, its subsidiaries and portfolio companies as are currently rendered and as are customarily performed by persons situated in a similar executive capacity and consistent with the duties of a Chief Legal Officer and Chief Compliance Officer as set forth in the Bylaws of the Company.  The Executive shall report to the Chief Executive Officer in his role as Chief Legal Officer. The Executive shall report to the Board in his role as Chief Compliance Officer. The Executive shall also promote, by entertainment or otherwise, as and to the extent permitted by law, the business of the Company and its subsidiaries.  The Executive’s other duties shall be such as the Chief Executive Officer or Board may from time to time reasonably direct, including normal duties as an officer of the Company.
3.    Annual Base Compensation.  The Company agrees to pay the Executive during the term of this Agreement a salary at the rate of $335,000 per annum, payable in cash not less frequently than monthly. 
4.    Cash Bonuses.  The Chief Executive Officer shall determine the Executive’s right to receive cash bonuses. Cash bonuses shall be awarded annually based upon the Executive’s and the Company’s annual performance pursuant to the Company’s policy.
5.    Other Benefits.
(a)    Participation in Retirement, Medical and Other Plans.  The Executive shall participate in any plan that the Company maintains for the benefit of its employees if the plan relates to (i) pension, profit-sharing, or other retirement benefits, (ii) medical insurance or the reimbursement of medical or dependent care expenses, or (iii) other group benefits, including disability and life insurance plans. 
(b)    Executive Benefits; Expenses.  The Executive shall participate in any fringe benefits which are or may become available to the Company’s senior management Executives, including for example incentive compensation plans, club memberships, and any other benefits which are commensurate with the responsibilities and functions to be performed by the Executive under this Agreement.  The Executive shall be reimbursed for all reasonable out-of-pocket business expenses which he shall incur in connection with his services under this Agreement upon substantiation of such expenses in accordance with the policies of the Company.
6.    Term.  The Company hereby employs the Executive, and the Executive hereby accepts such employment, subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on March 31, 2019 or such earlier date as is determined in accordance with Section 11 (the “Term”).”
7.    Loyalty; Noncompetition.
(a)    During the period of Executive’s employment hereunder and except for illnesses, reasonable vacation periods, and reasonable leaves of absence, the Executive shall devote substantially all of Executive’s full business time, attention, skill, and efforts to the faithful performance of Executive’s duties hereunder; provided, however, from time to time, Executive may serve on the boards of directors of, and hold any other offices or positions 

in, companies or organizations, at the request of the Company or which will not present in the opinion of the Board any conflict of interest with the Company or any of its subsidiaries or portfolio companies, nor unfavorably affect the performance of Executive’s duties pursuant to this Agreement, nor violate any applicable statute or regulation.  During the Term of Executive’s employment under this Agreement, the Executive shall not engage in any business or activity contrary to the business affairs or interests of the Company.
(b)    Nothing contained in this Paragraph 7 shall be deemed to prevent or limit the Executive’s right to invest in the capital stock or other securities of any business dissimilar from that of the Company or, solely as a passive or minority investor, in any business, provided such investment does not: (i) constitute a conflict of interest, (ii) violate laws or regulations applicable to the Company, including, without limitation, the Investment Company Act of 1940, or (iii) violate any rules or polices promulgated by the Board.
8.    Standards.  The Executive shall perform his duties under this Agreement in accordance with such reasonable standards as the Chief Executive Officer may establish from time to time.  The Company will provide Executive with the working facilities and staff customary for similar executives and necessary for him to perform his duties. 
9.    Vacation and Sick Leave.  At such reasonable times according to Company policy the Executive shall be entitled, without loss of pay, to absent himself voluntarily from the performance of his employment under this Agreement, all such voluntary absences to count as vacation time; provided that:
(a)    The Executive shall be entitled to an annual vacation in accordance with the policies that the Company periodically establishes for senior management Executives of the Company.
(b)    The Executive shall not receive any additional compensation from the Company on account of his failure to take a vacation, and the Executive shall not accumulate unused vacation from one fiscal year to the next, except in either case to the extent authorized by the Chief Executive Officer.
(c)    In addition to the aforesaid paid vacations, the Executive shall be entitled to absent himself voluntarily from the performance of his employment with the Company for such additional periods of time and for such valid and legitimate reasons as the Chief Executive Officer may in his discretion determine.  Further, the Chief Executive Officer may grant to the Executive a leave or leaves of absence with or without pay..
(d)    In addition, the Executive shall be entitled to an annual sick leave benefit as established by the Company.
10.    Indemnification.  The Company shall, to the extent permitted by the Company’s Bylaws, indemnify and hold harmless Executive from any and all loss, expense, or liability that he may incur due to his services for the Company as an officer and or a director of the Company or any of its subsidiaries or portfolio companies (including any liability Executive  may ever incur as the result of severance benefits Executive collects pursuant to Sections 11 or 13), during the full Term of this Agreement and shall at all times maintain adequate insurance for such purposes.
11.    Termination and Termination Pay.  Subject to Section 13 hereof, the Executive’s employment hereunder may be terminated under the following circumstances:
(a)    Just Cause.  The Chief Executive Officer may, based on a good faith determination and only after giving the Executive written notice and a reasonable opportunity to cure, immediately terminate the Executive’s employment at any time, for Just Cause.  The Executive shall have no right to receive compensation or other benefits for any period after termination for Just Cause.
(b)    Without Just Cause.  The Chief Executive Officer may, by written notice to the Executive, immediately terminate Executive’s employment for a reason other than Just Cause.  In such event, the Executive shall be entitled to a total severance payment equal to one (1) times the sum of (i) Executive’s Annual Base Compensation in effect at the time of termination, plus (ii) the amount of all compensation paid to Executive under Section 4 hereof 

with respect to the immediately preceding fiscal year (the “Severance Payment”). The Severance Payment shall be paid in equal installments over a twelve (12) month period following the Executive’s termination of employment, payable in accordance with the Company’s regularly scheduled payroll (the “Installment Payments”).  Each Installment Payment shall be treated as a separate payment for purposes of Treasury Regulations Section 1.409A-2(b)(2)(iii).  
(c)    Resignation by Executive with Good Reason.  The Executive may at any time immediately terminate employment for Good Reason, in which case the Executive shall be entitled to receive the Severance Payment payable in the same manner and on the same basis as provided for under Section 11(b) herein upon a termination without Just Cause.  In addition, the Executive will be entitled to health, life, disability and other benefits which the Executive would have been eligible to participate in through the expiration of the Term based on the benefit levels substantially equal to those that the Company provided for the Executive at the date of termination of employment, subject to any restrictions as may be required under Code Section 409A 
(d)    Resignation by Executive without Good Reason.  The Executive may voluntarily terminate employment with the Company during the term of this Agreement, upon at least 60 days’ prior written notice to the Chief Executive Officer, in which case the Executive shall receive only his compensation, vested rights, and Executive benefits up to the date of Executive’s last day of employment.
(e)    Death, or Disability.  If the Executive’s employment terminates during the Term of this Agreement due to Executive’s death or a disability that results in Executive’s collection of any long-term disability benefits, the Executive (or the beneficiaries of Executive’s estate) shall be entitled to receive the compensation and benefits that the Executive would otherwise have become entitled to receive pursuant to subsection (d) hereof upon a resignation without Good Reason.
(f)     Non-Renewal Payment.  If the Term of this Agreement is not extended for at least one (1) additional year in circumstances in which the Executive is willing and able to execute such extension and continue performing services (the “Non-Renewal”), then the Executive’s employment shall be terminated by the Company effective as of the expiration of the Term, in which event Executive shall be entitled to fifty percent (50%) times the Severance Payment (the “Non-Renewal Payment”).  The Non-Renewal Payment shall be paid in equal installments over the six (6) month period following the Executive’s termination of employment, payable in accordance with the Company’s regularly scheduled payroll.  However, if the Non-Renewal occurs following a Change in Control, the Non-Renewal Payment shall be paid in a lump sum within thirty (30) days of Executive’s termination of employment. 
(g)     Acceleration of Equity Awards.  All: (i) outstanding and unvested options to purchase Common Stock granted to Executive under any equity plan of the Company, (ii) unvested shares of restricted Common Stock awarded to the Executive under any equity plan of the Company, and (iii) other equity and equity equivalent awards then held by the Executive, shall be accelerated in full, and thereafter all such options, shares of restricted Common Stock and other equity awards shall be immediately vested and exercisable for such period of time as provided for by the specific agreements governing each such award, upon Executive’s termination pursuant to Sections 11(b), (c),  (e) or (f) hereof.
12.    No Mitigation.  The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to the Executive in any subsequent employment.
13.    Change in Control.  Notwithstanding any provision in this Agreement to the contrary, if Executive’s employment is terminated following a Change of Control: (i) by the Company or its successor in interest for any reason other than Just Cause, or (ii) by the Executive for Good Reason, the Executive shall be paid the Severance Payment in a lump sum within thirty (30) days of Executive’s termination of employment.
14.    Covenants.  
(a)    Definitions.  For purposes of this Agreement:

(i)    Restrictive Period.  The term “Restrictive Period” shall mean the period beginning on the Effective Date and ending two (2) years after the termination of the Executive’s employment hereunder.
(ii)    Covered Customer.  The term “Covered Customer” shall mean (A) during the Term, any customer, merchant, independent sales agency (ISA), independent sales organization (ISO), alliance partner or any intermediary of the Company or its portfolio companies and (B) after the Term, as of the end of the Term, a Covered Customer of the Company or its portfolio companies within the prior three years. 
(iii)    Covered Business.  The term “Covered Business” shall mean (A) during the term, any business in which the Company is engaged and (B) after the Term, any business in which the Company was engaged as of the end of the Term.
(iv)    Covered State.  The term “Covered State” shall mean (A) during the Term, any state in the United States and (B) after the Term, any state (1) in which, as of the end of the Term, the Company was engaged in business or (2) with respect to which the Company, as of the end of the Term, had expended material expense and/or efforts in connection with preparing to do business therein.
(b)    Non-Interference.  The Executive covenants and agrees that Executive will not at any time during the Restrictive Period for whatever reason, whether for Executive’s own account or for the account of any other person, firm, corporation or other business organization: (i) interfere with contractual relationships between the Company or its subsidiaries or portfolio companies and any of their Covered Customers or employees; (ii) hire, or solicit for hire, any person who is employed by the Company or its subsidiaries or portfolio companies, without the express written consent of the Company; or (iii) other than on behalf of the Company or its subsidiaries or portfolio companies, solicit any Covered Customer in connection with the engagement, by any person or entity, in any Covered Business in any Covered State.
(c)    Confidentiality.  The Executive will not, at any time whether during or after his termination of employment, (i) disclose to anyone, without proper authorization from the Company, or (ii) use, for his or another’s benefit, any confidential or proprietary information of the Company or any subsidiary of the Company, which may include trade secrets, business plans or outlooks, financial data, marketing or sales programs, customer lists, brand formulations, training and operations manuals, products or price strategies, mergers, acquisitions, and/or Company personnel issues.
(d)    Blue Pencil; Equitable Relief.  The provisions contained in this Section 14 as to the time periods, scope of activities, persons or entities affected and territories restricted shall be deemed divisible so that if any provision contained in this Section is determined to be invalid or unenforceable, such provision shall be deemed modified so as to be valid and enforceable to the full extent lawfully permitted.  The Executive acknowledges that the provisions of this Section 14 are reasonable and necessary for the protection of the Company and that the Company will be irrevocably damaged if such covenants are not specifically enforced.  Accordingly, the Executive agrees that if he breaches or threatens to breach any of the covenants contained in this Section 14, the Company will be entitled (i) to damages sufficient to compensate the Company for any harm to the Company caused thereby and (ii) to specific performance and injunctive relief for the purpose of preventing the breach or threatened breach thereof without bond or other security or a showing that monetary damages will not provide an adequate remedy, in addition to any other relief to which the Company may be entitled under this Agreement.
15.    Reimbursement for Litigation Expenses.
In the event that any dispute arises between the Executive and the Company as to the terms or interpretation of this Agreement, whether instituted by formal legal proceedings or otherwise, including any action that the Executive takes to enforce the terms of this Agreement or to defend against any action taken by the Company, the Executive shall be reimbursed for all costs and expenses, including reasonable attorneys’ fees, arising from such dispute, proceedings or actions, provided that the Executive shall obtain a final judgement by a court of competent jurisdiction in favor of the Executive.  Such reimbursement shall be paid within ten (10) days of Executive’s furnishing to the Company written 

evidence, which may be in the form, among other things, of a cancelled check or receipt, of any costs or expenses incurred by the Executive.  

16.    Successors and Assigns.
(a)    This Agreement shall inure to the benefit of and be binding upon any corporate or other successor of the Company which shall acquire, directly or indirectly, by merger, consolidation, purchase or otherwise, all or substantially all of the assets or stock of the Company.
(b)    Since the Company is contracting for the unique and personal skills of the Executive, the Executive shall be precluded from assigning or delegating his rights or duties hereunder without first obtaining the written consent of the Company.
17.    Corporate Authority.  Company represents and warrants that the execution and delivery of this Agreement by it has been duly and properly authorized by the Board and that when so executed and delivered this Agreement shall constitute the lawful and binding obligation of the Company.
18.    Amendments.  No amendments or additions to this Agreement shall be binding unless made in writing and signed by all of the parties, except as herein otherwise specifically provided.
19.    Applicable Law.  Except to the extent preempted by Federal law, the laws of the State of New York shall govern this Agreement in all respects, whether as to its validity, construction, capacity, performance or otherwise.  
20.    Severability.  The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.
21.    Entire Agreement.  This Agreement, together with any understanding or modifications thereof as agreed to in writing by the parties, shall constitute the entire agreement between the parties hereto with respect to the matters addressed and shall supercede all previous agreements with respect to such matters.
22.    Tax Matters.    All payments or benefits provided under this Agreement are subject to any applicable employment or tax withholdings or deductions.  In addition, the parties hereby agree that it is their intention that all payments or benefits provided under this Agreement be exempt from, or if not so exempt, comply with, Code Section 409A and this Agreement shall be interpreted accordingly.  Notwithstanding anything in this Agreement to the contrary, if any payments or benefits made or provided under the Agreement are considered deferred compensation subject to Code Section 409A payable on account of Employee’s separation from service (but that do not meet an exemption under Code Section 409A, including without limitation the short term deferral or the separation pay plan exemption), such payments or benefits shall be paid no earlier than the date that is six (6) months following Employee’s separation from service (or, if earlier, the date of death) to the extent required by Code Section 409A.
[signatures on following page]
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first hereinabove written.

NEWTEK BUSINESS SERVICES CORP.

By:    /s/ Barry Sloane            
Barry Sloane, Chief Executive Officer

By:    /s/ Michael A. Schwartz        
 Michael A. Schwartz, Chief Legal OfficerEX-4.01

 Exhibit 4.01 

DESCRIPTION OF CAPITAL STOCK 

Biglari Holdings Inc. (the “Company”) is incorporated in the State of Indiana. The rights of shareholders of the Company will
generally be governed by Indiana law and the Company’s articles of incorporation and by-laws, as each may be amended from time to time. 

The following summary does not purport to be a complete description of the terms of the Company’s capital stock, including certain
provisions of the Company’s articles of incorporation and by-laws and certain provisions of Indiana law. Refer to the Company’s articles of incorporation
and by-laws and the relevant provisions of Indiana law for a more complete understanding of the Company’s capital stock. 

General 
 The authorized capital of
the Company is 11,500,000 shares, without par value, consisting of 500,000 shares of Class A common stock and 10,000,000 shares of Class B common stock, and 1,000,000 shares of preferred stock, without par value. 

Class A and Class B Common Stock 

Dividends and Distributions. Holders of Class A common stock will be entitled to such dividends or other distributions (including
liquidating distributions) per share, whether in cash, in kind, in stock or by any other means, when and as may be declared by the Company’s board of directors out of assets or funds legally available therefor. Holders of Class B common
stock will be entitled to dividends or other distributions (including liquidating distributions) per share, whether in cash, in kind, in stock or by any other means, equal to 1/5th of the
amount per share declared for each share of Class A common stock, payable in the same form and at the same time as dividends or distributions with respect to the Class A common stock. However, in the event of a stock split or dividend,
holders of Class A common stock will receive shares of Class A common stock and holders of Class B common stock will receive shares of Class B common stock, unless otherwise specifically designated by resolution of the
Company’s board of directors. 
 Voting Rights. Each holder of Class A common stock will be entitled to one vote per share.
Shares of Class B common stock will not be entitled to vote on any matter (except as otherwise required by Indiana law), but holders of the Class B common stock will receive the same proxy statements, annual reports, and other information
and reports as the Company delivers to the holders of shares of Class A common stock. There are no cumulative voting rights in the election of directors or any other matter. 

Conversion. Neither the Class A common stock nor Class B common stock are convertible. 

Preemptive or Similar Rights. There are no preemptive, redemption or sinking fund rights applicable to Class A or Class B
common stock. 
 Equal Treatment. Except as expressly provided with respect to voting rights, shares of Class B common stock
will have the same rights and privileges and rank equally, share ratably and be identical in all respects to 1/5th of one share of Class A common stock. In the event of any merger,
consolidation, or other business combination requiring the approval of the Company’s shareholders entitled to vote thereon (whether or not the Company is the surviving entity), the holders of shares of Class B common stock will receive the
same form of consideration and 1/5th of the amount of consideration, on a per share basis, as the consideration, if any, received by holders of shares of Class A common stock in
connection with such merger, consolidation or combination (and if holders of shares of Class A common stock are entitled to make an election as to the amount or form of consideration that such holders will receive in any such merger,
consolidation or combination with respect to their shares of Class A common stock, then the holders of shares of Class B common stock will be entitled to make the same election as to their shares of Class B common stock). In the event
of any (i) tender or exchange offer to acquire any shares of Class A common stock by any third party pursuant to an agreement to which the Company is a party, resulting in a change of control

 
of the Company; or (ii) tender or exchange offer by the Company to acquire any shares of Class A common stock, the holders of shares of Class B common stock will be offered the
same form of consideration and 1/5th of the amount of consideration, on a per share basis, as the consideration received by holders of shares of Class A common stock (and if holders of
shares of Class A common stock are entitled to make an election as to the amount or form of consideration that such holders will receive in any such tender or exchange offer with respect to their shares of Class A common stock, then the
holders of shares of Class B common stock will be entitled to make the same election as to their shares of Class B common stock). 

Preferred Stock 
 The
Company’s board of directors may, at its discretion and without further shareholder approval, issue up to 1,000,000 shares of preferred stock in one or more series and fix the number of shares in that series, the number of votes, if any, to
which the shares in that series are entitled, the consideration for the shares in that series, and the designations, powers, preferences and other rights, qualifications, limitations or restrictions of the shares in that series. The powers,
preferences and rights, and the qualifications, limitations or restrictions, if any, of each series of preferred stock may be different from those of any and all other series. Depending upon the rights prescribed for a series of preferred stock, the
issuance of preferred stock could have an adverse effect on the voting power or economic rights of the holders of the Company’s common stock. 

Transfer Agent 
 The transfer agent
for the Class A and Class B common stock is Computershare Trust Company, N.A. 
 Certain Provisions of the Company’s Organizational
Documents 
 Certain provisions of the Company’s articles of incorporation
and by-laws may delay or make more difficult unsolicited acquisitions or changes of control of the Company. These provisions could have the effect of discouraging third parties from making proposals
involving an unsolicited acquisition or change in control of the Company, although these proposals, if made, might be considered desirable by our unaffiliated shareholders. These provisions also may have the effect of making it more difficult for
third parties to cause the replacement of the current management without the concurrence of the board of directors. These provisions include: 
  

	 	•	 	the availability of authorized but unissued shares of stock, including shares of preferred stock, for issuance from time to time at the discretion of the board of directors; 

 

	 	•	 	permitting only the Chairman, a majority of the board of directors or a shareholder holding at least 50 percent of the issued and outstanding capital stock entitled to vote to call a special meeting of shareholders
and preventing shareholders from proposing business to be brought before a special meeting; and 

  

	 	•	 	requirements for advance notice for raising business or making nominations at annual meetings. 

The by-laws of the Company provide that unless the Company consents in writing to the
selection of an alternative forum, the State of Indiana shall be the sole and exclusive forum for: (a) any derivative action or proceeding brought by or in the name of the corporation; (b) any action asserting a claim of breach of a
fiduciary duty owed by any director, officer, employee, agent or affiliate of the Company to the Company or to the Company’s shareholders; (c) any action arising pursuant to any provision of the Indiana Business Corporation Law (the
“IBCL”) or the Company’s articles of incorporation or by-laws (as may be amended from time to time); or (d) any action asserting a claim against the Company governed by the
internal affairs doctrine. 
 Certain Provisions of the Indiana Business Corporation Law 

Under specified circumstances, the following provisions of the IBCL may delay, prevent or make more difficult unsolicited acquisitions or
changes of control of the Company. These provisions also may have the effect of preventing changes in the management of the Company. It is possible that these provisions could make it more difficult to accomplish transactions that shareholders may
otherwise deem to be in their best interests. 

  
 2 

 Control Share Acquisitions. Under Chapter 42 of the IBCL, an acquiring person or group who
makes a “control share acquisition” in an “issuing public corporation” may not exercise voting rights on any “control shares” unless these voting rights are conferred by a majority vote of the disinterested shareholders
of the issuing public corporation at a special meeting of those shareholders held upon the request and at the expense of the acquiring person. If control shares acquired in a control share acquisition are accorded full voting rights and the
acquiring person has acquired control shares with a majority or more of all voting power, all shareholders of the issuing public corporation have dissenters’ rights to receive the fair value of their shares pursuant to Chapter 44 of the IBCL.

 Under the IBCL, “control shares” are shares acquired by a person that, when added to all other shares of the issuing public
corporation owned by that person or in respect to which that person may exercise or direct the exercise of voting power, would otherwise entitle that person to exercise voting power of the issuing public corporation in the election of directors
within any of the following ranges: 
  

	 	•	 	one-fifth or more but less than one-third; 

  

	 	•	 	one-third or more but less than a majority; or 

  

	 	•	 	a majority or more. 

 A “control share acquisition” means, subject to specified
exceptions, the acquisition, directly or indirectly, by any person of ownership of, or the power to direct the exercise of voting power with respect to, issued and outstanding control shares. For the purposes of determining whether an acquisition
constitutes a control share acquisition, shares acquired within 90 days or under a plan to make a control share acquisition are considered to have been acquired in the same acquisition. 

An “issuing public corporation” means a corporation which has (i) 100 or more shareholders, (ii) its principal place of
business or its principal office in Indiana, or that owns or controls assets within Indiana having a fair market value of greater than $1,000,000, and (iii) (A) more than 10% of its shareholders resident in Indiana, (B) more than 10% of
its shares owned of record or owned beneficially by Indiana residents, or (C) 1,000 shareholders resident in Indiana. 
 The provisions
described above do not apply if, before a control share acquisition is made, the corporation’s articles of incorporation or by-laws, including
a by-law adopted by the corporation’s board of directors, provide that they do not apply. The Company’s by-laws do not exclude the Company from
Chapter 42 of the IBCL. 
 Certain Business Combinations. Chapter 43 of the IBCL restricts the ability of a “resident domestic
corporation” to engage in any combinations with an “interested shareholder” for five years after the date the interested shareholder became such, unless the combination or the purchase of shares by the interested shareholder on the
interested shareholder’s date of acquiring shares is approved by the board of directors of the resident domestic corporation before that date. If the combination was not previously approved, then the interested shareholder may effect a
combination after the five-year period only if that shareholder receives approval from a majority of the disinterested shareholders or the offer meets specified “fair price” criteria. 

For purposes of the above provisions, “resident domestic corporation” means an Indiana corporation that has 100 or more
shareholders. “Interested shareholder” means any person, other than the resident domestic corporation or its subsidiaries, who is (i) the beneficial owner, directly or indirectly, of 10% or more of the voting power of the outstanding
voting shares of the resident domestic corporation or (ii) an affiliate or associate of the resident domestic corporation, which at any time within the five-year period immediately before the date in question, was the beneficial owner, directly
or indirectly, of 10% or more of the voting power of the then outstanding shares of the resident domestic corporation. 
 The definition of
“beneficial owner” for purposes of Chapter 43 of the IBCL means a person who, directly or indirectly, owns the shares, has the right to acquire or vote the subject shares (excluding voting rights under revocable proxies made in accordance
with federal law), has any agreement, arrangement or understanding for the purpose of acquiring, holding or voting or disposing of the subject shares, or holds any “derivative instrument” that includes the opportunity, directly or
indirectly, to profit or share in any profit derived from any increase in the value of the subject shares. 

  
 3 

 The above provisions do not apply to corporations that elect not to be subject to Chapter 43 of
the IBCL in an amendment to their articles of incorporation approved by a majority of the disinterested shareholders. That amendment, however, cannot become effective until 18 months after its passage and would apply only to share acquisitions
occurring after its effective date. The Company’s articles of incorporation do not exclude the Company from Chapter 43 of the IBCL. 

Directors’ Duties and Liability. Under Chapter 35 of the IBCL, directors are required to discharge their duties:

  

	 	•	 	in good faith; 

  

	 	•	 	with the care an ordinarily prudent person in a like position would exercise under similar circumstances; and 

  

	 	•	 	in a manner the directors reasonably believe to be in the best interests of the corporation. 

Under the IBCL, a director is not liable for any action taken as a director, or any failure to act, regardless of the nature of the alleged
breach of duty (including breaches of the duty of care, the duty of loyalty, and the duty of good faith) unless the director has breached or failed to perform the duties of the director’s office and the action or failure to act constitutes
willful misconduct or recklessness. This exculpation from liability under the IBCL does not affect the liability of directors for violations of the federal securities laws. 

Consideration of Effects on Other Constituents. Chapter 35 of the IBCL also provides that a board of directors, in discharging its
duties, may consider, in its discretion, both the long-term and short-term best interests of the corporation, taking into account, and weighing as the directors deem appropriate, the effects of an action on the corporation’s shareholders,
employees, suppliers and customers and the communities in which offices or other facilities of the corporation are located and any other factors the directors consider pertinent. Directors are not required to consider the effects of a proposed
corporate action on any particular corporate constituent group or interest as a dominant or controlling factor. If a determination is made with the approval of a majority of the disinterested directors of the board of directors, that determination
is conclusively presumed to be valid unless it can be demonstrated that the determination was not made in good faith after reasonable investigation. 

Chapter 35 of the IBCL specifically provides that specified judicial decisions in Delaware and other jurisdictions, which might be looked upon
for guidance in interpreting Indiana law, including decisions that propose a higher or different degree of scrutiny in response to a proposed acquisition of the corporation, are inconsistent with the proper application of the business judgment rule
under that section. 
 Mandatory Classified Board of Directors. Under Section 23-1-33-6(c) of the IBCL, a corporation with a class of voting shares registered with the U.S. Securities and Exchange Commission under Section 12 of the Securities
Exchange Act, as amended (the “Exchange Act”) must have a classified board of directors unless the corporation adopts a by-law expressly electing not to be governed by this provision by the
later of July 31, 2009 or 30 days after the corporation’s voting shares are registered under Section 12 of the Exchange Act. The Company’s by-laws include a provision electing not to
be subject to this mandatory requirement; however, the IBCL permits this election to be rescinded by subsequent action of the Company’s board of directors. 

Exculpation from Liability of Directors in Certain Circumstances 

The Company’s articles of incorporation provide for indemnification of their respective directors where they have acted in good faith,
which means that in the case of official action, they reasonably believed the conduct was in our best interests and in all other cases, the action taken was not against our best interests, and in the case of criminal proceedings, they had reasonable
cause to believe the action was lawful or there was no reasonable cause to believe the action was unlawful. Under the IBCL, a director is not liable for any action taken as a director, or any failure to act, regardless of the nature of the alleged
breach of duty (including breaches of the duty of care, the duty of loyalty, and the duty of good faith) unless the director has breached or failed to perform the duties of the director’s office and the action or failure to act constitutes
willful misconduct or recklessness. The Company’s articles of incorporation do not absolve directors of liability for payment of any unlawful distributions by the Company in violation of Section 23-1-35-4 (or any successor provision) of the IBCL, provided that such action constitutes willful misconduct or recklessness. 

  
 4 

 We do not believe that exculpation from liability under the IBCL affects the liability of the
Company’s directors for violations of the federal securities laws. The Company’s articles of incorporation and by-laws provide indemnification for the benefit of its respective directors
and officers to the fullest extent permitted by the IBCL, including most circumstances under which indemnification otherwise would be discretionary. 

  
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