INVESTMENT CRITERIA-I

Like the ever-watchful eagle, FNCP is constantly on the lookout for attractive investment opportunities.

WHAT THE FUND WILL INVEST IN

GENERAL

1. Must be located in the 11 Western States if FNCP is the lead investor. If FNCP is not the lead, then can consider outside this territory as long as the lead investor is located in reasonably close proximity to the portfolio company investment.

2. At least two (but preferably a three or more) year profitable operating history, with “Adjusted” Operating Earnings of at least $1 million on a current basis.

3. Fairly priced i.e. a reasonable multiple, using a ‘normalized’ valuation approach.

4. A targeted investment of $2-$3 million per deal, with a floor of $1mm being the minimum and $5 million, including add-ons, being the absolute maximum.

5. A Management Team already in place or coming in with the change-of-control.

6. Either control or not-for-control investments, but with a reason for availability.

7. If a ‘not-for-control’ investment, and in addition to “Piggy-back” or Registration Rights, then one (or more) bona-fide exit strategies such as a Put/Call or Buy/Sell Agreement or Right to call for the sale of the entire company.

8. “Niche” businesses, meaning those with proprietary products, technology, expertise, reputation or position in the marketplace.

9. Investments may take one (or more) of the following forms: Subordinated Debt, Preferred or Common Stock, or Warrants. Joint-ventures.

10. The Fund will seek Board representation or observer rights for all investments.


SPECIFIC

The Fund will make investments in the following industries: basic or light manufacturing, specialty retail, business or consumer products and services, medical devices and health care services, specialty electronics and equipment, parts, packaging, plastics, fabrication, industrial materials, supplies, distribution, recreational products and services, gaming suppliers, hospitality related, processing, chemicals, specialty printing and publishing, home improvement products and services, transportation and communication.