MEDALLION FINANCIAL CORP
LOAN AND SECURITY AGREEMENT
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>7
<FILENAME>me091202.txt
<DESCRIPTION>LOAN AND SECURITY AGREEMENT
<TEXT>


                                                                    Exhibit 10.4

                                                                  EXECUTION COPY









                           LOAN AND SECURITY AGREEMENT



                         Dated as of September 13, 2002


                           TAXI MEDALLION LOAN TRUST I
                                   as Borrower


                                       and


                             MERRILL LYNCH BANK USA
                                    as Lender


<PAGE>


                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

ARTICLE I     DEFINITIONS AND ACCOUNTING MATTERS...............................1

   Section 1.01   Certain Defined Terms........................................1
   Section 1.02   Accounting Terms and Determinations.........................21

ARTICLE II    ADVANCES, NOTE AND PREPAYMENTS..................................21

   Section 2.01   Advances....................................................21
   Section 2.02   Note........................................................22
   Section 2.03   Procedure for Borrowing.....................................22
   Section 2.04   Delivery of Medallion Loan Files............................23
   Section 2.05   Repayment of Advances; Interest.............................23
   Section 2.06   Limitation on Advances; Illegality..........................23
   Section 2.07   Determination of Borrowing Base; Mandatory Prepayments
                     or Pledge; Rapid Amortization Event......................24
   Section 2.08   Optional Prepayments; Release of Medallion Loans upon
                     Repayment................................................24
   Section 2.09   Requirements of Law.........................................25
   Section 2.10   Purpose of Advances.........................................26
   Section 2.11   Taxes.......................................................26
   Section 2.12   Interest Reserve Deposit Account............................28
   Section 2.13   Collection Account..........................................28
   Section 2.14   Continuation................................................28
   Section 2.15   Minimum Amounts and Maximum Number of Tranches..............29
   Section 2.16   Indemnity...................................................29

ARTICLE III   PAYMENTS; COMPUTATIONS; FEES....................................29

   Section 3.01   Payments....................................................29
   Section 3.02   Computations................................................30
   Section 3.03   Facility Fee................................................30
   Section 3.04   Non-Usage Fee...............................................31

ARTICLE IV    COLLATERAL SECURITY.............................................31

   Section 4.01   Collateral; Security Interest...............................31
   Section 4.02   Further Documentation.......................................33
   Section 4.03   Changes in Locations, Name, etc.............................33
   Section 4.04   Lender's Appointment as Attorney-in-Fact....................33
   Section 4.05   Performance by Lender of Borrower's Obligations.............35
   Section 4.06   Proceeds....................................................35
   Section 4.07   Remedies....................................................35
   Section 4.08   Limitation on Duties Regarding Presentation of Collateral...36
   Section 4.09   Powers Coupled with an Interest.............................36

                                      -i-


<PAGE>


   Section 4.10   Release of Security Interest................................36

ARTICLE V     CONDITIONS PRECEDENT............................................37

   Section 5.01   Initial Advance.............................................37
   Section 5.02   Initial and Subsequent Advances.............................40

ARTICLE VI    REPRESENTATIONS AND WARRANTIES OF THE BORROWER..................42

   Section 6.01   Eligible Medallion Loans....................................42
   Section 6.02   Existence; Qualification....................................42
   Section 6.03   Authority and Authorization; Enforceability; Approvals;
                     Absence of Adverse Notice................................42
   Section 6.04   No Breach...................................................43
   Section 6.05   Litigation..................................................43
   Section 6.06   No Adverse Selection........................................43
   Section 6.07   Bulk Transfer...............................................43
   Section 6.08   Indebtedness................................................43
   Section 6.09   Borrower's Purpose..........................................43
   Section 6.10   Adverse Orders..............................................43
   Section 6.11   Taxes.......................................................43
   Section 6.12   Chief Executive Office; Jurisdiction of Organization........44
   Section 6.13   Legal Name..................................................44
   Section 6.14   Solvency....................................................44
   Section 6.15   Subsidiaries................................................44
   Section 6.16   Consideration...............................................44
   Section 6.17   True and Complete Disclosure................................44
   Section 6.18   Proceeds Regulations........................................44
   Section 6.19   Adverse Agreements..........................................45
   Section 6.20   Investment Company..........................................45
   Section 6.21   No Default..................................................45
   Section 6.22   Underwriting and Servicing..................................45
   Section 6.23   ERISA.......................................................45
   Section 6.24   Sharing of Payments.........................................45
   Section 6.25   Collateral Security; Acquisition............................45
   Section 6.26   Subsidiary..................................................46
   Section 6.27   Subsidiaries of the Parent..................................46

ARTICLE VII   COVENANTS OF THE BORROWER.......................................46

   Section 7.01   Existence; etc..............................................46
   Section 7.02   Special Purpose Entity......................................47
   Section 7.03   Accuracy of Opinions........................................48
   Section 7.04   Prohibition on Adverse Claims...............................48
   Section 7.05   Prohibition on Fundamental Change...........................48
   Section 7.06   Sale or Contribution Treatment..............................48
   Section 7.07   Prohibition on Modifications................................49
   Section 7.08   Amendment to Organizational Documents.......................49
   Section 7.09   Remittance of Collections...................................49

                                      -ii-


<PAGE>


   Section 7.10   Hedging Strategy............................................49
   Section 7.11   Litigation..................................................49
   Section 7.12   Notices.....................................................49
   Section 7.13   Additional Information......................................50
   Section 7.14   Transaction with Affiliates.................................50
   Section 7.15   Limitation on Liens.........................................50
   Section 7.16   Advertising, Origination and Servicing Activities...........50
   Section 7.17   Required Filings............................................50
   Section 7.18   Financial Statements........................................50
   Section 7.19   Maintenance of Insurance....................................51
   Section 7.20   Right of First Refusal Replacement Financing................51
   Section 7.21   Monthly Pricing Reports; Monthly Liquidation Reports........51
   Section 7.22   Underwriting Guidelines.....................................52
   Section 7.23   Approved Purchase Agreement Sale or Contribution Treatment..52
   Section 7.24   "Warm" Backup Servicer......................................52
   Section 7.25   Allonge Identification......................................52

ARTICLE VIII  EVENTS OF DEFAULT...............................................52

ARTICLE IX    REMEDIES UPON DEFAULT...........................................54

ARTICLE X     MISCELLANEOUS...................................................55

   Section 10.01  Waiver......................................................55
   Section 10.02  Notices.....................................................55
   Section 10.03  Indemnification and Expenses................................56
   Section 10.04  Amendments..................................................57
   Section 10.05  Successors and Assigns......................................57
   Section 10.06  Survival....................................................57
   Section 10.07  Captions....................................................57
   Section 10.08  Counterparts................................................57
   Section 10.09  GOVERNING LAW; ETC..........................................58
   Section 10.10  SUBMISSION TO JURISDICTION; WAIVERS.........................58
   Section 10.11  WAIVER OF JURY TRIAL........................................58
   Section 10.12  Acknowledgments.............................................59
   Section 10.13  Hypothecation and Pledge of Collateral......................59
   Section 10.14  Assignments; Participations.................................59
   Section 10.15  Alteration of Medallion Loan Documents......................60
   Section 10.16  Periodic Due Diligence Review...............................60
   Section 10.17  Usury Savings Clause........................................61
   Section 10.18  Pledge of Ownership Interest in the Borrower................62

                                      -iii-


<PAGE>


SCHEDULES
---------

     SCHEDULE 1.01(a)  Credit and Collection Policy

     SCHEDULE 1.01(b)  Existing Permitted Joint Participants

     SCHEDULE 1.01(c)  Existing Permitted Junior Participants

     SCHEDULE 1.01(d)  Underwriting Guidelines

     SCHEDULE 1.01(e)  Former FSP Medallion Loans

     SCHEDULE 1.01(f)  Specified 90% LTV Medallion Loans

     SCHEDULE 1        Eligibility Criteria

     SCHEDULE 6.25     Filing Jurisdictions

     SCHEDULE 6.27     Parent Subsidiaries

     SCHEDULE 7.20     Right of First Refusal

     SCHEDULE 7.21     Monthly Pricing Reports

EXHIBITS
--------

     EXHIBIT A         Form of Note

     EXHIBIT B         Form of Borrowing Base Certificate

     EXHIBIT C         Form of Collection Account Control Agreement

     EXHIBIT D         Form of Custodial Agreement

     EXHIBIT E-1       RESERVED

     EXHIBIT E-2       RESERVED

     EXHIBIT E-3       RESERVED

     EXHIBIT F-1       Form of Junior Participation Supplemental Agreement
                       (E.J.T.)

     EXHIBIT F-2       Form of Junior Participation Supplemental Agreement (Elk)

     EXHIBIT F-3       Form of Junior Participation Supplemental Agreement
                       (Susil Cab, Inc.)

     EXHIBIT F-4       Form of Junior Participation Supplemental Agreement (The
                       OSG Corporation)

     EXHIBIT G         Form of Interest Reserve Deposit Account Control
                       Agreement

     EXHIBIT H         Form of Notice of Borrowing and Pledge

     EXHIBIT I         Form of Tax Certificate

     EXHIBIT J         Form of Assignment and Acceptance

     EXHIBIT K-1       RESERVED

     EXHIBIT K-2       RESERVED

                                      -i-


<PAGE>


     EXHIBIT K-3       RESERVED

     EXHIBIT L-1       Form of Approved Junior Participation Agreement (E.J.T.)

     EXHIBIT L-2       Form of Approved Junior Participation Agreement (Elk)

     EXHIBIT L-3       Form of Approved Junior Participation Agreement (Susil
                       Cab, Inc.)

     EXHIBIT L-4       Form of Approved Junior Participation Agreement (The OSG
                       Corporation)

                                      -ii-


<PAGE>


                           LOAN AND SECURITY AGREEMENT

          THIS LOAN AND  SECURITY  AGREEMENT  is made as of  September  13, 2002
between TAXI MEDALLION LOAN TRUST I, a Delaware business trust (the "Borrower"),
and MERRILL LYNCH BANK USA, a Utah industrial loan corporation (the "Lender").

                                    RECITALS

          WHEREAS,   pursuant  to  the  Purchase  Agreement,   the  Borrower,  a
special-purpose  entity,  has agreed to purchase  Medallions  Loans from time to
time from Medallion Funding (defined below), as Seller;

          WHEREAS,  pursuant to the Servicing Agreement, the Servicer has agreed
to perform  certain  services in connection  with the  collection of payments in
respect of the Medallion Loans;

          WHEREAS,  the Borrower has requested that the Lender from time to time
make revolving credit loans to the Borrower, the proceeds of which shall be used
to finance the  purchase  of  Medallion  Loans by the  Borrower  from  Medallion
Funding,  as Seller,  pursuant to the Purchase  Agreement or for other  purposes
permitted  hereby,  and the Lender is prepared to make such loans upon the terms
and subject to the conditions hereof;

          WHEREAS,  the  Borrower  may request that the Lender from time to time
make revolving credit loans to the Borrower, the proceeds of which shall be used
to finance the  purchase of  Medallion  Loans by the  Borrower  from an Approved
Seller pursuant to an Approved Purchase Agreement, and the Lender is prepared to
make such loans upon the terms and subject to the conditions hereof;

          NOW, THEREFORE,  for good and valuable consideration,  the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

                                   ARTICLE I

                       DEFINITIONS AND ACCOUNTING MATTERS

          Section 1.01 Certain  Defined  Terms.  As used herein,  the  following
terms shall have the following  meanings (all terms defined in this Section 1.01
or in other  provisions of this Loan  Agreement in the singular to have the same
meanings when used in the plural and vice versa):

          "Acceptable  Refinancing"  shall mean the refinancing of the Medallion
Credit  Facilities on terms  providing for no earlier  amortization  than in the
applicable  amended  Medallion Credit Facility or on terms otherwise  reasonably
acceptable to the Lender.


<PAGE>


          "Accepted Servicing Practices" shall have the meaning assigned thereto
in the Servicing Agreement.

          "Advance"  shall  have the  meaning  assigned  to such term in Section
2.01(a).

          "Advance Rate" shall mean:

          (a)  with  respect  to  each  Eligible  Medallion  Loan  other  than a
Specified 90% LTV Medallion  Loan, the applicable  advance rate set forth in the
chart below opposite the applicable class of such Eligible Medallion Loan:

          --------------------------------------------------  ------------------
                   Type of Eligible Medallion Loans              Advance Rate
          --------------------------------------------------  ------------------
                      Class A Medallion Loans                         90%
                      Class B Medallion Loans                         90%
                      Class C Medallion Loans                         85%
                      Class D Medallion Loans                         75%
                      Class E Medallion Loans                         50%
          --------------------------------------------------  ------------------

          (b) with respect to each Eligible  Medallion  Loan that is a Specified
90% LTV Medallion Loan, the applicable advance rate set forth in the chart below
opposite   the   applicable    class   of   such   Eligible    Medallion   Loan:

          --------------------------------------------------  ------------------
              Type of Specified 90% LTV Medallion Loans          Advance Rate
          --------------------------------------------------  ------------------
                      Class A Medallion Loans                         80%
                      Class B Medallion Loans                         80%
                      Class C Medallion Loans                         75%
                      Class D Medallion Loans                         65%
                      Class E Medallion Loans                         40%
          --------------------------------------------------  ------------------

provided, however, that an Advance Rate may be reduced by an amount of up to 2.5
percentage points, in the sole and absolute discretion of the Lender, if any of
the following events shall exist at any time:

          (a) the Delinquency Ratio shall exceed 25%; or

                                      -2-


<PAGE>


          (b)  10% or more of the  Medallion  Loans  financed  under  this  Loan
     Agreement are Class D Medallion Loans and Class E Medallion Loans; or

          (c) the Cumulative Losses for Medallion Loans shall exceed $1,000,000;
     or

          (d) (i) the average cost of fully liquidating a Medallion,  determined
     as of the  last  day of  each  month,  based  on the  cost  of  liquidating
     Medallions  during  the  preceding  three  months  (or if  fewer  than  ten
     Medallions were liquidated  during such  three-month  period,  based on the
     cost of liquidating the ten most recently liquidated  Medallions),  exceeds
     5% of the original principal balance,  or (ii) the average time required to
     fully  liquidate a Medallion in a  jurisdiction,  determined as of the last
     day of each month,  based on the time of liquidating  Medallions during the
     preceding  three months (or if fewer than ten  Medallions  were  liquidated
     during such  three-month  period,  based on the time of liquidating the ten
     most recently liquidated  Medallions),  exceeds the number of days allotted
     per  jurisdiction  as  set  forth  on  Schedule  10 to the  Borrowing  Base
     Certificate under "Cannot exceed ___ days" due to a change in the procedure
     for liquidating Medallions estimated by the applicable Taxi Commission,  in
     each case as determined by the Lender in its sole  discretion  exercised in
     good faith, in which case the Advance Rate may be reduced only with respect
     to Medallion Loans secured by Medallions in the  jurisdiction in which such
     average time to liquidate Medallions exceeds the applicable allotted number
     of days.

          "Adverse Claim" means a lien, security interest,  charge,  encumbrance
or  other  right  or  claim  of any  Person  other  than,  with  respect  to the
Collateral,  any lien, security interest,  charge, encumbrance or other right or
claim in favor of the Lender.

          "Affiliate" means, with respect to any Person, any other Person which,
directly or indirectly,  controls,  is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" (together with the
correlative  meanings of "controlled  by" and "under common control with") means
possession,  directly or indirectly, of the power (a) to vote 10% or more of the
securities or interests (on a fully diluted basis) having  ordinary voting power
for the directors or managing  partners (or their equivalent) of such Person, or
(b) to direct or cause the  direction  of the  management  or  policies  of such
Person,  whether  through the ownership of voting  securities  or interests,  by
contract, or otherwise.

          "Applicable  Margin"  shall  mean  (i) for  each  Advance  secured  by
Eligible  Medallion Loans other than Specified 90% LTV Medallion Loans,  subject
to Section 7.24,  1.50%,  and (ii) for each Advance secured by Specified 90% LTV
Medallion Loans, subject to Section 7.24, 1.75%.

          "Approved Joint  Participation  Agreement"  shall mean a participation
agreement  between   Medallion  Funding  and  a  Permitted  Joint   Participant,
substantially  in the form of  Exhibits  K-1,  K-2 and K-3  hereto,  as amended,
supplemented  or  otherwise  modified  from time to time with the consent of the
Lender in its sole and absolute discretion.

          "Approved Junior  Participation  Agreement" shall mean a participation
agreement  between  Medallion  Funding  and  a  Permitted  Junior   Participant,
substantially in the form of

                                      -3-


<PAGE>


Exhibits L-1,  L-2, L-3 and L-4 hereto,  as amended,  supplemented  or otherwise
modified  from  time to time  with the  consent  of the  Lender  in its sole and
absolute discretion.

          "Approved Seller" shall mean any Person, other than Medallion Funding,
acceptable  to the Lender in its sole and  absolute  discretion  and approved in
writing by the Lender,  as seller of Medallion Loans to the Borrower pursuant to
an Approved Purchase Agreement.

          "Approved  Purchase  Agreement"  shall  mean  each  purchase  and sale
agreement  for  Medallion  Loans  between the  Borrower,  as  purchaser,  and an
Approved  Seller,  together  with  all  instruments,  documents  and  agreements
executed in  connection  therewith,  acceptable  to the Lender in writing in the
Lender's sole and absolute  discretion,  as such Approved Purchase Agreement may
from time to time be amended,  supplemented or otherwise  modified in accordance
with the terms hereof.

          "Assignment  and  Acceptance"  shall  have the  meaning  set  forth in
Section 10.14 hereof.

          "Backup  Servicer" shall have the meaning assigned to such term in the
Servicing Agreement.

          "Backup Servicing Agreement" shall mean the Backup Servicing Agreement
between  the  Backup  Servicer,   the  Borrower  and  the  Lender,  as  amended,
supplemented or otherwise modified from time to time.

          "Bankruptcy  Event" shall be deemed to have occurred with respect to a
Person if either:

          (a) a case  or  other  proceeding  shall  be  commenced,  without  the
application or consent of such Person,  in any court,  seeking the  liquidation,
reorganization,  debt  arrangement,  dissolution,  winding up, or composition or
readjustment of debts of such Person,  the  appointment of a trustee,  receiver,
custodian,  liquidation,  assignee,  sequestrator or the like for such Person or
all or  substantially  all of its assets,  or any similar action with respect to
such Person under any law relating to  bankruptcy,  insolvency,  reorganization,
winding up or  composition  or adjustment of debts,  and such case or proceeding
shall  continue  undismissed,  or  unstayed  and in  effect,  for a period of 30
consecutive  days;  or an order for relief in respect  of such  Person  shall be
entered  in an  involuntary  case  under the  federal  bankruptcy  laws or other
similar laws now or hereafter in effect; or

          (b) such Person shall  commence a voluntary  case or other  proceeding
under any applicable bankruptcy, insolvency,  reorganization,  debt arrangement,
dissolution or other similar law now or hereafter in effect, or shall consent to
the  appointment of or taking  possession by a receiver,  liquidator,  assignee,
trustee, custodian,  sequestrator (or other similar official) for such Person or
for any substantial part of its property,  or shall make any general  assignment
for the  benefit  of  creditors,  or shall  fail to,  or  admit in  writing  its
inability  to, pay its debts  generally as they become due, or, if a corporation
or similar entity, its board of directors or members shall vote to implement any
of the foregoing.

                                      -4-


<PAGE>


          "Borrower"  shall  have  the  meaning  assigned  to  such  term in the
Preamble.

          "Borrowing  Base"  shall  mean at any  time  an  amount  equal  to the
aggregate Collateral Value of all Eligible Medallion Loans pledged to the Lender
hereunder at such time.

          "Borrowing Base Certificate"  shall mean a certificate,  substantially
in the form of  Exhibit B  hereto,  with  appropriate  insertions,  showing  the
Borrowing Base as of the date set forth  therein,  and certified as complete and
correct by a Responsible Officer of the Servicer.

          "Borrowing Base Deficiency" shall have the meaning provided in Section
2.07(b) hereof.

          "Borrowing  Base Period" shall have the meaning  assigned to such term
in Section 2.01(a).

          "Boston  Medallion  Loan"  shall  mean a  Medallion  Loan  secured  by
Medallion Collateral that includes a Medallion issued by the Taxi Commission for
the City of Boston, Massachusetts.

          "Business  Day" shall mean any day other than (i) a Saturday or Sunday
or (ii) a day on which the New York Stock Exchange,  the Federal Reserve Bank of
New York, the Lender or the Custodian (if other than the Borrower) is authorized
or obligated by law or executive  order to be closed and, if such day relates to
a borrowing  of, a payment or  prepayment  of principal of or interest on, or an
Interest  Period for, a Eurodollar Loan or a notice by the Borrower with respect
to any such borrowing,  payment,  prepayment or Interest  Period, a day in which
dealings in Dollar deposits are carried out in the London interbank market.

          "Cambridge  Medallion  Loan"  shall mean a Medallion  Loan  secured by
Medallion Collateral that includes a Medallion issued by the Taxi Commission for
the City of Cambridge, Massachusetts.

          "Chicago  Medallion  Loan"  shall  mean a  Medallion  Loan  secured by
Medallion Collateral that includes a Medallion issued by the Taxi Commission for
the City of Chicago, Illinois.

          "Class"  shall  mean the status of a  Medallion  Loan at any time as a
Class A Medallion Loan,  Class B Medallion Loan, Class C Medallion Loan, Class D
Medallion Loan or Class E Medallion Loan.

          "Class A  Medallion  Loans"  shall mean  Eligible  Medallion  Loans in
respect of which there is no delinquency in payment or there is a delinquency in
the payment of principal  and/or  interest which continues for a period of up to
30 days (without regard to any applicable grace periods).

          "Class B  Medallion  Loans"  shall mean  Eligible  Medallion  Loans in
respect of which  there is a  delinquency  in the  payment of  principal  and/or
interest which continues for a period greater than and including 31 days but not
in excess of 60 days (without regard to any applicable grace periods).

                                      -5-


<PAGE>


          "Class C  Medallion  Loans"  shall mean  Eligible  Medallion  Loans in
respect of which  there is a  delinquency  in the  payment of  principal  and/or
interest which continues for a period greater than and including 61 days but not
in excess of 90 days (without regard to any applicable grace periods).

          "Class D  Medallion  Loans"  shall mean  Eligible  Medallion  Loans in
respect of which  there is a  delinquency  in the  payment of  principal  and/or
interest which continues for a period greater than and including 91 days but not
in excess of 180 days (without regard to any applicable grace periods).

          "Class E  Medallion  Loans"  shall mean  Eligible  Medallion  Loans in
respect of which  there is a  delinquency  in the  payment of  principal  and/or
interest  which  continues for a period  greater than and including 181 days but
not in excess of 360 days (without regard to any applicable grace periods).

          "Code" shall mean the Internal  Revenue Code of 1986,  as amended from
time to time.

          "Collateral"  shall  have the  meaning  provided  in  Section  4.01(b)
hereof.

          "Collateral  Value" shall mean, with respect to any Eligible Medallion
Loan on any date of  determination,  an amount  equal to the  product of (a) the
Advance  Rate  applicable  to  such  Eligible  Medallion  Loan  and  (b) the Net
Principal  Balance of such Eligible  Medallion  Loan;  provided,  that:

          (a) the following additional limitations shall apply:

          (i) the aggregate  Collateral  Value of all Eligible  Medallion  Loans
     which consist of New York City Medallion Loans shall be no less than 66.67%
     of the aggregate  Collateral Value of all Eligible  Medallion Loans at such
     time (or such other  percentage  as the Lender may  consent to from time to
     time);

          (ii) the aggregate  Collateral  Value of all Eligible  Medallion Loans
     which consist of Chicago Medallion Loans, Boston Medallion Loans, Cambridge
     Medallion Loans,  Newark Medallion Loans,  Philadelphia  Medallion Loans or
     Other  Acceptable  Medallion Loans shall not exceed 33.33% of the aggregate
     Collateral  Value of all  Eligible  Medallion  Loans at such  time (or such
     other percentage as the Lender may consent to from time to time);

          (iii) the aggregate  Collateral Value of all Eligible  Medallion Loans
     that are included in the Borrowing  Base at any time and that are not Class
     A Medallion Loans shall not exceed 25% of the aggregate Collateral Value of
     all Eligible  Medallion Loans at such time;

          (iv) the aggregate  Collateral  Value of all Eligible  Medallion Loans
     that are included in the Borrowing  Base at any time and that are not Class
     A Medallion  Loans or Class B  Medallion  Loans shall not exceed 10% of the
     aggregate  Collateral  Value of all Eligible  Medallion Loans at such time;

                                      -6-


<PAGE>


          (v) the aggregate  Collateral  Value of all Eligible  Medallion  Loans
     that are included in the Borrowing  Base at any time and that are not Class
     A Medallion Loans, Class B Medallion Loans or Class C Medallion Loans shall
     not exceed 5% of the aggregate  Collateral Value of all Eligible  Medallion
     Loans at such time;

          (vi) the aggregate  Collateral  Value of all Eligible  Medallion Loans
     which consist of Junior Participation  Medallion Loans shall not exceed the
     lesser of $25,000,000 or 10% of the Maximum  Committed Credit at such time;

          (vii) the aggregate  Collateral Value of all Eligible  Medallion Loans
     which consist of Joint  Participation  Medallion Loans shall not exceed the
     lesser of $25,000,000 or 10% of the Maximum  Committed Credit at such time;

          (viii) the aggregate  Collateral Value of all Eligible Medallion Loans
     which consist of Former FSP Medallion  Loans shall not exceed  $13,500,000;
     and

          (ix) the aggregate  Collateral  Value of all Eligible  Medallion Loans
     which  consist  of  Specified  90% LTV  Medallion  Loans  shall not  exceed
     $10,000,000;

          (b) the  Collateral  Value shall be deemed to be zero with  respect to
each Medallion Loan:

          (i) with  respect  to which  the  eligibility  criteria  set  forth on
     Schedule 1 are not satisfied on such date;

          (ii) made to any one Obligor (or  guaranteed by any one  guarantor) in
     an amount that exceeds  $8,000,000 in the aggregate together with any other
     Medallion Loans to such Obligor;

          (iii) in respect of which  there is a  delinquency  in the  payment of
     principal  and/or  interest  which  continues for a period greater than 360
     days (without regard to any applicable grace periods);

          (iv) for which the  Medallion  Loan  File has been  released  from the
     possession  of the Custodian  under the  Custodial  Agreement to any Person
     other than the Lender or a Person acting as the  consenting  bailee for the
     Lender for a period of fifteen (15) or more consecutive days;

          (v) which exceeds the  limitations  on  Collateral  Value set forth in
     paragraph (a) above;

          (vi) for which the Custodian has not received the Medallion  Loan File
     with  respect  to such  Medallion  Loan in the time and manner set forth in
     Section 2.04;

          (vii) in respect of any Former FSP  Medallion  Loan that is pledged to
     the Lender after the Effective Date; and

                                      -7-


<PAGE>


          (viii) in  respect of any  Specified  90% LTV  Medallion  Loan that is
     pledged to the Lender after the Effective Date.

          "Collection  Account" shall mean a segregated bank account  maintained
by the  Collection  Account  Bank,  as  depositary,  pursuant to the  Collection
Account  Control  Agreement,  in the name of the Borrower for the benefit of the
Lender and subject to a security  interest in favor of the Lender into which all
Collections shall be deposited by the Servicer.

          "Collection  Account  Control  Agreement"  shall  mean the  Collection
Account  Control  Agreement,  dated  as of the date  hereof,  by and  among  the
Borrower,   the  Servicer,   the  Lender,   and  the  Collection  Account  Bank,
substantially  in the form of  Exhibit C hereto,  as  amended,  supplemented  or
otherwise modified from time to time.

          "Collection   Account   Bank"   shall  mean   JPMorgan   Chase   Bank.

          "Collections" shall mean, collectively, all collections,  payments and
recoveries on or in respect of the Medallion Loans, the Hedging Arrangements and
the other Medallion Collateral  (including without limitation insurance proceeds
and proceeds of the  disposition of the Medallion Loans or of assets securing or
otherwise subject to the Medallion Loans), and all proceeds of the foregoing.

          "Combined  Loan-To-Value  Ratio"  shall have the  meaning  provided in
Section 2.07(d) hereof.

          "Commitment Letter" shall mean the commitment letter, dated as of June
21,  2002,  between  the Lender and  Medallion  Funding,  as such  letter may be
amended from time to time.

          "Continue", "Continuation" and "Continued" shall mean the continuation
of a Eurodollar Loan from one Interest Period to the next Interest Period.

          "Contractual Obligation" shall mean as to any Person, any provision of
any agreement,  instrument or other  undertaking to which such Person is a party
or by which it or any of its property is bound or any  provision of any security
issued by such Person.

          "Corporate Medallion" shall mean a Medallion that is not an Individual
Medallion.

          "Credit and  Collection  Policy" shall mean the credit and  collection
policy of Medallion Funding,  as Servicer,  for Medallion Loans, a copy of which
is attached hereto as Schedule 1.01(a).

          "Cumulative  Losses" shall mean cumulative  losses  actually  realized
with  respect  to  Medallion  Loans  from and after the time such  loans  became
Medallion Loans, but shall not include costs,  expenses or losses resulting from
Hedging Arrangements.

          "Custodial Agreement" shall mean the Custodial Agreement,  dated as of
the date hereof, among the Borrower, the Custodian, the Servicer and the Lender,
substantially in the

                                      -8-


<PAGE>


form of Exhibit D hereto,  as the same shall be modified and supplemented and in
effect from time to time.

          "Custodian"   shall  mean  Wells   Fargo  Bank   Minnesota,   National
Association,  as custodian under the Custodial Agreement, and its successors and
permitted assigns thereunder.

          "Default"  shall mean an Event of Default or an event that with notice
or lapse of time or both would become an Event of Default.

          "Default  Rate" shall mean, in respect of any principal of any Advance
or, to the extent  permitted by law, any other amount under this Loan Agreement,
the Note or any other  Loan  Document  that is not paid  when due to the  Lender
(whether  at  stated  maturity,  by  acceleration,   by  optional  or  mandatory
prepayment or otherwise),  a rate per annum during the period from and including
the due date to but  excluding  the date on which  such  amount  is paid in full
equal to the Eurodollar Rate plus 4.00% per annum.

          "Delinquency  Ratio" means, as of the last day of each month,  (x) the
aggregate  of the Net  Principal  Balance of all  Medallion  Loans for which the
related Obligors have been delinquent for thirty-one (31) or more days,  divided
by (y) the aggregate of the Net Principal Balance of all Medallion Loans at such
time.

          "Dollars"  and "$" shall mean  lawful  money of the  United  States of
America.

          "Due Diligence Review" shall mean the performance by the Lender of any
or all of the reviews  permitted  under Section 10.16 hereof with respect to any
or all of the Medallion Loans, as desired by the Lender from time to time.

          "Effective  Date"  shall  mean  the date  upon  which  the  conditions
precedent set forth in Section 5.01 shall have been satisfied.

          "Eligible Medallion Loan" shall mean a Medallion Loan purchased by the
Borrower from a Seller (a) which satisfies the eligibility  characteristics  set
forth on Schedule 1 hereto on and as of the  applicable  Funding  Date and which
continues to satisfy such  eligibility  characteristics  at all times thereafter
while such  Medallion Loan is included in the Borrowing Base and (b) in the case
of a Medallion  Loan  described in (ii) or (iii) of the definition of "Medallion
Loan," as to which the Lender has received  evidence  satisfactory to the Lender
that  such  Medallion  Loan  was  acquired  by  such  Seller  in a  "true  sale"
transaction.

          "ERISA"  shall mean the  Employee  Retirement  Income  Security Act of
1974, as amended from time to time.

          "Eurocurrency   Liabilities"  shall  have  the  meaning  specified  in
Regulation  D of the Board of  Governors of the Federal  Reserve  System,  as in
effect from time to time.

          "Eurodollar Base Rate" shall mean with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum equal to the
corresponding  rate  appearing on page BBAM of Bloomberg  L.P. as LIBOR for such
Interest  Period two (2) Business  Days prior to the  beginning of such Interest
Period (and if such date is not a Business

                                      -9-


<PAGE>


Day, the  Eurodollar  Rate in effect on the Business Day  immediately  preceding
such date), and if such rate shall not be so quoted, the rate per annum at which
the Lender is offered  Dollar  deposits at or about  10:00  A.M.,  New York City
time, two Business Days prior to the beginning of such Interest  Period by prime
banks in the  interbank  eurodollar  market  where the  eurodollar  and  foreign
currency exchange operations in respect of its Advances are then being conducted
for  delivery  on the first day of such  Interest  Period for the number of days
comprised  therein and in an amount  comparable to the amount of the Advances to
be outstanding during such Interest Period.

          "Eurodollar   Loan"  shall  mean  an  Advance  the  rate  of  interest
applicable to which is based upon the Eurodollar Rate.

          "Eurodollar  Rate"  shall mean with  respect  to each day during  each
Interest Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the nearest
1/100th of 1%):

                             Eurodollar Base Rate
                   -----------------------------------------
                   1.00 - Eurodollar Rate Reserve Percentage

          "Eurodollar  Rate  Reserve  Percentage"  shall mean,  for any Interest
Period for all of the Eurodollar  Loans  comprising  part of the same borrowing,
the reserve percentage applicable two Business Days before the first day of such
Interest  Period  under  regulations  issued  from  time to time by the Board of
Governors  of  the  Federal  Reserve  System  (or  any  successor  thereto)  for
determining the maximum reserve requirement (including,  without limitation, any
emergency, supplemental or other marginal reserve requirement) for a member bank
of the Federal  Reserve System in New York, New York with respect to liabilities
or assets consisting of or including  Eurocurrency  Liabilities (or with respect
to any other  category of  liabilities  that  includes  deposits by reference to
which  the  interest  rate on  Eurodollar  Loans  is  determined)  having a term
comparable to such Interest Period.

          "Event of Default"  or  "Default"  shall have the meaning  provided in
Article VIII hereof.

          "Facility  Fee" shall have the  meaning  provided  in Section  3.03(a)
hereof.

          "Federal  Funds Rate" shall mean for any day, a  fluctuating  interest
rate per annum equal to the weighted  average of the rates on overnight  Federal
funds  transactions  with  members of the  Federal  Reserve  System  arranged by
Federal  funds  brokers,  as  published  for such day (or,  if such day is not a
Business Day, for the next preceding  Business Day) by the Federal  Reserve Bank
of New  York,  or,  if such  rate is not so  published  for any day  which  is a
Business Day, the average of the quotations  for such day for such  transactions
received by the Lender from three Federal  funds brokers of recognized  standing
selected by the Lender.

          "Financing Lease" shall mean any lease of property,  real or personal,
the  obligations  of the lessee in respect of which are  required in  accordance
with GAAP to be capitalized on a balance sheet of the lessee.

                                      -10-


<PAGE>


          "Former  FSP  Medallion  Loan"  shall mean a  Medallion  Loan that was
subject to a  subordinated  participation  held by  Freshstart  but is no longer
subject to a participation interest listed on Schedule 1.01(b) hereto.

          "Freshstart"   shall  mean  Freshstart   Venture  Corp.,  a  New  York
corporation.

          "Funding Date" shall mean,  (x) with respect to a Medallion  Loan, the
first date on which an Advance is made  hereunder  to fund the  purchase of such
Medallion  Loan,  and (y) with  respect  to an  Advance,  the date on which such
Advance is made.

          "Funding Date  Documentation"  shall have the meaning assigned to such
term in the Custodial Agreement.

          "Funding  Documentation  Receipt Date" shall have the meaning assigned
to such term in the Custodial Agreement.

          "GAAP"  shall mean  generally  accepted  accounting  principles  as in
effect from time to time in the United States of America.

          "Governmental  Authority"  shall  mean any nation or  government,  any
state or other political  subdivision thereof, any entity exercising  executive,
legislative,  judicial,  regulatory or administrative functions of or pertaining
to government and any court or arbitrator having  jurisdiction over the Borrower
or any of its properties.

          "Hedging  Arrangement"  shall mean,  with respect to any or all of the
Medallion  Loans,  any interest rate swap, cap or collar  agreement,  Eurodollar
future  contracts,  repurchase  agreement or other  agreements  or  arrangements
(including  any  arrangement  providing  for the  short  sale  of U.S.  Treasury
securities),  and any securities,  securities  accounts or securities  contracts
relating to the foregoing,  in each case intended to provide  protection against
fluctuations in interest rates or the exchange of nominal interest  obligations,
either generally or under specific  contingencies,  entered into by the Borrower
or a designee of the Borrower and the hedging counterparty.

          "Hedging  Strategy"  shall mean an interest rate hedging  strategy for
the purpose of providing  protection  against  fluctuations  in interest  rates,
which   strategy   may  from  time  to  time  include  the  absence  of  Hedging
Arrangements.

          "Indebtedness"  shall  mean,  of  any  Person  at  any  date,  without
duplication,  (a) all indebtedness of such Person for borrowed money (whether by
loan or the issuance and sale of debt  securities) or for the deferred  purchase
price of property or services (other than current trade liabilities  incurred in
the  ordinary  course of  business  and  payable in  accordance  with  customary
practices),  (b) any other  indebtedness  of such Person which is evidenced by a
note, bond, debenture or similar instrument,  (c) all obligations of such Person
under Financing Leases, (d) all obligations of such Person in respect of letters
of credit,  acceptances or similar instruments issued or created for the account
of such Person and (e) all liabilities secured by any Lien on any property owned
by such Person even  though  such  Person has not  assumed or  otherwise  become
liable for the payment thereof.

                                      -11-


<PAGE>


          "Indemnified  Party" shall have the meaning  provided in Section 10.03
hereof.

          "Individual Medallion" shall mean a Medallion issued to an Obligor who
is a natural person in circumstances where such natural person is the only party
who  may  use  such  Medallion   (commonly   referred  to  as  an  "owner-driver
medallion").

          "Interest  Period" shall mean with respect to any Eurodollar Loan:

          (i) initially,  the period commencing on the Funding Date with respect
     to  such  Eurodollar  Loan  and  ending  one,  two,  three  or  six  months
     thereafter,  as selected by the  Borrower  in its Notice of  Borrowing  and
     Pledge given with respect thereto; and

          (ii)  thereafter,  each period  commencing on the last day of the next
     preceding  Interest  Period  applicable to such  Eurodollar Loan and ending
     one, two,  three or six months  thereafter,  as selected by the Borrower by
     irrevocable notice to the Lender not less than three Business Days prior to
     the last day of the then current Interest Period with respect thereto;

provided that, all of the foregoing  provisions relating to Interest Periods are
subject to the following:

                    (1) if any Interest  Period  pertaining to a Eurodollar Loan
               would  otherwise  end on a day that is not a Business  Day,  such
               Interest Period shall be extended to the next succeeding Business
               Day unless the  result of such  extension  would be to carry such
               Interest  Period into another  calendar month in which event such
               Interest Period shall end on the immediately  preceding  Business
               Day;

                    (2) any Interest Period that would  otherwise  extend beyond
               the Termination Date shall end on the Termination Date;

                    (3) any Interest Period pertaining to a Eurodollar Loan that
               begins on the last Business Day of a calendar  month (or on a day
               for  which  there  is no  numerically  corresponding  day  in the
               calendar  month at the end of such Interest  Period) shall end on
               the last Business Day of a calendar month; and

                    (4) the  Borrower  shall  select  Interest  Periods so as to
               minimize any amounts  payable  under  Section 2.16 as a result of
               any payment or prepayment of any Eurodollar  Loans which would be
               scheduled to be due during any such Interest Periods.

          "Interest  Reserve  Deposit  Account" shall mean a segregated  deposit
account  maintained at the Interest  Reserve Deposit Account Bank in the name of
the Borrower for the benefit of the Lender and subject to a security interest in
favor of the Lender.

                                      -12-


<PAGE>


          "Interest  Reserve Deposit Account Bank" shall mean Merrill Lynch Bank
USA or another bank or other financial  institution  acceptable to the Lender at
which the Interest Reserve Deposit Account is maintained.

          "Interest  Reserve Deposit Account Control  Agreement"  shall mean the
Interest Reserve Deposit Account Control Agreement, dated as of the date hereof,
by and among the Borrower,  the Lender, and the Interest Reserve Deposit Account
Bank, substantially in the form of Exhibit G hereto, as amended, supplemented or
otherwise modified from time to time.

          "Investment  Company  Act" shall mean the  Investment  Company  Act of
1940, as amended.

          "Joint Participation  Medallion Loan" shall mean a Medallion Loan that
is subject to a Permitted Joint Participation Interest.

          "Joint  Participation  Supplemental  Agreement"  shall mean each Joint
Participation  Supplemental Agreement among the Lender, the Borrower,  Medallion
Funding and a Permitted Joint Participant, substantially in the form of Exhibits
E-1, E-2 and E-3 hereto, or any other Joint Participation Supplemental Agreement
among  the  Lender,  the  Borrower,  Medallion  Funding  and a  Permitted  Joint
Participant approved by the Lender in its sole and absolute discretion,  in each
case as the same may be amended, supplemented or otherwise modified from time to
time.

          "Junior Participation Medallion Loan" shall mean a Medallion Loan that
is subject to a Permitted Junior Participation Interest.

          "Junior Participation  Supplemental  Agreement" shall mean each Junior
Participation  Supplemental Agreement among the Lender, the Borrower,  Medallion
Funding  and a  Permitted  Junior  Participant,  substantially  in the  form  of
Exhibits  F-1,  F-2,  F-3,  and F-4 hereto,  or any other  Junior  Participation
Supplemental  Agreement among the Lender, the Borrower,  Medallion Funding and a
Permitted  Junior  Participant  approved by the Lender in its sole and  absolute
discretion,  in each case as the same may be amended,  supplemented or otherwise
modified from time to time.

          "Lender" shall have the meaning assigned to such term in the Preamble.

          "Lien"  shall  mean  any  mortgage,  lien,  pledge,  charge,  security
interest or similar encumbrance.

          "Loan Agreement" shall mean this Loan and Security  Agreement,  as the
same may be amended, supplemented or otherwise modified from time to time.

          "Loan Documents" shall mean,  collectively,  this Loan Agreement,  the
Note, the Collection  Account Control  Agreement,  the Interest  Reserve Deposit
Account Control Agreement, the Custodial Agreement, the Servicing Agreement, the
Purchase Agreement, each Junior Participation Supplemental Agreement, each Joint
Participation Supplement Agreement, each Approved Purchase Agreement, the Backup
Servicing Agreement and the agreements relating to Hedging Arrangements.

                                      -13-


<PAGE>


          "Loan-to-Value Ratio" shall mean, with respect to a Medallion Loan, as
of any date of  determination,  the  percentage  equivalent  of a  fraction  the
numerator of which is the Net Principal  Balance for such Medallion Loan and the
denominator  of  which  is  the  Medallion  Valuation  Amount  for  the  related
Medallion.

          "Material  Adverse Effect" shall mean a material adverse effect on (a)
the  contracts,  property,  business,  condition  (financial  or  otherwise)  or
prospects  of the  Borrower,  (b) the  ability of the  Borrower  to perform  its
obligations  under  any of the Loan  Documents  to which it is a party,  (c) the
validity  or  enforceability  of any of the Loan  Documents,  (d) the rights and
remedies of the Lender under any of the Loan  Documents,  (e) the timely payment
of the  principal  of or interest on the  Advances or other  amounts  payable in
connection therewith or (f) the Collateral.

          "Maximum Committed Credit" shall mean $250,000,000.

          "Medallion"  shall mean a medallion or other license  issued by a Taxi
Commission  which  enables  the holder  thereof to operate a taxicab in New York
City, Chicago, Boston,  Cambridge,  Newark,  Philadelphia or another location in
which  the  Lender in its sole  discretion  deems  acceptable  and  approves  in
writing.

          "Medallion Collateral" shall mean, in respect of a Medallion Loan, the
related  Medallion and any other  interest in property  securing such  Medallion
Loan.

          "Medallion Credit Facilities" shall mean, collectively,  the Medallion
Funding Facility Agreements and the Parent Loan Agreement.

          "Medallion  Funding"  shall mean  Medallion  Funding Corp., a New York
corporation, and its successors and permitted assigns.

          "Medallion Funding Facility Agreements" shall mean, collectively,  (i)
the Amended and Restated Loan  Agreement,  dated  December 24, 1997, as amended,
between Medallion Funding, as borrower,  the lenders party thereto,  Fleet Bank,
National Association,  as swing line lender,  administrative  agent,  collateral
agent and arranger,  and The Bank of New York, as documentation  agent, and (ii)
the Note Purchase Agreement,  dated June 1, 1999, as amended,  between Medallion
Funding and each of the noteholders party thereto,  in each case as the same may
be further amended, supplemented or otherwise modified from time to time.

          "Medallion  Loan"  shall mean each of the loans  secured by  Medallion
Collateral  originated by any of (i) the Seller,  (ii) an Affiliate of Medallion
Funding or (iii) a third-party  originator  acceptable to the Lender in its sole
and absolute discretion and approved by the Lender in writing,  and purchased by
the Borrower  evidenced by, among other things,  a Medallion  Note and Medallion
Security  Agreement,  that is included in any Medallion Loan  Schedule,  and all
rights and obligations under such loan.

          "Medallion Loan  Documents"  shall mean, with respect to any Medallion
Loan, each of the documents referred to in Section 2 of the Custodial  Agreement
(regardless of whether such document has been  delivered to the Custodian  under
the Custodial Agreement).

                                      -14-


<PAGE>


          "Medallion  Loan File" shall mean, with respect to any Medallion Loan,
all Medallion Loan Documents related to such Medallion Loan.

          "Medallion Loan Schedule" shall have the meaning assigned to such term
in the Custodial Agreement.

          "Medallion Note" shall mean the original  executed  promissory note or
other evidence of indebtedness of an Obligor with respect to a Medallion Loan.

          "Medallion Security Agreement" shall mean a security agreement between
a Seller and an Obligor  under a  Medallion  Note  pursuant to which the Obligor
grants such Seller a security interest in the underlying Medallion and any other
Medallion Collateral.

          "Medallion   Valuation   Amount"   shall  mean,  as  of  any  date  of
determination:

          (a) in the case of a Medallion  issued by the Taxi  Commission for New
     York City, (i) for an Individual  Medallion,  the prior month's  average of
     monthly  sales prices for sales of  Individual  Medallions,  as reported by
     such Taxi Commission, and (ii) for a Corporate Medallion, the prior month's
     average  of monthly  sales  prices for sales of  Corporate  Medallions,  as
     reported by such Taxi Commission;

          (b) in the case of a  Medallion  issued by any Taxi  Commission  other
     than the Taxi  Commission for New York City,  the prior month's  average of
     monthly sales prices for sales of Medallions, as reported by the applicable
     Taxi Commission;

provided  that  (x) in the  event  of a  change  in the  manner  in which a Taxi
Commission  reports  average  sales  prices  of  Medallions  as in effect on the
Effective  Date  or (y) in  the  case  of  the  determination  of the  Medallion
Valuation Amount by an Other Acceptable Taxi Commission, the Medallion Valuation
Amount shall be determined by the Lender  pursuant to a methodology  established
by the Lender in its sole  discretion  exercised in good faith,  notice of which
methodology shall be given to the Borrower and the Servicer in writing.

          "Net Principal  Balance" shall mean, with respect to a Medallion Loan,
the unpaid  principal  balance of a Medallion Loan less the principal  amount of
any Permitted Junior  Participation  Interest in such Medallion Loan;  provided,
however,  that if the  Loan-to-Value  Ratio of any  Former  FSP  Medallion  Loan
exceeds 90% at any time, the Net Principal  Balance of such Former FSP Medallion
Loan for the  purpose of  determining  the  Collateral  Value of such Former FSP
Medallion Loan shall equal 90% of the Medallion Valuation Amount for such Former
FSP Medallion Loan.

          "New York City Medallion  Loan" shall mean a Medallion Loan secured by
Medallion Collateral that includes a Medallion issued by the Taxi Commission for
the City of New York, New York.

          "Newark  Medallion  Loan"  shall  mean a  Medallion  Loan  secured  by
Medallion Collateral that includes a Medallion issued by the Taxi Commission for
the City of Newark, New Jersey.

                                      -15-


<PAGE>


          "Non-Excluded  Taxes" shall have the meaning  provided in Section 2.11
hereof.

          "Non-Usage  Fee"  shall have the  meaning  provided  in  Section  3.04
hereof.

          "Note"  shall have the meaning  assigned to such term in Section  2.02
hereof.

          "Notice of Borrowing  and Pledge"  shall have the meaning  provided in
Section 2.01(d) hereof.

          "Obligor"  shall mean the Person  obligated to make  payments  under a
Medallion Loan.

          "Other  Acceptable  Medallion Loan" shall mean a Medallion Loan issued
by an Other Acceptable Taxi Commission.

          "Other Acceptable Taxi Commission"  shall mean an agency,  commission,
regulatory body or other municipal instrumentality of a jurisdiction approved by
the Lender in its sole and absolute discretion.

          "Parent" shall mean Medallion Financial Corp., a Delaware corporation,
a "regulated investment company" within the meaning of the Code and a closed-end
management  investment  company  registered under the Investment Company Act and
its permitted successors hereunder.

          "Parent  Loan  Agreement"  shall mean the Second  Amended and Restated
Loan  Agreement,  dated September 22, 2000, as amended,  between the Parent,  as
borrower,  Medallion  Business Credit,  LLC, the lenders party thereto and Fleet
Bank,  National  Association,  as agent, swing line lender and arranger,  as the
same may be further  amended,  supplemented  or otherwise  modified from time to
time.

          "Partial  Payment  Date"  shall have the  meaning  provided in Section
2.08(a) hereof.

          "Payment  Date" shall mean (i) each  Regular  Payment  Date,  (ii) any
Business Day designated by the Borrower as a "Payment Date", provided,  that, in
the case of this  clause (ii) the  Borrower  shall have given the Lender and the
Custodian one (1) Business  Day's prior written notice of such Payment Date, and
the Servicer shall have delivered a current  Servicing Report and Medallion Loan
Schedule  to the Lender  and the  Custodian  in  accordance  with the  Servicing
Agreement, provided, further, that the Borrower shall designate a "Payment Date"
pursuant to this clause (ii) only if the principal  amount of the Advances to be
paid on such day is at least  $500,000,  provided,  further,  that the  Borrower
shall not designate  more than one "Payment  Date"  pursuant to this clause (ii)
during any calendar week, (iii) each other Business Day on which a prepayment of
the Advances is required under Section 2.07 and (iv) the Termination Date.

          "Permitted  Encumbrances"  shall mean mechanics  liens,  materialmen's
liens,  liens  relating to other matters to which like  properties  are commonly
subject and other  similar  statutory  and common law liens,  provided that such
liens and other matters (x) individually or in

                                      -16-


<PAGE>


the aggregate,  do not materially and adversely affect the applicable  Obligor's
ability to make  payments on the related  Medallion  Loan or interfere  with the
benefits of the security  intended to be provided by the related  Medallion Loan
Documents, and (y) do not constitute liens securing debt for borrowed money.

          "Permitted  Joint  Participant"  shall  mean (a) a  lender,  financial
institution or other Person listed on Schedule 1.01(c) hereto or another lender,
financial  institution or other Person  acceptable to the Lender in its sole and
absolute discretion, in each case that is not an Affiliate of the Borrower, that
purchases  participations  in medallion  loans;  provided that in no event shall
Permitted Joint  Participant  include  individuals,  and (b) an Affiliate of the
Borrower that is a bankruptcy  remote  entity and is listed on Schedule  1.01(c)
hereto (and whose bankruptcy remoteness has been established to the satisfaction
of  the  Lender  in  its  sole  and  absolute  discretion,   including,  without
limitation,  by delivery of a legal opinion of counsel to the Borrower  relating
to the issues of substantive  consolidation and true sale, in form and substance
satisfactory  to the  Lender) or another  Affiliate  of the  Borrower  that is a
bankruptcy  remote  entity  that is  acceptable  to the  Lender  in its sole and
absolute discretion hereto (and whose bankruptcy remoteness has been established
to the  satisfaction  of  the  Lender  in  its  sole  and  absolute  discretion,
including,  without limitation, by delivery of a legal opinion of counsel to the
Borrower  relating to the issues of substantive  consolidation and true sale, in
form and substance satisfactory to the Lender).

          "Permitted  Joint  Participation  Interest" shall mean a participation
interest in a Medallion Loan that (i) is pari passu in right of payment with the
rights of the Borrower under such Medallion Loan and is evidenced by an Approved
Joint  Participation  Agreement  or  another  agreement  in form  and  substance
acceptable to the Lender in its sole and absolute discretion,  (ii) is held by a
Permitted  Joint  Participant,  and (iii) is  subject  to a Joint  Participation
Supplemental Agreement.

          "Permitted  Junior  Participant"  shall  mean (a) a lender,  financial
institution or other Person listed on Schedule 1.01(d) hereto or another lender,
financial  institution or other Person  acceptable to the Lender in its sole and
absolute discretion, in each case that is not an Affiliate of the Borrower, that
purchases  participations  in medallion  loans;  provided that in no event shall
Permitted Junior Participant  include  individuals,  and (b) an Affiliate of the
Borrower that is a bankruptcy  remote  entity and is listed on Schedule  1.01(d)
hereto (and whose bankruptcy remoteness has been established to the satisfaction
of  the  Lender  in  its  sole  and  absolute  discretion,   including,  without
limitation,  by delivery of a legal opinion of counsel to the Borrower  relating
to the issues of substantive  consolidation and true sale, in form and substance
satisfactory  to the  Lender) or another  Affiliate  of the  Borrower  that is a
bankruptcy  remote  entity  that is  acceptable  to the  Lender  in its sole and
absolute discretion hereto (and whose bankruptcy remoteness has been established
to the  satisfaction  of  the  Lender  in  its  sole  and  absolute  discretion,
including,  without limitation, by delivery of a legal opinion of counsel to the
Borrower  relating to the issues of substantive  consolidation and true sale, in
form and substance satisfactory to the Lender).

          "Permitted Junior  Participation  Interest" shall mean a participation
interest in a Medallion Loan that (i) is subordinated in right of payment to the
rights of the  Borrower and is  evidenced  by an Approved  Junior  Participation
Agreement or another agreement in form and

                                      -17-


<PAGE>


substance acceptable to the Lender in its sole and absolute discretion,  (ii) is
held by a  Permitted  Junior  Participant,  and  (iii)  is  subject  to a Junior
Participation Supplemental Agreement.

          "Person" shall mean any individual,  corporation,  company,  voluntary
association,  partnership,  joint venture,  limited  liability  company,  trust,
unincorporated  association,  government  (or  any  agency,  instrumentality  or
political subdivision thereof) or any other entity of whatever nature.

          "Philadelphia  Medallion  Loan" shall mean a Medallion Loan secured by
Medallion Collateral that includes a Medallion issued by the Taxi Commission for
the City of Philadelphia, Pennsylvania.

          "Property"  shall mean any right or  interest in or to property of any
kind  whatsoever,  whether  real,  personal  or mixed and  whether  tangible  or
intangible.

          "Purchase  Agreement"  means that certain  Loan Sale and  Contribution
Agreement,  dated as of the date hereof,  between Medallion Funding,  as Seller,
and the Borrower,  as purchaser,  together with all  instruments,  documents and
agreements executed in connection therewith, as such Purchase Agreement may from
time to time be amended,  supplemented or otherwise  modified in accordance with
the terms hereof.

          "Qualified  Institutional Buyer" shall mean a "qualified institutional
buyer" as defined in Rule 144A of the U.S. Securities Act of 1933, as amended.

          "Rapid  Amortization Event" shall have the meaning provided in Section
2.07(d) hereof.

          "Reconciliation"  shall have the  meaning  set forth in the  Servicing
Agreement.

          "Reference Date" shall mean September 12, 2003.

          "Regular Payment Date" shall mean the 16th Business Day of each month.

          "Related   Parties"   means  the  Borrower,   Medallion   Funding  and
Freshstart.

          "Release  Price"  shall mean,  with respect to a Medallion  Loan,  the
Lender's  security  interest in which is to be released in  connection  with the
repayment  of an Advance  pursuant to Section  2.08(b),  an amount  equal to the
Collateral  Value of such  Medallion  Loan as of the date of such repayment plus
all accrued but unpaid interest thereon.

          "Requirement  of Law" shall mean as to any Person,  the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person,  and  any  law,  treaty,  rule  or  regulation  or  determination  of an
arbitrator or a court or other Governmental  Authority,  in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

          "Responsible  Officer"  shall  mean,  as  to  any  Person,  the  chief
executive officer,  president,  vice president,  treasurer or secretary or, with
respect to financial matters, the chief

                                      -18-


<PAGE>


financial  officer,  chief  accounting  officer,   president,   vice  president,
treasurer  or secretary  of such  Person;  provided,  that in the event any such
officer  is  unavailable  at any time he or she is  required  to take any action
hereunder,  Responsible Officer shall mean any officer authorized to act on such
officer's behalf as demonstrated to the Lender to its reasonable satisfaction.

          "SBA" shall mean the U.S. Small Business Administration.

          "SBA Commitment" shall mean the Commitment Letter, dated as of May 21,
2000, between Freshstart and the SBA, and all exhibits, schedules,  applications
and other documents related thereto.

          "Secured  Obligations"  shall mean the unpaid principal amount of, and
interest on the  Advances,  and all other  obligations  and  liabilities  of the
Borrower  to  the  Lender,  any  Affiliate  of  the  Lender  that  is a  hedging
counterparty under a Hedging  Arrangement or any Indemnified Party,  (including,
but not limited to, fees,  expenses  and  indemnification  payments  owed to the
Custodian under Sections 8 and 15 of the Custodial  Agreement) whether direct or
indirect,  absolute or  contingent,  due or to become  due,  or now  existing or
hereafter  incurred,  which may arise under,  out of or in connection  with this
Loan  Agreement,  the Note, any other Loan Document and any other document made,
delivered or given in connection  herewith or  therewith,  whether on account of
principal,  interest,   reimbursement  obligations,  fees,  indemnities,  costs,
expenses (including,  without limitation,  all fees and disbursements of counsel
to the Lender or  otherwise).  For purposes  hereof,  "interest"  shall include,
without  limitation,  interest  accruing  after the maturity of the Advances and
interest  accruing  after  the  filing of any  petition  in  bankruptcy,  or the
commencement of any insolvency,  reorganization or like proceeding,  relating to
the Borrower,  whether or not a claim for post-filing or post-petition  interest
is allowed in such proceeding.

          "Seller" shall mean (a) Medallion  Funding,  in its capacity as Seller
under the Purchase Agreement, or (b) an Approved Seller.

          "Servicer" shall mean Medallion  Funding,  in its capacity as servicer
under the Servicing Agreement,  or such other servicer as shall be acceptable to
the Lender in its sole discretion.

          "Servicer  Default"  shall  have  the  meaning  provided  for  in  the
Servicing Agreement.

          "Servicing Agreement" shall mean the Servicing Agreement,  dated as of
the date  hereof,  between the  Borrower,  the Lender and the  Servicer  for the
servicing  of  Medallion  Loans,  as  the  same  may  be  amended,  modified  or
supplemented from time to time with the prior written consent of the Lender.

          "Servicing  Fee" shall have the meaning  provided for in the Servicing
Agreement.

          "Servicing  Records"  means  all  servicing  records  relating  to the
Collateral,  including  but not  limited  to any and all  servicing  agreements,
files, documents, records, data bases, computer tapes, copies of computer tapes,
proof of insurance  coverage,  insurance  policies,

                                      -19-


<PAGE>


appraisals, other closing documentation,  payment history records, and any other
records relating to or evidencing the servicing of Medallion Loans.

          "Servicing  Report" shall have then meaning  provided in the Servicing
Agreement.

          "Specified 90% LTV Medallion Loan" shall mean a Medallion Loan with an
LTV less than or equal to 90% but greater than 80% on the date of origination of
such Medallion Loan listed on Schedule 1.01(e) hereto.

          "Standard  Form  Medallion  Loan  Documentation"  means  the  forms of
Medallion Loan Documents utilized by a Seller to originate Medallion Loans.

          "Subsidiary"  shall mean, with respect to any Person, any other Person
of which at least a majority  of the  securities  or other  ownership  interests
having by the terms  thereof  ordinary  voting  power to elect a majority of the
board of  directors  or  other  persons  performing  similar  functions  of such
corporation,  partnership, trust or other entity (irrespective of whether or not
at the time  securities  or other  ownership  interests  of any  other  class or
classes of such  corporation,  partnership,  trust or other entity shall have or
might have voting power by reason of the happening of any contingency) is at the
time  directly or  indirectly  owned or controlled by such Person or one or more
Subsidiaries  of such Person or by such Person and one or more  Subsidiaries  of
such Person.

          "Taxi  Commission" shall mean (i) in the case of the City of New York,
New York, the New York City Taxicab and Limousine  Commission,  (ii) in the case
of the City of Boston, Massachusetts, the Boston Police Department, (iii) in the
case of the City of Chicago,  Illinois,  the  Commissioner  of the Department of
Consumer Services,  Public Vehicles Operations  Division for Chicago,  Illinois,
(iv) in the case of the City of Cambridge, Massachusetts, the City of Cambridge,
Hackney Carriage  Division,  (v) in the case of the City of Newark,  New Jersey,
the Division of Taxicabs, Newark Police Department, (vi) in the case of the City
of Philadelphia,  Pennsylvania, the Pennsylvania Public Utilities Commission, or
(vii) any Other  Acceptable  Taxi  Commission,  and, in each case, any successor
agency,  commission,  regulatory body or other municipal instrumentality charged
with responsibility for licensing taxicabs in the applicable municipality.

          "Termination  Date" shall mean the earlier of: (i) the Reference Date;
provided,  however,  that in the event that both (X) the Parent Loan  Agreement,
and (Y) the Medallion Funding Facility  Agreements,  are either refinanced by an
Acceptable  Refinancing  or otherwise  repaid no later than the Reference  Date,
such date shall be September  12,  2004,  and (ii) the date on which an Event of
Default  occurs,  or, in  either  case,  such  earlier  date on which  this Loan
Agreement  shall  terminate  in  accordance  with the  provisions  hereof  or by
operation of law.

          "Tranche" or "Eurodollar Tranche" shall mean Eurodollar Loans the then
current Interest Periods with respect to all of which begin on the same date and
end on the same later date (whether or not such Loans shall originally have been
made on the same day).

          "Trigger  Event"  shall have the  meaning  provided  in  Section  3.03
hereof.

                                      -20-


<PAGE>


          "Underwriting  Guidelines"  shall  mean (i) in the  case of  Medallion
Loans sold by Medallion  Funding,  as Seller, to the Borrower,  the underwriting
guidelines of Medallion Funding for Medallion Loans, a copy of which is attached
hereto as Schedule  1.01(f),  or (ii) in the case of Medallion  Loans sold by an
Approved Seller to the Borrower,  the  underwriting  guidelines of such Approved
Seller for Medallion Loans delivered to the Lender and approved by the Lender in
writing in the Lender's sole and absolute discretion.

          "Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect on the date hereof in the State of New York;  provided  that if by reason
of mandatory  provisions  of law, the  perfection or the effect of perfection or
non-perfection of the security interest or the renewal or enforcement thereof in
any  Collateral  is governed by the  Uniform  Commercial  Code as in effect in a
jurisdiction  other  than New York,  "Uniform  Commercial  Code"  shall mean the
Uniform  Commercial Code as in effect in such other jurisdiction for purposes of
the  provisions  hereof  relating to such  perfection or effect of perfection or
non-perfection.

          "Warm  Backup  Servicer  Event"  shall have the  meaning  provided  in
Section 7.24 hereof.

          Section 1.02 Accounting Terms and Determinations.  Except as otherwise
expressly   provided   herein,   all  accounting  terms  used  herein  shall  be
interpreted,  and all financial  statements and  certificates  and reports as to
financial  matters  required to be  delivered to the Lender  hereunder  shall be
prepared, in accordance with GAAP.

                                   ARTICLE II

                         ADVANCES, NOTE AND PREPAYMENTS

          Section  2.01  Advances.

          (a) Subject to the terms and  conditions of this Loan  Agreement,  the
Lender  agrees to make loans  (individually,  an  "Advance";  collectively,  the
"Advances")  to the  Borrower,  from time to time on any  Business  Day from and
including  the  Effective  Date to but  excluding  the  Termination  Date, in an
aggregate  principal  amount at any one time outstanding up to but not exceeding
the lesser of (i) the Maximum Committed  Credit,  and (ii) the Borrowing Base at
such time;  provided  that during each period from the date on which a Borrowing
Base  Certificate  is  delivered  until the earlier of (A) the date on which the
next Borrowing Base  Certificate is delivered and (B) the date on which the next
Borrowing  Base  Certificate is required to be delivered  (the  "Borrowing  Base
Period"),  the Borrower may borrow Advances up to and equal to the lesser of (I)
the  Maximum  Committed  Credit  and (II) the sum of (x) the  Borrowing  Base as
reported in the then current  Borrowing  Base  Certificate  (less the Collateral
Value of any Medallion Loans released during such Borrowing Base Period pursuant
to Section  2.08(b))  and (y) the amount of  principal  repayments  on Medallion
Loans   received   during  such   Borrowing  Base  Period  as  set  forth  on  a
Reconciliation  timely delivered by the Servicer  pursuant to Section 4.01(b) of
the Servicing  Agreement;  provided  further,  that amounts borrowed on any date
other than a Regular  Payment  Date may only be used by the Borrower to purchase
additional  Medallion  Loans that are pledged to the Lender.

                                      -21-


<PAGE>


          (b) Subject to the terms and conditions of this Loan Agreement, during
the  period  from  and  including  the  Effective  Date  to  but  excluding  the
Termination Date the Borrower may borrow,  repay and reborrow hereunder.

          (c) In no event shall an Advance be made when any Default has occurred
and is  continuing  or would occur as a result of such  Advance.

          (d) The Lender  shall have no  obligation  to make new  Advances  with
respect to any  Medallion  Loan at any time  unless (x) an  irrevocable  written
Notice of Borrowing and Pledge  substantially in the form of Exhibit H hereto (a
"Notice of Borrowing  and  Pledge")  relating to such  Medallion  Loans has been
delivered  to the Lender prior to the Funding Date for such Advance (as provided
in Section 2.03(a))  including the certification with respect to the delivery of
the Funding Date  Documentation,  and (y) the Custodian  shall have received the
Funding Date  Documentation  with respect to such  Medallion  Loan in accordance
with the terms of the Custodial Agreement.

          (e) There  shall be no minimum  amount  required to be borrowed by the
Borrower in  connection  with the  initial  Advance  under this Loan  Agreement.


          Section 2.02 Note.

          (a) The  Advances  made by the Lender  shall be  evidenced by a single
promissory  note of the Borrower  substantially  in the form of Exhibit A hereto
(the "Note"), dated the date hereof, payable to the Lender in a principal amount
equal  to  the  amount  of the  Maximum  Committed  Credit  and  otherwise  duly
completed.  The  Lender  shall  have the right to have its Note  subdivided,  by
exchange for  promissory  notes of lesser  denominations  or otherwise.

          (b) The  date,  amount,  Interest  Period  and  interest  rate of each
Advance made by the Lender to the Borrower,  and each payment made on account of
the principal and interest thereof, shall be recorded by the Lender on its books
and records.

          Section 2.03 Procedure for Borrowing.

          (a) The Borrower may request an Advance hereunder, on any Business Day
during the period from and  including  the  Effective  Date to but excluding the
Termination Date, by delivering to the Lender,  with a copy to the Custodian,  a
Notice of  Borrowing  and  Pledge,  appropriately  completed  and  executed by a
Responsible  Officer of the Borrower,  which Notice of Borrowing and Pledge must
be received by the Lender,  with a copy to the  Custodian,  prior to 4 p.m., New
York City time, one (1) Business Day prior to the requested Funding Date of such
Advance; provided, that the Borrower shall not request more than one Advance per
Business Day; provided,  further,  that the Borrower shall not request more than
two Advances for any calendar  week.  Such Notice of Borrowing  and Pledge shall
(i) attach a schedule  identifying the Eligible Medallion Loans for each Advance
that the  Borrower  proposes  to pledge to the Lender and to be  included in the
Borrowing Base in connection  with such Advance,  (ii) contain the amount of the
requested Advance,  which shall in all events be at least equal to $500,000,  to
be made on such Funding Date,  (iii) specify the  requested  Funding Date,  (iv)
attach an officer's  certificate signed by a Responsible Officer of the Borrower
as to the  satisfaction of all of the matters  referred to in Sections 5.02 (a),
(b) and (c) hereof,  (v) specify the length of the initial

                                      -22-


<PAGE>


Interest  Period,  and (vi)  contain  (by  attachment)  such  other  information
reasonably  requested by the Lender from time to time.

          (b) With respect to each Advance,  upon satisfaction of all conditions
precedent set forth in Section 5.01 and 5.02 hereof and the  satisfaction of all
procedures  set forth in this  Section  2.03,  the Lender shall  transfer  funds
relating to such Advance to such account as the Lender and the Borrower may from
time to time agree.

          Section  2.04  Delivery of Medallion  Loan Files.  With respect to any
Medallion  Loan,  the  Borrower  shall  deliver  to the  Custodian  the  related
Medallion  Loan  File in the  manner  set forth in  Section  2 of the  Custodial
Agreement.

          Section 2.05 Repayment of Advances; Interest.

          (a) The Borrower  hereby  promises to repay in full on the Termination
Date  the  aggregate  outstanding  principal  amount  of the  Advances.

          (b) The Borrower  hereby promises to pay to the Lender interest on the
unpaid  principal  amount of each Advance for the period from and  including the
Funding Date of such  Advance to but  excluding  the date such Advance  shall be
paid in full, at a rate per annum for each day during each Interest Period equal
to the Eurodollar Rate plus the Applicable Margin; calculated such that interest
shall accrue each day on the outstanding  principal amount of all Advances as of
12:00 noon, New York City time, on such day.  Notwithstanding the foregoing, the
Borrower  hereby  promises to pay to the Lender  interest at the Default Rate on
any  principal  of any Advance and on any other  amount  payable by the Borrower
hereunder or under the other Loan  Documents that shall not be paid in full when
due (whether at stated maturity,  by acceleration or by mandatory  prepayment or
otherwise)  for the  period  from  and  including  the due date  thereof  to but
excluding  the date the same is paid in full.  Accrued  interest on each Advance
shall be payable on each Payment Date.  Notwithstanding the foregoing,  interest
accruing at the Default Rate shall be payable to the Lender on demand.

          Section 2.06  Limitation on Advances;  Illegality.  Anything herein to
the  contrary  notwithstanding,  if,  on or  prior to the  determination  of any
Eurodollar  Rate:

          (a) the Lender determines,  which  determination  shall be conclusive,
that quotations of interest rates for the relevant  deposits  referred to in the
definition of "Eurodollar Rate" in Section 1.01 hereof are not being provided in
the relevant amounts or for the relevant  maturities for purposes of determining
rates of interest for Advances as provided  herein;  or

          (b) it becomes unlawful for the Lender to honor its obligation to make
or maintain Advances hereunder using the Eurodollar Rate;

then the Lender shall give the Borrower  prompt  notice  thereof and, so long as
such  condition  remains in effect,  the Lender shall be under no  obligation to
Continue  or make  additional  Advances  using the  "Eurodollar  Rate",  and the
Borrower  shall,  at its  option,  either  prepay  all such  Advances  as may be
outstanding or such Advances shall accrue interest at a rate equal to the sum of
(i) the Federal Funds Rate and (ii) the Applicable Margin.

                                      -23-


<PAGE>


          Section 2.07 Determination of Borrowing Base; Mandatory Prepayments or
Pledge;  Rapid Amortization  Event.

          (a) The  Borrower  shall cause the Servicer to deliver to the Lender a
Borrowing Base Certificate no later than the fifteenth (15th) Business Day after
the last day of each month  calculating the Borrowing Base as of the last day of
such prior month,  certified as complete and correct by a Responsible Officer of
the Servicer.

          (b)  Subject  to Section  2.16  hereto,  if at any time the  aggregate
outstanding  principal amount of Advances exceeds the Borrowing Base, including,
without  limitation,  as the  result  of any  Medallion  Loan  ceasing  to be an
Eligible  Medallion Loan (a "Borrowing Base  Deficiency")  the Borrower shall no
later  than  12:00  (noon) New York City time on the fifth  (5th)  Business  Day
immediately  succeeding  the discovery of such  Borrowing  Base  Deficiency  (i)
prepay  the  outstanding  principal  amount  of  Advances  in part or in  whole,
together with accrued and unpaid  interest on, and other costs  relating to such
prepayment  under this Loan  Agreement  payable by the Borrower with respect to,
the principal amount prepaid, or (ii) pledge additional Eligible Medallion Loans
to the Lender,  such that after giving  effect to such  prepayment or pledge the
aggregate  outstanding  principal  amount of the  Advances  does not  exceed the
Borrowing  Base.

          (c) The Borrower shall prepay Advances as set forth in Section 4.01 of
the Servicing Agreement.

          (d)  Subject to Section  2.16  hereto,  if at any time,  the  Weighted
Average  Loan-To-Value  Ratio (as  defined  below) of Eligible  Medallion  Loans
exceeds 90%, and such Weighted  Average  Loan-To-Value  Ratio  multiplied by the
then-applicable   Advance  Rate  for  Class  B  Medallion  Loan  (the  "Combined
Loan-To-Value  Ratio") exceeds 80% (a "Rapid Amortization  Event"), the Servicer
or the Borrower shall so notify the Lender  immediately  following the discovery
of such  Rapid  Amortization  Event.  From and after the  occurrence  of a Rapid
Amortization  Event, the Lender may, by notice to the Borrower and the Servicer,
direct  that all  Collections  be applied to the  payment of accrued  but unpaid
interest on the Advances and the  repayment of principal of the Advances  until,
after giving effect to such  repayments  and any change in the Weighted  Average
Loan-to-Value  Ratio (including as a result of the pledge of additional Eligible
Medallion  Loans to the  Lender),  the  Combined  Loan-to-Value  Ratio is 72% or
lower.  The  "Weighted  Average  Loan-To-Value  Ratio"  shall be computed as the
decimal  equivalent of a fraction by multiplying  the Net Principal  Balance and
accrued  interest  of each  Medallion  Loan by the  Loan-To-Value  Ratio of such
Medallion  Loan,  and dividing the sum of such numbers by the total  outstanding
principal  and accrued  interest on all Medallion  Loans.

          Section 2.08  Optional  Prepayments;  Release of Medallion  Loans upon
Repayment.

          (a) Subject to Section 2.16 hereto,  the Borrower may prepay, in whole
or in part, Advances at any time without premium or penalty. Any amounts prepaid
shall be applied to repay the outstanding principal amount of any Advances until
paid in full and  shall be  accompanied  by  repayment  of  accrued  and  unpaid
interest on the amount.  Amounts repaid may be reborrowed in accordance with the
terms of this Loan  Agreement.  If the Borrower intends to

                                      -24-


<PAGE>


prepay an Advance in whole or in part from any source,  the Borrower  shall give
one (1) Business Day's prior written  notice  thereof to the Lender,  specifying
the date (such  date,  a  "Partial  Payment  Date")  and  amount of  prepayment,
together with any amounts payable  pursuant to Section 2.16  hereunder.  If such
notice is given, the amount specified in such notice shall be due and payable on
the  date  specified  therein.  Partial  prepayments  shall  be in an  aggregate
principal amount of at least $500,000 or a whole multiple in excess thereof.

          (b) With respect to any  Advance,  the Borrower may obtain the release
of the Lender's  security  interest in one or more Medallion Loans securing such
Advance, pursuant to Section 4.10, by (i) transferring to the account referenced
in Section  3.01(a) the Release Price  therefor on the date of such repayment or
(ii)  pledging  to the  Lender  additional  Eligible  Medallion  Loans  having a
Collateral Value at least equal to the Collateral Value of the Medallion Loan(s)
to be  released;  provided,  however,  that a release  pursuant to this  Section
2.08(b) shall be available only if, after giving effect  thereto  (including the
application of the proceeds thereof or the grant of the security interest in the
additional  Eligible Medallion Loans),  there shall not exist a Default or Rapid
Amortization Event.

          Section  2.09  Requirements of Law.

          (a) If the  introduction  or adoption of or any change (other than any
change by way of the imposition of or increase in reserve requirements  included
in the Eurodollar Rate Reserve Percentage) in any Requirement of Law (other than
with respect to any amendment made to the Lender's  certificate of incorporation
and by-laws or other organizational or governing documents) or any change in the
interpretation  or  application  thereof or  compliance  by the Lender  with any
request or  directive  (whether or not having the force of law) from any central
bank or other  Governmental  Authority made  subsequent to the date hereof:

          (i) shall  subject the Lender to any tax of any kind  whatsoever  with
     respect  to  this  Loan  Agreement,  the  Note  or any  Advance  made by it
     (excluding  net  income  taxes or  franchise  taxes) or change the basis of
     taxation of payments to the Lender in respect  thereof;

          (ii) shall  impose,  modify or hold  applicable  any reserve,  special
     deposit,  compulsory advance or similar  requirement against receivables or
     other assets held by,  deposits or other  liabilities in or for the account
     of, advances or other extensions of credit by, or any other  acquisition of
     funds by, any office of the Lender which is not  otherwise  included in the
     determination  of the Eurodollar Rate  hereunder;  or

          (iii) shall impose on the Lender any other condition;

and the result of any of the foregoing is to increase the cost to the Lender, by
an amount which the Lender deems to be material, of making, participating in,
continuing or maintaining any Advance or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall
promptly pay the Lender such additional amount or amounts as will compensate the
Lender for such increased cost or reduced amount receivable.

          (b) If the Lender  shall have  determined  that the adoption of or any
change  in  any  Requirement  of  Law  regarding  capital  adequacy  or  in  the
interpretation or application thereof or

                                      -25-


<PAGE>


compliance  by the Lender or any  corporation  controlling  the Lender  with any
request or directive regarding capital adequacy (whether or not having the force
of law) from any Governmental Authority made subsequent to the date hereof shall
have  the  effect  of  reducing  the  rate of  return  on the  Lender's  or such
corporation's  capital as a consequence of its obligations  hereunder to a level
below that which the Lender or such corporation  (taking into  consideration the
Lender's or such corporation's  policies with respect to capital adequacy) by an
amount deemed by the Lender to be material,  then from time to time,  subject to
clause (c) below,  the Borrower shall promptly pay to the Lender such additional
amount or amounts as will compensate the Lender for such  reduction.

          (c) If the Lender  becomes  entitled to claim any  additional  amounts
pursuant to this  Section  2.09,  it shall  notify the  Borrower of the event by
reason of which it has become so entitled.  A certificate  as to any  additional
amounts  payable  pursuant to this Section  2.09  submitted by the Lender to the
Borrower shall be conclusive in the absence of manifest  error. It is understood
and agreed that any  additional  amounts  that the Lender is entitled to receive
pursuant to this Section 2.09 shall only  include  amounts  incurred on or after
the ninetieth day  immediately  preceding the day on which the Lender shall have
notified  the  Borrower  pursuant  to this  clause (c) of the event by reason of
which  it  became  entitled  to  such  additional  amount.

          (d) As promptly as  practicable  after the Lender becomes aware of the
occurrence of an event described in Section 2.09(a) or (b), the Lender shall use
reasonable  efforts  to  make,  fund or  maintain  its  rights  and  obligations
hereunder  through  another  office of the  Lender,  if as a result  thereof the
grounds for payments under Section  2.09(a) or (b) would thereby cease to exist;
provided, that the Lender shall not be obligated to select an alternative office
if the Lender determines that (i) as a result of such selection the Lender would
be in violation of any applicable  law,  regulation,  treaty,  or guideline,  or
would  incur  additional  costs or  expenses,  or (ii) such  selection  would be
inadvisable  for regulatory  reasons or  inconsistent  with the interests of the
Lender.

          Section  2.10 Purpose of  Advances.  Subject to the second  proviso in
Section 2.01(a),  Advances may be used by the Borrower for any lawful purpose.

          Section 2.11 Taxes.

          (a) All payments  made by the Borrower  under this Loan  Agreement and
the Note shall be made free and clear of, and without  deduction or  withholding
for or on  account  of,  any  present or future  income,  stamp or other  taxes,
levies,  imposts,  duties,  charges,  fees,  deductions or withholdings,  now or
hereafter imposed, levied,  collected,  withheld or assessed by any Governmental
Authority (collectively, "Taxes"), unless required by law. If the Borrower shall
be required  under any  applicable  Requirement of Law to deduct or withhold any
Taxes  from or in respect  of any sum  payable  under or in respect of this Loan
Agreement to the Lender,  (i) the Borrower  shall make all such  deductions  and
withholdings  in respect of Taxes,  (ii) the Borrower  shall pay the full amount
deducted or withheld in respect of Taxes to the relevant  taxation  authority or
other  Governmental  Authority in accordance with the applicable  Requirement of
Law,  and (iii) the sum payable by the  Borrower  shall be  increased  as may be
necessary  so that  after the  Borrower  has made all  required  deductions  and
withholdings  such  Lender  receives  an amount  equal to the sum it would  have
received  had no  such  deductions  or  withholdings  been

                                      -26-


<PAGE>


made  in  respect  of  Non-Excluded   Taxes.  For  purposes  of  this  Agreement
"Non-Excluded  Taxes" are Taxes other than,  in the case of each  Lender,  Taxes
that are measured by or imposed on its overall net income (and  franchise  taxes
imposed in lieu thereof) by the state or foreign  jurisdiction under the laws of
which such Lender is  organized  or of its  Applicable  Lending  Office,  or any
political subdivision thereof, unless such Taxes are imposed as a result of such
Lender or such Agent having executed,  delivered or performed its obligations or
received  payments under,  or enforced,  this Agreement or any of the other Loan
Documents (in which case such Taxes will be treated as Non-Excluded  Taxes).

          (b) The Borrower shall not be required to increase any amounts payable
under Section  2.11(a) to any Lender that is not organized under the laws of the
United  States of America or a state  thereof if the Lender fails to comply with
the requirements of clause (c) of this Section.  Whenever any Non-Excluded Taxes
are payable by the  Borrower,  as promptly as possible  thereafter  the Borrower
shall send to the Lender,  as the case may be, a  certified  copy of an original
official  receipt  received by the  Borrower  showing  payment  thereof.  If the
Borrower fails to pay any Non-Excluded  Taxes when due to the appropriate taxing
authority  or fails  to  remit to the  Lender  the  required  receipts  or other
required documentary  evidence,  the Borrower shall indemnify the Lender for any
incremental  taxes,  interest or penalties that may become payable by the Lender
as a result of any such  failure.  The  agreements in this Section shall survive
the  termination  of this Loan Agreement and the payment of the Advances and all
other amounts payable hereunder.

          (c) If the Lender (or transferee that acquires a interest hereunder in
accordance  with Section  10.14  hereof) that is not a United  States Person (as
such term is defined in Section  7701(a)(30)  of the Code (a "US  Person"))  for
United  States  federal  income tax  purposes (a "Non-US  Lender"),  such Non-US
Lender shall  deliver or caused to be delivered to the Borrower and the Servicer
the following properly completed and duly executed  documents:

                    (1) two  complete and  executed  (x) U.S.  Internal  Revenue
               Forms W-8BEN (or any  successor  form thereto) with respect to an
               income tax treaty providing for a zero rate of withholding tax on
               interest,  or (y) U.S.  Internal Revenue Service Forms W-8ECI (or
               any successor form thereto); or

                    (2) two complete and executed U.S.  Internal Revenue Service
               Forms  W-8BEN (or any  successor  form  thereto),  including  all
               appropriate attachments, documenting the status of the Lender (or
               transferee)  as a Non-U.S.  Lender and (y) a  Certificate  in the
               form of Exhibit I hereto.

Such documents shall be delivered by each Lender (or transferee) on or before
the date it becomes a party to this Agreement (or, in the case of a transferee
or assignee that is a participation holder, on or before the date such
participation holder becomes a transferee hereunder) and on or before the date,
if any, such Lender (or transferee) changes its applicable lending office by
designating a different lending office (a "New Lending Office"). In addition,
each Lender (or transferee) shall deliver or cause to be delivered such Forms
and/or Certificates promptly upon or before the expiration, obsolescence or
invalidity of any document previously delivered by such Lender (or transferee).
Notwithstanding any other provision of this Section

                                      -27-


<PAGE>


2.11(c),  a Lender (or transferee) shall not be required to deliver any document
pursuant to this Section 2.11(c) that such Lender (or Transferee) is not legally
able to deliver.

          Section 2.12 Interest Reserve Deposit Account.  (a) The Borrower shall
establish,  on or prior to the  Effective  Date,  the Interest  Reserve  Deposit
Account  in the  name of the  Borrower  for the  benefit  of the  Lender  at the
Interest  Reserve  Deposit  Account  Bank and subject to a security  interest in
favor of the  Lender.  The  Borrower  shall  deposit  or  cause to be  deposited
$1,000,000  into  the  Interest  Reserve  Deposit  Account  on or  prior  to the
Effective Date.  Funds on deposit in the Interest  Reserve Deposit Account shall
be invested in interest  bearing demand cash accounts with the Interest  Reserve
Deposit  Bank.

          (b) If an Event of Default has occurred and is continuing,  the Lender
may, in its sole discretion, give notice to the Interest Reserve Deposit Account
Bank that the Lender is exercising its rights under the Interest Reserve Deposit
Account  Control  Agreement,  and the Lender may  direct  the  Interest  Reserve
Deposit Bank that any and all amounts in the Interest  Reserve  Deposit  Account
shall be used to repay the  principal,  interest and other amounts due hereunder
(such  repayment  to be applied  in the order set forth in  Section  4.01 of the
Servicing Agreement).

          (c) Upon  termination  of this Loan Agreement and repayment in full to
the Lender of all Secured Obligations,  the Lender shall cause to be paid to the
Borrower all amounts held in the Interest Reserve Deposit Account.

          Section 2.13 Collection Account.

          (a) The Borrower shall  establish,  on or prior to the Effective Date,
the Collection Account in the name of the Borrower for the benefit of the Lender
at the  Collection  Account Bank and subject to a security  interest in favor of
the Lender.  Pursuant to, and in accordance with the Collection  Account Control
Agreement,  funds on deposit in the Collection  Account shall be invested by the
Collection  Account  Bank in  interest  bearing  demand cash  accounts  with the
Collateral  Account Bank, in the name of the Lender.

          (b) In accordance with the Collection Account Control  Agreement,  the
Collection  Account  Bank  shall not have any  responsibility,  or in any way be
liable  to any  party  hereto,  for any  loss  in the  value  of any  investment
described in this Section 2.13 (including,  without limitation, losses resulting
from a fluctuation in interest rates,  market values or otherwise).

          (c) Each of the  Borrower  and the Lender  hereby  agree that upon the
occurrence and during the continuation of a Default,  the Lender may give notice
(i) to the  Collection  Account Bank that it is exercising  its rights under the
Collection Account Control Agreement,  and (ii) to the Obligors,  directing them
to make  payments on the  Medallion  Loans to a Person other than the  Servicer,
including an account,  other than the Collection Account,  over which the Lender
or its  designee  shall  have  exclusive  dominion  and  control.

          Section 2.14  Continuation.  Any Eurodollar  Loans may be Continued as
such upon the  expiration  of the then  current  Interest  Period  with  respect
thereto by the Borrower  giving  notice to the Lender,  in  accordance  with the
applicable  provisions of the term "Interest  Period" set forth in Section 1.01,
of the length of the next Interest  Period to be  applicable  to such

                                      -28-


<PAGE>


Advances, provided that no Eurodollar Loan may be Continued as a Eurodollar Loan
having an Interest  Period  longer than  one-month (i) when any Event of Default
has  occurred  and is  continuing  and the  Lender  has  determined  that such a
Continuation is not appropriate,  (ii) if, after giving effect thereto,  Section
2.16 would be  contravened,  or (iii) after the date that is three (3)  Business
Days  prior  to the end of the  then  current  Interest  Period,  and  provided,
further,  that  if  the  Borrower  fails  to  give  notice  to the  Lender  of a
Continuation, such Advances shall be automatically continued as Eurodollar Loans
having a  one-month  Interest  Period on the last day of such  Interest  Period.

          Section  2.15  Minimum  Amounts and Maximum  Number of  Tranches.  All
borrowings  and  continuations  of  Advances  hereunder  and all  selections  of
Interest Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto,  the aggregate  principal amount
of the Advances comprising each Eurodollar Tranche shall be equal to $500,000 or
a whole multiple of $500,000 in excess thereof.  In no event shall there be more
than  three  (3)  Eurodollar  Tranches  outstanding  at any time.

          Section 2.16  Indemnity.  The Borrower  agrees to indemnify the Lender
and to hold the Lender  harmless  from any loss or expense  which the Lender may
sustain or incur as a  consequence  of (a)  default by the  Borrower in making a
borrowing of or Continuation of Eurodollar  Loans after the Borrower has given a
notice  requesting the same in accordance with the provisions of this Agreement,
(b) default by the  Borrower in making any  prepayment  after the  Borrower  has
given a notice thereof in accordance with the provisions of this  Agreement,  or
(c) the making of a prepayment  of  Eurodollar  Loans with  Interest  Periods of
either  two,  three  or six  months  on a day  which  is not the  last day of an
Interest Period with respect thereto. Such indemnification may include an amount
equal to the  excess,  if any,  of (i) the amount of  interest  which would have
accrued on the amount so  prepaid,  or not so  borrowed  or  Continued,  for the
period from the date of such prepayment or of such failure to borrow or Continue
to the last day of such Interest  Period (or, in the case of a failure to borrow
or Continue,  the Interest  Period that would have commenced on the date of such
failure)  in each case at the  applicable  rate of  interest  for such  Advances
provided for herein (excluding, however, the Applicable Margin included therein,
if any) over (ii) the  amount  of  interest  (as  reasonably  determined  by the
Lender)  which would have  accrued to the Lender on such amount by placing  such
amount on deposit for a comparable  period with leading  banks in the  interbank
eurodollar market. This covenant shall survive the termination of this Agreement
and the payment of the Advances and all other amounts payable hereunder.

                                  ARTICLE III

                          PAYMENTS; COMPUTATIONS; FEES

          Section 3.01  Payments.

          (a) Except to the extent otherwise  provided  herein,  all payments of
principal, interest and other amounts to be made by the Borrower under this Loan
Agreement and the other Loan Documents, shall be made in Dollars, in immediately
available funds,  without deduction,  set-off or counterclaim,  to the Lender at
the following account maintained by the Lender:

                                      -29-


<PAGE>


                    Merrill  Lynch  Bank USA,
                    ABA# 124 084 669
                    A/C 62030
                    Ref:  Credit Globus Account 0200001124 ML MCI,
                    Re:   Taxi Medallion Loan Trust I,

not later than 3:00 p.m.,  New York City time, on the date on which such payment
shall  become due (and each such  payment  made after such time on such due date
shall be  deemed to have been made on the next  succeeding  Business  Day).  The
Borrower  acknowledges  that it has no rights of  withdrawal  from the foregoing
account.

          (b) Except to the extent otherwise  expressly  provided herein, if the
due date of any payment  under this Loan  Agreement or the other Loan  Documents
would  otherwise  fall on a day that is not a Business  Day,  such date shall be
extended to the next succeeding  Business Day, and interest shall be payable for
any  principal  so  extended  for the  period of such  extension.

          Section  3.02  Computations.  (a)  Interest on the  Advances  shall be
computed on the basis of a 360-day year for the actual days  elapsed  (including
the first day but  excluding  the last day)  occurring  in the  period for which
payable.  The Lender  shall as soon as  practicable  notify the Borrower of each
determination  of a  Eurodollar  Rate.  Any  change in the  interest  rate on an
Advance resulting from a change in the Eurocurrency  Reserve  Requirements shall
become  effective  as of the opening of business on the day on which such change
becomes  effective.  The Lender shall as soon as practicable notify the Borrower
of the effective  date and the amount of each such change in interest rate.

          (b) Each  determination  of an interest rate by the Lender pursuant to
any provision of this Agreement  shall be conclusive and binding on the Borrower
in the  absence of  manifest  error.  The Lender  shall,  at the  request of the
Borrower, deliver to the Borrower a statement showing the quotations used by the
Lender in determining  any interest rate pursuant to Section 3.02.

          Section 3.03  Facility  Fee. The Borrower  agrees to pay to the Lender
the following amounts (collectively, the "Facility Fee"):

          (a) the  Borrower  shall pay the Lender an amount equal to one hundred
basis  points  (1.00%)  of  the  Maximum   Committed  Credit  (i.e.,  a  fee  of
$2,500,000),  which shall be due and payable on or prior to the Effective  Date,

          (b) in the event that (i) an Acceptable Refinancing or other repayment
in full of all  indebtedness  of the  Parent  and  Medallion  Funding  under the
Medallion Credit Facility has occurred prior to the Reference Date (the "Trigger
Event"),  and  (ii)  the  Borrower  does  not  repay  in full  all  the  Secured
Obligations  under this Loan  Agreement and terminate  this Loan Agreement on or
prior to the  Reference  Date,  the  Borrower  shall  pay to the  Lender  on the
Reference  Date an amount  equal to fifty  basis  points  (0.50%) of the Maximum
Committed  Credit  (the  Borrower  having the option to  permanently  reduce the
Maximum  Committed  Credit  on  the  Reference  Date  immediately  prior  to the
calculation  and  payment  of such fee),

                                      -30-


<PAGE>


          (c) in the event that (i) the Trigger  Event  shall not have  occurred
prior to the  Reference  Date  and (ii) the  Lender  elects  not to  extend  the
Termination Date beyond the Reference Date, the Borrower shall pay the Lender on
the Reference Date the amount of $625,000,

          (d) In the event that (i) the Trigger  Event  shall not have  occurred
prior to the Reference Date and (ii) at the request of the Borrower,  the Lender
elects to extend the Termination Date for an additional year, the Borrower shall
pay the Lender on the Reference Date the amount of $1,250,000, and

          (e) in the event that on or prior to the  Reference  Date the Borrower
shall repay in full all the Secured  Obligations  under this Loan  Agreement and
terminate this Loan Agreement,  the Borrower shall pay the Lender on the date of
such repayment the amount of $1,250,000;

in each case,  such  payment to be made in  Dollars,  in  immediately  available
funds, without deduction, set-off or counterclaim,  to the Lender at the account
set forth in Section  3.01(a)  hereof.  The  Facility  Fee shall be deemed fully
earned as of the  Effective  Date and shall not be  subject to rebate or set-off
for any reason whatsoever,  including,  without limitation,  early occurrence of
the Termination Date.

          Section 3.04 Non-Usage Fee. The Borrower agrees to pay to the Lender a
Non-Usage fee (the "Non-Usage Fee") from and including the Effective Date to the
Termination  Date,  computed at the rate of 37.5 basis points (0.375%) per annum
on the average daily amount of the unutilized  portion of the Maximum  Committed
Credit during the period for which payment is made, in each case payable monthly
in  arrears  on  the  first  Business  Day  of the  following  month  and on the
Termination  Date,  commencing on September 1, 2002,  such payment to be made in
Dollars,  in  immediately   available  funds,  without  deduction,   set-off  or
counterclaim, to the Lender at the account set forth in Section 3.01(a) hereof.

                                   ARTICLE IV

                              COLLATERAL SECURITY

          Section 4.01 Collateral; Security Interest.

          (a) The Custodian shall hold the Medallion Loan Documents as exclusive
bailee and agent for the Lender  pursuant to terms of the  Custodial  Agreement.

          (b) All of the Borrower's  right,  title and interest in, to and under
each of the  following  items  of  property,  whether  now  owned  or  hereafter
acquired, now existing or hereafter created and wherever located, is hereinafter
referred to as the "Collateral":

          (i) all Medallion Loans identified on a Notice of Borrowing and Pledge
     delivered  by the  Borrower  to the Lender and the  Custodian  from time to
     time, including, without limitation all liquidation proceeds and recoveries
     with respect thereto, and the

                                      -31-


<PAGE>


     Medallion  Collateral  securing  same,  and any  security  interest in such
     Medallion Loans in favor of the applicable Seller;

          (ii) all Medallion Loan Documents;

          (iii) the Purchase Agreement (including, without limitation all rights
     of the Borrower to amounts due, and all rights of indemnity arising,  under
     or in connection with the Purchase  Agreement);

          (iv) all Approved Purchase Agreements  (including,  without limitation
     all rights of the  Borrower  to amounts  due,  and all rights of  indemnity
     arising, under or in connection with any Approved Purchase Agreement);

          (v) all Hedging Arrangements;

          (vi) all  insurance  policies  and any  proceeds  from such  insurance
     policies  relating  to the  Medallion  Loans,  the  Obligors or the related
     Medallion  Collateral;

          (vii) all Collections and all rights with respect thereto;

          (viii) the Collection  Account,  the Interest  Reserve Deposit Account
     and the  balances,  investments  and other items of value  attributable  or
     credited to the Collection Account or the Interest Reserve Deposit Account,
     and  all  rights  with  respect  thereto;

          (ix) all "chattel  paper" and  "documents"  (as defined in the Uniform
     Commercial  Code) evidencing or relating to the Medallion Loans;

          (x) the  Servicing  Agreement  and all  Servicing  Records;

          (xi) all Permitted Joint Participation  Interests and Permitted Junior
     Participation Interests, and all agreements with respect thereto;

          (xii) all  "equipment",  "general  intangibles"  and  "instruments" as
     defined in the Uniform  Commercial Code relating to or constituting any and
     all of the foregoing; and

          (xiii) any and all replacements,  substitutions,  distributions on, or
     proceeds of any and all of the foregoing.

          (c) The Borrower  hereby pledges to the Lender,  and grants a security
interest  in favor of the  Lender  in, all of the  Borrower's  right,  title and
interest  in, to and under  the  Collateral  including  without  limitation  the
repayment of  principal  of and  interest on all Advances and all other  amounts
owing to the Lender hereunder, under the Note and under the other Loan Documents
and all other amounts owing by such Borrower to the Lender, whether now owned or
hereafter  acquired,  now existing or hereafter  created,  to secure the Secured
Obligations.  Each of the Borrower  and the  Servicer  agrees to mark its master
computer  databases  and  computer  files (by way of the  creation  of a special
"field" or  otherwise),  in a manner  acceptable to the Lender,  to evidence the
interests granted to the Lender hereunder.

                                      -32-


<PAGE>


          Section 4.02 Further Documentation. At any time and from time to time,
and at the sole expense of the  Borrower,  the Borrower  will  promptly and duly
execute and deliver,  or will promptly cause to be executed and delivered,  such
further instruments and documents and take such further actions as are necessary
(or as are  reasonably  requested by the Lender) for the purpose of obtaining or
preserving the full benefits of this Loan Agreement and of the rights and powers
herein granted,  including,  without limitation,  the filing of any financing or
continuation  statements  under  the  Uniform  Commercial  Code in effect in any
jurisdiction with respect to the Liens created hereby or the taking of any other
action  necessary to preserve the status of the Lender's Liens on the Collateral
as first  priority  perfected  liens.  The Borrower also hereby  authorizes  the
Lender  to file  any  such  financing  or  continuation  statement  without  the
signature  of  the  Borrower  to the  extent  permitted  by  applicable  law.  A
photographic or other reproduction of this Loan Agreement shall be sufficient as
a financing  statement for filing in any  jurisdiction.

          Section 4.03 Changes in Locations,  Name,  etc. The Borrower shall not
(i) change the location of its chief  executive  office/chief  place of business
from that  specified in Section 6.12 hereof,  (ii) change its name,  identity or
corporate  structure  (or the  equivalent)  or  change  the  location  where  it
maintains its records with respect to the Collateral or (iii)  reincorporate  or
reorganize under the laws of another jurisdiction,  in each case unless it shall
have given the Lender at least 30 days prior  written  notice  thereof and shall
have delivered to the Lender all Uniform  Commercial  Code financing  statements
and  amendments  thereto as the Lender  shall  reasonably  request and taken all
other  actions  deemed  reasonably  necessary  by the  Lender  to  continue  its
perfected  status  in the  Collateral  with the  same or  better  priority.  The
Borrower's  organizational  identification  number is 3542576 and the Borrower's
federal tax  identification  number is 51-6527213 . The Borrower  shall promptly
notify the Lender of any change in such organizational identification number. In
the event of a disaster at the location of the Borrower's chief executive office
or at the location of the Borrower's  records regarding the Medallion Loans, the
Borrower shall maintain its backup office and records at 11-49 44th Drive,  Long
Island City, New York 11101.

          Section 4.04 Lender's Appointment as Attorney-in-Fact.

          (a) The  Borrower  hereby  irrevocably  constitutes  and  appoints the
Lender and any officer or agent thereof, with full power of substitution, as its
true and lawful  attorney-in-fact  with full irrevocable  power and authority in
the place and stead of the  Borrower  and in the name of the  Borrower or in its
own name,  from time to time in the  Lender's  discretion,  for the  purpose  of
carrying out the terms of this Loan  Agreement,  to take any and all appropriate
action and to  execute  any and all  documents  and  instruments  related to the
Collateral  which may be necessary or  desirable to  accomplish  the purposes of
this Loan Agreement,  and, without limiting the generality of the foregoing, the
Borrower hereby gives the Lender the power and right, on behalf of the Borrower,
without  assent by the Borrower,  if an Event of Default shall have occurred and
be continuing, to do the following:

          (i) in the name of the Borrower or its own name, or otherwise, to take
     possession  of  and  endorse  and  collect  any  checks,   drafts,   notes,
     acceptances  or other  instruments  for the payment of moneys due under any
     insurance  policy or with respect to any other  Collateral  and to file any
     claim or to take any  other  action  or  proceeding  in any court of law or
     equity or otherwise deemed appropriate by the Lender for the purpose of

                                      -33-


<PAGE>


collecting any and all such moneys due under any such  insurance  policy or with
respect to any other Collateral whenever payable;

          (ii) to pay or  discharge  taxes  and  Liens  levied  or  placed on or
     threatened against the Collateral; and

          (iii)  (A) to  direct  any  party  liable  for any  payment  under any
     Collateral  to make  payment  of any and all  moneys  due or to become  due
     thereunder directly to the Lender or as the Lender shall direct; (B) to ask
     or demand for,  collect,  receive  payment of and receipt  for, any and all
     moneys,  claims  and  other  amounts  due or to  become  due at any time in
     respect of or arising  out of any  Collateral;  (C) to sign and endorse any
     invoices,  assignments,  verifications,  notices  and  other  documents  in
     connection  with any of the  Collateral;  (D) to commence and prosecute any
     suits, actions or proceedings at law or in equity in any court of competent
     jurisdiction  to collect the  Collateral  or any thereof and to enforce any
     other right in respect of any Collateral; (E) to defend any suit, action or
     proceeding brought against the Borrower with respect to any Collateral; (F)
     to settle, compromise or adjust any suit, action or proceeding described in
     clause (E) above and, in connection  therewith,  to give such discharges or
     releases  as the  Lender  may deem  appropriate;  (G) to make any filing or
     other submission to any Taxi Commission on behalf of the Borrower;  and (H)
     generally, to sell, transfer, pledge and make any agreement with respect to
     or otherwise  deal with any of the  Collateral  as fully and  completely as
     though the Lender were the absolute owner thereof for all purposes,  and to
     do, at the Lender's  option and the  Borrower's  expense,  at any time, and
     from time to time, all acts and things which the Lender deems  necessary to
     protect,  preserve or realize upon the  Collateral  and the Lender's  Liens
     thereon and to effect the intent of this Loan  Agreement,  all as fully and
     effectively as the Borrower might do.

The Borrower  hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue  hereof.  This power of attorney is a power coupled with an
interest and shall be irrevocable.

          (b) The Borrower also authorizes the Lender, at any time and from time
to time, to execute,  in  connection  with any sale provided for in Section 4.07
hereof,  any  endorsements,  assignments  or other  instruments of conveyance or
transfer  with  respect  to the  Collateral  and to file any  initial  financing
statements  amendments  thereto and continuation  statements with or without the
signature of any Borrower as authorized by applicable  law, as applicable to all
or any part of the  Collateral  and to file any  initial  financing  statements,
amendments thereto and continuation  statements with or without the signature of
any Borrower as authorized  by applicable  law, as applicable to all or any part
of the Collateral.

          (c) The powers  conferred  on the  Lender  are  solely to protect  the
Lender's  interests  in the  Collateral  and shall not  impose any duty upon the
Lender to exercise any such powers.  The Lender  shall be  accountable  only for
amounts  that it actually  receives as a result of the  exercise of such powers,
and, without limiting Section 4.08,  neither the Lender nor any of its officers,
directors,  or  employees  shall be  responsible  to the Borrower for any act or
failure to act under this Section 4.04,  except for its own gross  negligence or
willful misconduct.

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<PAGE>


          Section 4.05 Performance by Lender of Borrower's  Obligations.  If the
Borrower fails to perform or comply with any of its agreements  contained in the
Loan Documents and the Lender may itself perform or comply,  or otherwise  cause
performance or compliance,  with such  agreement,  the  out-of-pocket  costs and
expenses  of  the  Lender  incurred  in  connection  with  such  performance  or
compliance,  together  with  interest  thereon at a rate per annum  equal to the
Default Rate, shall be payable by the Borrower to the Lender on demand and shall
constitute Secured  Obligations.

          Section  4.06  Proceeds.  If an Event of  Default  shall  occur and be
continuing,  (a) all proceeds of Collateral  received by the Borrower consisting
of cash,  checks and other cash  equivalents  shall be held by the  Borrower  in
trust for the Lender,  segregated  from other funds of the  Borrower,  and shall
forthwith upon receipt by the Borrower be turned over to the Lender in the exact
form received by the Borrower (duly  endorsed by the Borrower to the Lender,  if
required) and (b) any and all such proceeds received by the Lender (whether from
the Borrower or otherwise) may, in the sole discretion of the Lender, be held by
the Lender as collateral security for, and/or then or at any time thereafter may
be applied by the Lender against,  the Secured  Obligations  (whether matured or
unmatured),  such application to be in such order as the Lender shall elect. Any
balance of such proceeds remaining after the Secured Obligations shall have been
paid in full and this Loan Agreement  shall have been  terminated  shall be paid
over to the Borrower or to  whomsoever  may be lawfully  entitled to receive the
same. For purposes  hereof,  proceeds shall include,  but not be limited to, all
principal and interest payments, all prepayments and payoffs,  insurance claims,
recoveries against Obligors, sale and foreclosure proceeds, and any other income
and all other  amounts  received  with respect to the  Collateral.

          Section  4.07  Remedies.  If an Event of  Default  shall  occur and be
continuing,  the  Lender  may  exercise,  in  addition  to all other  rights and
remedies  granted to it in this Loan  Agreement  and in any other  instrument or
agreement  securing,  evidencing  or relating to the  Secured  Obligations,  all
rights and  remedies  of a secured  party  under the  Uniform  Commercial  Code.
Without  limiting the generality of the foregoing,  the Lender without demand of
performance or other demand,  presentment,  protest,  advertisement or notice of
any kind  (except any notice  required by law  referred to below) to or upon the
Borrower  or any  other  Person  (each and all of which  demands,  presentments,
protests,   advertisements   and  notices  are  hereby  waived),   may  in  such
circumstances  forthwith  collect,  receive,  appropriate  and realize  upon the
Collateral,  or any part  thereof,  and/or may  forthwith  sell (on a  servicing
released basis, at the Lender's option),  lease,  assign, give option or options
to purchase,  or  otherwise  dispose of and deliver the  Collateral  or any part
thereof (or contract to do any of the  foregoing),  in one or more parcels or as
an entirety at public or private sale or sales, at any exchange,  broker's board
or office of the Lender or elsewhere  upon such terms and  conditions  as it may
deem  advisable and at such prices as it may deem best, for cash or on credit or
for future delivery without assumption of any credit risk. The Lender shall have
the right upon any such public sale or sales,  and, to the extent  permitted  by
law,  upon any such private sale or sales,  to purchase the whole or any part of
the  Collateral  so sold,  free of any  right or  equity  of  redemption  in the
Borrower,  which right or equity is hereby waived or released. In the event that
the  Lender  elects to take any  action  described  in this  Section  4.07,  the
Borrower further agrees, at the Lender's request, to assemble the Collateral and
make it  available  to the Lender at places  which the Lender  shall  reasonably
select, whether at the Borrower's premises or elsewhere.  The Lender shall apply
the net  proceeds  of any such  collection,  recovery,  receipt,  appropriation,
realization or sale, after

                                      -35-


<PAGE>


deducting all  reasonable  costs and expenses of every kind incurred  therein or
incidental  to the care or  safekeeping  of any of the  Collateral or in any way
relating  to the  Collateral  or the rights of the Lender  hereunder,  including
without limitation reasonable attorneys' fees and disbursements,  to the payment
in whole or in part of the Secured Obligations,  in such order as the Lender may
elect,  and only after such  application  and after the payment by the Lender of
any other  amount  required or  permitted  by any  provision  of law,  including
without limitation Sections 9-610 and 9-615 of the Uniform Commercial Code, need
the Lender  account  for the  surplus,  if any, to the  Borrower.  To the extent
permitted by applicable law, the Borrower waives all claims, damages and demands
it may acquire  against the Lender  arising out of the exercise by the Lender of
any of its rights  hereunder,  other  than those  claims,  damages  and  demands
arising from the gross  negligence or willful  misconduct of the Lender.  If any
notice of a proposed sale or other  disposition of Collateral  shall be required
by law, such notice shall be deemed  reasonable  and proper if given at least 10
days before such sale or other disposition. The Borrower shall remain liable for
any  deficiency  (plus  accrued  interest  thereon as  contemplated  pursuant to
Section 2.05(b) hereof) if the proceeds of any sale or other  disposition of the
Collateral are insufficient to pay the Secured  Obligations,  including the fees
and  disbursements  of any  attorneys  employed  by the Lender to  collect  such
deficiency.

          Section  4.08   Limitation  on  Duties   Regarding   Presentation   of
Collateral.  The  Lender's  duty with respect to the  custody,  safekeeping  and
physical  preservation of the Collateral in its possession,  under Section 9-207
of the Uniform  Commercial  Code or  otherwise,  shall be to deal with it in the
same  manner as the Lender  deals with  similar  property  for its own  account.
Neither  the Lender nor any of its  directors,  officers or  employees  shall be
liable for  failure to  demand,  collect or realize  upon all or any part of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or  otherwise  dispose of any  Collateral  upon the  request of the  Borrower or
otherwise.

          Section 4.09 Powers Coupled with an Interest.  All  authorizations and
agencies  herein  contained with respect to the Collateral are  irrevocable  and
powers coupled with an interest.

          Section 4.10 Release of Security  Interest.  Upon (x)  termination  of
this Loan Agreement,  repayment to the Lender of all Secured Obligations and the
performance of all other obligations under the Loan Documents,  the Lender shall
release its security  interest in any remaining  Collateral,  (y) repayment of a
Medallion Loan in full by the related Obligor or sale of a Medallion Loan by the
Borrower  to the extent  permitted  by this Loan  Agreement,  the  Lender  shall
release its security interest in any Collateral securing such Medallion Loan, in
the case of this  clause (y),  upon  receipt by the Lender of the amount of such
repayment or sales proceeds  (unless  otherwise agreed by the Lender in its sole
discretion),  or (z)  deposit  of the  Release  Price or pledge to the Lender of
additional Eligible Medallion Loans as contemplated by Section 2.08(b), provided
that no Event of  Default  or  Rapid  Amortization  Event  has  occurred  and is
continuing,  the Lender shall  release its security  interest in any  Collateral
securing such Medallion Loan; provided that if any payment, or any part thereof,
of any of the Secured  Obligations is rescinded or must otherwise be restored or
returned by the Lender upon the insolvency, bankruptcy, dissolution, liquidation
or reorganization of the Borrower,  or upon or as a result of the appointment of
a receiver,  intervenor or conservator  of, or a trustee or similar officer for,
the Borrower or any substantial  part of its Property,  or otherwise,  this Loan

                                      -36-


<PAGE>


Agreement,  all rights  hereunder and the Liens created hereby (other than Liens
referred  to  in  clause  (y)  above)  shall  continue  to be  effective,  or be
reinstated, as though such payments had not been made.

                                   ARTICLE V

                              CONDITIONS PRECEDENT

          Section 5.01 Initial Advance.  The agreement of the Lender to make the
initial  Advance  requested  to be  made  by it  hereunder  is  subject  to  the
satisfaction,  immediately  prior to or  concurrently  with the  making  of such
Advance, of the following conditions precedent:

          (a)  Loan  Agreement.   The  Lender  shall  have  received  this  Loan
Agreement,  executed and delivered by a duly authorized  officer of the Borrower
and the Lender.

          (b) Note.  The Lender shall have received the Note,  conforming to the
requirements hereof and executed by a duly authorized officer of the Borrower.

          (c) Custodial Agreement.  The Lender shall have received the Custodial
Agreement,  conforming  to  the requirements  hereof  and  executed  by a  duly
authorized officer of the Borrower, the Lender and the Custodian.

          (d) Servicing Agreement.  The Lender shall have received the Servicing
Agreement,  conforming  to  the  requirements  hereof  and  executed  by a  duly
authorized officer of the Borrower, the Lender and the Servicer.

          (e) Purchase  Agreement.  The Lender shall have  received the Purchase
Agreement,  conforming  to  the  requirements  hereof  and  executed  by a  duly
authorized officer of the Borrower and Medallion Funding, as Seller.

          (f) Organizational Documents. The Lender shall have received copies of
the organizational  documents of the Related Parties, each in form and substance
satisfactory to the Lender and certified by a duly authorized officer of each of
the parties thereto.

          (g) Filings,  Registrations,  Recordings.  All  documents  (including,
without limitation,  financing  statements) required to be filed,  registered or
recorded in order to create, in favor of the Lender, a perfected, first-priority
security  interest  in the  Collateral,  subject  to no Liens  other  than those
created  hereunder and those in favor of the  applicable  Seller or the Borrower
and pledged hereunder, shall have been properly prepared and executed for filing
(including the applicable  county(ies) if the Lender determines such filings are
necessary  in its  reasonable  discretion),  registration  or  recording in each
office  in  each   jurisdiction  in  which  such  filings,   registrations   and
recordations are required to perfect such first-priority  security interest; and
lien search results in such jurisdictions of the Borrower,  the Servicer and the
Parent are in form and substance satisfactory to the Lender.

          (h) Closing Certificates. The Lender shall have received a certificate
of the Secretary or Assistant  Secretary of each Related Party,  dated as of the
date hereof, and certifying

                                      -37-


<PAGE>


(A) that  attached  thereto  is a true,  complete  and  correct  copy of (i) the
organizational  documents  of each  Related  Party,  and (ii)  resolutions  duly
adopted  by  such  Related  Party  (or  its  general  partner)  authorizing  the
execution,  delivery and  performance of this Loan  Agreement,  the Note and the
other Loan  Documents to which it is a party,  and the  borrowings  contemplated
hereunder, and that such resolutions have not been amended, modified, revoked or
rescinded,  and (B) as to the incumbency and specimen  signature of each officer
executing any Loan Documents on behalf of such Related Party and, in the case of
the Borrower, authorized to execute any Notice of Borrowing and Pledge, and such
certificate and the resolutions  attached thereto shall be in form and substance
satisfactory  to the Lender.

          (i) Good Standing Certificates.  The Lender shall have received copies
of certificates evidencing the good standing of the Borrower,  Medallion Funding
and the Parent, dated as of a recent date, from the Secretary of State (or other
appropriate  authority) of the jurisdiction  under which such party is organized
and of each  other  jurisdiction  where the  ownership,  lease or  operation  of
property,  or the  conduct  of  business,  requires  such  party to qualify as a
foreign  corporation,  except  where the  failure  to  qualify  would not have a
Material Adverse Effect.

          (j) Legal  Opinions.  (i) The Lender shall have  received the executed
legal  opinions of Willkie  Farr &  Gallagher,  counsel to the Related  Parties,
dated the Effective Date and in form and substance  acceptable to the Lender and
covering such other matters  incident to the  transactions  contemplated  by the
Loan Documents as the Lender shall request.

          (ii) The Lender shall have  received,  from counsel  acceptable to the
     Lender and in form and substance  satisfactory to the Lender, an opinion of
     special  New York,  Illinois,  Massachusetts,  New Jersey and  Pennsylvania
     counsel of the  Related  Parties in form and  substance  acceptable  to the
     Lender and covering such matters incident to the transactions  contemplated
     by the Loan Documents as the Lender shall  request.

          (k) Fees and  Expenses.  The Borrower  shall have paid the  reasonable
fees and disbursements of (i) Cadwalader, Wickersham & Taft,
counsel to the Lender,  and (ii) RSM  McGladrey,  Inc.,  outside  due  diligence
consultant to the Lender.

          (l) Interest  Reserve Deposit  Account.  The Interest  Reserve Deposit
Account shall have been established,  conforming to the requirements hereof, all
amounts to be deposited in the Interest  Reserve Deposit Account shall have been
deposited by the Borrower pursuant to Section 2.12 hereto,  and the Lender shall
have received the Interest Reserve Deposit Account Control Agreement executed by
duly authorized  officers of the Borrower,  the Lender and the Interest  Reserve
Deposit Account Bank.

          (m) Collection Account Control Agreement. The Collection Account shall
have been established conforming to the requirements hereof and the Lender shall
have  received  the  Collection  Account  Control  Agreement  executed  by  duly
authorized officers of the Borrower, the Servicer, the Lender and the Collection
Account  Bank.

          (n) Due Diligence Review. The Lender shall have successfully completed
its  due  diligence  review  of the  Medallion  Loans  and the  Related  Parties
(including,  without limitation,  a

                                      -38-


<PAGE>


comprehensive  valuation and appraisal of the Medallion  Loans and an assessment
of the management of the Related  Parties) and be satisfied with the operations,
financial  condition of the Related Parties,  and with the Medallion Loan Files,
in each case in its sole discretion.

          (o)  Facility  Fee.  The Related  Parties  shall have paid in full the
Facility Fee to the Lender.

          (p) Evidence of  Insurance.  The Lender shall have  received  evidence
satisfactory to it that (i) the requirements of Section 7.19 hereof, relating to
insurance coverage of the Borrower, and (ii) the requirements of Section 6.18 of
the Servicing  Agreement,  relating to insurance coverage of the Servicer,  have
been satisfied.

          (q) Standard Form Medallion Loan Documentation.  The Lender shall have
received copies of the Standard Form Medallion Loan  Documentation,  which shall
be acceptable to the Lender.

          (r)  Borrowing  Base  Certificate.  The Lender  shall have  received a
Borrowing Base Certificate  showing the Borrowing Base as of the Effective Date,
with appropriate  insertions and dated the Effective Date,  satisfactory in form
and  substance  to the  Lender,  executed  by  the  President,  Vice  President,
Treasurer or Secretary of the Borrower.

          (s)  Commitment  Fee.  Medallion  Funding  shall have paid in full the
commitment fee payable to the Lender pursuant to the Commitment Letter.

          (t)  Amendment to Medallion  Funding  Facility  Agreements.  Medallion
Funding  shall have  executed an  amendment  to each of the  existing  Medallion
Funding  Facility  Agreements  providing for (i) an extension of the termination
date until no earlier than July 31, 2003, (ii) an amended amortization  schedule
providing for fixed or scheduled  payments no earlier than as set forth in Annex
1 to Exhibit B to the Amended and Restated Commitment Letter, dated as of August
5, 2002, between the Lender and Medallion Funding, as such letter may be amended
from time to time, (iii) removal of all financial covenants (but not the removal
of a borrowing base), and (iv) a waiver of all current defaults.

          (u) Amendment to Parent Loan Agreement. The Parent shall have executed
an  amendment  to the  existing  Parent  Loan  Agreement  providing  for  (i) an
extension of the  termination  date until no earlier than July 31, 2003, (ii) an
amended  amortization  schedule  providing  for fixed or  scheduled  payments no
earlier  than as set forth in Annex 1 to Exhibit B to the Amended  and  Restated
Commitment Letter,  dated as of August 5, 2002, between the Lender and Medallion
Funding,  as such letter may be amended from time to time,  (iii) removal of all
financial covenants (but not the removal of a borrowing base), and (iv) a waiver
of all current defaults.

          (v)  Identification  of a Backup  Servicer.  The  Borrower  shall have
designated a servicer acceptable to the Lender to act as the Backup Servicer and
the Backup  Servicer  shall have agreed in principle to act as backup  servicer,
subject to the execution and delivery of definitive documentation.

                                      -39-


<PAGE>


          (w) Additional Matters.  All corporate and other proceedings,  and all
documents,   instruments   and  other  legal  matters  in  connection  with  the
transactions  contemplated  by this Loan  Agreement and the other Loan Documents
shall be reasonably  satisfactory  in form and substance to the Lender,  and the
Lender shall have received such other documents and legal opinions in respect of
any aspect or consequence of the transactions  contemplated hereby or thereby as
it shall reasonably  request.

          (x) Other  Conditions.  The Related  Parties shall have  satisfied all
other  conditions that the Lender may reasonably  request.

          Section  5.02  Initial  and  Subsequent  Advances.  The making of each
Advance to the Borrower  (including the initial  Advance) on any Business Day is
subject to the satisfaction of the following further conditions precedent,  both
immediately  prior to the making of such  Advance and also after  giving  effect
thereto and to the intended use thereof:

          (a) No Default. No Default or Event of Default shall have occurred and
be continuing.

          (b) Representations  and Warranties.  Each representation and warranty
made by a Related Party in the Loan Documents,  shall be true and correct in all
material  respects on and as of the date of the making of such  Advance with the
same  force  and  effect  as if made on and as of such  date  (or,  if any  such
representation  or  warranty  is  expressly  stated  to have  been  made as of a
specific  date, as of such specific  date).  Each Related Party shall also be in
compliance  in  all  material  respects  with  all  governmental   licenses  and
authorizations, statutory and regulatory requirements.

          (c) Outstanding  Advances.  The aggregate outstanding principal amount
of the  Advances  shall not exceed the amount  permitted  to be  outstanding  as
described in Section 2.01(a) hereof.

          (d) Notice of Borrowing  and Pledge.  The Lender shall have received a
completed  Notice of  Borrowing  and  Pledge  and  Medallion  Loan  Schedule  in
accordance with Section 2.03 hereof.

          (e) Medallion Loan Files. The Custodian shall have received a complete
Medallion Loan File with respect to each pledged  Medallion Loan to be funded on
the Funding Date and which was required to have been  received by the  Custodian
(i) in the case of the initial  Advance,  at least three (3) Business Days prior
to the funding of such Advance,  and (ii) at least one (1) Business Day prior to
the funding of such Advance.

          (f) Additional  Documents.  The Lender shall have received with regard
to all Medallion Loans,  such  information,  documents,  agreement,  opinions or
instruments (including,  without limitation,  good standing certificates of each
Obligor under each  Medallion Loan pledged  hereunder) as the Lender  reasonably
requires  with  respect  to  Medallion  Loans to be  pledged  hereunder  on such
Business  Day,  each in form and substance  satisfactory  to the Lender.

                                      -40-


<PAGE>


          (g) No Material  Adverse Effect.  There shall not have occurred one or
more  events  that,  in  the  judgement  of  Lender  exercised  in  good  faith,
constitutes,  or could reasonably be expected to constitute,  a Material Adverse
Effect.

          (h) Due Diligence  Review.  Without  limitation  the Lender's right to
perform one or more Due Diligence Reviews pursuant to Section 10.16 hereof,  the
Lender shall have  completed (i) any due diligence  review of the Medallion Loan
Documents   relating  to  such  Advance  and  such  other  documents,   records,
agreements,  instruments, collateral or information relating to such Advances as
the Lender in its  reasonable  discretion  deems  appropriate to review and such
review shall be  satisfactory  to the Lender in its reasonable  discretion,  and
(ii)  in the  case  of an  Approved  Seller,  any due  diligence  review  of the
applicable  Approved  Purchase  Agreement and any due  diligence  review of such
Approved Seller  (including,  without  limitation,  a review of its Underwriting
Guidelines,  credit and collection policy and creditworthiness) as the Lender in
its sole and  absolute  discretion  deems  appropriate  and such review shall be
satisfactory to the Lender in its sole and absolute discretion, and the Borrower
shall have  reimbursed  the Lender for all  reasonable  out-of-pocket  costs and
expenses  incurred  by the Lender in  connection  with such  review  pursuant to
Section 10.16(b) hereof.

          (i) Junior  Participation  Medallion  Loan. In the case of each Junior
Participation  Medallion  Loan, the Lender shall have determined in its sole and
absolute  discretion that the  subordinated  participation is a Permitted Junior
Participation Interest and the Lender shall have so notified the Borrower.

          (j) Joint  Participation  Medallion  Loan.  In the case of each  Joint
Participation  Medallion  Loan, the Lender shall have determined in its sole and
absolute discretion that the pari passu joint participation is a Permitted Joint
Participation Interest and the Lender shall have so notified the Borrower.

          (k) Evidence of Notification  to the Taxi  Commission of Chicago.  The
Lender shall have received evidence that in connection with the financing of any
Chicago  Medallion  Loans  to  the  Borrower,  an  appropriate  UCC-3  Financing
Statements  was  filed  with  the  Illinois  Secretary  of State  assigning  the
Borrower's  security interest in such Chicago Medallion Loans to the Lender, and
within five days after receipt of notice that such UCC-3 Financing Statement was
properly filed, the Taxi Commission for Chicago,  Illinois shall have received a
copy of such  completed  filing and all relevant  documents  pertaining  to such
assignment of security interest to the Lender.

          (l) Participation Agreements. The Lender shall have received copies of
any and all participation agreements executed by Medallion Funding in connection
with any Medallion  Loan to be pledged  under this Loan  Agreement in connection
with such Advance,  together with a  certificate  of a Responsible  Officer that
such participation agreement does not vary in any material respect from the form
of participation  agreement with the applicable  Permitted Joint  Participant or
Permitted  Junior  Participant  previously  provided  to, and  approved  by, the
Lender.

          (m) Bankruptcy Remoteness. In the case of an initial Advance where the
Collateral  securing  such initial  Advance is held by either a Permitted  Joint
Participant  or a  Permitted  Junior  Participant  that is an  Affiliate  of the
Borrower, the bankruptcy remoteness of

                                      -41-


<PAGE>


such  Permitted  Joint  Participant  or Permitted  Junior  Participant  shall be
established  to  the  satisfaction  of  the  Lender  in its  sole  and  absolute
discretion prior to such initial Advance.

          (n) Other Actions. Any other actions required or advisable to be taken
by the Borrower in  connection  with the purchase and pledging of any  Medallion
Loans to be included in the Borrowing Base (including,  without limitation,  the
giving of notice of the purchase of such  Medallion  Loans and the giving of any
notice  required to be given with respect to the pledge of such Medallion  Loans
to the Lender hereunder) shall have been taken.

                                   ARTICLE VI

                 REPRESENTATIONS AND WARRANTIES OF THE BORROWER

          As of the Effective Date and each Funding  Documentation Receipt Date,
the Borrower  represents and warrants to the Lender that:

          Section 6.01 Eligible  Medallion  Loans. (a) As of the date on which a
Medallion  Loan is  initially  pledged  hereunder,  such  Medallion  Loan was an
Eligible  Medallion Loan and (b) to the best of the Borrower's  knowledge,  each
Medallion  Loan included as an Eligible  Medallion  Loan in any  Medallion  Loan
Schedule,  or any  calculation of the Borrowing Base made by the Borrower is (or
was)  as of the  date of such  schedule,  tape,  report,  other  information  or
calculation, an Eligible Medallion Loan.

          Section  6.02  Existence;  Qualification.  The  Borrower is a Delaware
business trust duly organized,  validly  existing and in good standing under the
laws of the jurisdiction of its formation and has the power and all licenses and
permits  necessary to own its assets and to transact the business in which it is
presently engaged,  and is duly qualified and in good standing under the laws of
each jurisdiction where the conduct of its business requires such qualification.

          Section 6.03 Authority and Authorization;  Enforceability;  Approvals;
Absence of Adverse Notice. The Borrower has the power, authority and legal right
to make,  deliver and perform this Loan Agreement and each of the Loan Documents
to which  it is a party  and all of the  transactions  contemplated  hereby  and
thereby, and has taken all necessary action to authorize the execution, delivery
and  performance  of this Loan Agreement and each of the Loan Documents to which
it is a party,  and to grant to the Lender a first priority  perfected  security
interest in the Collateral on the terms and  conditions of this Loan  Agreement.
This Loan  Agreement  and each of the Loan  Documents to which the Borrower is a
party  constitutes  the legal,  valid and binding  obligation  of the  Borrower,
enforceable  against the  Borrower in  accordance  with their  respective  terms
except as the  enforceability  hereof and thereof may be limited by  bankruptcy,
insolvency,  moratorium,  reorganization  and  other  similar  laws  of  general
application  affecting  creditors' rights generally and by general principles of
equity (whether such  enforceability  is considered in a proceeding in equity or
at law).  No consent of any other  party and no  consent,  license,  approval or
authorization   of,  or  registration  or  declaration  with,  any  governmental
authority, bureau or agency (including, without limitation, any Taxi Commission)
is required in connection  with the  execution,  delivery or  performance by the
Borrower of this Loan Agreement or any Loan Document to which it is a party,  or
the validity or  enforceability of this Loan Agreement or any such Loan Document
or the  Medallion  Loans,  other  than  such as

                                      -42-


<PAGE>


have been met or obtained.  The  Borrower has not received any notice,  nor does
the Borrower have any knowledge or reason to believe,  that any Taxi  Commission
or other Governmental Authority intends to seek the cancellation, termination or
modification  of any of its licenses or permits,  or that valid grounds for such
cancellation,  termination or modification  exist.

          Section 6.04 No Breach.  The  execution,  delivery and  performance of
this Loan  Agreement  and all other  agreements  and  instruments  executed  and
delivered  or to be  executed  and  delivered  pursuant  hereto  or  thereto  in
connection  with the pledge of the  Collateral  will not (i) create any  Adverse
Claim on the Collateral  other than as  contemplated  herein or (ii) violate any
provision of any existing law or regulation or any order or decree of any court,
regulatory  body or  administrative  agency or the  certificate  of formation or
by-laws of the Borrower or any mortgage,  indenture, contract or other agreement
to which the  Borrower is a party or by which the  Borrower  or any  property or
assets of the Borrower may be bound.

          Section 6.05 Litigation. No litigation or administrative proceeding of
or before any court,  tribunal or governmental  body is presently pending or, to
the knowledge of the Borrower, threatened against the Borrower or any properties
of the  Borrower or with  respect to this Loan  Agreement  which,  if  adversely
determined,  could have a material  effect on the business,  assets or financial
condition of the Borrower or which would draw into question the validity of this
Loan  Agreement,  any Loan Document to which the Borrower is a party,  or any of
the other applicable  documents forming part of the Collateral.

          Section 6.06 No Adverse Selection. In selecting the Medallion Loans to
be  pledged  pursuant  to this Loan  Agreement,  no  selection  procedures  were
employed  which are  intended to be, of had the effect of being,  adverse to the
interests of the Lender.

          Section 6.07 Bulk Transfer.  The grant of the security interest in the
Collateral by the Borrower to the Lender  pursuant to this Loan  Agreement is in
the ordinary  course of business for the Borrower and is not subject to the bulk
transfer  or any  similar  statutory  provisions  in  effect  in any  applicable
jurisdiction.

          Section  6.08  Indebtedness.  The  Borrower  has  no  Indebtedness  or
obligation,  secured or  unsecured,  direct or indirect,  absolute or contingent
(including guaranteeing any obligation),  other than Indebtedness incurred under
(or contemplated  by) the terms of this Loan Agreement.

          Section 6.09 Borrower's  Purpose.  The Borrower has been formed solely
for the purpose of engaging in  transactions  of the types  contemplated by this
Loan Agreement.

          Section 6.10 Adverse Orders. No injunction, writ, restraining order or
other order of any nature  adversely  affects the Borrower's  performance of its
obligations under this Loan Agreement or any Loan Document to which the Borrower
is a party.

          Section  6.11  Taxes.  The  Parent  has  elected  to be treated as and
qualifies as a "regulated  investment  company"  within the meaning of the Code.
The Borrower has filed (on a consolidated  basis or otherwise) on a timely basis
all tax returns (including,  without limitation,  all foreign,  federal,  state,
local and other tax  returns)  required  to be filed,  is not  liable  for taxes
payable by any other  Person and has paid or made  adequate  provisions  for the
payment of all

                                      -43-


<PAGE>


taxes,  assessments and other governmental charges due from the Borrower. No tax
lien or similar  adverse claim has been filed,  and no claim is being  asserted,
with  respect to any such tax,  assessment  or other  governmental  charge.  Any
taxes, fees and other governmental charges payable by the Borrower in connection
with the  execution  and  delivery  of this Loan  Agreement  and the other  Loan
Documents and the transactions  contemplated hereby or thereby have been paid or
shall  have been paid if and when due.

          Section 6.12 Chief Executive Office; Jurisdiction of Organization.  On
the Effective Date, the Borrower's  chief executive  office is (and the location
of the Borrower's  records regarding the Medallion  Loans),  and during the four
months  immediately  preceding July 1, 2001 such office has been, located at 437
Madison Avenue,  New York, New York 10022. On the Effective Date, the Borrower's
jurisdiction of organization is the State of Delaware.

          Section 6.13 Legal Name. The Borrower's  legal name is as set forth in
this Loan Agreement;  the Borrower has not changed its name since its formation;
the  Borrower  does not have trade names,  fictitious  names,  assumed  names or
"doing  business as" names.

          Section  6.14  Solvency.  The  Borrower is solvent and will not become
insolvent  after giving  effect to the  transactions  contemplated  hereby;  the
Borrower is paying its debts as they become due; and the Borrower,  after giving
effect to the transactions  contemplated  hereby,  will have adequate capital to
conduct  its  business.

          Section 6.15 Subsidiaries.  The Borrower has no subsidiaries.

          Section   6.16   Consideration.   Taking  into   account  the  capital
contribution   in  the   Purchase   Agreement,   the  Borrower  has  given  fair
consideration  and reasonably  equivalent  value in exchange for the sale of the
Medallion Loans by Medallion Funding,  as Seller,  under the Purchase Agreement.

          Section 6.17 True and Complete Disclosure.  The information,  reports,
financial  statements,  exhibits  and  schedules  furnished  in writing by or on
behalf of the Related  Parties to the Lender or the Custodian in connection with
the  negotiation,  preparation  or delivery of this Loan Agreement and the other
Loan  Documents or included  herein or therein or delivered  pursuant  hereto or
thereto  are true and  correct  in every  material  respect,  or (in the case of
projections)  are based on  reasonable  estimates,  on the date as of which such
information  is stated or  certified.  There is no fact  known to a  Responsible
Officer of the Borrower that, after due inquiry,  should  reasonably be expected
to have a Material  Adverse  Effect that has not been disclosed  herein,  in the
other Loan Documents or in a report,  financial  statement,  exhibit,  schedule,
disclosure letter or other writing furnished to the Lender for use in connection
with the  transactions  contemplated  hereby or thereby.

          Section 6.18 Proceeds Regulations. No proceeds of any Advances will be
used by the  Borrower (i) to acquire any  security in any  transaction  which is
subject to Section 13 or 14 of the  Securities  Exchange Act of 1934, as amended
or (ii) for the purpose of  purchasing  or carrying  any "margin  stock" as such
term is defined in  Regulation  U of the Federal  Reserve  Board.

                                      -44-


<PAGE>


          Section 6.19 Adverse  Agreements.  There are no  agreements  in effect
adversely affecting the rights of the Borrower to make, or cause to be made, the
grant of the security  interest in the Collateral  contemplated by Section 4.01.

          Section 6.20 Investment Company. The Parent is a closed-end management
investment  company  registered under the Investment Company Act and has elected
to be treated as a "business  development  company"  under and as defined in the
Investment Company Act. The Parent is an "investment  company",  as such term is
defined  in the  Investment  Company  Act.  The  Borrower  is  Subsidiary  of an
"investment company", as such term is defined in the Investment Company Act. The
acquisition  of the Note by the Lender,  the making of Advances  hereunder,  the
application  of the proceeds  and  repayment of Advances by the Borrower and the
performance  of the  transactions  contemplated  by this Agreement and the other
Loan  Documents  will not  violate  any  provision  of said  Act,  or any  rule,
regulation or order issued by the  Securities  Exchange  Commission  thereunder.

          Section  6.21 No Default.  No Default or Event of Default has occurred
and is continuing.

          Section 6.22  Underwriting and Servicing.  Each of the Medallion Loans
was  underwritten  in accordance with the  Underwriting  Guidelines and is being
serviced in conformance  with the  applicable  Seller's  standard  underwriting,
credit, collection, operating and reporting procedures and systems and otherwise
in accordance  with Accepted  Servicing  Practices and the Credit and Collection
Policy.

          Section 6.23 ERISA.  The Borrower is in compliance  with ERISA and has
not  incurred and does not expect to incur any  liabilities  (except for premium
payments  arising in the ordinary  course of  business)  to the Pension  Benefit
Guaranty  Corporation  (or any  successor  thereto)  under  ERISA.

          Section 6.24 Sharing of Payments.  There is not now, nor will there be
at any time in the future,  any  agreement or  understanding  between  Medallion
Funding  and the  Borrower  (other  than as  expressly  set  forth  in the  Loan
Documents)  providing  for the  allocation  or  sharing of  obligations  to make
payments  or  otherwise  in  respect of any taxes,  fees,  assessments  or other
governmental  charges.

          Section 6.25 Collateral  Security;  Acquisition.  (a) The Borrower has
not assigned, pledged, or otherwise conveyed or encumbered any Medallion Loan or
other  Collateral to any other Person,  and  immediately  prior to the pledge of
such Medallion Loan or any other Collateral to the Lender,  the Borrower was the
sole  owner of such  Medallion  Loan or such other  Collateral  and had good and
marketable  title thereto,  free and clear of all Liens other than those created
hereunder  and  those in favor of the  applicable  Seller  or the  Borrower  and
pledged hereunder, in each case except for Permitted Participation Interests and
Liens to be  released  simultaneously  with the  Liens  granted  in favor of the
Lender  hereunder.  Each  Medallion  Loan was  acquired by the  Borrower  from a
Seller.

                                      -45-


<PAGE>


          (b) The  provisions of this Loan  Agreement are effective to create in
favor of the Lender a valid security  interest in all right,  title and interest
of the  Borrower  in, to and  under the  Collateral.

          (c) Upon delivery to the Custodian of a complete  Medallion Loan File,
the  Lender  shall  have a fully  perfected  first  priority  security  interest
therein, in each Medallion Loan pledged hereunder and in the Borrower's interest
in the related Medallion Collateral.

          (d) Upon the filing of financing  statements  on Form UCC-1 naming the
Lender as "secured  party" and the  Borrower as  "debtor",  and  describing  the
Collateral,  in the  jurisdictions and recording offices listed on Schedule 6.25
attached hereto, the security interests granted hereunder in the Collateral will
constitute fully perfected first priority  security  interests under the Uniform
Commercial  Code in all right,  title and  interest of the  Borrower  in, to and
under  such  Collateral  which  can be  perfected  by filing  under the  Uniform
Commercial  Code.

          Section 6.26 Subsidiary.  The Borrower is a wholly-owned subsidiary of
Medallion Funding.

          Section 6.27 Subsidiaries of the Parent.  Schedule 6.27 sets forth, as
of the  Effective  Date,  the name of each direct or indirect  subsidiary of the
Parent, its form of organization and its jurisdiction of organization.

                                   ARTICLE VII

                            COVENANTS OF THE BORROWER

          The Borrower covenants and agrees with the Lender that, so long as any
Advance is  outstanding  and until the later to occur of the  payment in full of
all Secured Obligations and the termination of this Loan Agreement:

          Section  7.01  Existence; etc.

          (a) The  Borrower is a Delaware  business  trust and will  observe all
procedures required by its trust agreement (or equivalent document) and the laws
of its  jurisdiction  of formation.  The Borrower will maintain its existence in
good standing under the laws of its  jurisdiction of formation and will promptly
obtain  and  thereafter  maintain  qualifications  to do  business  as a foreign
business  trust in any other state in which it does  business and in which it is
required to so qualify.

          (b) The Borrower will comply with the  requirements  of all applicable
laws,  rules,  regulations  and orders of Governmental  Authorities  (including,
without limitation,  all environmental laws, all laws with respect to unfair and
deceptive  lending  practices and predatory  lending  practices),  if failure to
comply with such requirements would be reasonably likely (either individually or
in the aggregate) to have a Material  Adverse Effect.

          (c) The  Borrower  will not move its chief  executive  office from the
address  referred to in Section 6.12 or change its  jurisdiction of organization
from the jurisdiction  referred

                                      -46-


<PAGE>


to in Section  6.02  unless it shall  have  provided  the Lender 30 days'  prior
written  notice of such change.

          (d) The Borrower  will pay and discharge  all taxes,  assessments  and
governmental  charges or levies  imposed on it or on its income or profits or on
any of its Property prior to the date on which penalties attach thereto,  except
for any such  tax,  assessment,  charge  or levy the  payment  of which is being
contested in good faith and by proper  proceedings  and against  which  adequate
reserves are being maintained.

          (e) The Borrower  will permit  representatives  of the Lender,  during
normal  business  hours,  to examine,  copy and make extracts from its books and
records,  to inspect  any of its  Properties,  and to discuss its  business  and
affairs with its officers, all to the extent reasonably requested by the Lender.

          Section 7.02 Special Purpose Entity.

          (a) The Borrower  will at all times ensure that (i) its  directors and
managers  act  independently  and in its  interests,  (ii) it shall at all times
maintain at least two  independent  directors  each of (x) whom is not currently
and has not been during the five years preceding the date of this Loan Agreement
an  officer,  director,  manager or employee  of the  Borrower  or an  Affiliate
thereof (other than a limited purpose corporation,  business trust,  partnership
or other entity  organized for the purpose of acquiring,  financing or otherwise
investing, directly or indirectly, in assets or receivables originated, owned or
serviced  by  Medallion  Funding  or an  Affiliate  thereof),  (y) whom is not a
current or former  officer or  employee  of the  Borrower  and (z) whom is not a
manager  of the  Borrower  or an  Affiliate  thereof,  (iii) its  assets are not
commingled  with  those of  Medallion  Funding  or any  other  Affiliate  of the
Borrower,  (iv) its  board of  managers  duly  authorizes  all of its  corporate
actions, (v) it maintains separate and accurate records and books of account and
such books and records are kept separate from those of Medallion Funding and any
other Affiliate of the Borrower,  and (vi) it maintains  minutes of the meetings
and other proceedings of the members and the board of managers. Where necessary,
the Borrower  will obtain  proper  authorization  from its managers for business
trust action.

          (b) The  Borrower  will pay its  operating  expenses  and  liabilities
(including, as applicable,  shared personnel and overhead expenses) from its own
assets; provided,  however, that the Borrower's  organizational expenses and the
expenses  incurred in connection with the negotiation and execution of this Loan
Agreement and the other Loan Documents may be paid by Medallion Funding;

          (c) The Borrower will not have any of its  indebtedness  guaranteed by
Medallion  Funding or any  Affiliate  of  Medallion  Funding.  Furthermore,  the
Borrower  will not hold itself  out, or permit  itself to be held out, as having
agreed to pay or as being  liable for the debts of any  Person and the  Borrower
will not engage in business  transactions  with any  Affiliate of the  Borrower,
except on an arm's-length basis. The Borrower will not hold Medallion Funding or
any  Affiliate of the Borrower out to third parties as other than an entity with
assets and liabilities  distinct from the Borrower.  The Borrower will cause any
financial  statements  consolidated  with  those  of  Medallion  Funding  or any
Affiliate of the Borrower to state that the Borrower is a

                                      -47-


<PAGE>


separate   corporate  entity  with  its  own  separate  creditors  who,  in  any
liquidation  of the  Borrower,  will  be  entitled  to be  satisfied  out of the
Borrower's assets prior to any value in the Borrower  becoming  available to the
Borrower's  equity  holders.  The Borrower will not act in any other matter that
could  foreseeably  mislead  others  with  respect  to the  Borrower's  separate
identity.

          (d) The  Borrower  shall  own no  assets,  and will not  engage in any
business,  other than the assets and transactions  specifically  contemplated by
this Loan Agreement and the Loan Documents.

          (e) The  Borrower  shall be, and at all times will hold  itself out to
the  public as, a legal  entity  separate  and  distinct  from any other  entity
(including any Affiliate),  shall correct any known  misunderstanding  regarding
the  Borrower's  status as a separate  entity,  shall  conduct  business  in the
Borrower's  own name,  shall not identify  itself or any of its  Affiliates as a
division  or part of the  other  and  shall  maintain  and  utilize  a  separate
telephone number and separate stationery, invoices and checks.

          (f) The Borrower shall maintain the Borrower's assets in such a manner
that it will not be costly or difficult to segregate,  ascertain or identify the
Borrower's individual assets from those of any Affiliate or any other Person.

          (g) The Borrower shall, at all times, be a wholly-owned  subsidiary of
Medallion Funding.

          Section 7.03 Accuracy of Opinions.  The Borrower  shall take all other
actions necessary to maintain the accuracy of the factual  assumptions set forth
in the legal opinion of Willkie Farr & Gallagher,  counsel to Medallion  Funding
and the Borrower,  issued in connection with the Purchase Agreement and relating
to the issues of substantive consolidation and true sale of the Medallion Loans.

          Section  7.04  Prohibition  on  Adverse  Claims.  Except as  otherwise
provided herein or in any other Loan Document,  the Borrower shall not (i) sell,
assign (by operation of law or otherwise) or otherwise  dispose of, or create or
suffer to exist any Adverse Claim upon or with respect to, any  Medallion  Loan,
any Collections related thereto or any other Collateral related thereto, or upon
or with respect to any account to which any  Collections  of any Medallion  Loan
are sent,  or assign  any right to  receive  income in  respect  thereof or (ii)
create or suffer to exist any Adverse  Claim upon or with  respect to any of the
Borrower's assets.

          Section 7.05 Prohibition on Fundamental  Change. The Borrower will not
engage  in, or  suffer  any,  change  of  ownership,  dissolution,  winding  up,
liquidation,  merger  or  consolidation  with,  or  convey,  transfer,  lease or
otherwise   dispose  of  (whether  in  one   transaction   or  in  a  series  of
transactions),  all or  substantially  all of its assets  (whether  now owned or
hereafter  acquired),  or  acquire  all or  substantially  all of the  assets or
capital stock or other ownership interest of, any Person.

          Section 7.06 Sale or  Contribution  Treatment.  The Borrower  will not
account  for or  treat  (whether  in  financial  statements  or  otherwise)  the
transactions contemplated by the Purchase Agreement in any manner other than the
sale or  contribution  of  Medallion  Loans and other  Collateral  by  Medallion
Funding to the Borrower.

                                      -48-


<PAGE>


          Section 7.07  Prohibition  on  Modifications.  The  Borrower  will not
amend,  modify,  waive or  terminate  any terms or  conditions  of the  Purchase
Agreement,  any Approved Purchase Agreement,  the Servicing Agreement or, in any
material  respect,  the Standard Form Medallion Loan  Documentation  without the
written consent of the Lender (which consent shall not be unreasonably  withheld
in the case of an amendment  curing an ambiguity or correcting any  inconsistent
provisions of the Purchase  Agreement or any Approved Purchase  Agreement),  and
shall perform its obligations thereunder.

          Section 7.08 Amendment to Organizational  Documents. The Borrower will
not amend,  modify or otherwise  make any change (other than an  inconsequential
change) to its organizational documents without the consent of the Lender.

          Section 7.09 Remittance of Collections.  If the Borrower  receives any
Collections,  the Borrower will remit such Collections to the Collection Account
within one (1) Business Days of the Borrower's receipt thereof.

          Section 7.10 Hedging Strategy. The Borrower shall use its best efforts
to be in material compliance with the Hedging Strategy.

          Section 7.11 Litigation.  The Borrower will promptly, and in any event
within 10 days after  service of  process on any of the  following,  give to the
Lender notice of all litigation,  actions, suits,  arbitrations,  investigations
(including,  without  limitation,  any of the  foregoing  which are  pending  or
threatened) or other legal or arbitrable  proceedings  affecting the Borrower or
any of its  Subsidiaries  or affecting any of the Property of any of them before
any  Governmental  Authority  that (i) questions or  challenges  the validity or
enforceability  of any of the  Loan  Documents  or any  action  to be  taken  in
connection with the transactions  contemplated hereby, (ii) which,  individually
or in the aggregate, if adversely determined, could be reasonably likely to have
a Material  Adverse  Effect,  or (iii)  requires  filing with the Securities and
Exchange  Commission in accordance  with the Securities and Exchange Act of 1934
and any rules thereunder.

          Section 7.12 Notices. The Borrower shall give notice to the Lender:

          (a) promptly upon receipt of notice or knowledge of the  occurrence of
any Default or Event of Default or a Rapid Amortization Event;

          (b)  promptly  upon  receipt of notice or knowledge of (i) any default
related  to any  Collateral,  (ii) any Lien or  security  interest  (other  than
security  interests  created hereby or by the other Loan Documents) on, or claim
asserted  against,  any of the  Collateral  or  (iii)  any  event or  change  in
circumstances  which could  reasonably  be  expected to have a Material  Adverse
Effect;

          (c) promptly upon any material  change in the  Medallion  Value of any
Medallion Collateral;

          (d) promptly upon receipt of notice or knowledge of any  issuance,  or
possible issuance, of additional  Medallions by New York City, Chicago,  Boston,
Cambridge,  Newark,  Philadelphia or any other jurisdiction for which the Lender
has financed the purchase of Medallion Loans by the Borrower; and

                                      -49-


<PAGE>


          (e) promptly upon receipt of notice or knowledge that a Medallion Loan
is no longer an Eligible Medallion Loan.

          Each notice  pursuant to this  subsection  shall be  accompanied  by a
statement of a Responsible  Officer of the Borrower setting forth details of the
occurrence referred to therein and stating what action the Borrower has taken or
proposes to take with respect thereto.

          Section 7.13 Additional Information.  The Borrower shall, from time to
time,  provide  to  the  Lender  such  other  information,   reports,  financial
statements and documents as the Lender may reasonably request.

          Section 7.14 Transaction with Affiliates.  The Borrower will not enter
into any transaction,  including without limitation any purchase, sale, lease or
exchange of property or the rendering of any service,  with any Affiliate unless
such  transaction is (a) otherwise  permitted under this Loan Agreement,  (b) in
the ordinary course of the Borrower's  business and (c) upon fair and reasonable
terms no less  favorable  to the  Borrower  than it would obtain in a comparable
arm's  length  transaction  with a Person which is not an  Affiliate,  or make a
payment that is not otherwise permitted by this Section 7.14 to any Affiliate.

          Section  7.15  Limitation  on Liens.  The  Borrower  will  defend  the
Collateral  against,  and will take such other action as is necessary to remove,
any Lien,  security  interest or claim on or to the  Collateral,  other than the
security interests created under this Loan Agreement or Permitted  Participation
Interests,  and the  Borrower  will defend the right,  title and interest of the
Lenders in and to any of the  Collateral  against  the claims and demands of all
persons whomsoever.

          Section 7.16 Advertising,  Origination and Servicing  Activities.  All
advertising, origination and servicing activities, procedures and materials used
with  regard to any  Medallion  Loan made or  accounts  acquired,  collected  or
serviced by the Borrower  comply with all  applicable  Federal,  state and local
laws,  ordinances,  rules and  regulations,  including  but not limited to those
related to usury, truth in lending, real estate settlement procedures,  consumer
protection,  equal credit opportunity,  fair debt collection,  rescission rights
and  disclosures,  except  where  failure  to comply  would not have a  Material
Adverse Effect.

          Section 7.17 Required Filings. The Borrower shall promptly provide the
Lender with copies of all  documents  which the Parent or any  Affiliate  of the
Parent is  required  to file with the  Securities  and  Exchange  Commission  in
accordance with the Securities and Exchange Act of 1934 or any rules thereunder.

          Section 7.18 Financial  Statements.  (a) The Borrower shall deliver to
the  Lender  within  30 days  after  the last day of each  calendar  month,  (i)
unaudited  balance  sheets  and  statements  of  income  and cash  flows for the
Borrower for such month (including,  if such calendar month is the last month of
a calendar  quarter,  consolidated  statements  of cash flows for such  calendar
quarter) and (ii) a certificate of an officer of the Borrower, whose position is
vice president or higher,  stating that such financial  statements are presented
fairly in all material respects and in accordance with GAAP, subject to year-end
audit adjustments.

                                      -50-


<PAGE>


          (b) The Borrower  shall deliver to the Lender within 90 days after the
end of each fiscal year, the  consolidated  balance sheets of the Borrower as at
the end of such fiscal year and the related  consolidated  statements  of income
and retained earnings and of cash flows for the Borrower for such year,  setting
forth in each  case in  comparative  form the  figures  for the  previous  year,
accompanied by an opinion thereon of independent certified public accountants of
recognized  national standing,  which opinion shall not be qualified as to scope
of audit or going  concern  and shall  state  that said  consolidated  financial
statements  fairly present the consolidated  financial  condition and results of
operations  of the  Borrower  as at the end of,  and for,  such  fiscal  year in
accordance  with GAAP,  and a certificate of such  accountants  stating that, in
making the examination  necessary for their opinion, they obtained no knowledge,
except as specifically stated, of any Default or Event of Default.

          The Borrower will furnish to the Lender, at the time it furnishes each
set of  financial  statements  pursuant  to  paragraphs  (a)  and (b)  above,  a
certificate of a Responsible  Officer of the Borrower  stating that, to the best
of such Responsible Officer's knowledge,  the Borrower during such fiscal period
or year has observed or performed all of its covenants and other agreements, and
satisfied every  condition,  contained in this Loan Agreement and the other Loan
Documents  to  be  observed,  performed  or  satisfied  by  it,  and  that  such
Responsible Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate (and, if any Default or Event of Default
has occurred and is  continuing,  describing  the same in reasonable  detail and
describing  the action the  Borrower  has taken or proposes to take with respect
thereto).

          Section 7.19  Maintenance of Insurance.  The Borrower will maintain at
all  times in full  force  and  effect  with  financially  sound  and  reputable
insurance  companies insurance covering such risks and liabilities and with such
deductibles or self-insured retentions as are in accordance with normal industry
practices for policies of insurance.

          Section  7.20  Right  of  First  Refusal  Replacement  Financing.  The
Borrower  shall give the Lender the right of first  refusal  with respect to any
replacement  financing in connection with any Eligible  Medallion  Loans, as set
forth on Schedule  7.20 hereto,  provided,  however,  that the Lender  offers to
provide such replacement  financing on terms comparable to but no less favorable
to the Borrower and its Affiliates than the terms for such replacement financing
offered in good faith by any other potential lender.

          Section 7.21 Monthly Pricing Reports; Monthly Liquidation Reports. The
Borrower  shall  deliver to the Lender within 30 days after the last day of each
calendar  month (i) a monthly report  summarizing  the pricing and sales of taxi
medallions in New York City, Boston, Chicago,  Cambridge,  Newark,  Philadelphia
and any other  location  of an Other  Acceptable  Taxi  Commission,  meeting the
requirements set forth on Schedule 7.21 hereto, in form acceptable to the Lender
in its  sole  and  absolute  discretion,  and  (ii) a  monthly  report  in  each
jurisdiction of the cost of fully  liquidating  Medallions  during the preceding
three months,  and the average cost for such  liquidations (or if fewer than ten
Medallions  were  liquidated  during  such  three-month   period,  the  cost  of
liquidating the ten most recently  liquidated  Medallions,  and the average cost
for such  liquidations),  in form and substance  acceptable to the Lender in its
sole and absolute discretion.

                                      -51-


<PAGE>


          Section 7.22  Underwriting  Guidelines.  The Borrower  shall  promptly
notify the Lender (i) if  Medallion  Funding  amends,  modifies  or revises  its
Underwriting  Guidelines or (ii) if the Borrower has knowledge that any Approved
Seller has amended,  modified or revised its  Underwriting  Guidelines  (and the
Borrower  shall  require any Approved  Seller to notify the Borrower of any such
amendment,  modification  or revision).  If the Lender  determines,  in its sole
discretion,  that a proposed change to Underwriting  Guidelines is material, the
Lender  will  have no  obligation  to  finance  any  Medallion  Loans  that  are
originated pursuant to such new Underwriting Guidelines.

          Section  7.23  Approved   Purchase   Agreement  Sale  or  Contribution
Treatment.  The  Borrower  will not account for or treat  (whether in  financial
statements or otherwise) the transactions  contemplated by any Approved Purchase
Agreement  in any  manner  other  than the sale of  Medallion  Loans  and  other
Collateral by the applicable Approved Seller to the Borrower.

          Section  7.24  "Warm"  Backup  Servicer.  (a) In  accordance  with the
Servicing  Agreement,  in the  event an  Acceptable  Refinancing  does not occur
within 150 days after the Effective Date and there exists $20,000,000 or more in
the aggregate  outstanding  under the Medallion Credit Facilities or $12,000,000
or more  outstanding  under  either  Medallion  Credit  Facility (a "Warm Backup
Servicer Event"),  the Backup Servicer,  as promptly as practicable  thereafter,
and in any event no later than 30 days after the  occurrence  of the Warm Backup
Servicer  Event,  shall  become a  "warm"  backup  servicer  (i.e.,  shall  have
completed a thorough review of Medallion  Funding's servicing of Medallion Loans
and shall have been  provided  sufficient  information  and  access to  computer
programs to permit a prompt and orderly  transition  of  servicing if the Backup
Servicer is instructed to become the Servicer upon the  occurrence of a Servicer
Default).  In accordance with the Servicing Agreement,  following the occurrence
of a Warm Backup  Servicer  Event,  the Servicer shall fully  cooperate with the
Backup  Servicer's  review  and  due  diligence  of  the  Servicer's   servicing
procedures  in  connection  with  the  Medallion  Loans,  including  the  Backup
Servicer's ongoing monitoring of servicing.

          (b) If the  Backup  Servicer  shall  not have  become a "warm"  backup
servicer  within  such  30-day  period,  as  determined  by  the  Lender  in its
reasonable  discretion,  the  interest  rate  payable on the  Advances  shall be
increased by 0.25% per annum until such time as the Lender shall  determine,  in
its reasonable  discretion,  that the Backup Servicer shall have become a "warm"
backup  servicer.  The fees and expenses of the Backup Servicer shall be for the
account of the Borrower.

          Section 7.25  Allonge  Identification.  Within two (2)  calendar  days
after the  Effective  Date,  the Borrower  shall  identify  each allonge to each
Medallion  Note pledged to the Lender by including  the  Medallion  Loan account
number on the face of each such allonge.

                                  ARTICLE VIII

                                EVENTS OF DEFAULT

          Each of the following  events shall constitute an event of default (an
"Event of Default") hereunder:

                                      -52-


<PAGE>


          (a) the Borrower  shall  default in the payment of any principal of or
interest on any Advance when due (whether at stated maturity,  upon acceleration
or at mandatory or optional prepayment); or

          (b) the  Borrower  shall  default in the  payment of any other  amount
payable by it hereunder or under any other Loan Document after  notification  by
the Lender of such default, and such default shall have continued unremedied for
five (5) consecutive Business Days; or

          (c) The Borrower shall fail to comply with Section  2.07(a),  and such
failure shall have continued unremedied for two (2) Business Days; or

          (d) the Borrower  shall fail to perform or observe any term,  covenant
or agreement  hereunder or under any other Loan Document in any material respect
which failure is (i) not curable or (ii) curable and continues  unremedied for a
period of ten (10)  consecutive  Business  Days (and written  assurances of such
cure shall have been given within one Business Day of default); or

          (e)  the  occurrence  of any  Bankruptcy  Event  with  respect  to the
Borrower; or

          (f) any  representation  or warranty  made or deemed to be made by the
Borrower (or any of its respective  officers)  under or in connection  with this
Loan Agreement,  any remittance  report or other information or report delivered
pursuant  hereto or any other Loan  Document  shall  prove to have been false or
incorrect in any material respect when made (other than the  representations and
warranties made in a Borrowing Base Certificate with respect to the inclusion of
Medallion Loans in the Borrowing Base as Eligible  Medallion Loans,  which shall
be considered  solely for the purpose of determining the Collateral Value of the
Mortgage Loans,  unless (i) the Borrower shall have included a Medallion Loan in
the Borrowing  Base with  knowledge that such Medallion Loan was not an Eligible
Medallion  Loan or (ii)  the  Lender  shall  determine  in its  sole  discretion
exercised in good faith that the Borrower shall have included Medallion Loans in
the Borrowing Base with that were not an Eligible  Medallion  Loans on a regular
basis); or

          (g) (i) the Lender shall at any time fail to have a valid,  perfected,
first  priority  security  interest in a material  portion of the Collateral (as
determined by the Lender in its sole discretion,  exercised in good faith), free
of adverse claims, or (ii) the purchase by the Borrower of Medallion Loans under
the  Purchase  Agreement or any Approved  Purchase  Agreement  with respect to a
material  portion of the  Collateral  (as  determined  by the Lender in its sole
discretion,  exercised in good faith) shall, for any reason,  cease to create in
favor of the Borrower a perfected ownership interest in such Medallion Loans and
the other Medallion Collateral related thereto, free of adverse claims; or

          (h) the Borrower shall have suffered any material  adverse change,  as
determined by the Lender in its sole discretion,  to its financial  condition or
operations  which could reasonably be expected to affect the  collectability  of
the Medallion Loans or the Borrower's ability to conduct its business or perform
its obligations under the Loan Documents; or

                                      -53-


<PAGE>


          (i) the  Borrower's  activities are terminated in whole or in part for
any reason,  including  any  termination  thereof by a Taxi  Commission or other
regulatory, tax or accounting body; or

          (j) the Purchase  Agreement,  any  Approved  Purchase  Agreement,  the
Custodial  Agreement,  the Servicing Agreement or any other Loan Documents shall
cease to be in full  force and  effect or the  enforceability  thereof  shall be
contested by a party thereto; or

          (k) the failure of the Borrower to cure a Borrowing Base Deficiency in
the manner, and within the time period, set forth in Section 2.07; or

          (l) a final  judgment or judgments  for the payment of money in excess
of $500,000 in the  aggregate  shall be rendered  against the Borrower by one or
more courts,  administrative  tribunals or other bodies having  jurisdiction and
the same shall not be satisfied,  discharged (or provision shall not be made for
such discharge) or bonded, or a stay of execution thereof shall not be procured,
within five (5) Business Days from the date of entry  thereof,  and the Borrower
or any such Affiliate  shall not,  within said period of five (5) Business Days,
or such longer period during which  execution of the same shall have been stayed
or bonded,  appeal therefrom and cause the execution thereof to be stayed during
such appeal; or

          (m) the Borrower shall be in default under any note,  indenture,  loan
agreement,  guaranty,  swap  agreement  or any other  contract  to which it is a
party,  which default (i) involves the failure to pay a matured  obligation,  or
(ii) permits the  acceleration of the maturity of obligations by any other party
to or  beneficiary  of such note,  indenture,  loan  agreement,  guaranty,  swap
agreement or other contract; or

          (n) the Board of Managers of the Borrower  (which  shall  consist of a
total of five managers, including two independent managers) shall not include at
least three of the  following  persons for a period of five (5)  Business  Days:
Alvin  Murstein,  Andrew  Murstein,  James Jack,  Brian O'Leary,  Larry Hall and
Michael Kowalsky; or

          (o) both Alvin  Murstein and Andrew  Murstein  shall fail to be on the
Board of Managers of the Borrower.

                                   ARTICLE IX

                              REMEDIES UPON DEFAULT

          (a) Upon the  occurrence  of one or more Events of Default  hereunder,
the  Lender's  obligation  to make  additional  Advances to the  Borrower  shall
automatically   terminate  without  further  action  by  any  Person.  Upon  the
occurrence  and  continuation  of one or more Events of Default other than those
referred  to in Article  VIII,  paragraph  (e)  hereof,  and in  addition to the
remedies  provided in Section  4.07 hereof and  otherwise  provided in this Loan
Agreement,  the Lender  may  immediately  declare  the  principal  amount of the
Advances  then  outstanding  under the Note to be  immediately  due and payable,
together  with all interest  thereon and fees and expenses  accruing  under this
Loan  Agreement.  Upon the  occurrence  of an Event of  Default  referred  to in
Article VIII, paragraph (e), and in addition to the remedies provided in

                                      -54-


<PAGE>


Section 4.07 hereof and otherwise provided in this Loan Agreement,  such amounts
referred to in the preceding sentence shall immediately and automatically become
due and payable without any further action by any Person.  Upon such declaration
or such automatic  acceleration,  the balance then outstanding on the Note shall
become  immediately due and payable,  without  presentment,  demand,  protest or
other  formalities of any kind, all of which are hereby  expressly waived by the
Borrower.

          (b) The powers conferred on the Lender hereunder are solely to protect
the Lender's  interests in the  Collateral and shall not impose any duty upon it
to exercise any such powers.  The Lender shall be  accountable  only for amounts
that it  actually  receives  as a result of the  exercise  of such  powers,  and
neither it nor any of its  officers,  directors,  employees  or agents  shall be
responsible  to the  Related  Parties  for any act or failure to act  hereunder,
except for its or their own gross negligence or willful misconduct.

                                    ARTICLE X

                                  MISCELLANEOUS

          Section 10.01 Waiver. No failure on the part of the Lender to exercise
and no delay in exercising, and no course of dealing with respect to, any right,
power or privilege  under any Loan Document  shall operate as a waiver  thereof,
nor shall any single or partial exercise of any right,  power or privilege under
any Loan Document preclude any other or further exercise thereof or the exercise
of any other  right,  power or  privilege.  The  remedies  provided  herein  are
cumulative and not exclusive of any remedies provided by law.

          Section 10.02 Notices. Except as otherwise expressly permitted by this
Loan  Agreement,  all notices,  requests and other  communications  provided for
under the Loan Documents  (including without limitation any modifications of, or
waivers, requests or consents under, this Loan Agreement) shall be given or made
in writing (including without limitation by telecopy)  delivered to the intended
recipient at the address  specified for each party hereto  below;  or, as to any
party,  at such other  address as shall be designated by such party in a written
notice to each other party:

                  The Borrower:

                           Taxi Medallion Loan Trust I
                           437 Madison Avenue
                           New York, New York 10022
                           Attention: President
                           Telecopier No.: 212-328-3654
                           Telephone No.: 212-328-3654

                  The Lender:

                           Merrill Lynch Bank USA
                           15 W. South Temple
                           Suite 300

                                      -55-


<PAGE>


                           Salt Lake City, Utah 84101
                           Attention: Louise Alder
                           Telecopier No.: 801-531-7470
                           Telephone No.: 801-526-8324

                  With a copy to:

                           Merrill Lynch Global Asset Based Finance
                           4 World Financial Center
                           New York, New York  10080
                           Attention:  Joshua Green
                           Telecopier No.: 212-449-6673
                           Telephone No.: 212-449-7330

Except as otherwise provided in this Loan Agreement and except for notices given
under  Section  2  (which  shall  be  effective  only  on  receipt),   all  such
communications  shall be  deemed to have been duly  given  when  transmitted  by
telecopy  or  personally  delivered  or,  in the case of a mailed  notice,  upon
receipt,   in  each  case  given  or  addressed  as  aforesaid.

          Section 10.03 Indemnification and Expenses.

          (a) The Borrower agrees to hold the Lender, the Custodian,  the Backup
Servicer and each of their officers,  directors,  agents and employees (each, an
"Indemnified  Party") harmless from and indemnify each Indemnified Party against
all  liabilities,  losses,  damages,  judgments,  costs and expenses of any kind
which may be imposed on, incurred by or asserted against such Indemnified  Party
in any suit, action, claim or proceeding relating to or arising out of this Loan
Agreement,  the Note, any other Loan Document, any Collateral or any transaction
contemplated hereby or thereby, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Loan Agreement,  the Note,
any other Loan Document,  any Collateral or any transaction  contemplated hereby
or thereby,  including,  without  limitation,  (i) any  Medallion  Loan  pledged
hereunder not  constituting  an Eligible  Medallion  Loan,  (ii) the offering or
effectuation of any securitization,  or (iii) the commingling of the proceeds of
the Collateral at any time with other funds, except, in each case, to the extent
arising from such Indemnified Party's gross negligence or willful misconduct. In
any suit,  proceeding  or action  brought by the Lender in  connection  with any
Collateral  for any sum owing  thereunder,  or to enforce any provisions of such
Collateral,  the Borrower will save, indemnify and hold the Lender harmless from
and  against all  expense,  loss or damage  suffered  by reason of any  defense,
set-off,  counterclaim,  recoupment or reduction or liability  whatsoever of the
account debtor or obligor thereunder, arising out of a breach by the Borrower of
any obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account  debtor or obligor or
its  successors  from the  Borrower.  The Borrower  also agrees to reimburse the
Lender as and when billed by the Lender for all the  Lender's  reasonable  costs
and expenses  incurred in connection with the enforcement or the preservation of
the  Lender's  rights  under  this  Loan  Agreement,  the Note,  any other  Loan
Document,  any  Collateral or any  transaction  contemplated  hereby or thereby,
including  without  limitation  the  reasonable  fees and  disbursements  of its
counsel (including  reasonable fees and disbursements  incurred in any action or
proceeding  between  the  Borrower  and  an  Indemnified  Party  or  between  an
Indemnified  Party

                                      -56-


<PAGE>


and any third party relating  hereto).  The Borrower hereby  acknowledges  that,
notwithstanding  the fact  that  the  Secured  Obligations  are  secured  by the
Collateral, each Secured Obligation is a recourse obligation of the Borrower.

          (b) The  Borrower  agrees to pay as and when  billed by the Lender all
reasonable  costs and  expenses  incurred by the Lender in  connection  with the
development,  preparation and execution of, this Loan  Agreement,  the Note, any
other  Loan  Document,  any  Collateral  or  any  other  documents  prepared  in
connection herewith or therewith, and any amendment,  supplement or modification
thereto,   and  the   consummation  and   administration   of  the  transactions
contemplated  hereby  and  thereby,  including  without  limitation  (i) all the
reasonable fees,  disbursements and expenses of counsel to the Lender,  and (ii)
all the  reasonable  due  diligence,  inspection,  testing and review  costs and
expenses  incurred  by the Lender  with  respect to  Collateral  under this Loan
Agreement.

          Section  10.04  Amendments.  Any  provision of a Loan  Document may be
modified  or  supplemented  only  by an  instrument  in  writing  signed  by the
Borrower,  the Lender and (to the extent  any such  modification  or  supplement
would have a material  adverse  effect on the  interest  of the  Custodian)  the
Custodian,  and any  provision  of a Loan  Document  may be  waived  only by the
written  agreement  of the Lender.  Any consent by the Lender to any  amendment,
modification  or  supplement  to the  trust  agreement  of the  Borrower  or the
Purchase  Agreement may be  conditioned  upon  confirmation  from Willkie Farr &
Gallagher,  counsel to the Borrower, that the analysis and conclusions expressed
in the legal opinion  delivered by them dated the Effective  Date and addressing
issues of true sale and nonconsolidation remain unchanged.

          Section 10.05  Successors and Assigns.  This Loan  Agreement  shall be
binding  upon and  inure to the  benefit  of (i) the  parties  hereto  and their
respective  successors and permitted  assigns and (ii) to the Custodian (and its
successors and assigns),  to the extent of provisions herein that pertain to the
Custodian.

          Section 10.06 Survival. The obligations of the Borrower under Sections
2.09,  2.11 and  10.03 and 10.16  hereof  shall  survive  the  repayment  of the
Advances  and  the  termination  of  this  Loan  Agreement.  In  addition,  each
representation  and  warranty  made or  deemed  to be made  by a  request  for a
borrowing   herein  or  pursuant   hereto  shall  survive  the  making  of  such
representation and warranty,  and the Lender shall not be deemed to have waived,
by reason of making any  Advance,  any Default  that may arise  because any such
representation  or  warranty  shall  have  proved  to be  false  or  misleading,
notwithstanding  that the Lender may have had notice or  knowledge  or reason to
believe that such representation or warranty was false or misleading at the time
such Advance was made.

          Section 10.07 Captions. The table of contents and captions and section
headings  appearing  herein are included solely for convenience of reference and
are not  intended to affect the  interpretation  of any  provision  of this Loan
Agreement.

          Section 10.08 Counterparts. This Loan Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same  instrument,  and any of the parties hereto may execute this Loan Agreement
by signing any such counterpart.

                                      -57-


<PAGE>


          Section  10.09  GOVERNING  LAW;  ETC.  THIS  LOAN  AGREEMENT  SHALL BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK WITHOUT  REFERENCE TO CHOICE OF LAW
DOCTRINE  (BUT  WITH  REFERENCE  TO  SECTION  5-1401  OF THE  NEW  YORK  GENERAL
OBLIGATIONS LAW, WHICH BY ITS TERMS APPLIES TO THIS LOAN  AGREEMENT),  AND SHALL
CONSTITUTE  A SECURITY  AGREEMENT  WITHIN THE MEANING OF THE UNIFORM  COMMERCIAL
CODE.

          Section  10.10  SUBMISSION  TO  JURISDICTION;  WAIVERS.  EACH  OF  THE
BORROWER AND THE LENDER HEREBY IRREVOCABLY AND UNCONDITIONALLY:

          (A)  SUBMITS  FOR  ITSELF  AND ITS  PROPERTY  IN ANY  LEGAL  ACTION OR
     PROCEEDING  RELATING  TO THIS LOAN  AGREEMENT,  THE NOTE AND THE OTHER LOAN
     DOCUMENTS,  OR FOR  RECOGNITION  AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT
     THEREOF,  TO THE  NON-EXCLUSIVE  GENERAL  JURISDICTION OF THE COURTS OF THE
     STATE OF NEW YORK,  THE FEDERAL  COURTS OF THE UNITED STATES OF AMERICA FOR
     THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;

          (B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH
     COURTS AND, TO THE EXTENT  PERMITTED BY LAW,  WAIVES ANY OBJECTION  THAT IT
     MAY NOW OR HEREAFTER  HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN
     ANY SUCH  COURT  OR THAT  SUCH  ACTION  OR  PROCEEDING  WAS  BROUGHT  IN AN
     INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

          (C) AGREES THAT  SERVICE OF PROCESS IN ANY SUCH  ACTION OR  PROCEEDING
     MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED  OR CERTIFIED  MAIL
     (OR ANY  SUBSTANTIALLY  SIMILAR  FORM OF  MAIL),  POSTAGE  PREPAID,  TO ITS
     ADDRESS SET FORTH  UNDER ITS  SIGNATURE  BELOW OR AT SUCH OTHER  ADDRESS OF
     WHICH THE LENDER SHALL HAVE BEEN NOTIFIED; AND

          (D)  AGREES  THAT  NOTHING  HEREIN  SHALL  AFFECT  THE RIGHT TO EFFECT
     SERVICE OF PROCESS IN ANY OTHER MANNER  PERMITTED BY LAW OR SHALL LIMIT THE
     RIGHT TO SUE IN ANY OTHER JURISDICTION.

          (E) AGREES THAT THE LENDER  SHALL HAVE NO  LIABILITY  FOR ANY PUNITIVE
     DAMAGES IN ANY SUCH  ACTION OR  PROCEEDING.

          Section  10.11  WAIVER OF JURY  TRIAL.  EACH OF THE  BORROWER  AND THE
LENDER HEREBY IRREVOCABLY  WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY

                                      -58-


<PAGE>


IN ANY LEGAL PROCEEDING  ARISING OUT OF OR RELATING TO THIS LOAN AGREEMENT,  ANY
OTHER LOAN DOCUMENT OR THE TRANSACTIONS  CONTEMPLATED HEREBY OR THEREBY.

          Section 10.12 Acknowledgments. The Borrower hereby acknowledges that:

          (a) it has been advised by counsel in the  negotiation,  execution and
delivery of this Loan Agreement, the Note and the other Loan Documents;

          (b) the Lender has no fiduciary  relationship to the Borrower, and the
relationship  between the  Borrower  and the Lender is solely that of debtor and
creditor; and

          (c) no joint venture exists between the Lender and the Borrower.

          Section 10.13 Hypothecation and Pledge of Collateral. The Lender shall
have  free and  unrestricted  use of all  Collateral  and  nothing  in this Loan
Agreement  shall  preclude the Lender from engaging in  repurchase  transactions
with  the   Collateral   or  otherwise   pledging,   repledging,   transferring,
hypothecating, or rehypothecating the Collateral. Nothing contained in this Loan
Agreement shall obligate the Lender to segregate any Collateral delivered to the
Lender by the Borrower.

          Section 10.14 Assignments;  Participations.  (a) The Lender may assign
to one or more  Qualified  Institutional  Buyers (or, if an Event of Default has
occurred and is continuing,  to any Person who is not a Qualified  Institutional
Buyer,  provided  that  prior to such  assignment  the  Lender  delivers  to the
Borrower an opinion of  experienced  securities law counsel to the Lender to the
effect  that such  assignment  will not cause the  Borrower  to be  required  to
register as an  investment  company under the  Investment  Company Act) all or a
portion of its rights and obligations under this Loan Agreement;  provided, that
if no Event of Default has occurred and is continuing, the Lender may not assign
to a  Person  that  competes  with  Medallion  Funding  in the  origination  and
servicing of Medallion Loans;  provided,  however, that the parties to each such
assignment shall execute and deliver an Assignment and Acceptance  substantially
in the form of Exhibit  J, with  appropriate  completions  (an  "Assignment  and
Acceptance"),  along  with  replacement  Notes  executed  and  delivered  by the
Borrower.

          (b) Upon such  execution  and  delivery,  from and after the effective
date specified in such  Assignment and Acceptance,  (i) the assignee  thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such  Assignment and  Acceptance,  have the
rights and  obligations of the Lender  hereunder,  and (ii) the Lender  assignor
thereunder  shall, to the extent that any rights and obligations  hereunder have
been assigned by it pursuant to such Assignment and  Acceptance,  relinquish its
rights and be released from its obligations under this Loan Agreement.

          (c) The  Lender  may  sell  participations  to one or  more  Qualified
Institutional Buyers (or, if an Event of Default has occurred and is continuing,
to any Person who is not a Qualified Institutional Buyer, provided that prior to
such  assignment  the Lender  delivers to the Borrower an opinion of experienced
securities law counsel to the Lender to the effect that such assignment will not
cause the Borrower to be required to register as an investment company under the
Investment  Company  Act) all or a portion of its rights and  obligations  under
this Loan

                                      -59-


<PAGE>


Agreement;  provided, however, that (i) the Lender's obligations under this Loan
Agreement  shall  remain   unchanged,   (ii)  the  Lender  shall  remain  solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the Lender  shall  remain the holder of any such Note for all  purposes of
this Loan  Agreement,  and (iv) the Borrower  shall  continue to deal solely and
directly with the Lender in connection  with the Lender's rights and obligations
under and in  respect  of this Loan  Agreement  and the  other  Loan  Documents.
Notwithstanding  the terms of Section 2.09, each participant of the Lender shall
be entitled to the  additional  compensation  and other  rights and  protections
afforded the Lender under Sections 2.09 or 2.16 to the same extent as the Lender
would have been entitled to receive them with respect to the participation  sold
to such  participant but not in excess of amounts to which the Lender would have
been entitled  hereunder.

          (d) The Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 12.14, disclose
to the assignee or participant or proposed assignee or participant,  as the case
may be, any information  relating to the Borrower or any of its  Subsidiaries or
to any aspect of the Loans that has been furnished to the Lender by or on behalf
of the Borrower or any of its Subsidiaries.

          (e) The Lender may at any time  create a security  interest  in all or
any  portion  of its  rights  under  this  Loan  Agreement  (including,  without
limitation,  the  Loans  owing  to it and the  Note  held by it) in favor of any
Federal  Reserve Bank in accordance  with Regulation A of the Board of Governors
of the Federal Reserve System and any operating  circular issued by such Federal
Reserve Bank.  No such  assignment  shall release the assigning  Lender from its
obligations hereunder.

          (f) Notwithstanding the foregoing,  upon the occurrence and during the
continuance of an Event of Default,  Lender may assign all or any portion of its
rights and obligations hereunder to any Person, provided that upon the effective
date of such  assignment  such Person  shall  become a party hereto and a Lender
hereunder and shall be (A) entitled to all the rights,  benefits and  privileges
accorded Lender under the Loan Documents,  and (B) subject to all the duties and
obligations of Lender under the Loan Documents.

          (g) The  Borrower  agrees to cooperate  with the Lender in  connection
with any such  assignment or transfer,  to execute and deliver such  replacement
notes, and to enter into such  restatements of, and amendments,  supplements and
other  modifications  to, this Loan  Agreement  and the other Loan  Documents in
order to give effect to such assignment or transfer.

          (h) The  Borrower  may not  assign  any of its  rights or  obligations
hereunder or under any Loan Document  without the prior  written  consent of the
Lender.

          Section  10.15  Alteration  of  Medallion  Loan  Documents.  After the
Funding  Documentation  Receipt Date,  until the pledge of any Medallion Loan is
relinquished  by the Lender,  the Borrower will have no right to modify or alter
the terms of the related  Medallion Loan Documents except in accordance with the
applicable  Seller's  written   Underwriting   Guidelines  and  the  Credit  and
Collection Policy.

          Section  10.16  Periodic  Due  Diligence  Review.   (a)  The  Borrower
acknowledges  that the Lender has the right to perform  continuing due diligence
reviews with respect to the

                                      -60-


<PAGE>


Medallion Loans, for purposes of verifying  compliance with the representations,
warranties and  specifications  made hereunder,  or otherwise,  and the Borrower
agrees that upon  reasonable  (but no less than one (1)  Business  Day's)  prior
notice to the  Borrower  (which  prior  notice  shall not be required  after the
occurrence  and  during  the  continuation  of a  Default),  the  Lender  or its
authorized  representatives  will be permitted  during normal  business hours to
examine,  inspect, and make copies and extracts of, the Medallion Loan Files and
any and all documents, records, agreements,  instruments or information relating
to such  Medallion  Loans in the possession or under the control of the Borrower
and/or the  Custodian.  The Borrower  also shall make  available to the Lender a
knowledgeable  financial  or  accounting  officer for the  purpose of  answering
questions  respecting  the  Medallion  Loan  Files,  the  Medallion  Loans,  the
Borrowing Base or other related matters.  Without limiting the generality of the
foregoing,  the Borrower  acknowledges  that the Lender may make Advances to the
Borrower  based  solely upon the  information  provided  by the  Borrower to the
Lender and the  representations,  warranties and covenants contained herein, and
that the Lender,  at its option,  has the right at any time to conduct a partial
or complete due diligence  review on some or all of the Medallion Loans securing
such  Advance,  including  without  limitation  ordering new credit  reports and
otherwise  re-generating the information used to originate such Medallion Loans.
The Lender  may  underwrite  such  Medallion  Loans  itself or engage a mutually
agreed upon third party underwriter to perform such underwriting,  provided that
such third  party  underwriter  shall  agree in  writing  with the  Borrower  to
maintain the  confidentiality  of the information  reviewed and only to use such
information in connection  with its engagement by the Lender in connection  with
this Loan  Agreement.  The Borrower  agrees to cooperate with the Lender and any
third party underwriter in connection with such underwriting, including, but not
limited to, providing the Lender and any third party  underwriter with access to
any and all documents, records, agreements,  instruments or information relating
to such  Medallion  Loans  in the  possession,  or  under  the  control,  of the
Borrower.   The  Borrower   shall   reimburse  the  Lender  for  all  reasonable
out-of-pocket  costs and expenses  incurred by the Lender in connection with the
Lender's  activities  pursuant to this  Section  10.16 and  Section  9.09 of the
Servicing  Agreement;  provided,  however that,  except if a Servicer Default or
Event of Default has  occurred  and is  continuing,  the  Borrower  shall not be
required to reimburse the Lender for ongoing due diligence and monitoring  costs
and expenses in excess of $20,000 for any calendar  year.

          (b) The  Borrower  shall  reimburse  the  Lender  for  all  reasonable
out-of-pocket  costs and expenses  incurred by the Lender in connection with any
due  diligence  review of a  proposed  Approved  Seller or a  proposed  Approved
Purchase  Agreement.  Amounts reimbursed pursuant to this Section 10.16(b) shall
not be subject to or applied toward the  reimbursement  cap set forth in Section
10.16(a)  hereof.

          Section 10.17 Usury Savings Clause. Anything in this Loan Agreement or
the Note to the contrary notwithstanding, the obligation of the Borrower to make
payments  of  interest  shall be  subject to the  limitation  that  payments  of
interest shall not be required to be made to the extent that a Lender's  receipt
thereof would not be permissible under the law or laws applicable to it limiting
rates of interest  which may be charged or  collected  by it. Any such amount of
interest  which is not paid as a result  of the  limitation  referred  to in the
preceding  sentence  shall be carried  forward  and paid by the  Borrower to the
Lender on the earliest date or dates on which any interest is payable under this
Loan Agreement and on which the receipt

                                      -61-


<PAGE>


thereof is permissible under the laws applicable to the Lender limiting rates of
interest which may be charged or collected by the Lender.  Such payment shall be
made as additional  interest for the month preceding such interest payment date.
Such  deferred  payments  shall  not bear  interest.

          Section   10.18  Pledge  of  Ownership   Interest  in  the   Borrower.
Notwithstanding  anything in this Loan  Agreement  to the  contrary,  the Lender
hereby consents to a silent pledge of Medallion  Funding's ownership interest in
the Borrower in favor of the lenders and noteholders  under the Medallion Credit
Facilities (i) on customary terms or on other terms reasonably acceptable to the
Lender,  and (ii) in any event,  providing  for the ability of such  lenders and
noteholders  to exercise  remedies only upon  acceleration  of the  indebtedness
under this Loan Agreement.


                            [SIGNATURE PAGE FOLLOWS]

                                      -61-


<PAGE>


          IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed and delivered as of the day and year first above written.


                                        BORROWER:

                                        TAXI MEDALLION LOAN TRUST I

                                        By: /s/ Andrew Murstein
                                            ------------------------------
                                            Name:  Andrew Murstein
                                            Title: President


                                        LENDER:

                                        MERRILL LYNCH BANK USA

                                        By: /s/ David L. Millett
                                            ------------------------------------
                                            Name:  David L. Millett
                                            Title: Vice President


<PAGE>


                                                                Schedule 1.01(a)

                          CREDIT AND COLLECTION POLICY

                                  [To Be Added]


<PAGE>


                                                                Schedule 1.01(b)

                           FORMER FSP MEDALLION LOANS

                                  [To Be Added]


<PAGE>


                                                                Schedule 1.01(c)

                      EXISTING PERMITTED JOINT PARTICIPANTS

1.   Atlantic Bank of New York
2.   The Merchants Bank of New York
3.   North Fork Bank

                                      (i)


<PAGE>


                                                                Schedule 1.01(d)

                     EXISTING PERMITTED JUNIOR PARTICIPANTS

1.   E.J.T. Management, Inc.
2.   Elk Associates Funding Corporation
3.   Susil Cab, Inc.
4.   The OSG Corporation


<PAGE>


                                                                Schedule 1.01(e)

                        SPECIFIED 90% LTV MEDALLION LOANS

                                  [To Be Added]



<PAGE>


                                                                Schedule 1.01(f)

                             UNDERWRITING GUIDELINES

                                  [To Be Added]


<PAGE>


                                                                      Schedule 1
                                                                      ----------

                              Eligibility Criteria

          To be an Eligible  Medallion  Loan, a Medallion  Loan (and the related
Medallion) must satisfy,  and maintain at all times,  the following  eligibility
characteristics,  subject to any exceptions  thereto  approved in writing by the
Lender in its sole discretion:

          (a) In the case of  Medallion  Loans other than  Former FSP  Medallion
Loans and Specified 90% LTV Medallion  Loans,  at the time of  origination or of
acquisition by the Borrower,  the Medallion Loan has a Loan-to-Value  Ratio less
than or equal to 80% (for purposes of calculating the  Loan-to-Value  Ratio, the
maximum  Medallion  Valuation Amount  attributed to any Medallion Loan shall not
exceed $325,000).

          (b) In the  case  of  Former  FSP  Medallion  Loans,  at the  time  of
origination or of acquisition by the Borrower, the Former FSP Medallion Loan has
a Loan-to-Value Ratio less than or equal to 92% (for purposes of calculating the
Loan-to-Value  Ratio, the maximum  Medallion  Valuation Amount attributed to any
Former FSP Medallion Loan shall not exceed $325,000).

          (c) In the case of Specified 90% LTV Medallion  Loans,  at the time of
origination or of  acquisition by the Borrower,  the Specified 90% LTV Medallion
Loan has a  Loan-to-Value  Ratio less than or equal to 90% but greater  than 80%
(for purposes of calculating  the  Loan-to-Value  Ratio,  the maximum  Medallion
Valuation  Amount  attributed to any Specified 90% LTV Medallion  Loan shall not
exceed $325,000).

          (d) The Medallion Loan provides for not less  frequently  than monthly
payments of interest.

          (e) The Medallion  Loan and other  Medallion  Loan  Documents have not
been extended,  waived, amended or modified except in accordance with the Credit
and Collection  Policy.  The Lender shall be notified of any material  change to
the Credit and Collection Policy and shall have the right to declare  ineligible
any  Medallion  Loans  originated  or  modified  under such  revised  Credit and
Collection Policy.

          (f) The Medallion  Loan does not contravene  any  Requirements  of Law
applicable thereto.

          (g) All required consents,  approvals and authorizations in connection
with the Medallion Loan have been obtained.

          (h) The  Medallion  Loan is in full force and effect,  no provision of
which has been  modified,  waived or amended  (in the case of a  Medallion  Loan
acquired  from  an  Approved  Seller,  since  the  date of  acquisition  of such
Medallion Loan), except in accordance with the Credit and Collection Policy, and
constitutes the legal, valid and binding obligation of the Obligor in accordance
with its terms.

                                  Schedule 1-1


<PAGE>


          (i) The Medallion Loan is (i) payable in Dollars,  (ii) denominated in
Dollars and (iii) originated in the United States.

          (j) Immediately  prior to the sale,  assignment and transfer  thereof,
the Medallion Loan is secured by a valid first  perfected  security  interest in
the related  Medallion  Collateral  in favor of the Seller or the  Borrower,  as
secured party.

          (k) No right of rescission,  setoff,  counterclaim or defense has been
asserted in connection with the Medallion Loan.

          (l) The related Obligor is an individual, corporation or partnership.

          (m) If the  Obligor  is an  individual,  such  individual  is either a
United  States  citizen or a resident  alien with a "Green  Card",  has a social
security  number,  a drivers  license,  and does not have a  criminal  record or
otherwise complies with all requirements of the applicable Taxi Commission.

          (n) The  Seller  originated  the  Medallion  Loan for the  purpose  of
financing  an  Obligor's  Medallion,  and the  Medallion  Loan  was  made in the
ordinary course of such Seller's business in accordance in all material respects
with the Underwriting Guidelines.

          (o) The Medallion Loan  Documents were fully and properly  executed by
the parties thereto.

          (p) The Medallion Loan is not more than 360 days  delinquent  (without
regard to any applicable grace periods).

          (q) The  Medallion  Loan (i) has been sold by  Medallion  Funding,  as
Seller,  to the Borrower  pursuant to the Purchase  Agreement,  or (ii) has been
sold by an Approved  Seller to the  Borrower  pursuant  to an Approved  Purchase
Agreement.

          (r) The related Obligor (i) is not currently the subject of a judgment
in favor of the  Borrower,  or the  applicable  Seller and (ii) did not have its
related Medallion foreclosed (or subject to foreclosure).

          (s) There exists a Medallion  Loan File with respect to the  Medallion
Loan  that has been  delivered  to the  Custodian  in  accordance  with the Loan
Documents.  The related  Medallion Loan File for the Medallion Loan contains the
documents and instruments specified to be included therein in the form specified
in the definition of "Medallion Loan File."

          (t) The information with respect to the Medallion Loan and the related
Medallion  Loan  Documents and Medallion  Collateral  set forth in the Medallion
Loan Schedule is true, correct and complete in all material respects.

          (u) No adverse  selection  procedures  have been utilized in selecting
the Medallion Loan as one meeting the selection  criteria  contained in the Loan
Agreement.

                                  Schedule 1-2


<PAGE>


          (v) The  origination and servicing of the Medallion Loan, and the sale
of  the  Medallion  Loan  did  not  contravene  in  any  material   respect  any
requirements  of  applicable  federal,  state and local  laws,  and  regulations
thereunder   including,    without   limitation,   usury   laws,   the   Federal
Truth-in-Lending  Act,  the  Equal  Credit  Opportunity  Act,  the  Fair  Credit
Reporting  Act,  the Fair Debt  Collection  Practices  Act,  the  Federal  Trade
Commission  Act, the  Magnuson-Moss  Warranty Act, the Federal  Reserve  Board's
Regulations B and Z, the Soldiers' and Sailors'  Civil Relief Act of 1940,  each
applicable  state  Motor  Vehicle  Retail   Installment  Sales  Act,  and  state
adaptations  of the  National  Consumer Act and of the Uniform  Consumer  Credit
Code, and other consumer credit laws and equal credit opportunity and disclosure
laws.

          (w) The Medallion Loan is not due from the United States of America or
any state or from any other Governmental Authority.

          (x) The Medallion Loan has created a valid, subsisting and enforceable
first priority perfected  security interest in the related Medallion  Collateral
in favor of the applicable  Seller as secured party, and such security  interest
is prior to all other liens (other than liens described in the next sentence, as
to which the Borrower  has no  knowledge)  upon and  security  interests in such
Medallion Collateral that now exist or may hereafter arise or be created. To the
best of the Borrower's knowledge,  there are no Liens or claims existing or that
have been filed for work,  labor,  storage or materials  relating to the related
Medallion  that are prior to the  security  interest  in the  related  Medallion
granted by such Medallion Loan.  There is no Lien against the Medallion  related
to such Medallion Loan for delinquent taxes, except where an adequate escrow for
such taxes has been established and funded.

          (y) The Medallion Loan is the legal,  valid and binding  obligation of
the Obligor  thereunder and is enforceable in accordance with its terms,  except
only as such  enforcement  may be limited by  bankruptcy,  insolvency or similar
laws affecting the enforcement of creditors'  rights  generally;  all parties to
the Medallion Loan had full legal capacity to execute and deliver such Medallion
Loan and all other documents  related thereto and to grant the security interest
purported to be granted  thereby.  The  Medallion  Loan has not been  satisfied,
subordinated  or rescinded,  nor has any  Medallion  been released from the lien
granted by such Medallion Loan in whole or in part.

          (z)  The  Medallion  Loan  has  not  been  modified  as  a  result  of
application of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended.

          (aa) No right of rescission,  setoff, counterclaim,  or defense exists
with respect to the Medallion  Loan. The operation of the terms of the Medallion
Loan or the exercise of any right thereunder will not render such Medallion Loan
unenforceable  in whole or in part or subject  to any such right of  rescission,
setoff, counterclaim or defense.

          (bb) As of the Funding  Documentation  Receipt Date for the  Medallion
Loan, except for Permitted Delinquencies, no default, breach, violation or event
permitting  acceleration under the terms of the Medallion Loan has occurred;  no
continuing  condition  that with notice or the lapse of time would  constitute a
default, breach,  violation, or event permitting acceleration under the terms of
such Medallion Loan has arisen;  the applicable Seller has not waived any of the
foregoing;  and the  Medallion  related  to the  Medallion  Loan  has  not  been
repossessed under

                                  Schedule 1-3


<PAGE>


the Medallion Loan. To the best of the Borrower's knowledge, the related Obligor
is not in default on any other debt  obligation owed or owing to the Borrower or
any Affiliate of the Borrower. "Permitted Delinquency" means a delinquency of no
more than 360 days.

          (cc) The Medallion  Loan has not been sold,  transferred,  assigned or
pledged by the  applicable  Seller to any Person  other than the  Borrower,  and
immediately  prior to the sole of the Medallion Loan to the Lender,  such Seller
had good and marketable title to the Medallion Loan, and was sole owner thereof,
free and clear of all Liens, except for Permitted Participation Interests.  Such
Seller has not taken any  action to convey  any right to any  Person  that would
result in such  Person  having a right to  payments  received  under the related
insurance  policies,  except in connection with Permitted  Junior  Participation
Interests or Permitted Joint Participation Interests.

          (dd) On the  Effective  Date and each  Funding  Documentation  Receipt
Date,  the Borrower  and the Servicer  will have each caused the portions of its
master  computer  records  relating  to the  Medallion  Loan to be  clearly  and
unambiguously  marked to show that the  Medallion  Loans has been pledged to the
Lender in accordance with the terms of this Loan Agreement.

          (ee) Each  Medallion  Loan Schedule made  available by the Borrower to
the  Lender  was  complete  and  accurate  in all  material  respects  as of the
Effective   Date  (in  the  case  of  the  first  such  tape)  and  the  Funding
Documentation Receipt Date with respect to which such tape was delivered.

          (ff) The Medallion  Loan was not  originated in, and is not subject to
the laws of,  any  jurisdiction  under  which the  pledge,  sale,  contribution,
transfer  and  assignment  of such  Medallion  Loan shall be  unlawful,  void or
voidable,  except  as set  forth  in the  opinions  of local  counsel  delivered
pursuant to Section 5.01(j)(ii) of the Loan Agreement. The applicable Seller has
not entered into any agreement with any Obligor or other Person that  prohibits,
restricts or conditions the pledge, sale,  contribution,  transfer or assignment
of any  portion of such  Medallion  Loan or the  related  Collateral  or that is
otherwise  inconsistent  with the  terms  of such  Medallion  Loan or this  Loan
Agreement.

          (gg) The Lender has a first  priority  perfected Lien in the Medallion
Loan and the  Medallion  Collateral  related  thereto.  All filings  (including,
without   limitation,   Uniform   Commercial  Code  filings)  necessary  in  any
jurisdiction to give the Lender a first priority perfected Lien in the Medallion
Loan and the other Medallion Collateral have been made.

          (hh) There is only one original  executed copy of the  Medallion  Note
for the Medallion Loan,  including any assumptions,  amendments or modifications
thereto.

          (ii) No further action is required under the Uniform  Commercial  Code
or any titling  statute or act to  continue  the  perfected  status of the first
priority security interest of the Borrower in the Medallion against creditors of
and  transferees  of  the  Obligor,   except  for  the  filing  of  continuation
statements.

          (jj) The Medallion Loan constitutes  "chattel paper",  an "instrument"
or a "general intangible" under the Uniform Commercial Code.

                                  Schedule 1-4


<PAGE>


          (kk) Each related  Medallion  Loan  Document  contains  customary  and
enforceable  provisions  so as to render the rights and  remedies  of the holder
thereof  adequate for the practical  realization of the benefits of the security
interests intended to be provided thereby,  subject to the limitations described
in the next  succeeding  sentence.  There is no  exemption  under  existing  law
available to the related  Obligor  which would  interfere  with secured  party's
right to foreclose or to realize upon the related Medallion Loan Document, other
than that  which may be  available  under the  insolvency  laws,  other  laws of
general  application  relating to or affecting  the  enforcement  of  creditors'
rights  generally,  applicable  debt  relief or  homestead  statutes  or general
principles of equity. No  representations  have been made to the related Obligor
by the  applicable  Seller  or the  Borrower  that  are  inconsistent  with  the
Medallion Loan Documents.  The Medallion Loan contains an enforceable  provision
for the  acceleration  of the payment of the principal  balance of the Medallion
Loan in the event that the  Medallion is sold or  transferred  without the prior
written consent of the Borrower.

          (ll) Any applicable  intangible taxes and documentary stamp taxes were
paid as to the Medallion Loan and each related Medallion Loan Document.

          (mm)  The  Medallion  Loan  Documents  for the  Medallion  Loan are in
substantially  the form of the Standard Form Medallion Loan  Documentation  with
the  exceptions,  if any,  listed on the  Notice of  Borrowing  and  Pledge  and
approved in writing by the Lender.

          (nn) The  Borrower has not advanced  funds,  or induced,  solicited or
knowingly received any advance of funds by a party other than an Obligor on such
Medallion Loan,  directly or indirectly,  for the payment of any amount required
by such Medallion Loan.

          (oo) The proceeds of such  Medallion  Loan have been fully  disbursed,
there is no obligation or requirement  for future advances  thereunder,  and all
costs,  fees and expenses  incurred in making or closing the Medallion Loan have
been  paid.  The  Borrower  has duly  fulfilled  in all  material  respects  all
obligations on its part to be fulfilled  under or in connection with the related
Medallion  Loan  Documents  and has done  nothing  to impair  the  rights of the
applicable  Seller,  the Borrower or the Lender in such Medallion Loan Documents
or payments with respect thereto.

          (pp) As of the applicable date of transfer  thereunder,  no Obligor on
the  Medallion  Loan is bankrupt,  is the debtor in a voluntary  or  involuntary
bankruptcy  proceeding,  or is  the  subject  of a  comparable  receivership  or
insolvency proceeding,  other than Obligors under the protection of a bankruptcy
court or  receivership  which has  approved  payment by any such  Obligor of the
Medallion Loan.

          (qq) To the best of the Borrower's knowledge, there are no proceedings
or investigations  pending or,  threatened,  before any court,  regulatory body,
administrative  agency,  or other tribunal or governmental  instrumentality  (a)
asserting the invalidity of the related Medallion Loan Documents, (b) seeking to
prevent payment and performance of such Medallion Loan Documents, or (c) seeking
any  determination  or ruling that might  materially  and  adversely  affect the
validity,  enforceability or collectability of the Medallion Loan or the related
Medallion Loan Documents.

                                  Schedule 1-5


<PAGE>


          (rr) The Borrower has no  knowledge of any  circumstance  or condition
with  respect to the  Medallion  Loan,  the  Medallion  Collateral  with respect
thereto or the  related  Obligors'  credit  standing  that could  reasonably  be
expected  to cause the  Lender  to regard  the  Medallion  Loan as  unacceptable
security,  cause the Medallion Loan to become delinquent or adversely affect the
value or marketability of such Medallion Loan.

          (ss) The Medallion Loan is a Boston Medallion Loan,  Chicago Medallion
Loan, New York City Medallion Loan,  Cambridge  Medallion Loan, Newark Medallion
Loan,  Philadelphia  Medallion  Loan or  Other  Permitted  Medallion  Loan.  The
Medallion  securing such Medallion is valid and subsisting and in full force and
effect.

          (tt) The applicable  Seller and related Obligor shall have complied in
all  material  respects  with  all  the  requirements  of  the  applicable  Taxi
Commission.

          (uu)  In  the  case  of a New  York  Medallion  Loan,  the  underlying
Medallion is either an Individual Medallion or a Corporate Medallion.

          (vv) The Medallion  Loan and other  Medallion  Loan Documents have not
been  extended,  waived,  amended  or  modified  except in  accordance  with the
applicable  Seller's  written   Underwriting   Guidelines  and  the  Credit  and
Collection Policy.

          (ww) The Medallion  Loans shall have been originated in a manner which
is consistent  with the  applicable  Seller's  Underwriting  Guidelines,  and in
compliance  with  applicable   federal  and  state  consumer   protection  laws,
including,  without  limitation,  all laws with  respect to unfair or  deceptive
practices and all laws relating to predatory lending practices.

          (xx) In the  case of a  Medallion  Loan  that  is  subject  to a Joint
Participation  Interest  or a  Junior  Participation  Interest,  the  applicable
participation  agreement  is an Approved  Joint  Participation  Agreement  or an
Approved  Junior  Participation  Agreement,  as applicable,  and constitutes the
legal,  valid  and  binding   obligation  of  the  applicable   Permitted  Joint
Participant or Permitted  Junior  Participant  and is  enforceable  against such
Permitted Joint  Participant or Permitted Junior  Participant in accordance with
the respective terms and conditions of such participation agreement.

          (yy) In the case of a Former FSP  Medallion  Loan,  the  participation
formerly  held by  Freshstart  was sold to  Medallion  Funding in a "true  sale"
transaction.

          (zz) In the case of a Newark  Medallion  Loan,  the Lender  shall have
received  evidence,  in form and  substance  satisfactory  to the  Lender in the
Lender's  sole and  absolute  discretion,  that the Newark Taxi  Commission  has
approved (i) the sale of Medallion Loans from Medallion  Funding to the Borrower
pursuant to the Purchase  Agreement and, (ii) the  Borrower's  grant of security
interest  to the  Lender in the Newark  Medallion  Loans  pursuant  to this Loan
Agreement.

                                  Schedule 1-6


<PAGE>


                                                                   Schedule 6.25
                                                                   -------------

                              FILING JURISDICTIONS

Taxi Medallion Loan Trust I
---------------------------
Delaware Secretary of State


Medallion Funding Corp.
-----------------------
New York Secretary of State


Medallion Financial Corp.
-------------------------
Delaware Secretary of State


<PAGE>


                                                                   Schedule 6.27
                                                                   -------------

                               PARENT SUBSIDIARIES

--------------------------   -----------------------------    ------------------
                                                              Jurisdiction
Subsidiary                   Form of Organization             of Organization
--------------------------   -----------------------------    ------------------

Medallion Funding Corp.      Corporation                      New York

Business Lenders, LLC        Limited Liability Corporation    Delaware

Medallion Taxi Media, Inc.   Corporation                      New York

Medallion Capital Corp.      Corporation                      New York

Medallion Business
  Credit, LLC                Limited Liability Corporation    Delaware

Freshstart Venture
  Capital Corp.              Corporation                      New York

Medallion Funding
  Chicago Corp.              Corporation                      Delaware
--------------------------   -----------------------------    ------------------


<PAGE>


                                                                   Schedule 7.20
                                                                   -------------

                             RIGHT OF FIRST REFUSAL

From the date hereof until and including the later of (i) the  Termination  Date
and (ii) the date of repayment to the Lender of all Secured  Obligations and the
performance of all other obligations under the Loan Documents,  the Lender shall
have a right of  first  refusal  with  respect  to each  financing  of  Eligible
Medallion  Loans and the  Borrower  shall  not,  and shall not permit any of its
Affiliates to, effect any financing of Eligible  Medallion Loans with any Person
who is not an Affiliate of the Borrower,  except  pursuant to the procedures set
forth below.

1.   If a party other than the Lender or an  Affiliate of the Borrower (a "Third
     Party") has  provided a good faith  proposal,  terms sheet,  indication  or
     commitment to provide financing of Eligible Medallion Loans (a "Third Party
     Proposal"),  the Borrower shall provide  written notice (a "Match  Notice")
     thereof to the Lender together with a copy of the Third Party Proposal.

2.   At the request of the Lender,  the Borrower shall  cooperate fully with the
     Lender in good faith for a period of twenty Business Days, to negotiate the
     details of the terms of the proposed  financing and to reach agreement with
     the Lender to obtain from the Lender or one of its Affiliates, financing on
     terms  substantially as beneficial to the Borrower as that contained in the
     Third Party Proposal;  provided,  however, in any event, upon notice to the
     Borrower,  the  Lender  or one of its  Affiliates  shall  have the right to
     provide the financing pursuant to the terms of the Third Party Proposal.

3.   The  Lender or one of its  Affiliates  may elect to  provide  the  proposed
     financing  by  delivering  to the  Borrower  on or before the date which is
     twenty  Business  Days  after the Match  Notice  has been  received  by the
     Lender,  or,  if the  Borrower  and  Lender  agree in good  faith to extend
     negotiations   referred  to  in   paragraph  2,  such  later  date  as  the
     negotiations  are finalized or terminated,  a terms sheet setting forth the
     terms and  conditions of the its proposal,  such terms and conditions to be
     either (i) as agreed by the parties  pursuant to paragraph 2 above, or (ii)
     on the same terms and  conditions  as those  contained  in the Third  Party
     Proposal.  In such event,  the  Borrower  shall not proceed  with the Third
     Party Proposal.

4.   If (i) the Lender or one of its  Affiliates  gives  notice to the  Borrower
     that it elects not to provide  the  financing  set forth in the Third Party
     Proposal or to negotiate with the Borrower pursuant to paragraph 2, or (ii)
     Lender or one of its Affiliates does not, within the time period  specified
     above,  provide the term sheet referred to in paragraph 2, the Borrower may
     close the financing on the terms specified in the Third Party Proposal.

5.   If the Borrower  proposes to close a transaction on terms more favorable to
     the Third Party or any of the Third Party's  Affiliates than those included
     in the Third  Party  Proposal  accompanying  the most recent  Match  Notice
     delivered to the Lender,  than such  financing  shall be deemed a new Third
     Party  Proposal  and the Borrower  shall  provide a new Match Notice to the
     Lender and comply with the provisions of this Schedule 7.20 with respect to
     such financing terms.


<PAGE>


6.   If the financing is being provided by a Third Party,  then (i) one Business
     Day after  receipt  thereof,  the Borrower  shall  provide to the Lender an
     initial draft of the credit  agreement or similar document and all material
     related documentation with the Third Party (collectively,  the "Third Party
     Credit  Documents"),  the  terms  of  which  must be  consistent  with  the
     applicable Third Party Proposal accompanying a Match Notice; and (ii) three
     Business Days prior to the  execution of any Third Party Credit  Documents,
     the Borrower  shall  provide to the Lender the then  current  drafts of the
     Third Party Credit  Documents,  which shall be substantially in the form to
     be executed by the  parties  thereto.  Within one  Business  Day  following
     execution  thereof,  the Borrower shall provide to the Lender copies of the
     final Third Party Credit Documents.

7.   Section 7.20 to the Loan  Agreement and this Schedule 7.20 are not intended
     to be and do not constitute a commitment or obligation by the Lender or any
     of its  Affiliates  to provide or arrange for any financing by the Borrower
     or any of its Affiliates, and no liability or obligation on the part of the
     Lender or any of its  Affiliates  to  proceed  with or  participate  in any
     financing  by the  Borrower  or any of its  Affiliates  shall be created or
     exist unless or until the Lender,  or such  Affiliate,  as the case may be,
     has  executed  and  delivered  definitive   documentation  containing  such
     obligation.


<PAGE>


                                                                   Schedule 7.21
                                                                   -------------

                             MONTHLY PRICING REPORTS

----------------------  --------------------------------------------------------
     JURISDICTION                        DESCRIPTION OF REPORT
----------------------  --------------------------------------------------------

Boston, Massachusetts   Pricing  and  sales   report  from  the  Boston   Police
                        Department   setting  forth,  among  other  things,  the
                        medallion  numbers,   sellers,   buyers,   sales  price,
                        transaction  dates,  and  purchase  dates (or such other
                        information  as shall then be included in such  report),
                        or if for any month  such  pricing  and sales  report is
                        not available  after  reasonable  attempts to obtain the
                        same,  a letter  from  Robert  Kline,  Esq.  or  another
                        attorney   acceptable   to  the   Lender   in  its  sole
                        discretion,  (i)  setting  forth,  that  based  upon the
                        sales of taxi medallions  during the applicable month in
                        which  such  counsel  participated  in or of which  such
                        counsel is otherwise  aware,  the average price at which
                        taxi medallions  were sold during the applicable  month,
                        and (ii)  attaching  to such  letter a  schedule  of the
                        sales of taxi medallions  during such  applicable  month
                        which  such  counsel  participated  in or of which  such
                        counsel is otherwise aware.
----------------------  --------------------------------------------------------
Cambridge,              Pricing  and sales  report  from the City of  Cambridge,
  Massachusetts         Hackney  Carriage  Division  setting forth,  among other
                        things,  the  medallion  numbers,  dates of transfer and
                        sales price (or such other  information as shall then be
                        included  in  such  report),  or if for any  month  such
                        pricing  and  sales  report  is  not   available   after
                        reasonable  attempts  to obtain the same,  a letter from
                        Robert  Kline,  Esq. or another  attorney  acceptable to
                        the Lender in its sole  discretion,  (i) setting  forth,
                        that based upon the sales of taxi medallions  during the
                        applicable  month in which such counsel  participated in
                        or  of  which  such  counsel  is  otherwise  aware,  the
                        average price at which taxi  medallions were sold during
                        the applicable  month, and (ii) attaching to such letter
                        a schedule of the sales


<PAGE>


                        of taxi medallions  during such  applicable  month which
                        such counsel participated in or of which such counsel is
                        otherwise aware.
----------------------  --------------------------------------------------------
Chicago, Illinois       Pricing and sales  report from the  Commissioner  of the
                        Department of Consumer  Services  setting  forth,  among
                        other things, the medallion  numbers,  transaction dates
                        and sales  price  (or such  other  information  as shall
                        then be  included in such  report),  or if for any month
                        such  pricing and sales  report is not  available  after
                        reasonable  attempts  to obtain the same,  a letter from
                        Bernie  Block,  Esq. or another  attorney  acceptable to
                        the Lender in its sole  discretion,  (i) setting  forth,
                        that based upon the sales of taxi medallions  during the
                        applicable  month in which such counsel  participated in
                        or  of  which  such  counsel  is  otherwise  aware,  the
                        average price at which taxi  medallions were sold during
                        the applicable  month, and (ii) attaching to such letter
                        a schedule of the sales of taxi  medallions  during such
                        applicable  month which such counsel  participated in or
                        of which such counsel is otherwise aware.
----------------------  --------------------------------------------------------
Newark, New Jersey      A  pricing  and  sales   report  from  the  Division  of
                        Taxicabs,   Newark  Police  Department  (or  such  other
                        information  as shall then be included in such  report),
                        or if for any month such pricing and sales report is not
                        available after reasonable  attempts to obtain the same,
                        a letter  from Alan  Decker,  Esq.  or another  attorney
                        acceptable  to the  Lender in its sole  discretion,  (i)
                        setting  forth,  that  based  upon  the  sales  of  taxi
                        medallions  during  the  applicable  month in which such
                        counsel  participated  in or of which  such  counsel  is
                        otherwise   aware,  the  average  price  at  which  taxi
                        medallions  were sold during the applicable  month,  and
                        (ii) attaching to such letter a schedule of the sales of
                        taxi medallions  during such applicable month which such
                        counsel  participated  in or of which  such  counsel  is
                        otherwise aware.
----------------------  --------------------------------------------------------
New York, New York      Pricing  and sales  report from the New York City Taxi &
                        Limousine  Commission setting forth, among other things,
                        the  average   price


<PAGE>


                        and number of medallion loan transfers for the six prior
                        months  (or such  other  information  as  shall  then be
                        included  in  such  report),  or if for any  month  such
                        pricing  and  sales  report  is  not   available   after
                        reasonable  attempts  to obtain the same,  a letter from
                        Lance Kuba, Esq., Roger Davis,  Esq. or another attorney
                        acceptable  to the  Lender in its sole  discretion,  (i)
                        setting  forth,  that  based  upon  the  sales  of  taxi
                        medallions  during  the  applicable  month in which such
                        counsel  participated  in or of which  such  counsel  is
                        otherwise   aware,  the  average  price  at  which  taxi
                        medallions  were sold during the applicable  month,  and
                        (ii) attaching to such letter a schedule of the sales of
                        taxi medallions  during such applicable month which such
                        counsel  participated  in or of which  such  counsel  is
                        otherwise aware.
----------------------  --------------------------------------------------------
Philadelphia,           A pricing and sales report from the Pennsylvania  Public
  Pennsylvania          Utilities  Commission,  or if for any month such pricing
                        and  sales  report  is not  available  after  reasonable
                        attempts  to  obtain  the  same,   a  letter  from  John
                        Gallagher,  Esq. or another  attorney  acceptable to the
                        Lender in its sole discretion,  (i) setting forth,  that
                        based  upon the  sales  of taxi  medallions  during  the
                        applicable  month in which such counsel  participated in
                        or  of  which  such  counsel  is  otherwise  aware,  the
                        average price at which taxi  medallions were sold during
                        the applicable  month, and (ii) attaching to such letter
                        a schedule of the sales of taxi  medallions  during such
                        applicable  month which such counsel  participated in or
                        of which such counsel is otherwise aware.
----------------------  --------------------------------------------------------


<PAGE>


                                                                       Exhibit A
                                                                       ---------

                                  FORM OF NOTE

                                  [To Be Added]


<PAGE>


                                                                       Exhibit B
                                                                       ---------

                       FORM OF BORROWING BASE CERTIFICATE

                                  [To Be Added]


<PAGE>


                                                                       Exhibit C
                                                                       ---------

                  FORM OF COLLECTION ACCOUNT CONTROL AGREEMENT

                                  [To Be Added]


<PAGE>


                                                                       Exhibit D
                                                                       ---------

                           FORM OF CUSTODIAL AGREEMENT

                                  [To Be Added]


<PAGE>


                                                                     Exhibit E-1
                                                                     -----------

                                    RESERVED


<PAGE>


                                                                     Exhibit E-2
                                                                     -----------

                                    RESERVED


<PAGE>


                                                                     Exhibit E-3
                                                                     -----------

                                    RESERVED


<PAGE>


                                                                     Exhibit F-1
                                                                     -----------

               FORM OF JUNIOR PARTICIPATION SUPPLEMENTAL AGREEMENT
                                    (E.J.T.)

                                  [To Be Added]


<PAGE>


                                                                     Exhibit F-2
                                                                     -----------

               FORM OF JUNIOR PARTICIPATION SUPPLEMENTAL AGREEMENT
                                      (ELK)

                                  [To Be Added]


<PAGE>


                                                                     Exhibit F-3
                                                                     -----------
               FORM OF JUNIOR PARTICIPATION SUPPLEMENTAL AGREEMENT
                                (SUSIL CAB, INC.)

                                  [To Be Added]


<PAGE>


                                                                     Exhibit F-4
                                                                     -----------

               FORM OF JUNIOR PARTICIPATION SUPPLEMENTAL AGREEMENT
                              (THE OSG CORPORATION)

                                  [To Be Added]


<PAGE>


                                                                       Exhibit G
                                                                       ---------

           FORM OF INTEREST RESERVE DEPOSIT ACCOUNT CONTROL AGREEMENT

                                  [To Be Added]


<PAGE>


                                                                       Exhibit H
                                                                       ---------

                     FORM OF NOTICE OF BORROWING AND PLEDGE

                                  [To Be Added]


<PAGE>


                                                                       Exhibit I
                                                                       ---------

                             FORM OF TAX CERTIFICATE

                                  [To Be Added]


<PAGE>


                                                                       Exhibit J
                                                                       ---------

                        FORM OF ASSIGNMENT AND ACCEPTANCE

                                  [To Be Added]


<PAGE>


                                                                     Exhibit K-1
                                                                     -----------

                                    RESERVED


<PAGE>


                                                                     Exhibit K-2
                                                                     -----------

                                    RESERVED


<PAGE>


                                                                     Exhibit K-3
                                                                     -----------

                                    RESERVED


<PAGE>


                                                                     Exhibit L-1
                                                                     -----------

                 FORM OF APPROVED JUNIOR PARTICIPATION AGREEMENT
                                    (E.J.T.)

          Each Approved Junior Participation Agreement shall be substantially in
the form of the Participation Agreement, dated September 5, 2001, by and between
Medallion  Funding  Corp.  ("Medallion  Funding")  and E.J.T.  Management,  Inc.
("EJT"),  attached hereto, as modified by the Junior Participation  Supplemental
Agreement,  dated September 13, 2002, by and among EJT, Medallion Funding,  Taxi
Medallion  Loan Trust I and  Merrill  Lynch Bank USA,  subject to the  following
modifications:

          1. Changing the date of the of the Participation  Agreement (paragraph
1);

          2. Changing the dates, parties and terms of the underlying loan (first
and second Whereas Clauses);

          3.  Changing  the dollar  amount of the  participation,  participation
percentage,  dollar amount of the  unparticipated  share,  lender percentage and
participation interest rate (Section 1.A);

          4. Changing the lender interest rate (Section 1.B);

          5.  Changing  the  description  of the Loan  Documents  and  principal
balance thereunder (Section 1.C); and

          6. Such other changes that are incidental to the forgoing  changes and
otherwise such other changes reasonably approved by Lender.


<PAGE>


                                                                     Exhibit L-2
                                                                     -----------

                 FORM OF APPROVED JUNIOR PARTICIPATION AGREEMENT
                                      (ELK)

          Each approved Junior participation Agreement shall be substantially in
the form of the  Participation  Agreement,  dated April 19, 1999, by and between
Elk  Associates  Funding   Corporation   ("Elk")  and  Medallion  Funding  Corp.
("Medallion Funding"),  attached hereto, as modified by the Junior Participation
Supplemental  Agreement,  dated September 13, 2002, by and among Elk,  Medallion
Funding,  Taxi Medallion Loan Trust I and Merrill Lynch Bank USA, subject to the
following  modifications:

          1. Changing the date of the Participation Agreement (paragraph 1);

          2.  Changing  the  parties,   dollar   amount  of   underlying   loan,
participation percentage, dollar amount of the participation,  lender percentage
and dollar amount of unparticipated share (Whereas clause);

          3. Changing the term of the loan, timing of balloon payment,  interest
rate, participation interest rate and lender interest rate (Section 1);

          4.  Changing  the  description  of the loan  documents  and  principal
balance thereunder (Section 2);

          5. Changing the lender interest rate and  participation  interest rate
(Section 4); and

          6. Such other changes that are incidental to the foregoing changes and
otherwise such other changes reasonably approved by Lender.


<PAGE>


                                                                     Exhibit L-3
                                                                     -----------

                 FORM OF APPROVED JUNIOR PARTICIPATION AGREEMENT
                                (SUSIL CAB, INC.)

          Each Approved Junior Participation Agreement shall be substantially in
the form of the  Participation  Agreement,  dated  September  22,  2000,  by and
between Susil Cab,  Inc.  ("Susil")  and  Medallion  Funding  Corp.  ("Medallion
Funding"), attached hereto, as modified by the Junior Participation Supplemental
Agreement, dated September 13, 2002, by and among Susil, Medallion Funding, Taxi
Medallion  Loan Trust I and  Merrill  Lynch Bank USA,  subject to the  following
modifications:

          1. Changing the date of the Participation Agreement (paragraph 1);

          2. Changing the dates, parties and terms of the underlying loan (first
and second Whereas clauses);

          3.  Changing  the dollar  amount of the  participation,  participation
percentage,  dollar amount of the  unparticipated  share,  lender percentage and
participation interest rate (Section 1.A);

          4. Changing the lender interest rate (Section 1.B);

          5.  Changing  the  description  of the Loan  Documents  and  principal
balance thereunder (Section 1.C); and

          6. Such other changes that are incidental to the forgoing  changes and
otherwise such other changes reasonably approved by Lender.


<PAGE>


                                                                     Exhibit L-4
                                                                     -----------

                 FORM OF APPROVED JUNIOR PARTICIPATION AGREEMENT
                              (THE OSG CORPORATION)

          Each Approved Junior Participation Agreement shall be substantially in
the form of the  Participation  Agreement  dated August 14, 2002, by and between
The OSG  Corp.  ("OSG")  and  Medallion  Funding  Corp.  ("Medallion  Funding"),
attached hereto, as modified by the Junior Participation Supplemental Agreement,
dated September 13, 2002, by and among OSG,  Medallion  Funding,  Taxi Medallion
Loan Trust I and Merrill Lynch Bank USA, subject to the following modifications:

          1. Changing the date of the Participation Agreement (paragraph 1);

          2.  Changing  the dates,  parties  and amount of the  underlying  loan
(Whereas clause);

          3.  Changing  the dollar  amount of the  participation,  participation
percentage,  dollar amount of the  unparticipated  share,  lender percentage and
participation interest rate (Section 1.A); and

          4. Such other changes that are incidental to the forgoing  changes and
otherwise such other changes reasonably approved by the Lender.


</TEXT>
</DOCUMENT>
