EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into effective the 4th day of May,
1998, by and among Business Loan Center, Inc., a Delaware corporation with
offices at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, X.X. ("Company" or "BLC") and Xxxxxxx
Xxxxxxx residing at 0 Xxxxxx Xxxxx, Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000
("Executive").
WHEREAS, the Company is a wholly owned subsidiary of BLC Financial
Services, Inc., a Delaware Corporation ("Financial") with an office at 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx; and
WHEREAS, Company is in the business of originating, underwriting and
processing commercial loans, including but not limited to loans that fall within
the parameters of the 7(a) Program of the U.S. Small Business Administration
("7(a) Loans") and loans that fall within the parameters of the Department of
Agricultures Rural Development guaranteed loan program ("B & I Loans"), which
loans are funded by or through Financial or its subsidiaries, including Business
Loan Center, Inc. a Delaware Corporation ("BLC"), BLC Commercial Capital
Corporation, a Florida Corporation and BLC Capital Corporation, a Delaware
corporation; and
WHEREAS, Company originates, underwrites and processes the aforementioned
commercial loans exclusively for Financial and its subsidiaries, Business Loan
Center, Inc. ("BLC"), BLC Commercial Capital Corp. ("Commercial"), BLC Capital
Corp. ("Capital") and any other subsidiaries or affiliates that may hereafter be
formed; and
WHEREAS, Executive has valuable experience in commercial lending; and
WHEREAS, Executive's experience as set forth above is of great value to
the Company, Financial and its other subsidiaries; and
WHEREAS, Company desires to employ Executive for the Term set forth herein
and Executive desires to accept such employment on an exclusive basis; and
WHEREAS, in view of Executive's experience and anticipated services for
Company, Executive acknowledges the necessity and reasonableness of his covenant
against disclosure of trade
secrets of, and unfair competition with, Company and restrictions on his future
business activities;
NOW, THEREFORE, in consideration of the premises and mutual promises set
forth herein, Company, Financial and Executive agree as follows:
(a) Employment and Term.
Company shall employ Executive for a period of five (5) years,
commencing on the date hereof and ending April 30, 2003 ("Initial Period"),
subject to the termination provisions hereinafter set forth. This Agreement
shall be automatically deemed extended for additional successive one-year
periods, unless Financial or Executive notifies the other at least 90 days prior
to the end of the Initial Period or any extension thereof, that it or he does
not wish to extend the Agreement.
(b) Compensation.
(i) As compensation for Executive's performance of all required
services hereunder, and conditioned upon his full, faithful and diligent
performance of all promises and undertakings herein, Company shall pay to
Executive the sum of One Hundred Seventy Thousand Dollars ($170,000) per year.
Said compensation shall be payable in bi-weekly installments, or in accordance
with Company's regular payroll practices for other senior executives of
Financial and BLC.
(ii) All payments to be made by Company to Executive hereunder shall
be subject to such tax, FICA or other deductions or withholdings as Company
shall be required to make by law or which Company uniformly makes as a matter of
policy from compensation paid to other employees.
(iii) As further compensation for Executive's performance of all
required services hereunder, and conditioned upon his full, faithful and
diligent performance of all promises and undertakings herein, Executive shall be
granted options to purchase 70,000 shares of the $.01 par value common stock of
Financial, pursuant to the Option Agreement annexed as Exhibit I.
(iv) From time to time, Financial's Board of Directors may elect to
increase Executive's compensation hereunder, and to grant bonuses and stock
options for Financial stock to Executive based on the Company's, Financial's and
Executive's performance.
(v) During the term of the Executive's employment hereunder,
employee benefits, including medical insurance, will be provided to Executive in
accordance with programs at BLC then available to the BLC's executive employees.
The Executive also shall be entitled to participate in all the Company's and the
BLC's profit sharing, pension, retirement, deferred compensation and savings
plans, as the same may be amended and in effect from time to time, at levels and
having interests commensurate with all of Company's and the BLC's executive
employees.
(viii) Executive shall be entitled to reasonable periods of
vacation, not to exceed
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four (4) weeks each year, to be taken at time or times which do not unreasonably
interfere with the performance of his duties hereunder.
(ix) Executive shall also be given a one Ten Thousand Dollar
($10,000) bonus upon signing of this Agreement.
(c) Office, Title and Duties.
Executive shall be Company's President, the Executive Vice President
of Financial and shall serve on the Loan Committee of the BLC, Capital &
Commercial. Executive will also, at the direction of the Board of Directors of
Financial, BLC or the Company, assist in the expansion of the loan origination
network, throughout the United States, of BLC, Financial or their subsidiaries.
Executive will devote all of his skill, knowledge and working time (except for
(i) reasonable vacation time and absence for sickness or similar disability and
(ii) to the extent that it does not interfere with the performance of the
Executive's duties hereunder, such reasonable time as may be devoted to service
on boards of directors of civic organizations, civic board of fulfillment of
other civic responsibilities) to the conscientious performance of the duties of
such positions. He may not otherwise engage in other business activities for his
own account of for others, except Executive may, without the prior written
consent of the Company, but subject to restrictions set forth below, own up to
five percent (5%) of the outstanding capital stock of any publicly traded
company and own interests in privately held companies, other entities and
investments that do not compete with the Company. Although Executive may retain
whatever capital stock of any publicly traded company he owns as of the date
hereof, Executive shall not acquire after the date hereof the outstanding
capital stock of any publicly traded company that competes with the Company nor
have any financial interest in any privately held business, company, or
investment, that competes with Company without the prior written consent of
Financial. Executive shall exercise all powers and duties consistent with his
position, as well as such powers and duties as may be delegated or assigned to
him from time to time by the Board of Directors of Company and/or Financial.
Executive, without additional compensation, will, if requested, serve as an
officer and/or director, of Company, Financial, Commercial, BLC, Capital and/or
any hereinafter formed subsidiaries, if he is so elected or designated.
Executive agrees to discharge the above-described powers and duties in a
diligent and professional manner and shall render such other services as may be
requested from time to time by the Board of Directors of Company and/or
Financial upon reasonable advance notice. Without limiting the generality of any
of the foregoing, Executive shall actively seek out and refer to the Company,
Capital, Financial, BLC and Commercial all 7(a) Loans, B & I Loans and other
commercial loans of all types and kinds, Executive shall actively seek to
promote, coordinate and expand the Company's network of loan brokers, loan
representatives and other loan sources and Executive shall use his best efforts
to operate the Company in a profitable manner and maximize the profits generated
by the Company, Financial, Commercial, BLC and Capital. Executive agrees to
travel as reasonably required in performing his functions hereunder. The duties
and obligations of Executive as set forth hereinabove and elsewhere in this
Agreement are collectively referred to as Duties. BLC, Financial, Commercial,
Capital and any later formed subsidiaries of Financial are sometimes hereinafter
referred to as Affiliates.
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(d) Covenants Against Disclosure of Trade Secrets and Unfair
Competition; Non-Competition
To preserve for Company and its Affiliates the benefit of the
goodwill and ongoing value of Company's and Affiliates' businesses, Executive
covenants and agrees to deliver promptly to Company upon termination of his
employment by Company, or at any other time Company may so request, all
memoranda, notes, records, reports, mailing lists, customer lists, databases and
other documents (and all copies thereof) relating to Company's business, which
Executive obtained from the Company or Affiliates while serving or acting on
behalf of Company or Affiliates.
During the term of this Agreement and for two years after the
termination of this Agreement (the "Non-Competition Term"), in order to preserve
the goodwill and ongoing business value of Company and Affiliates, and in view
of Executive's experience and access to unique and proprietary information of
the current and proposed business activities of Company and Affiliates,
Executive will not directly or indirectly:
(i) Disclose to any third party any of Company's or Affiliates'
trade secrets as they exist from time to time, or any of
Company's or Affiliates' confidential information, including,
but not limited to, loan sources, mail lists, customer lists,
databases, loan underwriting criteria and procedures, loan
administration procedures, sources of finance, loan sales and
securitization procedures, confidential technical information,
confidential information concerning loan procurement or sales
activities or procedures, promotion or pricing techniques, or
credit or financial data, including confidential data
concerning customers or business relationships of Company or
Affiliates (collectively, "Confidential Information"), nor
under any circumstances will Executive use any of such
Confidential Information for his own purposes or for the
benefit of any firm, corporation or other person, except
Company or Affiliates. The foregoing restriction shall be
inapplicable to any Confidential Information which becomes
generally available to the public other than as a result of a
disclosure by Executive. Additionally, the foregoing
restriction shall not apply if the Executive is compelled to
disclose the Confidential Information by a regulatory body or
court order. Furthermore, the foregoing restriction shall be
inapplicable to any Confidential Information which becomes
generally available to the public other than as a result of a
disclosure by Executive, and to any information, knowledge,
expertise or experience Executive possessed before becoming
employed by the Company.
(ii) Attempt to divert, solicit, interfere with, or take away any
business of any person, firm, or corporation which has been an
employee, loan broker, loan representative, loan source, or
customer of Company or Affiliates prior to the date hereof or
at any time during Executive's employment.
(iii) Interfere with the employment, contractual or business
relationships of
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Company or Affiliates which currently exist, or which shall
have been developed at any time during Executive's employment,
by and between Company or Affiliates and any other person,
firm or corporation, including, but not limited to, loan
brokers, loan representatives and other loan sources.
(iv) In any city, village, town or the like in which the Company or
Affiliates conducts business on the date of termination
hereof, or at any time two years prior to such date, and
within a five-mile radius from the center thereof, act in any
manner or capacity, as principal, agent, partner, officer,
director, employee, member or any business entity, consultant,
adviser or investor in or for any business entity or
enterprise which, at the date hereof, is engaged in, becomes
engaged in during the term hereof, or which, during the Non-
Competition Term, commences to engage in, the making,
origination, underwriting and/or placement of commercial
loans, including, but not limited to, 7(a) loans and B & I
Loans. Notwithstanding anything to the contrary contained
herein, this subparagraph (4) shall apply during the term of
this Agreement and for eighteen months after termination of
this Agreement. This subparagraph shall not apply if
Executive's employment is terminated without Cause.
(v) Executive has carefully reviewed the above restrictions on his
future business activities and represents to Company that they
will not unreasonably interfere with his future ability to be
gainfully employed. However, if the scope of any restriction
contained herein is too broad to permit enforcement of such
restriction to its full extent, then such restriction shall be
enforced to the maximum extent permitted by law, and Executive
hereby consents and agrees that such scope may be judicially
modified accordingly in any proceedings brought to enforce
such restrictions.
(e) Executive's Work Product.
All of the results and proceeds of Executive's services under this
Agreement, including, without limitation, any and all programs, written
procedures, trade names, trademarks, service marks, inventions, improvements,
technical information, software, suggestions and the like, relating to Company's
and its affiliates' business, which Executive, during the term of this Agreement
creates, develops or acquires (whether or not during usual business hours and
whether alone or in collaboration with others), together with all patent
applications, letters patent, trademarks, copyrights, and reissues and renewals
thereof, that during the term are filed or granted for or upon any such
invention, improvement, trade name, trademark, service xxxx, materials or
technical information, shall at any time be and remain the sole and exclusive
property of Company. To the extent necessary to comply with the above, Executive
further agrees that he will promptly transfer, grant and assign to Company, or
to a corporation designated by Company, for its sole use and benefit, all
ownership rights with respect to the foregoing.
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(f) Termination of Employment.
(i) Default. The Executive may be terminated for "Cause" by
the Company. "Cause" shall mean (a) the failure or refusal by the Executive
substantially to perform his duties hereunder (other than any such failure due
to physical or mental illness) after a demand for substantial performance is
delivered to the Executive by Financial's Board of Directors or the Company's
Board of Directors, which notice identifies the manner in which the Board
believes that the Executive has not substantially performed his duties, (b) the
Executive's conviction, or entering a plea of nolo contendere to, a crime that
constitutes a felony, (c) the Executive's intentional breach of his covenant not
to disclose Confidential Information, or (d) Executive commits an act of Fraud,
misrepresentation, dishonesty or misappropriation of Company assets or any act
that would jeopardize the Company's or Affiliates' ability to continue to
participate in the SBA 7a, B& I or other government sponsored lending programs.
(ii) Disability. The Executive may be terminated for
"disability" by the Company. "Disability" shall mean a physical or mental
disability that prevents the substantial performance by the Executive of his
duties hereunder lasting for a continuous period of four (4) months or longer.
The reasoned and good faith judgment of the company's Board of Directors as to
the Executive's disability shall be final and shall be based upon such competent
medical evidence as shall be presented to the Company's Board of Directors by
the Executive or by any physician or group of physicians or other competent
medical experts on behalf of the executive and on behalf of the Company.
Prior to termination, Company shall be entitled to deduct from
all payments to be made to Executive during any disability period an amount
equal to all disability payments received by Executive (but only with respect to
that portion of the disability period occurring during the Term and then only to
the extent of the salary due to Executive during the period of his disability)
from Worker's Compensation, Social Security and disability insurance policies
maintained by Company by or on behalf of Executive.
(iii) Death. In the event of Executive's death at any time during
the term hereof, this Agreement shall terminate, in which event Company shall
thereupon be released and discharged of and form all further obligations
hereunder.
(iv) Executive's Right to Terminate. Executive may terminate this
Agreement in the event that Xxxxxx X. Xxxxxxxxxxxx no longer affiliated with the
Company. Xx. Xxxxxxxxxxxx shall be deemed to be affiliated with the Company as
long as he serves as an Officer or Director of the Company or Financial. A
termination under this provision shall not be deemed a termination for Cause.
(v) Notice of Termination. Any termination by the Company and/or
Financial pursuant to this paragraph or by the Executive pursuant to this
paragraph shall be communicated by a written "Notice of Termination" addressed
to the other parties to this Agreement. A "Notice of Termination" shall mean a
notice stating that the Executive's employment hereunder has been or will be
terminated, indicating the specific termination provisions in this Agreement
relied upon and
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setting forth in reasonable detail the facts and circumstances claimed to
provide a basis for such termination of employment. Subject to the cure rights
provided for herein, the termination of the Executive's employment shall be
effective as of the date specified in the Notice of Termination; provided,
however, no such termination shall be effective prior to the date the Notice of
Termination was received.
(g) Consequences of Termination.
In the event that the Executive's active employment with the Company
is terminated for any reason, other than Cause ( i.e. disability), the Company
shall pay to the Executive as termination compensation an amount equal to six
months compensation determined as of the Termination Date. Such payment shall be
in addition to any compensation due and payable to the Executive as an active
employee of the Company pursuant to paragraph (b) of this Agreement, through and
including the Termination Date. The payment shall be made in cash in six (6)
monthly installments.
(h) Injunctive Relief.
It is mutually understood and agreed that Executive's services are
special, unique, unusual, extraordinary and of an intellectual character giving
them a peculiar value, the loss of which cannot be reasonably or adequately
compensated in damages in an action at law, and therefore in the event of any
breach by Executive, Company and/or Affiliates shall be entitled to equitable
relief by way of injunction or otherwise without the necessity of posting of a
bond or other security, or the necessity of proving actual damages. This
provision shall not, however, be construed as a waiver of any of the rights
which Company may have for damages under this Agreement or otherwise.
(i) Life Insurance.
Executive will permit the Company to purchase "key man" or similar
insurance coverage on this life for the exclusive benefit of the Company, in
amounts that it determines, and Executive will cooperate with the Company and
the insurance carrier in obtaining such insurance.
(j) Miscellaneous.
(i) Assignment. This Agreement shall not be assignable by either
party, except Company shall be entitled to assign this Agreement to, and it
shall thereafter be binding upon any entity with which company may merge or
consolidate, or into which company may liquidate, or to which substantially all
of the assets of Company are transferred, provided that such successor assumes
all of the Company's obligations hereunder. The Company may also assign this
Agreement to any of its Affiliates.
(ii) Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties hereto, and supersedes all prior
agreements, arrangements and understandings.
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(iii) Partial Invalidity. Nothing herein contained shall be
construed to require the commission of any act contrary to law. Where there is a
conflict between a provision of this Agreement and any present or future
statute, law, ordinance or regulation, the latter shall prevail, but in such
event, the provision of this Agreement affected shall be curtailed and limited
only to the extent necessary to bring it within legal requirements.
(iv) Representations. No representation, promise or inducement has
been made by either party that is not embodied in this Agreement, and neither
party shall be bound by or liable for any alleged representation, promise or
inducement not set forth herein. Executive warrants that he is free to enter
into this Agreement and to render his services pursuant thereto.
(v) Benefit. The provisions of this Agreement shall inure to the
benefit of the parties hereto, their heirs, legal representatives, successors
and assigns.
(vi) Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
applicable to agreements made and to be performed wholly with New York.
(vii) Modification. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms or covenants hereof may
be waived, only by a written instrument executed by the parties hereto, or in
the case of a waiver, by the party waiving compliance. The failure of a party at
any time or times to require performance of any provision hereof shall not
affect the party's right at a later time to enforce the same. No waiver by
either party of the breach of any term or covenant contained in this Agreement,
whether by conduct or otherwise, in any one or more instances, shall be deemed
to be, or construed as, a further or continuing waiver of any such breach, or a
waiver of the breach of any other term or covenant contained in this Agreement.
(viii) Section Headings. The section headings contained herein are
for reference purposes only and shall not affect the meaning or interpretation
of this Agreement.
(ix) Notices. All notices, requests, demands and other
communications required, or as may be given, under this Agreement shall be in
writing and shall be deemed to have been duly received three (3) days thereafter
if delivered, or mailed, certified mail, return receipt requested, first class,
postage prepaid, if to Executive to Xxxxxxx Xxxxxxx 0 Xxxxxx Xxxxx, Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000; and to Company or BLCF c/o Business Loan Center,
Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, Attention: Xxxxxx X.
Xxxxxxxxxxxx; or to such other address as Executive or Financial may designate
in writing.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first hereinabove written.
COMPANY
Business Loan Center, Inc.
By: /s/ Xxxxxxxx Xxxxxx
--------------------------------
Xxxxxxxx Xxxxxx, Treasurer
BLC Financial Services, Inc.
By: /s/ Xxxxxx Xxxxxxxxxxxx
--------------------------------
Xxxxxx Xxxxxxxxxxxx, President
EXECUTIVE:
/s/ Xxxxxxx Xxxxxxx
-----------------------------------
Xxxxxxx Xxxxxxx
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