UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended January 31, 2000
Commission file number 1-12006
FINANCIAL FEDERAL CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 88-0244792
(State of incorporation) (I.R.S. Employer Identification Number)
733 Third Avenue, New York, NY 10017
(Address of principal executive offices)
(Zip code)
(212) 599-8000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
At March 1, 2000, 14,901,641 shares of Registrant's common stock, $.50 par
value, were outstanding.
<PAGE>
FINANCIAL FEDERAL CORPORATION
AND SUBSIDIARIES
Quarterly Report on Form 10-Q
for the quarter ended January 31, 2000
TABLE OF CONTENTS
Part I - Financial Information Page No.
- ------------------------------------------------------------------- --------
Item 1 Financial Statements:
Consolidated Balance Sheet at January 31, 2000 (unaudited)
and July 31, 1999 (audited) 3
Consolidated Statement of Operations and Retained Earnings
for the three and six months ended January 31, 2000 and
1999 (unaudited) 4
Consolidated Statement of Cash Flows for the six months
ended January 31, 2000 and 1999 (unaudited) 5
Notes to Consolidated Financial Statements 6-7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-9
Part II - Other Information
- ---------------------------
Item 4 Submission of matters to a vote of security holders 9
Item 6 Exhibits and Reports on Form 8-K 10
Signatures 11
2
<PAGE>
<TABLE>
FINANCIAL FEDERAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
<CAPTION>
January 31, July 31,
2000 * 1999
---------- --------
<S> <C> <C>
ASSETS
Finance receivables $1,015,081 $948,727
Allowance for possible losses (17,273) (16,202)
---------- --------
Finance receivables - net 997,808 932,525
Cash 5,774 5,544
Other assets 3,833 4,116
---------- --------
TOTAL ASSETS $1,007,415 $942,185
========== ========
LIABILITIES
Senior debt:
Long-term ($36,122 at January 31, 2000 and $38,879 at
July 31, 1999 due to related parties) $509,163 $540,662
Short-term 190,788 106,990
Subordinated debt ($4,681 at January 31, 2000 and July 31,
1999 due to related parties) 95,490 97,790
Accrued interest, taxes and other liabilities 29,140 29,500
Deferred income taxes 24,661 22,261
---------- --------
Total liabilities 849,242 797,203
---------- --------
STOCKHOLDERS' EQUITY
Preferred stock - $1 par value, authorized 5,000,000 shares,
none issued
Common stock - $.50 par value, authorized 100,000,000 shares;
shares issued: 14,890,347 at January 31, 2000 and
14,860,207 at July 31, 1999 7,445 7,430
Additional paid-in capital 58,304 58,115
Warrants - issued and outstanding 1,606,500 29 29
Retained earnings 92,395 79,408
---------- --------
Total stockholders' equity 158,173 144,982
---------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,007,415 $942,185
========== ========
<FN>
* Unaudited
The notes to consolidated financial statements are made a part hereof.
</FN>
</TABLE>
3
<PAGE>
<TABLE>
FINANCIAL FEDERAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
AND RETAINED EARNINGS (UNAUDITED)
(Dollars in Thousands, Except Per Share Amounts)
<CAPTION>
Three months Ended Six months ended
January 31, Janaury 31,
----------------- -------------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Finance income $26,667 $21,508 $52,087 $42,624
Interest expense 12,542 9,518 24,184 19,079
------- ------- ------- -------
Finance income before provision for possible
losses on finance receivables 14,125 11,990 27,903 23,545
Provision for possible losses on finance receivables 550 650 1,225 1,450
------- ------- ------- -------
Net finance income 13,575 11,340 26,678 22,095
Gain on debt retirement 385 385 187
Salaries and other expenses (2,965) (2,507) (5,874) (4,998)
------- ------- ------- -------
Earnings before income taxes 10,995 8,833 21,189 17,284
Provision for income taxes 4,248 3,417 8,202 6,677
------- ------- ------- -------
NET EARNINGS 6,747 5,416 12,987 10,607
Retained earnings - beginning of period 85,648 63,101 79,408 57,910
------- ------- ------- -------
RETAINED EARNINGS - END OF PERIOD $92,395 $68,517 $92,395 $68,517
======= ======= ======= =======
EARNINGS PER COMMON SHARE:
Diluted $0.38 $0.31 $0.74 $0.61
===== ===== ===== =====
Basic $0.45 $0.36 $0.87 $0.71
===== ===== ===== =====
<FN>
The notes to consolidated financial statements are made a part hereof.
</FN>
</TABLE
4
<PAGE>
</TABLE>
<TABLE>
FINANCIAL FEDERAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(Dollars in Thousands)
<CAPTION>
Six Months Ended January 31, 2000 1999
- -------------------------------------------------------------------- -------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $12,987 $10,607
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Provision for possible losses on finance receivables 1,225 1,450
Depreciation and amortization 3,569 2,874
Deferred income taxes 2,400 2,056
Gain on debt retirement (385) (187)
Decrease (increase) in other assets 324 (154)
(Decrease) in accrued interest, taxes and other liabilities (360) (8,923)
-------- --------
Net cash provided by operating activities 19,760 7,723
-------- --------
Cash flows from investing activities:
Finance receivables:
Originated (336,198) (300,750)
Collected 266,267 234,792
Other (187) (214)
-------- --------
Net cash (used in) investing activities (70,118) (66,172)
-------- --------
Cash flows from financing activities:
Commercial paper:
Maturities 90 days or less (net) 50,901 (3,106)
Maturities greater than 90 days:
Proceeds 39,841 40,306
Repayments (59,774) (57,556)
Bank borrowings - net proceeds (repayments) (34,670) 55,015
Proceeds from senior term notes 50,000
Proceeds from term loans - banks 25,000
Repurchases of convertible subordinated notes (1,915) (1,313)
Variable rate senior term notes - net proceeds (repayments) 6,001 (366)
Proceeds from exercise of stock options 204 259
Tax benefit from stock options 12
-------- --------
Net cash provided by financing activities 50,588 58,251
-------- --------
NET INCREASE (DECREASE) IN CASH 230 (198)
Cash - beginning of period 5,544 2,756
-------- --------
CASH - END OF PERIOD $5,774 $2,558
======== ========
Supplemental disclosures of cash flow information:
Interest paid $22,875 $18,937
======== ========
Income taxes paid $5,180 $2,888
======== ========
<FN>
The notes to consolidated financial statements are made a part hereof.
</FN>
</TABLE>
5
<PAGE>
FINANCIAL FEDERAL CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
In the opinion of the management of Financial Federal Corporation and
Subsidiaries (the "Company"), the accompanying unaudited consolidated
financial statements contain all adjustments (consisting only of normal
recurring items) necessary to present fairly the financial position at January
31, 2000 and the results of operations and cash flows of the Company for the
three and six month periods ended January 31, 2000 and 1999. These condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and note disclosures included in the
Company's Annual Report on Form 10-K for the year ended July 31, 1999. The
consolidated results of operations for the three and six month periods ended
January 31, 2000 and 1999 are not necessarily indicative of the results for
the respective full years.
NOTE 2 - EARNINGS PER COMMON SHARE
- ----------------------------------
Earnings per common share was calculated as follows (in thousands, except per
share amounts):
<TABLE>
<CAPTION>
Three months ended Six months ended
January 31, January 31,
----------------- -------------------
2000 1999 2000 1999
------ ------ ------- -------
<S> <C> <C> <C> <C>
Net earnings (used for basic earnings per share) $6,747 $5,416 $12,987 $10,607
Effect of convertible securities 749 775 1,511 1,565
------ ------ ------- -------
Adjusted net earnings (used for diluted earnings
per share) $7,496 $6,191 $14,498 $12,172
====== ====== ======= =======
Weighted average common shares outstanding
(used for basic earnings per share) 14,865 14,868 14,863 14,861
Effect of dilutive securities:
Convertible subordinated notes 3,147 3,266 3,157 3,280
Warrants 1,382 1,423 1,383 1,412
Stock options 243 407 244 352
------ ------ ------- -------
Adjusted weighted average common shares and
assumed conversions (used for diluted
earnings per share) 19,637 19,964 19,647 19,905
====== ====== ======= =======
Net earnings per common share - Diluted $0.38 $0.31 $0.74 $0.61
===== ===== ===== =====
Net earnings per common share - Basic $0.45 $0.36 $0.87 $0.71
===== ===== ===== =====
</TABLE>
NOTE 3 - SENIOR DEBT
- --------------------
At January 31, 2000, the Company had $422.5 million of committed unsecured
revolving credit facilities with various banks including $205.0 million that
expire after January 31, 2001 and $217.5 million that expire before January
31, 2001. Long-term senior debt of $509.2 million at January 31, 2000
comprised $31.3 million of borrowings under credit facilities that expire
after January 31, 2001, $173.7 million of commercial paper supported by credit
facilities that expire after January 31, 2001 and $304.2 million of term notes
payable. In September 1999, the Company issued $50.0 million of 7.57% fixed
rate senior term notes that mature in September 2002.
NOTE 4 - DERIVATIVE FINANCIAL INSTRUMENTS
- -----------------------------------------
At January 31, 2000, the Company had variable to fixed interest rate swaps
with a notional amount of $25.0 million, weighted average receive and pay
rates of 6.2% and 5.2%, respectively, and a weighted average remaining term of
eleven months.
6
<PAGE>
NOTE 5 - RECENT ACCOUNTING PRONOUNCEMENTS
- -----------------------------------------
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This Statement requires the fair value
of derivatives to be recorded as assets or liabilities. Gains or losses
resulting from changes in the fair values of derivatives would be accounted
for depending on the purpose of the derivatives and whether they qualify for
hedge accounting treatment. This statement, as deferred by SFAS No. 137,
"Accounting for Derivatives and Hedging Activities - Deferral of the Effective
Date of FASB Statement No. 133," issued in June 1999, is effective for fiscal
years beginning after June 15, 2000. The Company has not yet determined the
impact SFAS 133 will have on its earnings or financial position.
PART I
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Comparison of three months ended January 31, 2000 to three months ended
January 31, 1999
- ----------------------------------------------------------------------------
Finance income increased by 24% to $26.7 million in the second quarter of
fiscal 2000 from $21.5 million in the second quarter of fiscal 1999. The
increase was primarily due to the 22%, or $179 million, increase in average
finance receivables outstanding to $997 million in the second quarter of
fiscal 2000 from $818 million in the second quarter of fiscal 1999 and to a
lesser extent, higher yields on new receivables and on variable rate
receivables resulting from increases in market interest rates. Finance
receivables booked in the second quarter of fiscal 2000 increased by 10% to
$161 million from $147 million in the second quarter of fiscal 1999.
Interest expense, incurred on borrowings used to fund finance receivables,
increased by 32% to $12.5 million in the second quarter of fiscal 2000 from
$9.5 million in the second quarter of fiscal 1999. The increase was primarily
due to the 22% increase in average debt outstanding in the second quarter of
fiscal 2000 from the second quarter of fiscal 1999, and to a lesser extent,
recent issuances of additional term debt and higher rates incurred on short
term and variable rate debt resulting from higher average market interest
rates in the second quarter of fiscal 2000 from the second quarter of fiscal
1999.
Finance income before provision for possible losses on finance receivables
increased by 18% to $14.1 million in the second quarter of fiscal 2000 from
$12.0 million in the second quarter of fiscal 1999. Finance income before
provision for possible losses, expressed as an annualized percentage of
average finance receivables outstanding, decreased to 5.6% in the second
quarter of fiscal 2000 from 5.8% in the second quarter of fiscal 1999
primarily due to the increase in market interest rates.
The provision for possible losses on finance receivables decreased by 15% to
$550,000 in the second quarter of fiscal 2000 from $650,000 in the second
quarter of fiscal 1999. The provision for possible losses is determined by
the amount required to increase the allowance for possible losses to a level
that management considers appropriate. The allowance for possible losses was
$17.3 million, or 1.70% of finance receivables at January 31, 2000, as
compared to $14.7 million, or 1.76% of finance receivables, at January 31,
1999. The allowance is periodically reviewed by the Company's management and
is estimated based on total finance receivables, net credit losses incurred
and management's current assessment of the risks inherent in the Company's
finance receivables from national and regional economic conditions, industry
conditions, concentrations, the financial condition of counterparties and
other factors. Future additions to the allowance may be necessary based on
changes in these factors. Non-performing finance receivables were $12.1
million, or 1.2% of total finance receivables, at January 31, 2000, compared
to $7.9 million, or 0.9% of total finance receivables, at January 31, 1999.
In the second quarter of fiscal 2000, the Company repurchased $2.3 million
principal amount of its convertible subordinated notes for $1.9 million.
7
<PAGE>
Salaries and other expenses increased by 18% to $3.0 million in the second
quarter of fiscal 2000 from $2.5 million in the second quarter of fiscal 1999
primarily due to the increase in the number of employees and salary increases.
Net earnings increased by 25% to $6.7 million in the second quarter of fiscal
2000 from $5.4 million in the second quarter of fiscal 1999. Diluted earnings
per share increased by 23% to $0.38 per share in the second quarter of fiscal
2000 from $0.31 per share in the second quarter of fiscal 1999 and basic
earnings per share increased by 25% to $0.45 per share in the second quarter
of fiscal 2000 from $0.36 per share in the second quarter of fiscal 1999.
Comparison of six months ended January 31, 2000 to six months ended January
31, 1999
- -----------------------------------------------------------------------------
Finance income increased by 22% to $52.1 million in the first half of fiscal
2000 from $42.6 million in the first half of fiscal 1999. The increase was
primarily due to the 22%, or $174 million, increase in average finance
receivables outstanding to $980 million in the first half of fiscal 2000 from
$805 million in the first half of fiscal 1999. Finance receivables booked in
the first half of fiscal 2000 increased by 12% to $336 million from $301
million in the first half of fiscal 1999.
Interest expense, incurred on borrowings used to fund finance receivables,
increased by 27% to $24.2 million in the first half of fiscal 2000 from $19.1
million in the first half of fiscal 1999. The increase was primarily due to
the 22% increase in average debt outstanding in the first half of fiscal 2000
from the first half of fiscal 1999, and to a lesser extent, recent issuances
of additional term debt and higher rates incurred on short term and variable
rate debt resulting from higher average market interest rates in the first
half of fiscal 2000 from the first half of fiscal 1999.
Finance income before provision for possible losses on finance receivables
increased by 19% to $27.9 million in the first half of fiscal 2000 from $23.5
million in the first half of fiscal 1999. Finance income before provision for
possible losses, expressed as an annualized percentage of average finance
receivables outstanding, decreased to 5.7% in the first half of fiscal 2000
from 5.8% in the first half of fiscal 1999.
The provision for possible losses on finance receivables decreased by 16% to
$1.2 million in the first half of fiscal 2000 from $1.5 million in the first
half of fiscal 1999. The provision for possible losses is determined by the
amount required to increase the allowance for possible losses to a level that
management considers appropriate. The allowance for possible losses was $17.3
million, or 1.70% of finance receivables at January 31, 2000, as compared to
$14.7 million, or 1.76% of finance receivables, at January 31, 1999.
Salaries and other expenses increased by 18% to $5.9 million in the first half
of fiscal 2000 from $5.0 million in the first half of fiscal 1999 primarily
due to the increase in the number of employees and salary increases.
Net earnings increased by 22% to $13.0 million in the first half of fiscal
2000 from $10.6 million in the first half of fiscal 1999. Diluted earnings
per share increased by 21% to $0.74 per share in the first half of fiscal 2000
from $0.61 per share in the first half of fiscal 1999 and basic earnings per
share increased by 23% to $0.87 per share in the first half of fiscal 2000
from $0.71 per share in the first half of fiscal 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company is dependent upon the continued availability of funds to originate
or acquire finance receivables and to purchase portfolios of finance
receivables. The Company may obtain required funds from a variety of sources,
including internal generation, dealer placed and directly issued commercial
paper, borrowings under committed unsecured revolving credit facilities,
private and public issuances of term debt, securitizations and sales of common
and preferred equity. Management believes, but cannot assure, that the
Company has available sufficient liquidity to support its future operations.
The Company issues investment grade commercial paper directly and through a
$350.0 million program with recognized dealers. Commercial paper outstanding
at January 31, 2000 was $314.5 million. The Company's commercial paper is
unsecured and matures within 270 days. Increases in commercial paper are
generally offset by decreases in bank and other borrowings, and vice versa.
The Company's current policy is to maintain committed revolving credit
facilities from banks so that the aggregate amount available thereunder
exceeds commercial paper outstanding.
8
<PAGE>
At January 31, 2000, the Company had $422.5 million of committed unsecured
revolving credit facilities with various banks including $205.0 million that
expire after one year and $217.5 million that expire within one year. At
January 31, 2000, the Company had $31.3 million of borrowings outstanding
under credit facilities expiring after one year.
In September 1999, the Company issued $50.0 million of senior term notes due
in September 2002.
YEAR 2000
As of the date of this filing, the Company has not experienced any material
business interruptions resulting from the Year 2000 issue. The Company will
continue to monitor its information technology systems for possible future
interruptions.
FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Operations and Financial
Condition contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
involve risks, uncertainties and assumptions due to their subjective nature.
Therefore, actual outcomes and results could differ materially from those
anticipated by such forward-looking statements due to the impact of many
factors beyond the Company's control, including economic, geographic and
industry conditions, availability of funding sources, market risk from
fluctuations in interest rates, prepayments, competition and changes in laws
or regulations.
PART II
Item 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Stockholders held on December 14, 1999, the
following matters were voted upon:
The following nominees were elected to the Board of Directors:
Number of Votes
Nominee For Withheld
------------------------- ---------- --------
Lawrence B. Fisher 13,729,197 11,370
William C. MacMillen, Jr. 13,734,992 5,575
Bernard G. Palitz 13,728,027 12,540
Clarence Y. Palitz, Jr. 13,728,027 12,540
Michael C. Palitz 13,729,207 11,360
Paul R. Sinsheimer 13,729,397 11,170
H. E. Timanus 13,735,072 5,495
The reappointment of Eisner & Lubin LLP as the independent public accounting
firm to audit the Company's financial statements for the fiscal year ending
July 31, 2000 was ratified by a vote of 13,715,027 shares for, 24,525 shares
against and 1,015 shares abstained.
9
<PAGE>
Item 6
EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
3.6 - Restated By-laws of the Registrant as amended through March 7,
2000
10.26- Deferred Compensation Agreement dated March 7, 2000 between the
Registrant and Clarence Y. Palitz, Jr.
27 - Financial Data Schedule (EDGAR version only)
(b) Reports on Form 8-K
The Company filed a report on Form 8-K dated February 2, 2000 reporting,
under Item 5, the announcement that Clarence Y. Palitz, Jr. retired from
his management position as CEO effective February 2, 2000.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FINANCIAL FEDERAL CORPORATION
-----------------------------
(Registrant)
By: /s/ Michael C. Palitz
----------------------------
Executive Vice President and
Chief Financial Officer
By: /s/ David H. Hamm
----------------------------
Controller and Assistant
Treasurer
March 15, 2000
(Date)
11
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit No. Exhibits
- ----------- --------
3.6 Restated By-laws of the Registrant as amended through March 7,
2000
10.26 Deferred Compensation Agreement dated March 7, 2000 between the
Registrant and Clarence Y. Palitz, Jr.
27 Financial Data Schedule (EDGAR version only)
12
<PAGE>
AMENDED AND RESTATED BY-LAWS
OF
FINANCIAL FEDERAL CORPORATION
[DATED AS OF MARCH 7, 2000]
ARTICLE I
Stockholders
SECTION 1. Annual Meeting. The annual meeting of the stockholders of
the Corporation shall be held on such date, at such time and at such place
within or without the State of Nevada as may be designated by the Board of
Directors, for the purpose of electing Directors and for the transaction of
such other business as may be properly brought before the meeting.
SECTION 2. Special Meetings. Except as otherwise provided in the
Articles of Incorporation, a special meeting of the stockholders of the
Corporation may be called at any time by the Board of Directors, the Chairman
of the Board, Chief Executive Officer or the President and shall be called by
the Chairman of the Board, Chief Executive Officer, the President or the
Secretary at the request in writing of stockholders holding together at least
twenty-five percent of the number of shares of stock outstanding and entitled
to vote at such meeting. Any special meeting of the stockholders shall be held
on such date, at such time and at such place within or without the State of
Nevada as the Board of Directors or the officer calling the meeting may
designate. At a special meeting of the stockholders, no business shall be
transacted and no corporate action shall be taken other than that stated in the
notice of the meeting unless all of the stockholders are present in person or
by proxy, in which case any and all business may be transacted at the meeting
even though the meeting is held without notice.
SECTION 3. Notice of Meetings. Except as otherwise provided in these
By-Laws or by law, a written notice of each meeting of the stockholders shall
be given not less than ten (10) nor more than sixty (60) days before the date
of the meeting to each stockholder of the Corporation entitled to vote at such
meeting at his address as it appears on the records of the Corporation. The
notice shall state the place, date and hour of the meeting and, in the case of
a special meeting, the purpose or purposes for which the meeting is called.
SECTION 4. Quorum. At any meeting of the stockholders, the holders of
a majority in number of the total outstanding shares of stock of the
Corporation entitled to vote at such meeting, present in person or represented
by proxy, shall constitute a quorum of the stockholders for all purposes,
unless the representation of a larger number of shares shall be required by
law, by the Articles of Incorporation or by these By-Laws, in which case the
representation of the number of shares so required shall constitute a quorum;
provided that at any meeting of the stockholders at which the holders of any
class of stock of the Corporation shall be entitled to vote separately as a
class, the holders of a majority in number of the total outstanding shares of
such class, present in person or represented by proxy, shall constitute a
quorum for purposes of such class vote unless the representation of a larger
number of shares of such class shall be required by law, by the Articles of
Incorporation or by these By-Laws.
SECTION 5. Adjourned Meetings. Whether or not a quorum shall be
present in person or represented at any meeting of the stockholders, the
holders of a majority in number of the shares of stock of the Corporation
present in person or represented by proxy and entitled to vote at such meeting
may adjourn from time to time; provided, however, that if the holders of any
class of stock of the Corporation are entitled to vote separately as a class
upon any matter at such meeting, any adjournment of the meeting in respect of
action by such class upon such matter shall be determined by the holders of a
majority of the shares of such class present in person or represented by proxy
and entitled to vote at such meeting. When a meeting is adjourned to another
time or place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the stockholders, or the holders of any class
of stock entitled to vote separately as a class, as the case may be, may
transact any business which might have been transacted by them at the original
meeting. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the adjourned meeting.
SECTION 6. Organization. The Chairman of the Board or, in his absence,
the Chief Executive Officer, or in his absence, the President shall call all
meetings of the stockholders to order, and shall act as Chairman of such
meetings. In the absence of the Chairman of the Board, the Chief Executive
Officer and the President, the holders of a majority in number of the shares of
stock of the Corporation present in person or represented by proxy and entitled
to vote at such meeting shall elect a Chairman.
The Secretary of the Corporation shall act as Secretary of all meetings of
the stockholders; but in the absence of the Secretary, the Chairman may appoint
any person to act as Secretary of the meeting. It shall be the duty of the
Secretary to prepare and make, at least ten days before every meeting of
stockholders, a complete list of stockholders entitled to vote at such meeting,
arranged in alphabetical order and showing the address of each stockholder and
the number of shares registered in the name of each stockholder. Such list
shall be open, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting or, if not so
specified, at the place where the meeting is to be held, for the ten days next
preceding the meeting, to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, and shall be produced
and kept at the time and place of the meeting during the whole time thereof and
subject to the inspection of any stockholder who may be present.
SECTION 7. Voting. Except as otherwise provided in the Articles of
Incorporation or by law, each stockholder shall be entitled to one vote for
each share of the capital stock of the Corporation registered in the name of
such stockholder upon the books of the Corporation. Each stockholder entitled
to vote at a meeting of stockholders or to express consent or dissent to
corporate action in writing without a meeting may authorize another person or
persons to act for him by proxy, but no such proxy shall be voted or acted upon
after three years from its date, unless the proxy provides for a longer period.
When directed by the presiding officer or upon the demand of any stockholder,
the vote upon any matter before a meeting of stockholders shall be by ballot.
Except as otherwise provided by law or by the Articles of Incorporation,
Directors shall be elected by a plurality of the votes cast at a meeting of
stockholders by the stockholders entitled to vote in the election and, whenever
any corporate action, other than the election of Directors is to be taken, it
shall be authorized by a majority of the votes cast at a meeting of
stockholders by the stockholders entitled to vote thereon.
Shares of the capital stock of the Corporation belonging to the Corporation
or to another corporation, if a majority of the shares entitled to vote in the
election of directors of such other corporation is held, directly or
indirectly, by the Corporation, shall neither be entitled to vote nor be
counted for quorum purposes.
SECTION 8. Inspectors. When required by law or directed by the
presiding officer or upon the demand of any stockholder entitled to vote, but
not otherwise, the polls shall be opened and closed, the proxies and ballots
shall be received and taken in charge, and all questions touching the
qualification of voters, the validity of proxies and the acceptance or
rejection of voters shall be decided at any meeting of the stockholders by two
or more Inspectors who may be appointed by the Board of Directors before the
meeting, or if not so appointed, shall be appointed by the presiding officer at
the meeting. If any person so appointed fails to appear or act, the vacancy
may be filled by appointment in like manner.
SECTION 9. Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided in the Articles of Incorporation, any action required to be
taken or which may be taken at any annual or special meeting of the
stockholders of the Corporation, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of any such corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE II
Board of Directors
SECTION 1. Number and Term of Office. The business and affairs of the
Corporation shall be managed by or under the direction of a Board consisting of
five or more Directors, who need not be stockholders of the Corporation. The
Directors shall, except as hereinafter otherwise provided for filling
vacancies, be elected at the annual meeting of stockholders, and shall hold
office until their respective successors are elected and qualified or until
their earlier resignation or removal. The number of Directors may be altered
from time to time by amendment of these By-Laws.
SECTION 2. Election, powers and duties of the Chairman of the Board.
The Directors may elect a Chairman of the Board. The Chairman of the Board
shall preside at all meetings of the stockholders and at all meetings of the
Board of Directors and shall have such other powers and perform such other
duties as may from time to time be assigned to him by these By-Laws or by the
Board of Directors.
SECTION 3. Removal, Vacancies and Additional Directors. The
stockholders may, at any special meeting the notice of which shall state that
it is called for that purpose, remove, with or without cause, any Director and
fill the vacancy; provided that whenever any Director shall have been elected
by the holders of any class of stock of the Corporation voting separately as a
class under the provisions of the Articles of Incorporation, such Director may
be removed and the vacancy filled only by the holders of that class of stock
voting separately as a class. Vacancies caused by any such removal and not
filled by the stockholders at the meeting at which such removal shall have been
made, or any vacancy caused by the death or resignation of any Director or for
any other reason, and any newly created directorship resulting from any
increase in the authorized number of Directors, may be filled by the
affirmative vote of a majority of the Directors then in office, although less
than a quorum, and any Director so elected to fill any such vacancy or newly
created directorship shall hold office until his successor is elected and
qualified or until his earlier resignation or removal.
When one or more Directors shall resign effective at a future date, a
majority of the Directors then in office, including those who have so resigned,
shall have power to fill such vacancy or vacancies, the vote thereon to take
effect when such resignation or resignations shall become effective, and each
Director so chosen shall hold office as herein provided in connection with the
filling of the vacancies.
SECTION 4. Place of Meeting. The Board of Directors may hold its
meetings in such place or places in the State of Nevada or outside the State of
Nevada as the Board from time to time shall determine.
SECTION 5. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such times and places as the Board from time to time
by resolution shall determine. No notice shall be required for any regular
meeting of the Board of Directors; but a copy of every resolution fixing or
changing the time or place of regular meetings shall be mailed to every
Director at least five days before the first meeting held in pursuance thereof.
SECTION 6. Special Meetings. Special meetings of the Board of
Directors shall be held whenever called by direction of the Chairman of the
Board, the Chief Executive Officer or the President or by any two of the
Directors then in office.
Notice of the day, hour and place of holding of each special meeting shall
be given by mailing the same at least two days before the meeting or by causing
the same to be transmitted by telegraph, cable or wireless at least one day
before the meeting to each Director. At any meeting at which every Director
shall be present, even though without any notice, any business may be
transacted, including the amendment of these By-Laws.
SECTION 7. Quorum. Subject to the provisions of Section 2 of this
Article II, a majority of the members of the Board of Directors in office (but
in no case less than one-third of the total number of Directors nor less than
two Directors) shall constitute a quorum for the transaction of business and
the vote of the majority of the Directors present at any meeting of the Board
of Directors at which a quorum is present shall be the act of the Board of
Directors. If at any meeting of the Board there is less than a quorum present,
a majority of those present may adjourn the meeting from time to time.
SECTION 8. Organization. The Chairman of the Board or, in his absence,
the Chief Executive Officer or, in his absence, the President shall preside at
all meetings of the Board of Directors. In the absence of the Chairman of the
Board, the Chief Executive Officer and the President, a Chairman shall be
elected from the Directors present. The Secretary of the Corporation shall act
as Secretary of all meetings of the Directors; but in the absence of the
Secretary, the Chairman may appoint any person to act as Secretary of the
meeting.
SECTION 9. Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the Directors of the Corporation. The
Board may designate one or more Directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member. Any such committee, to the extent
provided by resolution passed by a majority of the whole Board, shall have and
may exercise all the powers and authority of the Board of Directors in the
management of the business and the affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which may
require it; but no such committee shall have the power of authority in
reference to amending the Articles of Incorporation, adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending these By-Laws; and unless such
resolution, these By-Laws, or the Certificate of Incorporation expressly so
provide, no such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock.
SECTION 10. Conference Telephone Meetings. Unless otherwise restricted by
the Articles of Incorporation or by these By-Laws, the members of the Board of
Directors or any committee designated by the Board, may participate in a
meeting of the Board or such committee, as the case may be, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting.
SECTION 11. Consent of Directors or Committee in Lieu of Meeting. Unless
otherwise restricted by the Articles of Incorporation or by these By-Laws, any
action required or permitted to be taken at any meeting of the Board of
Directors, or of any committee thereof, may be taken without a meeting if all
members of the Board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings
of the Board or committee, as the case may be.
ARTICLE III
Officers
SECTION 1. Officers. The officers of the Corporation shall be a Chief
Executive Officer, a President, one or more Vice Presidents, a Secretary and a
Treasurer, and such additional officers, if any, as shall be elected by the
Board of Directors pursuant to the provisions of Section 7 of this Article III.
The Chief Executive Officer, the President, one or more Vice Presidents, the
Secretary and the Treasurer shall be elected by the Board of Directors at its
first meeting after each annual meeting of the stockholders. The failure to
hold such election shall not of itself terminate the term of office of any
officer. All officers shall hold office at the pleasure of the Board of
Directors. Any officer may resign at any time upon written notice to the
Corporation. Officers may, but need not, be Directors. Any number of offices
may be held by the same person.
All officers, agents and employees shall be subject to removal, with or
without cause, at any time by the Board of Directors. The removal of an
officer without cause shall be without prejudice to his contract rights, if
any. The election or appointment of an officer shall not of itself create
contract rights. All agents and employees other than officers elected by the
Board of Directors shall also be subject to removal, with or without cause, at
any time by the officer appointing them.
Any vacancy caused by the death of any officer, his resignation, his
removal, or otherwise, may be filled by the Board of Directors, and any officer
so elected shall hold office at the pleasure of the Board of Directors.
In addition to the powers and duties of the officers of the Corporation as
set forth in these By-Laws, the officers shall have such authority and shall
perform such duties as from time to time may be determined by the Board of
Directors.
SECTION 2. Powers and duties of the Chief Executive Officer. The Chief
Executive Officer shall be the chief executive officer of the Corporation and
shall, subject to the direction of the Board of Directors, have general
supervision and control of its business. In the absence of the Chairman of
the Board, the Chief Executive Officer, shall preside at all meetings of the
stockholders and at all meetings of the Board of Directors. The Chief
Executive Officer shall have general supervision and direction of all of the
officers, employees and agents of the Corporation.
SECTION 3. Powers and duties of the President. The President, subject
to the control of the Board of Directors and the Chief Executive Officer of
the Corporation, shall have general charge and control of all the
Corporation's business, affairs and operations and shall perform all duties
incident to the office of President. In the absence of the Chairman of the
Board and the Chief Executive Officer, the President shall preside at all
meetings of the stockholders and at all meetings of the Board of Directors and
shall have such other powers and perform such other duties as may, from time
to time, be assigned to him by these By-Laws or by the Board of Directors.
The President, subject to the control of the Board of Directors and the Chief
Executive Officer, shall have general supervision and direction of all of the
officers, employees and agents of the Corporation.
SECTION 4. Powers and duties of the Vice Presidents. Each Vice
President shall perform all duties incident to the office of Vice President and
shall have such other powers and perform such other duties as may from time to
time be assigned to him by these By-Laws or by the Board of Directors, the
Chairman of the Board, the Chief Executive Officer or the President.
SECTION 5. Powers and duties of the Secretary. The Secretary shall
keep the minutes of all meetings of the Board of Directors and the minutes of
all meetings of the stockholders in books provided for that purpose; he shall
attend to the giving or serving of all notices of the Corporation; he shall
have custody of the corporate seal of the Corporation and shall affix the same
to such documents and other papers as the Board of Directors, the Chief
Executive Officer or the President shall authorize and direct; he shall have
charge of the stock certificate books, transfer books and stock ledgers and
such other books and papers as the Board of Directors, the Chief Executive
Officer or the President shall direct, all of which shall at all reasonable
times be open to the examination of any Director, upon application, at the
office of the Corporation during business hours; and he shall perform all
duties incident to the office of Secretary and shall also have such other
powers and shall perform such other duties as may from time to time be assigned
to him by these By-Laws or the Board of Directors, the Chairman of the Board,
the Chief Executive Officer or the President.
SECTION 6. Powers and duties of the Treasurer. The Treasurer shall
have custody of, and when proper shall pay out, disburse or otherwise dispose
of, all funds and securities of the Corporation which may have come into his
hands; he may endorse on behalf of the Corporation for collection checks, notes
and other obligations and shall deposit the same to the credit of the
Corporation in such bank or banks or depositary or depositaries as the Board of
Directors may designate; he shall sign all receipts and vouchers for payments
made to the Corporation; he shall enter or cause to be entered regularly in the
books of the Corporation kept for the purpose full and accurate accounts of all
moneys received or paid or otherwise disposed of by him and whenever required
by the Board of Directors, the Chief Executive Officer or the President shall
render statements of such accounts; he shall, at all reasonable times, exhibit
his books and accounts to any Director of the Corporation upon application at
the office of the Corporation during business hours; and he shall perform all
duties incident to the office of the Treasurer and shall also have such other
powers and shall perform such other duties as may from time to time be assigned
to him by these By-Laws or by the Board of Directors, the Chairman of the
Board, the Chief Executive Officer or the President.
SECTION 7. Additional Officers. The Board of Directors may from time
to time elect such other officers (who may but need not be Directors),
including a Controller, Assistant Treasurers, Assistant Secretaries and
Assistant Controllers, as the Board may deem advisable and such officers shall
have such authority and shall perform such duties as may from time to time be
assigned to them by the Board of Directors, the Chairman of the Board, the
Chief Executive Officer or the President.
The Board of Directors may from time to time by resolution delegate to any
Assistant Treasurer or Assistant Treasurers any of the powers or duties herein
assigned to the Treasurer; and may similarly delegate to any Assistant
Secretary or Assistant Secretaries any of the powers or duties herein assigned
to the Secretary.
SECTION 8. Giving of Bond by Officers. All officers of the
Corporation, if required to do so by the Board of Directors, shall furnish
bonds to the Corporation for the faithful performance of their duties, in such
penalties and with such conditions and security as the Board shall require.
SECTION 9. Voting Upon Stocks. Unless otherwise ordered by the Board
of Directors, the Chief Executive Officer, the President or any Vice President
shall have full power and authority on behalf of the Corporation to attend and
to act and to vote, or in the name of the Corporation to execute proxies to
vote, at any meetings of stockholders of any corporation in which the
Corporation may hold stock, and at any such meetings shall possess and may
exercise, in person or by proxy, any and all rights, powers and privileges
incident to the ownership of such stock. The Board of Directors may from time
to time, by resolution, confer like powers upon any other person or persons.
SECTION 10. Compensation of Officers. The officers of the Corporation
shall be entitled to receive such compensation for their services as shall from
time to time be determined by the Board of Directors.
ARTICLE IV
Stock-Seal-Fiscal Year
SECTION 1. Certificates for Shares of Stock. The certificates for
shares of stock of the Corporation shall be in such form, not inconsistent with
the Articles of Incorporation, as shall be approved by the Board of Directors.
All certificates shall be signed by the Chief Executive Officer, the President
or a Vice President and by the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer, and shall not be valid unless so signed.
In case any officer or officers who shall have signed any such certificate
or certificates shall cease to be such officer or officers of the Corporation,
whether because of death, resignation or otherwise, before such certificate or
certificates shall have been delivered by the Corporation, such certificate or
certificates may nevertheless be issued and delivered as though the person or
persons who signed such certificate or certificates had not ceased to be such
officer or officers of the Corporation.
All certificates for shares of stock shall be consecutively numbered as the
same are issued. The name of the person owning the shares represented thereby
with the number of such shares and the date of issue thereof shall be entered
on the books of the Corporation.
Except as hereinafter provided, all certificates surrendered to the
Corporation for transfer shall be cancelled, and no new certificates shall be
issued until former certificates for the same number of shares have been
surrendered and cancelled.
SECTION 2. Lost, Stolen or Destroyed Certificates. Whenever a person
owning a certificate for shares of stock of the Corporation alleges that it has
been lost, stolen or destroyed, he shall file in the office of the Corporation
an affidavit setting forth, to the best of his knowledge and belief, the time,
place and circumstances of the loss, theft or destruction, and, if required by
the Board of Directors, a bond of indemnity or other indemnification sufficient
in the opinion of the Board of Directors to indemnify the Corporation and its
agents against any claim that may be made against it or them on account of the
alleged loss, theft or destruction of any such certificate or the issuance of a
new certificate in replacement therefor. Thereupon the Corporation may cause
to be issued to such person a new certificate in replacement for the
certificate alleged to have been lost, stolen or destroyed. Upon the stub of
every new certificate so issued shall be noted the fact of such issue and the
number, date and the name of the registered owner of the lost, stolen or
destroyed certificate in lieu of which the new certificate is issued.
SECTION 3. Transfer of Shares. Shares of stock of the Corporation
shall be transferred on the books of the Corporation by the holder thereof, in
person or by his attorney duly authorized in writing, upon surrender and
cancellation of certificates for the number of shares of stock to be
transferred, except as provided in the preceding section.
SECTION 4. Regulations. The Board of Directors shall have power and
authority to make such rules and regulations as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
stock of the Corporation.
SECTION 5. Record Date. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting or entitled to receive payment of any
dividend or other distribution or allotment or any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action, as the case may be, the Board of
Directors may fix, in advance, a record date, which shall not be more than
sixty (60) nor less than ten (10) days before the date of such meeting, nor
more than sixty (60) days prior to any other action.
If no record date is fixed, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held; the record date for determining stockholders
entitled to express consent to corporate action in writing without a meeting,
when no prior action by the Board of Directors is necessary, shall be the day
on which the first written consent is expressed; and the record date for
determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of
the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
SECTION 6. Dividends. Subject to the provisions of the Articles of
Incorporation, the Board of Directors shall have power to declare and pay
dividends upon shares of stock of the Corporation, but only out of funds
available for the payment of dividends as provided by law.
Subject to the provisions of the Articles of Incorporation, any dividends
declared upon the stock of the Corporation shall be payable on such date or
dates as the Board of Directors shall determine. If the date fixed for the
payment of any dividend shall in any year fall upon a legal holiday, then the
dividend payable on such date shall be paid on the next day not a legal
holiday.
SECTION 7. Corporate Seal. The Board of Directors shall provide a
suitable seal, containing the name of the Corporation, which seal shall be kept
in the custody of the Secretary. A duplicate of the seal may be kept and be
used by any officer of the Corporation designated by the Board, the Chief
Executive Officer or the President.
SECTION 8. Fiscal Year. The fiscal year of the Corporation shall be
such fiscal year as the Board of Directors from time to time by resolution
shall determine.
ARTICLE V
Miscellaneous Provisions
SECTION 1. Check, Notes, Etc. All checks, drafts, bills of exchange,
acceptances, notes or other obligations or orders for the payment of money
shall be signed and, if so required by the Board of Directors, countersigned by
such officers of the Corporation and/or other persons as the Board of Directors
from time to time shall designate.
Checks, drafts, bills of exchange, acceptances, notes, obligations and
orders for the payment of money made payable to the Corporation may be endorsed
for deposit to the credit of the Corporation with a duly authorized depositary
by the Treasurer, or otherwise as the Board of Directors may from time to time,
by resolution, determine.
SECTION 2. Loans. No loans and no renewals of any loans shall be
contracted on behalf of the Corporation except as authorized by the Board of
Directors. When authorized so to do, any officer or agent of the Corporation
may effect loans and advances for the Corporation from any bank, trust company
or other institution or from any firm, corporation or individual, and for such
loans and advances may make, execute and deliver promissory notes, bonds or
other evidences of indebtedness of the Corporation. When authorized so to do,
any officer or agent of the Corporation may pledge, hypothecate or transfer, as
security for the payment of any and all loans, advances, indebtedness and
liabilities of the Corporation, any and all stocks, securities and other
personal property at any time held by the Corporation, and to that end may
endorse, assign and deliver the same. Such authority may be general or
confined to specific instances.
SECTION 3. Waivers of Notice. Whenever any notice whatever is required
to be given by law, by the Certificate of Incorporation or by these By-Laws to
any person or persons, a waiver thereof in writing, signed by the person or
persons entitled to the notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
SECTION 4. Offices Outside of Nevada. Except as otherwise required by
the laws of the State of Nevada, the Corporation may have an office or offices
and keep its books, documents and papers outside of the State of Nevada at such
place or places as from time to time may be determined by the Board of
Directors, the Chief Executive Officer or the President.
SECTION 5. Indemnification of Directors, Officers and Employees. The
Corporation shall indemnify to the full extent authorized by law any person
made or threatened to be made a party to an action, suit or proceeding, whether
criminal, civil, administrative or investigative, by reason of the fact that
he, his testator or intestate is or was a director, officer, employee or agent
of the Corporation or is or was serving, at the request of the Corporation, as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise.
ARTICLE VI
Amendments
These By-Laws and any amendment thereof may be altered, amended or repealed,
or new By-Laws may be adopted, by the Board of Directors at any regular or
special meeting by the affirmative vote of a majority of all of the members of
the Board, provided in the case of any special meeting at which all of the
members of the Board are not present, that the notice of such meeting shall
have stated that the amendment of these By-Laws was one of the purposes of the
meeting; but these By-Laws and any amendment thereof, including the By-Laws
adopted by the Board of Directors, may be altered, amended or repealed and
other By-Laws may be adopted by the holders of a majority of the total
outstanding stock of the Corporation entitled to vote at any annual meeting or
at any special meeting, provided, in the case of any special meeting, that
notice of such proposed alteration, amendment, repeal or adoption is included
in the notice of the meeting.
<PAGE>
DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT, made as of the 7th day of March, 2000, by and between
Financial Federal Corporation (the "Company") and Clarence Y. Palitz, Jr. (the
"Employee");
W I T N E S S E T H :
WHEREAS, Employee is an employee of the Company; and
WHEREAS, the Employee and the Company desire to set forth in writing
herein the terms and conditions of their agreement with respect to the payment
to Employee, on a deferred basis, of the deferred compensation held by the
Company for the Employee's past service to the Company through and including
March 7, 2000.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Company acknowledges that the Employee has deferred salary
with the Company as of March 7, 2000 in the amount of $2,266,722.77 ("deferred
compensation"). That deferred compensation earned by the Employee for his past
service to the Company through March 7, 2000, shall be deferred and, in lieu of
current payment thereof, the Company shall pay to the Employee the amounts
listed below on the respective dates listed below unless paid sooner pursuant
to this Agreement;
(i) $300,000.00 on April 1, 2001
(ii) $325,000.00 on April 1, 2002
(iii) $350,000.00 on April 1, 2003
(iv) $375,000.00 on April 1, 2004
(v) $400,000.00 on April 1, 2005
(vi) $450,000.00 on April 1, 2006
(vii) $500,000.00 on April 1, 2007
(viii) $408,950.71 on April 1, 2008
2. In the event of Employee's death, then payments of amounts due
hereunder shall be made first to the Employee's Beneficiary, Anka K. Palitz,
the Employee's Wife, or if she is not then alive, to the Employee's Estate.
3. If, pursuant to paragraphs "2", "4" or "6" of this Agreement,
payment of any amount provided for in paragraph "1" of this Agreement is to be
made earlier than the due date set forth in such paragraph "1", the amount to
be paid is the amount as provided in paragraph "1" of this Agreement,
discounted at the rate of 6.60% per annum, compounded monthly, from the date
any such payments would have been due (as set forth in paragraph "1" of the
Agreement) to the actual date of payment. For purposes of illustration, a
payment of $500.00 would be due with respect to a $653.09 payment which would
have been due and payable forty-eight (48) months later.
4. If any federal, state or other tax law or regulation or any
determination by any taxing authority with respect to the Employee would cause
any amounts due pursuant to this Agreement to become taxable to the Employee
before payment thereof, except for taxes owing due to FICA, FUTA, or other
employment taxes, then the Employee, irrespective and notwithstanding any other
provisions of this Agreement, shall have the right, upon written notice to the
Company, to require payment of any of the installments or portions thereof
specified in paragraph "1" of this Agreement. The notice shall specify a date
within ninety (90) days of such notice when payment is to be made. The payment
shall be made in an amount calculated as set forth in paragraph "3" of this
Agreement.
5. Employee shall have no right to pledge, hypothecate, assign or
otherwise dispose of any amounts due or to become due hereunder. Employee's
right to receive payments under this Agreement shall be no greater than those
of any other unsecured creditor of the Company.
6. Should, at any time, more than 50 percent of the combined
voting power of the Company's then outstanding voting securities be held by any
person, entity or group of persons, directly or indirectly, within the meaning
of section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended
("Act"), other than those persons, entities or groups of persons owning over 14
percent of the combined voting power as of the date hereof, or a liquidation or
dissolution of the Company or of the sale of all or substantially all of the
Company's assets, then Employee may, upon 30 days notice, require that the
Company pay to Employee the amount payable pursuant to paragraph "1" of this
Agreement on the first day of the first month following such notice in an
amount calculated as set forth in paragraph "3" of this Agreement unless the
new person, entity or group of persons guarantee the obligations due hereunder.
7. During the term of this Agreement, the Company shall furnish to
Employee, no later than the 30th day of each fiscal year, a schedule setting
forth in reasonable detail the changes occurring during the preceding year and
the balance as at the end of the preceding year with respect to the amount
accrued by the Company on account of all sums payable hereunder to Employee.
8. Employee shall have the right at any time, by written notice to
the Company, to change the Beneficiary named in paragraph "2" hereof, with such
notice acknowledged in writing by the Company.
9. This Agreement contains the entire understanding of the parties
hereto relating to the payments described herein; however, this Agreement shall
not affect any other salary nor any other benefit that Employee may be or may
become entitled to, except as required by law. This written agreement
represents the entire final agreement between the parties relating to the
payments described herein and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties. This agreement cannot be
amended, modified or changed except by a writing signed by both parties. Only
an officer of the Company with the title of Senior Vice President or a more
senior officer may accept this agreement or agree to any amendments,
modifications or changes.
10. This Agreement shall be governed and construed in accordance
with the laws of the State of New York. If any provision of this Agreement is
rendered or declared invalid, illegal or ineffective by any existing or
subsequently enacted legislation or decision of a court of competent
jurisdiction, such legislation or decision shall only invalidate such provision
to the extent so rendered or declared invalid, illegal or ineffective in such
jurisdiction only and shall not impair, invalidate or nullify the remainder of
this Agreement which shall remain in full force and effect.
11. Any controversy or claim arising out of or relating to this
Agreement or any alleged breach thereof shall be settled by arbitration in New
York City in accordance with the rules of the American Arbitration Association
governing contract disputes and judgment upon the award rendered by any
arbitrator(s) may be entered in any court of appropriate jurisdiction; the
Federal Arbitration Act and the applicable laws of the State of New York shall
govern.
IN WITNESS WHEREOF, Company has caused this Agreement to be executed by
its duly authorized officers and Employee has hereunto set his hand on the day
and year first above written.
FINANCIAL FEDERAL CORPORATION
BY:
---------------------------------
(Title)
EMPLOYEE:
---------------------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF FINANCIAL FEDERAL CORPORATION AND SUBSIDIARIES
AS OF JANUARY 31, 2000 AND THE RELATED CONSOLIDATED STATEMENT OF OPERATIONS
AND RETAINED EARNINGS FOR THE SIX MONTH PERIOD THEN ENDED AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-2000
<PERIOD-END> JAN-31-2000
<CASH> 5774
<SECURITIES> 0
<RECEIVABLES> 1015081
<ALLOWANCES> 17273
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1007415
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 7445
<OTHER-SE> 150728
<TOTAL-LIABILITY-AND-EQUITY> 1007415
<SALES> 0
<TOTAL-REVENUES> 52087
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1225
<INTEREST-EXPENSE> 24184
<INCOME-PRETAX> 21189
<INCOME-TAX> 8202
<INCOME-CONTINUING> 12987
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6240
<EPS-BASIC> .87
<EPS-DILUTED> .74
<FN>
<F1>THE FINANCIAL STATEMENTS INCLUDE A NONCLASSIFIED BALANCE SHEET
</FN>
</TABLE>
