SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 4,
1996
BLC FINANCIAL SERVICES, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-8185
(State or Other Jurisdiction of Incorporation) (Commission
File No.)
75-1430436
(IRS Employer I.D. Number)
919 Third Avenue, 17th Floor, New York, New York 10022
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code
(212) 751-5626
(Former Name or Former Address, If Changed
Since Last Report)
<PAGE>
Item 5. Other Events.
On May 30, 1996 Business Loan Center, a partnership
which is approximately 88% owned by Business Loan Center, Inc.
(Delaware), a wholly-owned subsidiary, sold a participation in
its portfolio of loans in the amount of $6,383,817. The proceeds
of the sale will be utilized to repay Business Loan Center's
existing bank line. Business Loan Center's retained portfolio
after the sale consists of approximately $5,600,000 in loans.
As part of the sale, Business Loan Center is entitled
to receive a spread of approximately 1-3/4% per annum on the
loans sold, together with all servicing income. In addition, as
a condition to the sale, it agreed to repurchase from the
purchaser any loans that are in default for more than 60 days.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(c) Exhibits.
(1) Participation Agreement dated May 23, 1996
between Business Loan Center and GE Capital Small Business
Finance Corporation.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
BLC Financial Services,
Inc.
(Registrant)
Dated: June 4, 1996 By:/s/ Robert F. Tannenhauser
Robert F. Tannenhauser
President
<PAGE>
EXHIBIT
PARTICIPATION AGREEMENT
This Participation Agreement ("Agreement") between Business
Loan Center (the "Bank"), and GE Capital Small Business Finance
Corporation (the "Participant") is entered into this 23rd day of
May, 1996.
Preliminary Statement
The Bank has entered into the Authorization and Loan
Agreements (Loan Agreements) identified in Exhibit A attached
with the borrower or borrowers identified in said Exhibit A. The
Loan Agreements are evidenced by a note or notes payable to the
Bank (collectively, the "Notes"). Unless the context clearly
indicates otherwise, all terms used in this Agreement shall have
the meanings given them by, and shall be construed as set forth
in, the Loan Agreements notwithstanding any termination thereof.
In consideration of the premises and the mutual covenants
contained herein, the Bank and the Participant hereby covenant
and agree as follows:
Section 1. Purchase and Sale of Participation Interests.
The Bank hereby sells to the Participant and the
Participant hereby purchases from the Bank, for the Participant's
own accounts, the participations comprising undivided interests
in the Non SBA Guaranteed portion of certain of the Bank's Loans
existing as of May 28, 1996 (the "Purchase Date") as set forth
in Exhibit A (the "Participant's Percentage" of each loan).
Bank, in accordance with the provisions of paragraph 12 B of the
SBA form 750, will be retaining an interest in the Non SBA
Guaranteed portion of said Loans equal to ten (10%) of the
outstanding principal amount of each loan set forth on Exhibit A.
Participant's Percentage may be decreased to the extent that Bank
funds additional monies to Borrower(s) in accordance with the
Loan Agreements with respect to partially funded loans. The total
interest which the Participant purchases in the Loans on the
Purchase Date which are outstanding is hereinafter referred to as
the "Participant's Participation".
Section 2. The Participant's Right to Payments .
The Participant shall be entitled to receive with
respect to Participant's Participation from all payments received
on each of these loans from any source whatsoever: (a) the
Participant's Percentage of all funds received and applied on
account of a payment of principal, and (b) Participant's
Percentage of all funds received and applied on account of
interest accrued from and after the Purchase Date on the
Participant's Percentage of principal up to the rate set forth on
Exhibit A with the base Prime Rate adjustments being made,
monthly or quarterly, in accordance with the applicable Loan
Agreements.
Section 3. Payment and Disbursement of Proceeds.
On the Purchase Date, the Participant shall
transfer funds in an amount set forth in Purchase Price column on
Exhibit A to the Bank by Wire Transfer sent to:
NationsBank of Virginia, N.A.
Patrick Henry Corporate Center
12350 Jefferson Avenue, Suite 260
Newport News, Va. 23602-6900
ABA # 0510-0001-7
For Credit to: BUSINESS LOAN CENTER
Account # 11 16 15 98
Section 4. Participation Certificates. The Participant's
interest in the Loans identified on Exhibit A shall be evidenced
by a Participation Certificate substantially in the form attached
hereto as Exhibit B, which Participation Certificate shall be
mailed to the Participant and a copy sent to the Participant by
telex, telefax, or other means of telecommunication upon receipt
by the Bank of immediately available funds representing the
principal amount of the Participant's Participation in such
Loans.
Section 5. Collection of Payments. The Bank shall have the
right to collect all payments of interest due on, and all
payments of principal of, the Loans, together with any service
charges, premiums, fees, late charges and any and all other
amounts due on or in connection with the Loan Agreement or the
Notes. The Participant's share of payments received in good funds
on account of principal, interest and late charges as provided
hereunder shall be paid to the Participant by wire transfer of
immediately available funds within fifteen (15) business days
from the first calendar day of each month. Payments not received
by the Bank in good funds by the fifteenth business day must be
paid within five (5) business days of receipt of good funds by
the Bank. Wire transfers are to be sent to:
Bankers Trust, New York, NY
ABA #021001033
For Further Credit To:
GE Capital Small Business Finance Corp.
Acct. No. 50256717
The Bank will mail to the Participant, on the same day the wire
transfer is sent, a breakdown and application of payment on all
accounts listed on Exhibit A. This breakdown and application of
payment shall be in a format substantially similar to the format
found on Exhibit C and shall include the "Date Payment Was
Received" and the "Penalty" (late charge) if any. For any account
listed on Exhibit A in which the Bank did not receive a payment
by the last day of any month, notification of non-payment will be
sent to the Participant with the breakdown and what would have
been the application of the payment had it been received on its
due date. As used herein, the term "Business Day" shall mean and
include any calendar day other than a day on which all commercial
banks in New York City are required or authorized to be closed.
Section 6. Late Payments. In the event the Bank collects
late charges on any loan listed on Exhibit A, the Participant
shall be entitled to receive the applicable Participant's
Percentage of said late charge.
Section 7. Information. The Bank shall furnish to the
Participant an executed or conformed copy of the Loan Agreement
and note for each loan listed on Exhibit A and, if so requested
by the Participant in writing, copies of such of the documents
pertaining to the Loan Agreement (including, without limitation,
financial information required to be delivered to the Bank under
the Loan Agreement and all applicable Small Business
Administration ("SBA") approvals relating to such Loans) which
the Bank has in its possession subject only the Participant's
compliance with applicable law and any applicable confidentiality
requirements.
Section 8. Agreements by the Bank.
Bank expressly acknowledges and agrees that upon a
default by a Borrower on any Loan listed on Exhibit A (for
purposes hereof a default shall mean a failure by a Borrower that
continues uncured for more than 60 days in making payment when
due of any installment of principal or interest on the loan),
Bank shall within ten (10) business days after receipt of the
written request of Participant, repurchase the Participant's
Participation in the Loan(s) in default for a purchase price
equal to the Participant's Percentage share of the then unpaid
principal balance of the Loan(s) being repurchased (with interest
accrued to the date of such repurchase being payable to the
Participant as if such repurchase had not occurred) and thereupon
the Participant's rights and obligations hereunder with respect
to the repurchased Loans shall terminate. Bank may pay the
aforementioned purchase price including the accrued interest
either in immediately available funds by wire transfer or by
substituting a participation or participations in another
performing loan or loans (reasonable acceptable to Participant)
in the same aggregate principal amount with the same interest
rate or by a combination of immediately available funds and
substitution of loan participations.
Section 9. Action by the Bank. The Participant expressly
understands and agrees that (a) the Bank may use its discretion
with respect to exercising or refraining from exercising any
rights which it may have or taking or refraining from taking any
actions it may be entitled to take in connection with the Loans,
any Note, the Loan Agreement or any other document related to the
Loans or any collateral therefor or any obligor thereunder; (b)
in exercising such discretion, the Bank will use the same care to
protect the interest of the Participant as it does to protect its
own. The Participant further expressly understands and agrees
that the Bank may, in its sole discretion in each instance,
without prior notice to or consent of the Participant, agree to
take or refrain from taking, any action with respect any Notes,
the Loan Agreement or any document (including, without
limitation, any security agreement or guaranty) relative to the
Loans, except that the Bank ( unless otherwise required by the
SBA), will not, without the consent of the Participant which will
not be unreasonably withheld, agree to any amendment,
modification or waiver of any provision with respect to the
Notes, Loan Agreement or any document (including, without
limitation, any security agreement or guaranty) relative to the
Loans, or release any collateral of Borrower or make any
extension of the final scheduled maturity of, or reduction of the
effective interest rate on the Loans or forgiveness of any
principal of or interest on the Loans. The Bank may without prior
consent of the Participant, take any action which SBA defines as
being within the Bank's "Unilateral Servicing Authority",
provided the Bank advises the Participant of this action. If the
Participant is unwilling to consent to any amendment,
modification, waiver, release or consent which requires its
consent, the Bank shall have the right, but not the obligation,
to repurchase the Participant's Participation in the Loan(s)
affected by such change, at such time for a purchase price equal
to the Participant's Percentage share of the then unpaid
principal balance of the Loans being repurchased (with interest
accrued to the date of such repurchase being payable to the
Participant as if such repurchase had not occurred) and terminate
the Participant's obligations hereunder with respect to the
repurchased Loans.
Section 10. Knowledge of Default. Upon the Bank's actual
knowledge of the occurrence of any Event of Default (as defined
in the Loan Agreement, the Notes or any other loan documents
pertaining to the Loans), the Bank shall give the Participant
notice thereof within five (5) Business Days of the Bank's actual
knowledge of such Event of Default.
Section 11. Confidentiality. Except as may be required by
law, or as may occur as a result of the operation of law, or as
may be requested by any regulatory authority having authority
over the Bank or the Participant, the Bank and the Participant
shall maintain the confidentiality of all information hereunder
or in connection with any document relative to the Loans, except
that the Bank and the Participant shall have no obligation of
confidentiality with respect to information that may be generally
available to the public, or becomes generally available to the
public through no fault of the Bank or the Participant.
Section 12. Subparticipation. The Participant's
Participation may not be subdivided or transferred without the
Bank's prior written consent, which consent shall not be
unreasonably withheld.
Section 13. Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors and
assigns of the Bank and the Participant.
Section 14. Notices. Notices required hereunder shall be in
writing and given to the parties hereto at the addresses set
forth opposite their names below.
Section 15. Applicable Law. This Agreement shall be a
contract made under and governed by the laws of the State of
Missouri. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under such law, such provision
shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
Section 16. Amendments, Changes and Modifications. This
Agreement may only be amended, changed, modified, altered, or
terminated by an agreement in writing signed by the Bank and the
Participant (or their successors or assigns).
Section 17. Entire Agreement. This Agreement sets forth the
entire understanding of the parties and supersedes any and all
prior agreements, arrangements, and understandings relating to
the subject matter hereof. No representation, promise,
inducement, or statement of intent has been made by either party
which is not embodied in this Agreement, and neither party shall
be bound by or liable for any alleged representation, promise,
inducement or statement of intention not expressly set forth
herein.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed on their behalf by their duly authorized officers
as of the 23rd day of May, 1996.
By:/s/ Robert F. Tannenhauser
Robert F. Tannenhauser
Title: Managing Director
Address:
Business Loan Center
Att: Robert F. Tannenhauser
1301 North Hamilton Street
Suite 200
Richmond, Virginia 23230
GE CAPITAL SBFC
By: /s/ Gerard D. Sullivan
Gerard D. Sullivan
Title: Executive Vice President
Address:
635 Maryville Centre Dr., Ste. 120
St. Louis, MO 63141
Attention: Gerard D. Sullivan
