<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C., 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-11011
THE FINOVA GROUP INC.
(Exact name of registrant as specified in its charter)
DELAWARE 86-0695381
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1850 North Central Ave., P. O. Box 2209, Phoenix, AZ 85002-2209
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 602/207-6900
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 such shorter period that the Registrant was
required to file such report), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
------- -------
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of November 1, 1995, 27,264,344 shares of Common Stock ($0.01 par value) were
outstanding.
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THE FINOVA GROUP INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I FINANCIAL INFORMATION.
Item 1. Financial Statements.
Condensed Consolidated Financial Information:
Condensed Consolidated Balance Sheet - September 30, 1995 and
December 31, 1994 1
Condensed Consolidated Income Statement - Nine Months Ended
September 30, 1995 and 1994 2
Condensed Consolidated Statement of Cash Flows - Nine Months
Ended September 30, 1995 and 1994 3
Notes to Interim Condensed Consolidated Financial Information 4 - 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 - 10
PART II OTHER INFORMATION.
Item 6. Exhibits and Reports on Form 8-K 11 - 12
SIGNATURES 13
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE FINOVA GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS: 1995 1994
------------- ------------
<S> <C> <C>
CASH AND CASH EQUIVALENTS $ 20,293 $ 49,875
INVESTMENT IN FINANCING TRANSACTIONS:
Loans and other financing contracts, less unearned income of
$316,834 and $249,550, respectively 4,784,209 4,034,648
Direct financing leases 864,461 774,834
Operating leases 431,297 412,782
Leveraged leases 323,760 287,518
Factored receivables 205,493 157,862
------------- ------------
6,609,220 5,667,644
Less reserve for possible credit losses (119,602) (109,245)
------------- ------------
Investment in financing transactions - net 6,489,618 5,558,399
OTHER ASSETS AND DEFERRED CHARGES 275,698 226,057
------------- ------------
$ 6,785,609 $ 5,834,331
============= ============
LIABILITIES:
Accounts payable and accrued expenses $ 374,412 $ 301,838
Senior debt 5,403,323 4,573,354
Deferred income taxes 202,561 188,887
------------- ------------
5,980,296 5,064,079
------------- ------------
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value, 100,000,000 shares
authorized, 28,422,000 shares issued 284 284
Additional capital 686,828 688,042
Retained income 163,900 109,830
Cumulative translation adjustments (4,368) (4,726)
Common stock in treasury, 1,178,000 and 745,000 shares,
respectively (41,331) (23,178)
------------- ------------
805,313 770,252
------------- ------------
$ 6,785,609 $ 5,834,331
============= ============
</TABLE>
See notes to interim consolidated financial information.
1
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THE FINOVA GROUP INC.
CONDENSED CONSOLIDATED INCOME STATEMENT
(Dollars in Thousands, except per share data)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
---------------------------------- -------------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest and income
earned from financing
transactions $ 171,004 $ 129,674 $ 489,335 $ 306,797
Operating lease income 21,283 17,975 62,402 36,704
----------- ----------- ----------- -----------
Total interest and income
earned 192,287 147,649 551,737 343,501
Interest expense 93,136 65,881 267,857 152,662
Depreciation 12,980 11,345 38,891 21,626
----------- ----------- ----------- -----------
Interest margins earned 86,171 70,423 244,989 169,213
Provision for possible
credit losses 10,800 2,215 28,800 10,353
----------- ----------- ----------- -----------
Net interest margins
earned 75,371 68,208 216,189 158,860
Gains on sale of assets 4,646 1,169 11,699 5,672
----------- ----------- ----------- -----------
80,017 69,377 227,888 164,532
Selling, administrative and
other operating expenses 39,583 32,253 112,578 78,870
----------- ----------- ----------- -----------
INCOME BEFORE
INCOME TAXES 40,434 37,124 115,310 85,662
Income taxes 15,284 14,867 44,163 34,711
----------- ----------- ----------- -----------
NET INCOME $ 25,150 $ 22,257 $ 71,147 $ 50,951
=========== =========== =========== ===========
EARNINGS PER COMMON AND
EQUIVALENT SHARE $ 0.91 $ 0.78 $ 2.56 $ 2.10
=========== =========== =========== ===========
DIVIDENDS DECLARED
PER COMMON SHARE $ 0.22 $ 0.18 $ 0.62 $ 0.54
=========== =========== =========== ===========
AVERAGE
OUTSTANDING
COMMON AND
EQUIVALENT SHARES 27,771,000 28,620,000 27,845,000 24,284,000
=========== =========== =========== ===========
</TABLE>
See notes to interim consolidated financial information.
2
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THE FINOVA GROUP INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------------------
OPERATING ACTIVITIES: 1995 1994
------------ -------------
<S> <C> <C>
Net income $ 71,147 $ 51,169
Adjustments to reconcile net income to net cash provided (used)
by operating activities:
Provision for possible credit losses 28,800 10,353
Depreciation and amortization 50,740 27,911
Gains on securitizations and sale of assets (11,699) (5,672)
Deferred income taxes 13,674 13,376
Change in assets and liabilities, net of effects from subsidiaries
purchased 15,571 (107,836)
------------ -------------
Net cash provided (used) by operating activities 168,233 (10,699)
------------ -------------
INVESTING ACTIVITIES:
Proceeds from sale of assets 48,191 22,840
Proceeds from assets securitized 115,507
Principal collections on financing transactions 770,426 639,340
Expenditures for financing transactions (1,379,847) (973,086)
Net change in short-term financing transactions (311,248) (147,841)
Purchase of Ambassador Factors (246,285)
Purchase of TriCon (344,212)
Purchase of portfolios (127,045)
Other 1,675 1,109
------------ -------------
Net cash used by investing activities (997,848) (932,628)
------------ -------------
FINANCING ACTIVITIES:
Net borrowings under commercial paper 494,292 1,036,915
Long-term borrowings 825,000 827,550
Repayment of long-term borrowings (489,323) (1,125,609)
Issuance of common stock 233,923
Proceeds from exercise of stock options 3,751
Common stock purchased for treasury (22,760)
Dividends (17,078) (14,342)
Other 6,151 16,760
------------ -------------
Net cash provided by financing activities 800,033 975,197
------------ -------------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (29,582) 31,870
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 49,875 2,859
------------ -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 20,293 $ 34,729
============ =============
</TABLE>
See notes to interim consolidated financial information.
3
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THE FINOVA GROUP INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
NOTE A BASIS OF PREPARATION
The consolidated financial statements present the financial position,
results of operations and cash flows of The FINOVA Group Inc. (formerly known as
GFC Financial Corporation) and its subsidiaries (collectively, "FINOVA" or the
"Company"), including FINOVA Capital Corporation (formerly known as Greyhound
Financial Corporation) and its subsidiaries (collectively, "FINOVA Capital"),
including Ambassador Factors ("Ambassador") acquired on February 14, 1994 and
TriCon Capital ("TriCon") acquired on April 30, 1994. Both Ambassador and TriCon
were merged into FINOVA Capital in 1994. Recognizing the substantial increase in
the Company's size and scope of operations and its use of several names in its
operations, GFC Financial Corporation changed its name to The FINOVA Group Inc.,
and changed its principal operating subsidiary's name from Greyhound Financial
Corporation to FINOVA Capital Corporation, both effective February 1, 1995.
The interim consolidated financial information is unaudited. In the
opinion of management all adjustments, consisting only of normal recurring
accruals, necessary to present fairly the financial position as of September 30,
1995, the results of operations for the quarter and nine months ended September
30, 1995 and 1994 and cash flows for the nine months ended September 30, 1995
and 1994, have been included. Interim results of operations are not necessarily
indicative of the results of operations for the full year.
NOTE B SIGNIFICANT ACCOUNTING POLICIES
The Company adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 114 "Accounting by Creditors for Impairment of a Loan"
("SFAS 114"), as amended by SFAS No. 118 "Accounting by Creditors for Impairment
of a Loan - Income Recognition and Disclosures" ("SFAS 118"), as of January 1,
1995. These statements require that impaired loans be measured based on the
present value of the expected cash flows discounted at the loan's effective
interest rate or the fair value of the collateral, if the loan is collateral
dependent. Under SFAS 114, a loan is considered impaired when, based on current
information and events, it is probable that a creditor will be unable to collect
all amounts due according to the contractual terms of the loan agreement. These
standards do not apply to leasing transactions or to large groups of smaller
balance homogeneous loans. Evaluation for loan impairment is performed as a part
of the portfolio management review process. When a loan is determined to be
impaired, a write- down is taken or an impairment reserve is established based
on the difference between the recorded balance of the loan ("carrying amount")
and the relevant measured value. The total carrying amount of impaired loans was
$98.4 million at September 30, 1995, $18.1 million of which were performing and
$80.3 million of which were nonaccruing. Income is recognized in the same manner
as it is on normal accruing loans. For the nine months ended September 30, 1995,
$1.6 million of income was recognized on the accruing impaired loans. Cash
collected on nonaccruing impaired loans is applied to the carrying amount of the
loans.
Under SFAS 114, in-substance foreclosed assets are accounted for as
loans. Accordingly, effective January 1, 1995, $12.6 million of performing and
$25.3 million of nonaccruing in-substance foreclosed assets were reclassified
from repossessed assets to loans. The Company has elected to account for
troubled debt restructurings, as defined under SFAS No. 15, "Accounting by
Debtors and Creditors for Troubled Debt Restructurings" under SFAS 114.
Accounts are either written-down or written-off when the loss is
considered probable and
4
<PAGE> 7
determinable, after giving consideration to the customer's financial condition
and the value of the underlying collateral, including any guarantees. Impaired
loans were written-down by $11.2 million during the nine months ended September
30, 1995. Reserve levels (including $12 million of accrued liabilities
applicable to securitizations) were not impacted by the adoption of SFAS 114 on
January 1, 1995 and approximated 2.0% of managed assets and 77.8% of
non-earnings at September 30, 1995. Impairment reserves of $17.3 million were
required for $50.8 million of impaired loans, with no impairment reserve being
required for the remaining $47.6 million of impaired loans. The total reserve
for possible credit losses represents management's estimate of the amount
necessary to cover potential losses in the portfolio considering delinquencies,
loss experience and collateral.
NOTE C PORTFOLIO QUALITY
The following table presents a breakdown (by line of business) of the
Company's investment in financing transactions before the reserve for possible
credit losses at the dates indicated.
5
<PAGE> 8
INVESTMENT IN FINANCING TRANSACTIONS
BY LINE OF BUSINESS
SEPTEMBER 30, 1995
(Dollars in Thousands)
<TABLE>
<CAPTION>
Revenue Accruing Nonaccruing
-------------------------------------- -------------------------------------
Repos-
sessed Repos- Leases Total
Original Impaired Assets Impaired sessed & Carrying
Rate (1) (2) (1) Assets Other Amount
-------------------------------------- ------------------------------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Corporate Finance $ 898,535 $ 15,905 $ $ 11,605 $ 335 $ $ 926,380
Transportation Finance (3) 814,244 814,244
Resort Finance 755,752 11,667 6,346 23,518 797,283
Commercial Real Estate Finance 645,288 2,156 43,596 13,106 19,578 988 724,712
Communications Finance 593,522 2,557 18,135 5,863 620,077
Medical Finance 514,909 105 1,225 516,239
Manufacturer and Dealer
Services (4) 407,518 104 23,151 430,773
Commercial Equipment Finance 316,149 3,132 5,177 324,458
Franchise Finance 305,011 7,581 2,359 314,951
Rediscount Finance 303,660 303,660
Commercial Finance 209,254 12,839 222,093
Factoring Services 204,846 647 205,493
Inventory Finance 196,118 414 196,532
Government Finance 105,676 17 105,693
European Finance 63,916 6,075 6,660 76,651
Other 29,761 220 29,981
------------- ----------- --------- ----------- ----------- --------- ------------
TOTAL (4) $ 6,364,159 $ 18,061 $ 57,820 $ 80,309 $ 49,294 $ 39,577 $ 6,609,220
- -------------------- ============= =========== ========= =========== =========== ========= ============
</TABLE>
(1) Total recorded carrying amount of impaired loans was $98.4 million at
September 30, 1995. Of the total impaired loans, $18.1 million were
performing and $80.3 million were nonaccruing. For the period ended
September 30, 1995, $1.6 million of income was recognized on these loans.
Under SFAS 114, in-substance foreclosed assets should be accounted for as
loans. Accordingly, effective January 1, 1995, $12.6 million of
performing and $25.3 million of nonaccruing in-substance foreclosed
assets were reclassified from repossessed assets to loans.
(2) The Company earned income totaling $2.7 million on repossessed assets
during 1995, including $2.3 million in Commercial Real Estate Finance,
$0.3 million in Resort Finance and $0.1 million in Communications Finance
(3) Transportation Finance includes $106 million of new aircraft financing
business booked through the London office.
(4) Excludes $133 million of assets securitized which the Company manages.
------------------
6
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RESERVE AND ACCRUED LIABILITIES FOR POSSIBLE CREDIT LOSSES:
The reserve and accrued liabilities for possible credit losses of
$131.6 million at September 30, 1995 represents 2.0% of managed assets
(investment in financing transactions and securitized assets) before deducting
such reserve. Accrued liabilities of $12 million represent a reserve for
estimated losses under certain recourse provisions on $133.1 million of the
securitized assets. Changes in the reserve for possible credit losses were as
follows:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------------
1995 1994
---------- ----------
(Dollars in Thousands)
<S> <C> <C>
Balance, beginning of period $109,245 $ 64,280
Provision for possible credit losses 28,800 10,353
Write-offs (22,868) (19,009)
Recoveries 1,675 1,109
Other 2,750 58,498
-------- --------
Balance, end of period $119,602 $115,231
======== ========
</TABLE>
The Company believes that collateral values significantly reduce its
loss exposure and that the reserve for possible credit losses is adequate.
The specific impairment reserve of $17.3 million at September 30, 1995
applies to $50.8 million of the $98.4 million of impaired loans. The remaining
$102.3 million of the reserve for possible credit losses is designated for
general purposes and represents management's estimate of the amount to cover
potential losses in the portfolio considering delinquencies, loss experience and
collateral. Additions to general and specific reserves are reflected in current
operations. Management may transfer reserves between the general and specific
reserves as considered necessary.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 1995
TO THE NINE MONTHS ENDED SEPTEMBER 30, 1994
The following discussion relates to The FINOVA Group Inc. (formerly
known as GFC Financial Corporation) and its subsidiaries (collectively, "FINOVA"
or the "Company"), including FINOVA Capital Corporation (formerly known as
Greyhound Financial Corporation) and its subsidiaries (collectively, "FINOVA
Capital"), including Ambassador Factors ("Ambassador") acquired on February 14,
1994 and TriCon Capital ("TriCon") acquired on April 30, 1994. Both Ambassador
and TriCon were merged into FINOVA Capital in 1994. Recognizing the substantial
increase in the Company's size and scope of operations and its use of several
names in its operations, GFC Financial Corporation changed its name to The
FINOVA Group Inc., and changed its principal operating subsidiary's name from
Greyhound Financial Corporation to FINOVA Capital Corporation, both effective
February 1, 1995.
RESULTS OF OPERATIONS
Net income for the nine months of 1995 was $71.1 million ($2.56 per
common share) compared to $51.0 million ($2.10 per common share) for the nine
months of 1994, a 22% increase in earnings per common share (with 15% more
average shares outstanding) and a 40% increase in net income.
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INTEREST MARGINS EARNED. Interest margins earned, which represent the
difference between (a) interest and income earned from financing transactions
and (b) interest expense and depreciation, increased to $245 million for 1995
from $169.2 million for 1994. This increase was driven by portfolio growth,
together with the addition of TriCon and Ambassador in 1994. The primary source
of the portfolio growth was new business, which totaled $1.7 billion for 1995
compared to $1.1 billion for 1994 (an increase of 51%). Portfolio growth was
also helped by the acquisition of $117 million of consumer rediscount assets
during the first quarter of 1995. Factoring and floor planning volume also
increased to $1.3 billion for the first nine months of 1995, more than double
the 1994 volume.
Interest margins earned, measured as a percent of average earning
assets, were 5.8% for the first nine months of 1995 compared to 6.0% for the
1994 period. This reduction in interest margins was expected in 1995 due to the
cost of the hedges that the Company entered into to lock in the spread between
its lending and borrowing rates on $1.5 billion of its floating-rate debt and to
the diminishing ratio of the higher yielding businesses relative to the total
portfolio. Growth in the amount of interest margins more than offset the higher
provisions for possible credit losses and the higher selling, administrative and
other operating expenses in the 1995 period.
NON-INTEREST EXPENSE. Loss provisions, which increase the reserve for
possible credit losses ("reserve"), were greater by $18.4 million during 1995
compared to 1994. The greater loss provisions were consistent with the
requirements of a larger and growing portfolio. Management believes that reserve
coverage (reserve and accrued liabilities/nonaccruing assets) remains adequate
at 77.8% of nonaccruing assets and at 2.0% of funds employed and
securitizations.
Selling, administrative and other operating expenses were higher by
$33.7 million in the 1995 period but, when measured as a percent of interest
margins earned, declined to 46.0% from 46.6% in 1994. The higher operating
expenses are primarily attributable to the additions of TriCon and Ambassador,
as well as to higher incentive accruals related to improved results and the
higher volume of new business added during the year.
GAINS ON SALE OF ASSETS. Gains on sale of assets in 1995 were $6.0
million higher than in 1994 due to the amount and type of assets sold (1994
included a $4 million gain from the securitization of assets).
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INCOME TAXES. Income taxes for 1995 increased to $44.2 million from
$34.7 million in 1994. Income taxes were higher in 1995 due to an increase in
income before income taxes, which more than offset a lower effective income tax
rate resulting from state income tax adjustments and certain tax credits.
Excluding the tax adjustments and credits, the incremental income tax rate for
the Company is approximately 40%.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The portfolio (funds employed) grew by $0.9 billion to $6.6 billion at
September 30, 1995 from $5.7 billion at December 31, 1994. This increase is
attributable primarily to the addition of $1.8 billion of new assets, partially
offset by approximately $0.9 billion of portfolio run-off.
The reserve and accrued liabilities for possible credit losses at
September 30, 1995 increased by $9.3 million when compared to December 31, 1994.
The increase in the reserve and accrued liabilities consisted of increases due
to loss provisions of $28.8 million which were applicable to portfolio growth
and $2.4 million of reserves acquired with the rediscount portfolio, offset by
write-offs of $22.9 million.
Nonaccruing contracts and repossessed assets increased to $169.2 million
at September 30, 1995 from $168.8 million at December 31, 1994. When measured as
a percent of funds employed and securitizations, nonearning assets declined to
2.5% at September 30, 1995 from 2.9% at December 31, 1994.
The Company had total debt of approximately $5.4 billion or 6.71 times
its equity base of $805.3 million at September 30, 1995. The Company also had
deferred income taxes of $202.6 million, generally used to reduce debt and,
therefore, help finance lending activities. In addition, the Company is
contemplating the securitization of certain assets as a funding source.
Growth in funds employed is generally financed by internally generated
cash flow and additional borrowings. During the first nine months of 1995,
FINOVA Capital issued $825 million in new senior debt, which together with
general corporate funds and net commercial paper borrowings were used to finance
asset additions and redeem or retire $489 million of debt.
On October 25, 1995, FINOVA Capital filed a shelf registration statement
with the Securities and Exchange Commission to offer, from time to time, up to
$1.5 billion aggregate principal amount of its senior debt securities on terms
to be determined at time of sale. The shelf registration statement serves as a
source of funds for future portfolio growth or to repay maturing debt.
RECENT DEVELOPMENTS AND BUSINESS OUTLOOK
Following the Company's spin-off from The Dial Corp in 1992 (the
"Spin-Off"), the Company focused its resources and capital on its domestic
commercial finance activities. The Company embarked on a program of selling or
winding down those businesses included in the Spin-Off that were not associated
with the Company's charter domestic commercial finance activities. The Company
concentrated on redeploying the capital previously invested in such businesses
and raised additional capital to support internal portfolio growth and to make
selected acquisitions to complement the Company's charter operations. This
strategy has resulted in (i) the managed liquidation and sale of the London and
Latin American loan portfolios, (ii) an increase (excluding acquisitions) in
FINOVA's domestic loan portfolio each year, (iii) the acquisition of the asset
based lending activity of U.S. Bancorp, (iv) the sale of the discontinued
mortgage insurance subsidiary, (v) the acquisition of Ambassador and (vi) the
acquisition of TriCon. More recently, on February 27, 1995, FINOVA Capital
acquired substantially all of the rediscount portfolio of the Lender Finance
Division of Transamerica Business Credit Corporation,
9
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a wholly owned subsidiary of Transamerica Corporation. The rediscount portfolio
is comprised of secured revolving credit facilities to independent consumer
finance companies. The principal amount of the loans purchased amounted to
approximately $117 million. These activities and the Company's performance were
implicitly recognized in FINOVA Capital's recent increases in credit ratings of
its senior debt by Standard & Poor's Rating Group to BBB+ from BBB and Moody's
Investors Service to Baa1 from Baa2.
NEW ACCOUNTING STANDARDS
The Company adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 114 "Accounting by Creditors for Impairment of a Loan"
("SFAS 114"), as amended by SFAS No. 118 "Accounting by Creditors for Impairment
of a Loan - Income Recognition and Disclosures" ("SFAS 118"), as of January 1,
1995. These statements require that impaired loans be measured based on the
present value of the expected cash flows discounted at the loan's effective
interest rate or the fair value of the collateral, if the loan is collateral
dependent. Under SFAS 114, a loan is considered impaired when, based on current
information and events, it is probable that a creditor will be unable to collect
all amounts due according to the contractual terms of the loan agreement. For
the impact and disclosures of these new standards, see Notes B and C to Interim
Condensed Consolidated Financial Information.
The Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", effective for
years beginning after December 15, 1995. The Company will adopt SFAS No. 121
effective January 1, 1996. This standard applies to property, plant and
equipment, identifiable intangibles and goodwill and requires impairment to be
considered whenever evidence suggests a lack of recoverability. SFAS No. 121
requires that an impairment loss be recognized when the aggregate of estimated
future cash flows (less estimated future cash out flows) to be generated by an
asset is less than the carrying amount of the asset. The impairment loss that
would be recorded would be the difference between the carrying amount of the
asset and its market value (if an active market exists) or the expected future
net cash flows discounted at a rate commensurate with the risk involved. The
Company believes that adoption of this Standard will not materially affect its
financial position or results of operations.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following exhibits are filed herewith:
<TABLE>
<CAPTION>
Exhibit No. Document
----------- --------
<S> <C>
4.A Indenture, dated as of October 1, 1995, between FINOVA Capital and First Interstate Bank of Arizona,
N.A., (incorporated by reference from FINOVA Capital's Report on Form 8-K, dated October 25, 1995,
Exhibit 4.1).
4.B 1992 Stock Incentive Plan of the Company as amended through the date hereof.
10.A Second Amendment, dated as of May 11, 1995, to Sixth Amendment and Restatement of Credit Agreement (the
"Sixth Amendment") among FINOVA Capital and the lender and agent parties thereto.
10.B Third Amendment dated as of November 1, 1995 to the Sixth Amendment.
10.C Second Amendment dated as of May 11, 1995 to the Credit Agreement (Short-Term Facility) among FINOVA
Capital and the lender and agent parties referenced in 10.A above.
10.D Third Amendment dated as of November 1, 1995 to Credit Agreement noted in 10.C above.
10.E The Company's Executive Severance Plan for Tier I Employees, as amended through the date hereof.
10.F The Company's Executive Severance Plan for Tier II Employees, as amended through the date hereof.
10.G The Company's Management Incentive Plan, as amended through the date hereof.
10.H The Company's 1993 - 1995 Performance Share Incentive Plan, as amended through the date hereof.
10.I The Company's 1994 - 1996 Performance Share Incentive Plan, as amended through the date hereof.
10.J The Company's 1995 - 1997 Performance Share Incentive Plan, as amended through the date hereof.
10.K The Company's Value Sharing Plan for Executive Officers and Key Employees.
</TABLE>
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<TABLE>
<CAPTION>
Exhibit No. Document
----------- --------
<S> <C>
10.L The Company's Value Sharing Plan for the Chief Executive Officer.
10.M Amendment to Employment Agreement dated as of August 10, 1995 with Samuel L. Eichenfield.
11 Computation of Earnings Per Share.
12 Computation of Ratio of Income to Combined Fixed Charges and Preferred Stock Dividends (interim period).
27 Financial Data Schedule.
</TABLE>
(b) Reports on Form 8-K:
A Report on Form 8-K, dated September 21, 1995, was filed by the
Registrant which reported under Items 5 and 7, amendments to the
Registrant's Rights Agreement with Bank One, Arizona, N.A.
(formerly Valley National Bank of Arizona, N.A.).
A Report on Form 8-K, dated October 17, 1995, was filed by the
Registrant which reported under Items 5 and 7 the revenues, net
income and selected financial data and ratios for the third quarter
ended September 30, 1995 (unaudited).
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THE FINOVA GROUP INC.
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.
THE FINOVA GROUP INC.
(Registrant)
Dated: November 1, 1995 By: /s/ Bruno A. Marszowski
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Bruno A. Marszowski, Senior Vice
President, Chief Financial
Officer and Controller
Principal Accounting
Officer/Authorized Officer
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THE FINOVA GROUP INC.
COMMISSION FILE NUMBER 1-11011
EXHIBIT INDEX
SEPTEMBER 30, 1995 FORM 10-Q
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Exhibit No. Document
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4.A Indenture, dated as of October 1, 1995, between FINOVA Capital and First Interstate Bank of Arizona, N.A.,
(incorporated by reference from FINOVA Capital's Report on Form 8-K, dated October 25, 1995, Exhibit 4.1).
4.B 1992 Stock Incentive Plan of the Company as amended through the date hereof.
10.A Second Amendment, dated as of May 11, 1995, to Sixed Amendment and Restatement of Credit Agreement (the
"Sixth Amendment") among FINOVA Capital and the lender and agent parties thereto.
10.B Third Amendment dated as of November 1, 1995 to the Sixth Amendment.
10.C Second Amendment dated as of May 11, 1995 to the Credit Agreement (Short-Term Facility) among FINOVA
Capital and the lender and agent parties referenced in 10.A above.
10.D Third Amendment dated as of November 1, 1995 to Credit Agreement noted in 10.B above.
10.E The Company's Executive Severance Plan for Tier I employees, as amended through the date hereof.
10.F The Company's Executive Severance Plan for Tier II Employees, as amended through the date hereof.
10.G The Company's Management Incentive Plan, as amended through the date hereof.
10.H The Company's 1993 - 1995 Performance Share Incentive Plan, as amended through the date hereof.
10.I The Company's 1994 - 1996 Performance Share Incentive Plan, as amended through the date hereof.
10.J The Company's 1995 - 1997 Performance Share Incentive Plan, as amended through the date hereof.
10.K The Company's Value Sharing Plan for Executive Officers and Key Employees.
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Exhibit No. Document
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10.L The Company's Value Sharing Plan for the Chief Executive Officer.
10.M Amendment to Employment Agreement with Samuel L. Eichenfield dated as of August 10, 1995.
11 Computation of Earnings Per Share.
12 Computation of Ratio of Income to Combined Fixed Charges and referred Stock Dividends (interim period).
27 Financial Data Schedule.
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EXHIBIT 4.B
The FINOVA Group Inc.
1992 STOCK INCENTIVE PLAN
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SECTION 1. PURPOSE; DEFINITIONS.
The purpose of the Plan is to give the Company a significant advantage
in attracting, retaining and motivating officers, employees and directors and to
provide the Company and its subsidiaries with the ability to provide incentives
more directly linked to the profitability of the Company's businesses and
increases in stockholder value.
For purposes of the Plan, the following terms are defined as set forth
below:
a. "Affiliate" means a corporation or other entity controlled by the
Company and designated by the Committee as such.
b. "Award" means a Stock Appreciation Right, Stock Option or Restricted
Stock.
c. "Board" means the Board of Directors of the Company.
d. "Cause" has the meaning set forth in Section 5(i).
e. "Change in Control" and "Change in Control Price" have the meanings
set forth in Sections 8(b) and (c), respectively.
f. "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
g. "Commission" means the Securities and Exchange Commission or any
successor agency.
h. "Committee" means the Committee referred to in Section 2.
i. "Common Stock" means common stock, par value $.01 per share, of the
Company.
j. "Company" means The FINOVA Group Inc., a Delaware corporation.
k. "Disability" means permanent and total disability as determined
under the Company's existing policies which may be amended by the Committee.
l. "Disinterested Person" shall mean a member of the Board who
qualifies as a disinterested person as defined in Rule 16b-3(c)(2), as
promulgated by the Commission under the Exchange Act, or any successor
definition adopted by the Commission.
m. "Distribution" means the distribution of shares of Common Stock to
the holders of common stock of The Dial Corp.
n. "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.
o. "Fair Market Value" means, except as provided in Sections 5(j) and
6(b)(ii)(2), as of any given date, the mean between the highest and lowest
reported sales prices of the Stock on the New York Stock Exchange Composite Tape
or, if not listed on such exchange, on any other national exchange on which the
Stock is listed or on NASDAQ. If there is no regular public trading market for
such Stock, the Fair Market Value of the Stock shall be determined by the
Committee in good faith.
p. "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.
q. "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
r. "Plan" means the GFC Financial Corporation 1992 Stock Incentive
Plan, as set forth herein and as hereinafter amended from time to time.
s. "Preferred Stock" means preferred stock, par value $.01, of the
Company.
t. "Restricted Stock" means an award granted under Section 7.
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u. "Retirement" means retirement from active employment under a pension
plan of the Company, any subsidiary or Affiliate, or under an employment
contract with any of them, or termination of employment at or after age 55 under
circumstances which the Committee, in its sole discretion, deems equivalent to
retirement.
v. "Rule 16b-3" means Rule 16b-3, as promulgated by the Commission
under Section 16(b) of the Exchange Act, as amended from time to time.
w. "Stock" means the Common Stock or Preferred Stock.
x. "Stock Appreciation Right" means a right granted under Section 6.
y. "Stock Option" means an option granted under Section 5.
z. "Termination of Employment" means the termination of the
participant's employment with the Company and any subsidiary or Affiliate. A
participant employed by a subsidiary or an Affiliate shall also be deemed to
incur a Termination of Employment if the subsidiary or Affiliate ceases to be
such a subsidiary or Affiliate, as the case may be, and the participant does not
immediately thereafter become an employee of the Company or another subsidiary
or Affiliate.
In addition, certain other terms used herein have definitions given to
them in the first place in which they are used.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by the Executive Compensation Committee
of the Board or such other committee of the Board, composed of not less than two
Disinterested Persons, each of whom shall be appointed by and serve at the
pleasure of the Board. If at any time no Committee shall be in office, the
functions of the Committee specified in the Plan shall be exercised by the
Board.
The Committee shall have plenary authority to grant Awards pursuant to
the terms of the Plan to officers, employees and directors of the Company and
its subsidiaries and Affiliates.
Among other things, the Committee shall have the authority, subject to
the terms of the Plan:
(a) to select the officers, employees and directors to whom Awards may
from time to time be granted; provided that Awards to non-employee directors may
be made only in accordance with Section 13 hereof.
(b) to determine whether and to what extent Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights and Restricted Stock or
any combination thereof are to be granted hereunder;
(c) to determine the number of shares of Stock to be covered by each
Award granted hereunder;
(d) to determine the terms and conditions of any Award granted
hereunder (including, but not limited to, the option price (subject to Section
5(a)), any vesting restriction or limitation and any vesting acceleration or
forfeiture waiver regarding any Award and the shares of Stock relating thereto,
based on such factors as the Committee shall determine);
(e) to adjust the terms and conditions, at any time or from time to
time, of any Award, including with respect to performance goals and measurements
applicable to performance-based Awards pursuant to the terms of the Plan;
(f) to determine to what extent and under what circumstances Stock and
other amounts payable with respect to an Award shall be deferred; and
(g) to determine under what circumstances a Stock Option may be settled
in cash or Stock under Section 5(j).
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The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any agreement relating thereto)
and to otherwise supervise the administration of the Plan.
The Committee may act only by a majority of its members then in office,
except that the members thereof may (i) delegate to an officer of the Company
the authority to make decisions pursuant to paragraphs (c), (f), (g), (h) and
(i) of Section 5 (provided that no such delegation may be made that would cause
Awards or other transactions under the Plan to cease to be exempt from Section
16(b) of the Exchange Act) and (ii) authorize any one or more of their number or
any officer of the Company to execute and deliver documents on behalf of the
Committee.
Any determination made by the Committee or pursuant to delegated
authority pursuant to the provisions of the Plan with respect to any Award shall
be made in the sole discretion of the Committee or such delegate at the time of
the grant of the Award or, unless in contravention of any express term of the
Plan, at any time thereafter. All decisions made by the Committee or any
appropriately delegated officer pursuant to the provisions of the Plan shall be
final and binding on all persons, including the Company and Plan participants.
SECTION 3. STOCK SUBJECT TO PLAN.
Subject to adjustment as provided herein, the total number of shares of
Common Stock of the Company available for grant under the Plan in each calendar
year (including partial calendar years) during which the Plan is in effect shall
be equal to two and one-half percent (2.5%) of the total number of shares of
Common Stock of the Company outstanding as of the first day of each such year
for which the Plan is in effect; (a) provided that any shares available for
grant in a particular calendar year (or partial calendar year) which are not, in
fact, granted in such year shall only be added to the shares available for grant
in any subsequent calendar year to the extent such shares are applied to initial
Awards granted to new officers and employees in connection with the merger or
consolidation with or the acquisition of all or substantially all of the stock
or assets of another corporation or other entity by the Company or any of its
subsidiaries, so long as all persons ("Section 16 Persons") subject to Section
16 of the Securities Exchange Act of 1934 (the "Exchange Act) shall not be
entitled in the aggregate to any portion of Awards granted pursuant to this
subsection (a) or subsection (c) below equal to or in excess of 10% of available
Shares remaining under the Plan; (b) provided further that, an additional amount
of shares shall be available in 1992 equal to the number of shares of Common
Stock necessary to provide new Awards to employees of the Company in exchange
for outstanding awards in connection with the Distribution (it being understood
that such additional number of shares shall not exceed 2,000,000); and (c)
provided further that an additional amount of Shares shall be available in 1994
equal to the number of shares of Common Stock necessary in the aggregate to
provide new Awards to officers and employees of TriCon Capital Corporation
following its acquisition by Greyhound Financial Corporation ("GFC"), as
provided for such officers and employees pursuant to the Stock Purchase
Agreement between GFC and Bell Atlantic TriCon Leasing Corporation dated as of
March 4, 1994, and to provide all officers and employees of TriCon with stock
options to purchase 100 shares at the fair market value of the common stock on
the date of grant, for those employees who are governed by the United States
Department of Labor's overtime wage regulations, and options to purchase up to
500 shares at such price for those employees who are exempt from such overtime
wage regulations (it being understood that such additional number of shares
shall not exceed 500,000 in the aggregate). In addition to the limitation set
forth above with respect to the number of shares available for grant in any
single calendar-year, no more than 2,500,000 shares of Common Stock shall be
cumulatively available for the grant of incentive options over the life of the
Plan. Shares subject to an option or award under the Plan may be authorized and
unissued shares or may be "treasury shares."
The total number of shares of Preferred Stock reserved and available
for distribution pursuant to Awards under the Plan shall be 250,000.
Subject to Section 7(c)(iii), if any shares of Restricted Stock are
forfeited for which the participant did not receive any benefits of ownership,
or if any Stock Option (and related Stock Appreciation Right, if any) terminates
without being exercised, or if any Stock Appreciation Right is exercised for
cash, shares subject to such Awards shall again be available for distribution in
connection with Awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, extraordinary distribution with
respect to the Stock or other change in corporate structure affecting the Stock,
such substitution or adjustments shall be made in the aggregate number of shares
reserved for issuance under the Plan, in the number and option price of shares
subject to outstanding Stock Options and Stock Appreciation Rights, and in the
number of shares subject to other outstanding Awards granted under the Plan as
may be determined to be appropriate by the Committee or the Board, in its sole
discretion; provided, however, that the number of shares subject to any Award
shall always be a whole number. Such adjusted option price shall also be used to
determine the amount payable by the Company upon the exercise of any Stock
Appreciation Right associated with any Stock Option.
SECTION 4. ELIGIBILITY.
Officers, employees and directors of the Company, its subsidiaries and
Affiliates who are responsible for or contribute to the management, growth and
profitability of the business of the Company, its subsidiaries and Affiliates
are eligible to be granted Awards
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under the Plan. Except as expressly authorized by Section 13 of the Plan,
however, no grant shall be made to a director who is not an officer or a
salaried employee.
SECTION 5. STOCK OPTIONS.
Stock Options may be granted alone or in addition to other Awards
granted under the Plan and may be of two types: Incentive Stock Options and
Non-Qualified Stock Options. Any Stock Option granted under the Plan shall be in
such form as the Committee may from time to time approve.
The Committee shall have the authority to grant any optionee Incentive
Stock Options, Non-Qualified Stock Options or both types of Stock Options (in
each case with or without Stock Appreciation Rights). Incentive Stock Options
may be granted only to employees of the Company and its subsidiaries (within the
meaning of Section 424(f) of the Code). To the extent that any Stock Option is
not designated as an Incentive Stock Option or even if so designated does not
qualify as an Incentive Stock Option, it shall constitute a Non-Qualified Stock
Option.
Stock Options shall be evidenced by option agreements, the terms and
provisions of which may differ. An option agreement shall indicate on its face
whether it is an agreement for an Incentive Stock Option or a Non-Qualified
Stock Option. The grant of a Stock Option shall occur on the date the Committee
by resolution selects an individual to be a participant in any grant of a Stock
Option, determines the number of shares of Stock to be subject to such Stock
Option to be granted to such individual and specifies the terms and provisions
of the Stock Option. The Company shall notify a participant of any grant of a
Stock Option, and a written option agreement or agreements shall be duly
executed and delivered by the Company to the participant.
Anything in the Plan to the contrary notwithstanding, no term of the
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered nor shall any discretion or authority granted under the Plan be
exercised so as to disqualify the Plan under Section 422 of the Code or, without
the consent of the optionee affected, to disqualify any Incentive Stock Option
under such Section 422.
Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions as
the Committee shall deem desirable:
(a) Option Price. The option price per share of Stock purchasable under
a Stock Option shall be determined by the Committee and set forth in the option
agreement, and shall not be less than the Fair Market Value of the Stock subject
to the Stock Option on the date of grant; provided, however, that the exercise
price for each Stock Option issued in connection with the Distribution shall be
set pursuant to a formula set forth in the agreement providing for the
Distribution.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than 10 years after the
date the Stock Option is granted.
(c) Exercisability. Except as otherwise provided herein, Stock Options
shall be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee. If the Committee provides
that any Stock Option is exercisable only in installments, the Committee may at
any time waive such installment exercise provisions, in whole or in part, based
on such factors as the Committee may determine. In addition, the Committee may
at any time accelerate the exercisability of any Stock Option.
(d) Method of Exercise. Subject to the provisions of this Section 5,
Stock Options may be exercised, in whole or in part, at any time during the
option term by giving written notice of exercise to the Company specifying the
number of shares of Stock subject to the Stock Option to be purchased.
Such notice shall be accompanied by payment in full of the purchase
price by certified or bank check or such other instrument as the Company may
accept. If approved by the Committee, payment in full or in part may also be
made in the form of unrestricted Stock already owned by the optionee of the same
class as the Stock subject to the Stock Option and, in the case of the exercise
of a Non-Qualified Stock Option, Restricted Stock subject to an Award hereunder
which is of the same class as the Stock subject to the Stock Option (based on
the Fair Market Value of the Stock on the date the Stock Option is
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exercised); provided, however, that, in the case of an Incentive Stock Option,
the right to make a payment in the form of already owned shares of Stock of the
same class as the Stock subject to the Stock Option may be authorized only at
the time the Stock Option is granted.
If payment of the option exercise price of a Non-Qualified Stock Option
is made in whole or in part in the form of Restricted Stock, the number of
shares of Stock to be received upon such exercise equal to the number of shares
of Restricted Stock used for payment of the option exercise price shall be
subject to the same forfeiture restrictions to which such Restricted Stock was
subject, unless otherwise determined by the Committee.
No shares of Stock shall be issued until full payment therefor has been
made. Subject to any forfeiture restrictions that may apply if a Stock Option is
exercised using Restricted Stock, an optionee shall have all of the rights of a
stockholder of the Company holding the class or series of Stock that is subject
to such Stock Option (including, if applicable, the right to vote the shares and
the right to receive dividends), when the optionee has given written notice of
exercise, has paid in full for such shares and, if requested, has given the
representation described in Section 11(a).
(e) Non-transferability of Stock Options. No Stock Option shall be
transferable by the optionee other than (i) by will or by the laws of descent
and distribution or (ii) pursuant to a qualified domestic relations order (as
defined in the Code or Title I of the Employee Retirement Income Security Act of
1974, as amended), or the rules thereunder. All Stock Options shall be
exercisable, during the optionee's lifetime, only by the optionee or by the
guardian or legal representative of the optionee, it being understood that the
terms "holder" and "optionee" include the guardian and legal representative of
the optionee named in the option agreement and any person to whom an option is
transferred by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order.
(f) Termination by Death. If an optionee's employment terminates by
reason of death, any Stock Option held by such optionee may thereafter be
exercised, to the extent then exercisable, or on such accelerated basis as the
Committee may determine, for a period of one year (or such other period as the
Committee may specify in the option agreement) from the date of such death or
until the expiration of the stated term of such Stock Option, whichever period
is the shorter.
(g) Termination by Reason of Disability. If an optionee's employment
terminates by reason of Disability, any Stock Option held by such optionee may
thereafter be exercised by the optionee, to the extent it was exercisable at the
time of termination, or on such accelerated basis as the Committee may
determine, for a period of three years (or such shorter period as the Committee
may specify in the option agreement) from the date of such termination of
employment or until the expiration of the stated term of such Stock Option,
whichever period is the shorter; provided, however, that if the optionee dies
within such three-year period (or such shorter period), any unexercised Stock
Option held by such optionee shall, notwithstanding the expiration of such
three-year (or such shorter) period, continue to be exercisable to the extent to
which it was exercisable at the time of death for a period of 12 months from the
date of such death or until the expiration of the stated term of such Stock
Option, whichever period is the shorter. In the event of termination of
employment by reason of Disability, if an Incentive Stock Option is exercised
after the expiration of the exercise periods that apply for purposes of Section
422 of the Code, such Stock Option will thereafter be treated as a Non-Qualified
Stock Option.
(h) Termination by Reason of Retirement. If an optionee's employment
terminates by reason of Retirement, any Stock Option held by such optionee may
thereafter be exercised by the optionee, to the extent it was exercisable at the
time of such Retirement or on such accelerated basis as the Committee may
determine, for a period of three years (or such shorter period as the Committee
may specify in the option agreement) from the date of such termination of
employment or until the expiration of the stated term of such Stock Option,
whichever period is the shorter; provided, however, that if the optionee dies
within such three-year (or such shorter) period any unexercised Stock Option
held by such optionee shall, notwithstanding the expiration of such three-year
(or such shorter) period, continue to be exercisable to the extent to which it
was exercisable at the time of death for a period of 12 months from the date of
such death or until the expiration of the stated term of such Stock Option,
whichever period is the shorter. In the event of termination of employment by
reason of Retirement, if an Incentive Stock Option is exercised after the
expiration of the exercise periods that apply for purposes
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of Section 422 of the Code, such Stock Option will thereafter be treated as a
Non-Qualified Stock Option.
(i) Other Termination. Unless otherwise determined by the Committee, if
an optionee incurs a Termination of Employment for any reason other than death,
Disability or Retirement, any Stock Option held by such optionee shall thereupon
terminate, except that such Stock Option, to the extent then exercisable, or on
such accelerated basis as the Committee may determine, may be exercised for the
lesser of three months from the date of such Termination of Employment or the
balance of such Stock Option's term if such Termination of Employment of the
optionee is involuntary and without Cause; provided, however, that if the
optionee dies within such three-month period, any unexercised Stock Option held
by such optionee shall notwithstanding the expiration of such three-month
period, continue to be exercisable to the extent to which it was exercisable at
the time of death for a period of 12 months from the date of such death or until
the expiration of the stated term of such Stock Option, whichever period is the
shorter. In the event of Termination of Employment, if an Incentive Stock Option
is exercised after the expiration of the exercise periods that apply for
purposes of Section 422 of the Code, such Stock Option will thereafter be
treated as a Non-Qualified Stock Option. Unless otherwise determined by the
Committee, for the purposes of the Plan "Cause" shall mean (1) the conviction of
the optionee for committing a felony under Federal law or the law of the state
in which such action occurred, (2) dishonesty in the course of fulfilling the
optionee's employment duties or (3) willful and deliberate failure on the part
of the optionee to perform his employment duties in any material respect.
(j) Cashing Out of Stock Option. On receipt of written notice of
exercise, the Committee may elect to cash out all or part of the portion of the
shares of Stock for which a Stock Option is being exercised by paying the
optionee an amount, in cash or Stock, equal to the excess of the Fair Market
Value of the Stock over the option price times the number of shares of Stock for
which to the Option is being exercised on the effective date of such cash out.
Cash outs relating to options held by optionees who are actually or
potentially subject to Section 16(b) of the Exchange Act shall comply with the
"window period" provisions of Rule 16b-3, to the extent applicable, and, in the
case of cash outs of Non-Qualified Stock Options held by such optionees, the
Committee may determine Fair Market Value under the pricing rule set forth in
Section 6(b)(ii)(2).
(k) Notwithstanding any other provision of the Plan, during the 60-day
period from and after a Change in Control (the "Exercise Period"), unless the
Committee shall determine otherwise at the time of grant, an optionee shall have
the right, whether or not the Stock Option is fully exercisable and in lieu of
the payment of the exercise price for the shares of Stock being purchased under
the Stock Option and by giving notice to the Company, to elect (within the
Exercise Period) to surrender all or part of the Stock Option to the Company and
to receive cash, within 30 days of such notice, in an amount equal to the amount
by which the Change in Control Price per share of Stock on the date of such
election shall exceed the exercise price per share of Stock under the Stock
Option (the "Spread") multiplied by the number of shares of Stock granted under
the Stock Option as to which the right granted under this Section 5(k) shall
have been exercised; provided, however, that if the Change in Control is within
six months of the date of grant of a particular Stock Option held by an optionee
who is an officer or director of the Company and is subject to Section 16(b) of
the Exchange Act no such election shall be made by such optionee with respect to
such Stock Option prior to six months from the date of grant. Notwithstanding
any other provision hereof, if the end of such 60-day period from and after a
Change in Control is within six months of the date of grant of a Stock Option
held by an optionee who is an officer or director of the Company and is subject
to Section 16(b) of the Exchange Act, such Stock Option shall be cancelled in
exchange for a cash payment to the optionee, effected on the day which is six
months and one day after the date of grant of such Option, equal to the Spread
multiplied by the number of shares of Stock granted under the Stock Option.
SECTION 6. STOCK APPRECIATION RIGHTS.
(a) Grant and Exercise. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In the
case of a Non-Qualified Stock Option, such rights may be granted either at or
after the time of grant of such Stock Option. In the case of an Incentive Stock
Option, such rights may be granted only at the time of grant of such Stock
Option. A Stock Appreciation Right shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option.
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A Stock Appreciation Right may be exercised by an optionee in
accordance with Section 6(b) by surrendering the applicable portion of the
related Stock Option in accordance with procedures established by the Committee.
Upon such exercise and surrender, the optionee shall be entitled to receive an
amount determined in the manner prescribed in Section 6(b). Stock Options which
have been so surrendered shall no longer be exercisable to the extent the
related Stock Appreciation Rights have been exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be subject to
such terms and conditions as shall be determined by the Committee, including the
following:
(i) Stock Appreciation Rights shall be exercisable only at such
time or times and to the extent that the Stock Options to which they
relate are exercisable in accordance with the provisions of Section 5
and this Section 6; provided, however, that a Stock Appreciation Right
shall not be exercisable during the first six months of its term by an
optionee who is actually or potentially subject to Section 16(b) of the
Exchange Act, except that this limitation shall not apply in the event
of death or Disability of the optionee prior to the expiration of the
six-month period.
(ii) Upon the exercise of a Stock Appreciation Right, an
optionee shall be entitled to receive an amount in cash, shares of
Stock or both equal in value to the excess of the Fair Market Value of
one share of Stock over the option price per share specified in the
related Stock Option multiplied by the number of shares in respect of
which the Stock Appreciation Right shall have been exercised, with the
Committee having the right to determine the form of payment.
In the case of Stock Appreciation Rights relating to Stock
Options held by optionees who are actually or potentially subject to
Section 16(b) of the Exchange Act, the Committee:
(1) may require that such Stock Appreciation Rights be
exercised only in accordance with the applicable "window
period" provisions of Rule 16b-3; and
(2) in the case of Stock Appreciation Rights relating
to Non-Qualified Stock Options, may provide that the amount to
be paid upon exercise of such Stock Appreciation Rights during
a Rule 16b-3 "window period" shall be based on the highest mean
sales price of the Stock on the New York Stock Exchange on any
day during such "window period."
(iii) Stock Appreciation Rights shall be transferable only to
permitted transferees of the underlying Stock Option in accordance with
Section 5(e).
SECTION 7. RESTRICTED STOCK.
(a) Administration. Shares of Restricted Stock may be awarded either
alone or in addition to other Awards granted under the Plan. The Committee shall
determine the officers and employees to whom and the time or times at which
grants of Restricted Stock will be awarded, the number of shares to be awarded
to any participant, the time or times within which such Awards may be subject to
forfeiture and any other terms and conditions of the Awards, in addition to
those contained in Section 7(c).
The Committee may condition the grant of Restricted Stock upon the
attainment of specified performance goals of the participant or of the Company
or subsidiary, division or department of the Company for or within which the
participant is primarily employed or upon such other factors or criteria as the
Committee shall determine. The provisions of Restricted Stock Awards need not be
the same with respect to each recipient.
(b) Awards and Certificates. Shares of Restricted Stock shall be
evidenced in such manner as the Committee may deem appropriate, including
book-entry registration or issuance of one or more stock certificates. Any
certificate issued in respect of shares of Restricted Stock shall be registered
in the name of such participant and shall bear an appropriate legend referring
to the terms, conditions, and restrictions applicable to such Award,
substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the 1992 Stock Incentive Plan and a Restricted Stock
Agreement. Copies of such Plan and Agreement
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<PAGE> 9
are on file at the offices of GFC Financial Corporation, Dial Tower,
Phoenix, Arizona."
The Committee may require that the certificates evidencing such shares be held
in custody by the Company until the restrictions thereon shall have lapsed and
that, as a condition of any Award of Restricted Stock, the participant shall
have delivered a stock power, endorsed in blank, relating to the Stock covered
by such Award.
(c) Terms and Conditions. Shares of Restricted Stock shall be subject
to the following terms and conditions:
(i) Subject to the provisions of the Plan (including Section
5(d)) and the Restricted Stock Agreement referred to in Section
7(c)(vi), during a period set by the Committee, commencing with the
date of such Award (the "Restriction Period"), the participant shall
not be permitted to sell, assign, transfer, pledge or otherwise
encumber shares of Restricted Stock. Within these limits, the Committee
may provide for the lapse of such restrictions in installments and may
accelerate or waive such restrictions, in whole or in part, based on
service, performance of the participant or of the Company or the
subsidiary, division or department for which the participant is
employed or such other factors or criteria as the Committee may
determine.
(ii) Except as provided in this paragraph (ii) and Section
7(c)(i) and the Restricted Stock Agreement, the participant shall have,
with respect to the shares of Restricted Stock, all of the rights of a
stockholder of the Company holding the class or series of Stock that is
the subject of the Restricted Stock, including, if applicable, the
right to vote the shares and the right to receive any cash dividends.
If so determined by the Committee in the applicable Restricted Stock
Agreement and subject to Section 11(f) of the Plan, (1) cash dividends
on the class or series of Stock that is the subject of the Restricted
Stock shall be automatically deferred and reinvested in additional
Restricted Stock, and (2) dividends payable in Stock shall be paid in
the form of Restricted Stock of the same class as the Stock with which
such dividend was paid.
(iii) Except to the extent otherwise provided in the applicable
Restricted Stock Agreement and Sections 7(c)(i), 7(c)(iv) and 8(a)(ii),
upon a participant's Termination of Employment for any reason during
the Restriction Period, all shares still subject to restriction shall
be forfeited by the participant.
(iv) Except to the extent otherwise provided in Section
8(a)(ii), in the event that a participant's employment is involuntarily
terminated (other than for Cause), the Committee shall have the
discretion to waive in whole or in part any or all remaining
restrictions with respect to any or all of such participant's shares of
Restricted Stock.
(v) If and when the Restriction Period expires without a prior
forfeiture of the Restricted Stock subject to such Restriction Period,
unlegended certificates for such shares shall be delivered to the
participant.
(vi) Each Award shall be confirmed by, and be subject to the
terms of, a Restricted Stock Agreement.
SECTION 8. CHANGE IN CONTROL PROVISIONS.
(a) Impact of Event. Notwithstanding any other provision of the Plan to
the contrary, in the event of a Change in Control:
(i) Any Stock Options and Stock Appreciation Rights outstanding
as of the date such Change in Control is determined to have occurred
and not then exercisable and vested shall become fully exercisable and
vested to the full extent of the original grant, without regard to the
three month limit on exercisability imposed by Section 5(i) of the
Plan.
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<PAGE> 10
(ii) The restrictions applicable to any Restricted Stock shall
lapse, and such Restricted Stock shall become free of all restrictions
and become fully vested and transferable to the full extent of the
original grant, including without limitation immediate vesting and
transferability (subject to applicable securities law) of the
maximum amount of performance-based or other variable awards as if
maximum performance conditions or payouts were achieved, as the case
may be.
(b) Definition of Change in Control. For purposes of the Plan, a
"Change in Control" shall mean the happening of any of the following events:
(i) An acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (1) the
then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (2) the combined voting power of
the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); excluding, however, the following: (1) any acquisition
directly from the Company, other than an acquisition by virtue of the
exercise of a conversion privilege unless the security being so
converted was itself acquired directly from the Company, (2) any
acquisition by the Company, (3) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (4) any acquisition by any
corporation pursuant to a transaction which complies with clauses (1),
(2) and (3) of subsection (iii) of this Section 8(b); or
(ii) A change in the composition of the Board such that the
individuals who, as of February 28, 1992, constitute the Board (such
Board shall be hereinafter referred to as the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board;
provided, however, for purposes of this Section 8(b), that any
individual who becomes a member of the Board subsequent to February 28,
1992, whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of those
individuals who are members of the Board and who were also members of
the Incumbent Board (or deemed to be such pursuant to this proviso)
shall be considered as though such individual were a member of the
Incumbent Board; but, provided further, that any such individual whose
initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board shall not be so considered as a member of
the Incumbent Board; or
(iii) The approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company ("Corporate
Transaction"); excluding, however, such a Corporate Transaction
pursuant to which (1) all or substantially all of the individuals and
entities who are the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Corporate Transaction will
beneficially own, directly or indirectly, more than 60% of,
respectively, the outstanding shares of common stock, and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation resulting from such Corporate Transaction (including,
without limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such
Corporate Transaction, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (2) no
Person (other than the Company, any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Corporate
Transaction) will beneficially own, directly or indirectly, 20% or more
of, respectively, the outstanding shares of common stock of the
corporation resulting from such Corporate Transaction or the combined
voting power of the outstanding voting securities of such corporation
entitled to vote generally in the election of directors except to the
extent that such ownership existed prior to the Corporate Transaction
and (3) individuals who were members of the Incumbent Board will
constitute at least a majority of the members of the board of directors
of the corporation resulting from such Corporate Transaction; or
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<PAGE> 11
(iv) The approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
(c) Change in Control Price.For purposes of the Plan, "Change in
Control Price" means the higher of (i) the highest reported sales price, regular
way, of a share of Stock in any transaction reported on the New York Stock
Exchange Composite Tape or other national exchange on which such shares are
listed or on NASDAQ during the 60-day period prior to and including the date of
a Change in Control or (ii) if the Change in Control is the result of a tender
or exchange offer or a Corporate Transaction, the highest price per share of
Stock paid in such tender or exchange offer or Corporate Transaction; provided,
however, that (x) in the case of a Stock Option which (A) is held by an optionee
who is an officer or director of the Company and is subject to Section 16(b) of
the Exchange Act and (B) was granted within 240 days of the Change in Control,
then the Change in Control Price for such Stock Option shall be the Fair Market
Value of the Stock on the date such Stock Option is exercised or deemed
exercised and (y) in the case of Incentive Stock Options and Stock Appreciation
Rights relating to Incentive Stock Options, the Change in Control Price shall be
in all cases the Fair Market Value of the Stock on the date such Incentive Stock
Option or Stock Appreciation Right is exercised. To the extent that the
consideration paid in any such transaction described above consists all or in
part of securities or other non-cash consideration, the value of such securities
or other non-cash consideration shall be determined in the sole discretion of
the Board.
SECTION 9. TERM, AMENDMENT AND TERMINATION.
The Plan will terminate on December 31, 2002. Under the Plan, Awards
outstanding as of December 31, 2002 shall not be affected or impaired by the
termination of the Plan.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would (i) impair the rights of
an optionee under a Stock Option or a recipient of a Stock Appreciation Right or
Restricted Stock Award theretofore granted without the optionee's or recipient's
consent, except such an amendment made to cause the Plan to qualify for the
exemption provided by Rule 16b-3, or (ii) disqualify the Plan from the exemption
provided by Rule 16b-3. In addition, no such amendment shall be made without the
approval of the Company's stockholders to the extent such approval is required
by law or agreement.
The Committee may amend the terms of any Stock Option or other Award
theretofore granted, prospectively or retroactively, but no such amendment shall
impair the rights of any holder without the holder's consent except such an
amendment made to cause the Plan or Award to qualify for the exemption provided
by Rule 16b-3. The Committee may also substitute new Stock Options for
previously granted Stock Options, including previously granted Stock Options
having higher option prices.
Subject to the above provisions, the Board shall have authority to
amend the Plan to take into account changes in law and tax and accounting rules,
as well as other developments and to grant Awards which qualify for beneficial
treatment under such rules without stockholder approval.
SECTION 10. UNFUNDED STATUS OF PLAN.
It is presently intended that the Plan constitute an "unfunded" plan
for incentive and deferred compensation. The Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or make payments; provided, however, that, unless the
Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.
SECTION 11. GENERAL PROVISIONS.
(a) The Committee may require each person purchasing or receiving
shares pursuant to an Award to represent to and agree with the Company in
writing that such person is acquiring the shares without a view to the
distribution thereof. The certificates for such shares may include any legend
which the Committee deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock or other securities delivered
under the Plan shall be subject to such stock transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Commission,
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<PAGE> 12
any stock exchange upon which the Stock is then listed and any applicable
Federal or state securities law, and the Committee may cause a legend or legends
to be put on any such certificates to make appropriate reference to such
restrictions.
(b) Nothing contained in the Plan shall prevent the Company or any
subsidiary or Affiliate from adopting other or additional compensation
arrangements for its employees.
(c) The adoption of the Plan shall not confer upon any employee any
right to continued employment nor shall it interfere in any way with the right
of the Company or any subsidiary or Affiliate to terminate the employment of any
employee at any time.
(d) No later than the date as of which an amount first becomes
includible in the gross income of the participant for Federal income tax
purposes with respect to any Award under the Plan, the participant shall pay to
the Company, or make arrangements satisfactory to the Company regarding the
payment of, any Federal, state, local or foreign taxes of any kind required by
law to be withheld with respect to such amount. Unless otherwise determined by
the Company, withholding obligations may be settled with Stock, including Stock
that is part of the Award that gives rise to the withholding requirement. The
obligations of the Company under the Plan shall be conditional on such payment
or arrangements, and the Company and its Affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment
otherwise due to the participant. The Committee may establish such procedures as
it deems appropriate, including the making of irrevocable elections, for the
settlement of withholding obligations with Stock.
(e) At the time of grant, the Committee may provide in connection with
any grant made under the Plan that the shares of Stock received as a result of
such grant shall be subject to a right of first refusal pursuant to which the
participant shall be required to offer to the Company any shares that the
participant wishes to sell at the then Fair Market Value of the Stock, subject
to such other terms and conditions as the Committee may specify at the time of
grant.
(f) The reinvestment of dividends in additional Restricted Stock at the
time of any dividend payment shall only be permissible if sufficient shares of
Stock are available under Section 3 for such reinvestment (taking into account
then outstanding Stock Options and other Awards).
(g) The Committee shall establish such procedures as it deems
appropriate for a participant to designate a beneficiary to whom any amounts
payable in the event of the participant's death are to be paid.
(h) The Plan and all Awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Delaware.
SECTION 12. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on the date specified by the Board at the
time it is approved by the Board.
SECTION 13. DIRECTOR STOCK OPTIONS.
(a) Each director of the Company who is not otherwise an employee of
the Company or any Affiliate from and after February 28, 1992 shall, on the
third Thursday of August during such director's term, automatically be granted
Non-Qualified Stock Options to purchase 1,000 shares of Common Stock having an
exercise price per share equal to 100% of the Fair Market Value of the Common
Stock at the date of grant of such Non-Qualified Stock Option. Each director,
upon joining the Board, shall also be awarded an initial grant of Non-Qualified
Stock Options to purchase 2000 shares of Common Stock having an exercise price
equal to 100% of the Fair Market Value of the Common Stock as of such date.
(b) An automatic director Stock Option shall be granted hereunder only
if as of each date of grant (or, in the case of any initial grant, from and
after the Distribution Payment Date) the director (i) is not otherwise an
employee of the Company or any Affiliate, (ii) has not been an employee of the
Company or any subsidiary for any part of the preceding fiscal year (or, in the
case of any initial grant, from and after the Distribution Payment Date), and
(iii) has served on the Board continuously since the commencement of his term.
(c) Each holder of a Stock Option granted pursuant to this Section 13
shall also have the rights specified in Section 5(k).
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<PAGE> 13
(d) In the event that the number of shares of Common Stock available
for future grant under the Plan is insufficient to make all automatic grants
required to be made on such date, then all non-employee directors entitled to a
grant on such date shall share ratably in the number of options on shares
available for grant under the Plan.
(e) The provisions of paragraph (a) of this Section 13 may not be
amended more often than once every six months. Except as expressly provided in
this Section 13, any Stock Option granted hereunder shall be subject to the
terms and conditions of the Plan as if the grant were made pursuant to Section 5
hereof.
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<PAGE> 1
EXHIBIT 10.A
FINOVA CAPITAL CORPORATION
SECOND AMENDMENT DATED AS OF MAY 11, 1995
TO SIXTH AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT
This SECOND AMENDMENT TO SIXTH AMENDMENT AND RESTATEMENT OF
CREDIT AGREEMENT (this "Amendment") is dated as of MAY 11, 1995 and entered into
by and among FINOVA CAPITAL CORPORATION, a Delaware corporation (formerly,
Greyhound Financial Corporation, hereinafter the "Company"), the undersigned
lenders (collectively the "Lenders"), the undersigned Agents, BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, BANK OF MONTREAL, CHEMICAL BANK,
CITIBANK, N.A., and NATIONAL WESTMINSTER BANK USA, individually and as agents
(the "Agents") for the Lenders hereunder, and CITIBANK, N.A., a national banking
association, as administrative agent (the "Administrative Agent") for the
Lenders hereunder, and is made with reference to that certain Sixth Amendment
and Restatement dated as of May 16, 1994 of Credit Agreement dated as of May 31,
1976, by and among the Company, the Lenders, the Agents and the Administrative
Agent, as amended by a First Amendment to Sixth Amendment and Restatement of
Credit Agreement dated as of September 30, 1994 (as so amended, the "Credit
Agreement"). Capitalized terms used herein without definition shall have the
same meanings herein as set forth in the Credit Agreement.
RECITALS
WHEREAS, the Effective Date of the Credit Agreement is May 24,
1994, and the Termination Date is, without giving effect to this Amendment, May
24, 1997;
WHEREAS, the Company has requested that the Termination Date be
extended for one year and that certain covenants be amended as set forth herein;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:
SECTION 1. EXTENSION OF TERMINATION DATE
The Company hereby requests that the Termination Date be
extended for one year to May 24, 1998 as contemplated by Section 2.17 of the
Credit Agreement. Each Lender executing this Amendment shall be deemed to have
elected to consent to such extension for the purposes of Section 2.17 of the
Credit Agreement.
SECTION 2. AMENDMENTS TO THE CREDIT AGREEMENT
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<PAGE> 2
A. REFERENCES TO GREYHOUND FINANCIAL CORPORATION AND GFC
FINANCIAL CORPORATION. The Credit Agreement is hereby amended by deleting all
references to "Greyhound Financial Corporation" and substituting therefor
references to "FINOVA Capital Corporation" and deleting all references to "GFC
Financial Corporation" and substituting therefor references to "The FINOVA Group
Inc."
B. AMENDMENTS TO SECTION 2.11: INCREASES OF COMMITMENTS.
Section 2.11 of the Credit Agreement is hereby amended by deleting the heading
of such Section and substituting therefor a heading reading "Reduction and
Increase of the Commitments" and adding at the end thereof the following clause
(c):
"(c) At any time, if no event has occurred and is continuing which
constitutes an Event of Default or which would constitute an Event of
Default but for the requirement that notice be given or time elapse or
both, the Company may, with the consent of any Lender, increase the
Commitment of such Lender provided that such increase in the
Commitment of such Lender shall be effective upon the receipt by the
Administrative Agent of a commitment increase letter in substantially
the form of Exhibit G hereto (each a "Commitment Increase Letter"). No
Lender shall have any obligation to agree to any increase in its
Commitment and such agreement shall be at the sole discretion of each
such Lender."
C. AMENDMENT TO SECTION 4.01(G): REPORTING OF PAST DUE
ACCOUNTS. Section 4.01(g) of the Credit Agreement is hereby amended by deleting
the reference to the amount of $20,000,000 and substituting therefor reference
to the amount of $30,000,000.
D. AMENDMENT TO SECTION 4.02(A): RATIO OF INDEBTEDNESS TO
STOCKHOLDER'S EQUITY. Section 4.02(a) of the Credit Agreement is hereby amended
by deleting the phrase reading "total outstanding Indebtedness of the Company
and its consolidated subsidiaries to Stockholder's Equity" and substituting
therefor the phrase "(a) an amount equal to (x) total outstanding Indebtedness
of the Company and its consolidated subsidiaries less (y) the cash and cash
equivalents of the Company and its consolidated subsidiaries, except funds held
in escrow, to (b) Stockholder's Equity".
E. AMENDMENT TO EXHIBITS: EXHIBIT G. The Credit Agreement is
further amended by annexing as Exhibit G thereto Exhibit G as annexed hereto.
SECTION 3. COMPANY'S REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, the
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<PAGE> 3
Company represents and warrants to each Lender that the following statements are
true, correct and complete:
A. CORPORATE POWER AND AUTHORITY. The Company has all requisite
corporate power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement, as amended by this Amendment (the "Amended Agreement").
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of
this Amendment and the consummation of the Amended Agreement have been duly
authorized by all necessary corporate action on the part of the Company.
C. NO CONFLICT. The execution and delivery by the Company of
this Amendment and the consummation by the Company of the Amended Agreement do
not and will not (i) violate any provision of any law or any governmental rule
or regulation applicable to the Company or its Subsidiaries, the certificate of
incorporation or bylaws of the Company or any order, judgment or decree of any
court or other agency of government binding on the Company or its Subsidiaries,
(ii) conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any Contractual Obligation of the Company
or its Subsidiaries, (iii) result in or require the creation or imposition of
any Lien upon any of the properties or assets of the Company or its
Subsidiaries, or (iv) require any approval of stockholders or any approval or
consent of any Person under any contractual obligation of the Company or its
Subsidiaries (other than the parties hereto).
D. GOVERNMENTAL CONSENTS. The execution and delivery by the
Company of this Amendment and the consummation by the Company of the Amended
Agreement do not and will not require any registration with, consent or approval
of, or notice to, or other action to, with or by, any federal, state or other
governmental authority or regulatory body.
E. BINDING OBLIGATION. This Amendment has been duly executed
and delivered by the Company and this Amendment and the Amended Agreement are
the legally valid and binding obligations of the Company, enforceable against
the Company in accordance with their respective terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors' rights generally or by principles of equity and
commercial reasonableness.
F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 3.01 of the
Credit Agreement are true, correct and complete in all material respects to the
same extent as though made on and as of the date hereof, except as provided
above or to the extent such representations and warranties specifically relate
to an earlier date, in which case they were
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<PAGE> 4
true, correct and complete in all material respects on and as of such earlier
date.
G. ABSENCE OF DEFAULT. No event has occurred and is continuing
or will result from the consummation of the transactions contemplated by this
Amendment that would, upon the giving of notice, the passage of time, or
otherwise, constitute an Event of Default.
SECTION 4. CONDITIONS TO EFFECTIVENESS
Section 2 of this Amendment shall become effective on the first
date on which all of the following conditions precedent shall have been
satisfied (such date being referred to herein as the "Second Amendment Effective
Date"):
A. On or before the Second Amendment Effective Date, the
Company shall deliver to the Lenders (or to the Agents with sufficient
originally executed copies, where appropriate, for each Lender and its counsel)
the following, each, unless otherwise noted, dated the Second Amendment
Effective Date:
1. Resolutions of its Board of Directors approving and
authorizing the execution, delivery, and performance of this Amendment,
certified as of the Second Amendment Effective Date by its corporate
secretary or an assistant secretary as being in full force and effect
without modification or amendment;
2. Signature and incumbency certificates of its officers
executing this Amendment; and
3. Executed copies of this Amendment.
B. On or before the Second Amendment Effective Date, all
corporate and other proceedings taken or to be taken in connection with the
transactions contemplated hereby and all documents incidental thereto not
previously found acceptable by the Agents, acting on behalf of the Lenders, and
their counsel shall be satisfactory in form and substance to the Agents and such
counsel, and the Agents and such counsel shall have received all such
counterpart originals or certified copies of such documents as the Agents may
reasonably request.
SECTION 5. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE
OTHER LOAN DOCUMENTS.
(i) On and after the date this Amendment becomes effective in
accordance with its terms, each reference in the Credit Agreement to
"this Agreement", "hereunder", "hereof", "herein" or words of like
import referring to the Credit Agreement, and each reference in the
Notes to the
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<PAGE> 5
"Credit Agreement", "thereunder", "thereof" or words of like import
referring to the Credit Agreement shall mean and be a reference to the
Amended Agreement.
(ii) Except as specifically amended by this Amendment, the
Credit Agreement and the Notes shall remain in full force and effect
and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of
any provision of, or operate as a waiver of, any right, power or remedy
of the Agent or any Lender under, the Credit Agreement or the Notes.
B. FEES AND EXPENSES. The Company acknowledges that all costs,
fees and expenses as described in Section 8.05 of the Credit Agreement incurred
by the Administrative Agent and its counsel with respect to this Amendment and
the documents and transactions contemplated hereby shall be for the account of
the Company.
C. HEADINGS. Section and subsection headings in this Amendment
are included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Amendment shall become
effective as of the date hereof upon the execution and delivery of a counterpart
hereof by the Company and Majority Lenders.
[Remainder of page intentionally left blank]
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<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
The Company:
FINOVA CAPITAL CORPORATION
By /s/ Robert J. Fitzsimmons
------------------------------
Title Senior Vice President -
---------------------------
Treasurer
---------------------------
By /s/ Meilee Smythe
------------------------------
Title Vice President -
---------------------------
Assistant Treasurer
---------------------------
The Lenders:
CITIBANK, N.A. (Individually
and as an Agent and
Administrative Agent)
By /s/ Barbara A. Cohen
-----------------------------
Title Vice President
----------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/
-------------------------
Title Managing Director
----------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION (as an
Agent)
By /s/
-------------------------
Title Managing Director
---------------------
BANK OF MONTREAL (Individually
and as an Agent)
By /s/
-------------------------
Title
----------------------
S-1
<PAGE> 7
CHEMICAL BANK (Individually
and as an Agent)
By /s/ P.A. Parker
---------------------------
Title
------------------------
NATIONAL WESTMINSTER BANK USA
(Individually and as an Agent)
By /s/ Andrea L. Lee
---------------------------
Title Vice President
------------------------
BANK OF AMERICA ILLINOIS
By /s/
---------------------------
Title Managing Director
------------------------
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By /s/
---------------------------
Title Vice President
------------------------
CREDIT SUISSE
By /s/ Marilou Palenzuela
---------------------------
Title Member Senior Management
------------------------
By /s/ Lori S. Jenner
---------------------------
Title Associate
------------------------
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY
By /s/
---------------------------
Title Senior Vice President
------------------------
& Senior Manager
------------------------
S-2
<PAGE> 8
NATIONSBANK OF GEORGIA, N.A.
By /s/
---------------------------
Title Vice President
------------------------
UNION BANK OF SWITZERLAND LOS
ANGELES BRANCH
By /s/ Robert A. McKerroll Jr.
---------------------------
Title Assistant Vice President
------------------------
By /s/ Philip A. Stephens
---------------------------
Title Assistant Vice President
------------------------
WESTDEUTSCHE LANDESBANK
GIROZENTRALE - NEW YORK AND
CAYMAN ISLANDS BRANCHES
By /s/
---------------------------
Title Managing Director
------------------------
By /s/ Laura Spichiger
---------------------------
Title Associate
------------------------
CREDIT LYONNAIS
SAN FRANCISCO BRANCH
By /s/ William J. Fischer
---------------------------
Title Vice President & Manager
------------------------
FIRST INTERSTATE BANK OF
ARIZONA, N.A.
By /s/
---------------------------
Title Vice President
------------------------
NATIONAL WESTMINSTER BANK PLC
By /s/
---------------------------
Title Vice President
------------------------
S-3
<PAGE> 9
ROYAL BANK OF CANADA
By /s/ Tom J. Oberaigner
---------------------------
Title Manager
------------------------
SOCIETE GENERALE
By /s/ J. Staley Stewart
---------------------------
Title Vice President
------------------------
BANK ONE, ARIZONA, N.A.
By /s/
---------------------------
Title Vice President
------------------------
DRESDNER BANK AG LOS ANGELES
AGENCY
By /s/ Dennis G. Blank
---------------------------
Title Vice President
------------------------
By /s/ Sidney S. Jordan
---------------------------
Title Vice President
------------------------
UNION BANK
By /s/
---------------------------
Title Vice President
------------------------
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., LOS ANGELES
AGENCY
By /s/ Y. Kamisawa
---------------------------
Title
------------------------
By /s/
---------------------------
Title
------------------------
S-4
<PAGE> 10
THE MITSUBISHI TRUST AND
BANKING CORPORATION, ACTING
THROUGH ITS LOS ANGELES AGENCY
By /s/
---------------------------
Title Senior Vice President
------------------------
& Chief Manager
------------------------
ARAB BANKING CORPORATION
By /s/
---------------------------
Title Vice President & Manager
------------------------
THE BANK OF NOVA SCOTIA
By /s/
---------------------------
Title Officer
------------------------
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION
By /s/ Wynelle Farlow
---------------------------
Title Vice President
------------------------
BANK HAPOALIM, B.M.,
LOS ANGELES BRANCH
By /s/
---------------------------
Title Vice President
------------------------
By /s/
---------------------------
Title Vice President
------------------------
BANK OF AMERICA ARIZONA
By /s/
---------------------------
Title Vice President
------------------------
S-5
<PAGE> 11
BANK OF HAWAII
By /s/ Joseph J. Donaldson
---------------------------
Title Vice President
------------------------
BANQUE NATIONALE DE PARIS
By /s/ C. Morio
---------------------------
Title Senior Vice President
------------------------
& Manager
------------------------
By /s/
---------------------------
Title Vice President
------------------------
COMERICA BANK
By /s/
---------------------------
Title Assistant Vice President
------------------------
CREDIT AGRICOLE
By /s/ David Bouhl
---------------------------
Title Executive Vice President
------------------------
DG BANK DEUTSCHE
GENOSSENSCHAFTSBANK
By /s/ Karen A. Brinkman
---------------------------
Title Vice President
------------------------
By /s/ Robert B. Herber
---------------------------
Title Vice President
------------------------
KREDIETBANK N.V.
By /s/
---------------------------
Title Vice President
------------------------
By /s/ Robert Shauffer
---------------------------
Title Vice President
------------------------
S-6
<PAGE> 12
NBD BANK, N.A.
By /s/ Daniel J. Clarke, Jr.
---------------------------
Title Vice President
------------------------
ISTITUTO BANCARIO SAN PAOLO DI
TORINO S.P.A.
By /s/
---------------------------
Title Branch Manager
------------------------
By /s/
---------------------------
Title Assistant Vice President
------------------------
THE SANWA BANK, LIMITED, LOS
ANGELES BRANCH
By /s/
---------------------------
Title Vice President
------------------------
UNITED STATES NATIONAL BANK
OF OREGON
By /s/ Timothy A. Miller
---------------------------
Title Credit Officer
------------------------
ABN AMRO BANK N.V., LOS
ANGELES INTERNATIONAL BRANCH
By /s/ Ellen M. Coleman
---------------------------
Title Assistant Vice President
------------------------
By /s/ John A. Miller
---------------------------
Title Vice President
------------------------
BANK OF IRELAND
By /s/
---------------------------
Title Assistant Treasurer
------------------------
S-7
<PAGE> 13
THE BANK OF CALIFORNIA, N.A.
By /s/
----------------------------
Title
---------------------------
FUJI BANK, LTD.
By /s/ Nobuhiro Umemura
-----------------------------
Title Joint General Manager
--------------------------
THE SAKURA BANK, LTD.
By /s/ Ofusa Sato
-----------------------------
Title Assistant General Manager
--------------------------
& Senior Vice President
--------------------------
BANQUE PARIBAS
By /s/
-----------------------------
Title Senior Vice President
--------------------------
By /s/
-----------------------------
Title Vice President
--------------------------
COMPAGNIE FINANCIERE DE
CIC ET DE L'UNION EUROPEENNE
By /s/ Albert M. Calo
-----------------------------
Title Vice President
--------------------------
By /s/ Eric Longuet
-----------------------------
Title Vice President
--------------------------
THE SUMITOMO BANK, LIMITED,
LOS ANGELES BRANCH
By /s/
----------------------------
Title General Manager
-------------------------
DEUTSCHE BANK AG NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES
By /s/ Christopher de Chabert
-----------------------------
Title Assistant Vice President
--------------------------
S-8
<PAGE> 14
By /s/ Gayma Z. Shiorarain
---------------------------
Title Vice President
------------------------
COMMERZBANK AG,
LOS ANGELES BRANCH
By /s/ Steven F. Larsen
---------------------------
Title Vice President
------------------------
By /s/ Christian Jagenberg
---------------------------
Title Senior Vice President
------------------------
& General Manager
------------------------
THE DAI-ICHI KANGYO BANK, LTD.
LOS ANGELES AGENCY
By /s/ Tomohiro Nozaki
----------------------------
Title Senior Vice President
-------------------------
& Joint General Manager
-------------------------
MONTE DEI PASCHI DI SIENA
By /s/ S.M. Sondak
-----------------------------
Title First Vice President
--------------------------
& Deputy General Manager
--------------------------
By /s/ Brian R. Landy
-----------------------------
Title Vice President
--------------------------
THE SUMITOMO TRUST AND BANKING
CO., LTD., LOS ANGELES AGENCY
By /s/ Magayuki Imanaka
----------------------------
Title Senior Manager
-------------------------
LLOYDS BANK PLC
By /s/ Windsor R. Davies
----------------------------
Title Vice President & Manager
-------------------------
By /s/
----------------------------
Title Senior Vice President
-------------------------
CHIBA BANK, LTD.
By /s/ Kazuaki Kondo
----------------------------
Title General Manger
-------------------------
S-9
<PAGE> 15
EXHIBIT G
[LETTERHEAD OF FINOVA CAPITAL CORPORATION]
INCREASE OF COMMITMENT
, 19
------------------------ --
Citibank, N.A., as Administrative Agent
c/o Citicorp USA, Inc.
One Sansome Street
San Francisco, California 94104
Attention: Loan Administration
Ladies and Gentlemen
In accordance with Section 2.11(c) of the Sixth Amendment and
Restatement dated as of May 16, 1994 of Credit Agreement dated as of May 31,
1976, as heretofore amended (the "Credit Agreement"; terms defined therein being
used herein as therein defined), among the undersigned, the Lenders parties
thereto, Bank of America National Trust and Savings Association, Bank of
Montreal, Chemical Bank, Citibank, N.A. and National Westminster Bank USA, as
Agents, and Citibank, N.A., as Administrative Agent, the undersigned hereby
notifies you of the increase of [$ ] to [NAME OF INCREASING BANK]'s
Commitment which shall result in [NAME OF INCREASING BANK]'s net Commitment
equalling [$ ].
The undersigned hereby certifies, on behalf of the Company that
the representations and warranties contained in Section 3.01 of the Credit
Agreement are true and accurate as though made on and as of the date hereof
(except to the extent any representation and warranty is expressly made as of a
specific date, in which case such representation and warranty shall be true and
correct in all material respects as of such specific date).
G-1
<PAGE> 16
Such increase of the Commitment of [NAME OF INCREASING BANK] shall
be subject to [NAME OF INCREASING BANK]'s execution of a counterpart of this
notice on or before , 19 , and shall become effective as of
, 19 .
Very truly yours,
FINOVA CAPITAL
CORPORATION
By
--------------------------
Title:
The undersigned agrees to the increase of its Commitment as
noticed above.
Date: , 19 [NAME OF INCREASING BANK]
----------- --
By
--------------------------
Title:
G-2
<PAGE> 1
EXHIBIT 10.B
FINOVA CAPITAL CORPORATION
THIRD AMENDMENT DATED AS OF NOVEMBER 1, 1995
TO SIXTH AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT
This THIRD AMENDMENT TO SIXTH AMENDMENT AND RESTATEMENT OF
CREDIT AGREEMENT (this "Amendment") is dated as of November 1, 1995 and entered
into by and among FINOVA CAPITAL CORPORATION, a Delaware corporation (formerly,
Greyhound Financial Corporation, hereinafter the "Company"), the undersigned
lenders (collectively the "Lenders"), the undersigned Agents, BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, BANK OF MONTREAL, CHEMICAL BANK,
CITIBANK, N.A., and NATIONAL WESTMINSTER BANK USA, individually and as agents
(the "Agents") for the Lenders hereunder, and CITIBANK, N.A., a national
banking association, as administrative agent (the "Administrative Agent") for
the Lenders hereunder, and is made with reference to that certain Sixth
Amendment and Restatement dated as of May 16, 1994 of Credit Agreement dated as
of May 31, 1976, by and among the Company, the Lenders, the Agents and the
Administrative Agent, as amended by a First Amendment to Sixth Amendment and
Restatement of Credit Agreement dated as of September 30, 1994 and a Second
Amendment to Sixth Amendment and Restatement of Credit Agreement dated as of
May 11, 1995 (as so amended, the "Credit Agreement"). Capitalized terms used
herein without definition shall have the same meanings herein as set forth in
the Credit Agreement.
RECITALS
WHEREAS, the Company has requested that the Termination Date
be extended to May 21, 2000, that the interest rate margins and facility fee
rates be amended as set forth herein and that certain conforming changes be
made in the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
A. AMENDMENTS TO SECTION 1.01: DEFINITIONS. The Credit
Agreement is hereby amended by deleting therefrom the definitions of the terms
"Level 1", "Level 2", "Level 3", "Level 4", "Level 5", "Margin" and
"Termination Date" and substituting the following therefor in the appropriate
alphabetical order:
"'Level 1' shall mean that Long-term Debt carries two or more
of the following ratings:
'A' or higher by S&P
'A2' or higher by Moody's
'A' or higher by D&P"
1
<PAGE> 2
"'Level 2' shall mean that none of the criteria of Level 1 are
satisfied and Long-term Debt carries two or more of the following
ratings:
'A-' or higher by S&P
'A3' or higher by Moody's
'A-' or higher by D&P"
"'Level 3' shall mean that none of the criteria of Level 1 or
Level 2 are satisfied and Long-term Debt carries two or more of the
following ratings:
'BBB+' or higher by S&P
'Baa1' or higher by Moody's
'BBB+' or higher by D&P"
"'Level 4' shall mean that none of the criteria of Level 1,
Level 2 or Level 3 are satisfied and Long-term Debt carries two or
more of the following ratings:
'BBB' or higher by S&P
'Baa2' or higher by Moody's
'BBB' or higher by D&P"
"'Level 5' shall mean that none of the criteria of Level 1,
Level 2, Level 3 or Level 4 are satisfied and Long-term Debt carries
two or more of the following ratings:
'BBB-' or higher by S&P
'Baa3' or higher by Moody's
'BBB-' or higher by D&P"
"'Level 6' shall mean that none of the criteria of Level 1,
Level 2, Level 3, Level 4 or Level 5 are satisfied."
"`Margin' shall mean with respect to any day in any Interest
Period in relation to any Advance, the percentages set forth in Table
A below, with respect to determinations of the Base Rate, or Table B
below, with respect to determinations of the Eurodollar Rate:
2
<PAGE> 3
Table A
Base Rate Margins
(in basis points)
<TABLE>
<CAPTION>
Outstanding Advances as a
Percentage of Commitments
(without giving effect
to any B Reduction)
-------------------------
Greater than
Level Less than 50% or equal to 50%
- ----- ------------- ---------------
<S> <C> <C>
Level 1 -10.00 -10.00
Level 2 -11.00 -11.00
Level 3 -12.50 -12.50
Level 4 -15.00 -15.00
Level 5 -25.00 0.00
Level 6 15.00 65.00
</TABLE>
<TABLE>
<CAPTION>
Table B
Eurodollar Margins
(in basis points)
Outstanding Advances as a
Percentage of Commitments
(without giving effect
to any B Reduction)
-------------------------
Greater than
Level Less than 50% or equal to 50%
- ----- ------------- ---------------
<S> <C> <C>
Level 1 20.00 32.50
Level 2 24.00 36.50
Level 3 25.00 37.50
Level 4 30.00 42.50
Level 5 50.00 62.50
Level 6 65.00 77.50
</TABLE>
The applicable Margin shall be adjusted daily to reflect changes in the
outstanding principal amount of the Advances (determined for any day as of the
close of business) and the Level applicable to Long-term Debt in accordance with
Section 2.07."
"'Termination Date' shall mean May 21, 2000; provided, however, that, if
any Lender has consented to an Extension Request in accordance with Section
2.17, with regard to the then existing Termination Date, the then existing
Termination Date as to such Lender shall be automatically extended for one year
from the then existing Termination Date; provided, however, that,
notwithstanding any other provisions of this Agreement to the contrary, the
3
<PAGE> 4
Termination Date shall occur upon the earlier termination in whole of
the Commitments pursuant to Section 2.11 or 6.01."
B. AMENDMENT TO SECTION 2.10. Section 2.10 of the Credit
Agreement is hereby amended by deleting all of the text appearing after the
colon and before the period in the first sentence of such Section and
substituting the following therefor:
"with respect to each day that (i) Level 1 is
applicable, 0.10% per annum, (ii) Level 2 is applicable, 0.11%
per annum, (iii) Level 3 is applicable, 0.125% per annum, (iv)
Level 4 is applicable, 0.15% per annum, (v) Level 5 is
applicable, 0.25% per annum" or (vi) Level 6 is applicable,
0.35% per annum."
C. AMENDMENT TO SECTION 4.02(A). Section 4.02(a) of the
Credit Agreement is hereby amended by deleting the reference to "Level 4 or
Level 5" and substituting therefor reference to "Level 5 or Level 6" and by
deleting the reference to "Level 1 or Level 2" therefrom and substituting
therefor reference to "Level 1, Level 2 or Level 3".
SECTION 2. COMPANY'S REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Amendment and to
amend the Credit Agreement in the manner provided herein, the Company
represents and warrants to each Lender that the following statements are true,
correct and complete:
A. CORPORATE POWER AND AUTHORITY. The Company has all
requisite corporate power and authority to enter into this Amendment and to
carry out the transactions contemplated by, and perform its obligations under,
the Credit Agreement, as amended by this Amendment (the "Amended Agreement").
B. AUTHORIZATION OF AGREEMENTS. The execution and
delivery of this Amendment and the consummation of the Amended Agreement have
been duly authorized by all necessary corporate action on the part of the
Company.
C. NO CONFLICT. The execution and delivery by the
Company of this Amendment and the consummation by the Company of the Amended
Agreement do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to the Company or its Subsidiaries,
the certificate of incorporation or bylaws of the Company or any order,
judgment or decree of any court or other agency of government binding on the
Company or its Subsidiaries, (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of the Company or its Subsidiaries, (iii) result in or
require the creation or imposition of any Lien upon any of the properties or
assets of the Company or its Subsidiaries, or (iv) require any approval of
4
<PAGE> 5
stockholders or any approval or consent of any Person under any contractual
obligation of the Company or its Subsidiaries (other than the parties hereto).
D. GOVERNMENTAL CONSENTS. The execution and delivery by
the Company of this Amendment and the consummation by the Company of the
Amended Agreement do not and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by, any federal, state
or other governmental authority or regulatory body.
E. BINDING OBLIGATION. This Amendment has been duly
executed and delivered by the Company and this Amendment and the Amended
Agreement are the legally valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or limiting creditors' rights generally or by
principles of equity and commercial reasonableness.
F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM
CREDIT AGREEMENT. The representations and warranties contained in Section 3.01
of the Credit Agreement are true, correct and complete in all material respects
to the same extent as though made on and as of the date hereof, except as
provided above or to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.
G. ABSENCE OF DEFAULT. No event has occurred and is
continuing or will result from the consummation of the transactions
contemplated by this Amendment that would, upon the giving of notice, the
passage of time, or otherwise, constitute an Event of Default.
SECTION 3. CONDITIONS TO EFFECTIVENESS
Section 1 of this Amendment shall become effective on the
first date on which all of the following conditions precedent shall have been
satisfied (such date being referred to herein as the "Amendment Effective
Date"):
A. On or before the Amendment Effective Date, the
Company shall deliver to the Lenders (or to the Agents with sufficient
originally executed copies, where appropriate, for each Lender and its counsel)
the following, each, unless otherwise noted, dated the Amendment Effective
Date:
1. Resolutions of its Board of Directors
approving and authorizing the execution, delivery, and performance of
this Amendment, certified as of the Amendment Effective Date by its
corporate secretary or an assistant
5
<PAGE> 6
secretary as being in full force and effect without modification or
amendment;
2. Signature and incumbency certificates of its
officers executing this Amendment; and
3. Executed copies of this Amendment.
B. On or before the Amendment Effective Date, all
corporate and other proceedings taken or to be taken in connection with the
transactions contemplated hereby and all documents incidental thereto not
previously found acceptable by the Agents, acting on behalf of the Lenders, and
their counsel shall be satisfactory in form and substance to the Agents and
such counsel, and the Agents and such counsel shall have received all such
counterpart originals or certified copies of such documents as the Agents may
reasonably request.
SECTION 4. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND
THE OTHER LOAN DOCUMENTS.
(i) On and after the date this Amendment becomes
effective in accordance with its terms, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof", "herein" or
words of like import referring to the Credit Agreement, and each
reference in the Notes to the "Credit Agreement", "thereunder",
"thereof" or words of like import referring to the Credit Agreement
shall mean and be a reference to the Amended Agreement.
(ii) Except as specifically amended by this Amendment, the
Credit Agreement and the Notes shall remain in full force and effect
and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this
Amendment shall not, except as expressly provided herein, constitute a
waiver of any provision of, or operate as a waiver of, any right,
power or remedy of the Agent or any Lender under, the Credit Agreement
or the Notes.
B. FEES AND EXPENSES. The Company acknowledges that all
costs, fees and expenses as described in Section 8.05 of the Credit Agreement
incurred by the Administrative Agent and its counsel with respect to this
Amendment and the documents and transactions contemplated hereby shall be for
the account of the Company.
C. HEADINGS. Section and subsection headings in this
Amendment are included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose or be given any
substantive effect.
6
<PAGE> 7
D. EFFECT ON ACCRUED BUT UNPAID INTEREST AND FEES. The
parties hereto agree that this Amendment, and the amendments to the Credit
Agreement effected hereby, shall not affect the amounts of accrued and unpaid
interest and facility fees outstanding under the Credit Agreement immediately
prior to the effectiveness of this Amendment, which amounts shall be payable at
the times provided for in the Credit Agreement, it being understood that the
changes in the margins and facility fee rates effected hereby shall only affect
the rates at which interest and facility fees accrue on and after the Amendment
Effective Date.
E. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
F. COUNTERPARTS; EFFECTIVENESS. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Amendment shall become
effective as of the date hereof upon the execution and delivery of a
counterpart hereof by the Company and the Lenders.
[Remainder of page intentionally left blank]
7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
The Company:
FINOVA CAPITAL CORPORATION
By /s/ Robert J. Fitzsimmons
---------------------------------------
Title Senior Vice President Treasurer
------------------------------------
By /s/ Meilee Smythe
---------------------------------------
Title Vice President--Assistant Treasurer
------------------------------------
The Lenders:
CITIBANK, N.A. (Individually
and as an Agent and
Administrative Agent)
By /s/ Barbara A. Cohen
---------------------------------
Title Vice President
-------------------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/
---------------------------------
Title Managing Director
------------------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION (as an
Agent)
By /s/
---------------------------------
Title Managing Director
------------------------------
S-1
<PAGE> 9
BANK OF MONTREAL (Individually
and as an Agent)
By /s/
---------------------------------
Title
------------------------------
CHEMICAL BANK (Individually
and as an Agent)
By /s/ P. A. Parker
---------------------------------
Title Vice President
------------------------------
NATWEST BANK, N.A.
(Individually and as an Agent)
By /s/ Andrea L. Lee
---------------------------------
Title Vice President
------------------------------
BANK OF AMERICA ILLINOIS
By /s/
---------------------------------
Title Managing Director
-------------------------------
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By /s/
---------------------------------
Title Vice President
-------------------------------
CREDIT SUISSE
By /s/ Marilou Palenzuela
---------------------------------
Title Member Senior Management
-------------------------------
By /s/ Lori S. Jenner
---------------------------------
Title Associate
-------------------------------
S-2
<PAGE> 10
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY
By /s/
---------------------------------
Title Senior Vice President
-------------------------------
& Senior Manager
-------------------------------
NATIONSBANK OF GEORGIA, N.A.
By /s/
---------------------------------
Title Vice President
-------------------------------
UNION BANK OF SWITZERLAND
LOS ANGELES BRANCH
By /s/ Robert A. McKerroll, Jr.
----------------------------------
Title Assistant Vice President
-------------------------------
By /s/ Philip A. Stephens
----------------------------------
Title Assistant Vice President
-------------------------------
WESTDEUTSCHE LANDESBANK
GIROZENTRALE ------- NEW YORK AND
CAYMAN ISLANDS BRANCHES
By /s/
----------------------------------
Title Managing Director
-------------------------------
By /s/ Laura Spichiger
----------------------------------
Title Associate
-------------------------------
CREDIT LYONNAIS
SAN FRANCISCO BRANCH
By /s/ William J. Fischer
---------------------------------
Title Vice President & Manager
-------------------------------
S-3
<PAGE> 11
FIRST INTERSTATE BANK OF
ARIZONA, N.A.
By /s/
---------------------------------
Title Vice President
-------------------------------
NATIONAL WESTMINSTER BANK PLC
By /s/
---------------------------------
Title Vice President
-------------------------------
ROYAL BANK OF CANADA
By /s/ Tom J. Oberaigner
---------------------------------
Title Manager
-------------------------------
SOCIETE GENERALE
By /s/ J. Staley Stewart
---------------------------------
Title Vice President
-------------------------------
BANK ONE, ARIZONA, N.A.
By /s/
---------------------------------
Title Vice President
-------------------------------
DRESDNER BANK AG LOS ANGELES
AGENCY
By /s/ Dennis G. Blank
---------------------------------
Title Vice President
-------------------------------
By /s/ Sidney S. Jordan
---------------------------------
Title Vice President
-------------------------------
S-4
<PAGE> 12
UNION BANK
By /s/
---------------------------------
Title Vice President
-------------------------------
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., LOS ANGELES
AGENCY
By /s/ Y. Kamisawa
----------------------------------
Title
-------------------------------
By /s/
----------------------------------
Title
-------------------------------
THE MITSUBISHI TRUST AND
BANKING CORPORATION, ACTING
THROUGH ITS LOS ANGELES AGENCY
By /s/
---------------------------------
Title Senior Vice President
-------------------------------
& Chief Manager
-------------------------------
ARAB BANKING CORPORATION
By /s/
---------------------------------
Title Vice President & Manager
-------------------------------
THE BANK OF NOVA SCOTIA
By /s/
---------------------------------
Title Officer
-------------------------------
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION
By /s/ Wynelle Farlow
---------------------------------
Title Vice President
------------------------------
S-5
<PAGE> 13
BANK HAPOALIM, B.M.,
LOS ANGELES BRANCH
By /s/
----------------------------------
Title Vice President
-------------------------------
By /s/
----------------------------------
Title Vice President
-------------------------------
BANK OF AMERICA ARIZONA
By /s/
---------------------------------
Title Vice President
-------------------------------
BANK OF HAWAII
By /s/ Joseph J. Donaldson
---------------------------------
Title Vice President
-------------------------------
BANQUE NATIONALE DE PARIS
By /s/ C. Morio
----------------------------------
Title Senior Vice President
-------------------------------
& Manager
-------------------------------
By /s/
----------------------------------
Title Vice President
-------------------------------
COMERICA BANK
By /s/
---------------------------------
Title Assistant Vice President
-------------------------------
S-6
<PAGE> 14
CREDIT AGRICOLE
By /s/ David Bouhl
--------------------------------
Title Executive Vice President
------------------------------
DG BANK DEUTSCHE
GENOSSENSCHAFTSBANK
By /s/ Karen A. Brinkman
--------------------------------
Title Vice President
------------------------------
By /s/ Robert B. Herber
--------------------------------
Title Vice President
------------------------------
KREDIETBANK N.V.
By /s/
--------------------------------
Title Vice President
------------------------------
By /s/ Robert Shauffer
--------------------------------
Title Vice President
------------------------------
NBD BANK, N.A.
By /s/ Daniel J. Clarke, Jr.
--------------------------------
Title Vice President
------------------------------
ISTITUTO BANCARIO SAN PAOLO DI
TORINO S.P.A.
By /s/
---------------------------------
Title Branch Manager
------------------------------
By /s/
---------------------------------
Title Assistant Vice President
------------------------------
S-7
<PAGE> 15
THE SANWA BANK, LIMITED,
LOS ANGELES BRANCH
By /s/
---------------------------------
Title Vice President
------------------------------
UNITED STATES NATIONAL BANK
OF OREGON
By /s/ Timothy A. Miller
---------------------------------
Title Credit Officer
------------------------------
ABN AMRO BANK N.V., LOS
ANGELES INTERNATIONAL BRANCH
By /s/ Ellen M. Coleman
---------------------------------
Title Assistant Vice President
------------------------------
By /s/ John A. Miller
---------------------------------
Title Vice President
------------------------------
BANK OF IRELAND
By /s/
---------------------------------
Title Assistant Treasurer
------------------------------
THE BANK OF CALIFORNIA, N.A.
By /s/
---------------------------------
Title
------------------------------
FUJI BANK, LTD.
By /s/ Nobuhiro Umemura
---------------------------------
Title Joint General Manager
------------------------------
S-8
<PAGE> 16
THE SAKURA BANK, LTD.
By /s/ Ofusa Sato
----------------------------------
Title Assistant General Manager
-------------------------------
& Senior Vice President
-------------------------------
BANQUE PARIBAS
By /s/
----------------------------------
Title Senior Vice President
-------------------------------
By /s/
----------------------------------
Title Vice President
-------------------------------
COMPAGNIE FINANCIERE DE
CIC ET DE L'UNION EUROPEENNE
By /s/ Albert M. Calo
----------------------------------
Title Vice President
-------------------------------
By /s/ Eric Longuet
----------------------------------
Title Vice President
-------------------------------
THE SUMITOMO BANK, LIMITED,
LOS ANGELES BRANCH
By /s/
----------------------------------
Title General Manager
-------------------------------
DEUTSCHE BANK AG NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES
By /s/ Christopher de Chabert
----------------------------------
Title Assistant Vice President
-------------------------------
By /s/ Gayma Z. Shiorarain
----------------------------------
Title Vice President
-------------------------------
S-9
<PAGE> 17
COMMERZBANK AG,
LOS ANGELES BRANCH
By /s/ Steven F. Larsen
----------------------------------
Title Vice President
-------------------------------
By /s/ Christian Jagenberg
----------------------------------
Title Senior Vice President
-------------------------------
& General Manager
-------------------------------
THE DAI-ICHI KANGYO BANK, LTD.
LOS ANGELES AGENCY
By /s/ Tomohiro Nozaki
----------------------------------
Title Senior Vice President
-------------------------------
& Joint General Manager
-------------------------------
MONTE DEI PASCHI DI SIENA
By /s/ S. M. Sondak
----------------------------------
Title First Vice President
-------------------------------
& Deputy General Manager
-------------------------------
By /s/ Brian R. Landy
----------------------------------
Title Vice President
-------------------------------
THE SUMITOMO TRUST AND BANKING
CO., LTD., LOS ANGELES AGENCY
By /s/ Magayuki Imanaka
----------------------------------
Title Senior Manager
-------------------------------
LLOYDS BANK PLC
By /s/ Windsor R. Davies
----------------------------------
Title Vice President & Manager
-------------------------------
By /s/
----------------------------------
Title Senior Vice President
-------------------------------
S-10
<PAGE> 18
CHIBA BANK, LTD.
By /s/ Kazuaki Kondo
----------------------------------
Title General Manager
-------------------------------
S-11
<PAGE> 1
EXHIBIT 10.C
FINOVA CAPITAL CORPORATION
SECOND AMENDMENT DATED AS OF MAY 11, 1995
TO CREDIT AGREEMENT (SHORT TERM FACILITY)
This SECOND AMENDMENT TO CREDIT AGREEMENT (SHORT TERM
FACILITY) (this "Amendment") is dated as of May 11, 1995 and entered into by
and among FINOVA CAPITAL CORPORATION, a Delaware corporation (formerly known as
Greyhound Financial Corporation, hereinafter the "Company"), the undersigned
lenders (collectively the "Lenders"), the undersigned Agents, BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, BANK OF MONTREAL, CHEMICAL BANK,
CITIBANK, N.A., and NATIONAL WESTMINSTER BANK USA, individually and as agents
(the "Agents") for the Lenders hereunder, and CITIBANK, N.A., a national
banking association, as administrative agent (the "Administrative Agent") for
the Lenders hereunder, and is made with reference to that certain Credit
Agreement (Short Term Facility) dated as of May 16, 1994, by and among the
Company, the Lenders, the Agents and the Administrative Agent, as amended by a
First Amendment to Credit Agreement dated as of September 30, 1994 (as so
amended, the "Credit Agreement"). Capitalized terms used herein without
definition shall have the same meanings herein as set forth in the Credit
Agreement.
RECITALS
WHEREAS, the Effective Date of the Credit Agreement is May 24,
1994, and the Termination Date is, without giving effect to this Amendment, May
23, 1995;
WHEREAS, the Company has requested that the Termination Date
be extended for 364 days to May 21, 1996, and that certain covenants be amended
as set forth herein;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:
1
<PAGE> 2
SECTION 1. EXTENSION OF TERMINATION DATE
The Company hereby requests that the Termination Date be
extended for 364 days as contemplated by Section 2.15 of the Credit Agreement.
Each Lender executing this Amendment shall be deemed to have elected to consent
to such extension for the purposes of Section 2.15(b) of the Credit Agreement.
SECTION 2. AMENDMENTS TO THE CREDIT AGREEMENT
A. REFERENCES TO GREYHOUND FINANCIAL CORPORATION AND GFC
FINANCIAL CORPORATION. The Credit Agreement is hereby amended by deleting all
references to "Greyhound Financial Corporation" and substituting therefor
references to "FINOVA Capital Corporation" and deleting all references to "GFC
Financial Corporation" and substituting therefor references to "The FINOVA
Group Inc."
B. AMENDMENTS TO SECTION 2.10: INCREASES OF COMMITMENTS.
Section 2.10 of the Credit Agreement is hereby amended by deleting the heading
of such Section and substituting therefor a heading reading "Reduction and
Increase of the Commitments" and adding at the end thereof the following clause
(c):
"(c) At any time, if no event has occurred and is continuing which
constitutes an Event of Default or which would constitute an Event of
Default but for the requirement that notice be given or time elapse or
both, the Company may, with the consent of any Lender, increase the
Commitment of such Lender provided that such increase in the
Commitment of such Lender shall be effective upon the receipt by the
Administrative Agent of a commitment increase letter in substantially
the form of Exhibit G hereto (each a "Commitment Increase Letter").
No Lender shall have any obligation to agree to any increase in its
Commitment and such agreement shall be at the sole discretion of each
such Lender."
C. AMENDMENT TO SECTION 4.01(G): REPORTING OF PAST DUE
ACCOUNTS. Section 4.01(g) of the Credit Agreement is hereby amended by
deleting the reference to the amount of $20,000,000 and substituting therefor
reference to the amount of $30,000,000.
D. AMENDMENT TO SECTION 4.02(A): RATIO OF INDEBTEDNESS
TO STOCKHOLDER'S EQUITY. Section 4.02(a) of the Credit Agreement is hereby
amended by deleting the phrase reading "total outstanding Indebtedness of the
Company and its consolidated subsidiaries to Stockholder's Equity" and
substituting therefor the phrase "(a) an amount equal to (x) total outstanding
Indebtedness of the Company and its consolidated subsidiaries less (y) the cash
and cash equivalents of the Company and its consolidated subsidiaries, except
any funds held in escrow, to (b) Stockholder's Equity".
2
<PAGE> 3
E. AMENDMENT TO EXHIBITS: EXHIBIT G. The Credit Agreement
is further amended by annexing as Exhibit G thereto Exhibit G as annexed
hereto.
SECTION 3. COMPANY'S REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Amendment and to
amend the Credit Agreement in the manner provided herein, the Company
represents and warrants to each Lender that the following statements are true,
correct and complete:
A. CORPORATE POWER AND AUTHORITY. The Company has all
requisite corporate power and authority to enter into this Amendment and to
carry out the transactions contemplated by, and perform its obligations under,
the Credit Agreement, as amended by this Amendment (the "Amended Agreement").
B. AUTHORIZATION OF AGREEMENTS. The execution and
delivery of this Amendment and the consummation of the Amended Agreement have
been duly authorized by all necessary corporate action on the part of the
Company.
C. NO CONFLICT. The execution and delivery by the
Company of this Amendment and the consummation by the Company of the Amended
Agreement do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to the Company or its Subsidiaries,
the certificate of incorporation or bylaws of the Company or any order,
judgment or decree of any court or other agency of government binding on the
Company or its Subsidiaries, (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of the Company or its Subsidiaries, (iii) result in or
require the creation or imposition of any Lien upon any of the properties or
assets of the Company or its Subsidiaries, or (iv) require any approval of
stockholders or any approval or consent of any Person under any contractual
obligation of the Company or its Subsidiaries (other than the parties hereto).
D. GOVERNMENTAL CONSENTS. The execution and delivery by
the Company of this Amendment and the consummation by the Company of the
Amended Agreement do not and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by, any federal, state
or other governmental authority or regulatory body.
E. BINDING OBLIGATION. This Amendment has been duly
executed and delivered by the Company and this Amendment and the Amended
Agreement are the legally valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or limiting creditors' rights generally or by
principles of equity and commercial reasonableness.
3
<PAGE> 4
F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM
CREDIT AGREEMENT. The representations and warranties contained in Section 3.01
of the Credit Agreement are true, correct and complete in all material respects
to the same extent as though made on and as of the date hereof, except as
provided above or to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.
G. ABSENCE OF DEFAULT. No event has occurred and is
continuing or will result from the consummation of the transactions
contemplated by this Amendment that would, upon the giving of notice, the
passage of time, or otherwise, constitute an Event of Default.
SECTION 4. CONDITIONS TO EFFECTIVENESS
Section 2 of this Amendment shall become effective on the
first date on which all of the following conditions precedent shall have been
satisfied (such date being referred to herein as the "Second Amendment
Effective Date"):
A. On or before the Second Amendment Effective Date, the
Company shall deliver to the Lenders (or to the Agents with sufficient
originally executed copies, where appropriate, for each Lender and its counsel)
the following, each, unless otherwise noted, dated the Second Amendment
Effective Date:
1. Resolutions of its Board of Directors
approving and authorizing the execution, delivery, and performance of
this Amendment, certified as of the Second Amendment Effective Date by
its corporate secretary or an assistant secretary as being in full
force and effect without modification or amendment;
2. Signature and incumbency certificates of its
officers executing this Amendment; and
3. Executed copies of this Amendment.
B. On or before the Second Amendment Effective Date, all
corporate and other proceedings taken or to be taken in connection with the
transactions contemplated hereby and all documents incidental thereto not
previously found acceptable by the Agents, acting on behalf of the Lenders, and
their counsel shall be satisfactory in form and substance to the Agents and
such counsel, and the Agents and such counsel shall have received all such
counterpart originals or certified copies of such documents as the Agents may
reasonably request.
4
<PAGE> 5
SECTION 5. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND
THE OTHER LOAN DOCUMENTS.
(i) On and after the date this Amendment becomes
effective in accordance with its terms, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof", "herein" or
words of like import referring to the Credit Agreement, and each
reference in the Notes to the "Credit Agreement", "thereunder",
"thereof" or words of like import referring to the Credit Agreement
shall mean and be a reference to the Amended Agreement.
(ii) Except as specifically amended by this Amendment, the
Credit Agreement and the Notes shall remain in full force and effect
and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this
Amendment shall not, except as expressly provided herein, constitute a
waiver of any provision of, or operate as a waiver of, any right,
power or remedy of the Agents or any Lender under, the Credit
Agreement or the Notes.
B. FEES AND EXPENSES. The Company acknowledges that all
costs, fees and expenses as described in Section 8.05 of the Credit Agreement
incurred by the Administrative Agent and its counsel with respect to this
Amendment and the documents and transactions contemplated hereby shall be for
the account of the Company.
C. HEADINGS. Section and subsection headings in this
Amendment are included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose or be given any
substantive effect.
D. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. COUNTERPARTS; EFFECTIVENESS. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Amendment shall become
effective as of the date hereof upon the execution and delivery of a
counterpart hereof by the Company and Majority Lenders.
5
<PAGE> 6
[Remainder of page intentionally left blank]
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
The Company:
FINOVA CAPITAL CORPORATION
By /s/ Robert J. Fitzsimmons
------------------------------
Title Senior Vice President -
---------------------------
Treasurer
---------------------------
By /s/ Meilee Smythe
------------------------------
Title Vice President -
---------------------------
Assistant Treasurer
---------------------------
The Lenders:
CITIBANK, N.A. (Individually
and as an Agent and
Administrative Agent)
By /s/ Barbara A. Cohen
-----------------------------
Title Vice President
----------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/
-------------------------
Title Managing Director
----------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION (as an
Agent)
By /s/
-------------------------
Title Managing Director
---------------------
BANK OF MONTREAL (Individually
and as an Agent)
By /s/
-------------------------
Title
----------------------
S-1
<PAGE> 8
CHEMICAL BANK (Individually
and as an Agent)
By /s/ P.A. Parker
---------------------------
Title
------------------------
NATIONAL WESTMINSTER BANK USA
(Individually and as an Agent)
By /s/ Andrea L. Lee
---------------------------
Title Vice President
------------------------
BANK OF AMERICA ILLINOIS
By /s/
---------------------------
Title Managing Director
------------------------
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By /s/
---------------------------
Title Vice President
------------------------
CREDIT SUISSE
By /s/ Marilou Palenzuela
---------------------------
Title Member Senior Management
------------------------
By /s/ Lori S. Jenner
---------------------------
Title Associate
------------------------
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY
By /s/
---------------------------
Title Senior Vice President
------------------------
& Senior Manager
------------------------
S-2
<PAGE> 9
NATIONSBANK OF GEORGIA, N.A.
By /s/
---------------------------
Title Vice President
------------------------
UNION BANK OF SWITZERLAND LOS
ANGELES BRANCH
By /s/ Robert A. McKerroll Jr.
---------------------------
Title Assistant Vice President
------------------------
By /s/ Philip A. Stephens
---------------------------
Title Assistant Vice President
------------------------
WESTDEUTSCHE LANDESBANK
GIROZENTRALE - NEW YORK AND
CAYMAN ISLANDS BRANCHES
By /s/
---------------------------
Title Managing Director
------------------------
By /s/ Laura Spichiger
---------------------------
Title Associate
------------------------
CREDIT LYONNAIS
SAN FRANCISCO BRANCH
By /s/ William J. Fischer
---------------------------
Title Vice President & Manager
------------------------
FIRST INTERSTATE BANK OF
ARIZONA, N.A.
By /s/
---------------------------
Title Vice President
------------------------
NATIONAL WESTMINSTER BANK PLC
By /s/
---------------------------
Title Vice President
------------------------
S-3
<PAGE> 10
ROYAL BANK OF CANADA
By /s/ Tom J. Oberaigner
---------------------------
Title Manager
------------------------
SOCIETE GENERALE
By /s/ J. Staley Stewart
---------------------------
Title Vice President
------------------------
BANK ONE, ARIZONA, N.A.
By /s/
---------------------------
Title Vice President
------------------------
DRESDNER BANK AG LOS ANGELES
AGENCY
By /s/ Dennis G. Blank
---------------------------
Title Vice President
------------------------
By /s/ Sidney S. Jordan
---------------------------
Title Vice President
------------------------
UNION BANK
By /s/
---------------------------
Title Vice President
------------------------
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., LOS ANGELES
AGENCY
By /s/ Y. Kamisawa
---------------------------
Title
------------------------
By /s/
---------------------------
Title
------------------------
S-4
<PAGE> 11
THE MITSUBISHI TRUST AND
BANKING CORPORATION, ACTING
THROUGH ITS LOS ANGELES AGENCY
By /s/
---------------------------
Title Senior Vice President
------------------------
& Chief Manager
------------------------
ARAB BANKING CORPORATION
By /s/
---------------------------
Title Vice President & Manager
------------------------
THE BANK OF NOVA SCOTIA
By /s/
---------------------------
Title Officer
------------------------
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION
By /s/ Wynelle Farlow
---------------------------
Title Vice President
------------------------
BANK HAPOALIM, B.M.,
LOS ANGELES BRANCH
By /s/
---------------------------
Title Vice President
------------------------
By /s/
---------------------------
Title Vice President
------------------------
BANK OF AMERICA ARIZONA
By /s/
---------------------------
Title Vice President
------------------------
S-5
<PAGE> 12
BANK OF HAWAII
By /s/ Joseph J. Donaldson
---------------------------
Title Vice President
------------------------
BANQUE NATIONALE DE PARIS
By /s/ C. Morio
---------------------------
Title Senior Vice President
------------------------
& Manager
------------------------
By /s/
---------------------------
Title Vice President
------------------------
COMERICA BANK
By /s/
---------------------------
Title Assistant Vice President
------------------------
CREDIT AGRICOLE
By /s/ David Bouhl
---------------------------
Title Executive Vice President
------------------------
DG BANK DEUTSCHE
GENOSSENSCHAFTSBANK
By /s/ Karen A. Brinkman
---------------------------
Title Vice President
------------------------
By /s/ Robert B. Herber
---------------------------
Title Vice President
------------------------
KREDIETBANK N.V.
By /s/
---------------------------
Title Vice President
------------------------
By /s/ Robert Shauffer
---------------------------
Title Vice President
------------------------
S-6
<PAGE> 13
NBD BANK, N.A.
By /s/ Daniel J. Clarke, Jr.
---------------------------
Title Vice President
------------------------
ISTITUTO BANCARIO SAN PAOLO DI
TORINO S.P.A.
By /s/
---------------------------
Title Branch Manager
------------------------
By /s/
---------------------------
Title Assistant Vice President
------------------------
THE SANWA BANK, LIMITED, LOS
ANGELES BRANCH
By /s/
---------------------------
Title Vice President
------------------------
UNITED STATES NATIONAL BANK
OF OREGON
By /s/ Timothy A. Miller
---------------------------
Title Credit Officer
------------------------
ABN AMRO BANK N.V., LOS
ANGELES INTERNATIONAL BRANCH
By /s/ Ellen M. Coleman
---------------------------
Title Assistant Vice President
------------------------
By /s/ John A. Miller
---------------------------
Title Vice President
------------------------
BANK OF IRELAND
By /s/
---------------------------
Title Assistant Treasurer
------------------------
S-7
<PAGE> 14
THE BANK OF CALIFORNIA, N.A.
By /s/
----------------------------
Title
---------------------------
FUJI BANK, LTD.
By /s/ Nobuhiro Umemura
-----------------------------
Title Joint General Manager
--------------------------
THE SAKURA BANK, LTD.
By /s/ Ofusa Sato
-----------------------------
Title Assistant General Manager
--------------------------
& Senior Vice President
--------------------------
BANQUE PARIBAS
By /s/
-----------------------------
Title Senior Vice President
--------------------------
By /s/
-----------------------------
Title Vice President
--------------------------
COMPAGNIE FINANCIERE DE
CIC ET DE L'UNION EUROPEENNE
By /s/ Albert M. Calo
-----------------------------
Title Vice President
--------------------------
By /s/ Eric Longuet
-----------------------------
Title Vice President
--------------------------
THE SUMITOMO BANK, LIMITED,
LOS ANGELES BRANCH
By /s/
----------------------------
Title General Manager
-------------------------
DEUTSCHE BANK AG NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES
By /s/ Christopher de Chabert
-----------------------------
Title Assistant Vice President
--------------------------
S-8
<PAGE> 15
By /s/ Gayma Z. Shiorarain
---------------------------
Title Vice President
------------------------
COMMERZBANK AG,
LOS ANGELES BRANCH
By /s/ Steven F. Larsen
---------------------------
Title Vice President
------------------------
By /s/ Christian Jagenberg
---------------------------
Title Senior Vice President
------------------------
& General Manager
------------------------
THE DAI-ICHI KANGYO BANK, LTD.
LOS ANGELES AGENCY
By /s/ Tomohiro Nozaki
----------------------------
Title Senior Vice President
-------------------------
& Joint General Manager
-------------------------
MONTE DEI PASCHI DI SIENA
By /s/ S.M. Sondak
-----------------------------
Title First Vice President
--------------------------
& Deputy General Manager
--------------------------
By /s/ Brian R. Landy
-----------------------------
Title Vice President
--------------------------
THE SUMITOMO TRUST AND BANKING
CO., LTD., LOS ANGELES AGENCY
By /s/ Magayuki Imanaka
----------------------------
Title Senior Manager
-------------------------
LLOYDS BANK PLC
By /s/ Windsor R. Davies
----------------------------
Title Vice President & Manager
-------------------------
By /s/
----------------------------
Title Senior Vice President
-------------------------
CHIBA BANK, LTD.
By /s/ Kazuaki Kondo
----------------------------
Title General Manger
-------------------------
S-9
<PAGE> 16
EXHIBIT G
[LETTERHEAD OF FINOVA CAPITAL CORPORATION]
INCREASE OF COMMITMENT
, 19
--------------------- --
Citibank, N.A., as Administrative Agent
c/o Citicorp USA, Inc.
One Sansome Street
San Francisco, California 94104
Attention: Loan Administration
Ladies and Gentlemen
In accordance with Section 2.10(c) of the Credit Agreement, dated
as of May 16, 1994, as heretofore amended (the "Credit Agreement"; terms
defined therein being used herein as therein defined), among the undersigned,
the Lenders parties thereto, Bank of America National Trust and Savings
Association, Bank of Montreal, Chemical Bank, Citibank, N.A. and National
Westminster Bank USA, as Agents, and Citibank, N.A., as Administrative Agent,
the undersigned hereby notifies you of the increase of [$ ] to [NAME OF
INCREASING BANK]'s Commitment which shall result in [NAME OF INCREASING BANK]'s
net Commitment equalling [$ ].
The undersigned hereby certifies, on behalf of the Company that
the representations and warranties contained in Section 3.01 of the Credit
Agreement are true and accurate as though made on and as of the date hereof
(except to the extent any representation and warranty is expressly made as of a
specific date, in which case such representation and warranty shall be true and
correct in all material respects as of such specific date).
G-1
<PAGE> 17
Such increase of the Commitment of [NAME OF INCREASING BANK]
shall be subject to [NAME OF INCREASING BANK]'s execution of a counterpart of
this notice on or before , 19 , and shall become effective
as of , 19 .
Very truly yours,
FINOVA CAPITAL
CORPORATION
By
-----------------------------
Title:
The undersigned agrees to the increase of its Commitment as
noticed above.
Date: , 19 [NAME OF INCREASING BANK]
----------- --
By
-----------------------------
Title:
G-2
<PAGE> 1
EXHIBIT 10.D
FINOVA CAPITAL CORPORATION
THIRD AMENDMENT DATED AS OF NOVEMBER 1, 1995
TO CREDIT AGREEMENT (SHORT TERM FACILITY)
This THIRD AMENDMENT TO CREDIT AGREEMENT (SHORT TERM FACILITY)
(this "Amendment") is dated as of November 1, 1995 and entered into by and
among FINOVA CAPITAL CORPORATION, a Delaware corporation (formerly known as
Greyhound Financial Corporation, hereinafter the "Company"), the undersigned
lenders (collectively the "Lenders"), the undersigned Agents, BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, BANK OF MONTREAL, CHEMICAL BANK,
CITIBANK, N.A., and NATIONAL WESTMINSTER BANK USA, individually and as agents
(the "Agents") for the Lenders hereunder, and CITIBANK, N.A., a national
banking association, as administrative agent (the "Administrative Agent") for
the Lenders hereunder, and is made with reference to that certain Credit
Agreement (Short Term Facility) dated as of May 16, 1994, by and among the
Company, the Lenders, the Agents and the Administrative Agent, as amended by a
First Amendment to Credit Agreement dated as of September 30, 1994 and a Second
Amendment to Credit Agreement dated as of May 11, 1995 (as so amended, the
"Credit Agreement"). Capitalized terms used herein without definition shall
have the same meanings herein as set forth in the Credit Agreement.
RECITALS
WHEREAS, the Company has requested that the interest rate
margins and facility fee rates be amended as set forth herein and that certain
conforming changes be made in the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
A. AMENDMENTS TO SECTION 1.01: DEFINITIONS. The Credit
Agreement is hereby amended by deleting therefrom the definitions of the terms
"Level 1", "Level 2", "Level 3", "Level 4", "Level 5" and "Margin" and
substituting the following therefor in the appropriate alphabetical order:
"'Level 1' shall mean that Long-term Debt carries two or more
of the following ratings:
'A' or higher by S&P
'A2' or higher by Moody's
'A' or higher by D&P"
1
<PAGE> 2
"'Level 2' shall mean that none of the criteria of Level 1 are
satisfied and Long-term Debt carries two or more of the following ratings:
'A-' or higher by S&P
'A3' or higher by Moody's
'A-' or higher by D&P"
"'Level 3' shall mean that none of the criteria of Level 1 or
Level 2 are satisfied and Long-term Debt carries two or more of the following
ratings:
'BBB+' or higher by S&P
'Baa1' or higher by Moody's
'BBB+' or higher by D&P"
"'Level 4' shall mean that none of the criteria of Level 1,
Level 2 or Level 3 are satisfied and Long-term Debt carries two or more of the
following ratings:
'BBB' or higher by S&P
'Baa2' or higher by Moody's
'BBB' or higher by D&P"
"'Level 5' shall mean that none of the criteria of Level 1,
Level 2, Level 3 or Level 4 are satisfied and Long-term Debt carries two or more
of the following ratings:
'BBB-' or higher by S&P
'Baa3' or higher by Moody's
'BBB-' or higher by D&P"
"'Level 6' shall mean that none of the criteria of Level 1,
Level 2, Level 3, Level 4 or Level 5 are satisfied."
"'Margin' shall mean with respect to any day in any Interest
Period in relation to any Advance, the percentages set forth in Table A below,
with respect to determinations of the Base Rate, or Table B below, with respect
to determinations of the Eurodollar Rate:
2
<PAGE> 3
Table A
Base Rate Margins
(in basis points)
<TABLE>
<CAPTION>
Outstanding Advances as a
Percentage of Commitments
Greater than
Level Less than 50% or equal to 50%
----- ------------- ---------------
<S> <C> <C>
Level 1 -7.50 -7.50
Level 2 -8.50 -8.50
Level 3 -10.00 -10.00
Level 4 -12.5 -12.50
Level 5 -20.0 5.00
Level 6 25.0 75.00
</TABLE>
Table B
Eurodollar Margins
(in basis points)
<TABLE>
<CAPTION>
Outstanding Advances as a
Percentage of Commitments
Greater than
Level Less than 50% or equal 50%
----- ------------- ------------
<S> <C> <C>
Level 1 22.50 35.00
Level 2 26.50 39.00
Level 3 27.50 40.00
Level 4 32.50 45.00
Level 5 55.00 67.50
Level 6 75.00 87.50
</TABLE>
The applicable Margin shall be adjusted daily to reflect changes in the
outstanding principal amount of the Advances (determined for any day as of
the close of business) and the Level applicable to Long-term Debt in
accordance with Section 2.06."
B. AMENDMENT TO SECTION 2.09. Section 2.09 of the Credit Agreement is
hereby amended by deleting all of the text appearing after the colon and before
the period in the first sentence of such Section and substituting the following
therefor:
3
<PAGE> 4
"with respect to each day that (i) Level 1 is applicable,
0.075% per annum, (ii) Level 2 is applicable, 0.085% per annum, (iii)
Level 3 is applicable, 0.10% per annum, (iv) Level 4 is applicable,
0.125% per annum, (v) Level 5 is applicable, 0.20% per annum or (vi)
Level 6 is applicable, 0.25% per annum".
C. AMENDMENT TO SECTION 4.02(A). Section 4.02(a) of the Credit
Agreement is hereby amended by deleting the reference to "Level 4 or Level 5"
and substituting therefor reference to "Level 5 or Level 6" and by deleting the
reference to "Level 1 or Level 2" therefrom and substituting therefor reference
to "Level 1, Level 2 or Level 3".
SECTION 2. COMPANY'S REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Amendment and to
amend the Credit Agreement in the manner provided herein, the Company
represents and warrants to each Lender that the following statements are true,
correct and complete:
A. CORPORATE POWER AND AUTHORITY. The Company has all
requisite corporate power and authority to enter into this Amendment and to
carry out the transactions contemplated by, and perform its obligations under,
the Credit Agreement, as amended by this Amendment (the "Amended Agreement").
B. AUTHORIZATION OF AGREEMENTS. The execution and
delivery of this Amendment and the consummation of the Amended Agreement have
been duly authorized by all necessary corporate action on the part of the
Company.
C. NO CONFLICT. The execution and delivery by the
Company of this Amendment and the consummation by the Company of the Amended
Agreement do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to the Company or its Subsidiaries,
the certificate of incorporation or bylaws of the Company or any order,
judgment or decree of any court or other agency of government binding on the
Company or its Subsidiaries, (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of the Company or its Subsidiaries, (iii) result in or
require the creation or imposition of any Lien upon any of the properties or
assets of the Company or its Subsidiaries, or (iv) require any approval of
stockholders or any approval or consent of any Person under any contractual
obligation of the Company or its Subsidiaries (other than the parties hereto).
D. GOVERNMENTAL CONSENTS. The execution and delivery by
the Company of this Amendment and the consummation by the Company of the
Amended Agreement do not and will not require any registration with, consent or
approval of, or notice to, or other
4
<PAGE> 5
action to, with or by, any federal, state or other governmental authority or
regulatory body.
E. BINDING OBLIGATION. This Amendment has been duly
executed and delivered by the Company and this Amendment and the Amended
Agreement are the legally valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or limiting creditors' rights generally or by
principles of equity and commercial reasonableness.
F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM
CREDIT AGREEMENT. The representations and warranties contained in Section 3.01
of the Credit Agreement are true, correct and complete in all material respects
to the same extent as though made on and as of the date hereof, except as
provided above or to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.
G. ABSENCE OF DEFAULT. No event has occurred and is
continuing or will result from the consummation of the transactions
contemplated by this Amendment that would, upon the giving of notice, the
passage of time, or otherwise, constitute an Event of Default.
SECTION 3. CONDITIONS TO EFFECTIVENESS
Section 1 of this Amendment shall become effective on the
first date on which all of the following conditions precedent shall have been
satisfied (such date being referred to herein as the "Amendment Effective
Date"):
A. On or before the Amendment Effective Date, the
Company shall deliver to the Lenders (or to the Agents with sufficient
originally executed copies, where appropriate, for each Lender and its counsel)
the following, each, unless otherwise noted, dated the Amendment Effective
Date:
1. Resolutions of its Board of Directors
approving and authorizing the execution, delivery, and performance of
this Amendment, certified as of the Amendment Effective Date by its
corporate secretary or an assistant secretary as being in full force
and effect without modification or amendment;
2. Signature and incumbency certificates of its
officers executing this Amendment; and
3. Executed copies of this Amendment.
5
<PAGE> 6
B. On or before the Amendment Effective Date, all
corporate and other proceedings taken or to be taken in connection with the
transactions contemplated hereby and all documents incidental thereto not
previously found acceptable by the Agents, acting on behalf of the Lenders, and
their counsel shall be satisfactory in form and substance to the Agents and
such counsel, and the Agents and such counsel shall have received all such
counterpart originals or certified copies of such documents as the Agents may
reasonably request.
SECTION 4. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND
THE OTHER LOAN DOCUMENTS.
(i) On and after the date this Amendment becomes
effective in accordance with its terms, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof", "herein" or
words of like import referring to the Credit Agreement, and each
reference in the Notes to the "Credit Agreement", "thereunder",
"thereof" or words of like import referring to the Credit Agreement
shall mean and be a reference to the Amended Agreement.
(ii) Except as specifically amended by this Amendment, the
Credit Agreement and the Notes shall remain in full force and effect
and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this
Amendment shall not, except as expressly provided herein, constitute a
waiver of any provision of, or operate as a waiver of, any right,
power or remedy of the Agents or any Lender under, the Credit
Agreement or the Notes.
B. FEES AND EXPENSES. The Company acknowledges that all
costs, fees and expenses as described in Section 8.05 of the Credit Agreement
incurred by the Administrative Agent and its counsel with respect to this
Amendment and the documents and transactions contemplated hereby shall be for
the account of the Company.
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<PAGE> 7
C. HEADINGS. Section and subsection headings in this
Amendment are included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose or be given any
substantive effect.
D. EFFECT ON ACCRUED BUT UNPAID INTEREST AND FEES. The
parties hereto agree that this Amendment, and the amendments to the Credit
Agreement effected hereby, shall not affect the amounts of accrued and unpaid
interest and facility fees outstanding under the Credit Agreement immediately
prior to the effectiveness of this Amendment, which amounts shall be payable at
the times provided for in the Credit Agreement, it being understood that the
changes in the margins and facility fee rates effected hereby shall only affect
the rates at which interest and facility fees accrue on and after the Amendment
Effective Date.
E. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
F. COUNTERPARTS; EFFECTIVENESS. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Amendment shall become
effective as of the date hereof upon the execution and delivery of a
counterpart hereof by the Company and the Lenders.
[Remainder of page intentionally left blank]
7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
The Company:
FINOVA CAPITAL CORPORATION
By /s/ Robert J. Fitzsimmons
---------------------------------------
Title Senior Vice President Treasurer
------------------------------------
By /s/ Meilee Smythe
---------------------------------------
Title Vice President--Assistant Treasurer
------------------------------------
The Lenders:
CITIBANK, N.A. (Individually
and as an Agent and
Administrative Agent)
By /s/ Barbara A. Cohen
---------------------------------
Title Vice President
-------------------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/
---------------------------------
Title Managing Director
------------------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION (as an
Agent)
By /s/
---------------------------------
Title Managing Director
------------------------------
S-1
<PAGE> 9
BANK OF MONTREAL (Individually
and as an Agent)
By /s/
---------------------------------
Title
------------------------------
CHEMICAL BANK (Individually
and as an Agent)
By /s/ P. A. Parker
---------------------------------
Title Vice President
------------------------------
NATWEST BANK, N.A.
(Individually and as an Agent)
By /s/ Andrea L. Lee
---------------------------------
Title Vice President
------------------------------
BANK OF AMERICA ILLINOIS
By /s/
---------------------------------
Title Managing Director
-------------------------------
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By /s/
---------------------------------
Title Vice President
-------------------------------
CREDIT SUISSE
By /s/ Marilou Palenzuela
---------------------------------
Title Member Senior Management
-------------------------------
By /s/ Lori S. Jenner
---------------------------------
Title Associate
-------------------------------
S-2
<PAGE> 10
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY
By /s/
---------------------------------
Title Senior Vice President
-------------------------------
& Senior Manager
-------------------------------
NATIONSBANK OF GEORGIA, N.A.
By /s/
---------------------------------
Title Vice President
-------------------------------
UNION BANK OF SWITZERLAND
LOS ANGELES BRANCH
By /s/ Robert A. McKerroll, Jr.
----------------------------------
Title Assistant Vice President
-------------------------------
By /s/ Philip A. Stephens
----------------------------------
Title Assistant Vice President
-------------------------------
WESTDEUTSCHE LANDESBANK
GIROZENTRALE ------- NEW YORK AND
CAYMAN ISLANDS BRANCHES
By /s/
----------------------------------
Title Managing Director
-------------------------------
By /s/ Laura Spichiger
----------------------------------
Title Associate
-------------------------------
CREDIT LYONNAIS
SAN FRANCISCO BRANCH
By /s/ William J. Fischer
---------------------------------
Title Vice President & Manager
-------------------------------
S-3
<PAGE> 11
FIRST INTERSTATE BANK OF
ARIZONA, N.A.
By /s/
---------------------------------
Title Vice President
-------------------------------
NATIONAL WESTMINSTER BANK PLC
By /s/
---------------------------------
Title Vice President
-------------------------------
ROYAL BANK OF CANADA
By /s/ Tom J. Oberaigner
---------------------------------
Title Manager
-------------------------------
SOCIETE GENERALE
By /s/ J. Staley Stewart
---------------------------------
Title Vice President
-------------------------------
BANK ONE, ARIZONA, N.A.
By /s/
---------------------------------
Title Vice President
-------------------------------
DRESDNER BANK AG LOS ANGELES
AGENCY
By /s/ Dennis G. Blank
---------------------------------
Title Vice President
-------------------------------
By /s/ Sidney S. Jordan
---------------------------------
Title Vice President
-------------------------------
S-4
<PAGE> 12
UNION BANK
By /s/
---------------------------------
Title Vice President
-------------------------------
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., LOS ANGELES
AGENCY
By /s/ Y. Kamisawa
----------------------------------
Title
-------------------------------
By /s/
----------------------------------
Title
-------------------------------
THE MITSUBISHI TRUST AND
BANKING CORPORATION, ACTING
THROUGH ITS LOS ANGELES AGENCY
By /s/
---------------------------------
Title Senior Vice President
-------------------------------
& Chief Manager
-------------------------------
ARAB BANKING CORPORATION
By /s/
---------------------------------
Title Vice President & Manager
-------------------------------
THE BANK OF NOVA SCOTIA
By /s/
---------------------------------
Title Officer
-------------------------------
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION
By /s/ Wynelle Farlow
---------------------------------
Title Vice President
------------------------------
S-5
<PAGE> 13
BANK HAPOALIM, B.M.,
LOS ANGELES BRANCH
By /s/
----------------------------------
Title Vice President
-------------------------------
By /s/
----------------------------------
Title Vice President
-------------------------------
BANK OF AMERICA ARIZONA
By /s/
---------------------------------
Title Vice President
-------------------------------
BANK OF HAWAII
By /s/ Joseph J. Donaldson
---------------------------------
Title Vice President
-------------------------------
BANQUE NATIONALE DE PARIS
By /s/ C. Morio
----------------------------------
Title Senior Vice President
-------------------------------
& Manager
-------------------------------
By /s/
----------------------------------
Title Vice President
-------------------------------
COMERICA BANK
By /s/
---------------------------------
Title Assistant Vice President
-------------------------------
S-6
<PAGE> 14
CREDIT AGRICOLE
By /s/ David Bouhl
--------------------------------
Title Executive Vice President
------------------------------
DG BANK DEUTSCHE
GENOSSENSCHAFTSBANK
By /s/ Karen A. Brinkman
--------------------------------
Title Vice President
------------------------------
By /s/ Robert B. Herber
--------------------------------
Title Vice President
------------------------------
KREDIETBANK N.V.
By /s/
--------------------------------
Title Vice President
------------------------------
By /s/ Robert Shauffer
--------------------------------
Title Vice President
------------------------------
NBD BANK, N.A.
By /s/ Daniel J. Clarke, Jr.
--------------------------------
Title Vice President
------------------------------
ISTITUTO BANCARIO SAN PAOLO DI
TORINO S.P.A.
By /s/
---------------------------------
Title Branch Manager
------------------------------
By /s/
---------------------------------
Title Assistant Vice President
------------------------------
S-7
<PAGE> 15
THE SANWA BANK, LIMITED,
LOS ANGELES BRANCH
By /s/
---------------------------------
Title Vice President
------------------------------
UNITED STATES NATIONAL BANK
OF OREGON
By /s/ Timothy A. Miller
---------------------------------
Title Credit Officer
------------------------------
ABN AMRO BANK N.V., LOS
ANGELES INTERNATIONAL BRANCH
By /s/ Ellen M. Coleman
---------------------------------
Title Assistant Vice President
------------------------------
By /s/ John A. Miller
---------------------------------
Title Vice President
------------------------------
BANK OF IRELAND
By /s/
---------------------------------
Title Assistant Treasurer
------------------------------
THE BANK OF CALIFORNIA, N.A.
By /s/
---------------------------------
Title
------------------------------
FUJI BANK, LTD.
By /s/ Nobuhiro Umemura
---------------------------------
Title Joint General Manager
------------------------------
S-8
<PAGE> 16
THE SAKURA BANK, LTD.
By /s/ Ofusa Sato
----------------------------------
Title Assistant General Manager
-------------------------------
& Senior Vice President
-------------------------------
BANQUE PARIBAS
By /s/
----------------------------------
Title Senior Vice President
-------------------------------
By /s/
----------------------------------
Title Vice President
-------------------------------
COMPAGNIE FINANCIERE DE
CIC ET DE L'UNION EUROPEENNE
By /s/ Albert M. Calo
----------------------------------
Title Vice President
-------------------------------
By /s/ Eric Longuet
----------------------------------
Title Vice President
-------------------------------
THE SUMITOMO BANK, LIMITED,
LOS ANGELES BRANCH
By /s/
----------------------------------
Title General Manager
-------------------------------
DEUTSCHE BANK AG NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES
By /s/ Christopher de Chabert
----------------------------------
Title Assistant Vice President
-------------------------------
By /s/ Gayma Z. Shiorarain
----------------------------------
Title Vice President
-------------------------------
S-9
<PAGE> 17
COMMERZBANK AG,
LOS ANGELES BRANCH
By /s/ Steven F. Larsen
----------------------------------
Title Vice President
-------------------------------
By /s/ Christian Jagenberg
----------------------------------
Title Senior Vice President
-------------------------------
& General Manager
-------------------------------
THE DAI-ICHI KANGYO BANK, LTD.
LOS ANGELES AGENCY
By /s/ Tomohiro Nozaki
----------------------------------
Title Senior Vice President
-------------------------------
& Joint General Manager
-------------------------------
MONTE DEI PASCHI DI SIENA
By /s/ S. M. Sondak
----------------------------------
Title First Vice President
-------------------------------
& Deputy General Manager
-------------------------------
By /s/ Brian R. Landy
----------------------------------
Title Vice President
-------------------------------
THE SUMITOMO TRUST AND BANKING
CO., LTD., LOS ANGELES AGENCY
By /s/ Magayuki Imanaka
----------------------------------
Title Senior Manager
-------------------------------
LLOYDS BANK PLC
By /s/ Windsor R. Davies
----------------------------------
Title Vice President & Manager
-------------------------------
By /s/
----------------------------------
Title Senior Vice President
-------------------------------
S-10
<PAGE> 18
CHIBA BANK, LTD.
By /s/ Kazuaki Kondo
----------------------------------
Title General Manager
-------------------------------
DEN DANSKE BANK AKTIESELSKAB,
CAYMAN ISLANDS BRANCH
By /s/
---------------------------------
Title
-----------------------------
S-11
<PAGE> 1
EXHIBIT 10.E
THE FINOVA GROUP INC.
EXECUTIVE SEVERANCE PLAN
(TIER 1 Employees)
1. PURPOSE: To provide management continuity by inducing
selected Executives to remain in the employ of THE FINOVA GROUP INC.
("Corporation") or one of its subsidiaries pending a possible Change of Control
of the Corporation.
2. OBJECTIVES: To ensure in the event of a possible Change of
Control of the Corporation, in addition to the Executive's regular duties, that
he may be available to be called upon to assist in the objective assessment of
such situations, to advise management and the Board of Directors ("Board") of
the Corporation as to whether such proposals would be in the best interests of
the Corporation and its shareholders or one of its subsidiaries, and to take
such other actions as management or the Board might determine reasonably
appropriate and in the best interests of the Corporation and its shareholders.
3. PARTICIPATION: Participation in this Plan will be limited to
selected Executives (each referred to herein as "Executive") whose importance
to the Corporation during such periods is deemed to warrant good and valuable
special consideration by The Chairman of the Corporation. Each such Executive's
participation shall be evidenced by a certificate ("Certificate") issued by the
Corporation substantially in the form attached hereto, each of which is
incorporated herein by reference as if set forth in its entirety. In the event
an Executive shall become ineligible hereunder, his Certificate shall be
surrendered promptly to the Corporation, but the failure to surrender the
Certificate shall not affect such ineligibility or the inapplicability of this
plan to such Executive.
4. DEFINITION OF CHANGE OF CONTROL: For purposes of this Plan,
a "Change of Control" shall mean any of the following events:
(a) the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"))(a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the Corporation (the
"Outstanding Corporation Common Stock") or (ii) the combined voting power of
the then outstanding voting securities of the Corporation entitled to vote
generally in the election of directors (the "Outstanding Corporation Voting
Securities"); provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Corporation other than an acquisition by virtue
of the exercise of a conversion privilege unless the security being so
converted was itself acquired directly from the Corporation, (ii) any
acquisition by the Corporation, (iii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Corporation or any
corporation controlled by the Corporation or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i), (ii) and
(iii) of subsection (c) of this Section 4; or
(b) individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Corporation's shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board; or
(c) approval by the shareholders of the Corporation of a
reorganization, merger or consolidation
1
<PAGE> 2
or sale or other disposition of all or substantially all of the assets of the
Corporation (a "Business Combination"), in each case, unless, following such
Business Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns
the Corporation or all or substantially all of the Corporation's assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination
of the Outstanding Corporation Common Stock and Outstanding Corporation Voting
Securities, as the case may be, (ii) no Person (excluding any employee benefit
plan (or related trust) of the Corporation or such corporation resulting from
such Business Combination) beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business Combination and
(iii) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of
the action of the Board, providing for such Business Combination; or
(d) approval by the shareholders of the Corporation of a
complete liquidation or dissolution of the Corporation.
5. ADDITIONAL DEFINITIONS:
(a) For purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the Executive
to perform substantially the Executive's duties with the
Corporation or one of its affiliates (other than any such
failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance
is delivered to the Executive by the Board or the Chairman of
the Corporation which specifically identifies the manner in
which the Board or Chairman believes that the Executive has
not substantially performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially and
demonstrably injurious to the Corporation. For purposes of
this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done,
or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive's action or
omission was in the best interests of the Corporation. Any
act, or failure to act, based upon authority given pursuant
to a resolution duly adopted by the Board or upon the
instructions of the Chairman or a senior officer of the
Corporation or based upon the advice of counsel for the
Corporation shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the
best interests of the Corporation. The cessation of
employment of the Executive shall not be deemed to be for
Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice is
provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board,
the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the
particulars thereof in detail.
(b) For purposes of this Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the
2
<PAGE> 3
Executive's position (including status, offices, titles and
reporting requirements), authority, duties or
responsibilities immediately prior to the Change of Control,
or any other action by the Corporation which results in a
diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith
and which is remedied by the Corporation promptly after
receipt of notice thereof given by the Executive;
(ii) any reduction by the Corporation of the Executive's
base salary, annual bonus, incentive opportunities,
retirement benefits, welfare or fringe benefits below the
highest level enjoyed by the Executive during the 120-day
period prior to the Change of Control;
(iii) the Corporation's requiring the Executive to be
based at any office or location other than that at which he
was based immediately prior to the Change of Control or the
Corporation's requiring the Executive to travel on
Corporation business to a substantially greater extent than
required immediately prior to the Change of Control;
(iv) any purported termination by the Corporation of the
Executive's employment otherwise than as expressly permitted
by this Agreement; or
(v) any failure by the Corporation to comply with and
satisfy Section 11(c) of this Agreement.
For purposes of this Agreement, any good faith determination
of "Good Reason" made by the Executive shall be conclusive.
(c) For purposes of this Agreement, "Window Period" means the
30-day period following the first anniversary of the Change of Control.
6. ELIGIBILITY FOR BENEFITS: Benefits as described in Section 7
shall be paid only in the event Executive's employment with the Corporation or
any of its subsidiaries is terminated (a) involuntarily by the Corporation
without Cause or (b) by the Executive for Good Reason, in either case within
twenty-four (24) months after or as a result of a Change of Control of the
Corporation., or (c) by the Executive for any reason during the Window Period
(other than as a consequence of his death or disability, or of his retirement
at or after his normal retirement date under the Corporation's or a
subsidiary's retirement plan).
7. BENEFIT ENTITLEMENT:
(a) LUMP SUM PAYMENT: On or before the Executive's last day of
employment with the Corporation or any of its subsidiaries, the Corporation or
the applicable subsidiary will pay to the Executive as additional compensation
for services rendered a lump sum cash amount (subject to any applicable payroll
or other taxes required to be withheld) equal to the sum of (i) his highest
annual salary fixed during the period he was an employee of the Corporation or
any of its subsidiaries, plus (ii) the largest aggregate amount awarded to him
in a year, including any pro-rata payment made in connection with a Change of
Control under any currently existing and unvested plans, as cash bonus (whether
or not deferred) under the Corporation's Management Incentive Plan and any
Performance Share Incentive Plan or similar short and long term cash
incentive plans or arrangements providing for performance bonus payments during
the preceding four years multiplied by:
(i) Three if the termination is involuntary without Cause or for
Good Reason, or
(ii) Two if the termination is voluntary during the Window Period.
Nothing in this section shall affect Executive's rights to receive salary,
compensation, vacation and other benefits due for work performed through
Executive's severance date.
3
<PAGE> 4
(b) EMPLOYEE PLANS: The Executive's participation in life,
accident, health, compensation deferral, automobile, club membership, and
financial counseling plans of, and other similar benefits provided to Executive
by, the Corporation, or the applicable subsidiary, if any, provided to the
Executive prior to the Change of Control or his termination, shall be continued,
or equivalent benefits provided, by the Corporation or the applicable subsidiary
at no direct cost to the Executive for a period of:
(i) Three years if the termination is involuntary without Cause
or for Good Reason, or
(ii) Two years if the termination is voluntary during the Window
Period (or until his death or normal retirement date, whichever is
sooner)
from the date of termination . The Executive's participation in any applicable
qualified or nonqualified retirement and/or pension plans and any deferred
compensation or bonus plan of the Corporation or any of its subsidiaries, if
any, shall continue only through the last day of employment. Any terminating
distributions and/or vested rights under such plans shall be governed by the
terms of the respective plans.
(c) SPECIAL RETIREMENT BENEFITS: The Executive shall receive Special
Retirement Benefits payable hereunder to the Executive or his beneficiaries
equal to the excess of the amount specified in subsection (c)(i) or subsection
(c)(ii), as the case may be, over that in subsection (c)(iii) below:
(i) If the termination is voluntary without Cause or for Good
Reason,the total retirement benefits that would be paid to the
Executive or his beneficiaries under The FINOVA Group Inc. Pension
Plan and The FINOVA Group Inc. Supplemental Pension Plan ,or the
applicable subsidiary pension plans in which the Executive
participates (in either case, the "Retirement Plans"), if either (x)
the three years (or the period to his normal retirement date, if
less)following his termination, or (y) the number of years necessary
to be vested under the Retirement Plans (including any predecessor or
successor or substitute plan or plans of the Corporation or any of its
subsidiaries),whichever is greater, is counted and his final average
compensation is as determined under the Retirement Plans, in each case
using actuarial assumptions no less favorable to the Executive than
those used in the Retirement Plans immediately prior to the Change of
Control (the "Actuarial Assumptions"). For the purposes hereof, the
amount specified in Section 7(a) shall not be considered
"compensation" for purposes of calculating final average compensation
under this subsection (c)(i);
(ii) if the termination is voluntary during the Window Period, the
total retirement benefits that would be paid to the Executive or his
beneficiaries under the Retirement Plans using the Actuarial
Assumptions, if any, if two years (or the period to his normal
retirement date, if less) following his termination is added to his
credited service and his final average compensation is as determined
under the applicable Retirement Plans referred to in this subsection
(c)(ii). For the purposes hereof, the amount specified in Section 7(a)
shall not be considered "compensation" for purposes of calculating
final average compensation under this subsection (c)(ii);
(iii) the total qualified and unqualified benefits actually payable
to the Executive or his beneficiaries under the Retirement Plans.
All Special Retirement Benefits and other benefits provided for herein are
provided on an unfunded basis, are not intended to meet the qualification
requirements of Section 401 of the Internal Revenue Code, and shall be payable
solely from the general assets of the Corporation or its appropriate
subsidiary.
(d) TAXES: Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Corporation to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional
payments required under this Section 7(d)) (a "Payment") would be subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended, or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with
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any such interest and penalties, are hereinafter collectively referred to as
the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after payment
by the Executive of all taxes (including any interest and penalties imposed
with respect to such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(e) ACCELERATION OF STOCK AWARDS: Stock Options and any other
rights granted to the Executive by the Corporation under its 1992 Stock
Incentive Plan and any later or successor plan or plans (collectively, the
"Stock Incentive Plans"), will be exercisable in full for their respective
specified terms, notwithstanding a Change of Control of the Corporation or the
date of approval by the Corporation's shareholders of an agreement providing for
a merger in which the Corporation will not remain an independent publicly owned
corporation or a consolidation or a sale or other disposition of all or
substantially all the assets of the Corporation, provided that no option or
right shall be exercisable by the Executive within six months after the date of
grant, or after the termination date, of such option or right. In the event of a
Change of Control, the restrictions and deferral limitations applicable to any
restricted or deferred stock awarded under the Stock Incentive Plans shall
lapse, and such stock shall become free of all restrictions and become fully
vested and transferable to the full extent of the original grant, including
without limitation immediate vesting and exercisability of the maximum amount of
performance-based or other variable awards as if maximum performance conditions
or payouts were achieved.
8. INDEMNIFICATION: If litigation is brought to enforce or
interpret any provision contained herein, the Corporation or applicable
subsidiary, to the extent permitted by applicable law and the Corporation's or
subsidiaries' Certificate of Incorporation, as the case may be, shall indemnify
the Executive for Executive's reasonable attorneys' fees and disbursements
incurred in such litigation, and hereby agrees to pay interest on any money
judgment obtained by the Executive calculated at the Citibank, N.A. prime
interest rate in effect from time to time from the date that payment(s) to
Executive should have been made under this Agreement until the date the
payment(s) is made.
9. PAYMENT OBLIGATIONS ABSOLUTE: Except as expressly provided
in Sections 13 and 14, the Corporation's or subsidiary's obligation to pay the
Executive the benefits hereunder and to make the arrangements provided herein
shall be absolute and unconditional and shall not be affected by any
circumstances, including, without limitation, any set-off, counter-claim,
recoupment, defense or other right which the Corporation may have against
Executive or anyone else. All amounts payable by the Corporation or subsidiary
hereunder shall be paid without notice or demand. Each and every payment made
hereunder shall be paid without notice or demand. Each and every payment made
hereunder by the Corporation or subsidiary shall be final and the Corporation or
subsidiary will not seek to recover all or any part of such payment(s) from the
Executive or from whosoever may be entitled thereto, for any reason whatsoever.
The Executive shall not be obligated to seek other employment in mitigation of
the amounts payable or arrangements made under any provision of this Plan, and
the obtaining of any such other employment shall in no event effect any
reduction of the Corporation's or subsidiary's obligations to make the payments
and arrangements required to be made under this Plan. The Corporation or
applicable subsidiary may at the discretion of the Chairman of the Corporation
enter into an irrevocable, third-party guarantee or similar agreement with a
bank or other institution with respect to the benefits payable to an Executive
hereunder, which would provide for the unconditional payment of such benefits by
such third-party upon presentment by an Executive of his Certificate (and on
such other conditions deemed necessary or desirable by the Corporation) at some
specified time after termination of employment. Such third-party guarantor shall
have no liability for improper payment if it follows the instructions of the
Corporation as provided in such Certificate and other documents required to be
presented under the agreement, unless the Corporation, in a written notice, has
previously advised such third-party guarantor of the determination by its Board
of Directors of ineligibility of the Executive in accordance with Section 14.
10. CONTINUING OBLIGATIONS: The Executive shall retain in
confidence any confidential information known to him concerning the Corporation
and its subsidiaries and their respective businesses as long
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as such information is not publicly disclosed, except as otherwise required by
law.
11. SUCCESSORS:
(a) This Agreement is personal to the Executive and without the
prior written consent of the Corporation shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Corporation and its successors and assigns.
(c) The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Corporation would be required to perform it if no such
succession had taken place. As used in this Agreement, Corporation shall mean
the Corporation as hereinbefore defined and which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
12. SEVERABILITY: Any provision in this Plan which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability without
invalidating or affecting the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
13. OTHER AGREEMENTS: Notwithstanding any provision herein to
the contrary, in the event the Executive's employment with the Corporation or
applicable subsidiary terminates and the Executive is entitled to receive
termination, separation or other like amounts from the Corporation or any of its
subsidiaries pursuant to any contract of employment, generally prevailing
separation pay policy, or other program of the Corporation or applicable
subsidiary, all such amounts shall be applied to and set off against the
Corporation's or applicable subsidiaries' obligation set forth in Section 7 of
this Plan. Nothing in this Section 13 is intended to result in set-off of
salary, compensation, vacation and other benefits due Executive for work
performed through Executive's severance date, pension or Retirement Plan
benefits, supplemental executive retirement benefits, disability benefits,
retiree benefits, any pro-rata payment or payments made to Executive in
connection with a Change of Control under any currently existing and unvested
Management Incentive Plan or Performance Share Incentive Plan, or any payment to
Executive under the Corporation's Key Employee Value Sharing Plan, if any, or
any similar plans, or any other benefits not directly provided as termination or
separation benefits.
14. TERMINATION: This Agreement shall terminate with respect to
an Executive if the Chairman of the Corporation determines that the Executive is
no longer a key executive to be provided a severance agreement and so notifies
the Executive by hand delivery, overnight courier or certified mail at least
thirty (30) days before participation in this Plan shall cease; except that such
determination shall not be made, and if made shall have no effect, (i) within
twenty-four (24) months after the Change of Control in question or (ii) during
any period of time when the Corporation has knowledge that any third person has
taken steps reasonably calculated to effect a Change of Control until such third
person has abandoned or terminated his efforts to effect a Change of Control as
determined by such Board in good faith, but in its sole discretion.
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EXHIBIT 10.F
THE FINOVA GROUP INC.
EXECUTIVE SEVERANCE PLAN
(TIER 2 EMPLOYEES)
1. PURPOSE: To provide management continuity by inducing
selected Executives to remain in the employ of THE FINOVA GROUP INC.
("Corporation") or one of its subsidiaries pending a possible Change of Control
of the Corporation.
2. OBJECTIVES: To ensure in the event of a possible Change of
Control of the Corporation, in addition to the Executive's regular duties, that
he may be available to be called upon to assist in the objective assessment of
such situations, to advise management and the Board of Directors ("Board") of
the Corporation as to whether such proposals would be in the best interests of
the Corporation and its shareholders or one of its subsidiaries, and to take
such other actions as management or the Board might determine reasonably
appropriate and in the best interests of the Corporation and its shareholders.
3. PARTICIPATION: Participation in this Plan will be limited to
selected Executives (each referred to herein as "Executive") whose importance
to the Corporation during such periods is deemed to warrant good and valuable
special consideration by The Chairman of the Corporation. Each such Executive's
participation shall be evidenced by a certificate ("Certificate") issued by the
Corporation substantially in the form attached hereto, each of which is
incorporated herein by reference as if set forth in its entirety. In the event
an Executive shall become ineligible hereunder, his Certificate shall be
surrendered promptly to the Corporation, but the failure to surrender the
Certificate shall not affect such ineligibility or the inapplicability of this
plan to such Executive.
4. DEFINITION OF CHANGE OF CONTROL: For purposes of this Plan, a
"Change of Control" shall mean any of the following events:
(a) The acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the Corporation (the
"Outstanding Corporation Common Stock") or (ii) the combined voting power of
the then outstanding voting securities of the Corporation entitled to vote
generally in the election of directors (the "Outstanding Corporation Voting
Securities"); provided, however, that for purposes of this subsection (a), the
following acquisition shall not constitute a Change of Control: (i) any
acquisition directly from the Corporation, (ii) any acquisition by the
Corporation other than an acquisition by virtue of the exercise of a conversion
privilege unless the security being so converted was itself acquired directly
from the Corporation, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Corporation or any corporation
controlled by the Corporation or (iv) any acquisition by any corporation
pursuant to a transaction which complies with clauses (i), (ii) and (iii) of
subsection (c) of this Section 4; or
(b) individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Corporation's shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board; or
(c) approval by the shareholders of the Corporation of a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Corporation (a "Business Combination"),
<PAGE> 2
in each case, unless, following such Business Combination, (i) all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Corporation or all
or substantially all of the Corporation's assets either directly or through one
or more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting Securities, as the case may be,
(ii) no Person (excluding any employee benefit plan (or related trust) of the
Corporation or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such ownership
existed prior to the Business Combination and (iii) at least a majority of the
members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing
for such Business Combination; or
(d) Approval by the shareholders of the Corporation of a complete
liquidation or dissolution of the Corporation.
5. ADDITIONAL DEFINITIONS:
(a) For purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the Executive to perform
substantially the Executive's duties with the Corporation or one of its
affiliates (other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial performance
is delivered to the Executive by the Board or the Chairman of the Corporation
which specifically identifies the manner in which the Board or Chairman
believes that the Executive has not substantially performed the Executive's
duties, or
(ii) the willful engaging by the Executive in illegal conduct or
gross misconduct which is materially and demonstrably injurious to the
Corporation. For purposes of this provision, no act or failure to act, on the
part of the Executive, shall be considered "willful" unless it is done, or
omitted to be done, by the Executive in bad faith or without reasonable belief
that the Executive's action or omission was in the best interests of the
Corporation. Any act, or failure to act, based upon authority given pursuant to
a resolution duly adopted by the Board or upon the instructions of the Chairman
or a senior officer of the Corporation or based upon the advise of counsel for
the Corporation shall be conclusively presumed to be done, or omitted to be
done, by the Executive in good faith and in the best interests of the
Corporation. The cessation of employment of the Executive shall not be deemed
to be for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Board at a meeting of
the Board called and held for such purpose (after reasonable notice is provided
to the Executive and the Executive is given an opportunity, together with
counsel, to be heard before the Board), finding that, in the good faith opinion
of the Board, the Executive is guilty of the conduct described in subparagraph
(i) or (ii) above, and specifying the particulars thereof in detail.
(b) For purposes of this Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties inconsistent in
any respect with the Executive's position (including status, offices, titles
and reporting requirements), authority, duties or responsibilities immediately
prior to the Change of Control, or any other action by the Corporation which
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
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inadvertent action not taken in bad faith and which is remedied by the
Corporation promptly after receipt of notice thereof given by the Executive;
(ii) any reduction by the Corporation of the Executive's base
salary, annual bonus, incentive opportunities, retirement benefits, welfare or
fringe benefits below the highest level enjoyed by the Executive during the
120-day period prior to the Change of Control;
(iii) the Corporation's requiring the Executive to be based at any
office or location other than that at which he was based immediately prior to
the Change of Control or the Corporation's requiring the Executive to travel on
Corporation business to a substantially greater extent than required
immediately prior to the Change of Control;
(iv) any purported termination by the Corporation of the
Executive's employment otherwise than as expressly permitted by this Agreement;
or
(v) any failure by the Corporation to comply with and satisfy
Section 11(c) of this Agreement.
For purposes of this Agreement, any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
6. ELIGIBILITY FOR BENEFITS: Benefits as described in Section 7
shall be paid only in the event Executive's employment with the Corporation or
any of its subsidiaries is terminated (a) involuntarily by the Corporation
without Cause or (b) by the Executive for Good Reason, in either case within
twenty-four (24) months after or as a result of a Change of Control of the
Corporation.
7. BENEFIT ENTITLEMENT:
(a) LUMP SUM PAYMENT: On or before the Executive's last day of
employment with the Corporation or any of its subsidiaries, the Corporation or
the applicable subsidiary will pay to the Executive as additional compensation
for services rendered a lump sum cash amount (subject to any applicable payroll
or other taxes required to be withheld) equal to two times the sum of (i) his
highest annual salary fixed during the period he was an employee of the
Corporation or any of its subsidiaries, plus (ii) the largest aggregate amount
awarded to him in a year, including any pro-rata payment made in connection with
a Change of Control under any currently existing and unvested plans, as cash
bonus (whether or not deferred) under the Corporation's Management Incentive
Plan and any Performance Share Incentive Plan or similar short and long term
cash incentive plans or arrangements providing for performance bonus payments
during the preceding four years multiplied by two if the termination is
involuntary without Cause or for Good Reason. Nothing in this section shall
affect Executive's rights to receive salary, compensation, vacation and other
benefits due for work performed through Executive's severance date.
(b) EMPLOYEE PLANS: The Executive's participation in life,
accident, health, compensation deferral, automobile, club membership, and
financial counseling plans of, and other similar benefits provided to Executive
by, the Corporation, or the applicable subsidiary, if any, provided to the
Executive prior to the Change of Control or his termination, shall be
continued, or equivalent benefits provided, by the Corporation or the
applicable subsidiary at no direct cost to the Executive for a period of two
years from the date of termination (or until his death or normal retirement
date, whichever is sooner). The Executive's participation in any applicable
qualified or nonqualified retirement and/or pension plans and any deferred
compensation or bonus plan of the
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Corporation or any of its subsidiaries, if any, shall continue only through the
last day of employment. Any terminating distributions and/or vested rights
under such plans shall be governed by the terms of the respective plans.
(c) SPECIAL RETIREMENT BENEFITS: The Executive shall receive
Special Retirement Benefits payable hereunder to the Executive or his
beneficiaries equal to the excess of the amount specified in subsection (c)(i)
over that in subsection (c)(ii) below;
(i) If the termination is voluntary without Cause or for Good
Reason,the total retirement benefits that would be paid to the Executive or his
beneficiaries under The FINOVA Group Inc. Pension Plan and The FINOVA Group
Inc. Supplemental Pension Plan ,or the applicable subsidiary pension plans in
which the Executive participates (in either case, the "Retirement Plans"), if
either (x) the three years (or the period to his normal retirement date, if
less)following his termination, or (y) the number of years necessary to be
vested under the Retirement Plans (including any predecessor or successor or
substitute plan or plans of the Corporation or any of its subsidiaries),
whichever is greater, is counted and his final average compensation is as
determined under the Retirement Plans, in each case using actuarial assumptions
no less favorable to the Executive than those used in the Retirement Plans
immediately prior to the Change of Control (the "Actuarial Assumptions"). For
the purposes hereof, the amount specified in Section 7(a) shall not be
considered "compensation" for purposes of calculating final average
compensation under this subsection (c)(i);
(ii) the total and unqualified benefits actually payable to the
Executive or his beneficiaries under the Retirement Plans.
All Speial Retirement Benefits and other benefits provided for herein are
provided on an unfunded basis, are not intended to meet the qualification
requirements of Section 401 of the Internal Revenue Code, and shall be payable
solely from the general assets of the Corporation or its appropriate
subsidiary.
(d) TAXES: Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Corporation to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional
payments required under this Section 7(d)) (a "Payment") would be subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended, or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest
and penalties, are hereinafter collectively referred to as the "Excise Tax"),
then the Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by the Executive of
all taxes (including any interest or penalties imposed 105 with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments.
(e) ACCELERATION OF STOCK AWARDS. Stock Options and any other
rights granted to the Executive by the Corporation under its 1992 Stock
Incentive Plan and any later or successor plan or plans (collectively, the
"Stock Incentive Plans"), will be exercisable in full for their respective
specified terms, notwithstanding a Change of Control of the Corporation or the
date of approval by the Corporation's shareholders of an agreement providing
for a merger in which the Corporation will not remain an independent publicly
owned corporation or a consolidation or a sale of other disposition of all or
substantially all the assets of the Corporation, provided that no option or
right shall be exercisable by the Executive within six months after the date of
grant, or after the termination date, of such option or right. In the event of
a Change of Control, the restrictions and deferral limitations applicable to
any restricted or deferred stock awarded under the Stock Incentive Plans shall
lapse, and such stock shall become free of all restrictions and become fully
vested and transferable to the full extent of the original grant, including
without limitation immediate vesting and exercisability of the maximum amount
of performance-based or other variable awards as if maximum performance
conditions or payouts were achieved..
8. INDEMNIFICATION: If litigation is brought to enforce
or interpret any provision contained herein, the Corporation or applicable
subsidiary, to the extent permitted by applicable law and the Corporation's or
subsidiaries' Certificate of Incorporation, as the case may be, shall indemnify
the Executive for Executive's reasonable attorneys' fees and disbursements
incurred in such litigation, and hereby agrees to pay interest on any money
judgment obtained by the Executive
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calculated at the Citibank, N.A. prime interest rate in effect from time to
time from the date that payment(s) to Executive should have been made under
this Agreement until the date the payment(s) is made.
9. PAYMENT OBLIGATIONS ABSOLUTE: Except as expressly provided
in Section 13 and 14, the Corporation's or subsidiary's obligation to pay the
Executive the benefits hereunder and to make the arrangements provided herein
shall be absolute and unconditional and shall not be affected by any
circumstances, including, without limitation, any set-off, counter-claim,
recoupment, defense or other right which the Corporation may have against
Executive or anyone else. All amounts payable by the Corporation or subsidiary
hereunder shall be paid without notice or demand. Each and every payment made
hereunder shall be paid without notice or demand. Each and every payment made
hereunder by the Corporation or subsidiary shall be final and the Corporation
or subsidiary will not seek to recover all or any part of such payment(s) from
the Executive or from whosoever may be entitled thereto, for any reason
whatsoever. The Executive shall not be obligated to seek other employment in
mitigation of the amounts payable or arrangements made under any provision of
this Plan, and the obtaining of any such other employment shall in no event
effect any reduction of the Corporation's or subsidiary's obligations to make
the payments and arrangements required to be made under this Plan. The
Corporation or applicable subsidiary may at the discretion of the Chairman of
the Corporation enter into an irrevocable, third-party guarantee or similar
agreement with a bank or other institution with respect to the benefits payable
to an Executive hereunder, which would provide for the unconditional payment of
such benefits by such third-party upon presentment by an Executive of his
Certificate (and on such other conditions deemed necessary or desirable by the
Corporation) at some specified time after termination of employment. Such
third-party guarantor shall have no liability for improper payment if it
follows the instructions of the Corporation as provided in such Certificate and
other documents required to be presented under the agreement, unless the
Corporation, in a written notice, has previously advised such third-party
guarantor of the determination by its Board of Directors of ineligibility of
the Executive in accordance with Section 14.
10. CONTINUING OBLIGATIONS: The Executive shall retain in
confidence any confidential information known to him concerning the Corporation
and its subsidiaries and their respective businesses as long as such
information is not publicly disclosed, except as otherwise required by law.
11. SUCCESSORS:
(a) This Agreement is personal to the Executive and without the
prior written consent of the Corporation shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Corporation and its successors and assigns.
(c) The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Corporation would be required to perform it if no such
succession had taken place. As used in this Agreement, Corporation shall mean
the Corporation as hereinbefore defined and which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
12. SEVERABILITY: Any provision in this Plan which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability without
invalidating or affecting the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
13. OTHER AGREEMENTS: Notwithstanding any provision herein to the
contrary, in the event the Executive's employment with the Corporation or
applicable subsidiary terminates and the Executive is entitled to receive
termination, separation or other like amounts from the Corporation or any of
its subsidiaries pursuant to any contract of employment, generally prevailing
separation pay policy, or other program of the Corporation or applicable
subsidiary, all such amounts shall be applied to and set off against the
Corporation's or applicable subsidiaries' obligation set forth in Section 7 of
this plan. Nothing in this Section 13 is intended to result in set-off of
salary, compensation, vacation and other benefits due Executive for work
performed through Executive's severance date, pension or Retirement Plan
benefits, supplemental executive retirement benefits, disability benefits,
retiree benefits, any pro-rata payment or payments made to Executive in
connection with a Change of Control under any currently existing and unvested
Management Incentive Plan or Performance Share Incentive
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Plan, or any payment to Executive under the Corporation's Key Employee Value
Sharing Plan, if any, or any other plan benefits not directly provided as
termination or separation benefits.
14. TERMINATION: This Agreement shall terminate with respect to an
Executive if the Chairman of the Corporation determines that the Executive is
no longer a key executive to be provided a severance agreement and so notifies
the Executive by hand delivery, overnight courier or certified mail at least
thirty (30) days before participation in this Plan shall cease; except that
such determination shall not be made, and if made shall have effect, (i) within
twenty-four (24) months after the Change of Control in question or (ii) during
any period of time when the Corporation has knowledge that any third person has
taken steps reasonably calculated to effect a Change of Control until such
third person has abandoned or terminated his efforts to effect a Change of
Control as determined by such Board in good faith, but in its sole discretion.
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EXHIBIT 10.G
THE FINOVA GROUP INC.
MANAGEMENT INCENTIVE PLAN
I. PURPOSE:
The purpose of the Management Incentive Plan ("MIP") is to give key management
employees an incentive to fully contribute to annual improvement of our
historical operating results through effective leadership and action. By
operating as efficiently and effectively as possible, The FINOVA Group Inc. and
its subsidiaries (the "Company") can continue to position itself as the
"low-cost producer" among its peers, a valuable competitive advantage.
II. PARTICIPANTS:
The Executive Compensation Committee of The FINOVA Group Inc. ("the Committee")
is provided a list of Executive Officer participants (Securities Exchange Act
of 1934 Section 16(b) insiders) at its first meeting of the year (other
participants may be designated by the Chairman and Chief Executive Officer).
The list includes the proposed current year target MIP percentage, target MIP
award and estimated earnings for each participant. New hires, promotions, and
acquisitions will increase this estimate. Terminations, demotions, deaths,
retirements, disabilities, and divestitures will decrease this estimate. The
events above will generally result in pro-rata awards at the same time regular
awards are made at the beginning of the following year. Participants who resign
or are terminated during 1995 are generally eligible for 50% of their pro-rata
bonus, provided they enter into the standard release of liability provided for
by the Company's then-current severance policy.
The target percentage for each participant is established at the beginning of
each year. Target percentages are based on responsibilities and do not
generally change from year to year except for promotions and adjustments
resulting from market survey data.
Each participant shall prepare a list of individual objectives at the beginning
of the plan year. The objectives cover financial, task, leadership, development
and innovation goals. Each objective is weighted based on relative importance.
III. FINANCIAL OBJECTIVES:
The most critical Financial Objectives are determined by appropriate senior
managers of the Company. These Financial Objectives are then weighted.
For 1995 these objective and percentage weightings are:
<TABLE>
<CAPTION>
PERFORMANCE MEASURE
-------------------- FINOVA FINOVA
GROUP CAPITAL
------ -------
<S> <C> <C>
Earnings Per Share from Cont. Ops 60%
Relative Shareholder Performance 10%
Net income from Cont. Ops. 30% 50%
Average Funds Employed 25%
---
Non Earning Assets 25%
---
</TABLE>
<PAGE> 2
The target, minimum and maximum performance level for each measurement are
presented to the Committee at its first meeting of the year. Minimum
performance results in 50% achievement, target performance results in 100%
achievement and maximum performance results in 187% achievement with
consideration given for over achievement of any measure. However, maximum pool
may not exceed 187% of target pool. Performance less than minimum results in
zero achievement. Other results are interpolated.
Extraordinary and unusual events will generally be excluded from results.
Accruals under this Plan are added back for earnings calculations.
IV. RELATIVE SHAREHOLDER PERFORMANCE:
This measure is a comparison of the Company's total shareholder return ("TSR")
as compared to the market TSR. TSR is the dividend yield added to the share
price appreciation {depreciation}. The market TSR is the lesser of the TSR for
the S&P 500 or the S&P Financial Index. The measurement is based on the average
of the daily high and low share price for December of the previous year and
December of the plan year. The minimum performance level, which results in 50%
achievement, is for the Company's TSR to equal [omitted]. The target
performance level, 100% achievement, is for the Company's TSR to [omitted]. The
maximum performance level, 187% achievement, is for the Company's TSR to
[omitted].
V. MIP POOLS AND AWARDS:
The target MIP Pool for the Company is the sum of each participant's target
award (earnings multiplied by target percentage). The MIP pool available for
the Company is the target MIP pool multiplied by the achievement level of all
financial objectives (0% or 50%-187%).
At the end of the plan year, each MIP participant will be reviewed to assess
their level of completion of their individual objectives. The individual
objectives performance, the individual target percentage and the financial
objective achievement are all considered when determining recommended awards.
Individual awards may not exceed 200% of their target award. The sum of all
individual awards may not exceed the MIP pool available.
An alternate MIP pool is available to The FINOVA Group Inc. participants. The
pool is 25% of subsidiary pools achieved.
VI. SPECIAL ACHIEVEMENT AWARDS AND POOLS:
Exempt Employees. Special Achievement awards are available for exempt employees
who do not have job responsibilities which allow them to be an MIP participant.
The amount of each award is based on the individual's accomplishments of their
objectives detailed at the beginning of the year and the achievement level of
the financial objectives. The awards may be up to 15% of base earnings during
the plan year for exempt employees.
Non-Exempt Employees. Special Achievement Awards are available for non-exempt
employees at the sole discretion of the Company. The amount of each award may
be up to 10% of plan year base earnings (excluding overtime pay). Although
non-exempt employee awards are generally based upon accomplishment of certain
objectives, the award is determined at the sole discretion of the Company.
Unused MIP awards are available for Special Achievement awards. However, unused
Special
<PAGE> 3
Achievement awards are not available for MIP awards.
VII. APPROVAL AND DISTRIBUTION:
The Committee is responsible for approving any partial or full awards to
Executive Officers (Section 16(b) insiders). The Chief Executive Officer of The
FINOVA Group Inc. is responsible for approving all other partial or full
awards. The exercise of discretion in the evaluation of executive performance
and the establishment of individual awards shall be guided by this MIP, but
shall not be fettered by the provisions hereof.
For example, the Committee may consider matters such as extensive changes in
the environment, significant increases in stockholder value while earnings are
below target, and significant excess accruals from prior years.
VIII. COMPENSATION ADVISORY COMMITTEE:
The Compensation Advisory Committee is appointed by the Chief Executive Officer
of The FINOVA Group Inc. to assist in the implementation and administration of
this MIP. The Compensation Advisory Committee shall propose administrative
guidelines to govern interpretations of this MIP and to resolve ambiguities, if
any, but will not have the power to terminate, alter, amend, or modify this MIP
or any actions hereunder in any way at any time.
IX. SPECIAL COMPENSATION STATUS:
All bonuses paid under this MIP shall be deemed to be special compensation and,
therefore, unless otherwise provided for in another plan or agreement, will not
be included in determining the earnings of the recipients for the purposes of
any pension, group insurance or other plan or agreement of the Company.
X. PLAN TERMINATION:
Subject to the provisions of section XII, this MIP shall continue in effect
until such time as it is canceled or otherwise terminated by action of the
Committee. While it is contemplated that incentive awards for the MIP will be
made, the Committee may terminate, amend, alter, or modify this MIP at any time
and from time to time. The Committee shall also have the right to alter by
addition or deletion, the participants in this MIP and their target awards.
Participation in this MIP shall create no right to participate in any future
year's plan.
XI. EMPLOYEE RIGHTS:
No participant in this MIP shall be deemed to have a right to any part or share
of this MIP, except as provided in section XII. This MIP does not create for
any employee or participant any right to be retained in service by any company,
nor affect the right of any such company to discharge any employee or
participant from employment with or without cause or for no reason at all.
XII. CHANGE OF CONTROL:
(a) Impact of Event. Notwithstanding any other provision of this
Plan to the contrary, after or as a result of a Change in Control and one of
the following events occurs:
<PAGE> 4
(i) the participant is terminated (except for Cause) during the life
of the Plan,
(ii) participant's employment is terminated for Good Reason within 24
months after or as a result of a Change in Control, or
(iii) the Plan is terminated or amended so that it is less favorable
to the participant,
participant shall be paid by the Company, within 60 days of the termination or
amendment, whichever occurs sooner, a pro rata portion of the sums to be paid
under this Plan (from January 1, 1995 to the end of the last full calendar
month on or before the termination or amendment date, as the case may be), the
greater of:
(x) participant's target award, or
(y) the actual Plan performance annualized using the most recently
available audited or unaudited financial results on or before the
payment date, including the Change in Control Price for the Company's
common stock, as applicable
for each Financial Objective of the Plan.
(b) Definitions: For purposes of this Plan, the following terms shall
have the meanings noted below, unless the context clearly requires otherwise:
(i) Change in Control. Any of the following events shall constitute
a Change in Control:
(A) the acquisition by an individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"))(a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (I) the then
outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (II) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company
Voting Securities"); provided, however, that for purposes of this
subsection (A), the following acquisitions shall not constitute a
Change of Control: (W) any acquisition directly from the Company other
than an acquisition by virtue of the exercise of a conversion
privilege unless the security being so converted was itself acquired
directly from the Company, (X) any acquisition by the Company, (Y) any
acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the
Company or (Z) any acquisition by any corporation pursuant to a
transaction which complies with clauses (I), (II) and (III) of
subsection (C) of this Section XII(b)(i); or
(B) individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by
a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board; or
<PAGE> 5
(C) approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition
of all or substantially all of the assets of the Company (a "Business
Combination"), in each case, unless, following such Business
Combination, (I) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns
the Company or all or substantially all of the Company's assets either
directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (II) no
Person (excluding any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination and (III) at least a majority of the members
of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(D) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(ii) Change in Control Price. For purposes of this Plan, "Change in
Control Price" shall have the same meaning for such term as in effect in the
Company's 1992 Stock Incentive Plan, as amended from time to time; provided,
however, that if that plan is terminated, the definition in that plan
immediately preceding such termination shall continue to apply to this Plan;
provided, further, that no amendment of the definition of such term shall apply
to this Plan with respect to a participant if such amendment would have an
adverse impact on the aggregate benefits available to a participant in this Plan
and such amendment was made during the period from six months preceding a Change
in Control (if a Change in Control event was contemplated by the Company at that
time) to twenty four months after such an event.
(iii) Cause. For purposes of this Plan, "Cause" shall mean:
(A) the willful and continued failure of the participant to
perform substantially the participant's duties with the
Company or one of its affiliates (other than any such failure
resulting from incapacity due to physical or mental illness),
after a written demand for substantial performance is
delivered to the participant by the Board or the Chairman of
the Company which specifically identifies the manner in which
the Board or Chairman believes that the participant has not
substantially performed the participant's duties, or
(B) the willful engaging by the participant in illegal
conduct or gross misconduct which is materially and
demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act on the part
of the participant shall be
<PAGE> 6
considered "willful" unless it is done or omitted to be done by the
participant in bad faith or without reasonable belief that the
participant's action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or upon the
instructions of the Chairman or a senior officer of the Company or
based upon the advice of counsel for the Company shall be conclusively
presumed to be done or omitted to be done by the participant in good
faith and in the best interests of the Company. The cessation of
employment of the participant shall not be deemed to be for Cause
unless and until there shall have been delivered to the participant a
copy of a resolution duly adopted by the affirmative vote of not less
than three-quarters of the entire membership of the Board at a meeting
of the Board called and held for such purpose (after reasonable notice
is provided to the participant and the participant is given an
opportunity, together with counsel, to be heard before the Board),
finding that, in the good faith opinion of the Board, the participant
is guilty of the conduct described in subparagraph (I) or (II) above,
and specifying the particulars thereof in detail.
(iv) Good Reason. For purposes of this Plan, "Good Reason" shall mean:
(A) the assignment to the participant of any duties
inconsistent in any respect with the Participant's position
(including status, offices, titles and reporting
requirements), authority, duties or responsibilities
immediately prior to the Change of Control, or any other
action by the Company which results in a diminution in such
position, authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Participant,
(B) any reduction by the Company of the participant's
base salary, annual bonus, incentive opportunities, retirement
benefits, welfare or fringe benefits below the highest level
enjoyed by the participant during the 120- day period prior to
the Change of Control;
(C) the Company's requiring the participant to be
based at any office or location other than that at which he or
she was based immediately prior to the Change of Control or
the Company's requiring the participant to travel on Company
business to a substantially greater extent than required
immediately prior to the Change of Control;
(D) ny purported termination by the Company of the
participant's employment otherwise than as expressly permitted
by this Agreement; or
(E) any failure by the Company to comply with and
satisfy Section XII(d) of this Plan.
For purposes of this Plan, any good faith determination of "Good Reason" made
by the participant shall be conclusive.
(c). Excise Taxes. Anything in this Plan to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the participant who also is
a participant in either of the Company's Executive Severance Plans (Tier 1 and
Tier 2 Employees) (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this Section XII (c)) (a
"Payment") would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended, or any comparable successor
provision, or any interest or
<PAGE> 7
penalties are incurred by the participant with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the participant shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the participant of all taxes (including any interest
and penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
participant retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(d). The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Plan in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Plan, Company shall mean the Company as
hereinbefore defined and any entity which assumes and agrees to perform this
Plan by operation of law, or otherwise.
<PAGE> 1
EXHIBIT 10.H
THE FINOVA GROUP INC.
1993-1995 PERFORMANCE SHARE INCENTIVE PLAN
1. PURPOSE
The purpose of this Plan is to promote the long term interests of the Company
and its shareholders by providing (i) a means for attracting and retaining, and
(ii) a system of cash reward for the accomplishment of long term predefined
objectives by designated key officers of the Company and its Affiliates.
2. DEFINITIONS:
The following definitions are applicable to the Plan:
"Affiliate" - Any "Parent Corporation" or "Subsidiary Corporation" of
the Company as such terms are defined in Section 425 (e) and (f), or
the successor provisions, if any, respectively, of the Code (as
defined herein).
"Award" - The grant by the Board of a Performance Share or s Shares
as provided in the plan.
"Board" - The Board of Directors of The FINOVA Group Inc. or a duly
authorized Committee of such Board.
"Code" - The Internal Revenue Code of 1986, as amended, or its
successor general income tax law of the United States.
"Company" - The FINOVA Group Inc.
"Participant" - Any officer of the Company or any of its Affiliates
who is selected by the Board to receive an award.
"Performance Period" - The period of time selected by the Board for
the purpose of determining performance goals and measuring the degree
of accomplishment.
"Performancet Share Award" - An Award.
"Plan" - The Performance Share Incentive Plan of the Company.
"Shares" - A Performance Share shall have a value equivalent to the
mean of the market prices of a share of the Company's Common Stock on
the date the Award is granted, and shall serve as the basis for any
Award under the Plan.
<PAGE> 2
3. ADMINISTRATION
The Plan shall be administered by the Board. Except as limited by the express
provisions of the Plan, the Board shall have sole and complete authority and
discretion to (i) select Participants and grant Awards; (ii) determine the
number of Shares to be subject to Awards generally, as well as to individual
Awards granted under the Plan; (iii) determine the terms and conditions upon
which Awards shall be granted under the Plan; (iv) prescribe the form and terms
of instruments evidencing such grants; and (v) establish from time to time
regulations for the administration of the Plan, interpret the Plan, and make
all determinations deemed necessary or advisable for the administration of the
Plan.
4. PARTICIPATION:
The Board may select from time to time Participants for the Plan. Participants
shall be key executives of the Company or its Affiliates who, in the opinion of
the Board, contribute in a substantial measure to the successful performance of
the Company or its Affiliates.
5. PERFORMANCE SHARE AWARDS:
The Chairman and Chief Executive Officer of the Company annually during the
life of the Plan will determine and recommend to the Board in writing (i) the
Company and which among its Affiliates are to participate in the Plan for that
year, (ii) the names of those key executives who should participate in the Plan
for that year, (iii) the performance measurement factors to be used in the
determination of degree of accomplishment for purposes of the Plan for that
year, and (iv) the Performance Period to be used as a basis for the measurement
of performance for Awards under the Plan for that year.
6. GENERAL TERMS AND CONDITIONS:
The Board shall have full and complete authority and discretion, except as
expressly limited by the Plan, to grant Shares and to provide the terms and
conditions (which need not be identical among Participants) thereof. No
participant or any person claiming under or through such person shall have any
right or interest, whether vested or otherwise, in the Plan or in any Award
thereunder, contingent or otherwise, unless and until all the terms,
conditions, and provisions of the Plan and its approved administrative
requirements that affect such Participant or such other person shall have been
complied with. Nothing contained in the Plan or its administrative guidelines
shall (i) require the Company to segregate cash or other property on behalf of
any Participant or (ii) affect the rights and power of the Company or its
Affiliates to dismiss and/or discharge any officer or employee at any time.
7. CALCULATION AND PAYMENT OF AWARDS:
(a) Performance Share Awards which may be payable under this Plan
shall be calculated as determined by the Board but any resulting Performance
Share Award Payable shall be subject to the following calculation: each Share
payable shall be multiplied by the average of the daily means of the market
prices of the Company's Common Stock during the
<PAGE> 3
last month of the Performance Period. Performance Share Awards earned will be
determined within sixty (60) days following the close of the Performance Period
and distribution of the Award will be made within ninety (90) days following
the close of the Performance Period.
(b) Performance Share Awards granted under this Plan shall be payable
during the lifetime of the Participant to whom such Award was granted and only
to such Participant; and, except as provided in (d) and (e) of this Section 7,
no such Award will be payable unless at the time of payment such Participant is
an employee of and has continuously since the grant thereof been an employee
of, the Company or an Affiliate. Neither absence on leave, if approved by the
Company, nor any transfer of employment between Affiliates or between Affiliate
and the Company shall be considered an interruption or termination of
employment for purposes of this Plan.
(c) Ninety (90) days before the expiration of the Performance Period,
all participants will be provided an irrevocable option to defer all or a
portion of any earned Performancet Share Award, if there be one, but not less
than $1,000, in written form as prescribed by the Board under the provisions of
a deferred compensation plan for executives of the Company and its Affiliates,
if one be adopted.
(d) Subject to the provisions of Section 11, if a Participant to whom
a Performance Share Award was granted shall cease to be employed by the Company
or its Affiliate for any reason (other than death, disability, or retirement)
prior to the completion of any applicable Performance Period, said Performance
Share Award will be withdrawn and subsequent payment in any form or at any time
will not be made.
(e) If a Participant to whom a Performancet Share Award was granted
shall cease to be employed by the Company or its Affiliate due to early,
normal, or deferred retirement (other than within twenty-four months of or as a
result of a Change in Control, which event shall be governed by Section 11), or
in the event of the death or disability of the Participant during the
Performance Period stipulated in the Performance Share Award, such Award shall
be prorated for the period of time from date of grant to date of retirement,
disability or death, as applicable, and become payable within ninety (90) days
to the Participant or the person to whom interest therein is transferred by
will or by the laws of descent and distribution.
(f) There shall be deducted from all payment of Awards any taxes
required to be withheld by any Federal, State, or local government and paid
over to any such government in respect to any such payment.
8. ASSIGNMENTS AND TRANSFERS:
No Award to any Participant under the provisions of the Plan may be assigned,
transferred, or otherwise encumbered except, in the event of death of a
Participant, by will or the laws of descent and distribution. Participants may
complete a beneficiary designation form in accordance with then-current Company
policies.
<PAGE> 4
9. AMENDMENT OR TERMINATION:
The Board may amend, suspend, or terminate the Plan or any portion thereof at
any time provided, however, that no such amendment, suspension, or termination
shall invalidate the Awards already made to any Participant pursuant to the
Plan, without his or her consent.
10. EFFECTIVE DATE AND TERM OF PLAN:
The Plan shall be effective the first of the year indicated on the first page
hereof. No Awards shall be made under the Plan after December 31 of the tenth
year following its adoption.
11. CHANGE OF CONTROL:
(a) Impact of Event. Notwithstanding any other provision of this Plan to the
contrary, after or as a result of a Change in Control and one of the following
events occurs:
(i) the Participant is terminated (except for Cause) during
the life of the Plan;
(ii) participant's employment is terminated for Good Reason
within twenty-four months after or as a result of a Change in
Control; or
(iii) the Plan is terminated or amended so that it is less
favorable to the Participant.
Participant shall be paid by the Company, within 60 days of the termination or
amendment, whichever occurs sooner, a pro rata portion of the sums to be paid
under this Plan (from the beginning of any unpaid Performance Periods to the
end of the last full calendar month on or before the termination or amendment
date, as the case may be), the greater of:
(x) Participant's Target Final Award based on achievement of
Target Company Achievement Percentage, or
(y) Participant's Target Final Award based on actual Company
Achievement Percentage annualized using the most recently
available audited or unaudited financial results on or before
the payment date, including the higher of Change in Control
Price or actual share price, as provided in Section 7(a) for
the Company's common stock, as applicable.
Actual Company Achievement Percentages shall be used in calculating Awards for
any completed years. For uncompleted years, in the event of a Change in
Control, High End Share Units shall be awarded if the Company Achievement
Percentage is equal to or in excess of 50% over the Target Company Achievement
Percentage (compared to maximum Company Achievement Percentage) level.
Otherwise, Target Share Units shall be awarded, unless the Board, in its
discretion, awards greater than Target Share Units. The Board shall not have
discretion to award less than Target Share Units in the event of a Change in
Control.
<PAGE> 5
(b) Definitions: For purposes of this Plan, the following terms shall
have the meanings noted below, unless the context clearly requires otherwise:
(i) Change in Control. Any of the following events shall constitute
a Change in Control:
(A) the acquisition by an individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"))(a "Person") of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either (I) the then outstanding shares of common stock
of the Company (the "Outstanding Company Common Stock") or
(II) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this
subsection (A), the following acquisitions shall not
constitute a Change of Control: (W) any acquisition directly
from the Company other than an acquisition by virtue of the
exercise of a conversion privilege unless the security being
so converted was itself acquired directly from the Company,
(X) any acquisition by the Company, (Y) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the
Company or (Z) any acquisition by any corporation pursuant to
a transaction which complies with clauses (I), (II) and (III)
of subsection (C) of this Section 11(b)(i); or
(B) individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or
removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(C) approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless,
following such Business Combination, (I) all or substantially
all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case
<PAGE> 6
may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately
prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be,
(II) no Person (excluding any employee benefit plan (or related trust)
of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more
of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination and (III) at least a majority of the members
of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(D) approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
(ii) Change in Control Price. For purposes of this Plan, "Change in
Control Price" shall have the same meaning for such term as in effect in the
Company's 1992 Stock Incentive Plan, as amended from time to time; provided,
however, that if that plan is terminated, the definition in that plan
immediately preceding such termination shall continue to apply to this Plan;
provided, further, that no amendment of the definition of such term shall apply
to this Plan with respect to a participant if such amendment would have an
adverse impact on the aggregate benefits available to a participant in this Plan
and such amendment was made during the period from six months preceding a Change
in Control (if a Change in Control event was contemplated by the Company at that
time) to twenty four months after such an event.
(iii) Cause. For purposes of this Plan, "Cause" shall mean: (A) the
willful and continued failure of the Participant to perform
substantially the Participant's duties with the Company or one
of its affiliates (other than any such failure resulting from
incapacity due to physical or mental illness), after a written
demand for substantial performance is delivered to the
Participant by the Board or the Chairman of the Company which
specifically identifies the manner in which the Board or
Chairman believes that the Participant has not substantially
performed the Participant's duties, or
(B) the willful engaging by the Participant in illegal conduct
or gross misconduct which is materially and demonstrably
injurious to the Company.
For purposes of this provision, no act or failure to act on the part
of the Participant shall be considered "willful" unless it is done or
omitted to be done by the Participant
<PAGE> 7
in bad faith or without reasonable belief that the Participant's
action or omission was in the best interests of the Company. Any act,
or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or upon the instructions of the Chairman or
a senior officer of the Company or based upon the advice of counsel
for the Company shall be conclusively presumed to be done or omitted
to be done by the Participant in good faith and in the best interests
of the Company. The cessation of employment of the Participant shall
not be deemed to be for Cause unless and until there shall have been
delivered to the Participant a copy of a resolution duly adopted by
the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Participant
and the Participant is given an opportunity, together with counsel, to
be heard before the Board), finding that, in the good faith opinion of
the Board, the Participant is guilty of the conduct described in
subparagraph (A) or (B) above, and specifying the particulars thereof
in detail.
(iv) Good Reason. For purposes of this Plan, "Good Reason" shall mean:
(A) the assignment to the Participant of any duties
inconsistent in any respect with the Participant's position
(including status, offices, titles and reporting
requirements), authority, duties or responsibilities
immediately prior to the Change of Control, or any other
action by the Company which results in a diminution in such
position, authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Participant,
(B) any reduction by the Company of the
Participant's base salary, annual bonus, incentive
opportunities, retirement benefits, welfare or fringe benefits
below the highest level enjoyed by the Participant during the
120- day period prior to the Change of Control;
(C) the Company's requiring the Participant to be
based at any office or location other than that at which he or
she was based immediately prior to the Change of Control or
the Company's requiring the Participant to travel on Company
business to a substantially greater extent than required
immediately prior to the Change of Control;
(D) any purported termination by the Company of the
Participant's employment otherwise than as expressly permitted
by this Agreement; or
(E) any failure by the Company to comply with and
satisfy Section 11(d) of this Plan.
For purposes of this Agreement, any good faith determination of "Good Reason"
made by the Participant shall be conclusive.
<PAGE> 8
(c). Excise Taxes. Anything in this Plan to the contrary
notwithstanding, in the event it shall be determined that any
payment or distribution by the Company to or for the benefit of
the Participant who also is a participant in either of the
Company's Executive Severance Plans (Tier 1 or Tier 2 Employees)
(whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise, but determined
without regard to any additional payments required under this
Section XII (c)) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended, or any comparable successor provision, or any interest
or penalties are incurred by the Participant with respect to such
excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Participant shall be entitled to receive
an additional payment (a "Gross-Up Payment") in an amount such
that after payment by the Participant of all taxes (including any
interest and penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, the Participant retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed
upon the Payments.
(d). The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Plan in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Plan, Company shall mean the Company as
hereinbefore defined and any entity which assumes and agrees to perform this
Plan by operation of law, or otherwise.
<PAGE> 1
EXHIBIT 10.I
THE FINOVA GROUP INC.
1994-1996 PERFORMANCE SHARE INCENTIVE PLAN
1. PURPOSE
The purpose of this Plan is to promote the long term interests of the Company
and its shareholders by providing (i) a means for attracting and retaining, and
(ii) a system of cash reward for the accomplishment of long term predefined
objectives by designated key officers of the Company and its Affiliates.
2. DEFINITIONS:
The following definitions are applicable to the Plan:
"Affiliate" - Any "Parent Corporation" or "Subsidiary Corporation" of
the Company as such terms are defined in Section 425 (e) and (f), or
the successor provisions, if any, respectively, of the Code (as
defined herein).
"Award" - The grant by the Board of a Performance Share ors Shares as
provided in the plan.
"Board" - The Board of Directors of The FINOVA Group Inc. or a duly
authorized Committee of such Board.
"Code" - The Internal Revenue Code of 1986, as amended, or its
successor general income tax law of the United States.
"Company" - The FINOVA Group Inc.
"Participant" - Any officer of the Company or any of its Affiliates
who is selected by the Board to receive an award.
"Performance Period" - The period of time selected by the Board for
the purpose of determining performance goals and measuring the degree
of accomplishment.
"Performance Share Award" - An Award.
"Plan" - The Performance Share Incentive Plan of the Company.
Share - A Performance Share shall have a value equivalent to the mean
of the market prices of a share of the Company's Common Stock on the
date the Award is granted, and shall serve as the basis for any Award
under the Plan.
3. ADMINISTRATION
The Plan shall be administered by the Board. Except as limited by the express
provisions of the Plan, the Board shall have sole and complete authority and
discretion to (i) select Participants and grant Awards; (ii) determine the
number of Shares to be subject to Awards generally, as well as to individual
Awards granted under the Plan; (iii) determine the terms and conditions upon
which Awards shall be granted under the Plan; (iv) prescribe the form and terms
of instruments evidencing such grants; and (v) establish from time to time
regulations for the administration of the Plan, interpret the Plan, and make
all determinations deemed necessary or advisable for the administration of the
Plan.
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4. PARTICIPATION:
The Board may select from time to time Participants for the Plan. Participants
shall be key executives of the Company or its Affiliates who, in the opinion of
the Board, contribute in a substantial measure to the successful performance of
the Company or its Affiliates.
5. PERFORMANCE SHARE AWARDS:
The Chairman and Chief Executive Officer of the Company annually during the
life of the Plan will determine and recommend to the Board in writing (i) the
Company and which among its Affiliates are to participate in the Plan for that
year, (ii) the names of those key executives who should participate in the Plan
for that year, (iii) the performance measurement factors to be used in the
determination of degree of accomplishment for purposes of the Plan for that
year, and (iv) the Performance Period to be used as a basis for the measurement
of performance for Awards under the Plan for that year.
6. GENERAL TERMS AND CONDITIONS:
The Board shall have full and complete authority and discretion, except as
expressly limited by the Plan, to grant Shares and to provide the terms and
conditions (which need not be identical among Participants) thereof. No
participant or any person claiming under or through such person shall have any
right or interest, whether vested or otherwise, in the Plan or in any Award
thereunder, contingent or otherwise, unless and until all the terms,
conditions, and provisions of the Plan and its approved administrative
requirements that affect such Participant or such other person shall have been
complied with. Nothing contained in the Plan or its administrative guidelines
shall (i) require the Company to segregate cash or other property on behalf of
any Participant or (ii) affect the rights and power of the Company or its
Affiliates to dismiss and/or discharge any officer or employee at any time.
7. CALCULATION AND PAYMENT OF AWARDS:
(a) Performance Share Awards which may be payable under this Plan
shall be calculated as determined by the Board but any resulting Performance
Share Award Payable shall be subject to the following calculation: each Share
payable shall be multiplied by the average of the daily means of the market
prices of the Company's Common Stock during the last month of the Performance
Period. Performance Share Awards earned will be determined within sixty (60)
days following the close of the Performance Period and distribution of the
Award will be made within ninety (90) days following the close of the
Performance Period.
(b) Performance Share Awards granted under this Plan shall be payable
during the lifetime of the Participant to whom such Award was granted and only
to such Participant; and, except as provided in (d) and (e) of this Section 7,
no such Award will be payable unless at the time of payment such Participant is
an employee of and has continuously since the grant thereof been an employee
of, the Company or an Affiliate. Neither absence on leave, if approved by the
Company, nor any transfer of employment between Affiliates or between Affiliate
and the Company shall be considered an interruption or termination of
employment for purposes of this Plan.
(c) Ninety (90) days before the expiration of the Performance Period,
all participants will be provided an irrevocable option to defer all or a
portion of any earned Performancet Share Award, if there be one, but not less
than $1,000, in written form as prescribed by the Board under the provisions of
a deferred compensation plan for executives of the Company and its Affiliates,
if one be adopted.
(d) Subject to the provisions of Section 11, if a Participant to whom
a Performance Share Award was granted shall cease to be employed by the Company
or its Affiliate for any reason (other than death,
2
<PAGE> 3
disability, or retirement) prior to the completion of any applicable
Performance Period, said Performance Share Award will be withdrawn and
subsequent payment in any form or at any time will not be made.
(e) If a Participant to whom a Performance Share Award was granted
shall cease to be employed by the Company or its Affiliate due to early,
normal, or deferred retirement (other than within twenty-four months of or as a
result of a Change in Control, which event shall be governed by Section 11), or
in the event of the death or disability of the Participant during the
Performance Period stipulated in the Performance Share Award, such Award shall
be prorated for the period of time from date of grant to date of retirement,
disability or death, as applicable, and become payable within ninety (90) days
to the Participant or the person to whom interest therein is transferred by
will or by the laws of descent and distribution.
(f) There shall be deducted from all payment of Awards any taxes
required to be withheld by any Federal, State, or local government and paid over
to any such government in respect to any such payment.
8. ASSIGNMENTS AND TRANSFERS:
No Award to any Participant under the provisions of the Plan may be assigned,
transferred, or otherwise encumbered except, in the event of death of a
Participant, by will or the laws of descent and distribution. Participants may
complete a beneficiary designation form in accordance with then-current Company
policies.
9. AMENDMENT OR TERMINATION:
The Board may amend, suspend, or terminate the Plan or any portion thereof at
any time provided, however, that no such amendment, suspension, or termination
shall invalidate the Awards already made to any Participant pursuant to the
Plan, without his or her consent.
10. EFFECTIVE DATE AND TERM OF PLAN:
The Plan shall be effective the first of the year indicated on the first page
hereof. No Awards shall be made under the Plan after December 31 of the tenth
year following its adoption.
11. CHANGE OF CONTROL:
(a) Impact of Event. Notwithstanding any other provision of this Plan to
the contrary, after or as a result of a Change in Control and one of the
following events occurs:
(i) the Participant is terminated (except for Cause) during
the life of the Plan;
(ii) participant's employment is terminated for Good Reason
within twenty-four months after or as a result of a Change in
Control; or
(iii) the Plan is terminated or amended so that it is less
favorable to the Participant.
Participant shall be paid by the Company, within 60 days of the termination or
amendment, whichever occurs sooner, a pro rata portion of the sums to be paid
under this Plan (from the beginning of any unpaid Performance Periods to the
end of the last full calendar month on or before the termination or amendment
date, as the case may be), the greater of:
(x) Participant's Target Final Award based on achievement of
Target Company Achievement Percentage, or
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<PAGE> 4
(y) Participant's Target Final Award based on actual Company
Achievement Percentage annualized using the most recently
available audited or unaudited financial results on or before
the payment date, including the higher of Change in Control
Price or actual share price, as provided in Section 7(a) for
the Company's common stock, as applicable.
Actual Company Achievement Percentages shall be used in calculating Awards for
any completed years. For uncompleted years, in the event of a Change in
Control, High End Share Units shall be awarded if the Company Achievement
Percentage is equal to or in excess of 50% over the Target Company Achievement
Percentage (compared to maximum Company Achievement Percentage) level.
Otherwise, Target Share Units shall be awarded, unless the Board, in its
discretion, awards greater than Target Share Units. The Board shall not have
discretion to award less than Target Share Units in the event of a Change in
Control.
(b) Definitions: For purposes of this Plan, the following terms shall
have the meanings noted below, unless the context clearly requires otherwise:
(i) Change in Control. Any of the following events shall constitute
a Change in Control:
(A) the acquisition by an individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the
"Exchange Act"))(a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of either (I) the then outstanding shares of
common stock of the Company (the "Outstanding Company Common
Stock") or (II) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that for
purposes of this subsection (A), the following acquisitions
shall not constitute a Change of Control: (W) any acquisition
directly from the Company other than an acquisition by virtue
of the exercise of a conversion privilege unless the security
being so converted was itself acquired directly from the
Company, (X) any acquisition by the Company, (Y) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company or (Z) any acquisition by any
corporation pursuant to a transaction which complies with
clauses (I), (II) and (III) of subsection (C) of this Section
11(b)(i); or
(B) individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual
or threatened election contest with respect to the election
or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(C) approval by the shareholders of the Company of
a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless,
following such Business Combination, (I) all or substantially
all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then
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<PAGE> 5
outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may
be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation
which as a result of such transaction owns the Company or all
or substantially all of the Company's assets either directly
or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to
such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case
may be, (II) no Person (excluding any employee benefit plan
(or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership
existed prior to the Business Combination and (III) at least
a majority of the members of the board of directors of the
corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution
of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(D) approval by the shareholders of the Company of
a complete liquidation or dissolution of the Company.
(ii) Change in Control Price. For purposes of this Plan, "Change in
Control Price" shall have the same meaning for such term as in effect in the
Company's 1992 Stock Incentive Plan, as amended from time to time; provided,
however, that if that plan is terminated, the definition in that plan
immediately preceding such termination shall continue to apply to this Plan;
provided, further, that no amendment of the definition of such term shall apply
to this Plan with respect to a participant if such amendment would have an
adverse impact on the aggregate benefits available to a participant in this
Plan and such amendment was made during the period from six months preceding a
Change in Control (if a Change in Control event was contemplated by the Company
at that time) to twenty four months after such an event.
(iii) Cause. For purposes of this Plan, "Cause" shall mean:
(A) the willful and continued failure of the Participant to
perform substantially the Participant's duties with the
Company or one of its affiliates (other than any such failure
resulting from incapacity due to physical or mental illness),
after a written demand for substantial performance is
delivered to the Participant by the Board or the Chairman of
the Company which specifically identifies the manner in which
the Board or Chairman believes that the Participant has not
substantially performed the Participant's duties, or
(B) the willful engaging by the Participant in illegal
conduct or gross misconduct which is materially and
demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act on the part
of the Participant shall be considered "willful" unless it is done or
omitted to be done by the Participant in bad faith or without
reasonable belief that the Participant's action or omission was in the
best interests of the Company. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or
upon the instructions of the Chairman or a senior officer of the
Company or based upon the advice of counsel for the Company shall be
conclusively presumed to be done or omitted to be done by the
Participant in good faith and in the best interests of the Company.
The cessation of employment of the Participant shall not be deemed to
be for Cause unless and until there shall have been delivered to the
Participant a copy of a resolution duly
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<PAGE> 6
adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and
held for such purpose (after reasonable notice is provided to the
Participant and the Participant is given an opportunity, together with
counsel, to be heard before the Board), finding that, in the good
faith opinion of the Board, the Participant is guilty of the conduct
described in subparagraph (A) or (B) above, and specifying the
particulars thereof in detail.
(iv) Good Reason. For purposes of this Plan, "Good Reason" shall mean:
(A) the assignment to the Participant of any duties
inconsistent in any respect with the Participant's position
(including status, offices, titles and reporting
requirements), authority, duties or responsibilities
immediately prior to the Change of Control, or any other
action by the Company which results in a diminution in such
position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the
Participant,
(B) any reduction by the Company of the
Participant's base salary, annual bonus, incentive
opportunities, retirement benefits, welfare or fringe
benefits below the highest level enjoyed by the Participant
during the 120-day period prior to the Change of Control;
(C) the Company's requiring the Participant to be
based at any office or location other than that at which he
or she was based immediately prior to the Change of Control
or the Company's requiring the Participant to travel on
Company business to a substantially greater extent than
required immediately prior to the Change of Control;
(D) any purported termination by the Company of the
Participant's employment otherwise than as expressly
permitted by this Agreement; or
(E) any failure by the Company to comply with and
satisfy Section 11(d) of this Plan.
For purposes of this Agreement, any good faith determination of "Good Reason"
made by the Participant shall be conclusive.
(c). Excise Taxes. Anything in this Plan to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Participant who also
is a participant in either of the Company's Executive Severance Plans (Tier 1
or Tier 2 Employees) (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this Section XII (c)) (a
"Payment") would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended, or any comparable successor
provision, or any interest or penalties are incurred by the Participant with
respect to such excise tax (such excise tax, together with any such interest
and penalties, are hereinafter collectively referred to as the "Excise Tax"),
then the Participant shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by the Participant of
all taxes (including any interest and penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Participant retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(d). The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to
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<PAGE> 7
assume expressly and agree to perform this Plan in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Plan, Company shall mean the
Company as hereinbefore defined and any entity which assumes and agrees to
perform this Plan by operation of law, or otherwise.
7
<PAGE> 1
EXHIBIT 10.J
THE FINOVA GROUP INC.
1995-1997 PERFORMANCE SHARE INCENTIVE PLAN
1. PURPOSE
The purpose of this Plan is to promote the long term interests of the Company
and its shareholders by providing (i) a means for attracting and retaining, and
(ii) a system of cash reward for the accomplishment of long term predefined
objectives by designated key officers of the Company and its Affiliates.
2. DEFINITIONS:
The following definitions are applicable to the Plan:
"Affiliate" - Any "Parent Corporation" or "Subsidiary Corporation" of
the Company as such terms are defined in Section 425 (e) and (f), or
the successor provisions, if any, respectively, of the Code (as
defined herein).
"Award" - The grant by the Board of a Performance Share or s Shares
as provided in the plan.
"Board" - The Board of Directors of The FINOVA Group Inc. or a duly
authorized Committee of such Board.
"Code" - The Internal Revenue Code of 1986, as amended, or its
successor general income tax law of the United States.
"Company" - The FINOVA Group Inc.
"Company Achievement Percentage" - The actual performance of the
Financial Measures during the relevant period weighted proportionately
as determined by the Plan.
"Financial Measures" - The performance measures established by the
Board for the Plan objectives, such as return on equity, net income or
level of nonperforming assets, for example.
"Participant" - Any officer of the Company or any of its Affiliates
who is selected by the Board to receive an award.
"Performance Period" - The period of time selected by the Board for
the purpose of determining performance goals and measuring the degree
of accomplishment.
"Performance Share Award" - An Award.
"Plan" - The Performance Share Incentive Plan of the Company.
"Share" - A Performance Share shall serve as the basis for any Award
under the Plan.
"Target Company Achievement Percentage" - Company Achievement
Percentage assuming that target performance of the Financial Measures
was achieved.
3. ADMINISTRATION
The Plan shall be administered by the Board. Except as limited by the express
provisions of the Plan,
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<PAGE> 2
the Board shall have sole and complete authority and discretion to (i) select
Participants and grant Awards; (ii) determine the number of Shares to be
subject to Awards generally, as well as to individual Awards granted under the
Plan; (iii) determine the terms and conditions upon which Awards shall be
granted under the Plan; (iv) prescribe the form and terms of instruments
evidencing such grants; and (v) establish from time to time regulations for the
administration of the Plan, interpret the Plan, and make all determinations
deemed necessary or advisable for the administration of the Plan.
4. PARTICIPATION:
The Board may select from time to time Participants for the Plan. Participants
shall be key executives of the Company or its Affiliates who, in the opinion of
the Board, contribute in a substantial measure to the successful performance of
the Company or its Affiliates. The Company shall have the authority to add new
participants on a prorata basis if hired during the first year of a performance
period. In all cases, the Executive Compensation Committee must approve
participants with target levels greater than 30% or Securities Exchange Act of
1934 Section 16(b) individuals.
5. PERFORMANCE SHARE AWARDS:
The Chairman and Chief Executive Officer of the Company annually during the
life of the Plan will determine and recommend to the Board in writing (i) the
Company and which among its Affiliates are to participate in the Plan for that
year, (ii) the names of those key executives who should participate in the Plan
for that year, (iii) the performance measurement factors to be used in the
determination of degree of accomplishment for purposes of the Plan for that
year, and (iv) the Performance Period to be used as a basis for the measurement
of performance for Awards under the Plan for that year.
6. GENERAL TERMS AND CONDITIONS:
The Board shall have full and complete authority and discretion, except as
expressly limited by the Plan, to grant Shares and to provide the terms and
conditions (which need not be identical among Participants) thereof. No
participant or any person claiming under or through such person shall have any
right or interest, whether vested or otherwise, in the Plan or in any Award
thereunder, contingent or otherwise, unless and until all the terms,
conditions, and provisions of the Plan and its approved administrative
requirements that affect such Participant or such other person shall have been
complied with. Nothing contained in the Plan or its administrative guidelines
shall (i) require the Company to segregate cash or other property on behalf of
any Participant or (ii) affect the rights and power of the Company or its
Affiliates to dismiss and/or discharge any officer or employee at any time.
7. CALCULATION AND PAYMENT OF AWARDS:
(a) Performance Share Awards which may be payable under this
Plan shall be calculated as determined by the Board but any resulting
Performance Share Award Payable shall be subject to the following calculation:
each Share payable shall be multiplied by the average of the daily means of the
market prices of the Company's Common Stock during the last month of the
Performance Period. Performance Share Awards earned will be determined within
sixty (60) days following the close of the Performance Period and distribution
of the Award will be made within ninety (90) days following the close of the
Performance Period.
(b) Performance Share Awards granted under this Plan shall be
payable during the lifetime of the Participant to whom such Award was granted
and only to such Participant; and, except as provided in (d) and (e) of this
Section 7, no such Award will be payable unless at the time of payment such
Participant is an employee of and has continuously since the grant thereof been
an employee of, the Company or an Affiliate. Neither absence on leave, if
approved by the Company, nor any transfer of employment between Affiliates or
between Affiliate and the Company shall be considered an interruption
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<PAGE> 3
or termination of employment for purposes of this Plan.
(c) Beginning Period Target Share Units (Target Share Units) shall be
calculated for each participant at the beginning of the Performance Period by
dividing 1) the product of participant Target Percents of Salary and Base
Salaries in effect on the December 31 immediately preceding the beginning of
the Performance Period by 2) the average of the daily means of share prices of
FINOVA Common Stock for the December preceding the Performance Period.
(d) Subject to Section 11, Target Share Units represent the middle of
a Discretionary Range of Beginning Period Share Units bounded by Low End Share
Units and High End Share Units. The calculation for Low End Share Units shall be
the same as for Target Share Units (paragraph 7c, above) except the Target
Percents of Salary are reduced by 5 percentage points (e.g., from 25% to 20%).
The calculation for High End Share Units shall be the same as for Target Share
Units (paragraph 7c, above) except the Target Percents of Salary are increased
by 5 percentage points (e.g., from 25% to 30%).
(e) At the end of the Performance Period, company performance is
determined relative to the preestablished minimums, targets and maximums of the
Financial Measures. Minimum performance or less results in no awards. Target
performance results in 100% (target) awards. Maximum performance results in 200%
awards. Performance levels between Minimum and Maximum are interpolated. These
percentages are referred to as Company Achievement Percentages.
(f) Target Final Awards are calculated by multiplying all three of
the following: 1) Beginning Period Target Share Units, 2) Company Achievement
Percentage and 3) the average of the daily means of share prices of FINOVA
Common Stock for the last December in the Performance Period. As with Target
Share Units (paragraph 7.d, above), Subject to Section 11, Target Final Awards
represent the middle of a Discretionary Range of Awards. The calculation for
the Low End of the Discretionary Range of Awards is the same as the calculation
for Target Final Awards except Beginning Period Low End Share Units should be
substituted for Beginning Period Target Share Units. Similarly, The calculation
for the High End of the Discretionary Range of Awards is the same as the
calculation for Target Final Awards except Beginning Period High End Share
Units should be substituted for Beginning Period Target Share Units.
(g) Subject to Section 11, notwithstanding the existence of a Low End
of a Discretionary Range, the Committee has the authority to grant awards of
less than the Low End of the Discretionary Range or no awards at all if
individual performance so warrants.
(h) At the beginning of (and for each year in) the Performance
Period, Financial Measures minimums, targets and maximums will be determined
for each business group and line of business. If FINOVA Capital Corporation
achieves at least its minimum objectives for the Performance Period, 25% of
each award for leaders of business groups and lines of business shall be based
upon the FINOVA Capital Corporation achievement level and 75% will be based on
the level of achievement of the participant's business group or line of
business.
(i) Ninety (90) days before the expiration of the Performance Period,
all participants will be provided an irrevocable option to defer all or a
portion of any earned Performance Share Award, if there be one, but not less
than $1,000, in written form as prescribed by the Board under the provisions of
a deferred compensation plan for executives of the Company and its Affiliates,
if one be adopted.
(j) Subject to the provisions of Section 11, if a Participant to
whom a Performance Share Award was granted shall cease to be employed by the
Company or its Affiliate for any reason (other than death, disability, or
retirement) prior to the completion of any applicable Performance Period, said
Performance Share Award will be withdrawn and subsequent payment in any form or
at any time will not be made.
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<PAGE> 4
(k) If a Participant to whom a Performance Share Award was granted
shall cease to be employed by the Company or its Affiliate due to early,
normal, or deferred retirement (other than within twenty-four months of or as a
result of a Change in Control, which event shall be governed by Section 11), or
in the event of the death or disability of the Participant during the
Performance Period stipulated in the Performance Share Award, such Award shall
be prorated for the period of time from date of grant to date of retirement,
disability or death, as applicable, and become payable within ninety (90) days
to the Participant or the person to whom interest therein is transferred by
will or by the laws of descent and distribution.
(l) There shall be deducted from all payment of Awards any taxes
required to be withheld by any Federal, State, or local government and paid
over to any such government in respect to any such payment.
8. ASSIGNMENTS AND TRANSFERS:
No Award to any Participant under the provisions of the Plan may be assigned,
transferred, or otherwise encumbered except, in the event of death of a
Participant, by will or the laws of descent and distribution. Participants may
complete a beneficiary designation form in accordance with then-current Company
policies.
9. AMENDMENT OR TERMINATION:
The Board may amend, suspend, or terminate the Plan or any portion thereof at
any time provided, however, that no such amendment, suspension, or termination
shall invalidate the Awards already made to any Participant pursuant to the
Plan, without his or her consent.
10. EFFECTIVE DATE AND TERM OF PLAN:
The Plan shall be effective the first of the year indicated on the first page
hereof. No Awards shall be made under the Plan after December 31 of the tenth
year following its adoption.
11. CHANGE OF CONTROL:
(a) Impact of Event. Notwithstanding any other provision of this Plan to
the contrary, after or as a result of a Change in Control and one of the
following events occurs:
(i) the Participant is terminated (except for Cause) during
the life of the Plan;
(ii) participant's employment is terminated for Good Reason
within twenty-four months after or as a result of a Change in
Control; or
(iii) the Plan is terminated or amended so that it is less
favorable to the Participant.
Participant shall be paid by the Company, within 60 days of the termination or
amendment, whichever occurs sooner, a pro rata portion of the sums to be paid
under this Plan (from the beginning of any unpaid Performance Periods to the
end of the last full calendar month on or before the termination or amendment
date, as the case may be), the greater of:
(x) Participant's Target Final Award based on achievement of
Target Company Achievement Percentage, or
(y) Participant's Target Final Award based on actual Company
Achievement Percentage
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<PAGE> 5
annualized using the most recently available audited or
unaudited financial results on or before the payment date,
including the higher of Change in Control Price or actual
share price, as provided in Section 7(a) for the Company's
common stock, as applicable.
Actual Company Achievement Percentages shall be used in calculating Awards for
any completed years. For uncompleted years, in the event of a Change in
Control, High End Share Units shall be awarded if the Company Achievement
Percentage is equal to or in excess of 50% over the Target Company Achievement
Percentage (compared to maximum Company Achievement Percentage) level.
Otherwise, Target Share Units shall be awarded, unless the Board, in its
discretion, awards greater than Target Share Units. The Board shall not have
discretion to award less than Target Share Units in the event of a Change in
Control.
(b) Definitions: For purposes of this Plan, the following terms shall
have the meanings noted below, unless the context clearly requires otherwise:
(i) Change in Control. Any of the following events shall constitute
a Change in Control:
(A) the acquisition by an individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the
"Exchange Act"))(a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of either (I) the then outstanding shares of
common stock of the Company (the "Outstanding Company Common
Stock") or (II) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that for
purposes of this subsection (A), the following acquisitions
shall not constitute a Change of Control: (W) any acquisition
directly from the Company other than an acquisition by virtue
of the exercise of a conversion privilege unless the security
being so converted was itself acquired directly from the
Company, (X) any acquisition by the Company, (Y) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company or (Z) any acquisition by any
corporation pursuant to a transaction which complies with
clauses (I), (II) and (III) of subsection (C) of this Section
11(b)(i); or
(B) individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual
or threatened election contest with respect to the election
or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(C) approval by the shareholders of the Company of
a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless,
following such Business Combination, (I) all or substantially
all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting
power of the then
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<PAGE> 6
outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the
corporation resulting from such Business Combination
(including, without limitation, a corporation which as a
result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Common Stock
and Outstanding Company Voting Securities, as the case may
be, (II) no Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation resulting
from such Business Combination) beneficially owns, directly
or indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership
existed prior to the Business Combination and (III) at least
a majority of the members of the board of directors of the
corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution
of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(D) approval by the shareholders of the Company of
a complete liquidation or dissolution of the Company.
(ii) Change in Control Price. For purposes of this Plan, "Change in
Control Price" shall have the same meaning for such term as in effect in the
Company's 1992 Stock Incentive Plan, as amended from time to time; provided,
however, that if that plan is terminated, the definition in that plan
immediately preceding such termination shall continue to apply to this Plan;
provided, further, that no amendment of the definition of such term shall apply
to this Plan with respect to a participant if such amendment would have an
adverse impact on the aggregate benefits available to a participant in this
Plan and such amendment was made during the period from six months preceding a
Change in Control (if a Change in Control event was contemplated by the Company
at that time) to twenty four months after such an event.
(iii) Cause. For purposes of this Plan, "Cause" shall mean:
(A) the willful and continued failure of the Participant to
perform substantially the Participant's duties with the
Company or one of its affiliates (other than any such failure
resulting from incapacity due to physical or mental illness),
after a written demand for substantial performance is
delivered to the Participant by the Board or the Chairman of
the Company which specifically identifies the manner in which
the Board or Chairman believes that the Participant has not
substantially performed the Participant's duties, or
(B) the willful engaging by the Participant in illegal
conduct or gross misconduct which is materially and
demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act on the part
of the Participant shall be considered "willful" unless it is done or
omitted to be done by the Participant in bad faith or without
reasonable belief that the Participant's action or omission was in the
best interests of the Company. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or
upon the instructions of the Chairman or a senior officer of the
Company or based upon the advice of counsel for the Company shall be
conclusively presumed to be done or omitted to be done by the
Participant in good faith and in the best interests of the Company.
The cessation of employment of the Participant shall not be deemed to
be for Cause unless and until there shall have been delivered to the
Participant a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters of the entire membership of the
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<PAGE> 7
Board at a meeting of the Board called and held for such purpose
(after reasonable notice is provided to the Participant and the
Participant is given an opportunity, together with counsel, to be
heard before the Board), finding that, in the good faith opinion of
the Board, the Participant is guilty of the conduct described in
subparagraph (A) or (B) above, and specifying the particulars thereof
in detail.
(iv) Good Reason. For purposes of this Plan, "Good Reason" shall mean:
(A) the assignment to the Participant of any duties
inconsistent in any respect with the Participant's position
(including status, offices, titles and reporting
requirements), authority, duties or responsibilities
immediately prior to the Change of Control, or any other
action by the Company which results in a diminution in such
position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the
Participant,
(B) any reduction by the Company of the
Participant's base salary, annual bonus, incentive
opportunities, retirement benefits, welfare or fringe
benefits below the highest level enjoyed by the Participant
during the 120-day period prior to the Change of Control;
(C) the Company's requiring the Participant to be
based at any office or location other than that at which he
or she was based immediately prior to the Change of Control
or the Company's requiring the Participant to travel on
Company business to a substantially greater extent than
required immediately prior to the Change of Control;
(D) any purported termination by the Company of the
Participant's employment otherwise than as expressly
permitted by this Agreement; or
(E) any failure by the Company to comply with and
satisfy Section 11(d) of this Plan.
For purposes of this Agreement, any good faith determination of "Good Reason"
made by the Participant shall be conclusive.
(c). Excise Taxes. Anything in this Plan to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Participant who also
is a participant in either of the Company's Executive Severance Plans (Tier 1
or Tier 2 Employees) (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this Section XII (c)) (a
"Payment") would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended, or any comparable successor
provision, or any interest or penalties are incurred by the Participant with
respect to such excise tax (such excise tax, together with any such interest
and penalties, are hereinafter collectively referred to as the "Excise Tax"),
then the Participant shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by the Participant of
all taxes (including any interest and penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Participant retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(d). The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Plan in the same manner and to the same
extent that the
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<PAGE> 8
Company would be required to perform it if no such succession had taken place.
As used in this Plan, Company shall mean the Company as hereinbefore defined
and any entity which assumes and agrees to perform this Plan by operation of
law, or otherwise.
8
<PAGE> 1
EXHIBIT 10-K
THE FINOVA GROUP INC.
Value Sharing Plan
for
Executive Officers and Key Employees
1. Purpose.
The FINOVA Group Inc. Value Sharing Plan for Executive
Officers and Key Employees (the "Plan") is designed to recognize the
significant contributions made to The FINOVA Group Inc. (the "Company") and its
shareholders by executive officers (other than the Chief Executive Officer) of
the Company and certain other key employees of the Company, and to reward such
employees in the event of a Change in Control (as defined herein) of the
Company.
2 Definitions.
For purposes of the Plan:
(a) "Acquisition Value" of the Company shall mean an amount equal
to (i) the price per Share that is paid or offered to be paid, by any person or
entity, in connection with any transaction that constitutes a Change in
Control, multiplied by (ii) the total number of Shares outstanding and
Equivalent Shares, each determined on a fully diluted basis as of 5:00 p.m. New
York time on the day immediately preceding the Effective Date.
(b) "Award" shall mean any award granted pursuant to the Plan.
(c) "Base Value" of the Company shall be an amount equal to the
product of (i) the total number of Shares outstanding and Equivalent Shares,
each determined on a fully diluted basis as of 5:00 p.m. New York time, August
10, 1995, and (ii) forty dollars ($40).
(d) "Board" shall mean the board of directors of the Company.
(e) "CEO" shall mean the Chief Executive Officer of the Company.
(f) "Change in Control" shall mean:
(i) the acquisition by a Person of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 20% or more of either (A) the then
outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (B) the combined voting
power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however,
that for purposes of this subsection (i), the following
acquisitions shall not constitute a Change of Control: (A) any
acquisition directly from the Company other than an
acquisition by virtue of the exercise of a conversion
privilege unless the security being so converted was itself
acquired directly from the Company, (B) any acquisition by the
Company, (C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the
<PAGE> 2
Company or any corporation controlled by the Company or (D) any
acquisition by any corporation pursuant to a transaction which
complies with clauses (A), (B) and (C) of subsection (iii) of
this Section 2(f); or
(ii) individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding
for this purpose, any such individual whose initial assumption
of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board; or
(iii) approval by the shareholders of the Company of
a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless,
following such Business Combination, (A) all or substantially
all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock
and outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may
be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation
which as a result of such transaction owns the Company or all
or substantially all of the Company's assets either directly
or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Common Stock
and Outstanding Company Voting Securities, as the case may be,
(B) no Person (excluding any employee benefit plan (or related
trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then
outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business
Combination and (C) at least a majority of the members of the
board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination;
or
(iv) approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
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<PAGE> 3
(g) "Change in Control Shareholder Value Created" shall mean an
amount equal to (i) Acquisition Value minus (ii) Base Value.
(h) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(i) "Committee" shall mean the Executive Compensation Committee of
the Board, or such fewer members of which Committee as are "disinterested
directors" within the meaning of Rule 16b-3(c)(2)(i) under the Exchange Act, or
any successor provision.
(j) "Effective Date" shall mean the date on which the Change in
Control becomes effective.
(k) "Equivalent Share" shall mean a Share that is subject to, or
underlying, any stock option, restricted stock or other equity-based award
granted by the Company (including any share that represents a component of a
maximum vesting for a performance-based award as if maximum performance
conditions or payouts were achieved); provided, however, that each Equivalent
Share subject to an award granted in tandem with another award shall be
included as only one Equivalent Share.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(m) "Excise Tax" shall mean any excise tax imposed under section
4999 of the Code or any successor provision.
(n) "Fair Market Value" shall be the average of the high and low
prices of a Share as reported for such date on the Composite Tape for New York
Stock Exchange-Listed Stocks, or, if the Shares were not traded on the New York
Stock Exchange on such date, the "Fair Market Value" of a Share as of such date
shall be the average of the high and low prices of such Shares as reported on
said Composite Tape on the next preceding date on which such trades were
reported on said Composite Tape.
(o) "Participant" shall mean a person designated for participation
in the Plan pursuant to Section 5 hereof.
(p) "Person" shall have the meaning ascribed to it in Sections
13(d) and 14(d) of the Exchange Act.
(q) "Share" shall mean a share of common stock of the Company,
$.01 par value.
(r) "Value Sharing Pool" shall equal 2.5% of the Change in Control
Shareholder Value Created.
3. Administration.
The Plan shall be administered by the Committee. The
Committee shall have the authority in its sole discretion, subject to and not
inconsistent with the express provisions of the Plan, to administer the Plan
and to exercise all the powers and authorities either specifically granted to
it under the Plan or necessary or advisable in the administration of the Plan,
3
<PAGE> 4
including, without limitation, the authority to grant Awards; to determine the
persons to whom Awards shall be granted; to construe and interpret the Plan and
any Award; to prescribe, amend and rescind rules and regulations relating to
the Plan; and to make all other determinations deemed necessary or advisable
for the administration of the Plan.
All determinations of the Committee shall be made by a
majority of its members either present in person or participating by conference
telephone at a meeting or by written consent. The Committee may delegate to
one or more of its members or to one or more agents such administrative duties
as it may deem advisable, and the Committee or any person to whom it has
delegated duties as aforesaid may employ one or more persons to render advice
with respect to any responsibility the Committee or such person may have under
the Plan. All decisions, determinations and interpretations of the Committee
shall be final and binding on all persons, including the Company, the
Participant (or any person claiming any rights under the Plan from or through
any Participant) and any stockholder.
No member of the Board or the Committee shall be liable for
any action taken or determination made in good faith with respect to the Plan
or any Award granted hereunder.
4. Eligibility.
Awards may be granted to executive officers and other key
employees of the Company in the sole discretion of the Committee. In
determining the persons to whom Awards shall be granted and the amount of any
Award, the Committee shall take into account such factors as the Committee
shall deem relevant in connection with accomplishing the purposes of the Plan,
including the recommendation of the CEO.
5. Determination of Awards.
Prior to the Effective Date, or as soon as practicable
thereafter, the Committee, based on the recommendations of the CEO, shall
designate the Participants eligible to participate in the Plan and determine
the amount of each Award; provided, however, that the aggregate value of Awards
granted hereunder shall equal at least 80% of the Value Sharing Pool.
6. Payment of Awards.
As soon as practicable (but in no event later than 10 business
days) after the Effective Date, the Company shall pay to each Participant in
cash the full amount of his or her Award; provided, however, that if a
Participant was no longer employed by the Company on the Effective Date other
than by reason associated with the occurrence of a Change in Control, then such
Participant's Award shall be forfeited. In such event, in the discretion of
the Committee, such Participant's award may be distributed among the remaining
Participants. Notwithstanding the foregoing, payments made pursuant to this
Section 6 shall total, in the aggregate, an amount not less than 80% of the
Value Sharing Pool.
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<PAGE> 5
7. Excise Tax.
Solely with respect to Participants who, as of the Effective
Date are eligible to participate in the Company's Tier I or Tier II Executive
Severance Plans, in the event that the payment of an Award will be subject to
the Excise Tax, the Company shall pay to the Participant an additional amount
(the "Gross-Up Payment") such that the net amount retained by the Participant,
after deduction of any Excise Tax on the Award and any federal, state and local
income tax and Excise Tax upon the payment provided for by this Section 7,
shall be equal to the Award. For purposes of determining whether the Award
will be subject to the Excise Tax and the amount of such Excise Tax, (i) any
other payments or benefits received or to be received by the Participant in
connection with a Change in Control (whether pursuant to the terms of this Plan
or any other plan, arrangement or agreement with the Company, any Person whose
actions result in a Change in Control or any Person affiliated with the Company
or such Person) shall be treated as "parachute payments" within the meaning of
section 280G(b)(2) of the Code, and all "excess parachute payments" within the
meaning of section 280G(b)(1) of the Code shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel selected by the Company's
independent auditors and reasonably acceptable to the Participant such other
payments or benefits (in whole or in part) do not constitute parachute
payments, including by reason of section 280G(b)(4)(A) of the Code, or such
excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered, within the meaning of section
280G(b)(4)(B) of the Code, in excess of the Base Amount (as defined in section
280G(b)(3) of the Code) allocable to such reasonable compensation, or are
otherwise not subject to the Excise Tax, (ii) the amount of the Award that
shall be treated as subject to the Excise Tax shall be equal to the lesser of
(A) the total amount of the Award or (B) the amount of excess parachute
payments within the meaning of section 280G(b)(1) of the Code (after applying
clause (i), above), and (iii) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Company's independent
auditors in accordance with the principles of sections 280G(d)(3) and (4) of
the Code. For purposes of determining the amount of the Gross-Up Payment, the
Participant shall be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the highest marginal
rate of taxation in the state and locality of the Participant's residence on
the date of payment of the Award, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes. In the event that the Excise Tax is subsequently determined to be less
than the amount taken into account hereunder at the time of payment of the
Award, the Participant shall repay to the Company, at the time that the amount
of such reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction (plus that portion of the
Gross-Up Payment attributable to the Excise Tax and federal, state and local
income tax imposed on the Gross-Up Payment being repaid by the Participant to
the extent that such repayment results in a reduction in Excise Tax and/or
federal, state or local income tax deduction) plus interest on the amount of
such repayment at the rate provided in section 1274(b)(2)(B) of the Code. In
the event that the Excise Tax is determined to exceed the amount taken into
account hereunder at the time of the payment of the Award (including by reason
of any payment the existence or amount of which cannot be determined at the
time of the Gross-Up Payment), the Company shall make an additional Gross-Up
Payment in respect of such excess (plus any interest, penalties or additions
payable by the Participant with respect to such excess) at the time that the
amount of such excess is finally determined. The Participant and the Company
shall each reasonably cooperate with the other
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<PAGE> 6
in connection with any administrative or judicial proceedings concerning the
existence or amount of liability for Excise Tax with respect to the Award.
The payments provided for in Section 7 hereof shall be made
not later than the fifth day following the date of payment of the Award;
provided, however, that if the amounts of such payments cannot be finally
determined on or before such day, the Company shall pay to the Participant on
such day an estimate, as determined in good faith by the Participant, of the
minimum amount of such payments to which the Participant is clearly entitled
and shall pay the remainder of such payments (together with interest at the
rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined but in no event later than the thirtieth (30th) day
after the date of payment of the Award. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Participant, payable
on the fifth business day after demand by the Company (together with interest
at the rate provided in section 1274(b)(2)(B) of the Code). At the time that
payments are made under this Section 7, the Company shall provide the
Participant with a written statement setting forth the manner in which such
payments were calculated and the basis for such calculation including, without
limitation, any opinions or other advice the Company has received from outside
counsel, auditors or consultants (and any such opinions or advice which are in
writing shall be attached to the statement).
8. General Provisions.
(a) No Right To Continued Employment. Nothing in the Plan or
in any Award granted hereunder shall confer upon any Participant the right to
continue in the employ of the Company or to be entitled to any remuneration or
benefits not set forth in the Plan or other agreement or to interfere with or
limit in any way the right of the Company to terminate such Participant's
employment.
(b) Withholding Taxes. The Company shall have the right to
require the Participant or such other person to pay to the Company the amount
of any taxes which the Company may be required to withhold before delivery to
such Participant or other person of his or her award. Unless otherwise
prohibited by the Committee or by applicable law, a Participant may satisfy any
such withholding tax obligation by either of the following methods, or by a
combination of such methods: (x) tendering to the Company a cash payment; or
(y) authorizing the Company to withhold from the cash otherwise payable to such
Participant cash in an amount less than or equal to the amount of the total
withholding tax obligation.
(c) Amendment and Termination of the Plan. Prior to the
occurrence of a Change in Control, the Board or the Committee may at any time
and from time to time alter, amend, suspend, or terminate the Plan in whole or
in part. As of and following a Change in Control, the Plan may be altered,
amended, suspended or terminated only with the prior written consent of
Participants in the aggregate holding interests to at least three-quarters
(75%) of the Value Sharing Pool, if such interests have been designated, and if
not, by at least three-quarters (75%) of the Participants who, at the time such
amendment is sought, are eligible to receive Awards under the Plan.
Notwithstanding the foregoing, no amendment shall affect adversely any of the
rights of any Participant, without such Participant's consent, under any Award
theretofore granted under the Plan or any written designation or agreement to
designate a
6
<PAGE> 7
person to participate hereunder. The power to grant Awards under the Plan will
automatically terminate on December 31, 2002.
(d) Participant Rights. Subject to Section 8(c) above,
no Participant shall have any claim to be granted an Award under the Plan, and
there is no obligation for uniformity of treatment for Participants. Nothing in
this Plan shall create any rights in any other person or entity, whether
claiming through or on behalf of a Participant or otherwise.
(e) Adjustment of Values. The Acquisition Value and the
Base Value shall be adjusted pro rata for any merger, reorganization,
consolidation, recapitalization, stock dividend, stock split, extraordinary
distribution with respect to Shares or other change in corporate structure
affecting the Shares. The Committee shall have sole discretion to determine
the appropriate pro rata adjustments to be made as a consequence of the
foregoing events and its determination with respect thereto shall be final and
binding. In addition, the Committee shall have sole discretion to determine
whether and to what extent to adjust such values in the event of any issuance
of additional Shares, other than pursuant to the 1992 Stock Incentive Plan or
any other employee benefit plan, in excess of twenty percent (20%) of the
issued Shares on the effective date of the Plan (28,421,703 Shares) and its
determination with respect thereto shall be final and binding.
(f) Indemnification. If litigation is brought to enforce
or interpret any provision contained herein, the Company, to the extent
permitted by applicable law and the Company's Certificate of Incorporation,
shall indemnify the Participant for the Participant's reasonable attorneys'
fees and disbursements incurred in such litigation, and hereby agrees to pay
interest on any money judgment obtained by the Participant, calculated at the
Citibank, N.A. prime interest rate in effect from time to time from the date
that payment(s) to the Participant should have been made under the Plan.
(g) Unfunded Status of Awards. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant pursuant to an Award,
nothing contained in the Plan or any Award shall give any such Participant any
rights that are greater than those of a general creditor of the Company.
(h) Nontransferability of Awards. Awards shall not be
transferable by a Participant except by will or the laws of descent and
distribution.
(i) Governing Law. The Plan and all determinations made
and actions taken pursuant hereto shall be governed by the laws of the State of
Delaware without giving effect to the conflict of laws principles thereof.
(j) Effective Date of Plan. The Plan shall take effect
on August 10, 1995, which is the date of its adoption by the Board.
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<PAGE> 8
(k) Beneficiary. A Participant may file with the
Committee a written designation of a beneficiary on such form as may be
prescribed by the Committee and may, from time to time, amend or revoke such
designation. If no designated beneficiary survives the Participant, the
executor or administrator of the Participant's estate shall be deemed to be the
Participant's beneficiary.
(l) Successors. This Plan shall inure to the benefit of
Participants and persons designated to be Participants and shall be binding upon
the Company and its successors and assigns. The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to assume and expressly agree to perform this Plan in the same manner
and to the same extent that the Company would be required to perform it if no
such succession had taken place. As used in this Agreement, Company shall mean
the Company as herein- before defined and any entity that assumes and agrees to
perform this Plan by operation of law or otherwise.
(m) Interpretation. The Plan is intended to provide that
Awards paid hereunder shall not be "derivative securities" within the meaning
of Rule 16a-1(c)(3)(i) under the Exchange Act, and all provisions hereof shall
be construed in a manner to so comply.
8
<PAGE> 1
EXHIBIT 10.L
THE FINOVA GROUP INC.
Value Sharing Plan
for the
Chief Executive Officer
1. Purpose.
The FINOVA Group Inc. Value Sharing Plan for the Chief Executive
Officer (the "Plan") is designed to act as a retention device by providing to
the Chief Executive Officer (the "CEO") of The FINOVA Group Inc. (the "Company")
significant rewards for equally significant creation of value for the Company
and its shareholders, and to reward the CEO in the event of a Change in Control
(as defined herein) of the Company.
2. Definitions.
For purposes of the Plan:
(a) "Acquisition Value" of the Company shall mean an amount equal
to (i) the price per Share paid or offered to be paid, by any person or entity,
in connection with a transaction that constitutes a Change in Control multiplied
by (ii) the total number of Shares outstanding and Equivalent Shares, each
determined on a fully diluted basis as of 5:00 p.m. New York time on the day
immediately preceding the Effective Date.
(b) "Award" shall mean any payment made to the CEO pursuant to the
Plan.
(c) "Base Value" of the Company shall be an amount equal to the
product of (i) the total number of Shares outstanding and Equivalent Shares,
each determined on a fully diluted basis as of 5:00 p.m. New York time, August
10, 1995, and (ii) forty dollars ($40).
(d) "Board" shall mean the board of directors of the Company.
(e) "CEO" shall mean Samuel L. Eichenfield, so long as he shall
remain as the Chief Executive Officer of the Company, except to the extent he
no longer serves in that capacity as a result of a Change in Control.
(f) "Change in Control" shall mean:
(i) the acquisition by a Person of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 20% or more of either (A) the then
outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (B) the combined voting
power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however,
that for purposes of this subsection (i), the following
acquisitions shall not constitute a Change of Control: (A) any
<PAGE> 2
acquisition directly from the Company other than an
acquisition by virtue of the exercise of a conversion
privilege unless the security being so converted was itself
acquired directly from the Company, (B) any acquisition by the
Company, (C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (D) any acquisition
by any corporation pursuant to a transaction which complies
with clauses (A), (B) and (C) of subsection (iii) of this
Section 2(f); or
(ii) individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding
for this purpose, any such individual whose initial assumption
of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board; or
(iii) approval by the shareholders of the Company of
a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless,
following such Business Combination, (A) all or substantially
all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock
and outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may
be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation
which as a result of such transaction owns the Company or all
or substantially all of the Company's assets either directly
or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Common Stock
and Outstanding Company Voting Securities, as the case may be,
(B) no Person (excluding any employee benefit plan (or related
trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then
outstanding voting securities of
2
<PAGE> 3
such corporation except to the extent that such ownership
existed prior to the Business Combination and (C) at least a
majority of the members of the board of directors of the
corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(iv) approval by the shareholders of the Company of
a complete liquidation or dissolution of the Company.
(g) "Change in Control Percentage Share" shall have the meaning
set forth in Section 5(b) hereof.
(h) "Change in Control Shareholder Value Created" shall mean an
amount equal to (i) Acquisition Value minus (ii) Base Value.
(i) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(j) "Committee" shall mean the Executive Compensation Committee of
the Board, or such fewer members of which Committee as are "disinterested
directors" within the meaning of Rule 16b-3(c)(2)(i) under the Exchange Act or
any successor provision.
(k) "Effective Date" shall mean the date on which the Change in
Control becomes effective.
(l) "Equivalent Share" shall mean a Share that is subject to, or
underlying, any stock option, restricted stock or other equity-based award
granted by the Company (including any share that represents a component of a
maximum vesting for a performance-based award as if maximum performance
conditions or payouts were achieved); provided, however, that each Equivalent
Share subject to an award granted in tandem with another award shall be
included as only one Equivalent Share.
(m) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended or any successor provision.
(n) "Excise Tax" shall mean any excise tax imposed under section
4999 of the Code.
(o) "Fair Market Value" shall be the average of the high and low
prices of a Share as reported for such date on the Composite Tape for New York
Stock Exchange-Listed Stocks, or, if the Shares were not traded on the New York
Stock Exchange on such date, the "Fair Market Value" of a Share as of such date
shall be the average of the high and low prices of such Shares as reported on
said Composite Tape on the next preceding date on which such trades were
reported on said Composite Tape.
3
<PAGE> 4
(p) "Person" shall have the meaning ascribed to it in Section
13(d) and 14(d) of the Exchange Act.
(q) "Share" shall mean a share of common stock of the Company,
$.01 par value.
3. Administration.
The Plan shall be administered by the Committee. The Committee shall
have the authority in its sole discretion, subject to and not inconsistent with
the express provisions of the Plan, to administer the Plan and to exercise all
the powers and authorities either specifically granted to it under the Plan or
necessary or advisable in the administration of the Plan, including, without
limitation, the authority to construe and interpret the Plan and any Award; to
prescribe, amend and rescind rules and regulations relating to the Plan and any
Award; and to make all other determinations deemed necessary or advisable for
the administration of the Plan.
All determinations of the Committee shall be made by a majority of its
members either present in person or participating by conference telephone at a
meeting or by written consent. The Committee may delegate to one or more of its
members or to one or more agents such administrative duties as it may deem
advisable, and the Committee or any person to whom it has delegated duties as
aforesaid may employ one or more persons to render advice with respect to any
responsibility the Committee or such person may have under the Plan. All
decisions, determinations and interpretations of the Committee shall be final
and binding on all persons, including the Company, the CEO (or any person
claiming any rights under the Plan from or through the CEO) and any stockholder.
No member of the Board or the Committee shall be liable for any action
taken or determination made in good faith with respect to the Plan or any Award
granted hereunder.
4. Eligibility.
The CEO shall be the sole participant in the Plan.
5. Payment of Awards.
As soon as practicable (but in no event later than 10 business days)
after the Effective Date, the Company shall pay to the CEO in cash the
applicable Change in Control Percentage Share as set forth below:
(1) If the price per Share paid or offered to be paid, by any
person or entity, in connection with any transaction that constitutes a Change
in Control, is equal to or less than $55, a cash payment in an amount equal to
0.75% of the Change in Control Shareholder Value Created;
4
<PAGE> 5
(2) If the price per Share paid or offered to be paid, by any
person or entity, in connection with any transaction that constitutes a Change
in Control, is greater than $55 and less than $85, a cash payment in an amount
equal to a percentage between 0.75% and 1.50%, as determined on a straight-line
interpolation basis, of the Change in Control Shareholder Value Created, or;
(3) If the price per Share paid or offered to be paid, by any
person or entity, in connection with any transaction that constitutes a Change
in Control, is equal to or greater than $85, a cash amount equal to 1.50% of
the Change in Control Shareholder Value Created;
provided, however, that, with respect to clauses (2) and (3) hereof, the Change
in Control Percentage Share to be paid to the CEO shall be reduced by the
amount of any Awards received by the CEO pursuant to the Plan prior to the
payment of the Change in Control Percentage Share.
6. Excise Tax.
In the event that the payment of an Award will be subject to
the Excise Tax, the Company shall pay to the CEO an additional amount (the
"Gross-Up Payment") such that the net amount retained by the CEO, after
deduction of any Excise Tax on the Award and any federal, state and local
income tax and Excise Tax upon the payment provided for by this Section 6,
shall be equal to the Award. For purposes of determining whether the Award
will be subject to the Excise Tax and the amount of such Excise Tax, (i) any
other payments or benefits received or to be received by the CEO in connection
with a Change in Control (whether pursuant to the terms of this Plan or any
other plan, arrangement or agreement with the Company, any Person whose actions
result in a Change in Control or any Person affiliated with the Company or such
Person) shall be treated as "parachute payments" within the meaning of section
280G(b)(2) of the Code, and all "excess parachute payments" within the meaning
of section 280G(b)(1) of the Code shall be treated as subject to the Excise
Tax, unless in the opinion of tax counsel selected by the Company's independent
auditors and reasonably acceptable to the CEO such other payments or benefits
(in whole or in part) do not constitute parachute payments, including by reason
of section 280G(b)(4)(A) of the Code, or such excess parachute payments (in
whole or in part) represent reasonable compensation for services actually
rendered, within the meaning of section 280G(b)(4)(B) of the Code, in excess of
the Base Amount (as defined in section 280G(b)(3) of the Code) allocable to
such reasonable compensation, or are otherwise not subject to the Excise Tax,
(ii) the amount of the Award which shall be treated as subject to the Excise
Tax shall be equal to the lesser of (A) the total amount of the Award or (B)
the amount of excess parachute payments within the meaning of section
280G(b)(1) of the Code (after applying clause (i), above), and (iii) the value
of any non-cash benefits or any deferred payment or benefit shall be determined
by the Company's independent auditors in accordance with the principles of
sections 280G(d)(3) and (4) of the Code. For purposes of determining the
amount of the Gross-Up Payment, the CEO shall be deemed to pay federal income
taxes at the highest marginal rate of federal income taxation in the calendar
year in which the Gross-Up Payment is to be made and state and local income
taxes at the highest marginal
5
<PAGE> 6
rate of taxation in the state and locality of the CEO's residence on the date
of payment of the Award, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes. In the
event that the Excise Tax is subsequently determined to be less than the amount
taken into account hereunder at the time of payment of the Award, the CEO shall
repay to the Company, at the time that the amount of such reduction in Excise
Tax is finally determined, the portion of the Gross-Up Payment attributable to
such reduction (plus that portion of the Gross-Up Payment attributable to the
Excise Tax and federal, state and local income tax imposed on the Gross-Up
Payment being repaid by the CEO to the extent that such repayment results in a
reduction in Excise Tax and/or federal, state or local income tax deduction)
plus interest on the amount of such repayment at the rate provided in section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to
exceed the amount taken into account hereunder at the time of the payment of
the Award (including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Company shall
make an additional Gross-Up Payment in respect of such excess (plus any
interest, penalties or additions payable by the Participant with respect to
such excess) at the time that the amount of such excess is finally determined.
The CEO and the Company shall each reasonably cooperate with the other in
connection with any administrative or judicial proceedings concerning the
existence or amount of liability for Excise Tax with respect to the Award.
The payments provided for in Section 6 hereof shall be made
not later than the fifth day following the date of payment of the Award;
provided, however, that if the amounts of such payments cannot be finally
determined on or before such day, the Company shall pay to the CEO on such day
an estimate, as determined in good faith by the CEO, of the minimum amount of
such payments to which the CEO is clearly entitled and shall pay the remainder
of such payments (together with interest at the rate provided in section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but
in no event later than the thirtieth (30th) day after the date of payment of
the Award. In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess shall constitute a
loan by the Company to the CEO, payable on the fifth business day after demand
by the Company (together with interest at the rate provided in section
1274(b)(2)(B) of the Code). At the time that payments are made under this
Section 6, the Company shall provide the CEO with a written statement setting
forth the manner in which such payments were calculated and the basis for such
calculation including, without limitation, any opinions or other advice the
Company has received from outside counsel, auditors or consultants (and any
such opinions or advice which are in writing shall be attached to the
statement).
7. General Provisions.
(a) No Right To Continued Employment. Nothing in the
Plan or in any Award granted hereunder shall confer upon the CEO the right to
continue in the employ of the Company or to be entitled to any remuneration or
benefits not set forth in the Plan or other agreement or to interfere with or
limit in any way the right of the Company to terminate the CEO's employment.
6
<PAGE> 7
(b) Withholding Taxes. The Company shall have the right
to require the CEO or such other person to pay to the Company the amount of any
taxes which the Company may be required to withhold before delivery to the CEO
or other person of his Award. Unless otherwise prohibited by the Committee or
by applicable law, the CEO may satisfy any such withholding tax obligation by
either of the following methods, or by a combination of such methods: (i)
tendering to the Company a cash payment; or (ii) authorizing the Company to
withhold from the cash otherwise payable to the CEO cash in an amount less than
or equal to the amount of the total withholding tax obligation.
(c) Amendment and Termination of the Plan. Prior to the
occurrence in a Change in Control, the Board or the Committee may at any time
and from time to time alter, amend, suspend, or terminate the Plan in whole or
in part. As of and following a Change in Control, the Plan may be altered,
amended, suspended or terminated only with the prior written consent of the
CEO. Notwithstanding the foregoing, no amendment shall affect adversely any of
the rights of the CEO, without the consent of the CEO, under any Award
theretofore granted under the Plan. The power to grant Awards under the Plan
will automatically terminate on December 31, 2002.
(d) No Third Party Rights. Nothing in this Plan shall
create any rights in any other person or entity, whether claiming through or on
behalf of the CEO or otherwise.
(e) Adjustment of Values. The Acquisition Value and the
Base Value shall be adjusted pro rata for any merger, reorganization,
consolidation, recapitalization, stock dividend, stock split, extraordinary
distribution with respect to Shares or other change in corporate structure
affecting the Shares. The Committee shall have sole discretion to determine
the appropriate pro rata adjustments to be made as a consequence of the
foregoing events and its determination with respect thereto shall be final and
binding. In addition, the Committee shall have sole discretion to determine
whether and to what extent to adjust such values in the event of any issuance
of additional Shares, other than pursuant to the 1992 Stock Incentive Plan or
any other employee benefit plan, in excess of twenty percent (20%) of the
issued Shares on the effective date of the Plan (28,421,703 Shares) and its
determination with respect thereto shall be final and binding.
(f) Indemnification. If litigation is brought to enforce
or interpret any provision contained herein, the Company, to the extent
permitted by applicable law and the Company's Certificate of Incorporation,
shall indemnify the CEO for the CEO's reasonable attorneys' fees and
disbursements incurred in such litigation, and hereby agrees to pay interest on
any money judgment obtained by the CEO, calculated at the Citibank, N.A. prime
interest rate in effect from time to time from the date that payment(s) to the
CEO should have been made under the Plan.
(g) Unfunded Status of Awards. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to the CEO pursuant to an Award, nothing
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<PAGE> 8
contained in the Plan or any Award shall give the CEO any rights that are
greater than those of a general creditor of the Company.
(h) Nontransferability of Awards. Awards shall not be
transferable by the CEO except by will or the laws of descent and distribution.
(i) Governing Law. The Plan and all determinations made
and actions taken pursuant hereto shall be governed by the laws of the State of
Delaware without giving effect to the conflict of laws principles thereof.
(j) Effective Date of the Plan. The Plan shall take
effect on August 10, 1995, which is the date of its adoption by the Board.
(k) Beneficiary. The CEO may file with the Committee a
written designation of a beneficiary on such form as may be prescribed by the
Committee and may, from time to time, amend or revoke such designation. If no
designated beneficiary survives the CEO, the executor or administrator of the
CEO's estate shall be deemed to be the CEO's beneficiary.
(l) Successors. This Plan shall inure to the benefit
of the CEO and be binding upon the Company and its successors and assigns. The
Company shall require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume and expressly agree to perform this Plan
in the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in this Agreement,
Company shall mean the Company as hereinbefore defined and any entity that
assumes and agrees to perform this Plan by operation of law or otherwise.
(m) Interpretation. The Plan is intended to provide that
Awards paid hereunder shall not be "derivative securities" within the meaning
of Rule 16a-1(c)(3)(i) under the Exchange Act, and all provisions hereof shall
be construed in a manner to so comply.
8
<PAGE> 1
EXHIBIT 10.M
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT ("Amendment") is entered into
as of August 10, 1995, between The FINOVA Group Inc. (formerly GFC Financial
Corporation), a Delaware corporation ("Company") and Samuel L. Eichenfield
("Executive").
WHEREAS, the Company and Executive entered into an Employment
Agreement as of the 16th day of March, 1992 ("Employment Agreement"), and
WHEREAS, the Employment Agreement was allowed to continue for a period
of one year beyond its Term (as defined in the Employment Agreement) with an
Extended Term (as defined in the Employment Agreement) expiring March 15, 1996;
and
WHEREAS, Executive acknowledges that on August 10, 1995 he has
received notice of termination of the Employment Agreement effective upon the
close of business on March 15, 1996, with the understanding that a new
employment agreement will be entered between the Company and Executive
substantially on the terms and conditions authorized by the Company's Executive
Compensation Committee (the "Committee"), with the final agreement to be
approved by the Committee; and
WHEREAS, on August 10, 1995 the Committee and the Company's Board of
Directors authorized this Amendment to adopt and implement as a part of the
Employment Agreement a Chief Executive Officer Value Sharing Plan on the terms
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants contained in
the Employment Agreement and this Amendment, the Company and Executive hereby
agree to amend the Employment Agreement by adding a new paragraph 19 as
follows:
19. CEO Value Sharing Plan.
Executive shall, as of the date hereof, participate in a CEO
Value Sharing Plan as follows:
(a) PURPOSE. The purpose of the CEO Value Sharing Plan
is to act as a retention device by providing significant rewards for equally
significant shareholder value creation. This is accomplished by sharing a
portion of created value in the form of cash payments to Executive.
(b) PERFORMANCE OBJECTIVES. Stock price hurdles have
been established at $55, $70 and $85 per share or their equivalent. The first
hurdle ($55) is $15 per share greater than the current market price of $40 per
share or its equivalent. These translate into cumulative percentage increases
in the stock price of 37.5%, 75.0% and 112.5% respectively.
(c) MEASURING ACHIEVEMENT. A hurdle is considered
achieved when the average closing price of Company common stock is equal to, or
greater than, the hurdle price during any 20 consecutive trading days.
(d) PAYMENT AMOUNTS. When a hurdle is achieved,
Executive will receive a cash payment according to the attached schedule (CEO
Value Sharing Plan: Stock Price Hurdles and Payments). As appropriate,
calculations of amounts due or available for distribution under this plan shall
be adjusted for all recapitalizations of the Company's common stock.
<PAGE> 2
(e) EXCISE TAXES. Company shall gross-up any applicable
excise taxes resulting from payments under this plan.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed as of the day and year set forth above.
ATTEST: The FINOVA Group Inc.
By /s/ Veronica S. Ciancola By /s/ W.J. Hallinan
------------------------ ---------------------
Assistant Secretary Senior Vice President
/s/ S. Eichenfield
---------------------
Samuel L. Eichenfield
<PAGE> 3
CEO VALUE SHARING PLAN: STOCK PRICE HURDLES AND PAYMENTS
AUGUST 1995
<TABLE>
<CAPTION>
MARGINAL CUM. MARGINAL CUMULATIVE % OF % OF
STOCK % INC % INC SHAREHOLDER SHAREHOLDER PAYMENT MARGINAL CUMULATIVE
PRICE HURDLE TO $40 TO VALUE VALUE AT EACH CUMULATIVE VALUE VALUE
HURDLE HURDLE (A) HURDLE CREATED (B) CREATED HURDLE PAYMENTS SHARED SHARED
- ------------------------------ -------------------------- --------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$55 37.5% 37.5% 420,000,000 420,000,000 3,150,000 3,150,000 0.75% 0.75%
$70 27.3% 75.0% 420,000,000 840,000,000 6,300,000 9,450,000 1.50% 1.13%
$85 21.4% 112.5% 420,000,000 1,260,000,000 9,450,000 18,900,000 2.25% 1.50%
</TABLE>
NOTES:
(a) The Marginal % Increase of 37.5% for the $55 hurdle is based on a base price
of $40 per share.
(b) The estimated shareholder value created is calculated by multiplying the
increase in the price per share by the estimated number of shares outstanding.
As a beginning point, the approximate value of the company is established at $40
x 28 million shares or $1,120,000,000. Each $15 per share increase results in
additional shareholder value of $420,000,000.
<PAGE> 1
EXHIBIT 11
THE FINOVA GROUP INC.
Computation of Earnings Per Share
(Dollars in Thousands, except per share data)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
---------------------------------- ---------------------------------
1995 1994 1995 1994
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Net income/earnings available
to common shareholders $ 25,150 $ 22,257 $ 71,147 $ 50,951
============= ============= ============= ============
Average common shares
outstanding before
common equivalents 27,370,000 28,233,000 27,515,000 23,965,000
Common equivalent stock
options 401,000 387,000 330,000 319,000
------------- ------------- ------------- ------------
Average outstanding common
and equivalent shares 27,771,000 28,620,000 27,845,000 24,284,000
============= ============= ============= ============
Earnings per common
and equivalent share $ 0.91 $ 0.78 $ 2.56 $ 2.10
============= ============= ============= ============
</TABLE>
16
<PAGE> 1
EXHIBIT 12
THE FINOVA GROUP INC.
Computation of Ratio of Income to Combined Fixed Charges
and Preferred Stock Dividends
(Dollars in Thousands)
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
--------------------------- -----------------------------------------
1995 1994 1994 1993 1992
--------------------------- -----------------------------------------
<S> <C> <C> <C> <C> <C>
Net income before income
taxes $ 115,310 $ 85,662 $ 123,771 $ 66,422 $ 50,593
Add fixed charges:
Interest expense 267,857 152,662 222,200 123,853 136,107
One-third rentals 1,844 1,597 2,041 1,387 1,498
------------ ------------ ----------- ------------ ------------
Total fixed charges 269,701 154,259 224,241 125,240 137,605
------------ ------------ ----------- ------------ ------------
Net income as adjusted $ 385,011 $ 239,921 $ 348,012 $ 191,662 $ 188,198
------------ ------------ ----------- ------------ ------------
Ratio of income to fixed
charges 1.43 1.56 1.55 1.53 1.37
============ ============ =========== ============ ============
Preferred stock dividends
on a pre-tax basis $ $ $ $ 2,139 $ 2,826
Total combined fixed
charges and preferred
stock dividends $ 269,701 $ 154,259 $ 224,241 $ 127,379 $ 140,431
------------ ------------ ----------- ------------ ------------
Ratio of income to combined
fixed charges and preferred
stock dividends 1.43 1.56 1,55 1.50 1.34
============ ============ =========== ============ ============
</TABLE>
17
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 20,293
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 6,609,220
<ALLOWANCE> 119,602
<TOTAL-ASSETS> 6,785,609
<DEPOSITS> 0
<SHORT-TERM> 0
<LIABILITIES-OTHER> 576,973
<LONG-TERM> 5,403,323
<COMMON> 284
0
0
<OTHER-SE> 805,029
<TOTAL-LIABILITIES-AND-EQUITY> 6,785,609
<INTEREST-LOAN> 551,737
<INTEREST-INVEST> 0
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 0
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 267,857
<INTEREST-INCOME-NET> 244,989
<LOAN-LOSSES> 28,800
<SECURITIES-GAINS> 11,699
<EXPENSE-OTHER> 112,578
<INCOME-PRETAX> 115,310
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 71,147
<EPS-PRIMARY> 2.56
<EPS-DILUTED> 0
<YIELD-ACTUAL> 5.8
<LOANS-NON> 169,180
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 122,233
<CHARGE-OFFS> 22,868
<RECOVERIES> 1,675
<ALLOWANCE-CLOSE> 131,564
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
