Stock Incentive and Deferred Compensation Plan



 Exhibit 10.2 
  
 NEWTEK BUSINESS SERVICES, INC. 
  

  
 Employment Agreement with 
 Barry Sloane 
  

  
 PREAMBLE. This Agreement entered into this
14th day of May 2004, by and between Newtek Business Services, Inc. (the “Company”) and Barry Sloane (the “Executive”), effective immediately. 
  
 WHEREAS, the Executive is to be employed by the Company as an executive officer; and 
  
 WHEREAS, the parties desire by this writing to set forth the
employment relationship of the Company and the Executive. 
  
 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 50% or more of the Company’s voting stock, (ii) the acquisition of the ability to control the election of a majority of the Company’s directors, (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 of Directors of the Company (the “Existing Board”) cease for any reason to constitute at least one half
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 this paragraph only, 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. 
  
 (c)
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and as interpreted through applicable rulings and regulations in effect from time to time. 
  
 (d) “Code §280G Maximum” shall mean
the product of 2.99 and the Executive’s “base amount” as defined in Code §280G(b)(3). 
  









 (e) “Company” shall mean Newtek Business Services, Inc., and any
successor to its interest. 
  
 (f)
“Common Stock” shall mean common stock of the Company. 
  
 (g) “Effective Date” shall mean the date of execution referenced in the Preamble of this Agreement. 
  
 (h) “Executive” shall mean Barry Sloane. 
  
 (i) “Good Reason” shall mean any of the following events, which has not been consented to
in advance by the Executive in writing: (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 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 materially different from those associated
with his position on the Effective Date; (v) a failure to elect or reelect the Executive to the Board of Directors of the Company; (vi) a material diminution or reduction in the Executive’s responsibilities or authority (including reporting
responsibilities) in connection with his employment with the Company. 
  
 (j) “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 he has acted, or failed to act, with an absence of good faith and without a reasonable belief
that his action or failure to act was in the best interests of the Company. 
  
 (k) “Protected Period” shall mean the period that begins on the date six months before a Change in Control and ends on the earlier of six months following the Change in Control or the expiration date
of this Agreement. 
  
 (l) “Trigger
Event” shall mean (i) the Executive’s voluntary termination of employment either for any reason within the 30-day period beginning on the date of a Change in Control, or within 90 days of an event that both occurs during the Protected
Period and constitutes Good Reason, or (ii) the termination by the Company or its successor(s) in interest, of the Executive’s employment for any reason other than Just Cause during the Protected Period. 
  
 2. Employment. The Executive is employed as Chief Executive Officer of
the Company. The Executive shall render such administrative and management services for the Company and its subsidiaries as set forth in the attached Position Description and as requested by the Board, as are currently rendered and as are
customarily performed by persons situated in a similar executive capacity and consistent with the duties of the Chief Executive Officer as set 
  

 2 








 forth in the bylaws of the Company. 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 Board may from time to time reasonably direct, including normal duties as an officer of the Company. 
  
 3. Base Compensation. The Company agrees to pay the Executive during
the term of this Agreement a salary at the rate of $350,000 per annum, payable in cash not less frequently than monthly. Additionally, the Board shall review, not less often than annually, the rate of the Executive’s salary and may decide to
further increase his salary. 
  
 4. Cash Bonuses; Incentive
Compensation. 
  
 (a) The Board shall
determine the Executive’s right to receive incentive compensation in the form of cash bonuses and other awards. No other compensation provided for in this Agreement shall be deemed a substitute for such incentive compensation. Cash bonuses
shall be awarded pursuant to the terms of the Company’s Annual Cash Bonus Plan, if one has been adopted by the Board and if not, then by action of the Board. 
  
 (b) Incentive bonus: in addition to all other compensation payable hereunder, the Executive shall be
entitled to participate in consideration for a cash bonus out of a pool to be established for this purpose by the Board each year prior to February 28th of each year. The amount of the Executive’s bonus participation shall be fixed by the Compensation Committee of the Board if it finds the Executive’s performance to have been a major
contributing factor to the following: 
  

	 	(1)	the performance of the Company’s stock price as compared to that of its peers during the calendar year ended December 31; 

  

	 	(2)	the achievement by the Company of non-capco revenue during the calendar year ended December 31 of at least thirty percent (30%); and 

  

	 	(3)	overall performance of the Company and its level of profitability. 

  
 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 
  

 3 








 Agreement upon substantiation of such expenses in accordance with the policies of the Company.

  
 (c) Split-Dollar Life Insurance. The
Company shall provide the Executive with split-dollar life insurance coverage. The coverage shall be provided under a separate Split-Dollar Life Insurance Agreement (the “Split-Dollar Agreement”) entered into between the Executive and the
Company, the terms of which shall include the following: 
  
 (i) Amount of Insurance. The Company shall obtain an insurance policy (the “Policy”) in the face amount of $2 million on the life of the Executive. 
  
 (ii) Ownership. The Company shall be the sole owner
of the Policy. 
  
 (iii) Payment of
Premiums. The Company shall pay all premiums for each Policy year. 
  
 (iv) Death Benefits. Upon the death of the Executive, the death benefit payable under the Policy shall be paid to the Company in an amount equal to the lesser of (i) the aggregate premiums paid by the Company
and (ii) the cash surrender value of the Policy. The balance shall be paid to the Executive’s designated beneficiary or, if none is validly designated, his estate. 
  
 (v) Dividends. All dividends on the Policy shall be used to purchase additions to insurance issued by
the insurer. 
  
 (vi) Termination of
Employment. Upon termination of Executive’s employment for any reason, the Executive may elect, by written notice to the Company within 30 days of such termination, to purchase the Policy and assume all premium obligations there under from
the Company by paying the lesser of (i) the total premiums paid by the Company or (ii) the cash surrender value of the Policy. 
  
 6. Term. The Company hereby employs the Executive, and the Executive hereby accepts such employment under this Agreement, for the period commencing
on the Effective Date and ending on June 30, 2005 or such earlier date as is determined in accordance with Section 11 (the “Term”). 
  
 7. Loyalty; Non-competition. 
  
 (a) During the period of his employment hereunder and except for illnesses, reasonable vacation periods, and reasonable leaves of absence,
the Executive shall devote substantially all his full business time, attention, skill, and efforts to the faithful performance of his 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 affiliates, nor unfavorably
affect the performance of Executive’s duties pursuant to this Agreement, nor violate any applicable statute or regulation. “Full business time” is hereby defined as that amount of time usually devoted to like companies by similarly
situated executive officers. During the Term of his employment 
  

 4 








 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. 
  
 8. Standards. The Executive shall perform his
duties under this Agreement in accordance with such reasonable standards as the Board may establish from time 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 as the Board shall in its discretion permit, 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 Board 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 Board. 
  
 (c) In addition to the aforesaid paid vacations, the Executive shall be entitled without loss of pay, 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 Board may in its discretion determine. Further, the Board may grant to the
Executive a leave or leaves of absence, with or without pay, at such time or times and upon such terms and conditions as such Board in its discretion may determine. 
  
 (d) In addition, the Executive shall be entitled to an annual sick leave benefit as established by the
Board. 
  
 10. Indemnification. The Company shall 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 (including any liability he may ever incur under Code § 4999, or a successor, as the
result of severance benefits he 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 Board may, based on a good faith determination and only after giving the Executive written notice and a reasonable opportunity to cure, immediately 
  

 5 








 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 Board may, by written notice to the Executive, immediately terminate his employment for a reason other
than Just Cause, in which case the Executive shall be paid an amount equal to the balance of the compensation provided for by Sections 3 and 4 hereof for the balance of the Term. 
  
 (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 following compensation and benefits: (i) the salary and cash bonus provided pursuant to Sections 3 and 4 hereof, up to the expiration date (the “Expiration
Date”) of the Term, including any renewal term, of this Agreement, and (ii) the cost to the Executive of obtaining all health, life, disability and other benefits which the Executive would have been eligible to participate in through the
Expiration Date based upon the benefit levels substantially equal to those that the Company provided for the Executive at the date of termination of employment. Said payment shall be made in a lump sum payment within 10 days after his termination of
employment. 
  
 (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 Board of Directors, in which case the Executive shall receive
only his compensation, vested rights, and Executive benefits up to the date of his termination of employment. 
  
 (e) Retirement, Death, or Disability. If the Executive’s employment terminates during the Term of this Agreement due to his
death, a disability that results in his collection of any long-term disability benefits, or retirement at or after age 62, the Executive (or the beneficiaries of his 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) Termination or Non-Renewal Payment. If the Executive’s employment hereunder is terminated pursuant to subsections (b),
without Just Cause, or (c), with Good Reason, or if the Term of this Agreement is not extended for at least one additional year, the Executive shall be entitled to compensation and benefits equal to six (6) months compensation and benefits under
Sections 3 and 4 hereof, provided, however, that the Company shall have the option of paying such compensation over a twelve (12) month period. 
  
 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 herein to the contrary, if a Trigger Event occurs during the
Protected Period, the Executive shall be paid an amount equal to 
  

 6 








 the Code § 280G Maximum. Said sum shall be paid in one lump sum within ten (10) days of such termination.

  
 14. 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 judgment 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. 
  
 15. 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. 
  
 16. 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 so executed and delivered this Agreement shall constitute the lawful and binding obligation of the Company. 
  
 17. 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. 
  
 18. 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. 
  
 19. 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. 
  
 20. 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. 
  

 7 








 IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first hereinabove
written. 
  

									
	 Witnessed by:
	 	 	 	 NEWTEK BUSINESS SERVICES, INC.

				
	 	 	 	 	By:	 	 /s/    Jeffrey G.
Rubin        

	 	 	 	 	 	 	Its President
	 Witnessed by:
	 	 	 	 
			
	 	 	 	 	 /s/    Barry
Sloane        

	 	 	 	 	Barry Sloane

  

 8