BLC FINANCIAL SERVICES, INC.
645 Madison Avenue
New York, New York 10022
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 30, 2000
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 March 30,
2000 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 approve adoption of an amendment to the Amended 1995 Management
Incentive Plan (the "Plan")to increase the number of shares of common
stock, par value $0.01 per share, of the Company that may be subject to
options granted under the Plan.
3. To ratify the appointment of Richard A. Eisner & Company LLP as
auditors of the Company for the current fiscal year ending on June 30,
2000.
4. 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 February 22,
2000 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 on Form 10K of the Company
for the fiscal year ended June 30, 1999.
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
February 23, 2000
<PAGE>
BLC FINANCIAL SERVICES, INC.
----------------------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
To be held on March 30, 2000
----------------------------------------
GENERAL
This Proxy Statement is first being mailed to stockholders on or about
February 23, 2000, 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 March 30, 2000 (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") to increase the number of shares of Common Stock
from 2,500,000 to 3,500,000 that may be subject to options granted under the
Plan, and (iii) 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, 2000.
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 the proxy materials to their principals
and beneficial owners, and will reimburse such persons for reasonable expenses
incurred by them in forwarding the proxy materials.
<PAGE>
VOTING RIGHTS
The Board of Directors has fixed the close of business on February 22,
2000 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, 20,288,880 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 present at the Annual Meeting, represented in person or by proxy, is
necessary to elect nominees for directors, while the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock present at the
Annual Meeting, represented in person or by proxy, is required to effectuate
Proposals 2 and 3, 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.
The Board of Directors believes that each of the directors and officers
of the Company identified in the table set forth in "Security Ownership of
Certain Beneficial Owners and Management" (who hold approximately 33.80% of the
outstanding Common Stock of the Company) will vote in favor of each Proposal.
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, Robert F. Tannenhauser and Peter D. Blanck,
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.
2
<PAGE>
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 two 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>
Year
Age at Has Served Term
February 22, As Director Will
Name Principal Occupation 2000 Since Expire
- ------------------ ---------------------------------------- ------------ ------------ ------
<S> <C> <C> <C> <C>
Jerome B. Alenick Sole Proprietor 71 1998 2001
Jerome B. Alenick Investments
& Financial Services
Florham Park, New Jersey
Peter D. Blanck Professor of Law 42 1993 2003
(nominee) University of Iowa College of Law
Iowa City, Iowa
Robert W. D'Loren President 42 1997 2001
CAK Universal Credit Corp.
New York, New York
Irwin E. Redlener, M.D. President 55 1997 2002
Children's Hospital
Montefiore Medical Center
Bronx, New York
Kenneth S. Schwartz, M.D. Principal 54 1997 2002
S&D Medical, LLP
New York, New York
Robert F. Tannenhauser President 55 1986 2003
(nominee) BLC Financial Services, Inc.
New York, New York
Robert W. Wien Senior Managing Director and 48 1997 2001
Director of Investment Banking
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. Mr. Alenick is a member of
the Bar of the State of New Jersey and the Bar of 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 a Professor of Law since 1993
and a Professor of Preventative Medicine since 1997 at the University of Iowa.
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.
3
<PAGE>
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 at D'Loren, Levien & Company, LLC, which
provided investment banking services to the mortgage and asset-backed securities
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. Since 1990,
Dr. Redlener has also served as Director of the Division of Community Pediatrics
at Montefiore. 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. Dr. Redlener has been a special consultant
on health care policy for the White House and the federal Department of Health
and Human Services.
Kenneth S. Schwartz is currently a senior radiology consultant to
American Imaging Management, Inc. and a principal of S&D Medical LLP, New York.
Prior to this, he was Chief Medical Officer of American Imaging Management, Inc.
in Northbrook, Illinois. From 1996 to 1998, Dr. Schwartz was Senior Executive
Vice President of Complete Management, Inc. in New York, New York. From 1981 to
1995, Mr. Schwartz served as a Director of Radiology at Hudson Valley Hospital
Center, Peekskill, New York and was Medical Director at Putnam Hospital Center
in Carmel, New York from 1991 through 1994. From March 1995 to November 1996,
Dr. Schwartz was Systems Director of Radiology and Imaging Services at St.
Francis Hospital and Medical Center in Hartford, Connecticut.
Robert F. Tannenhauser has been a full-time employee of the Company
through its subsidiary, 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 and partnerships engaged in
both the oil and gas and the 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 Senior Managing Director and Director of
Investment Banking at Josephthal & Co. (formerly, Josephthal, Lyon & Ross,
Incorporated) since May 1999; he served as Managing Director and Director of
Mergers and Acquisitions from May 1996 until May 1999. 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. Mr. Wien is a member of the Bar in the State
of New York and a licensed Real Estate Broker in the State of New York.
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. During the fiscal
year ended June 30, 1999 ("Fiscal Year 1999"), Robert W. D'Loren, Peter Blanck,
Robert F. Tannenhauser, Jerome Alenick, Irwin E. Redlener, Kenneth M. Schwartz
and Robert W. Wien were each granted, pursuant to non-qualified stock option
agreements, options to purchase 10,000 shares of Common Stock at an exercise
price of $3.31 per share, which options are all exercisable immediately at any
time prior to July, 2003. In addition, during Fiscal Year 1999, Robert W.
D'Loren,
4
<PAGE>
Peter Blanck, Robert F. Tannenhauser, Jerome Alenick, Irwin E. Redlener, Kenneth
M. Schwartz and Robert W. Wien were each granted, pursuant to non-qualified
stock option agreements, options to purchase 25,000 shares of Common Stock at an
exercise price of $2.00 per share, which options are all exercisable immediately
at any time prior to May, 2004.
Committees and Meetings of the Board of Directors
During Fiscal Year 1999, the Board of Directors had three meetings, the
audit committee had two meetings, and the compensation committee had two
meetings. No incumbent director attended less than 75% of the aggregate of the
total number of meetings of the Board of Directors and any committee on which
the incumbent director served in Fiscal Year 1999.
The audit committee of the Board of Directors consists of Irwin
Redlener, Jerome Alenick, and Robert Wien. The audit committee met with
representatives of Richard A. Eisner Company, LLP, the Company's auditors, to
review the Fiscal Year 1999 audited 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 Plan.
PROPOSAL 2
AMENDMENT TO THE 1995 AMENDED MANAGEMENT INCENTIVE PLAN
The proposed amendment to the Plan, which was filed in connection with
the annual meeting held June 30, 1997, would increase the aggregate number of
shares of Common Stock that may be subject to options granted under the Plan
from 2,500,000 to 3,500,000. The Board of Directors has approved the proposed
amendment to enable the Company to provide for future awards of options in order
to continue to obtain the beneficial effects of the Plan.
The purpose of this proposed amendment is to allow the Company to
continue to provide incentives that 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.
As of December 31, 1999, under the Plan, options for an aggregate of
2,414,251 shares had been granted, and options for an aggregate of 2,367,249
shares remained outstanding and 89,749 shares remained available for future
grant prior to the proposed amendment.
General Terms of the Plan
Under the Plan as amended pursuant to the proposed amendment, options
to purchase an aggregate of 3,500,000 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 may be designated as "Incentive Stock
Options" ("ISOs") within the meaning of Section
5
<PAGE>
422 of the Internal Revenue Code of 1986, as amended (the "Code"), or as options
that do not satisfy the requirements for ISOs ("Non-qualified 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 subsidiaries (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 Company or 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
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 death or commencement of disability of such
optionee.
The number of shares subject to options and the exercise price of those
options are subject to adjustment as the Board determines to be appropriate in
the event of changes in the outstanding Common Stock by reason of stock
dividends, recapitalization, 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,
recapitalization, 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, or 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 options 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 outstanding options shall be
terminated, and the Company shall pay the optionee in lieu
6
<PAGE>
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 the occurrence of such
an 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 the 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 of 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 January 26, 2000 as
reported by NASDAQ- AMEX Online was $1.875 with a high of $1.875 and a low of
$1.75.
Vote Required for Approval
The Board of Directors has unanimously approved the proposed amendment
to the Plan. Approval of the proposed amendment to the Plan requires the
affirmative vote of the holders of a majority of the outstanding 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
proposed amendment to the 1995 Management Incentive Plan.
PROPOSAL 3
RATIFICATION OF APPOINTMENT 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, 2000. 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 or she 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 if, prior to
the next annual meeting of stockholders, such firm shall decline to act or
otherwise become incapable of acting or the engagement of such firm 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 30,2000. Ratification of the appointment by
stockholders requires the affirmative vote of a majority of the holders of
shares of Common Stock present at the Annual Meeting, represented in person or
by proxy, and entitled to vote on the matter.
The Board of Directors recommends a vote "FOR" the ratification of the
appointment of Richard A. Eisner & Company LLP as independent auditors.
7
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information as of January 31,
2000, at which time 20,288,880 shares of Common Stock were outstanding, with
respect to (i) those persons or groups known to the Company to beneficially own
more than 5% of the Company's Common Stock, (ii) each director of the Company,
(iii) each named executive officer and (iv) all directors and officers of the
Company as a group. The information is determined in accordance with Rule 13d-3
promulgated under the Securities Exchange Act of 1934 (ARule 13d-3@) based upon
information furnished by the persons listed or known to the Company. Except as
indicated on the following page, the shareholders listed possess sole voting and
investment power with respect to their shares.
<TABLE>
Name and Address of
Beneficial Owner Amount and Nature of Beneficial Ownership Percent Of Class
- -------------------------------------- ----------------------------------------- --------------------------------------
<S> <C> <C>
Futuronics Corporation 2,595,224 (1) 12.79%
3652 Forest Gate Drive, N.E.
Iowa City, Iowa 52240
- -------------------------------------- ----------------------------------------- --------------------------------------
Peter D. Blanck 3,396,390 (2)(3) 16.54%
University of Iowa, College of Law
Iowa City, Iowa 52241
- -------------------------------------- ----------------------------------------- --------------------------------------
Richard Blanck 3,211,391 (2)(4) 15.78%
9 Hickory Road
Manhasset Hills, New York 11040
- -------------------------------------- ----------------------------------------- --------------------------------------
Robert W. D'Loren 255,000(5) 1.24%
72 Woodland Drive
Oyster Bay Cove, NY 11771
- -------------------------------------- ----------------------------------------- --------------------------------------
Jennifer M. Goldstein 231,017(6) 1.13%
50 West 72nd Street
New York, New York 10023
- -------------------------------------- ----------------------------------------- --------------------------------------
David I. Redlener 9,437(7) *
155 Henry Street
Brooklyn, New York 11201
- -------------------------------------- ----------------------------------------- --------------------------------------
Irwin E. Redlener 55,000(8) *
11 Alfred Lane
New Rochelle, New York 10804
- -------------------------------------- ----------------------------------------- --------------------------------------
Diane Rosenfeld 1,119,984 (9) 5.46%
RR #1 Box 427 D
County Road #86
Amenia, New York 12501
- -------------------------------------- ----------------------------------------- --------------------------------------
Kenneth S. Schwartz 66,525(10) *
284 Guard Hill Road
Bedford, New York 10506
- -------------------------------------- ----------------------------------------- --------------------------------------
Carol Tannenhauser 5,686,751 (2)(11) 26.92%
210 East 68th Street
New York, New York 10021
- -------------------------------------- ----------------------------------------- --------------------------------------
Robert F. Tannenhauser 5,686,751 (11) 26.92%
210 East 68th Street
New York, New York 10021
- -------------------------------------- ----------------------------------------- --------------------------------------
Jerome B. Alenick 354,375 (12) 1.74%
26 Columbia Turnpike
Florham Park, New Jersey 07932
- -------------------------------------- ----------------------------------------- --------------------------------------
8
<PAGE>
Name and Address of
Beneficial Owner Amount and Nature of Beneficial Ownership Percent Of Class
- -------------------------------------- ----------------------------------------- --------------------------------------
Robert W. Wien 124,500 (13) *
24 James Road
Mount Kisco, New York 10549
- -------------------------------------- ----------------------------------------- --------------------------------------
Leonard Rudolph 44,064(14) *
3 Pelham Place
East Brunswick, New Jersey 08816
- -------------------------------------- ----------------------------------------- --------------------------------------
All Directors and officers 7,428,505(15) 33.80%
as a group (ten persons)
- -------------------------------------- ----------------------------------------- --------------------------------------
</TABLE>
* 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. (1) Includes 2,595,224 shares
owned directly by Futuronics
(2) Carol Tannenhauser, Richard Blanck, and Peter D. Blanck are siblings.
Each disclaims beneficial ownership of the shares owned by the others.
(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
four children, (c) 110,000 shares underlying options owned by Peter D.
Blanck, (d) 176,830 shares owned by 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) Includes (a) 273,834 shares owned directly by Richard Blanck, (b)
107,169 shares deemed owned by Richard Blanck as custodian for his two
children, (c) 176,830 shares owned by 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 and (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.
(5) 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) 55,000 shares that maybe acquired upon the
exercise of options held by Robert D'Loren.
(6) Includes (a) 119,767 shares owned by Jennifer M. Goldstein and (b)
111,250 shares that may be acquired upon the exercise of options held
by Jennifer M. Goldstein.
(7) Includes (a) 1,457 shares owned by David Redlener and (b) 8,000 shares
that may be acquired upon the exercise of options held by David
Redlener.
(8) Includes 55,000 shares that may be acquired upon the exercise of
options held by Irwin Redlener.
(9) Includes (a) 666,710 shares directly owned by Diane Rosenfeld, (b)
225,774 shares directly owned by Eric Rosenfeld, (c) 202,500 shares
underlying options owned by Diane Rosenfeld and (d) 25,000 shares that
may be acquired upon the exercise of Warrants owned by Diane Rosenfeld.
(10) Includes (a) 11,525 shares directly owned by Kenneth Schwartz or
jointly with Jane Schwartz and (b) 55,000 shares that may be acquired
upon the exercise of options held by Kenneth Schwartz.
9
<PAGE>
(11) Includes (a) 207,192 shares owned directly by Robert F. Tannenhauser,
(b) 1,325,409 shares directly owned by Carol Tannenhauser, the spouse
of Robert F. Tannenhauser, (c) 2,595,224 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 the spouse of Robert F. 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) 249,500 shares owned by
David Tannenhauser, the son of Robert F. Tannenhauser and Carol
Tannenhauser, (h) 164,600 shares held in a custodial account for the
benefit of Emily Tannenhauser, the daughter of Robert F. Tannenhauser
each of Carol Tannenhauser and Robert F. Tannenhauser share voting and
dispositive power of such shares, (i) 84,899 shares owned by Emily
Tannenhauser, the daughter of Robert F. Tannenhauser and Carol
Tannenhauser, (j) 4,500 shares that may be acquired upon the conversion
of Debentures held by Robert F. Tannenhauser, (k) 21,167 shares that
may be acquired upon the conversion of Debentures held by David
Tannenhauser, the son of Robert F. Tannenhauser and Carol Tannenhauser,
(l) 21,166 shares that may be acquired upon the conversion of
Debentures held by Emily Tannenhauser, the daughter of Robert F.
Tannenhauser and Carol Tannenhauser, (m) 22,132 shares held in trust
for David Tannenhauser, the son of Robert F. Tannenhauser and Carol
Tannenhauser, (n) 22,132 shares held in trust for Emily Tannenhauser,
the daughter of Robert F. Tannenhauser and Carol Tannenhauser and (o)
310,000 shares underlying options owned by Robert F. Tannenhauser.
(12) Includes (a) 311,875 shares owned by the Defined Benefit Plan for the
Benefit of Jerome Alenick, (b) 35,000 shares underlying options owned
by Jerome Alenick and (c) 7,500 shares owned by Jerome B. Alenick and
Nicole A. Alenick as joint tenants and tenants in common.
(13) Includes (a) 35,000 shares owned directly by Robert W. Wien, (b) 55,000
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.
(14) Includes (a) 21,564 shares owned directly by Leonard Rudolph and (b)
22,500 shares that may be acquired upon the exercise of options held by
Leonard Rudolph.
(15) 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, Mr. Rudolph,
Executive Vice President of the Company, Mr. Redlener, Secretary of the
Company, Messrs. D'Loren, Blanck, Wien and Alenick and Drs. Redlener
and Schwartz, directors of the Company. The shares deemed beneficially
owned by Mr. Tannenhauser and Mr. 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.
10
<PAGE>
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Age at
Name February 22, 2000 Position Officer Since
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Robert F. 55 President 1986
Tannenhauser
Leonard 52 Executive 1998
Rudolph Vice President
Jennifer M. 28 Chief Financial Officer 1996
Goldstein
David 32 Secretary 1997
Redlener
</TABLE>
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 received an MBA in Finance from Pace University
in May 1999.
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.
11
<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, 1999. The
following salaries and/or benefits are presently payable pursuant to employment
agreements. See "Certain Relationships and Related Transactions."
<TABLE>
Long-Term
Annual Compensation Compensation
---------------------------------- --------------
Securities
Name and Fiscal Underlying
Principal Position Year Salary Bonus Options(#)
<S> <C> <C> <C> <C>
Robert F. Tannenhauser ........... 1999 $ 224,285 (1) $50,000 375,000
President and Director 1998 208,085 (1) $0 500,000
1997 207,411 (1) $0 0
Leonard Rudolph................... 1999 $ 170,000 $10,000 25,000
Executive Vice 1998 34,154 (2) $0 70,000
President
Jennifer M. Goldstein............. 1999 $ 124,038 $35,000 75,000
Chief Financial Officer 1998 91,923 $15,000 100,000
1997 57,769 $7,000 75,000
</TABLE>
__________
(1) Includes premiums for excess health insurance.
(2) Based upon approximately two months salary at an annual rate of $170,000.
Option Grants in Last Fiscal Year
The following table sets forth information concerning stock options
granted to the named executive officers during the Fiscal Year 1999. See
"Certain Relationships and Related Transactions."
<TABLE>
Potential Potential
realizable realizable
value at value at
% of Total assumed assumed
Options annual rates annual rates
Granted of stock price of stock price
During Exercise appreciation appreciation
Options Fiscal Price Expiration for option for option
Name Granted Year 1999 ($/Sh) Date term 5% ($) term 10%($)
- ---------------- ------- --------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert F 375,000 73% $2.90 12/7/03 $0 $84,100
Tannenhauser
President and Director
Leonard Rudolph 25,000 5% $2.90 12/7/03 $0 $ 5,600
Executive Vice
President
Jennifer M. Goldstein 75,000 15% $2.90 12/7/03 $0 $ 16,800
Chief Financial Officer
</TABLE>
12
<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 ended June 30, 1999 by the
named individual, along with the year-end value of unexercised options/warrants
at June 30, 1999.
<TABLE>
Number of Securities Value of Unexercised In-The-
Name Shares Acquired Underlying Unexercised Money Options/Warrants at
on Exercise Value Realized Options at 6/30/99 6/30/99 (4)
- ---------------------------- ------------------ ---------------- ------------------------ -----------------------------
<S> <C> <C> <C> <C>
Robert F. Tannenhauser
President and Director 0 0 1,302,500 (1) $1,188,500 (5)
- ---------------------------- ------------------ ---------------- ------------------------ -----------------------------
Leonard Rudolph
Executive Vice President 0 0 95,000 (2) $ 0 (6)
- ---------------------------- ------------------ ---------------- ------------------------ -----------------------------
Jennifer Goldstein
Treasurer 0 0 250,000 (3) $ 230,500 (7)
- ---------------------------- ------------------ ---------------- ------------------------ -----------------------------
</TABLE>
(1) Includes 375,000 options at an exercise price of $2.90, 500,000 options at
an exercise price of $.82 of which 100,000 shares are currently exercisable, and
427,500 at an exercise price of $.60 of which 427,500 are currently exercisable.
(2) Includes 70,000 options at an exercise price of $3.25 of which 17,500 are
currently exercisable, and 25,000 options at an exercise price of $2.90.
(3) Includes 75,000 at an exercise price of $2.90, 100,000 options at an
exercise price of $.82 of which 20,000 are currently exercisable, and 75,000 at
an exercise price of $.50 per share of which 56,250 is currently exercisable.
(4) The value realized equals the market value of the common stock at June
30,1999 (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, 1999 was $2.00.
(5) 500,000 shares ($2.00 - $.82) = $590,000 and 427,500 ($2.00 - $.60) =
$598,500.
(6) These options are out of the money.
(7) 100,000 shares ($2.00 - $.82) = $118,000 and 75,000 ($2.00 - $.50) =
$112,500.
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 has entered into employment agreements with Robert F.
Tannenhauser, President of the Company, with Leonard Rudolph, Executive Vice
President of the Company, and Jennifer M. Goldstein, Chief Financial Officer and
Treasurer 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. During the fiscal year ended
June 30, 1999, the Board of Directors voted to increase his salary to $300,000.
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. 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.
13
<PAGE>
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 or
(ii) 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 officer.
Leonard Rudolph. Leonard Rudolph's Employment Agreement provides that
he shall be employed as Executive Vice President and 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 $4.81, 25% of which shall
vest each year during the term of the agreement. 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 his 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 or (ii) 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 Goldstein. Jennifer Goldstein's employment agreement provides
that she shall be employed as Treasurer and Chief Financial Officer of the
Company, BLC Commercial, BLC Capital and Business Loan Center through September
30, 2002 at an initial annual gross salary of $100,000. Every year thereafter
(with the exception of the fifth year), Ms. Goldstein will receive an automatic
increase in her base salary of $25,000 per annum. 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 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 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 or (ii) 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.
Compensation Committee Report
At June 30, 1999, 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 Plan.
General. The Company's executive compensation (including the
compensation of the Chief Executive Officer of the Company) is intended to
reward, retain and motivate management. The primary component of compensation
has been base salary. In determining salary levels for the executive officers,
primary consideration is given to each executive's level of responsibility and
individual performance.
14
<PAGE>
In addition, for certain of the most senior executives (including the
compensation of the Chief Executive Officer of the Company), compensation
packages now include grants of stock options. The grant of these stock options
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.
Chief Executive Officer Compensation. Mr. Tannenhauser's employment
agreement provides for a base salary of $300,000 and an annual bonus in an
amount to be determined at the discretion of the Board of Directors. In
addition, Mr. Tannenhauser is eligible to participate in any benefit plans
established by the Company on the same basis as all other executive employees.
In recognition of Mr. Tannenhauser's accomplishments on behalf of the Company in
Fiscal Year 1999, the Board of Directors awarded him a bonus of $50,000 and
options to acquire 375,000 shares of Common Stock in Fiscal Year 1999.
Additional information concerning the salary, bonus, and option grants
to Mr. Tannenhauser and the Company's other executive officers can be found in
the sections of this Proxy Statement entitled "Executive Compensation" and
"Employment Agreements".
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 1999. Specifically, Robert F.
Tannenhauser served as President and Chief Executive Officer of the Company. 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. (See "Security Ownership of
Certain Beneficial Owners and Management")
In addition, 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
(ADLC@), a limited liability company of which Mr. D'Loren is a member, received
total fees of $125,000 during Fiscal Year 1998. In July 1997, BLC Capital, 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 was to receive fees for originating and servicing non-SBA
first mortgage commercial real estate backed loans for the financial
institution. DLC is entitled to receive fees based upon each transaction closed.
In the fiscal year ended June 30, 1999, DLC received $21,800 in fees for these
services. In January 1999, DLC received a placement fee of $60,000 in connection
with sale of the Company's unguaranteed SBA loans, which occurred on December
30, 1998. In December 1997, DLC received a fee advance of $72,500 in connection
with arranging a line of credit for BLC Commercial, 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 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.
15
<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 one custom index, the Peer Group Index ("Peer 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, 1994, as well as the reinvestment of any dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG BLC FINANCIAL SERVICES, INC.,
RUSSELL 2000 INDEX AND SIC CODE INDEX
[GRAPHIC OMITTED]
<TABLE>
6/30/94 6/30/96 6/30/97 6/30/98 6/30/99
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
BLC Financial
Services, Inc...................... $ 100.00 $117.66 $164.72 $611.82 $376.51
Peer Group Index................... 100.00 206.83 346.19 514.43 354.40
Russell 2000 Index................. 100.00 148.90 173.21 201.77 202.87
</TABLE>
16
<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 the Company
for the purpose of originating loans. In exchange for extending such loans, the
Company paid interest to the person or entities funding such loans during Fiscal
Years 1999, 1998, 1997 and 1996. For those periods, the Company incurred
interest expense relating to such individuals in the aggregate amounts of
$19,000, $17,000, $157,000, and $130,000, respectively. The maximum amounts
outstanding for these loans during the periods in question were $1,077,000,
$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 Fiscal Year 1998. During Fiscal
Year 1999, interest expense and interest accrual relating to such individuals
approximated $88,000 and $22,000, respectively, based upon the outstanding
debenture of $950,000. Additionally, during Fiscal Year 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 November 11, 1997, the Company entered into an investment banking
agreement with Josephthal & Co., Inc. (AJosephthal@) 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 Years ended June 30,
1999 and 1998, the Company paid Josephthal approximately, $27,000 and $85,000 in
fees, respectively. 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 and Robert C. McGee, a former director and Vice-President
of the Company and a former beneficial owner of greater than five percent of the
Company's Common Stock, are parties to an amended and restated employment
agreement. Robert 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 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 Network's, Senior Credit Advisor through January 15,
2001 at a gross annual salary of $175,000. The agreement further provides that
should BLC-Network terminate the employment of Mary McGee (his wife) 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 from 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.
On April 1, 1997, the Company entered into an employment agreement with
R. Matthew McGee, the son of Robert McGee, whereby Mr. McGee shall be employed
as a consultant for BLC Capital through March 31, 2002 at an annual gross salary
of $136,000, which has been increased to $195,000 Mr. McGee is entitled to
participate in all plans established from time-to-time on the same basis as all
other employees.
17
<PAGE>
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.
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 1999.
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 February 15, 2001. 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 October 15, 2000. Shareholders
who intend to present a proposal at the 2001 Annual Meeting of Stockholders of
the Company without inclusion of such proposal in the Company's 2001 proxy
materials are required to provide notice of such proposal to the Company no
later than December 15, 2000.
18
<PAGE>
OTHER MATTERS
Management is not aware of any other matter to be presented for action
at the meeting other than Items 1 through 3 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
February 23, 2000
19
<PAGE>
