<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
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.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
BLC FINANCIAL SERVICES, INC.
645 MADISON AVENUE
NEW YORK, NEW YORK 10022
------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 27, 1999
------------------------------------
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 April 27,
1999 at 11:00 a.m., for the following purposes, all as more fully described in
the attached Proxy Statement.
1. To elect two directors of the Company.
2. To ratify the appointment of Richard A. Eisner & Company LLP as auditors of
the Company for the fiscal year ending on June 30, 1999.
3. 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 March 25, 1999 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, 1998.
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
March 26, 1999
<PAGE>
BLC FINANCIAL SERVICES, INC.
------------------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 27, 1999
------------------------------------
GENERAL
This Proxy Statement is first being mailed to stockholders on or about
March 26, 1999, 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 April 27, 1999 (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
and (ii) 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, 1999.
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 March 25, 1999 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, 20,247,628 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. The affirmative vote of 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, the
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock, represented in person or by proxy, is required to approve Proposal
2, 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 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.
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 33.06% of the
outstanding Common Stock of the Company) will vote in favor of Proposals 1
and 2.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Two persons are to be elected to the Board of Directors at the Annual
Meeting and the remaining five 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 two nominees listed below, unless instructions to the contrary
are given therein. The two nominees, Irwin E. Redlener, M.D. and Kenneth S.
Schwartz, M.D., 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 two 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 Director Affairs Committee of the Company 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 two nominees and the five 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>
HAS SERVED YEAR
AGE AT AS TERM
MARCH 25, DIRECTOR WILL
NAME PRINCIPAL OCCUPATION 1999 SINCE EXPIRE
- ---------------------------- --------------------------------- --------- ---------- ------
<S> <C> <C> <C> <C>
Jerome B. Alenick........... Sole Proprietor 70 1998 2001
Jerome B. Alenick Investments
& Financial Services
Florham Park, New Jersey
Peter D. Blanck............. Professor of Law 41 1993 2000
University of Iowa College of Law
Iowa City, Iowa
Robert W. D'Loren........... President 41 1997 2001
CAK Universal Credit Corp.
New York, New York
Irwin E. Redlener, M.D...... Director, Division of 54 1997 2002
(nominee) Community Pediatrics
Montefiore Medical Center
Bronx, New York
Kenneth S. Schwartz, M.D.... Chief Medical Officer 54 1997 2002
(nominee) Utilimed, Inc.
Northbrook, Illinois
Robert F. Tannenhauser...... President 54 1986 2000
BLC Financial Services, Inc.
New York, New York
Robert W. Wien.............. Managing Director and Director 47 1997 2001
of Mergers & Acquisitions
Josephthal & Co., Inc.
New York, New York
</TABLE>
2
<PAGE>
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 a member of the
Bar of the State of New Jersey and the District of Columbia 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 is currently and has been since May 1993 a Professor of Law
and of Medicine at the University of Iowa College of Law. Mr. Blanck is also
Director of the Law, Health and Disability Center. 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 was self-employed for eleven years and
conducted business in a partnership known as D'Loren, Levien & Company, LLC,
which 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 President of the Children's Hospital at
Montefiore Medical Center and has been Professor of Pediatrics at the Albert
Einstein College of Medicine, Montefiore Medical Center, since 1997. In
addition, Dr. Irwin Redlener has served as Attending Pediatrician at Montefiore
Medical Center in New York since 1990. Dr. Redlener is President and co-founder
of The Children's Health Fund, a not-for-profit foundation developed to support
health care for homeless and medically underserved children.
Kenneth S. Schwartz has been Chief Medical Officer of Utilimed, Inc. in
Northbrook, Illinois since December, 1998. From 1995 to 1998, Dr. Schwartz was
Vice President of Complete Management, Inc. in New York, New York. From 1985 to
1996, Dr. Schwartz served as Chief Executive Officer of Advanced Alliance
Management Corporation. From 1981 to 1995, Mr. 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 F. Tannenhauser has been a full-time employee of the Company through
its subsidiary, Business Loan Center, Inc., ("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.
Robert W. Wien has served as Managing Director and Director of Mergers and
Acquisitions at Josephthal & Co. (formerly, 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. Additionally, 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. In addition, during
the fiscal year ended June 30, 1998 ("Fiscal Year 1998"), Robert W. D'Loren,
Irwin E. Redlener, Kenneth M. Schwartz and Robert W. Wien were each granted,
pursuant to non-qualified stock option
3
<PAGE>
agreements, options to purchase 20,000 shares of Common Stock at an exercise
price of $.90 per share, which options are all exercisable immediately at any
time prior to June 30, 2002.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors had 4 meetings during the Fiscal Year 1998. No
incumbent director attended less than 75% of the aggregate of the total number
of meetings of the Board of Directors in Fiscal Year 1998.
The audit committee of the Board of Directors consists of Irwin Redlener,
Jerome Alenick and Robert Wien. The audit committee met with the Company's
Auditors to review the audited Fiscal Year 1998 financial statements and the
auditors recommendations and comments with respect thereto.
The compensation committee of the Board of Directors consists 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
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, 1999. 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.
On March 20, 1995, Richard A. Eisner & Company LLP was engaged as the
principal auditors for the Company and Farber, Blicht & Eyerman, the independent
accountant for the Company for the fiscal year ended June 30, 1994, was replaced
as the Company's auditors, effective with the completion of the 1994 audit.
Farber, Blicht & Eyerman's reports on the financial statements of the Company
did not contain an adverse opinion or a disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope or accounting principles,
except that upon the recommendation of Farber, Blicht & Eyerman the Company
changed from unacceptable methods of accounting for acquisition purchase price
adjustments, transactions involving its own securities and certain other
transactions to acceptable methods. The change in accounting principles has been
accounted for as corrections of errors and prior years' financial statements
have been restated. The decision to change accountants was approved by the Board
of Directors of the Company. Since July 1, 1992, there have not been any
disagreements between the Company and Farber, Blicht & Eyerman on any matter of
accounting principles or practices, financial statements, disclosure, or
auditing scope or procedure, which disagreements, if not resolved to Farber,
Blicht & Eyerman's satisfaction, would have caused Farber, Blicht & Eyerman to
make reference to the subject matter of the disagreement in connection with any
such report.
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, 1999. 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.
4
<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.
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- -------------------------------- -------------------- ----------------
Futuronics Corporation ......... 2,595,224(1) 12.82%
3562 Forest Gate Drive
Iowa City, Iowa
Jerome B. Alenick .............. 429,375(2) 2.12%
26 Columbia Turnpike
Florham Park, New Jersey 07932
Peter D. Blanck ................ 3,371,391(3)(4) 16.47%
University of Iowa,
College of Law
Iowa City, Iowa 52242
Richard Blanck ................. 3,211,391(4)(5) 15.82%
9 Hickory Road
Manhasset Hills, New York 11040
Robert W. D'Loren .............. 230,000(6) 1.12%
72 Woodland Drive
Oyster Bay Cove, New York 11771
Robert C. McGee ................ 1,096,296(7) 5.41%
204 Oxford Circle East
Richmond, Virginia 23221
Jennifer M. Goldstein .......... 180,687(8) *
50 West 72nd Street
New York, New York 10023
David I. Redlener .............. 14,656(9) *
155 Henry Street
Brooklyn, New York 11201
Irwin E. Redlener .............. 30,000(10) *
11 Alfred Lane
New Rochelle, New York 10804
Diane Rosenfeld ................ 1,121,984(11) 5.47%
RR #1 Box 427D
County Road #86
Amenia, New York 12501
Leonard Rudolph ................ 35,574(12) *
3 Pelham Place
East Brunswick, New Jersey
08816
Kenneth S. Schwartz ............ 41,525(13) *
284 Guard Hill Rd.
Bedford, New York 10506
5
<PAGE>
Carol Tannenhauser ............. 5,473,272(4)(14) 26.21%
210 East 68th Street
New York, New York 10021
Robert F. Tannenhauser ......... 5,473,272(14) 26.21%
210 East 68th Street
New York, New York 10021
Robert W. Wien ................. 89,500(15) *
Josephthal & Co., Inc.
200 Park Avenue
New York, New York 10166
All directors and officers 7,123,926(16) 33.06%
as a group (nine persons).....
- ------------------
* Owns less than 1% of the outstanding shares of Common Stock
(1) Includes 2,595,224 shares owned directly by Futuronics Corporation. Carol
Tannenhauser, Richard Blanck and Peter D. Blanck are officers and directors
of Futuronics Corporation.
(2) Includes (a) 311,875 shares owned by the Defined Benefit Plan for the
Benefit of Jerome Alenick, and (b) 107,500 shares owned by Jerome B. Alenick
and Nicole A. Alenick as tenants in common, and (c) 10,000 shares that may
be acquired upon the exercise of options held by Jerome B. Alenick.
(3) Includes (a) 85,737 shares owned directly by Peter D. Blanck, (b) 295,267
shares deemed owned by Peter D. Blanck as custodian for his three children,
(c) 85,000 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) 2,595,224 shares owned by
Futuronics Corporation of which Peter D. Blanck is an officer and director,
(f) 100,000 shares that may be acquired upon the conversion of debentures
held directly by Peter D. Blanck and (g) 33,332 shares that may be acquired
upon the conversion of debentures held by Peter D. Blanck as custodian for
his four children.
(4) Carol Tannenhauser, Richard Blanck and Peter D. Blanck are siblings. Each
disclaims beneficial ownership of the shares owned by the others.
(5) Includes (a) 273,835 shares owned directly by Richard Blanck, (b) 107,168
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) 2,595,224
shares owned by Futuronics Corporation of which Richard Blanck is an officer
and director, (e) 25,000 shares that may be acquired upon the conversion of
debentures held by Richard Blanck and (f) 33,334 shares that may be acquired
upon the conversion of debentures held by Richard Blanck as custodian for
his two children.
(6) Includes (a) 200,000 shares that may be acquired upon the exercise of
Warrants held by D'Loren Levien & Company L.L.C. of which Robert D'Loren is
a member and (b) 30,000 shares that may be acquired upon the exercise of
options held by Robert D'Loren.
(7) Includes (a) 908,821 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 by his
son, R. Matthew McGee.
(8) Includes (a) 118,187 shares owned by Jennifer M. Goldstein and (b) 62,500
shares that may be acquired upon the exercise of options held by Jennifer
Goldstein.
(9) Includes (a) 11,656 shares owned by David Redlener and (b) 3,000 shares that
may be acquired upon the exercise of options held by David Redlener.
(10) Includes 30,000 shares that may be acquired upon the exercise of options
held by Irwin Redlener.
(11) Includes (a) 692,710 shares directly owned by Diane Rosenfeld, (b) 205,774
shares owned by her husband Eric Rosenfeld, (c) 202,500 shares that may be
acquired upon the exercise of options held by Diane
6
<PAGE>
Rosenfeld and (d) 45,000 shares that may be acquired upon the exercise of
warrants owned by Diane Rosenfeld.
(12) Includes (a) 18,074 shares owned by Leonard Rudolph and (b) 17,500 shares
that may be acquired upon the exercise of options owned by Leonard Rudolph.
(13) Includes (a) 11,525 shares owned by Kenneth Schwartz and (b) 30,000 shares
that may be acquired upon the exercise of options owned by Kenneth
Schwartz.
(14) Includes (a) 198,713 shares owned by Robert Tannenhauser, (b) 1,325,409
shares owned by Carol Tannenhauser, the spouse of Robert Tannenhauser,
(c) 176,830 shares owned by a Trust created under the Will of Albert Blanck
under which Carol Tannenhauser is a Trustee and Beneficiary, (d) 2,595,224
shares owned by Futuronics Corporation of which Carol Tannenhauser is an
officer and Director, (e) 427,500 shares that may be acquired upon the
exercise of options held by Carol Tannenhauser, (f) 54,500 shares that may
be acquired upon the conversion of debentures held by Carol Tannenhauser,
(g) 105,000 shares that may be acquired upon the exercise of options held
by Robert Tannenhauser, (h) 249,500 shares held by David Tannenhauser, the
son of Robert Tannenhauser and Carol Tannenhauser, (i) 164,600 shares held
in a custodial account for the benefit of Emily Tannenhauser, the daughter
of Robert and Carol Tannenhauser and each of Carol Tannenhauser and Robert
Tannenhauser share voting and dispositive power of such shares, (j) 84,899
shares held by Emily Tannenhauser, the daughter of Robert Tannenhauser and
Carol Tannenhauser, (k) 4,500 shares that may be acquired upon the
conversion of debentures held by Robert Tannenhauser, (l) 21,167 shares
that may be acquired upon the conversion of debentures held by David
Tannenhauser, the son of Robert Tannenhauser and Carol Tannenhauser,
(m) 21,166 shares that may be acquired upon the conversion of debentures
held by Emily Tannenhauser, the daughter of Robert Tannenhauser and Carol
Tannenhauser, (n) 22,132 shares held in trust for David Tannenhauser, the
son of Robert Tannenhauser and Carol Tannenhauser and (o) 22,132 shares
held in trust for Emily Tannenhauser, the daughter of Robert Tannenhauser
and Carol Tannenhauser and each of Robert and Carol Tannenhauser share
voting and dispositive power over such shares.
(15) Includes (a) 25,000 shares owned directly by Robert W. Wien, (b) 30,000
shares that may be acquired upon the exercise of options held by Robert W.
Wien, and (c) 34,500 shares that may be acquired upon the exercise of
certain Warrants held by Robert W. Wien.
(16) Represents shares beneficially owned pursuant to Rule 13d-3 by
Mr. Tannenhauser, a Director and President of the Company, Ms. Goldstein,
Treasurer and Chief Financial Officer of the Company, Leonard Rudolph,
Executive Vice President of the Company, David Redlener, Secretary of the
Company, and Messrs. D'Loren, Blanck, Wien, Alenick and Drs. Redlener and
Schwartz, Directors of the Company. The shares deemed beneficially owned by
Robert F. Tannenhauser and Peter D. Blanck through Futuronics Corporation
and 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.
7
<PAGE>
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
AGE AT
MARCH 25, OFFICER
NAME 1999 POSITION SINCE
- ------------------------- --------- ----------------------- -------
Robert F. Tannenhauser... 54 President 1986
Leonard Rudolph.......... 51 Executive Vice 1998
President
Jennifer M. Goldstein.... 27 Chief Financial Officer 1996
David Redlener........... 31 Secretary 1997
The principal occupation of Mr. Tannenhauser for the last five years is
described under the caption "Proposal 1--Election of Directors."
Leonard Rudolph joined the Company as Executive Vice President in May of
1998 and currently serves as President of Business Loan Center, Inc. From 1996
until joining the Company, Mr. Rudolph served as Executive Vice President,
Senior Credit Officer of Sterling National Bank. Additionally, between 1991 and
1996, Mr. Rudolph held the position of Senior Vice President of Sterling
National Bank.
Jennifer M. Goldstein served as Assistant Secretary of the Company from
February 1996 to June 1997, as Treasurer of the Company from July 1997 to
September 1998, and as Chief Financial Officer from October 1998 to the present.
From June 1994 until the present, Ms. Goldstein has been employed by Business
Loan Center. Ms. Goldstein 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. as Counsel since May 1997.
From September 1994 until December 1996 Mr. Redlener was employed as an
Assistant District Attorney in the County of the Bronx, New York. Mr. Redlener
graduated with a degree in Economics from Hunter College and earned his law
degree from Saint Louis University School of Law in May 1994. He is currently
pursuing a Masters degree in Finance. Mr. Redlener is the son of Dr. Irwin
Redlener, a Director of the Company.
8
<PAGE>
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, 1998. 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
NAME AND FISCAL ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS(#) COMPENSATION
- --------------------------- ------ ----------- ----- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert F. Tannenhauser..... 1998 $ 208,085(1) $ 0 $0 500,000 $0
President and Director 1997 207,411(1) 0 0 0 $0
1996 150,997(1) 0 0 0 $0
Leonard Rudolph ........... 1998 $ 36,154(2) 0 $0 70,000
Executive Vice President
Robert C. McGee............ 1998 $ 196,417(3) $ 0 $0 0 $0
Vice President Director 1997 200,000 0 0 0 $0
1996 209,022 0 0 187,475 $0
Jennifer M. Goldstein...... 1998 $ 106,923 $ 0 $0 100,000 $0
Chief Financial Officer 1997 64,769 0 0 0 $0
1996 45,553 0 0 75,000 $0
</TABLE>
- ------------------
(1) Includes premiums for excess health insurance.
(2) Based upon approximately two months salary at an annual rate of $170,000.
(3) Robert McGee was an officer of the Company through the first half of Fiscal
Year 1998, during which period he earned $100,000. During the second half of
Fiscal Year 1998, Mr. McGee was employed by a subsidiary of the Company.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning stock options granted
to the named executive officers during the Fiscal Year 1998. See "Certain
Relationships and Related Transactions."
<TABLE>
<CAPTION>
POTENTIAL POTENTIAL
REALIZABLE REALIZABLE
% OF VALUE AT VALUE AT
TOTAL ASSUMED ASSUMED
OPTIONS ANNUAL RATES ANNUAL RATES
GRANTED OF STOCK PRICE OF STOCK PRICE
DURING EXERCISE APPRECIATION APPRECIATION
OPTIONS FISCAL PRICE EXPIRATION FOR OPTION FOR OPTION
NAME GRANTED YEAR 1998 ($/SH) DATE TERM 5% ($) TERM 10% ($)
- --------------------------- ------- --------- -------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Robert F. Tannenhauser .... 500,000 40% .82 4/5/03 $ 68,500 $194,000
President and Director
Leonard Rudolph ........... 70,000 6% 3.25 8/7/02 $144,749 $220,881
Executive Vice President
Robert C. McGee ........... 0 n/a n/a n/a n/a n/a
Vice President
Jennifer M. Goldstein ..... 100,000 8% .82 4/5/03 $ 13,700 $ 38,800
Chief Financial Officer
</TABLE>
9
<PAGE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning each exercise of
stock options during the Fiscal Year 1998 by the named individual, along with
the year-end value of unexercised options or warrants at June 30, 1998:
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
6/30/98 6/30/98(1)
SHARES -------------- ----------------
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED $ UNEXERCISABLE UNEXERCISABLE
- --------------------------- ----------- ---------- -------------- ----------------
<S> <C> <C> <C> <C>
Robert F. Tannenhauser..... 0 $0 427,500/ $1,132,875/
President and Director 500,000(2) 1,215,000(3)
Leonard Rudolph............ 0 $0 None/70,000(4) $0(4)
Executive Vice President
Jennifer M. Goldstein...... 0 $0 37,500/ $103,125/
Chief Financial Officer 137,500(5) 346,125(7)
Robert McGee(3)............ 0 $0 187,475/None $496,809/None(8)
Vice President
</TABLE>
- ------------------
(1) The value realized equals the market value of the common stock at June 30,
1998 (Closing Bid) minus the exercise price multiplied by the number of
shares. The price of a share of common stock at the close of business on
June 30, 1998 was $3.25.
(2) Includes 500,000 options at an exercise price of $.82 and 427,500 at an
exercise price of $.60.
(3) 500,000 shares ($3.25 - $.82) = $1,215,000 and 427,500 ($3.25 - $.82) =
$1,132,875.
(4) These options are out of the money.
(5) Includes 100,000 options at an exercise price of $.82 and 75,000 at an
exercise price of $.50 per share of which 37,500 options are currently
exercisable.
(7) 37,500 shares ($3.25 - $.50) = $103,125 and 100,000 shares ($3.25 - $.82)
plus 75,000 ($3.25 - $.50) = $346,125.
(8) 187,475 shares ($3.25 - $.60) = $496,809.
Reference is made to the section of this Proxy Statement entitled
"Employment Agreements" and "Certain Relationships and Related Transactions" for
a description of options granted to 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, former Vice President of the Company, on February 5, 1995.
Additionally, during Fiscal Year 1998, the Company entered into employment
agreements with Leonard Rudolph, Executive Vice President of the Company, and
Jennifer M. Goldstein, Chief Financial Officer of the Company.
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.
10
<PAGE>
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.
Robert C. McGee. Robert C. McGee's original Employment Agreement provided
that he was to be employed as Vice President of the Company, a Managing Partner
of Business Loan Center and President and Chief Executive Officer of BLC
Financial Network, Inc. ("BLC-Network") through January 15, 2001 at an annual
gross salary of $200,000. Mr. McGee was also 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's Amended and Restated Employment Agreement provides that he
shall be employed as BLC Financial Network, Inc.'s ("BLC-Network") Senior Credit
Advisor through January 15, 2001 at a gross annual salary of $175,000. The
agreement further provides that should BLC-Network terminate Mary McGee's, his
spouse, employment for other than cause or death or disability, then
Mr. McGee's compensation shall be increased to $256,000 per year. In the event
BLC-Network terminates Mary McGee's employment for cause or as a result of death
or disability, then Mr. McGee's compensation shall be increased to $200,000 per
annum. Furthermore, in the event BLC-Network reduces Mary McGee's salary below
$81,000 per year, then Mr. McGee's salary will be increased by a like amount.
Mr. McGee is also entitled to participate in all benefit plans established firm
time to time by the Company, BLC-Network, and Business Loan Center, Inc. on the
same basis as all other executive employees.
The agreement shall automatically renew for 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.
Leonard Rudolph. Leonard Rudolph's Employment Agreement provides that he
shall be employed as Executive Vice President of Business Loan Center, Inc.
through April 30, 2003 at an annual gross salary of $170,000. Mr. Rudolph was
also granted a $10,000 signing bonus as well as options to purchase 70,000
shares of Common Stock at an exercise price of $3.25, which shall vest equally
over the next four years. Mr. Rudolph is also entitled to participate in all
benefit plans established from time to time by the Company and Business Loan
Center, Inc. on the same basis as all other executive employees. He may
terminate this Agreement in the event that Robert F. Tannenhauser is no longer
affiliated with the Company. Mr. Tannenhauser shall be deemed to be affiliated
with the Company as long as he serves as an Officer or Director of the Company.
A termination under this provision shall not be deemed a termination for cause
under her employment agreement.
The agreement shall automatically renew for 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. Rudolph the greater of
$170,000 or his annual gross salary if (i) Mr. Rudolph's employment is
terminated for any reason other than his death or disability, (ii) the agreement
is not renewed by the Company or Business Loan Center or (iii) Mr. Rudolph
terminates the agreement due to a reduction in Mr. Rudolph's salary or benefits
or the diminution of his responsibility, authority or status as an executive.
Jennifer M. Goldstein. Jennifer Goldstein's employment agreement provides
that she shall be employed as Treasurer and Chief Financial Officer of the
Company, BLC Comm Cap Corp., BLC Cap Corp. and Business Loan Center through
September 30, 2002 at an initial annual gross salary of $100,000. Ms. Goldstein
was granted options to purchase 100,000 shares of Common Stock at an exercise
price of $.82, which shall vest equally over the next five years. Ms. Goldstein
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. She may terminate this Agreement in the event that Robert
F. Tannenhauser is not longer affiliated with the Company. Mr. Tannenhauser
shall be deemed to be affiliated with the Company as long as he serves as an
Officer or Director of the Company. A termination under this provision shall not
be deemed a termination for cause under her employment agreement.
11
<PAGE>
The agreement shall automatically renew for successive one-year periods
unless notice to the contrary is given by any party less than 90 days prior to
the expiration of the then current term.
The agreement obliges the Company to pay to Ms. Goldstein the greater of
$100,000 or her annual gross salary if (i) Ms. Goldstein's employment is
terminated for any reason other than her death or disability, (ii) the agreement
is not renewed by the Company or Business Loan Center or (iii) Ms. Goldstein
terminates the agreement due to a reduction in salary or benefits or the
diminution of her responsibility, authority or status as an executive.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
At June 30, 1998, Peter Blanck, Robert D'Loren and Kenneth Schwartz were
members of the Compensation Committee of the Board of Directors of the Company.
The Compensation Committee's functions include the review and approval of
compensation and terms of employment for all executive officers and
administering the grant of employee stock options pursuant to the 1995 Amended
Management Incentive Plan.
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, 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 to improve the Company's long-term business position and performance.
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 Fiscal Year 1998. Specifically, Robert F. Tannenhauser served
as President. Robert McGee served as Vice President and Director for a portion
of the year. The members of the Compensation Committee consisted of Peter
Blanck, who is a substantial shareholder of the Company and brother-in-law to
Robert F. Tannenhauser, as well as Robert D'Loren and Kenneth Schwartz who are
also warrant holders and/or shareholders of the Company.
12
<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
two custom indexes, the Peer Group Indexes ("Peer Index") and Miscellaneous
Business Credit Institutions ("Misc. Bus Credit Inst Index"). 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, 1995, as well as the reinvestment of any dividends.
COMPARE CUMULATIVE TOTAL RETURN AMONG BLC FINANCIAL SERVICES, INC.,
RUSSELL 2000 INDEX AND SIC CODE INDEX
June 30,
-----------------------------------------------
1994 1995 1996 1997 1998
------- ------- ------- ------- -------
BLC Financial
Services, Inc. ...... $100.00 $ 70.59 $117.66 $164.72 $611.82
Peer Group Index ..... 100.00 119.47 173.91 238.89 335.82
Russell 2000 Index ... 100.00 120.08 148.90 173.21 201.77
SIC Code Index ....... 100.00 132.30 206.83 346.19 514.43
ASSUMES $100 INVESTED ON JUNE 30, 1994
ASSUMES DIVIDEND REINVESTED FISCAL YEAR ENDING JUNE 30, 1998
13
<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 person or entities funding such loans during
Fiscal Years 1998, 1997 and 1996. For those periods, Business Loan Center
incurred interest expense relating to such individuals in the aggregate amounts
of $17,000, $157,000, and $130,000, respectively. The maximum amounts
outstanding for these loans during the periods in question were $2,594,000,
$2,594,000, and $2,108,000, respectively. Additionally, certain members and
affiliates of Mr. Tannenhauser's family participated in the debenture offering
placed by the Company during the fiscal year ended June 30, 1998. Interest
expense and interest accrual relating to such individuals totaled approximately
$48,000 and $25,000, respectively, based upon outstanding debentures to said
parties in the aggregate amount of $950,000.
On April 1, 1997, the Company entered into an employment agreement with R.
Matthew McGee whereby Mr. McGee shall be employed as a consultant for BLC
Capital Corp. through March 31, 2002 at an annual gross salary of $136,000.
Mr. McGee is entitled to participate in all plans established from time-to-time
on the same basis as all other employees. Mr. McGee is the son of Robert McGee,
a Vice President and Director of the Company for a portion of Fiscal Year 1998.
On November 11, 1997, the Company entered into an investment banking
agreement with Josephthal & Co., Inc. ("Josephthal") pursuant to which the
Company paid a $25,000 retainer to Josephthal 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. For the Fiscal Year 1998, the Company
paid Josephthal a total of $85,000 in fees. In addition, the Company issued to
Josephthal, pursuant to such Investment Banking Agreement, warrants to purchase
90,000 shares of the Common Stock of the Company. 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.
The Company, during Fiscal Year 1998 obtained a line of credit for Business
Loan Center and entered into a loan origination and servicing 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 total fees of $125,000. 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 first mortgage commercial real estate back
loans for the financial institution. DLC is entitled to receive fees based upon
each transaction closed. In December 1997, DLC received a fee advance of $72,500
in connection with arranging a line of credit for BLC Comm Cap Corp, to be
utilized to fund loans under the Department of Agriculture Program. In December
1997, the Company and DLC agreed, and the Board of Directors approved, an
amendment to the agreement with respect to the 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
shares.
During Fiscal Year 1998 the Company entered into Employment Agreements with
four executive officers. See "Employment Agreements."
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
14
<PAGE>
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.
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 1998.
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
FOR 1999 ANNUAL MEETING
The Board of Directors of the Company presently intends to schedule an
Annual Meeting of Stockholders of the Company for March 15, 2000. 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 January 15, 2000.
OTHER MATTERS
Management is not aware of any other matter to be presented for action at
the meeting other than Items 1 and 2 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
March 26, 1999
15
