Document:

Exhibit
10.2

MANAGEMENT
EMPLOYMENT AGREEMENT

This
Management Employment Agreement (the “Agreement”), dated as of
November 30, 2006, by and among FirstCity Business Lending Corporation,
a Texas corporation (“FirstCity BLC”), American Business Lending, Inc., a
Texas corporation (the “Company”), and Charles P. Bell,
Jr. (“Executive”).

WHEREAS,
the Company desires to secure the services of Executive as its Chief Executive
Officer, and Executive desires to become employed by the Company as its Chief
Executive Officer, and, in connection therewith, the Company and Executive
desire to enter into this Agreement to, among other things, set forth the terms
of such employment;

NOW,
THEREFORE, in consideration of the premises and mutual covenants contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Executive hereby
agree as follows:

1.             Agreement to Employ.  Upon the terms and subject to the conditions
of this Agreement, the Company hereby employs Executive and Executive hereby
accepts employment by the Company.

2.             Term; Position and
Responsibilities.

(a)           Term of Employment.  This Agreement shall be binding upon and
enforceable against the Company and Executive immediately upon its execution by
both parties.  The stated term of this
Agreement and the employment relationship created hereunder shall be deemed to
have begun June 19, 2006, and shall remain in effect until June 19, 2011,
unless sooner terminated in accordance with Section 6 hereof (the “Initial
Employment Term”).  This Agreement
shall be automatically renewed for successive one (1) year terms after the
Initial Employment Term (each a “Renewal Term”), unless terminated by
either party upon written notice (“Non-Renewal Notice”) given at least
sixty (60) days prior to the end of the Initial Employment Period or any
Renewal Term.  The date Executive
commences employment hereunder will be referred to as the “Commencement Date”
and the period during which Executive is employed pursuant to this Agreement
(including any Renewal Term) will be referred to as the “Employment Period.”

(b)           Position and Responsibilities.  During the Employment Period, Executive will
serve as Chief Executive Officer of the Company with such duties and responsibilities
as are customarily assigned to individuals serving in such position and such
other duties and responsibilities consistent with his position and his duties
and responsibilities as Chief Executive Officer as may be specified by the
Board of Directors of the Company (the “Board”) from time to time.  Executive will report directly to the Board
of Directors of the Company.  During the
Employment Period, Executive will 

 
  

devote his
undivided loyalty to the Company and devote all of his skill, knowledge and
working time (except for (i) reasonable vacation time and absence for sickness
or similar disability, and (ii) to the extent that it does not interfere with
the performance of Executive’s duties hereunder, (A) such reasonable time as
may be devoted to service on boards of directors and the fulfillment of civic
responsibilities, and (B) such reasonable time as may be necessary from
time to time for personal financial matters) to the conscientious performance
of his duties and responsibilities hereunder.  Executive represents that he is entering into
this Agreement voluntarily and that his employment hereunder and compliance by
him with the terms and conditions hereof will not conflict with or result in
the breach of any agreement to which he is a party or by which he may be bound.

3.             Compensation.  As compensation for the services to be
performed by Executive hereunder, during the Employment Period, the Company
will pay Executive, and Executive shall accept as full compensation hereunder,
the following:

(a)           Base Salary.  An annual base salary of $ 200,000 during the
first year of the Initial Employment Period, and $250,000 during the second
year of the Initial Employment Period, which annual base salary shall
hereinafter be referred to as the “Base Salary”); provided, however,
that during the pre-operational period of the Company, which commenced on June
19, 2006 and will continue until the Closing under the Asset Purchase
Agreement, dated as of June 30, 2006 (the “Asset Purchase Agreement”),
among NCS I, LLC, and AMRESCO SBA Holdings, Inc., as “Sellers,” and the
Company, as “Purchaser” (the “Pre-Op Period”), Executive shall receive
50% of his Base Salary until the end of the Pre-Op Period.  If the Closing (as defined in the Asset
Purchase Agreement) occurs, then Executive shall receive payment of the full
amount (100%) of the Base Salary retroactive to August 19, 2006, payable within
thirty (30) days after the Closing under the Asset Purchase Agreement.  Executive’s salary shall be subject to all
appropriate federal and state withholding taxes and shall be payable in
accordance with the normal payroll procedures of the Company.  The Company shall not reduce Executive’s
salary without Executive’s written consent.

(b)           Discretionary Bonus Pool. The
Board will establish an incentive bonus pool for all Company employees based on
the Bonus Pool Methodology set forth in Exhibit “A” attached hereto (the
“Bonus Pool”).  Executive shall be
permitted to participate in Bonus Pool, which may provide an Incentive Bonus
(hereinafter defined) of up to 100% of Base Salary each year during the
employment Period.  The evaluation of the
performance of Executive as measured by the applicable targets and the awarding
of applicable bonuses, if any, shall be at the sole discretion of the Board of
Directors of the Company.  The annual
discretionary incentive bonus (the “Incentive Bonus”) may be awarded in
whole or in part, based on the level of incentive bonus pool performance
criteria achieved by Executive, in the sole judgment of the Board of Directors
of the Company.  If Executive terminates
this Agreement without Good Reason, as defined in Section 6(d), or if the
Company terminates this Agreement at any time for Cause, as defined in Section
6(b), Executive will not be paid any Incentive Bonus, in whole or in part for
the year in which such termination occurred.

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(c)           Annual Review of Base Salary After
Two Years.  The Company will review
Executive’s Base Salary annually, commencing with the first such annual review
no later than thirty (30) days prior to the end of the second year of the
Initial Employment Term, and continuing for any Renewal Term, if any, and, in
the sole discretion of the Board, may increase the Base Salary.

4.             Equity Ownership of the Company;
Options.

(a)           Grant of Options and Opportunity
to Purchase Restricted Stock.  During
the Employment Period, within ten (10) business days after December 31, 2007
and continuing thereafter within ten (10) business days after December 31,
2008, 2009, and 2010 (the  period between
December 31 2007 and December 31 2010 being hereinafter referred to as the “Combined
Purchase Period”), FirstCity BLC will grant to Executive options (“Options”)to
purchase restricted shares (“Restricted Shares”) of common stock, $0.001
par value per share (“Common Stock”) of the Company, which combined with
the Restricted Shares which may be acquired upon exercise of the Options will
grant to Executive the right, upon purchase of such Restricted Stock and the
exercise of the Options, at the time of exercise and/or purchase (the “Exercise
Date”), to acquire shares of Common Stock in the form of Restricted Shares
equal to Executive’s Equity Ownership. 
Executive at any time during the Employment Period, in his sole
discretion, upon ten (10) business days notice to the Company and FirstCity
BLC, may purchase Restricted Shares equal to Executive’s Equity Ownership less
the amount of shares held by Executive subject to Options, provided that
Executive exercises all of the Options simultaneously with the purchase of the
Restricted Shares.  The Executive’s
rights to the grant of Options and the issuance and purchase of Restricted
Shares will terminate upon the termination of his employment under this
Agreement for any reason.  The Company
shall not be obligated to grant Executive any Options or issue and sell any
Restricted Shares to Executive unless Executive is employed by the Company
under this Agreement at the date of determination.

(b)           Certain Definitions.  For purposes of this Agreement, the term “Executive’s
Equity Ownership” shall mean shares of Common Stock equal in the aggregate
of eight per cent (8%) of the outstanding shares of Common Stock of the Company
at the date of Closing under the Asset Purchase Agreement.  The exercise price of the Options and the purchase
price of the Restricted Shares shall be equal to the greater of $1.00 or Book
Value per share of the Common Stock (the “Stock Purchase Price”).  For purposes of this Agreement, the term “Book
Value per Share of Common Stock” shall mean the book value per share of
Common Stock determined as of December 31 of the year preceding the Exercise
Date, and will be determined in accordance with generally accepted accounting
principles.

(c)           Yearly Option Grants. During
the Employment Agreement, within ten (10) business days after December 31 of
the years 2007, 2008, 2009, and 2010, the Company will grant to Executive an
Option to purchase shares of Common Stock at the Stock Purchase Price, in a
number of shares equal to the lesser of (i) 2.0% of the 

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outstanding Common
Stock of the Company (i.e., 25% of the total amount of shares of Common Stock
which may be acquired by the Executive under this Agreement), or (b) the number
of shares equal to Executive’s Equity Ownership, less the total number of
shares of Restricted Shares and Options owned by Executive at the date of
determination.  The Options may be
exercised by Executive, in his sole discretion, in whole but not in part, at
any time on or prior to 5:00 p.m., Central Time, on December 31, 2014.

(d)           Certain Restrictions on Sale.  In no event will the Company be required to
offer to sell or to sell Restricted Shares or issue or grant Options to
Executive (a) which in the aggregate at any time would cause the number of
shares of Common Stock to be acquired by Executive under this Agreement to
exceed the Executive’s Equity Ownership, or (b) at any time at which making
such an offer or selling any such Restricted Shares or Options would violate
any applicable securities law.

(e)           Management Shareholders’ Agreement.  The terms and conditions of Executive’s
purchase of any Restricted Shares, including certain restrictions on resale of
the Restricted Shares, the right of the Company to repurchase all or a portion
of such Restricted Shares from Executive under certain circumstances, including
without limitation upon termination of Executive’s employment, and the
applicable repurchase price for repurchase of the Restricted Shares, will be
set forth in a Shareholders’ Agreement, between the Company, the Executive, and
one or more other shareholders of the Company (as the same has been or may
hereafter be amended, the “Management  Shareholders’ Agreement”).  Among other things, the Management
Shareholders’ Agreement will grant a right of first refusal first under certain
circumstances, to Joseph N. Smith, and second, to the Company, to purchase
Executive’s Restricted Shares at a purchase price equal to the Book Value per
Share of Common Stock as of the last day of the month preceding the date of
purchase.

5.             Benefits and Perquisites:
Expenses.

(a)           Benefits and Perquisites.
Executive shall be entitled to participate in the benefit plans provided by the
Company for all employees generally, and for executive employees of The
Company.  The Company shall be entitled
to change or terminate such plans in its sole discretion.  The parties acknowledge that at the initial
date of this Agreement the fringe benefits provided to Executive include a
corporate 401(k) plan, health, dental, life, and long-term disability
insurance, and reimbursement of certain expenses in accordance with the
policies and procedures of the Company.

(b)           Business Expenses.  The Company will reimburse Executive for
reasonable travel, lodging and meal expenses incurred by him in connection with
his performance of services hereunder upon submission of information required
to be provided under the Company’s policy for reimbursement of business
expenses.

(c)           Key Man Life Insurance.  The Company reserves the right to purchase
key man life insurance on the life of Executive at the Company’s expense, and
in such amounts and on such terms as the Company, in its sole discretion, may
determine.

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6.             Termination of Employment.  The employment relationship between Executive
and the Company created hereunder shall terminate before the expiration of the
stated term of this Agreement upon the occurrence of any one of the following
events:

(a)           Death or Permanent Disability.  The employment relationship shall be
terminated effective upon the death or permanent disability of Executive. However,
Executive shall be entitled to leaves of absence from the Company in accordance
with the policy of the Company generally applicable to executives for illness
or temporary disabilities for a period or periods not exceeding three (3)
months on a cumulative basis in any calendar year, and his status as an
Executive shall continue during such periods.  
If Executive is incapacitated due to physical or mental illness and such
incapacity prevents Executive from satisfactorily performing his duties for the
Company on a full time basis for six (6) months or more, Executive shall be
deemed to have experienced a permanent disability and the Company may terminate
this Agreement upon thirty (30) days written notice.  Upon the death or permanent disability of
Executive, Executive or his estate (as the case may be) shall be entitled to
compensation as provided in Section 7(a) and (b) below.

(b)           Termination for Cause.  The Company shall have the option to
terminate the Executive’s employment during the Employment Period, effective
upon written notice of such termination to the Executive, for Cause as
determined by the Board of Directors. 
For purposes of this Agreement, termination for “Cause” shall
mean termination of Executive’s employment by the Board of Directors upon the
occurrence of any of the following events:

i.                                  Any
act of fraud, misappropriation or embezzlement by Executive with respect to any
aspect of the Company’s business;

ii.                               The
breach by Executive of any provision of Sections 1, 2 or 8 of this Agreement
(including but not limited to a refusal to follow lawful directives of the
Board or its designees which are not inconsistent with the duties of Executive’s
position and the provisions of this Agreement);

iii.                            The
conviction of Executive by a court of competent jurisdiction of a felony or a
crime involving moral turpitude;

iv.                           The
intentional failure by Executive to perform in all material respects his duties
and responsibilities (other than as a result of death or disability) and the
failure of Executive to cure the same in all material respects within fifteen
(15) days after written notice thereof from the Board or its designee;

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v.                              The
illegal use of drugs by Executive during the term of this Agreement that, in
the determination of the Board, substantially interferes with Executive’s
performance of his duties hereunder;

vi.                           Acceptance
of employment with any employer other than the Company, except (A) upon written
permission of the Board, or (B) after termination of the Employment Period for
another reason; or

vii.                        The breach
by Executive of his fiduciary duties to the Company.

(c)           The Company shall provide Executive
with a written notice of termination, which can be provided on the date of
termination.  In the event Executive’s
employment is terminated for Cause hereunder, Executive shall be entitled to
the compensation provided in Section 7(a) below.

(d)           Termination by the Company with
Notice.  The Company may terminate
this Agreement without Cause at any time upon sixty (60) days written notice to
Executive, during which period Executive shall not be required to perform any
services for the Company other than to assist the Company in training his
successor and generally preparing for an orderly transition, and the Company
may elect not to renew the Employment Term, in accordance with a Non-Renewal
Notice given under Section 2(a); provided, however, that upon such termination
or non-renewal, Executive shall be entitled to compensation as provided in
Section 7(a) and (b) below.

(e)           Termination by Executive for Good
Reason.  Executive shall be entitled
to terminate this Agreement at any time for Good Reason.  For purposes of this Agreement, “Good Reason”
shall mean the occurrence of any of the following events:

i.                                          Without
his express written consent, the assignment of Executive to a position
functionally and materially inferior to his position with the Company on the
date of this Agreement;

ii.                                       The
change of the location where Executive is based to a location which is more
than fifty (50) miles from his present location without Executive’s written
consent; or

iii.                                    A
reduction by the Company in Executive’s base salary as in effect on the date
hereof, unless such reduction is a proportionate reduction of the compensation
of Executive and all other senior officers of the Company as a part of a 

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                                                company-wide
effort to enhance the financial condition of the Company.

iv.                                   Any
other material breach by the Company of its obligations under this Agreement,
which is not remedied or cured by the Company within fourteen (14) days after
written notice to the Company from the Executive describing the breach.

(f)            Executive shall give the Company
thirty (30) business days notice of an intent to terminate this Agreement for “Good
Reason” as defined in this Section 6(d), and provide the Company with thirty
(30) business days after receipt of such notice from Executive to remedy the
alleged violation of Subsections 6(d)(i), (ii) or (iii).  In the event Executive terminates his
employment for Good Reason hereunder, Executive shall be entitled to the
compensation provided in Section 7(a) and (c) below.

7.             Compensation upon Termination.  Upon the termination of Executive’s
employment under this Agreement before the expiration of the stated term
hereof, Executive shall be entitled to the following:

(a)           Compensation upon Termination for
Any Reason.  Upon termination of
Executive’s employment during the Employment Period before the expiration of
the stated term hereof for any reason, Executive shall be entitled to:

i.                                          Salary.  The Base Salary earned by him before the
effective date of termination as provided in Section 3(a) hereof (including
salary payable during any applicable notice period), prorated on the basis of
the number of full days of service rendered by Executive during the salary payment
period to the effective date of termination;

ii.                                       Vacation
Benefits.  Any accrued, but unpaid,
vacation benefits; and

iii.                                    Unreimbursed
Business Expenses.  Any previously
authorized but unreimbursed business expenses.

Notwithstanding
the foregoing, with respect to any stock options or other plans or programs in
which Executive is participating at the time of termination of his employment,
Executive’s rights and benefits under each such plan shall be determined in
accordance with the terms, conditions, and limitations of the plan and any
separate agreement executed by Executive which may then be in effect.

(b)           Additional Compensation and
Benefits upon Termination by the Company without Cause or With Notice or by
Executive for Good Reason.  If 

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Executive’s
employment hereunder terminates without “Cause” (as defined in Section 6(b)
above), with notice pursuant to Section 6(c) above, or for “Good Reason” (as
defined in Section 6(e) above), or if the Company terminates this Agreement
pursuant to a Non-Renewal Notice given under Section 2(a), the Company shall,
upon Executive’s execution of a general release of claims in favor of the
Company, provide to Executive in addition to the amounts set forth in
Subsection 7(a) above:

i.                                          a
cash payment equal to 50 % of his Base Salary and Incentive Bonus for the
current year;

ii.                                       Continued
medical insurance benefits, at the Company’s expense, for a period of six (6)
months.

The
Company shall pay the severance amounts referenced in Section 7(c)(i) in equal
semi-monthly installments for a period of six (6) months (“Severance Period”)
in accordance with the Company’s regular payroll practices.  Executive shall have no obligation to
mitigate any severance obligation of the Company under this Agreement by
seeking new employment.  The Company
shall not be entitled to set off or reduce any severance payments owed to
Executive under this Agreement by the amount of earnings or benefits received
by Executive in future employment.  The
provisions of Sections 6, 7 and 8 hereof shall survive the termination of the
employment relationship hereunder and this Agreement.

Notwithstanding
the foregoing, with respect to any stock options or other plans or programs in
which Executive is participating at the time of termination of his employment,
Executive’s rights and benefits under each such plan shall be determined in
accordance with the terms, conditions, and limitations of the plan and any
separate agreement executed by Executive which may then be in effect.

(c)           Penalty for Breach of Covenants.  If, during the Severance Period, Executive is
in material breach of his post-employment covenants contained in Section 8 of
this Agreement, the Company shall not be obligated to pay any severance
payments referenced herein, the Company’s severance obligations shall terminate
and expire, and the Company shall have no further obligations to Executive
hereunder from and after the date of such breach and shall have all other
rights and remedies available under this Agreement or any other agreement and at
law or in equity.

8.             Protective Covenants.  Executive recognizes that his employment by
the Company is one of the highest trust and confidence because (i) Executive
has become and/or in the future will become familiar with critical aspects of
the Company’s business during the period of his employment with the Company,
(ii) the Company will provide to Executive certain information during his
employment by the Company which is proprietary, confidential and/or trade
secret information and is of special and peculiar value to the Company, and
(iii) if any such proprietary, confidential and/or trade secret information,
save and except such information in the public domain or information commonly
known in the industry, were imparted to or became known by any person, 

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including
Executive, engaging in a business in competition with that of the Company,
hardship, loss and irreparable injury and damage could result to the Company,
the measurement of which would be difficult if not impossible to ascertain.  Executive further acknowledges that the
Company has developed and will continue to develop unique concepts, lending
practices, sales presentations, marketing programs, marketing strategies,
business practices, methods of operation, pricing information, cost information,
trademarks, licenses, technical information, proprietary information, computer
software programs, tapes and disks concerning its operations systems, customer
lists, customer leads, documents identifying past, present and future
customers, customer profile and preference data, hiring and training methods,
investment policies, financial and other confidential, proprietary and/or trade
secret information concerning its operations and expansion plans (“Confidential
Information”).  Therefore, Executive
agrees that it is necessary for the Company to protect its business and that of
its affiliates from such damage, and Executive further agrees that the
following covenants constitute a reasonable and appropriate means, consistent
with the best interest of both Executive and the Company, to protect the
Company or its affiliates against damage due to loss or disclosure of
Confidential Information and shall apply to and be binding upon Executive as
provided herein:

(d)           Confidential Information.  The Company agrees to provide Executive with
some or all of its Confidential Information (as defined above) during the term
of this Agreement.  Executive recognizes
that his position with the Company is one of the highest trust and confidence
by reason of Executive’s access to and contact with certain Confidential
Information of the Company. Executive agrees and covenants that, except as may
be required by the Company in connection with this Agreement, or with the prior
written consent of the Company, Executive shall not, either during the term of
this Agreement or at any time thereafter, directly or indirectly, use for
Executive’s own benefit or for the benefit of another, or disclose,
disseminate, or distribute to another, except as directed by the Company or as
required for the performance of Executive’s duties on behalf of the Company,
any Confidential Information (whether or not acquired, learned, obtained, or
developed by Executive alone or in conjunction with others) of the Company or
of others with whom the Company has a business relationship, provided, however
that this restriction shall not apply to truthful testimony given under oath in
a legal proceeding by Executive pursuant to a properly issued subpoena if
Executive provides timely notice of such subpoena to the Company.  All Confidential Information, and all
memoranda, notes, records, drawings, documents, or other writings whatsoever
made, compiled, acquired, or received by Executive at any time during his
employment with the Company, including during the term of this Agreement,
arising out of, in connection with, or related to any activity or business of
the Company, including, but not limited to, the customers, suppliers, or others
with whom the Company has a business relationship, the arrangements of the
Company with such parties, and the pricing and expansion policies and strategy
of the Company, are, and shall continue to be, the sole and exclusive property
of the Company.

Executive
represents and warrants that he is not bound by any agreement with any prior
employer or other party that will be breached by execution and performance of
this 

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Agreement, or
which would otherwise prevent him from performing his duties with the Company
as set forth in this Agreement. 
Executive represents and warrants that he has not retained any copies of
proprietary or confidential information of any prior the Company, and he will
not use or rely on any confidential and proprietary information of any prior
the Company in carrying out his duties for the Company.

(e)           Covenant Not to Compete.  In consideration of the numerous mutual
promises and agreements contained in this Agreement between the Company and
Executive, including, without limitation, those involving Confidential
Information, and in order to protect the Company’s Confidential Information and
to reduce the likelihood of irreparable damage which would occur in the event
such information is provided to or used by a competitor of the Company,
Executive agrees that he will not, during his employment and for an additional
period of twenty-four (24) months immediately following the termination of his
employment  for any reason other than
termination without Cause or for Good Reason (the “Noncompetition Term”),
directly or indirectly, either through any form of ownership or as an individual,
director, officer, principal, agent, employee, the Company, adviser,
consultant, shareholder, partner, member, or in any individual or
representative capacity whatsoever, without the prior written consent of the
Company (which consent may be withheld in the Company’s sole discretion), (i)
compete for or solicit business for or on behalf of any person or business
entity operating a premium finance company providing similar services to those
provided by the Company with a place of business in any state in the United
States; (ii) own, operate, participate in, undertake any employment with or
have any interest in any entity with a place of business in any state in the
United States related to the operation of a premium finance company providing
similar services to those provided by the Company, except that Executive may
own publicly traded stock for investment purposes only in any company in which
Executive owns less than 5% of the voting equity, (iii) compete for or solicit
business related to the operation of a premium finance company providing
similar services to those provided by the Company from any customer of the
Company (or its successors by merger); or (iv) use in any competition,
solicitation, or marketing effort any Confidential Information, any proprietary
list, or any information concerning customers of the Company.   The restrictions of this Section 8 (e) shall
not apply to Executive if his employment by the Company is terminated by the
Company without cause or for Good Reason.

Executive
hereby acknowledges that the geographic boundaries, scope of prohibited
activities and the duration of the provisions of this Section 8 are reasonable
and are no broader than are necessary to protect the legitimate business
interests of the Company. This noncompetition provision shall survive the
termination of Executive’s employment and can only be revoked or modified by a
writing signed by the parties that specifically states an intent to revoke or
modify this provision.  Executive
acknowledges that the Company would not employ him or provide him with access
to its Confidential Information but for his covenants or promises contained in
this Section.

The
Company and Executive agree and stipulate that the agreements and covenants not
to compete contained in this Section 8 are fair and reasonable in light of all 

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of the facts and
circumstances of the relationship between Executive and the Company; however,
Executive and the Company are aware that in certain circumstances courts have
refused to enforce certain terms of agreements not to compete.  Therefore, in furtherance of, and not in
derogation of the provisions of this Section 8, the Company and Executive agree
that in the event a court should decline to enforce any term of terms of any of
the provisions of this Section 8, this Section 8 shall be deemed to be modified
or reformed to restrict Executive’s competition with the Company or its
affiliates to the maximum extent, as to time, geography and business scope,
which the court shall find enforceable; provided, however, that in no event
shall the provisions of this Section 8 be deemed to be more restrictive to
Executive than those contained herein.

Executive
agrees that during the Noncompetition Term, he shall immediately notify the
Company in writing of any employment, work or business he undertakes with or on
behalf of any person (including himself) or entity.

(f)            Non-Solicitation.  Executive agrees that during his employment,
and for a period of twenty-four (24) months following the termination of his
employment by the Company with or without Cause, that neither he nor any
individual, partner(s), limited partnership, corporation or other entity or
business with which he is in any way affiliated, including, without limitation,
any partner, limited partner, member, director, officer, shareholder, employee,
or agent of any such entity or business, will (i) request, induce or attempt to
influence, directly or indirectly, any employee of the Company to terminate
their employment with the Company or (ii) employ any person who as of the date
of this Agreement was, or after such date is, an employee of the Company.  Exceptions to (i) and (ii) are Cheryl
Surdick, Lisa Ellsworth and Scott Frizzell. 
Executive further agrees that during the period beginning with the
commencement of Executive’s employment with the Company and ending twenty-four
(24) months after the termination of Executive’s employment with the Company,
for whatever reason, he shall not, directly or indirectly, as an individual,
employee, agent, consultant, stockholder, director, partner or in any other
individual or representative capacity of the Company or of any other person,
entity or business, solicit or encourage any present supplier, contractor,
partner or investor of the Company to terminate, limit or otherwise alter his,
her or its relationship with the Company.

(g)           Work Product.  For purposes of this Section 8, “Work Product”
shall mean all intellectual property rights, including all trade secrets, U.S.
and international copyrights, patentable inventions, discoveries and other
intellectual property rights in any programming, design, documentation,
technology, or other work product that is created in connection with Executive’s
work.  In addition, all rights in any
preexisting programming, design, documentation, technology, or other Work
Product provided to the Company during Executive’s employment shall
automatically become part of the Work Product hereunder, whether or not it
arises specifically out of Executive’s “Work.” 
For purposes of this Agreement, “Work” shall mean (i) any direct
assignments and required performance by or for the Company, and (ii) any other
productive output that relates to the business of the Company and is produced
during the course of Executive’s employment or engagement by the Company.  For this purpose, 

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Work may be
considered present even after normal working hours, away from the Company’s
premises, on an unsupervised basis, alone or with others.  Unless otherwise approved in writing by the
Board, this Agreement shall apply to all Work Product created in connection
with all Work conducted before or after the date of this Agreement.

The
Company shall own all rights in the Work Product.  To this end, all Work Product shall be
considered work made for hire for the Company. 
If any of the Work Product may not, by operation of law or agreement, be
considered Work made by Executive for hire for the Company (or if ownership of
all rights therein do not otherwise vest exclusively in the Company
immediately), Executive agrees to assign, and upon creation thereof does hereby
automatically assign, without further consideration, the ownership thereof to
the Company.  Executive hereby
irrevocably relinquishes for the benefit of the Company and its assigns any
moral rights in the Work Product recognized by applicable law.  The Company shall have the right to obtain
and hold, in whatever name or capacity it selects, copyrights, registrations,
and any other protection available in the Work Product.

Executive
agrees to perform upon the request of the Company, during or after Executive’s
Work or employment, such further acts as may be necessary or desirable to
transfer, perfect, and defend the Company’s ownership of the Work Product,
including by (i) executing, acknowledging, and delivering any requested
affidavits and documents of assignment and conveyance, (ii) obtaining and/or
aiding in the enforcement of copyrights, trade secrets, and (if applicable)
patents with respect to the Work Product in any countries, and (iii) providing
testimony in connection with any proceeding affecting the rights of the Company
in any Work Product.  In the event that
Executive is required to perform the services described in this paragraph after
his employment with the Company has terminated, Executive will be reasonably
compensated for actual time spent providing such services.

Executive
warrants that his Work for the Company does not and will not in any way
conflict with any obligations Executive may have with any prior the Company or
contractor.  Executive also agrees, to
the best of his ability, to develop all Work Product in a manner that avoids
even the appearance of infringement of any third party’s intellectual property
rights.

(h)           Non-Solicitation of Clients.  During the period of Executive’s employment
and, as a condition to receiving severance pay thereafter during the
Non-Competition Term, Executive shall not, directly or indirectly, solicit or
otherwise attempt to establish for himself or any other person, firm or entity
any business relationship with any person, firm or entity which, at any time
during the twenty-four month period preceding the date of Executive’s
termination of employment, was a customer, client or distributor of the Company
or any of its subsidiaries except during Executive’s employment with the
Company with the sole exception of Ray Ellis and Kwik Industries and/or its
affiliates.

 

 12

 
  

 

(i)            Return of Documents.  In the event of the termination of Executive’s
employment for any reason, Executive will deliver to the Company all
non-personal documents and data of any nature and in whatever medium pertaining
to Executive’s employment with the Company, or any of its subsidiaries or
affiliates and he will not take with him any such property, documents or data
of any description or any reproduction thereof, including summaries or notes
regarding same, or any documents containing or pertaining to any Proprietary
Information.

(j)            Survival of Covenants.  Each covenant of Executive set forth in this
Section 8 shall survive the termination of this Agreement and Executive’s
employment for any reason and shall be construed as an agreement independent of
any other provision of this Agreement, and the existence of any claim or cause
of action of Executive against the Company whether predicated on this Agreement
or otherwise shall not constitute a defense to the enforcement by the Company
of said covenant.  No modification or
waiver of any covenant contained in this Section 8 shall be valid unless such
waiver or modification is approved in writing by the Board.

Executive
hereby acknowledges that Executive’s agreement to be bound by the protective
covenants set forth in this Section 8 was a material inducement for the Company
entering into this Agreement, agreeing to pay Executive the compensation and
benefits set forth herein, and providing Executive with the Company’s
Confidential Information and other proprietary information.

9.             Enforcement
of Covenants.

(a)           Injunctive Relief.  Executive acknowledges and agrees that the
covenants, obligations and agreements of Executive contained in Section 8
relate to special, unique and extraordinary matters and that a violation of any
of the terms of such covenants, obligations or agreements will cause the
Company irreparable injury for which adequate remedies are not available at
law.  Therefore, Executive agrees that
the Company will be entitled to an injunction, restraining order or such other
equitable relief (without the requirement to post bond) as a court of competent
jurisdiction may deem necessary or appropriate to restrain Executive from
committing any violation of the covenants, obligations or agreements referred
to in this Section 9.  These
injunctive remedies are cumulative and in addition to any other rights and
remedies the Company may have.  The
Company and Executive hereby irrevocably submit to the exclusive jurisdiction
of the courts of the State of the city of the Company’s headquarters and the
Federal courts of the United States of America, in each case located in (or
located nearest to) the city of the Company’s headquarters, solely in respect
of the injunctive remedies set forth in this Section  and the interpretation
and enforcement of Section 8 solely insofar as such interpretation and
enforcement relate to an application for injunctive relief in accordance with
the provisions of this Section , and the parties hereto hereby irrevocably
agree that (i) the sole and exclusive appropriate venue for any suit or
proceeding relating solely to such injunctive relief shall be in such
a court, (ii) all claims with respect to any application solely for
such injunctive relief shall be heard and determined exclusively in such a
court, (iii) any such court shall have exclusive jurisdiction over the
person of such 

 13
 

 
  

parties and over
the subject matter of any dispute relating to an application solely for such
injunctive relief, and (iv) each hereby waives any and all objections and
defenses based on forum, venue or personal or subject matter jurisdiction as
they may relate to an application solely for such injunctive relief in
a suit or proceeding brought before such a court in accordance with
the provisions of this Section 9.

(k)           Forfeiture of Severance Payments.  Executive agrees that receipt of severance
pay under Section 7 is conditioned upon Executive’s observance of the covenants
contained in Section 8.  Executive
further agrees that in the event of his failure to observe the provisions of
Section 8, (i) Executive shall forfeit the right to receive any portion of
any bonus, and (ii) the Company shall be entitled to discontinue further
severance payments under Section 8.

10.           Entire Agreement.  Except as otherwise expressly provided
herein, this Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof, and all promises,
representations, understandings, arrangements and prior agreements relating to
such subject matter (including those made to or with Executive by any other
person or entity) are merged herein and superseded in their entirety hereby.

11.           Indemnification.  The Company agrees that it shall indemnify
and hold harmless Executive to the fullest extent permitted by Texas law from
and against any and all liabilities, costs, claims and expenses including
without limitation all costs and expenses incurred in defense of litigation,
including attorneys’ fees, arising out of the employment of Executive
hereunder, except to the extent arising out of or based upon the gross
negligence or willful misconduct of Executive. 
Costs and expenses incurred by Executive in defense of any such
litigation, including attorneys’ fees, shall be paid by the Company in advance
of the final disposition of such litigation promptly upon receipt by the
Company of (i) a written request for payment, (ii) appropriate
documentation evidencing the incurrence, amount and nature of the costs and
expenses for which payment is being sought, and (iii) an undertaking
adequate under Texas law made by or on behalf of Executive to repay the amounts
so paid if it shall ultimately be determined that Executive is not entitled to
be indemnified by the Company under this Agreement.

12.           Miscellaneous.

(a)           Binding Effect.  This Agreement shall be binding on and inure
to the benefit of the Company and its successors and permitted assigns.  This Agreement shall also be binding on and
inure to the benefit of Executive and his heirs, executors, administrators and
legal representatives.

(b)           Taxes.  The Company may withhold from any payments
made under the Agreement all federal, state, city or other applicable taxes as
shall be required pursuant to any law, governmental regulation or ruling.

 14
 

 
  

 

13.           Non-Disparagement.  Executive agrees not to make any statements
that disparage the reputation of the Company, its products, services or
employees.  Executive further
acknowledges and agrees that any breach or violation of this non-disparagement
provision shall entitle the Company to seek injunctive relief to prevent any
future breaches of this provision and/or to sue Executive under the provisions
of this Agreement for the immediate recovery of any damages caused by such
breach.

14.           Assignment.  This Agreement is personal to Executive and
may not be assigned in any way by Executive without the prior written consent
of the Company.  This Agreement shall not
be assignable or delegable by the Company, other than to an affiliate of the
Company; provided, however, that in the event of the acquisition, merger or
consolidation of the Company, the obligations of the Company hereunder shall be
binding upon the surviving or resulting entity of such acquisition, merger or
consolidation.  The rights and obligations
under this Agreement shall inure to the benefit of and shall be binding upon
the heirs, legatees, administrators and personal representatives of Executive
and upon the successors, representatives and assigns of the Company.

15.           Severability and Reformation.
The parties hereto intend all provisions of this Agreement to be enforced to
the fullest extent permitted by law.  If,
however, any provision of this Agreement is held to be illegal, invalid, or
unenforceable under present or future law, such provision shall be fully
severable, and this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision were never a part hereof, and the
remaining provisions shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its
severance.  In lieu of such illegal,
invalid or unenforceable provision, there shall be added automatically as a
part of this Agreement a legal, valid and enforceable provision as similar in
terms to such illegal, invalid or unenforceable provision as may be possible,
and the Company and Executive hereby request the court to whom disputes
relating to this Agreement are submitted to reform the otherwise unenforceable
covenant in accordance with this Section 15.

16.           Notices. All notices and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given if delivered personally, mailed by
certified mail (return receipt requested) or sent by overnight delivery
service, cable, telegram, facsimile transmission or telex to the parties at the
following addresses or at such other addresses as shall be specified by the
parties by like notice:

	
  If to the Company:

  	
   

  	
  American Business Lending, Inc.

  
	
   

  	
   

  	
  C/o FirstCity Financial Corporation

  
	
   

  	
   

  	
  Attn: Legal Department

  
	
   

  	
   

  	
  6400 Imperial Drive

  
	
   

  	
   

  	
  Waco, TX 76712

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Fax: (254) 761-2953

  

 

 15
 

 
  

 

	
  If to Executive:

  	
   

  	
  Charles P. Bell, Jr.

  
	
   

  	
   

  	
  1135 Mallard Point Drive

  
	
   

  	
   

  	
  Cedar Hill, TX 75104

  

 

Notice
so given shall, in the case of notice so given by mail, be deemed to be given
and received on the fourth calendar day after posting, in the case of notice so
given by overnight delivery service, on the date of actual delivery and, in the
case of notice so given by cable, telegram, facsimile transmission, telex or
personal delivery, on the date of actual transmission or, as the case may be,
personal delivery.

17.           Further Acts.  Whether or not specifically required under
the terms of this Agreement, each party hereto shall execute and deliver such
documents and take such further actions as shall be necessary in order for such
party to perform all of his or its obligations specified herein or reasonably
implied from the terms hereof.

18.           Publicity and Advertising.  Executive agrees
that the Company may use his name, picture, or likeness for any advertising,
publicity or other business purpose at any time, during the term of this
Agreement and may continue to use materials generated during the term of this
Agreement for a period of six months thereafter.  Such use of Executive’s name, picture, or
likeness shall not be deemed to result in any invasion of Executive’s privacy
or in violation of any property right Executive may have; and Executive shall
receive no additional consideration if his name, picture or likeness is so
used.  The Executive further agrees that
any negatives, prints or other material for printing or reproduction purposes
prepared in connection with the use of his name, picture or likeness by the Company
shall be and are the sole property of the Company.

19.           GOVERNING LAW. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS (RULES) OR CHOICE OF LAWS
(RULES) THEREOF.

20.           `Venue.  The exclusive venue for all suits or
proceedings arising from or related to this Agreement shall be in a court of
competent jurisdiction in Dallas County, Texas.

21.           Amendment.  This Agreement may not be altered, amended,
or rescinded, nor may any of its provisions be waived, except by an instrument
in writing signed by both parties hereto or, in the case of an asserted waiver,
by the party against whom the waiver is sought to be enforced.  Any modification of this Agreement may only be
signed on behalf of the Company by the President of the Company and approved by
the Board.

22.           Counterparts.  This Agreement may be executed in
counterparts, with the same effect as if both parties had signed the same
document.  All such counterparts shall be
deemed an original, shall be construed together and shall constitute one and
the same instrument.

 16
 

 
  

 

23.           Headings.  The section and other headings contained in
this Agreement are for the convenience of the parties only and are not intended
to be a part hereof or to affect the meaning or interpretation hereof.

IN WITNESS
WHEREOF, the parties have executed this Agreement as of the date first
indicated above

	
  

  	
   

  	
  AMERICAN BUSINESS LENDING, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FIRSTCITY BUSINESS LENDING CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Charles P. Bell, Jr.

  

 

[remainder
of page intentionally left blank]

 17
 

 
  

 

Exhibit A”

Bonus
Pool Methodology

Bonuses for management
and employees of the Company will be calculated as follows:

On a fiscal year basis,
using corporate accounting records, a Bonus Pool (A) will be created in an
amount equal to 35 percent of the difference between the Bonus Pool Income (B)
and the Threshold Amount (C).  In the
event that the Bonus Pool Income (B) is less than or equal to the Threshold
Amount (C) , no Bonus Pool (A) will be created but performance bonuses will be
discretionary at the sole discretion of the Board of Directors of the Company.

Certain Definitions:

(B) The “Bonus Pool
Income” is equal to the annual sum of the balances of:

Net Income Before Tax of
the Company

+ Interest Paid on Shareholder Note from the Company to FirstCity BLC (the “Shareholder
Note”)

+ Dividends paid or accrued on the Preferred Equity of the Company

(C) The “Threshold Amount”
is equal to the average month-end balances for the 12 months in the preceding
fiscal year of:

Total Shareholders Equity
l of the Company

+ Outstanding Principal Amount of the Shareholder Note

Multiplied by a hurdle
rate of 25 percent.

Thus, A = 0.35 x (B — C)

The Bonus Pool shall be
distributed at the discretion of the Chief Executive Officer and the President
of the Company.  Irrespective of the size
of the bonus pool, in no event shall any executive or employee receive a bonus
amount in excess of 100 percent of his/her Base Salary.

 

 18Exhibit
10.3

MANAGEMENT
EMPLOYMENT AGREEMENT

This
Management Employment Agreement (the “Agreement”), dated as of
November 30, 2006, by and among FirstCity Business Lending Corporation,
a Texas corporation (“FirstCity BLC”), American Business Lending, Inc., a
Texas corporation (the “Company”), and Joseph N. Smith (“Executive”).

WHEREAS,
the Company desires to secure the services of Executive as its President, and
Executive desires to become employed by the Company as its President, and, in
connection therewith, the Company and Executive desire to enter into this
Agreement to, among other things, set forth the terms of such employment;

NOW,
THEREFORE, in consideration of the premises and mutual covenants contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Executive hereby
agree as follows:

1.             Agreement to Employ.  Upon the terms and subject to the conditions
of this Agreement, the Company hereby employs Executive and Executive hereby
accepts employment by the Company.

2.             Term; Position and
Responsibilities.

(a)           Term of Employment.  This Agreement shall be binding upon and
enforceable against the Company and Executive immediately upon its execution by
both parties.  The stated term of this
Agreement and the employment relationship created hereunder shall be deemed to
have begun June 19, 2006, and shall remain in effect until June 19, 2011,
unless sooner terminated in accordance with Section 6 hereof (the “Initial
Employment Term”).  This Agreement
shall be automatically renewed for successive one (1) year terms after the
Initial Employment Term (each a “Renewal Term”), unless terminated by
either party upon written notice (“Non-Renewal Notice”) given at least
sixty (60) days prior to the end of the Initial Employment Period or any
Renewal Term.  The date Executive
commences employment hereunder will be referred to as the “Commencement Date”
and the period during which Executive is employed pursuant to this Agreement
(including any Renewal Term) will be referred to as the “Employment Period.”

(b)           Position and Responsibilities.  During the Employment Period, Executive will
serve as President of the Company with such duties and responsibilities as are
customarily assigned to individuals serving in such position and such other
duties and responsibilities consistent with his position and his duties and
responsibilities as President as may be specified by the Board of Directors of
the Company (the “Board”) from time to time.  Executive will report directly to the Chief
Executive Officer of the Company.  During
the Employment Period, Executive will 
devote his undivided loyalty to the Company and devote all of his skill,
knowledge and working time (except for (i) 

 
  

reasonable vacation time and absence for sickness or
similar disability, and (ii) to the extent that it does not interfere with the
performance of Executive’s duties hereunder, (A) such reasonable time as may be
devoted to service on boards of directors and the fulfillment of civic
responsibilities, and (B) such reasonable time as may be necessary from
time to time for personal financial matters) to the conscientious performance
of his duties and responsibilities hereunder. 
Executive represents that he is entering into this Agreement voluntarily
and that his employment hereunder and compliance by him with the terms and
conditions hereof will not conflict with or result in the breach of any
agreement to which he is a party or by which he may be bound.

3.             Compensation.  As compensation for the services to be
performed by Executive hereunder, during the Employment Period, the Company
will pay Executive, and Executive shall accept as full compensation hereunder,
the following:

(a)           Base Salary.  An annual base salary of $ 175,000 during the
first year of the Initial Employment Period, and $200,000 during the second
year of the Initial Employment Period, which annual base salary shall
hereinafter be referred to as the “Base Salary”); provided, however,
that during the pre-operational period of the Company, which commenced on June
19, 2006 and will continue until the Closing under the Asset Purchase
Agreement, dated as of June 30, 2006 (the “Asset Purchase Agreement”),
among NCS I, LLC, and AMRESCO SBA Holdings, Inc., as “Sellers,” and the
Company, as “Purchaser” (the “Pre-Op Period”), Executive shall receive
50% of his Base Salary until the end of the Pre-Op Period.  If the Closing (as defined in the Asset
Purchase Agreement) occurs, then Executive shall receive payment of the full
amount (100%) of the Base Salary retroactive to August 19, 2006, payable within
thirty (30) days after the Closing under the Asset Purchase Agreement.  Executive’s salary shall be subject to all
appropriate federal and state withholding taxes and shall be payable in
accordance with the normal payroll procedures of the Company.  The Company shall not reduce Executive’s
salary without Executive’s written consent.

(b)           Discretionary Bonus Pool. The
Board will establish an incentive bonus pool for all Company employees based on
the Bonus Pool Methodology set forth in Exhibit “A” attached hereto (the
“Bonus Pool”).  Executive shall be
permitted to participate in Bonus Pool, which may provide an Incentive Bonus
(hereinafter defined) of up to 100% of Base Salary each year during the
employment Period.  The evaluation of the
performance of Executive as measured by the applicable targets and the awarding
of applicable bonuses, if any, shall be at the sole discretion of the Board of
Directors of the Company.  The annual
discretionary incentive bonus (the “Incentive Bonus”) may be awarded in
whole or in part, based on the level of incentive bonus pool performance
criteria achieved by Executive, in the sole judgment of the Board of Directors
of the Company.  If Executive terminates
this Agreement without Good Reason, as defined in Section 6(d), or if the
Company terminates this Agreement at any time for Cause, as defined in Section
6(b), Executive will not be paid any Incentive Bonus, in whole or in part for
the year in which such termination occurred.

 2
 

 
  

(c)           Annual Review of Base Salary After
Two Years.  The Company will review
Executive’s Base Salary annually, commencing with the first such annual review
no later than thirty (30) days prior to the end of the second year of the Initial
Employment Term, and continuing for any Renewal Term, if any, and, in the sole
discretion of the Board, may increase the Base Salary.

4.             Equity Ownership of the Company;
Options.

(a)           Grant of Options and Opportunity
to Purchase Restricted Stock.  During
the Employment Period, within ten (10) business days after December 31, 2007
and continuing thereafter within ten (10) business days after December 31,
2008, 2009, and 2010 (the  period between
December 31 2007 and December 31 2010 being hereinafter referred to as the “Combined
Purchase Period”), FirstCity BLC will grant to Executive options (“Options”)to
purchase restricted shares (“Restricted Shares”) of common stock, $0.001
par value per share (“Common Stock”) of the Company, which combined with
the Restricted Shares which may be acquired upon exercise of the Options will
grant to Executive the right, upon purchase of such Restricted Stock and the
exercise of the Options, at the time of exercise and/or purchase (the “Exercise
Date”), to acquire shares of Common Stock in the form of Restricted Shares
equal to Executive’s Equity Ownership. 
Executive at any time during the Employment Period, in his sole
discretion, upon ten (10) business days notice to the Company and FirstCity
BLC, may purchase Restricted Shares equal to Executive’s Equity Ownership less
the amount of shares held by Executive subject to Options, provided that
Executive exercises all of the Options simultaneously with the purchase of the
Restricted Shares.  The Executive’s
rights to the grant of Options and the issuance and purchase of Restricted
Shares will terminate upon the termination of his employment under this
Agreement for any reason.  The Company
shall not be obligated to grant Executive any Options or issue and sell any
Restricted Shares to Executive unless Executive is employed by the Company
under this Agreement at the date of determination.

(b)           Certain Definitions.  For purposes of this Agreement, the term “Executive’s
Equity Ownership” shall mean shares of Common Stock equal in the aggregate
of eight per cent (8%) of the outstanding shares of Common Stock of the Company
at the date of Closing under the Asset Purchase Agreement.  The exercise price of the Options and the
purchase price of the Restricted Shares shall be equal to the greater of $1.00
or Book Value per share of the Common Stock (the “Stock Purchase Price”).  For purposes of this Agreement, the term “Book
Value per Share of Common Stock” shall mean the book value per share of
Common Stock determined as of December 31 of the year preceding the Exercise
Date, and will be determined in accordance with generally accepted accounting
principles.

(c)           Yearly Option Grants.  During the Employment Period, within ten (10)
business days after December 31 of the years 2007, 2008, 2009, and 2010, the
Company will grant to Executive an Option to purchase shares of Common Stock at
the Stock Purchase Price, in a number of shares equal to the lesser of (i) 2.0%
of the outstanding Common Stock of the Company (i.e., 25% of the total amount
of shares of Common 

 3
 

 
  

Stock which may be acquired by the Executive under
this Agreement), or (b) the number of shares equal to Executive’s Equity
Ownership, less the total number of shares of Restricted Shares and Options
owned by Executive at the date of determination.  The Options may be exercised by Executive, in
his sole discretion, in whole but not in part, at any time on or prior to 5:00
p.m., Central Time, on December 31, 2014.

(d)           Certain Restrictions on Sale.  In no event will the Company be required to
offer to sell or to sell Restricted Shares or issue or grant Options to
Executive (a) which in the aggregate at any time would cause the number of
shares of Common Stock to be acquired by Executive under this Agreement to
exceed the Executive’s Equity Ownership, or (b) at any time at which making
such an offer or selling any such Restricted Shares or Options would violate
any applicable securities law.

(e)           Management Shareholders’ Agreement.  The terms and conditions of Executive’s
purchase of any Restricted Shares, including certain restrictions on resale of
the Restricted Shares, the right of the Company to repurchase all or a portion
of such Restricted Shares from Executive under certain circumstances, including
without limitation upon termination of Executive’s employment, and the
applicable repurchase price for repurchase of the Restricted Shares, will be
set forth in a Shareholders’ Agreement, between the Company, the Executive, and
one or more other shareholders of the Company (as the same has been or may
hereafter be amended, the “Management Shareholders’ Agreement”).  Among other things, the Shareholders’
Agreement will grant a right of first refusal under certain circumstances,
first to Charles P. Bell, Jr., and second, to the Company, to purchase
Executive’s Restricted Shares at a purchase price equal to the Book Value per
Share of Common Stock as of the last day of the month preceding the date of
purchase

5.             Benefits and Perquisites:
Expenses.

(a)           Benefits and Perquisites.
Executive shall be entitled to participate in the benefit plans provided by the
Company for all employees generally, and for executive employees of The
Company.  The Company shall be entitled
to change or terminate such plans in its sole discretion.  The parties acknowledge that at the initial
date of this Agreement the fringe benefits provided to Executive include a
corporate 401(k) plan, health, dental, life, and long-term disability
insurance, and reimbursement of certain expenses in accordance with the
policies and procedures of the Company.

(b)           Business Expenses.  The Company will reimburse Executive for
reasonable travel, lodging and meal expenses incurred by him in connection with
his performance of services hereunder upon submission of information required
to be provided under the Company’s policy for reimbursement of business
expenses.

(c)           Key Man Life Insurance.  The Company reserves the right to purchase
key man life insurance on the life of Executive at the Company’s expense, and
in such amounts and on such terms as the Company, in its sole discretion, may
determine.

 4
 

 
  

6.             Termination of Employment.  The employment relationship between Executive
and the Company created hereunder shall terminate before the expiration of the
stated term of this Agreement upon the occurrence of any one of the following
events:

(a)           Death or Permanent Disability.  The employment relationship shall be
terminated effective upon the death or permanent disability of Executive.
However, Executive shall be entitled to leaves of absence from the Company in
accordance with the policy of the Company generally applicable to executives
for illness or temporary disabilities for a period or periods not exceeding
three (3) months on a cumulative basis in any calendar year, and his status as
an Executive shall continue during such periods.   If Executive is incapacitated due to
physical or mental illness and such incapacity prevents Executive from
satisfactorily performing his duties for the Company on a full time basis for
six (6) months or more, Executive shall be deemed to have experienced a
permanent disability and the Company may terminate this Agreement upon thirty
(30) days written notice.  Upon the death
or permanent disability of Executive, Executive or his estate (as the case may
be) shall be entitled to compensation as provided in Section 7(a) and (b)
below.

(b)           Termination for Cause.  The Company shall have the option to
terminate the Executive’s employment during the Employment Period, effective
upon written notice of such termination to the Executive, for Cause as
determined by the Board of Directors. 
For purposes of this Agreement, termination for “Cause” shall
mean termination of Executive’s employment by the Board of Directors upon the
occurrence of any of the following events:

i.                                  Any
act of fraud, misappropriation or embezzlement by Executive with respect to any
aspect of the Company’s business;

ii.                               The
breach by Executive of any provision of Sections 1, 2 or 8 of this Agreement
(including but not limited to a refusal to follow lawful directives of the
Board or its designees which are not inconsistent with the duties of Executive’s
position and the provisions of this Agreement);

iii.                            The
conviction of Executive by a court of competent jurisdiction of a felony or a
crime involving moral turpitude;

iv.                           The
intentional failure by Executive to perform in all material respects his duties
and responsibilities (other than as a result of death or disability) and the
failure of Executive to cure the same in all material respects within fifteen
(15) days after written notice thereof from the Board or its designee;

 5
 

 
  

v.                              The
illegal use of drugs by Executive during the term of this Agreement that, in
the determination of the Board, substantially interferes with Executive’s
performance of his duties hereunder;

vi.                           Acceptance
of employment with any employer other than the Company, except (A) upon written
permission of the Board, or (B) after termination of the Employment Period for
another reason; or

vii.                        The breach
by Executive of his fiduciary duties to the Company.

(c)           The Company shall provide Executive
with a written notice of termination, which can be provided on the date of
termination.  In the event Executive’s
employment is terminated for Cause hereunder, Executive shall be entitled to
the compensation provided in Section 7(a) below.

(d)           Termination by the Company with
Notice.  The Company may terminate
this Agreement without Cause at any time upon sixty (60) days written notice to
Executive, during which period Executive shall not be required to perform any
services for the Company other than to assist the Company in training his
successor and generally preparing for an orderly transition, and the Company
may elect not to renew the Employment Term, in accordance with a Non-Renewal
Notice given under Section 2(a); provided, however, that upon such termination
or non-renewal, Executive shall be entitled to compensation as provided in
Section 7(a) and (b) below.

(e)           Termination by Executive for Good
Reason.  Executive shall be entitled
to terminate this Agreement at any time for Good Reason.  For purposes of this Agreement, “Good Reason”
shall mean the occurrence of any of the following events:

i.                                          Without
his express written consent, the assignment of Executive to a position
functionally and materially inferior to his position with the Company on the
date of this Agreement;

ii.                                       The
change of the location where Executive is based to a location which is more
than fifty (50) miles from his present location without Executive’s written
consent; or

iii.                                    A
reduction by the Company in Executive’s base salary as in effect on the date
hereof, unless such reduction is a proportionate reduction of the compensation
of Executive and all other senior officers of the Company as a part of a
company-wide effort to enhance the financial condition of the Company.

 

 6

 
  

 

iv.                                   Any
other material breach by the Company of its obligations under this Agreement,
which is not remedied or cured by the Company within fourteen (14) days after
written notice to the Company from the Executive describing the breach.

(f)            Executive shall give the Company
thirty (30) business days notice of an intent to terminate this Agreement for “Good
Reason” as defined in this Section 6(d), and provide the Company with thirty
(30) business days after receipt of such notice from Executive to remedy the alleged
violation of Subsections 6(d)(i), (ii) or (iii).  In the event Executive terminates his
employment for Good Reason hereunder, Executive shall be entitled to the
compensation provided in Section 7(a) and (c) below.

7.             Compensation upon Termination.
 Upon the termination of Executive’s
employment under this Agreement before the expiration of the stated term
hereof, Executive shall be entitled to the following:

(a)           Compensation upon Termination for
Any Reason.  Upon termination of
Executive’s employment during the Employment Period before the expiration of
the stated term hereof for any reason, Executive shall be entitled to:

i.                                          Salary.  The Base Salary earned by him before the
effective date of termination as provided in Section 3(a) hereof (including salary
payable during any applicable notice period), prorated on the basis of the
number of full days of service rendered by Executive during the salary payment
period to the effective date of termination;

ii.                                       Vacation
Benefits.  Any accrued, but unpaid, vacation
benefits; and

iii.                                    Unreimbursed
Business Expenses.  Any previously
authorized but unreimbursed business expenses.

Notwithstanding
the foregoing, with respect to any stock options or other plans or programs in
which Executive is participating at the time of termination of his employment,
Executive’s rights and benefits under each such plan shall be determined in
accordance with the terms, conditions, and limitations of the plan and any
separate agreement executed by Executive which may then be in effect.

(b)           Additional Compensation and
Benefits upon Termination by the Company without Cause or With Notice or by
Executive for Good Reason.  If
Executive’s employment hereunder terminates without “Cause” (as defined in
Section 6(b) above), with notice pursuant to Section 6(c) above, or for “Good
Reason” (as 

 7
 

 
  

defined in Section 6(e) above), or if the Company
terminates this Agreement pursuant to a Non-Renewal Notice given under Section
2(a), the Company shall, upon Executive’s execution of a general release of
claims in favor of the Company, provide to Executive in addition to the amounts
set forth in Subsection 7(a) above:

i.                                          a
cash payment equal to 50 % of his Base Salary and Incentive Bonus for the
current year;

ii.                                       Continued
medical insurance benefits, at the Company’s expense, for a period of six (6)
months.

The
Company shall pay the severance amounts referenced in Section 7(c)(i) in equal
semi-monthly installments for a period of six (6) months (“Severance Period”)
in accordance with the Company’s regular payroll practices.  Executive shall have no obligation to
mitigate any severance obligation of the Company under this Agreement by
seeking new employment.  The Company
shall not be entitled to set off or reduce any severance payments owed to
Executive under this Agreement by the amount of earnings or benefits received
by Executive in future employment.  The
provisions of Sections 6, 7 and 8 hereof shall survive the termination of the
employment relationship hereunder and this Agreement.

Notwithstanding
the foregoing, with respect to any stock options or other plans or programs in
which Executive is participating at the time of termination of his employment,
Executive’s rights and benefits under each such plan shall be determined in
accordance with the terms, conditions, and limitations of the plan and any
separate agreement executed by Executive which may then be in effect.

(c)           Penalty for Breach of Covenants.  If, during the Severance Period, Executive is
in material breach of his post-employment covenants contained in Section 8 of
this Agreement, the Company shall not be obligated to pay any severance
payments referenced herein, the Company’s severance obligations shall terminate
and expire, and the Company shall have no further obligations to Executive hereunder
from and after the date of such breach and shall have all other rights and
remedies available under this Agreement or any other agreement and at law or in
equity.

8.             Protective Covenants.  Executive recognizes that his employment by
the Company is one of the highest trust and confidence because (i) Executive
has become and/or in the future will become familiar with critical aspects of
the Company’s business during the period of his employment with the Company,
(ii) the Company will provide to Executive certain information during his
employment by the Company which is proprietary, confidential and/or trade
secret information and is of special and peculiar value to the Company, and
(iii) if any such proprietary, confidential and/or trade secret information,
save and except such information in the public domain or information commonly
known in the industry, were imparted to or became known by any person,
including Executive, engaging in a business in competition with that of the
Company, hardship, loss and irreparable injury and damage could result to the
Company, the 

 8
 

 
  

measurement of which would be difficult if not
impossible to ascertain.  Executive
further acknowledges that the Company has developed and will continue to
develop unique concepts, lending practices, sales presentations, marketing
programs, marketing strategies, business practices, methods of operation,
pricing information, cost information, trademarks, licenses, technical
information, proprietary information, computer software programs, tapes and
disks concerning its operations systems, customer lists, customer leads,
documents identifying past, present and future customers, customer profile and
preference data, hiring and training methods, investment policies, financial
and other confidential, proprietary and/or trade secret information concerning
its operations and expansion plans (“Confidential Information”).  Therefore, Executive agrees that it is
necessary for the Company to protect its business and that of its affiliates
from such damage, and Executive further agrees that the following covenants
constitute a reasonable and appropriate means, consistent with the best
interest of both Executive and the Company, to protect the Company or its
affiliates against damage due to loss or disclosure of Confidential Information
and shall apply to and be binding upon Executive as provided herein:

(d)           Confidential Information.  The Company agrees to provide Executive with
some or all of its Confidential Information (as defined above) during the term
of this Agreement.  Executive recognizes
that his position with the Company is one of the highest trust and confidence
by reason of Executive’s access to and contact with certain Confidential
Information of the Company. Executive agrees and covenants that, except as may
be required by the Company in connection with this Agreement, or with the prior
written consent of the Company, Executive shall not, either during the term of
this Agreement or at any time thereafter, directly or indirectly, use for Executive’s
own benefit or for the benefit of another, or disclose, disseminate, or
distribute to another, except as directed by the Company or as required for the
performance of Executive’s duties on behalf of the Company, any Confidential
Information (whether or not acquired, learned, obtained, or developed by
Executive alone or in conjunction with others) of the Company or of others with
whom the Company has a business relationship, provided, however that this
restriction shall not apply to truthful testimony given under oath in a legal
proceeding by Executive pursuant to a properly issued subpoena if Executive
provides timely notice of such subpoena to the Company.  All Confidential Information, and all
memoranda, notes, records, drawings, documents, or other writings whatsoever
made, compiled, acquired, or received by Executive at any time during his
employment with the Company, including during the term of this Agreement,
arising out of, in connection with, or related to any activity or business of
the Company, including, but not limited to, the customers, suppliers, or others
with whom the Company has a business relationship, the arrangements of the
Company with such parties, and the pricing and expansion policies and strategy
of the Company, are, and shall continue to be, the sole and exclusive property
of the Company.

Executive
represents and warrants that he is not bound by any agreement with any prior
employer or other party that will be breached by execution and performance of
this Agreement, or which would otherwise prevent him from performing his duties
with the Company as set forth in this Agreement.  Executive represents and warrants that he has

 9
 

 
  

not retained any copies of proprietary or confidential
information of any prior the Company, and he will not use or rely on any
confidential and proprietary information of any prior the Company in carrying
out his duties for the Company.

(e)           Covenant Not to Compete.  In consideration of the numerous mutual
promises and agreements contained in this Agreement between the Company and
Executive, including, without limitation, those involving Confidential
Information, and in order to protect the Company’s Confidential Information and
to reduce the likelihood of irreparable damage which would occur in the event
such information is provided to or used by a competitor of the Company,
Executive agrees that he will not, during his employment and for an additional
period of twenty-four (24) months immediately following the termination of his
employment  for any reason other than
termination without Cause or for Good Reason (the “Noncompetition Term”),
directly or indirectly, either through any form of ownership or as an
individual, director, officer, principal, agent, employee, the Company,
adviser, consultant, shareholder, partner, member, or in any individual or
representative capacity whatsoever, without the prior written consent of the
Company (which consent may be withheld in the Company’s sole discretion), (i)
compete for or solicit business for or on behalf of any person or business
entity operating a premium finance company providing similar services to those
provided by the Company with a place of business in any state in the United
States; (ii) own, operate, participate in, undertake any employment with or
have any interest in any entity with a place of business in any state in the
United States related to the operation of a premium finance company providing
similar services to those provided by the Company, except that Executive may
own publicly traded stock for investment purposes only in any company in which
Executive owns less than 5% of the voting equity, (iii) compete for or solicit
business related to the operation of a premium finance company providing
similar services to those provided by the Company from any customer of the
Company (or its successors by merger); or (iv) use in any competition,
solicitation, or marketing effort any Confidential Information, any proprietary
list, or any information concerning customers of the Company.   The restrictions of this Section 8 (e) shall
not apply to Executive if his employment by the Company is terminated by the
Company without cause or for Good Reason.

Executive
hereby acknowledges that the geographic boundaries, scope of prohibited
activities and the duration of the provisions of this Section 8 are reasonable
and are no broader than are necessary to protect the legitimate business
interests of the Company. This noncompetition provision shall survive the
termination of Executive’s employment and can only be revoked or modified by a
writing signed by the parties that specifically states an intent to revoke or
modify this provision.  Executive
acknowledges that the Company would not employ him or provide him with access
to its Confidential Information but for his covenants or promises contained in
this Section.

The
Company and Executive agree and stipulate that the agreements and covenants not
to compete contained in this Section 8 are fair and reasonable in light of all
of the facts and circumstances of the relationship between Executive and the
Company; however, Executive and the Company are aware that in certain
circumstances courts have 

 10
 

 
  

refused to enforce certain terms of agreements not to
compete.  Therefore, in furtherance of,
and not in derogation of the provisions of this Section 8, the Company and
Executive agree that in the event a court should decline to enforce any term of
terms of any of the provisions of this Section 8, this Section 8 shall be
deemed to be modified or reformed to restrict Executive’s competition with the
Company or its affiliates to the maximum extent, as to time, geography and
business scope, which the court shall find enforceable; provided, however, that
in no event shall the provisions of this Section 8 be deemed to be more
restrictive to Executive than those contained herein.

Executive
agrees that during the Noncompetition Term, he shall immediately notify the
Company in writing of any employment, work or business he undertakes with or on
behalf of any person (including himself) or entity.

(f)            Non-Solicitation.  Executive agrees that during his employment,
and for a period of twenty-four (24) months following the termination of his
employment by the Company with or without Cause, that neither he nor any
individual, partner(s), limited partnership, corporation or other entity or
business with which he is in any way affiliated, including, without limitation,
any partner, limited partner, member, director, officer, shareholder, employee,
or agent of any such entity or business, will (i) request, induce or attempt to
influence, directly or indirectly, any employee of the Company to terminate
their employment with the Company or (ii) employ any person who as of the date
of this Agreement was, or after such date is, an employee of the Company.  Executive further agrees that during the
period beginning with the commencement of Executive’s employment with the
Company and ending twenty-four (24) months after the termination of Executive’s
employment with the Company, for whatever reason, he shall not, directly or
indirectly, as an individual, employee, agent, consultant, stockholder,
director, partner or in any other individual or representative capacity of the
Company or of any other person, entity or business, solicit or encourage any
present supplier, contractor, partner or investor of the Company to terminate,
limit or otherwise alter his, her or its relationship with the Company.

(g)           Work Product.  For purposes of this Section 8, “Work Product”
shall mean all intellectual property rights, including all trade secrets, U.S.
and international copyrights, patentable inventions, discoveries and other
intellectual property rights in any programming, design, documentation,
technology, or other work product that is created in connection with Executive’s
work.  In addition, all rights in any
preexisting programming, design, documentation, technology, or other Work
Product provided to the Company during Executive’s employment shall
automatically become part of the Work Product hereunder, whether or not it
arises specifically out of Executive’s “Work.” 
For purposes of this Agreement, “Work” shall mean (i) any direct
assignments and required performance by or for the Company, and (ii) any other
productive output that relates to the business of the Company and is produced
during the course of Executive’s employment or engagement by the Company.  For this purpose, Work may be considered
present even after normal working hours, away from the Company’s premises, on
an unsupervised basis, alone or with others. 
Unless otherwise 

 11
 

 
  

approved in writing by the Board, this Agreement shall
apply to all Work Product created in connection with all Work conducted before
or after the date of this Agreement.

The
Company shall own all rights in the Work Product.  To this end, all Work Product shall be
considered work made for hire for the Company. 
If any of the Work Product may not, by operation of law or agreement, be
considered Work made by Executive for hire for the Company (or if ownership of
all rights therein do not otherwise vest exclusively in the Company
immediately), Executive agrees to assign, and upon creation thereof does hereby
automatically assign, without further consideration, the ownership thereof to
the Company.  Executive hereby
irrevocably relinquishes for the benefit of the Company and its assigns any
moral rights in the Work Product recognized by applicable law.  The Company shall have the right to obtain
and hold, in whatever name or capacity it selects, copyrights, registrations,
and any other protection available in the Work Product.

Executive
agrees to perform upon the request of the Company, during or after Executive’s
Work or employment, such further acts as may be necessary or desirable to
transfer, perfect, and defend the Company’s ownership of the Work Product,
including by (i) executing, acknowledging, and delivering any requested
affidavits and documents of assignment and conveyance, (ii) obtaining and/or
aiding in the enforcement of copyrights, trade secrets, and (if applicable)
patents with respect to the Work Product in any countries, and (iii) providing
testimony in connection with any proceeding affecting the rights of the Company
in any Work Product.  In the event that
Executive is required to perform the services described in this paragraph after
his employment with the Company has terminated, Executive will be reasonably
compensated for actual time spent providing such services.

Executive
warrants that his Work for the Company does not and will not in any way
conflict with any obligations Executive may have with any prior the Company or
contractor.  Executive also agrees, to
the best of his ability, to develop all Work Product in a manner that avoids
even the appearance of infringement of any third party’s intellectual property
rights.

(h)           Non-Solicitation of Clients.  During the period of Executive’s employment
and, as a condition to receiving severance pay thereafter during the
Non-Competition Term, Executive shall not, directly or indirectly, solicit or
otherwise attempt to establish for himself or any other person, firm or entity
any business relationship with any person, firm or entity which, at any time
during the twenty-four month period preceding the date of Executive’s
termination of employment, was a customer, client or distributor of the Company
or any of its subsidiaries except during Executive’s employment with the
Company.

(i)            Return of Documents.  In the event of the termination of Executive’s
employment for any reason, Executive will deliver to the Company all
non-personal documents and data of any nature and in whatever medium pertaining
to Executive’s employment with the Company, or any of its subsidiaries or
affiliates and he 

 12
 

 
  

will not take with him any such property, documents or
data of any description or any reproduction thereof, including summaries or
notes regarding same, or any documents containing or pertaining to any
Proprietary Information.

(j)            Survival of Covenants.  Each covenant of Executive set forth in this
Section 8 shall survive the termination of this Agreement and Executive’s
employment for any reason and shall be construed as an agreement independent of
any other provision of this Agreement, and the existence of any claim or cause
of action of Executive against the Company whether predicated on this Agreement
or otherwise shall not constitute a defense to the enforcement by the Company
of said covenant.  No modification or
waiver of any covenant contained in this Section 8 shall be valid unless such
waiver or modification is approved in writing by the Board.

Executive
hereby acknowledges that Executive’s agreement to be bound by the protective
covenants set forth in this Section 8 was a material inducement for the Company
entering into this Agreement, agreeing to pay Executive the compensation and
benefits set forth herein, and providing Executive with the Company’s
Confidential Information and other proprietary information.

9.             Enforcement
of Covenants.

(a)           Injunctive Relief.  Executive acknowledges and agrees that the
covenants, obligations and agreements of Executive contained in Section 8
relate to special, unique and extraordinary matters and that a violation of any
of the terms of such covenants, obligations or agreements will cause the
Company irreparable injury for which adequate remedies are not available at law.  Therefore, Executive agrees that the Company
will be entitled to an injunction, restraining order or such other equitable
relief (without the requirement to post bond) as a court of competent
jurisdiction may deem necessary or appropriate to restrain Executive from
committing any violation of the covenants, obligations or agreements referred
to in this Section 9.  These
injunctive remedies are cumulative and in addition to any other rights and
remedies the Company may have.  The
Company and Executive hereby irrevocably submit to the exclusive jurisdiction
of the courts of the State of the city of the Company’s headquarters and the
Federal courts of the United States of America, in each case located in (or
located nearest to) the city of the Company’s headquarters, solely in respect
of the injunctive remedies set forth in this Section  and the
interpretation and enforcement of Section 8 solely insofar as such
interpretation and enforcement relate to an application for injunctive relief
in accordance with the provisions of this Section , and the parties hereto
hereby irrevocably agree that (i) the sole and exclusive appropriate venue
for any suit or proceeding relating solely to such injunctive relief shall be
in such a court, (ii) all claims with respect to any application
solely for such injunctive relief shall be heard and determined exclusively in
such a court, (iii) any such court shall have exclusive jurisdiction over
the person of such parties and over the subject matter of any dispute relating
to an application solely for such injunctive relief, and (iv) each hereby
waives any and all objections and defenses based on forum, venue or personal or
subject matter jurisdiction as they may relate to an 

 13
 

 
  

application solely for such injunctive relief in
a suit or proceeding brought before such a court in accordance with
the provisions of this Section 9.

(k)           Forfeiture of Severance Payments.  Executive agrees that receipt of severance
pay under Section 7 is conditioned upon Executive’s observance of the covenants
contained in Section 8.  Executive
further agrees that in the event of his failure to observe the provisions of
Section 8, (i) Executive shall forfeit the right to receive any portion of
any bonus, and (ii) the Company shall be entitled to discontinue further
severance payments under Section 8.

10.           Entire Agreement.  Except as otherwise expressly provided
herein, this Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof, and all promises, representations,
understandings, arrangements and prior agreements relating to such subject
matter (including those made to or with Executive by any other person or
entity) are merged herein and superseded in their entirety hereby.

11.           Indemnification.  The Company agrees that it shall indemnify
and hold harmless Executive to the fullest extent permitted by Texas law from
and against any and all liabilities, costs, claims and expenses including
without limitation all costs and expenses incurred in defense of litigation,
including attorneys’ fees, arising out of the employment of Executive
hereunder, except to the extent arising out of or based upon the gross
negligence or willful misconduct of Executive. 
Costs and expenses incurred by Executive in defense of any such
litigation, including attorneys’ fees, shall be paid by the Company in advance
of the final disposition of such litigation promptly upon receipt by the
Company of (i) a written request for payment, (ii) appropriate
documentation evidencing the incurrence, amount and nature of the costs and
expenses for which payment is being sought, and (iii) an undertaking
adequate under Texas law made by or on behalf of Executive to repay the amounts
so paid if it shall ultimately be determined that Executive is not entitled to
be indemnified by the Company under this Agreement.

12.           Miscellaneous.

(a)           Binding Effect.  This Agreement shall be binding on and inure
to the benefit of the Company and its successors and permitted assigns.  This Agreement shall also be binding on and
inure to the benefit of Executive and his heirs, executors, administrators and
legal representatives.

(b)           Taxes.  The Company may withhold from any payments
made under the Agreement all federal, state, city or other applicable taxes as
shall be required pursuant to any law, governmental regulation or ruling.

13.           Non-Disparagement.  Executive agrees not to make any statements
that disparage the reputation of the Company, its products, services or
employees.  Executive further
acknowledges and agrees that any breach or violation of this non-disparagement 

 14
 

 
  

provision shall entitle the Company to seek injunctive
relief to prevent any future breaches of this provision and/or to sue Executive
under the provisions of this Agreement for the immediate recovery of any
damages caused by such breach.

14.           Assignment.  This Agreement is personal to Executive and
may not be assigned in any way by Executive without the prior written consent
of the Company.  This Agreement shall not
be assignable or delegable by the Company, other than to an affiliate of the
Company; provided, however, that in the event of the acquisition, merger or
consolidation of the Company, the obligations of the Company hereunder shall be
binding upon the surviving or resulting entity of such acquisition, merger or
consolidation.  The rights and
obligations under this Agreement shall inure to the benefit of and shall be
binding upon the heirs, legatees, administrators and personal representatives
of Executive and upon the successors, representatives and assigns of the
Company.

15.           Severability and Reformation.
The parties hereto intend all provisions of this Agreement to be enforced to
the fullest extent permitted by law.  If,
however, any provision of this Agreement is held to be illegal, invalid, or
unenforceable under present or future law, such provision shall be fully
severable, and this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision were never a part hereof, and the
remaining provisions shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its
severance.  In lieu of such illegal,
invalid or unenforceable provision, there shall be added automatically as a
part of this Agreement a legal, valid and enforceable provision as similar in
terms to such illegal, invalid or unenforceable provision as may be possible,
and the Company and Executive hereby request the court to whom disputes
relating to this Agreement are submitted to reform the otherwise unenforceable
covenant in accordance with this Section 15.

16.           Notices.
All notices and other communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally, mailed by certified mail (return receipt requested) or
sent by overnight delivery service, cable, telegram, facsimile transmission or
telex to the parties at the following addresses or at such other addresses as
shall be specified by the parties by like notice:

If to the Company:               American Business Lending, Inc.

C/o FirstCity Financial
Corporation

Attn: Legal Department

6400 Imperial Drive

Waco, TX 76712

 

Fax:
(254) 761-2953

 15
 

 
  

If to Executive:                      Joseph N. Smith

817 Crested Butte Trail

Flower Mound, TX
75028

Notice
so given shall, in the case of notice so given by mail, be deemed to be given
and received on the fourth calendar day after posting, in the case of notice so
given by overnight delivery service, on the date of actual delivery and, in the
case of notice so given by cable, telegram, facsimile transmission, telex or
personal delivery, on the date of actual transmission or, as the case may be,
personal delivery.

17.           Further Acts.  Whether or not specifically required under
the terms of this Agreement, each party hereto shall execute and deliver such
documents and take such further actions as shall be necessary in order for such
party to perform all of his or its obligations specified herein or reasonably
implied from the terms hereof.

18.           Publicity and Advertising.  Executive agrees
that the Company may use his name, picture, or likeness for any advertising,
publicity or other business purpose at any time, during the term of this
Agreement and may continue to use materials generated during the term of this
Agreement for a period of six months thereafter.  Such use of Executive’s name, picture, or
likeness shall not be deemed to result in any invasion of Executive’s privacy
or in violation of any property right Executive may have; and Executive shall
receive no additional consideration if his name, picture or likeness is so
used.  The Executive further agrees that
any negatives, prints or other material for printing or reproduction purposes
prepared in connection with the use of his name, picture or likeness by the
Company shall be and are the sole property of the Company.

19.           GOVERNING LAW. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS (RULES) OR CHOICE OF LAWS
(RULES) THEREOF.

20.           `Venue.  The exclusive venue for all suits or
proceedings arising from or related to this Agreement shall be in a court of
competent jurisdiction in Dallas County, Texas.

21.           Amendment.  This Agreement may not be altered, amended,
or rescinded, nor may any of its provisions be waived, except by an instrument
in writing signed by both parties hereto or, in the case of an asserted waiver,
by the party against whom the waiver is sought to be enforced.  Any modification of this Agreement may only
be signed on behalf of the Company by the President of the Company and approved
by the Board.

22.           Counterparts.  This Agreement may be executed in
counterparts, with the same effect as if both parties had signed the same
document.  All such counterparts shall be
deemed an original, shall be construed together and shall constitute one and
the same instrument.

 

 16

 
  

 

23.           Headings.  The section and other headings contained in
this Agreement are for the convenience of the parties only and are not intended
to be a part hereof or to affect the meaning or interpretation hereof.

IN WITNESS
WHEREOF, the parties have executed this Agreement as of the date first
indicated above

	
  

  	
  AMERICAN BUSINESS LENDING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
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  FIRSTCITY BUSINESS LENDING CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
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  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Joseph N. Smith

  

 

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 17
 

 
  

Exhibit A”

Bonus
Pool Methodology

Bonuses for management
and employees of the Company will be calculated as follows:

On a fiscal year basis,
using corporate accounting records, a Bonus Pool (A) will be created in an
amount equal to 35 percent of the difference between the Bonus Pool Income (B)
and the Threshold Amount (C).  In the
event that the Bonus Pool Income (B) is less than or equal to the Threshold
Amount (C) , no Bonus Pool (A) will be created but performance bonuses will be
discretionary at the sole discretion of the Board of Directors of the Company.

Certain Definitions:

(B) The “Bonus Pool
Income” is equal to the annual sum of the balances of:

Net Income Before Tax of the Company

+ Interest Paid on Shareholder Note from the Company to FirstCity BLC
(the “Shareholder Note”)

+ Dividends paid or
accrued on the Preferred Equity of the Company

(C) The “Threshold Amount”
is equal to the average month-end balances for the 12 months in the preceding
fiscal year of:

Total Shareholders Equity of the Company

+ Outstanding Principal
Amount of the Shareholder Note

Multiplied by a hurdle rate of 25 percent.

 

Thus, A = 0.35 x (B -
C)

The Bonus Pool shall be
distributed at the discretion of the President and the President of the
Company.  Irrespective of the size of the
bonus pool, in no event shall any executive or employee receive a bonus amount
in excess of 100 percent of his/her Base Salary.

 

 18

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