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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BLC FINANCIAL SERVICES, INC.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
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(2) Aggregate number of securities to which transaction applies:
N/A
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act
Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
N/A
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(5) Total fee paid:
N/A
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: N/A
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(2) Form, Schedule or Registration Statement No.: N/A
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(3) Filing Party: N/A
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(4) Date Filed: N/A
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<PAGE>
BLC FINANCIAL SERVICES, INC.
645 MADISON AVENUE
18TH FLOOR
NEW YORK, NEW YORK 10022
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 8, 1998
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of BLC
Financial Services, Inc. (the 'Company') will be held at the offices of Weil,
Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153 on May 8, 1998
at 11:00 a.m., for the following purposes, all as more fully described in the
attached Proxy Statement.
1. To elect three directors of the Company.
2. To approve adoption of amendments to the Amended 1995 Management
Incentive Plan (the 'Plan') (i) to increase the number of shares of
common stock, par value $.01 per share, of the Company ('Common
Stock') that may be subject to Options (as defined in the Plan)
granted under the Plan and (ii) to remove the current restrictions
in the Plan limiting the number of shares of Common Stock subject
to Options that may be granted to any individual employee under the
Plan during any three calendar year period.
3. To approve adoption of the 1998 BLC Financial Services, Inc.
Employee Stock Purchase Plan.
4. To ratify the appointment of Richard A. Eisner & Company, LLP as
auditors of the Company for the fiscal year ending on June 30,
1998.
5. To consider and act upon any matters incidental to the foregoing
purposes and to transact such other business as may properly come
before the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 7, 1998 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the meeting and at any adjournment thereof.
Enclosed is your copy of the Annual Report of the Company for the fiscal
year ended June 30, 1997.
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE ANNUAL MEETING IN
ORDER TO ASSURE THE PRESENCE OF A QUORUM AND TO AVOID ADDED PROXY SOLICITATION
COSTS. THEREFORE, YOUR PERSONAL ATTENDANCE OR PROXY IS IMPORTANT. WHETHER OR NOT
YOU PLAN TO ATTEND, PLEASE COMPLETE, SIGN AND DATE THE ACCOMPANYING PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE. ALL STOCKHOLDERS ARE
CORDIALLY INVITED TO ATTEND THE MEETING. IF YOU ATTEND THE MEETING AND DECIDE TO
VOTE IN PERSON, YOU MAY REVOKE YOUR PROXY.
By Order of the Board of Directors
DAVID REDLENER
Secretary
New York, New York
April 8, 1998
<PAGE>
BLC FINANCIAL SERVICES, INC.
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 8, 1998
------------------------
GENERAL
This Proxy Statement is first being mailed to stockholders on or about
April 8, 1998, and is solicited by and on behalf of the Board of Directors (the
'Board' or the 'Board of Directors') of BLC Financial Services, Inc., a Delaware
corporation (the 'Company'), for use at the Annual Meeting of Stockholders of
the Company to be held on May 8, 1998 (the 'Annual Meeting'), at the offices of
Weil, Gotshal & Manges LLP, 767 Fifth Avenue, 25th Floor, New York, New York
10153, at 11:00 a.m., and at any adjournment thereof. The Company's principal
executive offices are located at 645 Madison Avenue, New York, New York 10022.
If the proxy card accompanying this Proxy Statement is properly executed
and returned, the shares of common stock, par value $.01 per share of the
Company (the 'Common Stock'), represented thereby will be voted as instructed on
the proxy card, but if no instructions are given, such shares of Common Stock
will be voted in favor of (i) each of the nominees for directors of the Company,
(ii) the adoption of an amendment to the Amended 1995 Management Incentive Plan
(the 'Plan') (a) to increase from 1,000,000 to 2,500,000 the number of shares of
Common Stock that may be subject to Options (as defined in the Plan) granted
under the Plan and (b) to remove the current restrictions in the Plan limiting
the number of shares of Common Stock subject to Options that may be granted to
any individual employee under the Plan during any three calendar year period,
(iii) the adoption of the 1998 BLC Financial Services, Inc. Employee Stock
Purchase Plan and (iv) the ratification of the appointment of Richard A. Eisner
& Company LLP as auditors of the Company for the current fiscal year ending on
June 30, 1998.
SOLICITATION OF PROXIES
If the enclosed form of proxy is executed and returned, it will be voted as
directed, but may be revoked at any time insofar as it has not been exercised,
either by a written notice of the revocation received by the persons named
therein, or by voting the shares covered thereby in person or by another proxy
dated subsequent to the date thereof. The form of proxy vests in the persons
named therein as proxies discretionary authority to vote on any matter that may
properly come before the meeting not presently known to the Board of Directors.
The cost of preparing and mailing the Notice of Annual Meeting and this
Proxy Statement and soliciting proxies will be borne by the Company. In addition
to the use of the mails, officers, directors or employees of the Company, who
will receive no additional compensation therefor, may solicit proxies by
telephone or personal interview. The Company will request brokers, nominees,
fiduciaries and custodians to forward proxy material to their principals and
beneficial owners, and will reimburse such persons for reasonable expenses
incurred by them in forwarding the proxy materials.
VOTING RIGHTS
The Board of Directors has fixed the close of business on April 7, 1998 as
the record date (the 'Record Date') for the determination of stockholders
entitled to receive notice of and to vote at the Annual Meeting and at any
adjournment thereof. Only stockholders of record on that date are entitled to
vote at the Annual Meeting. As of the Record Date, 19,220,952 shares of Common
Stock were outstanding and entitled to be voted at the Annual Meeting. Each
share of Common Stock is entitled to one vote. A majority of the outstanding
shares of Common Stock is needed for a quorum. Proxies submitted which contain
abstentions or broker non-votes will be deemed present at the Annual Meeting for
the purpose of determining the presence of a quorum. A plurality of the votes of
the holders of shares of Common Stock, represented in person or by proxy, is
necessary to elect nominees for directors and the affirmative vote of the
holders of a majority of shares of Common Stock, represented in person or by
proxy, is necessary to effectuate Proposals 2, 3 and 4, and any other matter
that may properly come before the meeting, except as otherwise required by
applicable law. Abstentions and broker non-votes with respect to any matter are
not considered as votes cast with respect to that matter.
<PAGE>
The Board of Directors believes that each of the principal stockholders of
the Company identified in the table set forth in 'Security Ownership of Certain
Beneficial Owners and Management' (who hold approximately 33.38% of the
outstanding Common Stock of the Company) will vote in favor of Proposals 1
through 4.
PROPOSAL 1--ELECTION OF DIRECTORS
Three persons are to be elected to the Board of Directors at the Annual
Meeting and the remaining four directors will continue in office for the terms
specified below. The persons named in the enclosed proxy intend to vote for the
election of the three nominees listed below, unless instructions to the contrary
are given therein. Two of the nominees, Robert W. D'Loren and Robert W. Wien,
are currently directors of the Company. Proxies may not be voted for a greater
number of persons than the number of nominees named below.
The three nominees have indicated that they are able and willing to serve
as directors. However, if some unexpected occurrence should require the
substitution of some other person or persons for any one or more of the
nominees, the person or persons voting the Proxies will vote for such nominees
as the Board of Directors may select.
Nominees for directors who receive a plurality of the votes cast by the
holders of the outstanding Common Stock entitled to vote at the Annual Meeting
will be elected. Abstentions, broker non-votes, and withheld votes are not
counted in determining the number of votes cast for any nominee for director.
In accordance with the By-laws of the Company, any vacancies on the Board
of Directors will be filled by a majority vote of the remaining directors then
in office, and such directors so elected shall hold office for a term which
shall expire with the term of the other directors of such class, and until such
directors' respective successors shall have been elected and qualified.
The following table lists the name, age, principal occupation and certain
business experience of each of the three nominees and the four continuing
directors of the Company whose terms of office will continue after the Annual
Meeting, the year in which each director's term of office will expire (assuming,
in the case of each of the three nominees, such nominees are elected at the
Annual Meeting) and the year in which each director was first elected as a
director of the Company.
<TABLE>
<CAPTION>
YEAR
AGE AT HAS SERVED TERM
MARCH 31, AS DIRECTOR WILL
NAME PRINCIPAL OCCUPATION 1998 SINCE EXPIRE
- - ------------------------------------- ----------------------------------------- --------- ----------- ------
<S> <C> <C> <C> <C>
Jerome B. Alenick.................... Sole Proprietor 69 -- 2001
(nominee) Jerome B. Alenick Investments &
Financial Services
Florham Park, N.J.
Peter D. Blanck...................... Professor of Law 40 1993 2000
University of Iowa College of Law
Robert W. D'Loren.................... President 40 1997 2001
(nominee) CAK Universal Credit Corp.
New York, N.Y.
Irwin E. Redlener, M.D............... Director, Division of 53 1997 1999
Community Pediatrics
Montefiore Medical Center
Kenneth S. Schwartz, M.D............. Senior Vice President Medical Affairs 53 1997 1999
Complete Management, Inc.
New York, N.Y.
Robert F. Tannenhauser............... President of BLC Financial 53 1986 2000
Services, Inc.
Robert W. Wien....................... Managing Director and Director 46 1997 2001
(nominee) of Mergers & Acquisitions
Josephthal & Co. Inc.
New York, New York
</TABLE>
Jerome B. Alenick has been sole proprietor of Jerome B. Alenick Investments
& Financial Services since 1991. From 1990 to 1991 Mr. Alenick was Executive
Vice President of The Kushner Companies and from 1980 to 1990 Mr. Alenick was
Senior Vice President of Silverstein Properties. Mr. Alenick is member of the
Bar of the
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State of New Jersey and is a licensed Real Estate Broker in the State of New
Jersey. He has been an Adjunct Professor of Real Estate at New York University
since 1993 and has been a member of the faculty at New York University since
1983.
Peter D. Blanck has been a Professor of Law since May 1993, and an
Associate Professor of Law from July 1991 to April 1993, at the University of
Iowa College of Law. Since February 1992, Mr. Blanck has been a director and the
President of Futuronics Corporation. Mr. Blanck is the brother-in-law of Robert
F. Tannenhauser.
Robert W. D'Loren has been President of CAK Universal Credit Corporation
since February 1, 1998. Prior to that he had been self-employed for eleven years
and conducted business in a partnership known as D'Loren, Levien & Company, LLC.
This company provides investment banking services to the mortgage and
asset-backed industry. Prior to forming his own company in 1986, Mr. D'Loren
served as a manager in the accounting firm of Deloitte Touche.
Irwin Redlener is currently Director of the Division of Community
Pediatrics and Associate Professor of Pediatrics at the Albert Einstein College
of Medicine, Montefiore Medical Center. Dr. Redlener has served as Associate
Attending Pediatrician at Montefiore Medical Center in New York since 1990. Dr.
Redlener is President and Director of The Children's Health Fund, a
not-for-profit foundation developed to support health care for homeless and
medically underserved children.
Robert F. Tannenhauser has been a full time employee of Business Loan
Center, Inc. or its predecessor Business Loan Center, a New York general
partnership ('Business Loan Center'), since March 1995. From January 1992 until
February 1995, Mr. Tannenhauser was of counsel to the law firm of Hall Dickler
Kent Friedman & Wood, LLP. Mr. Tannenhauser has been or is a principal or
general partner of various corporations or partnerships engaged in the oil and
gas or real estate businesses. Additionally, Mr. Tannenhauser serves as a
Director of the Children's Health Fund, together with Dr. Redlener.
Kenneth S. Schwartz is currently Senior Executive Vice President of
Complete Management, Inc. in New York, New York. From 1996 to the present, Dr.
Schwartz has served as Chief Executive Officer of Advanced Alliance Management
Corporation and Director of Radiology at St. Francis Hospital in New York. Since
1995, Dr. Schwartz has been Systems Director of Radiology and Imaging Services
at St. Francis Hospital and Medical Center in Hartford, Connecticut and has
served as a Director of Hudson Imaging Associates, P.C. From 1981 to 1995, Dr.
Schwartz served as a Director of Radiology at Hudson Valley Hospital Center, a
Director of Northern Metropolitan Radiology Associates, and a Medical Director
at Putnam Hospital Center in Carmel, New York.
Robert W. Wien has served as Managing Director and Director of Mergers and
Acquisitions at Josephthal & Co. Inc. (formally Josephthal, Lyon & Ross,
Incorporated) since May 1996. From July 1994 to May 1996, Mr. Wien held the
position of Director of Corporate Finance and Real Estate Advisory Services at
Coopers & Lybrand, LLP. Mr. Wien served as Senior Vice President of Investment
Banking at Dean Witter Reynolds, Inc. from April 1987 to June 1994.
VOTE REQUIRED FOR APPROVAL
Nominees for directors who receive a plurality of the votes cast by the
holders of the shares of Common Stock in person or by proxy at the Annual
Meeting shall be elected.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE 'FOR' EACH NOMINEE.
DIRECTOR COMPENSATION
The Company pays independent directors $1,000 per meeting attended for
serving as members of the Board, and reimburses them for out-of-pocket expenses
incurred in connection with the performance of their duties.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors had four meeting during the fiscal year ending on
June 30, 1997 ('Fiscal Year 1997'). No incumbent director attended less than 75%
of the aggregate of the total number of meetings of the Board of Directors in
Fiscal Year 1997.
3
<PAGE>
The Company established an audit committee of the Board of Directors
consisting of Irwin Redlener, Peter Blanck and Robert Wien. The audit committee
met with the Company's Auditors to review the audited Fiscal Year 1997 financial
statements and the auditors recommendations and comments with respect thereto.
The Company established a compensation committee of the Board of Directors
consisting of Kenneth Schwartz, Robert D'Loren and Peter Blanck. The
compensation committee met for the purposes of establishing compensation of
senior management and the awarding of stock options to employees of the Company
and its subsidiaries pursuant to the Amended 1995 Management Incentive Plan.
PROPOSAL 2--AMENDMENT TO THE 1995 MANAGEMENT INCENTIVE PLAN
The proposed amendments to the 1995 Management Incentive Plan (the 'Plan')
would (i) increase the aggregate number of shares of Common Stock that may be
subject to Options (as defined in the Plan) granted under the Plan from
1,000,000 to 2,500,000 shares and (ii) remove the current restrictions in the
Plan limiting the number of shares of Common Stock subject to Options that may
be granted to any individual employee under the Plan within a three calendar
year period (collectively, the 'Plan Amendments').
The purpose of each of the Plan Amendments is to allow the Company to
continue to provide incentives which will attract and retain highly competent
persons as officers and key employees of the Company and its subsidiaries, by
providing them opportunities to acquire shares of Common Stock.
The Board of Directors has approved the Plan Amendments to enable the
Company to provide for future awards of Options in order to continue to obtain
the beneficial effects of the Plan.
As of March 31, 1998, under the Plan, Options for an aggregate of 1,357,000
shares had been granted, options for an aggregate of 1,357,000 shares remained
outstanding, and the Plan requires an additional 357,000 shares to be authorized
in order to satisfy the existing grants.
GENERAL TERMS OF THE PLAN
Under the Plan, as amended pursuant to the Plan Amendments, options to
purchase an aggregate of 2,500,000 shares of Common Stock may be granted from
time to time to employees, including directors and officers who are employees,
of the Company or of any subsidiary of the Company, who have been so employed
for at least one year at the end of the fiscal year ended immediately prior to
the grant of the option (provided that the Board of Directors may authorize the
grant of an option to an employee who has not served for such period).
The Plan is administered by the Board of Directors. The Board is generally
empowered to interpret the Plan, to prescribe rules and regulations relating
thereto, to determine the terms of option agreements, to amend them with the
consent of the optionee, to determine the employees to whom options are to be
granted and to determine the number of shares subject to each option granted.
Options granted under the Plan ('Options') may be designated as 'Incentive Stock
Options' ('ISOs') within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the 'Code') or as Options that do not satisfy the
requirements for ISOs ('Nonqualified Options').
The per share exercise price of each option is established by the Board and
in each instance will not be less than the fair market value of a share of the
Common Stock on the date the option is granted (110% of fair market value on the
date of grant of an ISO, as defined below, if the optionee owns stock possessing
more than 10% of the total combined voting power of all classes of stock of the
Company or any of its subsidiary corporations (a '10% Holder'). The exercise
price of options must be paid in cash.
Options will be exercisable for a term determined by the Board, which term
will not be greater than ten years from the date of grant (five years for ISOs
granted to a 10% Holder). Unless otherwise provided in an option agreement, an
option generally will become fully exercisable five years from the date of grant
or upon the earliest of the optionee's retirement (at the optionee's normal
retirement date), death, or permanent and total disability if such event occurs
subsequent to the first anniversary of the grant of the option. Prior thereto,
each option shall become exercisable as to one-fifth of the number of the shares
covered thereby cumulatively upon each anniversary of the date of the grant.
Except in the event of certain terminations of employment or death or permanent
and total disability, no option may be exercised unless the holder thereof is
then an employee of the
4
<PAGE>
Company of any subsidiary corporation. Options will not be transferable other
than by will or the laws of descent and distribution and may be exercised during
the optionee's lifetime only by the optionee or his guardian or legal
representative.
The Plan provides that the aggregate fair market value (determined at the
time an ISO is granted) of the Common Stock subject to ISOs exercisable for the
first time by an employee during any calendar year (under all plans of the
Company and any subsidiary corporation) may not exceed $100,000.
Upon any termination of employment that is either for 'cause' (as defined
in the Plan) or voluntary termination on the part of the employee and without
the consent of the Company or any subsidiary corporation that is the employer,
all options held by an optionee under the Plan, to the extent not theretofore
exercised, will terminate (except that a Nonqualified Option held by an employee
who continues after termination of employment to serve the Company as a
consultant may continue in effect). If employment is otherwise terminated
(except by reason of death or permanent and total disability), an option may be
exercised at any time within three months after such termination, to the extent
the optionee was entitled to do so at the date of termination of employment (or
in the case of retirement at the optionee's normal retirement date subsequent to
the first anniversary of the date of grant, for the shares remaining subject to
the Options). If the optionee dies or becomes permanently and totally disabled
subsequent to the first anniversary of the option grant, the option shall be
exercisable as to all shares of Common Stock remaining subject to the option,
and the optionee or his personal representative may exercise the option within
nine months after the earlier of the commencement of such disability or death.
The number of shares subject to options and the exercise price of options
are subject to adjustment as the Board determines appropriate in the event of
changes in the outstanding Common Stock by reason of stock dividends,
recapitalizations, mergers and similar events.
The Board of Directors may suspend, terminate, modify or amend the Plan,
provided that (except for adjustments by reason of stock dividends,
recapitalizations, mergers and similar events) any increase in the aggregate
number of shares issuable upon the exercise of Options, any reduction in the
purchase price of the Common Stock covered by any Option, any extension of the
period during which Options may be granted or increase in the maximum term of
Options, and any material modification in the requirements as to eligibility for
participation in the Plan shall be subject to the approval of stockholders. No
suspension, termination, modification or amendment of the Plan may adversely
affect an optionee's rights under the option theretofore granted without the
consent of the optionee.
Upon a 'change in control' (as defined below) of the Company, and if the
Board of Directors so determines, all the then outstanding Options shall be
terminated, and the Company shall pay the optionee in lieu thereof an amount
equal to (i) the Option Value (as defined in the Plan) of one share at the close
of business on the day next preceding occurrence of such event, multiplied by
(ii) the full number of shares subject to the Option, without regard to whether
any installment is then otherwise exercisable. In general, if the total amount
of payments to an individual that are contingent upon a 'change of control' of
the Company (as defined in Section 280G of the Code, including payments under
the Plan that are paid upon a 'change in control,' equals or exceeds three times
the individual's 'base amount' (generally, such individual's average annual
compensation for the five complete years preceding the change in control), then,
subject to certain exceptions, the payments may be treated as 'parachute
payments' under the Code, in which case a portion of such payments would be
nondeductible to the Company and the individual would be subject to a 20% excise
tax on such portion of the payments.
No options may be granted under the Plan after February 28, 2005.
The closing price of a share of Common Stock for March 31, 1998 as reported
on the over-the-counter Bulletin Board, was $2.94 based on the sale price of
$3.06 asked and $2.88 bid.
5
<PAGE>
VOTE REQUIRED FOR APPROVAL
Approval of the Plan Amendments requires the affirmative vote of the
holders of a majority of the shares of Common Stock present at the Annual
Meeting, in person or by proxy, and entitled to vote on the matter.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE 'FOR' THE APPROVAL OF THE
AMENDMENTS TO THE 1995 MANAGEMENT INCENTIVE PLAN.
PROPOSAL 3--ADOPTION OF THE 1998 BLC FINANCIAL SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors has approved and is proposing for stockholder
approval the 1998 BLC Financial Services, Inc. Employee Stock Purchase Plan (the
'Employee Purchase Plan'). The purpose of the Employee Purchase Plan is to
enable eligible employees of the Company or any of its subsidiaries, through
payroll deductions, to purchase shares of the Company's Common Stock and thus to
encourage stock ownership by employees, officers and directors of the Company
and to encourage the continued employment of employees, directors and officers
of the Company.
EMPLOYEE STOCK PURCHASE PLAN
Under the Employee Purchase Plan, 1,000,000 shares of Common Stock are
available for purchase by eligible employees of the Company or any of its
subsidiaries. The Employee Purchase Plan permits eligible employees to elect to
have a portion of their pay deducted by the Company to purchase shares of Common
Stock of the Company. In the event there is any increase or decrease in Common
Stock without receipt of consideration by the Company (for instance, by a
recapitalization or stock split), there may be a proportionate adjustment to the
number and kinds of shares that may be purchased under the Employee Purchase
Plan.
Rights to purchase shares of Common Stock will be deemed granted to
participating employees as of the first trading day of each Offering Period (as
defined in the Employee Purchase Plan). Offering Periods will be 24 months or
such other period as is set by the Company. Offering Periods are the periods
during which shares of Common Stock are purchased. Within an Offering Period
there will be four or more Purchase Periods (as defined in the Employee Purchase
Plan). Generally, Purchase Periods will be six months. Payroll deductions and
other payments will be accumulated during a Purchase Period and purchases of
shares will occur at the end of each Purchase Period (from the amounts
accumulated during that Purchase Period).
The purchase price for each share (the 'Purchase Price') will be set by a
Compensation Committee (the 'Compensation Committee'). The Purchase Price for
the initial Offering Period will be not less than 85% of the fair market value
of the Common Stock on the first trading day of such Offering Period or the last
day of the applicable Purchase Period, whichever is lower.
Any employee of the Company or subsidiary may participate in the Employee
Purchase Plan, except the following, who are ineligible to participate: (a) an
employee who has been employed by the Company or subsidiary for less than three
months as of the beginning of the Offering Period; (b) an employee whose
customary employment is for less than five months in any calendar year; (c) an
employee whose customary employment is 20 hours or less per week; and (d) an
employee who, after exercising his or her rights to purchase stock under the
Employee Purchase Plan, would own stock (including stock that may be acquired
under any outstanding options) representing five percent or more of the total
combined voting power of all classes of stock of the Company. An employee must
be employed on the last day of the Purchase Period in order to acquire stock for
that Purchase Period under the Employee Purchase Plan unless the employee has
retired, died, become disabled, been laid off or is on an approved leave of
absence.
An eligible employee may become a participant in the Employee Purchase Plan
by completing an election to participate in the Employee Purchase Plan
authorizing the Company to have deductions made from pay on each pay day
following the enrollment in the Employee Purchase Plan. The deductions or
contributions will be credited to the employee's account under the Employee
Purchase Plan. An employee may not change his or her percentage of payroll
deduction or contribution for any Purchase Period during an Offering Period, nor
may an
6
<PAGE>
employee withdraw any contributed funds other than by terminating participation
in the Employee Purchase Plan (as described below). A participating employee may
terminate payroll deductions or contributions at any time.
No employee may purchase Common Stock in any calendar year under the
Employee Purchase Plan and all other 'employee stock purchase plans' of the
Company and any parent or subsidiary having an aggregate fair market value in
excess of $25,000, determined as of the first trading date of the Offering
Period.
On the last trading day of each Purchase Period within an Offering Period,
a participating employee will be credited with the number of whole shares of
Common Stock purchased under the Employee Purchase Plan for such period. Common
Stock purchased under the Employee Purchase Plan will be held in the custody of
an agent designated by the Company (the 'Agent'). The Agent may hold the Common
Stock purchased under the Employee Purchase Plan in stock certificates in
nominee names and may commingle shares held in its custody in a single account
or stock certificate, without identification as to individual employees. An
employee may, however, instruct the Agent to have all or part of such shares
reissued in the employee's own name and have the stock certificate delivered to
the employee.
A participating employee will be refunded all monies in his or her account,
and his or her participation in the Employee Purchase Plan will be terminated,
if: (a) the employee elects to terminate participation by delivering a written
notice to that effect to the Company; (b) the employee ceases to be employed by
the Company or a participating affiliate except on account of death, disability,
retirement, lay-off or authorized leave of absence; (c) the Board elects to
terminate the Employee Purchase Plan; or (d) the employee ceases to be eligible
to participate in the Employee Purchase Plan. If a participating employee
terminates employment on account of death, disability, retirement, lay-off or
authorized leave of absence, the participating employee will have the following
alternatives: (a) refund of all monies in his or her account or (b) purchase of
Common Stock on the last day of the Purchase Period during which termination
occurs with the amounts then accumulated in his or her account.
No participating employee may assign his or her rights to purchase shares
of Common Stock under the Employee Purchase Plan, whether voluntarily, by
operation of law or otherwise.
The Employee Purchase Plan will be administered by the Compensation
Committee. The Compensation Committee has the authority to interpret the
Employee Purchase Plan, to prescribe, amend and rescind rules relating to it,
and to make all other determinations necessary or advisable in administering the
Employee Purchase Plan, all of which determinations will be final and binding.
The Board of Directors may, at any time, amend the Employee Purchase Plan
in any respect; provided, however, that without approval of the stockholders of
the Company no amendment shall be made (a) increasing the number of shares that
may be made available for purchase under the Employee Purchase Plan, (b)
changing the eligibility requirements for participating in the Employee Purchase
Plan or (c) impairing the vested rights of participating employees.
The Board of Directors may terminate the Employee Purchase Plan at any time
and for any reason or for no reason, provided that such termination shall not
impair any rights of participants that have vested at the time of termination.
In any event, the Employee Purchase Plan shall, without further action of the
Board of Directors, terminate at the earlier of (i) 10 years after adoption of
the Employee Purchase Plan by the Board of Directors and (ii) such time as all
shares of Common Stock that may be made available for purchase under the
Employee Purchase Plan have been issued.
FEDERAL INCOME TAX CONSEQUENCES OF THE EMPLOYEE PURCHASE PLAN
If a participant acquires stock under the Employee Purchase Plan, no income
will result to such participant, and the Company will be allowed no deductions
as a result of such purchase, if certain conditions are met. The principal
condition which must be satisfied is that the participant does not dispose of
the stock within two years after the first day of the applicable Offering Period
or one year after purchase of the stock. If the employee disposes of the stock
acquired pursuant to the Employee Purchase Plan after the statutory holding
period has expired, gain on the sale is capital gain except to the extent of
ordinary (compensation) income determined as described below. If the employee
disposes of the stock before the expiration of the statutory holding period, the
7
<PAGE>
employee must recognize as ordinary (compensation) income the difference between
the stock's fair market value and the purchase price.
An employee disposing of stock after expiration of the statutory holding
period (or who dies) must include in ordinary (compensation) income at the time
of sale or other taxable disposition of the stock acquired under the Employee
Purchase Plan, or upon the employee's death while still holding the stock, the
lesser of:
(1) the Purchase Price discount from the fair market value of the
stock at the beginning of the Offering Period; or
(2) the amount, if any, by which the stock's fair market value at the
time of such disposition or death exceeds the purchase price paid.
The foregoing is only a summary of the Employee Purchase Plan and is
subject to and qualified in its entirety by reference to the complete text of
the Employee Purchase Plan, a copy of which may be obtained upon request from
the Company at BLC Financial Services, Inc., 645 Madison Avenue, New York, New
York 10022, Attention: Secretary.
VOTE REQUIRED FOR APPROVAL
The Board of Directors of the Company has unanimously adopted the Employee
Purchase Plan. Approval of the Plan further requires the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock, represented in
person or by proxy, at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE 'FOR' THE APPROVAL OF THE 1998 BLC
FINANCIAL SERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN.
PROPOSAL 4--RATIFICATION OF SELECTION OF AUDITORS
The stockholders of the Company will be asked to take action to ratify the
appointment of Richard A. Eisner & Company, LLP as auditors of the Company for
its current fiscal year ending on June 30, 1998. Richard A. Eisner & Company,
LLP has been engaged as the principal accountant for the Company since March 20,
1995. A representative of Richard A. Eisner & Company, LLP is expected to be
present at the meeting and will have the opportunity to make a statement if he
desires to do so and be available to respond to appropriate questions. If the
selection of Richard A. Eisner & Company, LLP as auditors of the Company is not
ratified, or prior to the next annual meeting of stockholders such firm shall
decline to act or otherwise become incapable of acting, or if the engagement
shall be otherwise discontinued by the Board of Directors, the Board of
Directors will appoint other independent public accountants whose selection for
any period subsequent to the next annual meeting will be subject to stockholder
approval at such meeting.
VOTE REQUIRED FOR APPROVAL
The Board of Directors of the Company has unanimously approved the
selection of Richard A. Eisner & Company, LLP as auditors for the Company for
its current fiscal year ending on June 30, 1998. Ratification of the appointment
by stockholders requires the affirmative vote of the holders of a majority of
the outstanding shares of Common Stock represented in person or by proxy at the
Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE 'FOR' THE RATIFICATION OF THE
APPOINTMENT OF RICHARD A. EISNER & COMPANY, LLP AS INDEPENDENT AUDITORS.
8
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information as of the Record Date
with respect to (i) those persons or groups known to the Company to beneficially
own more than five percent (5%) of the Common Stock, (ii) each director and each
nominee for election as a director of the Company, (iii) each named executive
officer for whom compensation information is provided in this Proxy Statement
and (iv) all directors and executive officers of the Company as a group. The
information is determined in accordance with Rule 13d-3 promulgated under the
Exchange Act ('Rule 13d-3') based upon information furnished by the persons
listed or known to the Company. Except as indicated below, the stockholders
listed possess sole voting and investment power with respect to their shares.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- - -------------------------------------------------------------------------- -------------------- ----------------
<S> <C> <C>
Futuronics Corporation ................................................... 2,609,964(1) 13.58%
P.O. Box 293
Albertson, New York 11507
Peter D. Blanck .......................................................... 3,376,130(2)(3) 17.30%
University of Iowa,
College of Law
Iowa City, Iowa 52241
Richard Blanck ........................................................... 3,226,131(3)(4) 16.66%
9 Hickory Road
Manhasset Hills, New York 11040
Robert C. McGee .......................................................... 1,996,296(5) 10.39%
204 Oxford Circle East
Richmond, Virginia 23221
Diane Rosenfeld .......................................................... 1,147,997(6) 5.90%
RR #1 Box 427 D
County Road #86
Amenia, New York 12501
Eric D. Rosenfeld ........................................................ 1,147,997(6) 5.90%
RR #1 Box 427 D
County Road #86
Amenia, New York 12501
Kenneth S. Schwartz ...................................................... 31,525 *
Complete Management Inc.
3630 Hill Boulevard
Jefferson Valley, New York 10535
Carol Tannenhauser ....................................................... 5,355,767(3)(7) 27.0%
210 East 68th Street
New York, New York 10021
Robert F. Tannenhauser ................................................... 5,355,767(7) 27.0%
210 East 68th Street
New York, New York 10021
Robert W. Wien ........................................................... 40,000 *
Josephthal & Co. Inc.
200 Park Avenue
New York, New York 10166
Irwin E. Redlener ........................................................ 20,000 *
11 Alfred Lane
New Rochelle, New York 10804
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- - -------------------------------------------------------------------------- -------------------- ----------------
<S> <C> <C>
Robert W. D'Loren ........................................................ 220,000(8) 1.13%
72 Woodland Drive
Oyster Bay Cove, New York 11771
Jerome B. Alenick ....................................................... 417,375(9) 2.17%
26 Columbia Turnpike
Florham Park, New Jersey 07932
All directors and officers
as a group (nine persons) .............................................. 6,817,753(10) 33.38%
</TABLE>
- - ------------------
* Owns less than 1% of the outstanding shares of Common Stock
(1) Includes 2,609,964 shares owned directly by Futuronics Corporation. Carol
Tannenhauser, Richard Blanck and Peter D. Blanck are officers and directors
of Futuronics Corporation.
(2) Includes (a) 85,737 shares owned directly by Peter D. Blanck, (b) 211,933
shares deemed owned by Peter D. Blanck as custodian for his four children,
(c) 75,000 shares underlying options owned by Peter D. Blanck, (d) 176,830
shares owned by a Trust created under the Will of Albert Blanck under which
Peter D. Blanck is a Trustee and Beneficiary, (e) 2,609,964 shares owned by
Futuronics Corporation of which Peter D. Blanck is an officer and director,
(f) 83,334 shares that may be acquired upon the exercise of Warrants by
Peter D. Blanck as custodian for his four children, (g) 100,000 shares that
may be acquired upon the conversion of a debenture by Peter D. Blanck and
(h) 33,332 shares that may be acquired upon the conversion of a debenture
by Peter D. Blanck as custodian for his four children.
(3) Carol Tannenhauser, Richard Blanck and Peter D. Blanck are siblings. Each
disclaims beneficial ownership of the shares owned by the others.
(4) Includes (a) 107,168 shares owned directly by Richard Blanck, (b) 190,502
shares deemed owned by Richard Blanck as custodian for his two children,
(c) 176,830 shares owned by a Trust created under the Will of Albert
Blanck, under which Richard Blanck is a Trustee and Beneficiary, (d)
2,609,964 shares owned by Futuronics Corporation of which Richard Blanck is
an officer and director (e) 83,333 shares that may be acquired upon the
exercise of Warrants by Richard Blanck as custodian for his two children,
(f) 25,000 shares that may be acquired upon the conversion of a debenture
by Richard Blanck and (g) 33,334 shares that may be acquired upon the
conversion of a debenture by Richard Blanck as custodian for his four
children.
(5) Includes (a) 1,808,821 shares owned directly by Robert C. McGee and (b)
187,475 shares that may be acquired upon the exercise of certain warrants
owned by Robert C. McGee. Mr. McGee disclaims beneficial ownership of the
shares that may be acquired on the exercise of options or warrants owned by
his son, R. Matthew McGee.
(6) Includes (a) 690,710 shares directly owned by Diane Rosenfeld, (b) 209,787
shares directly owned by Eric Rosenfeld or jointly with Diane Rosenfeld,
(c) 202,500 shares underlying options owned by Diane Rosenfeld and (d)
45,000 shares that may be acquired upon the exercise of Warrants owned by
Eric Rosenfeld.
(7) Includes (a) 171,468 shares directly owned by Robert F. Tannenhauser, (b)
1,325,409 shares directly owned by Carol Tannenhauser, the spouse of Robert
F. Tannenhauser, (c) 2,609,964 owned by Futuronics Corporation of which
Carol Tannenhauser is an officer and director, (d) 176,830 shares owned by
Trust created under the Will of Albert Blanck under which Carol
Tannenhauser is Trustee and Beneficiary, (e) 427,500 shares underlying
options owned by Carol Tannenhauser, (f) 54,500 shares that may be acquired
upon the conversion of Debentures held by Carol Tannenhauser (g) 207,833
shares owned by David Tannenhauser, the son of Robert F. Tannenhauser and
(h) 207,833 shares held in a custodial account for the benefit of Emily
Tannenhauser, the daughter of Robert F. Tannenhauser, each of Carol
(Footnotes continued on next page)
10
<PAGE>
(Footnotes continued from previous page)
Tannenhauser and Robert F. Tannenhauser share voting and dispositive power
over such shares, (i) 4,500 shares that may be acquired upon the conversion
of Debentures held by Robert Tannenhauser, (j) 21,167 shares that may be
acquired upon the conversion of Debentures held by David Tannenhauser, (k)
21,166 shares that may be acquired upon the conversion of Debentures held
for Emily Tannenhauser, each of Carol Tannenhauser and Robert F.
Tannenhauser share voting and dispositive power over such shares, (l)
41,667 shares underlying warrants held by David Tannenhauser, (m) 41,666
shares underlying warrants held for Emily Tannenhauser , each of Carol
Tannenhauser and Robert F. Tannenhauser share voting and dispositive power
over such shares, (n) 22,132 shares held in trust for David Tannenhauser
and (o) 22,132 shares held in trust for Emily Tannenhauser.
(8) Includes 200,000 warrants to purchase Common Stock with respect to an
agreement with D'Loren, Levien & Company, LLC (see Certain Relationships
and Related Transactions) and 20,000 Director options.
(9) Includes 309,875 shares owned by the Defined Benefit Plan for the benefit
of Jerome B. Alenick and 107,500 shares owned by Jerome B. and Nicole A.
Alenick, as joint tenants.
(10) Represents shares beneficially owned pursuant to Rule 13d-3 by Mr.
Tannenhauser, a Director and President of the Company, Peter D. Blanck,
Kenneth Schwartz, Irwin Redlener, Robert D'Loren and Robert Wien, Directors
of the Company, Jerome B. Alenick, nominee to the Board of Directors of the
Company, and Jennifer Napier and David Redlener, officers of the Company.
The shares deemed beneficially owned by Jennifer Napier include 18,750 in
currently exercisable options. The shares deemed beneficially owned by
Robert F. Tannenhauser and Peter D. Blanck through Futuronics Corporation
and the Trust created under the Will of Albert Blanck have been added only
once to the total shares owned by officers and directors as a group.
11
<PAGE>
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
AGE AT
NAME MARCH 31, 1998 POSITION OFFICER SINCE
- - ---------------------------------------------------------------- -------------- -------------- -------------
<S> <C> <C> <C>
Robert F. Tannenhauser.......................................... 53 President 1986
Jennifer Napier................................................. 26 Treasurer 1996
Robert C. McGee(1).............................................. 61 Vice President 1996
David Redlener.................................................. 30 Secretary 1997
</TABLE>
- - ------------------
(1) Robert C. McGee resigned as an officer and director of the Company effective
January 1, 1998, however Mr. McGee remains an employee of a subsidiary of
the Company.
All officers other than Robert C. McGee will hold office until the meeting
of the Board following the next annual meeting or until removed by the Board.
The principal occupations of Mr. Tannenhauser for the last five years are
described under the caption 'Proposal 1--Election of Directors.'
From 1991 to 1995, Robert C. McGee was President and owner of Southeastern
First Financial, Inc. ('Southeastern First'), an originator of commercial and
Small Business Administration loans. After selling Southeastern First, Mr. McGee
formed Southeastern First Financial Network, Inc., also an originator of
commercial and SBA loans, which was subsequently acquired by the Company. Mr.
McGee resigned as Vice President in February 1997 and became Senior Credit
Advisor to BLC Financial Network , Inc., a wholly owned loan origination
subsidiary of the Company. Mr. McGee resigned as an officer of the Company
effective January 1, 1998.
Jennifer Napier served as Assistant Secretary of the Company from February
1996 to June 30, 1997 and as Treasurer of the Company since June 30, 1997. From
June 1994 until the present, Ms. Napier has been employed by Business Loan
Center and Business Loan Center, Inc. Ms. Napier graduated with a degree in
Accounting from San Diego State University in May 1994 and is currently pursuing
a Masters degree in Finance.
David Redlener has served as Secretary of the Company since June 30, 1997.
He has been employed by Business Loan Center, Inc. since May 1997. From
September 1994 until December 1996 Mr. Redlener was an Assistant District
Attorney in the City of New York. Mr. Redlener graduated from Saint Louis
University School of Law. Mr. Redlener is the son of Irwin Redlener, a Director
of the Company.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all plan and non-plan compensation paid to
the named individual for services rendered in all capacities to the Company and
its subsidiaries during the three fiscal years ended June 30, 1997. The
following salaries and/or benefits are presently payable pursuant to employment
agreements. See 'Certain Relationships and Related Transactions.'
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------- ------------
OTHER SECURITIES
FISCAL ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS(#) COMPENSATION
- - ---------------------------------- ------ -------- ----- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert F. Tannenhauser............ 1997 $207,411(1) $ 0 $0 $0
President and Director 1996 150,997(1) 0 0 0
1995 37,198(1) 0 0 450,000 0
Robert C. McGee................... 1997(2) 200,000 0 0 0
Vice President and Director 1996 209,022 187,475
</TABLE>
- - ------------------
(1) Includes premiums for excess health insurance.
(2) Robert C. McGee resigned as an officer and director of the Company effective
as of January 1, 1998, however Mr. McGee remains an employee of a subsidiary
of the Company.
12
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The Company did not grant options to either Robert F. Tannenhauser or
Robert C. McGee in Fiscal Year 1997.
The following table sets forth information concerning each exercise of
stock options during the Fiscal Year 1997 by the named individual, along with
the year-end value of unexercised options:
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
6/30/97 6/30/97
SHARES -------------- ---------------
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED $ UNEXERCISABLE UNEXERCISABLE
- - ------------------------------------------- ----------- ---------- -------------- ---------------
<S> <C> <C> <C> <C>
Robert F. Tannenhauser..................... 140,000 $ 59,500 427,500/None $192,375/None(1)(2)
Robert C. McGee............................ 0 0 187,475/None $ 51,556/None(1)(2)
</TABLE>
- - ------------------
(1) All options are exercisable; there were no unexercisable options at June 30,
1997.
(2) Calculated using the fair market value of the Common Stock at June 30, 1997
(closing bid) of $0.875 minus the exercise price.
Non-Qualified Stock Option Agreements were authorized on June 30, 1997
whereby certain directors are to receive 20,000 options each to purchase Common
Stock at an exercise price of $.90 per share, all of which are exercisable
immediately or at any time prior to June 30, 2002 as well as $1,000 per meeting
of the Board of Directors. The Directors covered under the above referenced
compensation package include Robert W. D'Loren, Irwin E. Redlener, M.D., Kenneth
S. Schwartz, M.D. and Robert W. Wien.
Reference is made to the section of this Proxy Statement entitled 'Certain
Relationships and Related Transactions' for a description of options granted to
certain executive officers, fees paid to entities that are affiliated with
certain executive officers and employment agreements with certain executive
officers.
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements with Robert F. Tannenhauser
and Robert C. McGee on February 5, 1996.
Robert F. Tannenhauser. Robert F. Tannenhauser's employment agreement
provides that he shall be employed as President and Chairman of the Board of the
Company and as Chief Executive Officer of Business Loan Center through January
15, 2001 at an annual gross salary of $200,000. Mr. Tannenhauser is also
entitled to participate in all benefit plans established from time to time by
the Company and Business Loan Center on the same basis as all other executive
employees.
The agreement shall automatically renew for successive one-year periods
until the Company registers the shares of Common Stock held by Mr. Tannenhauser
under the Securities Act and lists the Common Stock for trading on Nasdaq, The
American Stock Exchange ('AMEX') or another recognized securities exchange.
Thereafter, the agreement shall automatically renew for additional successive
one-year periods unless notice to the contrary is given by any party not less
than 90 days prior to the expiration of the then current term.
The agreement obliges the Company to pay to Mr. Tannenhauser the greater of
$200,000 or his annual gross salary if (i) Mr. Tannenhauser's employment is
terminated for any reason other than his death or disability, (ii) the agreement
is not renewed by Business Loan Center or (iii) Mr. Tannenhauser terminates the
agreement due to a reduction in Mr. Tannenhauser's salary or benefits or the
diminution of his responsibility, authority or status as chief executive.
13
<PAGE>
Robert C. McGee. Robert C. McGee resigned from the Company as an officer
and director effective as of January 1, 1998. Effective January 1, 1998 Mr.
McGee's employment agreement was amended by mutual consent to provide that he
shall be employed by BLC Financial Network, Inc. ('BLCFN') as Senior Credit
Advisor for the duration of his original contract at an annual salary of
$175,000. Mr. McGee's previous employment agreement provided that he shall be
employed as Vice President of the Company, a Managing Partner of Business Loan
Center and President and Chief Executive Officer of BLCFN, through January 15,
2001 at an annual gross salary of $200,000.
Mr. McGee was issued warrants to purchase 187,475 shares of Common Stock at
an exercise price of $.60, all of which are exercisable immediately or at any
time prior to November 5, 2000. Mr. McGee is also entitled to participate in all
benefit plans established from time to time by the Company and Business Loan
Center on the same basis as all other executive employees.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
The Board of Directors of the Company on June 30, 1997 designated a
Compensation Committee to review and approve of compensation and terms of
employment for all officers and the key employees of the Company and its
subsidiaries. The members of the Compensation Committee of the Board of
Directors are Peter D. Blanck, Robert D'Loren and Kenneth Schwartz.
The Company's executive compensation is intended to reward, retain and
motivate management. The primary component of compensation has been base salary.
However, for certain of the most senior executives and key employees,
compensation packages now include stock-based long-term incentive rewards (the
'Awards'). The grant of these Awards is intended to align the interests of the
Company's most senior executives and key employees to improve the Company's
long-term business position and performance. No awards were made to the Chief
Executive Officer and the other executive officers of the Company for fiscal
year ending June 30, 1997. The Board of Directors believes that the Company's
executive compensation arrangements are reasonable in light of the needs of the
Company, competitive compensation levels and the goals of retention and
motivation of management.
In determining salary levels for the executive officers, primary
consideration is given to each executive's level of responsibility and
individual performance.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Certain members of the Company's Board of Directors also served as officers
of the Company in 1997. Specifically, Robert F. Tannenhauser served as President
and Robert C. McGee served as Vice President. The members of the Compensation
Committee consisted of Peter Blanck, who is a substantial shareholder of the
Company and the brother in-law of Robert F. Tannenhauser and Robert D'Loren and
Kenneth Schwartz, who are independent directors.
14
<PAGE>
PERFORMANCE GRAPH
The following graph provides a comparison of the cumulative total return of
the Company's Common Stock with the Russell 2000 Market Index, a broad marked
index covering small capitalization stocks listed on the Russell 2000 Index, and
a Custom Peer Group Index ('Peer Index'). The Peer Index is a combination of two
stock indexes stratified by SIC Codes 6159 Miscellaneous Business Credit
Institutions and 6162 Mortgage Bankers and Loan Correspondents. The cumulative
total returns for each index were prepared by Media General Financial Services,
Inc. Each case assumes an initial investment of $100 after the close of the
market on June 30, 1994, as well as the reinvestment of any dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG BLC FINANCIAL SERVICES, INC.,
RUSSELL 2000 INDEX AND PEER GROUP INDEX
[LINE GRAPH]
<TABLE>
<CAPTION>
6/30/94 6/30/95 6/30/96 6/30/97
------- ------- ------- -------
<S> <C> <C> <C> <C>
BLC Financial Services, Inc........................................... $100.00 $ 70.59 $117.66 $164.72
Peer Group Index...................................................... 100.00 122.42 178.32 241.32
Russell 2000 Index.................................................... 100.00 120.08 148.90 173.21
</TABLE>
15
<PAGE>
ADDITIONAL INFORMATION
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since June 30, 1992, various members of the immediate family and affiliates
of Robert F. Tannenhauser have made available funds to Business Loan Center for
the purpose of originating loans. In exchange for extending such loans, Business
Loan Center paid interest to the persons and entities funding such loans. During
Fiscal Years 1995, 1996 and 1997 Business Loan Center incurred interest expense
relating to such individuals and entities in the aggregate amounts of $157,000,
$130,000 and $24,000 respectively. The maximum amounts outstanding for these
loans during the periods in question were $2,594,000, $2,108,000 and $1,800,000
respectively.
The Company, during Fiscal Year 1997 has negotiated a line of credit for
Business Loan Center, Inc. and entered into a loan participation agreement with
a certain financial institution introduced to the Company by Robert W. D'Loren,
a Director of the Company. In connection with such arrangements and pursuant to
a written agreement, D'Loren, Levien & Company, LLC ('DLC'), a limited liability
company of which Mr. D'Loren is a member, received an initial fee of $50,000 and
in August 1997, received an additional fee of $75,000 upon closing of such line
of credit. In July 1997, BLC Capital Corp., a subsidiary of the Company entered
into a loan origination and servicing agreement with the financial institution
introduced by Mr. D'Loren pursuant to which BLC Capital Corp. was to receive
fees for originating and servicing non-SBA commercial real estate backed loans
for the financial institution. DLC is entitled to receive fees based upon each
transaction closed. Through December 31, 1997, DLC received fees in the amount
of $17,521 in connection with this transaction and pursuant to a written
agreement. In December 1997, DLC received a fee advance of $72,500 in connection
with arranging a line of credit for BLC Commercial Capital Corp., a subsidiary
of the Company, to be utilized to fund loans under the Department of Agriculture
B & I Guaranteed Loan Program in connection with the Securitization of a portion
of Business Loan Center's loan portfolio. In December 1997, the Company and DLC
agreed, and the Board of Directors approved, an amendment to the agreement with
respect to fees due and to be received in the future by DLC whereby DLC agreed
to reduce the cash amount of its fees in exchange for 200,000 warrants to
purchase the Common Stock of the Company at a purchase price of $1.83 per share
and the right to earn an additional 600,000 such warrants.
On November 11, 1997 the Company entered into an Investment Banking
Agreement with Josephthal Lyon & Ross, Incorporated ('Josephthal'), pursuant to
which the Company paid a $25,000 retainer to Josephthal in 1997 and agreed to
pay an additional $12,500 per month for three months commencing in January 1998.
Thereafter the fee would be reduced to $5,000 per month. In addition the Company
issued to Josephthal, pursuant to such Investment Banking Agreement, warrants to
purchase 30,000 shares of the Common Stock of the Company and agreed to issue an
additional 60,000 warrants during the term of the agreement. The initial
exercise price for the warrants is $1.10 per share. Robert W. Wien, a Director
of the Company, is a Managing Director of Josephthal.
Management believes that each transaction described above was on terms at
least as favorable to the Company as could have been obtained at the time and
under the circumstances from non-affiliated persons.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act ('Section 16(a)') requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission (the 'Commission') initial reports of ownership and
reports of changes in ownership of such equity securities. Directors, officers
and greater-than-10%-stockholders are required by the Commission's regulations
to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such reports furnished and
written representations that no other reports were required, the Company
believes that all directors, officers and greater-than-10%-stockholders complied
with all applicable Section 16(a) filing requirements, except that on August 7,
1997 Jennifer Napier, Treasurer of the Company made a late filing of a report
required by Section 16(a), covering a transaction or event in the Common Stock.
16
<PAGE>
AVAILABILITY OF CERTAIN INFORMATION
Upon receipt of a stockholder's written request to the Secretary of the
Company at the Company's principal offices, the Company will furnish to such
stockholders without charge a copy of the Company's Annual Report on Form 10-K
for Fiscal Year 1997.
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
FOR 1998 ANNUAL MEETING
The Board of Directors of the Company presently intends to schedule an
Annual Meeting of Stockholders of the Company for January 29, 1999. In order for
stockholder proposals for this meeting to be eligible for inclusion in the
Company's Proxy Statement for that meeting, they must be received by the Company
at its principal office in New York, New York by November 3, 1998.
OTHER MATTERS
Management is not aware of any other matter to be presented for action at
the meeting other than Items 1 through 4 in the accompanying Notice of Annual
Meeting of Stockholders, and management does not intend to bring any other
matter before the Annual Meeting. However, if any other matters should be
presented at the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote said proxy in accordance with their best judgment.
Kindly date, sign and return the enclosed form of proxy. YOUR VOTE IS
IMPORTANT.
DAVID REDLENER
Secretary
New York, New York
April 8, 1998
17
<PAGE>
EXHIBIT 1
1998 BLC FINANCIAL SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
1. Shares Subject to the Plan........................................................................... 1
2. Administration....................................................................................... 1
3. Interpretation....................................................................................... 1
4. Eligible Employees................................................................................... 1
5. Participation in the Plan............................................................................ 1
6. Payroll Deductions................................................................................... 2
7. Interest on Payroll Deductions....................................................................... 2
8. Offering and Purchase Periods........................................................................ 2
9. Rights to Purchase Common Stock; Purchase Price...................................................... 2
10. Timing of Purchase; Purchase Limitation.............................................................. 2
11. Issuance of Stock Certificates....................................................................... 3
12. Withholding of Taxes................................................................................. 3
13. Account Statements................................................................................... 3
14. Participation Adjustment............................................................................. 3
15. Changes in Elections to Purchase..................................................................... 3
16. Termination of Employment............................................................................ 4
17. Retirement........................................................................................... 4
18. Layoff, Authorized Leave or Absence or Disability.................................................... 4
19. Death................................................................................................ 5
20. Termination of Participation......................................................................... 5
21. Assignment........................................................................................... 5
22. Application of Funds................................................................................. 6
23. No Right to Continued Employment..................................................................... 6
24. Amendment of Plan.................................................................................... 6
25. Effective Date; Term and Termination of the Plan..................................................... 6
26. Effect of Changes in Capitalization.................................................................. 6
(a) Changes in Stock................................................................................. 6
(b) Reorganization in Which the Company is the Surviving Corporation................................. 7
(c) Reorganization in Which the Company is not the Surviving Corporation
or Sale of Assets or Stock....................................................................... 7
(d) Adjustments...................................................................................... 7
(e) No Limitations on Company........................................................................ 7
27. Governmental Regulation.............................................................................. 7
28. Stockholder Rights................................................................................... 7
29. Rule 16b-3........................................................................................... 8
30. Payment of Plan Expenses............................................................................. 8
</TABLE>
i
<PAGE>
1998 BLC FINANCIAL SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors of BLC Financial Services, Inc. (the 'Company') has
adopted this 1998 BLC Financial Services, Inc. Employee Stock Purchase Plan (the
'Plan') to enable eligible employees of the Company and its participating
Affiliates (as defined below), through payroll deductions, to purchase shares of
the Company's common stock, par value $0.01 per share (the 'Common Stock'). The
Plan is for the benefit of the employees of BLC Financial Services, Inc. and any
participating Affiliates. The Plan is intended to benefit the Company by
increasing the employees' interest in the Company's growth and success and
encouraging employees to remain in the employ of the Company or its
participating Affiliates. The provisions of the Plan are set forth below:
1. SHARES SUBJECT TO THE PLAN.
Subject to adjustment as provided in Section 26 below, the aggregate
number of shares of Common Stock that may be made available for purchase by
participating employees under the Plan is 1,000,000. The shares issuable
under the Plan may, in the discretion of the Board of Directors of the
Company (the 'Board'), be authorized but unissued shares, treasury shares
or issued and outstanding shares that are purchased in the open market.
2. ADMINISTRATION.
The Plan shall be administered under the direction of the Compensation
Committee of the Board (the 'Committee'). No member of the Board or the
Committee shall be liable for any action or determination made in good
faith with respect to the Plan.
3. INTERPRETATION.
It is intended that the Plan will meet the requirements for an
'employee stock purchase plan' under Section 423 of the Internal Revenue
Code of 1986 (the 'Code'), and it is to be so applied and interpreted.
Subject to the express provisions of the Plan, the Committee shall have
authority to interpret, in its sole discretion, the Plan, to prescribe,
amend and rescind rules relating to it, and to make all other
determinations necessary or advisable in administering the Plan, all of
which determinations will be final and binding upon all persons.
4. ELIGIBLE EMPLOYEES.
Any Employee of the Company or any of its participating Affiliates may
participate in the Plan, except the following, who are ineligible to
participate: (a) an employee who has been employed by the Company or any of
its participating Affiliates for less than three months as of the beginning
of an Offering Period (as defined in Section 7 below); (b) an employee
whose customary employment is for less than five months in any calendar
year; (c) an employee whose customary employment is 20 hours or less per
week; and (d) an employee who, after exercising his or her rights to
purchase shares under the Plan, would own shares of Common Stock (including
shares that may be acquired under any outstanding options) representing
five percent or more of the total combined voting power of all classes of
stock of the Company. The term 'Participating Affiliate' means any company
or other trade or business that is a subsidiary of the Company (determined
in accordance with the principles of Sections 424(e) and (f) of the Code
and the regulations thereunder). The Board may at any time in its sole
discretion, if it deems it advisable to do so, terminate the participation
of the employees of a particular Participating Affiliate.
5. PARTICIPATION IN THE PLAN.
An eligible employee may become a participating employee in the Plan
by completing an election to participate in the Plan on a form provided by
the Company and submitting that form to the Payroll Department of the
Company. The form will authorize payroll deductions (as provided in Section
6 below) and authorize the purchase of shares of Common Stock for the
employee's account in accordance with the terms of the Plan. Enrollment
will become effective upon the first day of the first Offering Period.
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<PAGE>
6. PAYROLL DEDUCTIONS.
At the time an eligible employee submits his or her election to
participate in the Plan (as provided in Section 5 above), the employee
shall elect to have deductions made from his or her pay, on each pay day
following his or her enrollment in the Plan, and for as long as he or she
shall participate in the Plan. The deductions will be credited to the
participating employee's account under the Plan. An employee may not during
any Offering Period change his or her percentage of payroll deduction for
that Offering Period, nor may an employee withdraw any contributed funds,
other than in accordance with Sections 15 through 20 below.
7. INTEREST ON PAYROLL DEDUCTIONS.
The Company and Participating Affiliates will cause to be maintained a
record of amounts credited to each participating employee authorizing a
payroll deduction pursuant to Section 6. The Company may, but is not
required to, credit interest on the balance of the employees' accounts
during the Offering Period. If interest is credited to such accounts, the
rate may be a fixed or variable rate determined by the Company.
8. OFFERING AND PURCHASE PERIODS.
The Offering Periods and Purchase Period shall be determined by the
Committee. The initial Offering Period shall commence on
and end on , and every Offering
Period thereafter, shall commence on the six month anniversary of the
commencement of the prior Offering Period and shall be a 24-month period
until changed by the Committee. The initial Purchase Period shall commence
on and end on , and every Purchase
Period thereafter, shall commence immediately after the prior Purchase
Period ends and shall be a six month period until changed by the Committee.
9. RIGHTS TO PURCHASE COMMON STOCK; PURCHASE PRICE.
Rights to purchase shares of Common Stock will be deemed granted to
participating employees as of the first trading day of each Offering
Period. The purchase price of each share of Common Stock (the 'Purchase
Price') shall be not lower than the lesser of 85 percent of the fair market
value of the Common Stock (i) on the first trading day of the Offering
Period or (ii) on the last trading day of the Purchase Period, unless the
Purchase Price is otherwise established by the Committee; provided that in
no event shall the Purchase Price be less than the amount determined
pursuant to subparagraphs (i) and (ii) above or the par value of the Common
Stock. For purposes of the Plan, 'fair market value' means the value of
each share of Common Stock subject to the Plan determined as follows: if on
the determination date the shares of Common Stock are listed on an
established national or regional stock exchange, are admitted to quotation
on the National Association of Securities Dealers Automated Quotation
System, or are publicly traded on an established securities market, the
fair market value of the shares of Common Stock shall be the closing price
of the shares of Common Stock on such exchange or in such market (the
highest such closing price if there is more than one such exchange or
market) on the trading day immediately preceding the determination date (or
if there is no such reported closing price, the fair market value shall be
the mean between the highest bid and lowest asked prices or between the
high and low sale prices on such trading day) or, if no sale of the shares
of Common Stock is reported for such trading day, on the next preceding day
on which any sale shall have been reported. If the shares of Common Stock
are not listed on such an exchange, quoted on such System or traded on such
a market, fair market value shall be determined by the Board in good faith.
10. TIMING OF PURCHASE; PURCHASE LIMITATION.
Unless a participating employee has given prior written notice
terminating such employee's participation in the Plan, or the employee's
participation in the Plan has otherwise been terminated as provided in
Sections 16 through 20 below, such employee will be deemed to have
exercised automatically his or her right to purchase Common Stock on the
last trading day of the Purchase Period (except as provided in Section 15
below) for the number of shares of Common Stock which the accumulated funds
in the employee's account at that time will purchase at the Purchase Price,
subject to the participation
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<PAGE>
adjustment provided for in Section 14 below and subject to adjustment under
Section 26 below. Notwithstanding any other provision of the Plan, no
employee may purchase in any one calendar year under the Plan and all other
'employee stock purchase plans' of the Company and its Participating
Affiliates shares of Common Stock having an aggregate fair market value in
excess of $25,000, determined as of the first trading date of the Offering
Period as to shares purchased during such period. Effective upon the last
trading day of the Purchase Period, a participating employee will become a
stockholder with respect to the shares purchased during such period, and
will thereupon have all dividend, voting and other ownership rights
incident thereto. Notwithstanding the foregoing, no shares shall be sold
pursuant to the Plan unless the Plan is approved by the Company's
stockholders in accordance with Section 25 below.
11. ISSUANCE OF STOCK CERTIFICATES.
As of the last trading day of the Purchase Period, a participating
employee will be credited with the number of shares of Common Stock
purchased for his or her account under the Plan during such Offering
Period. Shares purchased under the Plan will be held in the custody of an
agent (the 'Agent') appointed by the Committee. The Agent may hold the
shares purchased under the Plan in stock certificates in nominee names and
may commingle shares held in its custody in a single account or stock
certificate without identification as to individual participating
employees. A participating employee may, at any time following his or her
purchase of shares under the Plan, by written notice instruct the Agent to
have all or part of such shares reissued in the participating employee's
own name and have the stock certificate delivered to the employee.
12. WITHHOLDING OF TAXES.
To the extent that a participating employee realizes ordinary income
in connection with a sale or other transfer of any shares of Common Stock
purchased under the Plan, the Company may withhold amounts needed to cover
such taxes from any payments otherwise due and owing to the participating
employee or from shares that would otherwise be issued to the participating
employee hereunder. Any participating employee who sells or otherwise
transfers shares purchased under the Plan within two years after the
beginning of the Offering Period in which the shares were purchased must
within 30 days of such transfer notify the Payroll Department of the
Company in writing of such transfer.
13. ACCOUNT STATEMENTS.
The Company will cause the Agent to deliver to each participating
employee a statement for each Purchase Period during which the employee
purchases Common Stock under the Plan, but no more frequently than
quarterly, reflecting the amount of payroll deductions during the Purchase
Period, the number of shares purchased for the employee's account, the
price per share of the shares purchased for the employee's account and the
number of shares held for the employee's account at the end of the Purchase
Period.
14. PARTICIPATION ADJUSTMENT.
If in any Purchase Period the number of unsold shares that may be made
available for purchase under the Plan pursuant to Section 1 above is
insufficient to permit exercise of all rights deemed exercised by all
participating employees pursuant to Section 9 above, a participation
adjustment will be made, and the number of shares purchasable by all
participating employees will be reduced proportionately. Any funds then
remaining in a participating employee's account after such exercise will be
refunded to the employee.
15. CHANGES IN ELECTIONS TO PURCHASE.
(a) A participating employee may, at any time prior to the last day of
the Purchase Period, by written notice to the Company, direct the Company
to cease payroll deductions (or, if the payment for shares is
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<PAGE>
being made through periodic cash payments, notify the Company that such
payments will be terminated), in accordance with the following
alternatives:
(i) The employee's option to purchase shall be reduced to the
number of shareswhich may be purchased, as of the last day of the
Purchase Period, with the amount then credited to the employee's
account; or
(ii) Withdraw the amount in such employee's account and terminate
such employee's option to purchase.
(b) Any participating employee may increase or decrease his or her
payroll deduction or periodic cash payments, to take effect on the first
day of the next Offering Period, by delivering to the Company a new form
regarding election to participate in the Plan under Section 5 above.
16. TERMINATION OF EMPLOYMENT.
In the event a participating employee voluntarily leaves the employ of
the Company or a participating Affiliate, otherwise than by retirement
under a plan of the Company or a Participating Affiliate, or is terminated
by the Company prior to the last day of the Purchase Period, the amount in
the employee's account will be distributed and the employee's option to
purchase will terminate.
17. RETIREMENT.
In the event a participating employee who has an option to purchase
shares leaves the employ of the Company or a Participating Affiliate
because of retirement under a plan of the Company or a Participating
Affiliate the participating employee may elect, within 10 days after the
date of such retirement or termination, one of the following alternatives:
(a) To make up any deficiency in the employee's account resulting
from the termination of payroll deductions by an immediate cash payment;
(b) The employee's option to purchase shall be reduced to the
number of shares which may be purchased, as of the last day of the
Purchase Period, with the amount then credited to the employee's
account; or
(c) Withdraw the amount in such employee's account and terminate
such employee's option to purchase.
In the event the participating employee does not make an election
within the aforesaid 10-day period, he or she will be deemed to have
elected subsection 17(c) above.
18. LAYOFF, AUTHORIZED LEAVE OR ABSENCE OR DISABILITY.
Payroll deductions for shares for which a participating employee has
an option to purchase may be suspended during any period of absence of the
employee from work due to lay-off, authorized leave of absence or
disability or, if the employee so elects, periodic payments for such shares
may continue to be made in cash.
If such employee returns to active service prior to the last day of
the Purchase Period, the employee's payroll deductions will be resumed and
if said employee did not make periodic cash payments during the employee's
period of absence, the employee shall, by written notice to the Company's
Payroll Department within 10 days after the employee's return to active
service, but not later than the last day of the Purchase Period, elect:
(a) To make up any deficiency in the employee's account resulting
from a suspension of payroll deductions by an immediate cash payment;
(b) Not to make up such deficiency, in which event the number of
shares to be purchased by the employee shall be reduced to the number of
whole shares which may be purchased with the amount, if
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<PAGE>
any, then credited to the employee's account plus the aggregate amount,
if any, of all payroll deductions to be made thereafter; or
(c) Withdraw the amount in the employee's account and terminate the
employee's option to purchase.
A participating employee on lay-off, authorized leave of absence or
disability on the last day of the Purchase Period shall deliver written
notice to his or her employer on or before the last day of the Purchase
Period, electing one of the alternatives provided in the foregoing clauses
(a), (b) and (c) of this Section 18. If any employee fails to deliver such
written notice within 10 days after the employee's return to active service
or by the last day of the Purchase Period, whichever is earlier, the
employee shall be deemed to have elected subsection 18(c).
If the period of a participating employee's lay-off, authorized leave
of absence or disability shall terminate on or before the last day of the
Purchase Period, and the employee shall not resume active employment with
the Company or a Participating Affiliate, the employee shall receive a
distribution in accordance with the provisions of Section 17 of this Plan.
19. DEATH.
In the event of the death of a participating employee while the
employee's option to purchase shares is in effect, the legal
representatives of such employee may, within three months after the
employee's death (but no later than the last day of the Purchase Period) by
written notice to the Company or Participating Affiliate, elect one of the
following alternatives:
(a) To make up any deficiency in the employee's account resulting
from a suspension of payroll deductions by an immediate cash payment;
(b) The employee's option to purchase shall be reduced to the
number of shares which may be purchased, as of the last day of the
Purchase Period, with the amount then credited to the employee's
account; or
(c) Withdraw the amount in such employee's account and terminate
such employee's option to purchase.
In the event the legal representatives of such employee fail to
deliver such written notice to the Company or Participating Affiliate
within the prescribed period, the election to purchase shares shall
terminate and the amount, then credited to the employee's account shall be
paid to such legal representatives.
20. TERMINATION OF PARTICIPATION.
A participating employee will be refunded all moneys in his or her
account, and his or her participation in the Plan will be terminated if
either (a) the Board elects to terminate the Plan as provided in Section 25
below, or (b) the employee ceases to be eligible to participate in the Plan
under Section 4 above. As soon as practicable following termination of an
employee's participation in the Plan, the company will deliver to the
employee a check representing the amount in the employee's account and a
stock certificate representing the number of whole shares held in the
employee's account. Once terminated, participation may not be reinstated
for the then current Offering Period, but, if otherwise eligible, the
employee may elect to participate in any subsequent Offering Period.
21. ASSIGNMENT.
No participating employee may assign his or her rights to purchase
shares of Common Stock under the Plan, whether voluntarily, by operation of
law (except as otherwise provided in Section 19) or otherwise. Any payment
of cash or issuance of shares of Common Stock under the Plan may be made
only to the participating employee (or, in the event of the employee's
death, to the employee's estate). Once a stock certificate has been issued
to the employee or for his or her account, such certificate may be assigned
the same as any other stock certificate.
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<PAGE>
22. APPLICATION OF FUNDS.
All funds received or held by the Company under the Plan shall be
deposited with the Agent for the account of the participating employees.
Participating employees' accounts will not be segregated.
23. NO RIGHT TO CONTINUED EMPLOYMENT.
Neither the Plan nor any right to purchase Common Stock under the Plan
confers upon any employee any right to continued employment with the
Company or any of its Participating Affiliates, nor will an employee's
participation in the Plan restrict or interfere in any way with the right
of the Company or any of its Participating Affiliates to terminate the
employee's employment at any time.
24. AMENDMENT OF PLAN.
The Board may, at any time, amend the Plan in any respect (including
an increase in the percentage specified in Section 9 above used in
calculating the Purchase Price); provided, however, that without approval
of the stockholders of the Company no amendment shall be made (a)
increasing the number of shares specified in Section 1 above that may be
made available for purchase under the Plan (except as provided in Section
26 below), (b) changing the eligibility requirements for participating in
the Plan, or (c) impairing the vested rights of participating employees.
25. EFFECTIVE DATE; TERM AND TERMINATION OF THE PLAN.
The Plan shall be effective as of the date of adoption by the Board,
which date is set forth below, subject to approval of the Plan by a
majority of the votes present and entitled to vote at a duly held meeting
of the shareholders of the Company at which a quorum representing a
majority of all outstanding voting stock is present, either in person or by
proxy; provided, however, that upon approval of the Plan by the
shareholders of the Company as set forth above, all rights to purchase
shares granted under the Plan on or after the effective date shall be fully
effective as if the shareholders of the Company had approved the Plan on
the effective date. If the shareholders fail to approve the Plan on or
before one year after the effective date, the Plan shall terminate, any
rights to purchase shares granted hereunder shall be null and void and of
no effect and all contributed funds shall be refunded to participating
employees. The Board may terminate the Plan at any time and for any reason
or for no reason, provided that such termination shall not impair any
rights of participating employees that have vested at the time of
termination. In any event, the Plan shall, without further action of the
Board, terminate ten (10) years after the date of adoption of the Plan by
the Board or, if earlier, at such time as all shares of Common Stock that
may be made available for purchase under the Plan pursuant to Section 1
above have been issued.
26. EFFECT OF CHANGES IN CAPITALIZATION.
(a) Changes in Stock.
If the number of outstanding shares of Common Stock is increased or
decreased or the shares of Common Stock are changed into or exchanged for a
different number or kind of shares or other securities of the Company by
reason of any recapitalization, reclassification, stock split, reverse
split, combination of shares, exchange of shares, stock dividend, or other
distribution payable in capital stock, or other increase or decrease in
such shares effected without receipt of consideration by the Company
occurring after the effective date of the Plan, the number and kinds of
shares that may be purchased under the Plan shall be adjusted
proportionately and accordingly by the Company. In addition, the number and
kind of shares for which rights are outstanding shall be similarly adjusted
so that the proportionate interest of a participating employee immediately
following such event shall, to the extent practicable, be the same as
immediately prior to such event. Any such adjustment in outstanding rights
shall not change the aggregate Purchase Price payable by a participating
employee with respect to shares subject to such rights, but shall include a
corresponding proportionate adjustment in the Purchase Price per share.
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<PAGE>
(b) Reorganization in Which the Company is the Surviving Corporation.
Subject to Subsection (c) of this Section 26, if the Company shall be
the surviving corporation in any reorganization, merger or consolidation of
the Company with one or more other corporations, all outstanding rights
under the Plan shall pertain to and apply to the securities to which a
holder of the number of shares of Common Stock subject to such rights would
have been entitled immediately following such reorganization, merger or
consolidation, with a corresponding proportionate adjustment of the
Purchase Price per share so that the aggregate Purchase Price thereafter
shall be the same as the aggregate Purchase Price of the shares subject to
such rights immediately prior to such reorganization, merger or
consolidation.
(c) Reorganization in Which the Company is Not the Surviving Corporation
or Sale of Assets or Stock.
Upon any dissolution or liquidation of the Company, or upon a merger,
consolidation or reorganization of the Company with one or more other
corporations in which the Company is not the surviving corporation, or upon
a sale of all or substantially all of the assets of the Company to another
corporation, or upon any transaction (including, without limitation, a
merger or reorganization in which the Company is the surviving corporation)
approved by the Board that results in any person or entity owning more than
80 percent of the combined voting power of all classes of stock of the
Company, the Plan and all rights outstanding hereunder shall terminate,
except to the extent provision is made in writing in connection with such
transaction for the continuation of the Plan and/or the assumption of the
rights theretofore granted, or for the substitution for such rights of new
rights covering the stock of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kinds
of shares and exercise prices, in which event the Plan and rights
theretofore granted shall continue in the manner and under the terms so
provided. In the event of any such termination of the Plan, all current
Purchase Periods and Offering Periods shall be deemed to have ended on the
last trading day prior to such termination, and in accordance with Section
10 above the rights of each participating employee then outstanding shall
be deemed to be automatically exercised on such last trading day. The Board
shall send written notice of an event that will result in such a
termination to all participating employees not later than the time at which
the Company gives notice thereof to its stockholders.
(d) Adjustments.
Adjustments under this Section 26 related to stock or securities of
the Company shall be made by the Committee, whose determination in that
respect shall be final, binding, and conclusive.
(e) No Limitations on Company.
The grant of a right pursuant to the Plan shall not affect or limit in
any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.
27. GOVERNMENTAL REGULATION.
The Company's obligation to issue, sell and deliver shares of Common
Stock pursuant to the Plan is subject to such approval of any governmental
authority and any national securities exchange or other market quotation
system as may be required in connection with the authorization, issuance or
sale of such shares.
28. STOCKHOLDER RIGHTS.
Any dividends paid on shares held by the Company for a participating
employee's account will be transmitted to the employee. The Company will
deliver to each participating employee who purchases shares of Common Stock
under the Plan, as promptly as practicable by mail or otherwise, all
notices of meetings, proxy statements, proxies and other materials
distributed by the Company to its stockholders. Any shares of Common Stock
held by the Agent for an employee's account will be voted in accordance
with the
1-7
<PAGE>
employee's duly delivered and signed proxy instructions. There will be no
charge to participating employees in connection with such notices, proxies
and other materials.
29. RULE 16B-3.
Transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or any successor provision under the
Securities Exchange Act of 1934, as amended. If any provision of the Plan
or action by the Board fails to so comply, it shall be deemed null and void
to the extent permitted by law and deemed advisable by the Board. Moreover,
in the event the Plan does not include a provision required by Rule 16b-3
to be stated herein, such provision (other than one relating to eligibility
requirements, or the price and amount of awards) shall be deemed
automatically to be incorporated by reference into the Plan.
30. PAYMENT OF PLAN EXPENSES.
The Company will bear all costs of administering and carrying out the
Plan; provided however, participating employees shall bear all costs
incurred subsequent to the issuance of stock certificates pursuant to
Section 11.
* * *
This Plan was duly adopted and approved by the Board of Directors of the
Company by resolution at a meeting held on the of , 199 .
------------------------------------------------------------------------------
Secretary of the Company
This Plan was duly approved by the stockholders of the Company at a meeting
of the stockholders held on the of , 199 .
------------------------------------------------------------------------------
Secretary of the Company
1-8
<PAGE>
PROXY
BLC FINANCIAL SERVICES, INC.
ANNUAL MEETING OF STOCKHOLDERS--MAY 8, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby nominates and appoints Peter D. Blanck and Robert F.
Tannenhauser, or either one of them, as proxies of the undersigned, with power
of substitution to each, to vote all shares of stock of BLC FINANCIAL SERVICES,
INC. (the 'Company') which the undersigned may be entitled to vote at the Annual
Meeting of Stockholders of the Company to be held at the offices of Weil,
Gotshal & Manges LLP, 25th Floor Conference Center, located at 767 Fifth Avenue,
New York, New York, on May 8, 1998 at 11:00 A.M. and at any adjournment or
adjournments thereof with authority to vote said stock on the following matters:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 THROUGH 5.
1. The election of three directors of the Company. Robert W. Wien, Robert W.
D'Loren and Jerome Alenick.
/ / VOTE FOR all nominees listed above, except vote withheld for the
following nominees, if any: or
/ / VOTE WITHHELD for all nominees.
- - --------------------------------------------------------------------------------
2. Adoption of an amendment to the Amended 1995 Management Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. Approval of the adoption of the 1998 BLC Financial Services, Inc.
Employee Stock Purchase Plan.
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED, AND TO BE SIGNED ON OTHER SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
4. Ratification of the appointment of Richard A. Eisner & Company LLP as
auditors of the Company for the fiscal year ending on June 30, 1998.
/ / FOR / / AGAINST / / ABSTAIN
5. Upon any matters incidental to the foregoing purposes and to transact
such other business as may properly come before the meeting or any adjournment
thereof.
/ / FOR / / AGAINST / / ABSTAIN
UNLESS OTHERWISE SPECIFIED ON THIS PROXY, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED 'FOR' PROPOSALS 1-5 ABOVE. DISCRETION WILL BE USED WITH
RESPECT TO SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT OR ADJUOURNMENTS THEREOF.
NOTE: Please sign and return promptly in the envelope provided. No postage
is required if mailed in the United States.
Date: ____________ , 1998
-------------------------
(Signature)
-------------------------
(Signature)
Please sign exactly as
your name appears. When
signing as attorney,
executor, administrator,
trustee or guardian,
please set forth your
full title. If signer is
a corporation, please
sign the full corporation
name by a duly authorized
officer. Joint
shareholders should each
sign.
