ex1021mschwartzemploymen






 NEWTEK BUSINESS SERVICES CORP.  _____________________________    EMPLOYMENT AGREEMENT WITH  MICHAEL A. SCHWARTZ  _____________________________    PREAMBLE.  This EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as  of the 15th  day of March 2021 (the “Effective Date”), by and between NEWTEK BUSINESS  SERVICES CORP. (the “Company”) and MICHAEL A. SCHWARTZ (the “Executive”).  WHEREAS, the Executive is currently employed by the Company as Chief Legal Officer,  Chief Compliance Officer and Corporate Secretary; and  WHEREAS, the parties desire by this writing to set forth the employment relationship of  the Company and the Executive as of the Effective Date.  NOW, THEREFORE, it is AGREED as follows:  1. Defined Terms  When used anywhere in the Agreement, the following terms shall have the meaning  set forth herein.  (a) “Board” shall mean the Board of Directors of the Company.  (b) “Change in Control” shall mean any one of the following events:  (i) the  acquisition of ownership, holding or power to vote more than 25% of the Company’s voting shares  by any person or persons acting as a “group” (within the meaning of Section 13(d) of the Securities  Exchange Act of 1934), (ii) the acquisition of the ability to control the election of a majority of the  Board by any person or persons acting as a “group” (within the meaning of Section 13(d) of the  Securities Exchange Act of 1934), (iii) the acquisition of a controlling influence over the  management or policies of the Company by any person or by persons acting as a “group” (within  the meaning of Section 13(d) of the Securities Exchange Act of 1934), or (iv) during any period  of two consecutive years, individuals (the “Continuing Directors”) who at the beginning of such  period constitute the Board (the “Existing Board”) cease for any reason to constitute at least two- thirds thereof, provided that any individual whose election or nomination for election as a member  of the Existing Board was approved by a vote of at least two-thirds of the Continuing Directors  then in office shall be considered a Continuing Director. For purposes of defining Change in  Control, the term “person” refers to an individual or a corporation, partnership, trust, association,  joint venture, pool, syndicate, sole proprietorship, unincorporated organization or any other form  of entity not specifically listed herein. Notwithstanding the foregoing, a Change in Control as  defined in this Section 1(b) shall not be treated as a Change in Control for purposes of this  Agreement unless it constitutes a “change in control event” within the meaning of Section 1.409A- 3(i)(5) of the Treasury Regulations promulgated under section 409A of the Internal Revenue Code  of 1986, as amended (the “Code”) (the “Treasury Regulations”).  





 






  2  (c)  “Common Stock” shall mean shares of the Company’s common stock, par  value $0.02 per share.  (d)  “Good Reason” shall mean any of the following events, which has not been  consented to in advance by the Executive in writing during the term of the Agreement: (i) the  requirement that the Executive move his personal residence, or perform his principal executive  functions, more than fifty (50) miles from his primary office as of the Effective Date; (ii) a material  reduction in the Executive’s Annual Base Compensation as the same may be increased from time  to time; (iii) the failure by the Company to continue to provide the Executive with compensation  and benefits provided for on the Effective Date, as the same may be increased from time to time,  or with benefits substantially similar to those provided to him under any of the Executive benefit  plans in which the Executive now or hereafter becomes a participant, or the taking of any action  by the Company which would directly or indirectly reduce any of such benefits or deprive the  Executive of any material fringe benefit enjoyed by him; (iv) the assignment to the Executive of  duties and responsibilities that constitute a material diminution from those associated with his  position on the Effective Date;  or (v) a material diminution or reduction in the Executive’s  responsibilities or authority (including reporting responsibilities) in connection with his  employment with the Company.  (e) “Just Cause” shall mean the Executive’s willful misconduct, breach of  fiduciary duty involving personal profit, intentional failure to perform stated duties, conviction for  a felony, or material breach of any provision of this Agreement.  No act, or failure to act, on the  Executive’s part shall be considered “willful” unless Executive has acted, or failed to act, with an  absence of good faith and without a reasonable belief that Executive’s action or failure to act was  in the best interests of the Company.   2. Employment.  The Executive is employed as Chief Legal Officer, Chief  Compliance Officer and Corporate Secretary of the Company.  The Executive shall render such  administrative and management services for the Company, its subsidiaries and portfolio companies  as are currently rendered and as are customarily performed by persons situated in a similar  executive capacity and consistent with the duties of a Chief Legal Officer and Chief Compliance  Officer as set forth in the Bylaws of the Company.  The Executive shall report to the Chief  Executive Officer in his role as Chief Legal Officer. The Executive shall report to the Board in his  role as Chief Compliance Officer. The Executive shall also promote, by entertainment or  otherwise, as and to the extent permitted by law, the business of the Company and its subsidiaries.   The Executive’s other duties shall be such as the Chief Executive Officer or Board may from time  to time reasonably direct, including normal duties as an officer of the Company.  3. Annual Base Compensation.  The Company agrees to pay the Executive during the  term of this Agreement a salary at the rate of $360,000 per annum, payable in cash not less  frequently than monthly.   





 






  3   4. Cash Bonuses.  The Chief Executive Officer shall determine the Executive’s right  to receive cash bonuses. Cash bonuses shall be awarded annually based upon the Executive’s and  the Company’s annual performance pursuant to the Company’s policy.   5. Other Benefits.  (a) Participation in Retirement, Medical and Other Plans.  The Executive shall  participate in any plan that the Company maintains for the benefit of its employees if the plan  relates to (i) pension, profit-sharing, or other retirement benefits, (ii) medical insurance or the  reimbursement of medical or dependent care expenses, or (iii) other group benefits, including  disability and life insurance plans.   (b) Executive Benefits; Expenses.  The Executive shall participate in any fringe  benefits which are or may become available to the Company’s senior management Executives,  including for example incentive compensation plans, club memberships, and any other benefits  which are commensurate with the responsibilities and functions to be performed by the Executive  under this Agreement.  The Executive shall be reimbursed for all reasonable out-of-pocket  business expenses which he shall incur in connection with his services under this Agreement upon  substantiation of such expenses in accordance with the policies of the Company.  6. Term.  The Company hereby employs the Executive, and the Executive hereby  accepts such employment, subject to the terms and conditions of this Agreement, for the period  commencing on the Effective Date and ending on March 15, 2022 or such earlier date as is  determined in accordance with Section 11 (the “Term”).”  7. Loyalty; Noncompetition.  (a) During the period of Executive’s employment hereunder and except for  illnesses, reasonable vacation periods, and reasonable leaves of absence, the Executive shall devote  substantially all of Executive’s full business time, attention, skill, and efforts to the faithful  performance of Executive’s duties hereunder; provided, however, from time to time, Executive  may serve on the boards of directors of, and hold any other offices or positions in, companies or  organizations, at the request of the Company or which will not present in the opinion of the Board  any conflict of interest with the Company or any of its subsidiaries or portfolio companies, nor  unfavorably affect the performance of Executive’s duties pursuant to this Agreement, nor violate  any applicable statute or regulation.  During the Term of Executive’s employment under this  Agreement, the Executive shall not engage in any business or activity contrary to the business  affairs or interests of the Company.   (b) Nothing contained in this Paragraph 7 shall be deemed to prevent or limit  the Executive’s right to invest in the capital stock or other securities of any business dissimilar  from that of the Company or, solely as a passive or minority investor, in any business, provided  such investment does not: (i) constitute a conflict of interest, (ii) violate laws or regulations  applicable to the Company, including, without limitation, the Investment Company Act of 1940,  or (iii) violate any rules or polices promulgated by the Board.  8. Standards.  The Executive shall perform his duties under this Agreement in  accordance with such reasonable standards as the Chief Executive Officer may establish from time  





 






  4  to time.  The Company will provide Executive with the working facilities and staff customary for  similar executives and necessary for him to perform his duties.   9. Vacation and Sick Leave.  At such reasonable times according to Company policy  the Executive shall be entitled, without loss of pay, to absent himself voluntarily from the  performance of his employment under this Agreement, all such voluntary absences to count as  vacation time; provided that:  (a) The Executive shall be entitled to an annual vacation in accordance with the  policies that the Company periodically establishes for senior management Executives of the  Company.  (b) The Executive shall not receive any additional compensation from the  Company on account of his failure to take a vacation, and the Executive shall not accumulate  unused vacation from one fiscal year to the next, except in either case to the extent authorized by  the Chief Executive Officer.  (c) In addition to the aforesaid paid vacations, the Executive shall be entitled to  absent himself voluntarily from the performance of his employment with the Company for such  additional periods of time and for such valid and legitimate reasons as the Chief Executive Officer  may in his discretion determine.  Further, the Chief Executive Officer may grant to the Executive  a leave or leaves of absence with or without pay.  (d) In addition, the Executive shall be entitled to an annual sick leave benefit as  established by the Company.  10. Indemnification.  The Company shall, to the extent permitted by the Company’s  Bylaws, indemnify and hold harmless Executive from any and all loss, expense, or liability that he  may incur due to his services for the Company as an officer and or a director of the Company or  any of its subsidiaries or portfolio companies (including any liability Executive  may ever incur as  the result of severance benefits Executive collects pursuant to Sections 11 or 13), during the full  Term of this Agreement and shall at all times maintain adequate insurance for such purposes.  11. Termination and Termination Pay.  Subject to Section 13 hereof, the Executive’s  employment hereunder may be terminated under the following circumstances:  (a) Just Cause.  The Chief Executive Officer may, based on a good faith  determination and only after giving the Executive written notice and a reasonable opportunity to  cure, immediately terminate the Executive’s employment at any time, for Just Cause.  The  Executive shall have no right to receive compensation or other benefits for any period after  termination for Just Cause.  (b) Without Just Cause.  The Chief Executive Officer may, by written notice to  the Executive, immediately terminate Executive’s employment for a reason other than Just Cause.   In such event, the Executive shall be entitled to a total severance payment equal to one (1) times  the sum of (i) Executive’s Annual Base Compensation in effect at the time of termination, plus  (ii) the amount of all compensation paid to Executive under Section 4 hereof with respect to the  immediately preceding fiscal year (the “Severance Payment”). The Severance Payment shall be  





 






  5  paid in equal installments over a twelve (12) month period following the Executive’s termination  of employment, payable in accordance with the Company’s regularly scheduled payroll (the  “Installment Payments”).  Each Installment Payment shall be treated as a separate payment for  purposes of Treasury Regulations Section 1.409A-2(b)(2)(iii).    (c) Resignation by Executive with Good Reason.  The Executive may at any  time immediately terminate employment for Good Reason, in which case the Executive shall be  entitled to receive the Severance Payment payable in the same manner and on the same basis as  provided for under Section 11(b) herein upon a termination without Just Cause.  In addition, the  Executive will be entitled to health, life, disability and other benefits which the Executive would  have been eligible to participate in through the expiration of the Term based on the benefit levels  substantially equal to those that the Company provided for the Executive at the date of termination  of employment, subject to any restrictions as may be required under Code Section 409A   (d) Resignation by Executive without Good Reason.  The Executive may  voluntarily terminate employment with the Company during the term of this Agreement, upon at  least 60 days’ prior written notice to the Chief Executive Officer, in which case the Executive shall  receive only his compensation, vested rights, and Executive benefits up to the date of Executive’s  last day of employment.  (e) Death, or Disability.  If the Executive’s employment terminates during the  Term of this Agreement due to Executive’s death or a disability that results in Executive’s  collection of any long-term disability benefits, the Executive (or the beneficiaries of Executive’s  estate) shall be entitled to receive the compensation and benefits that the Executive would  otherwise have become entitled to receive pursuant to subsection (d) hereof upon a resignation  without Good Reason.  (f)  Non-Renewal Payment.  If the Term of this Agreement is not extended for  at least one (1) additional year in circumstances in which the Executive is willing and able to  execute such extension and continue performing services (the “Non-Renewal”), then the  Executive’s employment shall be terminated by the Company effective as of the expiration of the  Term, in which event Executive shall be entitled to fifty percent (50%) times the Severance  Payment (the “Non-Renewal Payment”).  The Non-Renewal Payment shall be paid in equal  installments over the six (6) month period following the Executive’s termination of employment,  payable in accordance with the Company’s regularly scheduled payroll.  However, if the Non- Renewal occurs following a Change in Control, the Non-Renewal Payment shall be paid in a lump  sum within thirty (30) days of Executive’s termination of employment.   (g)  Acceleration of Equity Awards.  All: (i) outstanding and unvested options  to purchase Common Stock granted to Executive under any equity plan of the Company, (ii)  unvested shares of restricted Common Stock awarded to the Executive under any equity plan of  the Company, and (iii) other equity and equity equivalent awards then held by the Executive, shall  be accelerated in full, and thereafter all such options, shares of restricted Common Stock and other  equity awards shall be immediately vested and exercisable for such period of time as provided for  by the specific agreements governing each such award, upon Executive’s termination pursuant to  Sections 11(b), (c),  (e) or (f) hereof.  





 






  6    12. No Mitigation.  The Executive shall not be required to mitigate the amount of any  payment provided for in this Agreement by seeking other employment or otherwise, and no such  payment shall be offset or reduced by the amount of any compensation or benefits provided to the  Executive in any subsequent employment.   13. Change in Control.  Notwithstanding any provision in this Agreement to the  contrary, if Executive’s employment is terminated following a Change of Control: (i) by the  Company or its successor in interest for any reason other than Just Cause, or (ii) by the Executive  for Good Reason, the Executive shall be paid the Severance Payment in a lump sum within thirty  (30) days of Executive’s termination of employment.  14. Covenants.    (a) Definitions.  For purposes of this Agreement:   (i) Restrictive Period.  The term “Restrictive Period” shall mean the  period beginning on the Effective Date and ending two (2) years after the termination of the  Executive’s employment hereunder.   (ii) Covered Customer.  The term “Covered Customer” shall mean (A)  during the Term, any customer, merchant, independent sales agency (ISA), independent sales  organization (ISO), alliance partner, referral partner or any intermediary of the Company or its  portfolio companies and (B) after the Term, as of the end of the Term, a Covered Customer of the  Company or its portfolio companies within the prior three years.    (iii) Covered Business.  The term “Covered Business” shall mean (A)  during the term, any business in which the Company is engaged and (B) after the Term, any  business in which the Company was engaged as of the end of the Term.   (iv) Covered State.  The term “Covered State” shall mean (A) during the  Term, any state in the United States and (B) after the Term, any state (1) in which, as of the end  of the Term, the Company was engaged in business or (2) with respect to which the Company, as  of the end of the Term, had expended material expense and/or efforts in connection with preparing  to do business therein.  (b) Non-Interference.  The Executive covenants and agrees that Executive will  not at any time during the Restrictive Period for whatever reason, whether for Executive’s own  account or for the account of any other person, firm, corporation or other business organization:  (i) interfere with contractual relationships between the Company or its subsidiaries or portfolio  companies and any of their Covered Customers or employees; (ii) hire, or solicit for hire, any  person who is employed by the Company or its subsidiaries or portfolio companies, without the  express written consent of the Company; or (iii) other than on behalf of the Company or its  subsidiaries or portfolio companies, solicit any Covered Customer in connection with the  engagement, by any person or entity, in any Covered Business in any Covered State.  





 






  7  (c) Confidentiality.  The Executive will not, at any time whether during or after  his termination of employment, (i) disclose to anyone, without proper authorization from the  Company, or (ii) use, for his or another’s benefit, any confidential or proprietary information of  the Company or any subsidiary of the Company, which may include trade secrets, business plans  or outlooks, financial data, marketing or sales programs, customer lists, brand formulations,  training and operations manuals, products or price strategies, mergers, acquisitions, and/or  Company personnel issues.  (d) Blue Pencil; Equitable Relief.  The provisions contained in this Section 14  as to the time periods, scope of activities, persons or entities affected and territories restricted shall  be deemed divisible so that if any provision contained in this Section is determined to be invalid  or unenforceable, such provision shall be deemed modified so as to be valid and enforceable to the  full extent lawfully permitted.  The Executive acknowledges that the provisions of this Section 14  are reasonable and necessary for the protection of the Company and that the Company will be  irrevocably damaged if such covenants are not specifically enforced.  Accordingly, the Executive  agrees that if he breaches or threatens to breach any of the covenants contained in this Section 14,  the Company will be entitled (i) to damages sufficient to compensate the Company for any harm  to the Company caused thereby and (ii) to specific performance and injunctive relief for the  purpose of preventing the breach or threatened breach thereof without bond or other security or a  showing that monetary damages will not provide an adequate remedy, in addition to any other  relief to which the Company may be entitled under this Agreement.  15. Reimbursement for Litigation Expenses.  In the event that any dispute arises between the Executive and the Company as to the terms  or interpretation of this Agreement, whether instituted by formal legal proceedings or otherwise,  including any action that the Executive takes to enforce the terms of this Agreement or to defend  against any action taken by the Company, the Executive shall be reimbursed for all costs and  expenses, including reasonable attorneys’ fees, arising from such dispute, proceedings or actions,  provided that the Executive shall obtain a final judgement by a court of competent jurisdiction in  favor of the Executive.  Such reimbursement shall be paid within ten (10) days of Executive’s  furnishing to the Company written evidence, which may be in the form, among other things, of a  cancelled check or receipt, of any costs or expenses incurred by the Executive.      16. Successors and Assigns.  (a) This Agreement shall inure to the benefit of and be binding upon any  corporate or other successor of the Company which shall acquire, directly or indirectly, by merger,  consolidation, purchase or otherwise, all or substantially all of the assets or stock of the Company.  (b) Since the Company is contracting for the unique and personal skills of the  Executive, the Executive shall be precluded from assigning or delegating his rights or duties  hereunder without first obtaining the written consent of the Company.  17. Corporate Authority.  Company represents and warrants that the execution and  delivery of this Agreement by it has been duly and properly authorized by the Board and that when  





 






  8  so executed and delivered this Agreement shall constitute the lawful and binding obligation of the  Company.  18. Amendments.  No amendments or additions to this Agreement shall be binding  unless made in writing and signed by all of the parties, except as herein otherwise specifically  provided.  19. Applicable Law.  Except to the extent preempted by Federal law, the laws of the  State of New York shall govern this Agreement in all respects, whether as to its validity,  construction, capacity, performance or otherwise.    20. Severability.  The provisions of this Agreement shall be deemed severable and the  invalidity or unenforceability of any provision shall not affect the validity or enforceability of the  other provisions hereof.  21. Entire Agreement.  This Agreement, together with any understanding or  modifications thereof as agreed to in writing by the parties, shall constitute the entire agreement  between the parties hereto with respect to the matters addressed and shall supercede all previous  agreements with respect to such matters.  22. Tax Matters. All payments or benefits provided under this Agreement are subject  to any applicable employment or tax withholdings or deductions.  In addition, the parties hereby  agree that it is their intention that all payments or benefits provided under this Agreement be  exempt from, or if not so exempt, comply with, Code Section 409A and this Agreement shall be  interpreted accordingly.  Notwithstanding anything in this Agreement to the contrary, if any  payments or benefits made or provided under the Agreement are considered deferred  compensation subject to Code Section 409A payable on account of Employee’s separation from  service (but that do not meet an exemption under Code Section 409A, including without limitation  the short term deferral or the separation pay plan exemption), such payments or benefits shall be  paid no earlier than the date that is six (6) months following Employee’s separation from service  (or, if earlier, the date of death) to the extent required by Code Section 409A.  [signatures on following page]  





 






  9  IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first  hereinabove written.        NEWTEK BUSINESS SERVICES CORP.            By:                Barry Sloane, Chief Executive Officer          EXECUTIVE              By:                 Michael A. Schwartz