<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20594
--------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934
--------------------
For the Fiscal Year Ended December 31, 1994 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 Identification No.
Incorporation or Organization)
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 - 602-207-4900
--------------------
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
- ----------------------------- ---------------------
Common Stock, $0.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes____X______ No__________
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Registration S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, if definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment of this
Form 10-K. / X /
As of March 13, 1995, approximately 27,619,000 shares of Common Stock ($0.01 par
value) were outstanding, and the aggregate market value of the Common Stock
(based on its closing price per share on such date) held by nonaffiliates was
approximately $884,965,000.
DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<CAPTION>
Part Where
Document Incorporated
- -------- ------------
<S> <C>
1. Proxy Statement relating to 1995 Annual Meeting of Stockholders of The
FINOVA Group Inc. (but excluding information contained therein furnished
pursuant to items 402(k) and (l) of SEC Regulation S-K.) III
================================================================================
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Name of Item
-----------------
Item # Page
------ ----
Part I
<S> <C>
Item 1 Business:
Introduction 1
General 1
Lines of Business 2
Portfolio Composition 4
Investment in Financing Transactions 4
Cost and Utilization of Borrowed Funds 15
Credit Ratings 16
Residual Realization Experience 16
Business Development and Competition 17
Credit Quality 18
Risk Management 18
Portfolio Management 19
Delinquencies and Workouts 19
Governmental Regulation 20
Former Mortgage Insurance Operations 20
Employees 20
Item 2 Properties 20
Item 3 Legal Proceedings 21
Item 4 Submission of Matters to a Vote of Security Holders 21
Optional Executive Officers of Registrant 21
Part II
Item 5 Market Price of and Dividends on the Registrant's Common
Equity & Related Stockholder Matters 23
Item 6 Selected Financial Data 23
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations 25
Item 8 Financial Statements & Supplementary Data 25
Item 9 Changes in and Disagreements with Accountants
on Accounting & Financial Disclosure 25
Part III
Item 10 Directors & Executive Officers of the Registrant 26
Item 11 Executive Compensation 26
Item 12 Security Ownership of Certain Beneficial Owners & Management 26
Item 13 Certain Relationships & Related Transactions 26
Part IV
Item 14 Exhibits, Financial Statement Schedules, and Reports on Form 8-K 26
</TABLE>
<PAGE> 3
PART I
ITEM 1. BUSINESS.
INTRODUCTION
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.
The Company is the successor to the former financial services businesses
of The Dial Corp ("Dial"). On March 18, 1992, Dial consummated the spin-off (the
"Spin-Off") of the Company by distributing one share of the Company's common
stock (the "shares") for every two shares of Dial common stock held by each
stockholder. Prior to the Spin-Off, Dial contributed to the Company (i) all of
the common stock of FINOVA Capital representing the Company's core operations,
(ii) Greyhound European Financial Group ("GEFG"), Dial's European commercial and
consumer finance businesses not previously managed by the Company, (iii)
Greyhound BID Holding Corp. ("Greyhound BID") and (iv) Verex Corporation and
subsidiaries ("Verex"), Dial's discontinued mortgage insurance operations which
had been operated in a run-off mode by Dial since 1988. The Company sold Verex
in July 1993.
The historical consolidated financial statements of FINOVA have been
retroactively restated to include the accounts and results of operations of
FINOVA Capital, GEFG and Greyhound BID Holding and the investment in Verex for
all periods presented as if a pooling of interests of companies under common
control occurred. All intercompany accounts and transactions have been
eliminated from the consolidated financial statements.
GENERAL
FINOVA is a financial services company primarily engaged in providing
collateralized financing and leasing products to commercial enterprises in
focused market niches, principally in the United States. The FINOVA Group Inc.
is a holding company which operates through its direct and indirect subsidiaries
and was incorporated in Delaware in December 1991.
FINOVA's lending activities to businesses are conducted through FINOVA
Capital and its subsidiaries. FINOVA Capital was incorporated in 1965 in
Delaware and is the successor to a California corporation that commenced
operations in 1954. FINOVA Capital has conducted business continuously since
that time. Foreign financial services are provided primarily in the United
Kingdom, where GEFG has provided such services since 1964. Domestic and foreign
financial operations prior to the Spin-Off had been conducted independently of
each other for many years. Following the Spin-Off, they have been conducted as a
consolidated enterprise; however, following the Spin-Off, FINOVA announced its
intention to phase out the London based financing operations of GEFG. This phase
out is expected to be substantially completed by the end of 1996.
1
<PAGE> 4
FINOVA Capital extends revolving credit facilities, term loans and
equipment and real estate financing to "middle-market" businesses with financing
needs falling generally between $500,000 to $35 million. FINOVA Capital also
offers sales financing programs to manufacturers, distributors, vendors and
franchisors which facilitate sales of their products to customers. FINOVA
Capital currently operates in 15 specific industry or market niches in which its
expertise in evaluating the creditworthiness of prospective customers and its
ability to provide value-added services enables it to differentiate itself from
its competitors and to command product pricing which provides a satisfactory
spread over the Company's borrowing costs.
The Company seeks to maintain a high quality portfolio and to minimize
nonearning assets and write-offs by using clearly defined underwriting criteria,
stringent portfolio management techniques and by diversifying its lending
activities geographically and among a range of industries, customers and loan
products. Because of the diversity of the Company's portfolio, the Company
believes it is better able to manage competitive changes in its markets and to
withstand the impact of deteriorating economic conditions on a regional or
national basis, although there can be no assurance that competitive changes or
economic conditions will not result in an adverse impact on the Company's
results of operations or financial condition.
FINOVA Capital generates interest and other income through charges
assessed on outstanding loans, loan servicing, leasing and other fees. FINOVA
Capital's primary expenses are the costs of funding its loan and lease business
(including interest paid on debt), provisions for possible credit losses,
marketing expenses, salaries and employee benefits, servicing and other
operating expenses and income taxes.
LINES OF BUSINESS
FINOVA Capital's activities currently include the following principal
lines of business:
+ Corporate Finance. FINOVA Corporate Finance (which includes
the asset based lending activity acquired in February 1993 from
U.S. Bancorp) provides financing, generally in the range of $3
million to $35 million, focusing on middle market businesses
nationally, including distribution, wholesale, specialty
retail, manufacturing and services industries. The group's
lending is primarily in the form of revolving credit facilities
and term loans secured by the assets of the borrower, with
significant emphasis on the borrower's cash flow as the source
of repayment of the secured loan.
+ Transportation Finance. FINOVA Transportation Finance
structures secured financings for specialized areas of the
transportation industry, principally involving domestic and
foreign used aircraft, as well as domestic short-line railroads
including new and used rail equipment. Typical transactions
involve financing up to 80% of the fair market value of used
equipment in the $3 million to $30 million range. Traditionally
focused on the domestic marketplace, FINOVA Transportation
Finance has been active in international aircraft lending and
leasing since 1992 through GEFG's operations in London,
England.
+ Communications Finance. FINOVA Communications Finance
specializes in radio and television financing. Other markets
include cable television, print and outdoor media services in
the United States. FINOVA Capital extends secured loans to
communications businesses requiring funds for
recapitalizations, refinancings or
2
<PAGE> 5
acquisitions. Loan sizes generally are from $3 million to $35
million.
+ Commercial Real Estate Finance. FINOVA Commercial Real Estate
Finance provides cash-flow-based financing primarily for
acquisitions and refinancings to experienced real estate
developers and owner/occupants of income-producing properties
in the United States. FINOVA Capital concentrates on secured
financing opportunities, generally between $3 million and $30
million, involving senior mortgage term loans on owner-occupied
commercial real estate. FINOVA Capital's portfolio of real
estate leveraged leases is also managed as part of the
commercial real estate portfolio.
+ Resort Finance. FINOVA Resort Finance focuses on successful,
experienced resort developers, primarily of timeshare resorts,
second home resort communities, golf resorts and resort hotels.
Extending funds through a variety of lending options, FINOVA
Resort Finance provides loans and lines of credit ranging from
$3 million to $30 million for construction, acquisitions,
receivables financing and purchases and other uses. Through
FINOVA Portfolio Services, Inc., FINOVA Resort Finance offers
expanded convenience and service to its customers.
Professional receivables collections and cash management give
developers the ability of having loan-related administrative
functions performed for them by FINOVA Capital.
+ Rediscount Finance. FINOVA Rediscount Finance offers $1
million to $35 million revolving credit lines to regional
consumer finance companies, which in turn extend credit to
consumers. FINOVA Capital's customers provide credit to
consumers to finance home improvements, automobile purchases,
insurance premiums and a variety of other financial needs.
+ Factoring Services. On February 14, 1994, FINOVA Capital
purchased Ambassador from Fleet Financial Group, Inc. FINOVA
Factoring Services provides full service factoring and accounts
receivable management services for entrepreneurial and larger
firms in the textile and apparel industries who generate an
average annual factored volume between $5 million and $25
million.
+ Commercial Finance. FINOVA Commercial Finance offers
collateral-oriented revolving credit facilities and term loans
for manufacturers, distributors, wholesalers and service
companies. Typical transaction sizes range from $500,000 to $3
million.
TriCon was an indirect wholly-owned subsidiary of Bell
Atlantic Corporation ("Bell Atlantic"). The acquisition of
TriCon expanded the Company's activities from eight to
fifteen principal lines of business:
+ Medical Finance. FINOVA Medical Finance offers a full range
of equipment and real estate financing and asset management
services for the U.S. health care industry, targeting the top
2,400 health care providers in the United States. Transaction
sizes typically range from $500,000 to $25 million.
+ Commercial Equipment Finance. FINOVA Commercial Equipment
Finance offers equipment leases, loans and "turnkey" financing
to the supermarket, manufacturing, packaging and general
aviation industries. Typical transaction sizes are $500,000
to $15 million.
3
<PAGE> 6
+ Government Finance. FINOVA Government Finance provides
primarily tax-exempt financing to state and local governments
and non-profit corporations. Typical transaction sizes range
from $100,000 to $5 million.
+ Manufacturer and Dealer Services. FINOVA Manufacturer and
Dealer Services provides point-of-sale financing programs and
support services for regional and national manufacturers,
distributors and vendors of equipment classified as "small
ticket" in transaction size (generally transactions with an
equipment cost of less than $100,000). The equipment which
FINOVA Capital leases to the ultimate end-user is typically
sold to FINOVA Capital by the vendor participating in the
financing program.
+ Franchise Finance. FINOVA Franchise Finance offers equipment,
real estate and acquisition financing programs for operators of
established franchise concepts. The equipment which FINOVA
Capital leases to the ultimate end-user is typically purchased
by FINOVA Capital from the equipment manufacturer, vendor or
dealer selected by the end-user. Typical transaction sizes
range from $500,000 to $15 million.
+ Inventory Finance. FINOVA Inventory Finance provides
inventory financing, combined inventory/accounts receivable
lines of credit and purchase order financing for equipment
distributors, value-added resellers and dealers. Transaction
sizes generally range from $1 million to $35 million.
+ Capital Services. FINOVA Capital Services focuses on the
management and origination of highly structured financing of
"large ticket" commercial equipment (generally transactions
involving the sale or lease of equipment with a cost in excess
of $15 million) primarily leveraged leases for major
corporations. The equipment which FINOVA Capital leases to its
customers is typically purchased from an equipment
manufacturer, vendor or dealer selected by the customer. This
group focuses on investments generally ranging from $5 million
to $25 million.
PORTFOLIO COMPOSITION
The total assets under the management of the Company consist of
the Company's net investment in financing contracts plus certain assets
that are owned by others but managed by the Company and are not
reflected on the Company's balance sheet ("securitized assets"). At
December 31, 1994, the net investment in financing transactions was
approximately $5,667,644,000 and securitized assets totaled $253,386,000
resulting in total managed assets of $5,921,030,000.
The Company's investment in financing transactions is primarily
settled in U.S. dollars, except for approximately $87,000,000,
$100,000,000 and $128,000,000 at December 31, 1994, 1993 and 1992,
respectively, which is primarily due in British pounds. The exchange
rate of British pounds to dollars at December 31, 1994, 1993 and 1992
was 1.57:1, 1.48:1 and 1.52:1, respectively.
INVESTMENT IN FINANCING TRANSACTIONS
At December 31, 1994, 1993, 1992, 1991 and 1990, FINOVA's investment in
financing transactions (before reserve for possible credit losses) was
$5,667,644,000, $2,846,571,000, $2,428,523,000, $2,281,872,000 and
$2,198,441,000, respectively, and consisted of the following:
4
<PAGE> 7
<TABLE>
<CAPTION>
INVESTMENT IN FINANCING TRANSACTIONS
BY TYPES OF FINANCING
December 31,
---------------------------------------------------------------------------------------------
1994 % 1993 % 1992 % 1991 % 1990 %
---------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans, conditional sales and
other financing contracts:
Commercial $2,797,160 49.4 $1,397,863 49.1 $1,028,181 42.3 $ 967,693 42.4 $1,046,333 47.6
Real estate 1,237,488 21.8 945,892 33.2 891,190 36.7 772,285 33.9 619,414 28.2
Direct financing leases 774,834 13.6 71,812 2.5 138,871 5.7 201,327 8.8 246,756 11.2
Operating leases 412,782 7.3 147,222 5.2 100,911 4.2 75,204 3.3 10,303 0.5
Leveraged leases 287,518 5.1 283,782 10.0 269,370 11.1 265,363 11.6 275,635 12.5
Factored receivables 157,862 2.8
---------- ----- ---------- ----- ---------- ----- ---------- ----- ---------- -----
$5,667,644 100.0 $2,846,571 100.0 $2,428,523 100.0 $2,281,872 100.0 $2,198,441 100.0
========== ===== ========== ===== ========== ===== ========== ===== ========== =====
</TABLE>
5
<PAGE> 8
INVESTMENT IN FINANCING TRANSACTIONS
BY LINE OF BUSINESS
DECEMBER 31, 1994
(Dollars in Thousands)
<TABLE>
<CAPTION>
Revenue Accruing Nonaccruing
---------------------------------- -----------------------------
Repos-
sessed 90 Days Repos- Total
Original Rewritten Assets Delin- sessed Carrying
Rate Contracts (3) quent Assets Other Amount %
---------------------------------- ----------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Corporate Finance $ 746,671 $ 21,275 $ $ 3,581 $ 6,045 $ $ 777,572 13.8
Commercial Real Estate Finance 672,522 7,237 40,510 994 28,147 749,410 13.2
Transportation Finance (1) 706,242 14,620 720,862 12.7
Resort Finance 634,735 4,506 7,314 32,975 679,530 12.0
Communications Finance 551,218 6,288 7,282 6,593 16,647 671 588,699 10.4
Medical Finance 470,717 1,719 472,436 8.3
Manufacturer and Dealer
Services (5) 301,251 113 19,715 321,079 5.7
Commercial Equipment Finance 293,609 769 7,589 301,967 5.3
Franchise Finance 281,890 7,632 12,242 301,764 5.3
Commercial Finance 181,741 10,061 1,942 193,744 3.4
Factoring Services 157,090 772 157,862 2.8
European Financial Group (2) 93,700 1,561 9,065 2 104,328 1.8
Rediscount Finance 99,353 99,353 1.8
Government Finance 93,491 144 93,635 1.7
Inventory Finance 58,595 642 59,237 1.0
Other 36,951 8,918 297 46,166 0.8
----------- --------- -------- -------- -------- ------ ------------ -----
TOTAL (4) $ 5,379,776 $ 64,001 $ 55,106 $ 82,035 $ 85,758 $ 968 $ 5,667,644 100.0
=========== ========= ======== ======== ======== ====== ============ =====
</TABLE>
- --------------------
NOTES:
(1) Transportation Finance includes $66.9 million of new aircraft finance
business booked through the London office.
(2) European Financial Group balance includes transactions in Europe and other
continents (including the U.S.) originated from the Company's London office,
including Transportation Finance transactions prior to July 1, 1993. Also,
European Financial Group includes $39.2 million of Consumer Finance assets,
of which $4.8 million are nonaccruing. Consumer Finance accounts are
generally considered nonaccruing after being 180 days delinquent.
(3) The Company earned income totaling $3.3 million on repossessed assets during
1994, including $2.0 million in Commercial Real Estate Finance,
$0.8 million in Communications Finance and $0.5 million in Resort Finance.
(4) Excludes $253.4 million of assets securitized which the Company manages.
(5) Manufacturer and Dealer Services accounts are generally considered
nonaccruing after being 120 days delinquent.
--------------------
6
<PAGE> 9
INVESTMENT IN FINANCING TRANSACTIONS
BY LINE OF BUSINESS
DECEMBER 31, 1993
(Dollars in Thousands)
<TABLE>
<CAPTION>
Revenue Accruing Nonaccruing
-------------------------------- -------------------------
Repos-
sessed 90 Days Repos- Total
Original Rewritten Assets Delin- sessed Carrying
Rate Contracts (4) quent Assets Other Amount %
-------------------------------- ------------------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Corporate Finance (1) $ 397,779 $ 27,921 $ $ 2,277 $ 7,428 $ 386 $ 435,791 15.3
Commercial Real Estate
Finance (1) $ 500,598 $ 1,574 $ 27,844 $ 1,055 $ 25,542 $ $ 556,613 19.6
Transportation Finance (1) 604,416 841 605,257 21.2
(2)
Resort Finance 530,617 4,869 12,163 19,001 440 567,090 19.9
Communications Finance 487,890 7,989 8,949 8,264 25,030 538,122 18.9
European Financial Group (3) 107,486 4,430 12,320 23 124,259 4.4
Rediscount Finance 19,439 19,439 0.7
----------- -------- -------- -------- -------- ----- ----------- -----
$ 2,648,225 $ 46,783 $ 48,956 $ 24,757 $ 77,024 $ 826 $ 2,846,571 100.0
=========== ======== ======== ======== ======== ===== =========== =====
</TABLE>
- --------------------
NOTES:
(1) Reclassifications (effective January 1, 1993): Approximately $169 million of
accruing assets were reclassified from Corporate Finance with $163 million
going to Transportation Finance because they primarily represented aircraft
financing and $6 million to Commercial Real Estate Finance. Additionally,
$6.5 million of nonaccruing assets ($5.1 million classified as repossessed
assets and $1.4 million classified as 90 days delinquent) were reclassified
from Corporate Finance to Commercial Real Estate Finance.
(2) Transportation Finance included $31.9 million of new aircraft finance
business booked through the London office.
(3) The European Financial Group balance included transactions in Europe and
other continents (including the U.S.) originated from the Company's London
office, including Transportation Finance transactions prior to July 1, 1993.
Also, European Financial Group included $45.3 million of Consumer Finance
assets, of which $9.6 million were nonaccruing. Consumer Finance accounts
are generally considered nonaccruing after being 180 days delinquent.
(4) The Company earned income totaling $2.7 million on repossessed accruing
assets during 1993, including $1.5 million in Commercial Real Estate
Finance, $0.6 million in Communications Finance and $0.6 million in Resort
Finance.
--------------------
7
<PAGE> 10
INVESTMENT IN FINANCING TRANSACTIONS
BY LINES OF BUSINESS
DECEMBER 31, 1992
(Dollars in Thousands)
<TABLE>
<CAPTION>
Revenue Accruing Nonaccruing
------------------------------------ ------------------------------
Repos- 90 Days Repos-
Original Rewritten sessed Delin- sessed Carrying
Rate Contracts Assets (3) quent Assets Other Amount %
------------------------------------ ------------------------------ --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Corporate Finance (1) $ 420,006 $16,081 $ $ 7,820 $11,808 $ 530 $ 456,245 18.8
Commercial Real Estate Finance 463,571 12,482 21,509 6,302 15,052 518,916 21.4
Transportation Finance 328,962 328,962 13.5
Resort Finance 488,224 1,356 13,889 635 504,104 20.8
Communications Finance 382,914 32,548 8,744 13,182 437,388 18.0
European Financial Group (2) 154,609 5,839 22,400 60 182,908 7.5
----------- ------- ------- ------- ------- ------ ---------- -----
$2,238,286 $68,306 $21,509 $45,266 $53,991 $1,165 $2,428,523 100.0
=========== ======= ======= ======= ======= ====== ========== =====
</TABLE>
- --------------------
NOTES:
(1) Included $5.1 million of public sector Latin American loans that were
written-down to estimated market value. During 1992, FINOVA successfully
liquidated 72% of the face value of public sector Latin American loans at
favorable market prices, which were approximately $3.1 million in excess of
the carrying amount.
(2) The European Financial Group balance included transactions in Europe and
other countries (including the U.S.) originated from the Company's London
office, including Transportation Finance transactions prior to July 1, 1993.
European Financial Group included $57.8 million of Consumer Finance assets,
of which $16.4 million were nonaccruing. Consumer Finance accounts are
generally considered nonaccruing after being 180 days delinquent.
(3) The Company earned income of $1.9 million on repossessed accruing assets in
Commercial Real Estate Finance during 1992.
---------------------
8
<PAGE> 11
INVESTMENT IN FINANCING TRANSACTIONS
BY LINES OF BUSINESS
DECEMBER 31, 1991
(Dollars in Thousands)
<TABLE>
<CAPTION>
Revenue Accruing Nonaccruing
-------------------------- ---------------------------------------- Total
Original Rewritten 90 Days Repossessed Carrying
Terms Contracts Delinquent Assets Other Amount %
-------------------------- ----------------------------------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Corporate Finance $ 429,053 $14,594 $ 7,386 $ $3,694 $ 454,727 19.9
Commercial Real Estate Finance 431,097 15,734 10,504 20,002 477,337 20.9
Transportation Finance 223,803 223,803 9.8
Resort Finance 430,113 1,511 7,317 1,056 439,997 19.3
Communications Finance 321,918 12,340 16,636 350,894 15.4
European Financial Group (1) 263,995 5,095 43,875 826 313,791 13.8
Latin America (2) 21,323 21,323 0.9
---------- ------- ------- ------- ------- ---------- -----
$2,121,302 $49,274 $78,401 $28,145 $4,750 $2,281,872 100.0
========== ======= ======= ======= ====== ========== =====
</TABLE>
- --------------------
NOTES:
(1) The European Financial Group balance included transactions in Europe and
other continents (including the U.S.) originated from the Company's London
office, including Transportation Finance transactions prior to July 1, 1993.
Also, European Financial Group included $94.3 million of Consumer Finance
assets of which $31.9 million were nonaccruing. Consumer Finance accounts
are generally considered nonaccruing after being 180 days delinquent.
(2) Included $15.5 million of Latin American loans written-down to market value.
--------------------
9
<PAGE> 12
INVESTMENT IN FINANCING TRANSACTIONS
BY LINES OF BUSINESS
DECEMBER 31, 1990
(Dollars in Thousands)
<TABLE>
<CAPTION>
Revenue Accruing Nonaccruing
----------------------- ---------------------------------------- Total
Original Rewritten 90 Days Repossessed Carrying
Terms Contracts Delinquent Assets Other Amount %
---------- ----------- ------------- ------------- --------- ------------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Corporate Finance $ 478,456 $ 2,833 $ 4,345 $ 968 $ 4,511 $ 491,113 22.4
Commercial Real Estate Finance 408,201 13,713 14,312 11,942 6,605 454,773 20.7
Transportation Finance 167,988 167,988 7.6
Resort Finance 374,698 215 94 378 1,247 376,632 17.2
Communications Finance 253,519 11,464 6,222 3,866 275,071 12.5
European Financial Group (1) 308,566 7,720 39,776 2,611 358,673 16.2
Latin America 7,549 66,642 74,191 3.4
---------- ------- ------- ------ ------- ---------- ------
$1,998,977 $35,945 $64,749 $15,899 $82,871 $2,198,441 100.0
========== ======= ======= ======= ======= ========== =====
</TABLE>
- --------------------
NOTE:
(1) The European Financial Group balance included transactions in Europe and
other continents (including the U.S.) originated from the Company's London
office, including Transportation Finance transactions prior to July 1, 1993.
Also, European Financial Group included $120.0 million of Consumer Finance
assets of which $32.0 million were nonaccruing. Consumer Finance accounts
are generally considered nonaccruing after being 180 days delinquent.
--------------------
10
<PAGE> 13
The Company's geographic portfolio diversification at December 31, 1994
is as follows:
<TABLE>
<CAPTION>
State Total Percent
----- ----- -------
<S> <C> <C>
California $ 840,556 14.8%
Texas 521,655 9.2%
Florida 317,715 5.6%
New York 314,959 5.6%
Michigan 226,367 4.0%
Pennsylvania 224,347 4.0%
New Jersey 204,824 3.6%
Arizona 170,041 3.0%
Illinois 162,798 2.9%
Nevada 157,639 2.8%
Virginia 119,320 2.1%
Georgia 116,783 2.0%
Washington 111,668 2.0%
Other (1) 2,178,972 38.4%
---------- ------
$5,667,644 100.0%
========== ======
</TABLE>
- --------------------
NOTE:
(1) Other includes all other states which, on an individual basis, represent
less than 2% of the total and international, which represents approximately
5% of the total.
--------------------
11
<PAGE> 14
An analysis of nonaccruing contracts and repossessed assets at December
31 of each year shown is as follows:
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Nonaccruing contracts:
Domestic $ 73,938 $ 13,263 $ 24,031 $ 39,276 $ 41,201
Foreign 9,065 12,320 22,400 43,875 39,777
----------- ----------- ----------- ----------- -----------
83,003 25,583 46,431 83,151 80,978
----------- ----------- ----------- ----------- -----------
Latin America:
Brazil 22,775
Ecuador 40,487
Other 3,380
----------- ----------- ----------- ----------- -----------
66,642
----------- ----------- ----------- ----------- -----------
Total nonaccruing contracts 83,003 25,583 46,431 83,151 147,620
----------- ----------- ----------- ----------- -----------
Repossessed assets:
Domestic 85,756 77,001 53,931 27,319 13,288
Foreign 2 23 60 826 2,611
----------- ----------- ----------- ----------- -----------
Latin America
Total repossessed assets 85,758 77,024 53,991 28,145 15,899
----------- ----------- ----------- ----------- -----------
Total nonaccruing contracts
and repossessed assets $168,761 $102,607 $100,422 $111,296 $163,519
======== ======== ======== ======== ========
Nonaccruing contracts and
repossessed assets as a
percentage of investment
in financing transactions
and securitizations 2.9% 3.6% 4.1% 4.9% 7.4%
========= ======== ======== ======== ========
</TABLE>
In addition to the repossessed assets in the above table, FINOVA had
repossessed assets, with a total carrying amount of $55.1 million, $49.0 million
and $21.5 million at December 31, 1994, 1993 and 1992, respectively, which
earned income of $3.3 million, $2.7 million and $1.9 million during 1994, 1993
and 1992, respectively.
12
<PAGE> 15
The following is an analysis of the reserve for possible credit losses
for the years ended December 31:
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
-----------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Balance, beginning of year $ 64,280 $69,291 $87,600 $77,098 $72,636
Provision for possible credit losses (1) 16,670 5,706 6,740 77,687 10,529
Write-offs (1) (35,127) (12,575) (23,661) (68,346) (7,862)
Recoveries 1,898 717 749 663 1,247
Other (2) 61,524 1,141 (2,137) 498 548
-------- ------- ------- ------- -------
Balance, end of year $109,245 $64,280 $69,291 $87,600 $77,098
======== ======= ======= ======= =======
</TABLE>
- --------------------
NOTES:
(1) In 1991, the Company recorded a special provision for possible credit losses
of $65 million and recorded a $47.8 million write-down of Latin American
assets and recorded write-offs of $15 million in the foreign operations
(GEFG) portfolio.
(2) Includes reserves for possible credit losses acquired with TriCon and
Ambassador in 1994.
--------------------
Additionally, the Company has accrued liabilities of $12,998,000 at December
31, 1994 representing reserves for estimated losses under certain recourse
provisions on $253,386,000 of assets securitized.
FINOVA does not allocate a dollar amount of its reserve for possible credit
losses to specific categories of loans and financing contracts. Upon adoption of
Statement of Financial Accounting Standards ("SFAS") Nos. 114 and 118,
"Accounting by Creditors for Impairment of a Loan" ("SFAS 114") and "Accounting
by Creditors for Impairment of a Loan - Income Recognition and Disclosures"
("SFAS 118"), in the first quarter of 1995, a specific reserve for possible
credit losses will be allocated to impaired loans in the amount equal to the
total impairment on such loans. Adoption of SFAS 114 and SFAS 118 is not
expected to have a material impact on the Company's financial position or
results of operations.
13
<PAGE> 16
Write-offs by line of business, experienced by the Company during the
years ended December 31, are as follows:
WRITE-OFFS BY LINE OF BUSINESS
(Dollars in Thousands)
<TABLE>
<CAPTION>
TOTAL
---------------------------------------------------
1994 1993 1992 1991 1990
---------------------------------------------------
<S> <C> <C> <C> <C> <C>
Communications Finance $ 8,300 $ 1,488 $ 1,500 $ 1,200 $
Manufacturer and Dealer Services (1) 7,018
European Financial Group 5,140 5,026 15,838 15,593 1,748
Corporate Finance 4,233 3,741 1,000 668 2,890
Resort Finance 2,730 330
Franchise Finance (1) 2,247
Commercial Real Estate Finance 1,461 2,320 4,417 2,204 1,976
Commercial Equipment Finance (1) 1,257
Factoring Services (1) 1,148
Commercial Finance (1) 774
Inventory Finance (1) 442
Medical Finance (1) 377
Latin America 47,759 419
Other 906 592 829
------- -------- -------- -------- -------
$35,127 $12,575 $23,661 $68,346 $7,862
======= ======= ======= ======= =======
Write-offs as a percentage
of ending investments in
financing transactions and
securitizations 0.59% 0.44% 0.97% 3.00% 0.36%
======== ======= ======= ======= =======
</TABLE>
- --------------------
NOTES:
(1) These Lines of Business were not part of the Company's portfolio prior to
1994.
(2) In the fourth quarter of 1991, the Company recorded a special provision for
possible credit losses of $65.0 million and recorded write-offs of $15.0
million related to nonearning assets in the GEFG (foreign) portfolio and a
$47.8 million write-down to reduce Latin American assets to current market
value.
--------------------
A further breakdown of the portfolio by line of business can be found in
Note C of Notes to Consolidated Financial Statements in Annex A.
14
<PAGE> 17
COST AND UTILIZATION OF BORROWED FUNDS
FINOVA Capital relies on borrowed funds as well as internal cash flow to
finance its operations. FINOVA Capital follows a policy of relating provisions
under its loans and leases to the terms on which it obtains funds so that, to
the extent feasible, floating-rate assets are funded with floating-rate
borrowings and fixed-rate assets are funded with fixed-rate borrowings. For
further discussion on FINOVA Capital's debt and matched funding policy, see
Notes E and F of Notes to Consolidated Financial Statements included in Annex A.
The following table reflects the approximate average pre-tax effective
cost of borrowed funds and pre-tax equivalent rate earned on accruing assets for
FINOVA Capital for each of the periods listed:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------
1994 1993 1992 1991 1990
------------------------------------------------
<S> <C> <C> <C> <C> <C>
Short-term and variable rate long-term debt 5.5% 4.7% 5.3% 8.1% 10.2%
(1)
Fixed-rate long-term debt (1) 8.1% 11.4% 10.6% 10.9% 11.4%
Aggregate borrowed funds (1) 6.3% 6.3% 7.2% 9.3% 10.8%
Rate earned on average earning assets (2) 11.6% 10.9% 11.9% 13.6% 15.7%
(3)
Spread percentage (4) 6.0% 5.4% 5.1% 4.9% 5.0%
</TABLE>
- ---------------------
NOTES:
(1) Includes the effect of interest rate swap agreements.
(2) Earning assets are net of average nonaccruing assets and average deferred
taxes applicable to leveraged leases.
(3) Earnings are net of depreciation and include gains on sale of assets
excluding gains on securitizations.
(4) Spread percentages represent interest margins earned as a percentage of
average earning assets.
--------------------
The effective costs presented above include costs of commitment fees and
related borrowing costs and do not purport to predict the costs of funds in the
future.
For further information on FINOVA Capital's cost of funds, refer to Note
E of the Notes to Consolidated Financial Statements included in Annex A.
Following are the ratios of income to combined fixed charges and preferred
stock dividends ("ratio") for each of the past five years:
<TABLE>
<CAPTION>
Year Ended December 31,
- -----------------------------------------------------------------------------
1994 1993 1992 1991 1990
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1.55 1.50 1.34 --- 1.23
==== ==== ==== === ====
</TABLE>
Variations in interest rates generally do not have a substantial impact
on the ratio because fixed-rate and floating-rate assets are generally matched
with liabilities of similar rate and term.
15
<PAGE> 18
Income available for fixed charges, for purposes of the computation of
the ratio of income to combined fixed charges and preferred stock dividends,
consists of the sum of income before income taxes and fixed charges. Combined
fixed charges include interest and related debt expense and a portion of rental
expense determined to be representative of interest and preferred stock
dividends grossed up to a pre-tax basis.
For the year ended December 31, 1991, earnings were inadequate to cover
combined fixed charges by $37.0 million. The decline in the ratio in 1991 was
due to restructuring and other charges and transaction costs recorded in the
fourth quarter of 1991. Those charges and costs were recorded in connection with
the Spin-Off.
CREDIT RATINGS
FINOVA Capital currently has investment-grade credit ratings from the
following rating agencies:
<TABLE>
<CAPTION>
Commer Senior
cial Debt
Paper
------ ------
<S> <C> <C>
Duff & Phelps D1- A-
Fitch Investors Services, Inc. F1 A
Moody's Investors Service, Inc. P2 Baa2
Standard & Poor's Ratings Group A2 BBB+
</TABLE>
There can be no assurance that FINOVA Capital's ratings will be
maintained. Such ratings can be modified at any time. A credit rating is not a
recommendation to buy, sell or hold securities. Each rating should be evaluated
independently of any other rating. Neither The FINOVA Group Inc. nor any of
FINOVA Capital's subsidiaries have applied for credit ratings.
RESIDUAL REALIZATION EXPERIENCE
In approximately the last 40 years, FINOVA Capital has realized, in the
aggregate, proceeds from the sale of assets upon lease terminations (other than
foreclosures) in excess of carrying amounts; however, there can be no assurance
that such results will be realized in future years. Sales proceeds upon lease
terminations in excess of carrying amounts are reported as income when the
assets are sold.
16
<PAGE> 19
Income from leasing activities is affected by gains from asset sales
upon lease termination and, hence, can be somewhat less predictable than income
from non-leasing activities. During the five years ended December 31, 1994, the
proceeds to FINOVA Capital from sales of assets upon early termination of leases
and at the expiration of leases have exceeded the respective carrying amounts
and estimated residual values as follows:
<TABLE>
<CAPTION>
Early Terminations Terminations at End of Lease
(Notes 1, 2 ,4 and 5) Term (Note 3)
------------------------------------------------- ---------------------------------------
Proceeds
Proceeds Estimated as a % of
Carrying as a % of Residual Estimated
Sales Amount Carrying Sales Value of Residual
Year Proceeds of Assets Amount Proceeds Assets Value
------------------------------------------------- ---------------------------------------
(Dollars in Thousands) (Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
1994 $ 6,477 $ 5,865 110% $30,161 $25,682 117%
1993 --- --- --- 486 248 196%
1992 20,493 17,527 117% 2,164 1,768 122%
1991 25,027 21,904 114% 10,114 6,553 154%
1990 10,854 7,127 152% 20,210 11,719 172%
</TABLE>
- ---------------
Notes:
(1) Excludes foreclosures for credit reasons which are immaterial to the above
amounts.
(2) Excludes proceeds of $3,201,000 in 1993 on assets held for sale.
(3) Excludes proceeds of $2,000,000 in 1993 received on guarantees.
(4) Excludes proceeds of $460,000 in 1990 from the disposal of warrants.
(5) Excludes gain on securitizations of $3,954,000 in 1994.
--------------------
The estimated residual value of leased assets in the accounts of FINOVA
Capital at December 31, 1994 aggregated 28.3% of the original cost of such
assets (15.3% excluding the original costs of the assets and residuals
applicable to real estate leveraged leases, which typically have higher
residuals than other leases). The financing contracts and leases outstanding at
that date had initial terms ranging generally from one to 25 years. The average
initial term weighted by carrying amount at inception and the weighted average
remaining term of financing contracts at December 31, 1994 for financing
contracts excluding leveraged leases were 6.5 and 3.7 years, respectively, and
for leveraged leases were approximately 20 and 11 years, respectively. The
comparable average initial term and remaining term at December 31, 1993 for
financing contracts excluding leveraged leases were 7.3 and 3.7 years,
respectively, and for leveraged leases were approximately 20 and 12 years,
respectively. FINOVA Capital utilizes either employed or outside appraisers to
determine the collateral value of assets to be leased or financed and the
estimated residual or collateral value thereof at the expiration of each lease.
For a discussion of accounting for lease transactions, refer to Notes A
and C of Notes to Consolidated Financial Statements included in Annex A.
BUSINESS DEVELOPMENT AND COMPETITION
FINOVA Capital develops business primarily through direct solicitation
by its own sales force. Customers are also introduced by independent brokers
and referred by other financial institutions.
17
<PAGE> 20
At December 31, 1994, FINOVA Capital had 88,034 financing contracts with
70,892 customers (including 2,313 contracts with consumer finance customers and
small ticket transactions on 79,027 contracts and 64,886 customers in FINOVA
Manufacturer and Dealer Services), compared to 3,798 financing contracts with
3,490 customers (including 2,886 contracts with consumer finance customers) at
December 31, 1993.
FINOVA Capital is engaged in an extremely competitive activity. It
competes with banks, insurance companies, leasing companies, the credit units of
equipment manufacturers and other finance companies. Some of these competitors
have substantially greater financial resources and are able to borrow at costs
below those of FINOVA Capital. FINOVA Capital's principal means of competition
is through a combination of service, the interest rate charged for money and
concentration in focused market niches. The interest rate it charges for money
is a function of its borrowing costs, its operating costs and other factors.
While many of FINOVA Capital's larger competitors are able to offer lower
interest rates based upon their lower borrowing costs, FINOVA Capital seeks to
maintain the competitiveness of the interest rates it offers by emphasizing
strict control of its operating costs. The Company's ability to manage costs is,
in part, dependent on factors beyond the Company's control, such as the cost of
funds, outside litigation expenses and competitive salaries.
CREDIT QUALITY
As a result of the use of clearly defined underwriting standards,
portfolio management techniques, monitoring of covenant compliance and active
collections and workout departments, FINOVA Capital seeks to maintain a
high-quality customer base.
RISK MANAGEMENT
FINOVA Capital generally conducts investigations of its prospective
customers through a review of historical financial statements, published credit
reports, credit references, discussions with management, analysis of location
feasibility, personal visits and property inspections. In many cases, depending
upon the results of its credit investigations and the nature and type of
property involved, FINOVA Capital obtains additional collateral or guarantees
from others.
As part of its underwriting process, FINOVA Capital generally pays close
attention to the management, industry, financial position and level of
collateral of a proposed borrower. The purpose, term, amortization and amount of
any proposed transaction generally must be clearly defined and within
established corporate policy. In addition, underwriters attempt to avoid undue
concentrations in any one credit, industry or regional location.
- Management. FINOVA Capital generally considers the reputation,
experience and depth of management; quality of product or
service; adaptability to changing markets and demand; and prior
banking, finance and trade relationships.
- Industry. FINOVA Capital usually evaluates critical aspects of
each industry to which it lends, including the seasonality and
cyclicality of the industry; governmental regulation; the
effects of taxes; the economic value of goods or services
provided; and potential environmental liability.
- Financial. FINOVA Capital's review of a prospective borrower
includes a thorough analysis of the borrower's financial
trends. Items considered often include net worth; composition
of assets and liabilities; debt coverage and servicing
requirements; liquidity; sales growth and earning power; and
cash flow needs and generation.
- Collateral. FINOVA Capital regards collateral as an important
factor in a credit evaluation and has established maximum loan
to value ratios, normally ranging from 60% - 95%, for each of
its lines of business. However, collateral is only one of the
many factors considered.
18
<PAGE> 21
The underwriting process includes, in addition to the analysis of the
factors set forth above, the design and implementation of transaction structures
and strategies to mitigate identified risks; a review of transaction pricing
relative to product-specific return requirements and acknowledged risk elements;
a multi-step, interdepartmental review and approval process, with varying levels
of authority based on the size of the transaction; and periodic
interdepartmental reviews and revision of underwriting guidelines.
FINOVA Capital also monitors loan portfolio concentrations in the areas
of aggregate exposure to a single borrower and related entities, within a given
geographical area and with respect to an industry and/or product type within an
industry. FINOVA Capital has established concentration guidelines for each line
of business it conducts for the various product types it may entertain within
that line of business. Geographical concentrations are reviewed periodically and
evaluated based on historical loan experience and prevailing market and economic
conditions.
FINOVA Capital's financing contracts and leases generally require the
customer to pay taxes, license fees and insurance premiums and to perform
maintenance and repairs at the customer's expense. Contract payment rates are
based on several factors, including the cost of borrowed funds, term of
contract, creditworthiness of the prospective customer, type and nature of
collateral and other security and, in leasing transactions, the timing of tax
effects and estimated residual values. In leasing transactions, lessees
generally are granted an option to purchase the equipment at the end of the
lease term at its then fair market value or, in some cases, are granted an
option to renew the lease at its then fair rental value. The extent to which
lessees exercise their options to purchase leased equipment varies from year to
year, depending on, among other factors, the status of the economy, the
financial condition of the lessee, interest rates and technological
developments.
PORTFOLIO MANAGEMENT
In addition to the review at the time of original underwriting, FINOVA
Capital attempts to preserve and enhance the earnings quality of its portfolio
through proactive management of its financing relationships with its clients and
its underlying collateral. This process generally includes the periodic
appraisal or verification of the collateral to determine loan exposure and
residual values; sales of residual and warrant positions to generate
supplemental income; and review and management of covenant compliance. The
Portfolio Management department and dedicated personnel within the business
units regularly review financial statements to assess customer cash flow
performance and trends; periodically confirm operations of the customer; conduct
periodic reappraisals of the underlying collateral; seek to identify issues
concerning the vulnerability of debt service capabilities of the customer; seeks
to resolve outstanding issues with the borrower; and prepare quarterly summaries
of the aggregate portfolio quality for management review. To facilitate the
monitoring of a client's account, each client is assigned to a customer service
representative who is responsible for all follow-up with that client.
DELINQUENCIES AND WORKOUTS
FINOVA Capital monitors timely payment of all accounts. Generally, when
an invoice is 10 days past due, the customer is contacted, and a determination
is made as to the extent of the problem, if any. A commitment for immediate
payment is pursued and the account is observed closely. If payment is not
received after this contact, all guarantors of the account are contacted within
the next 20 days. If an invoice becomes 31 days past due, it is reported as
delinquent. A notice of default is generally sent prior to an invoice becoming
45 days past due and, between 60 and 90 days past the due date, if satisfactory
negotiations are not underway, outside counsel is generally retained to help
protect FINOVA Capital's rights and to pursue its remedies.
19
<PAGE> 22
When accounts become more than 90 days past due (or in the cases of
Manufacturer and Dealer Services, 120 days past due, or United Kingdom consumer
finance accounts, 180 days past due), income recognition is suspended, and
FINOVA Capital vigorously pursues its legal remedies. Foreclosed or repossessed
assets are considered to be nonperforming, and are reported as such unless such
assets generate sufficient cash to result in a reasonable rate of return. Such
accounts are continually reviewed, and write-downs are taken as deemed
necessary. While pursuing collateral and obligors, FINOVA Capital generally
continues to negotiate the restructuring or other settlement of the debt, as
appropriate.
Management believes that collateral values significantly reduce loss
exposure and that the reserve for possible credit losses is adequate. For
additional information regarding the reserve for possible credit losses, see
Note D of Notes to Consolidated Financial Statements included in Annex A.
GOVERNMENTAL REGULATION
FINOVA Capital's domestic activities, including the financing of its
operations, are subject to a variety of federal and state regulations such as
those imposed by the Federal Trade Commission, the Securities and Exchange
Commission, the Consumer Credit Protection Act, the Equal Credit Opportunity Act
and the Interstate Land Sales Full Disclosure Act. Additionally, a majority of
states have ceilings on interest rates chargeable to customers in financing
transactions. Some of FINOVA Capital's financing transactions are subject to
additional government regulation, such as aircraft leasing, which is regulated
by the Federal Aviation Authority, and communications, which is regulated by the
Federal Communication Commission. FINOVA Capital's international activities are
also subject to a variety of laws and regulations promulgated by the governments
and various agencies of the countries in which the business is conducted.
FORMER MORTGAGE INSURANCE OPERATIONS
Verex, which conducted FINOVA's mortgage insurance operations, ceased
writing new business as of January 1, 1988 but continued to write renewals and
settle valid claims in accordance with insurance contracts in force.
Accordingly, Verex was treated as a discontinued operation. On July 16, 1993,
FINOVA consummated the sale of Verex. Proceeds from the sale of Verex were
approximately $215 million. The sale price was generally determined by the book
value of the Verex assets plus a premium of $6 million and an adjustment for the
difference between the market value and book value of Verex's investment
portfolio, calculated as prescribed more fully by the Agreement.
EMPLOYEES
At December 31, 1994, the Company had 943 employees. None of such
employees were covered by collective bargaining agreements. The Company believes
its employee relations are satisfactory.
ITEM 2. PROPERTIES
The Company's principal executive offices are located in premises leased
from Dial in Phoenix, Arizona. FINOVA Capital operates 30 additional offices in
the United States and one office in Europe. All such properties are leased.
Alternative office space could be obtained without
20
<PAGE> 23
difficulty in the event leases are not renewed.
ITEM 3. LEGAL PROCEEDINGS.
The Company is a party either as plaintiff or defendant to various
actions, proceedings and pending claims, including legal actions, certain of
which involve claims for compensatory, punitive or other damages in significant
amounts. Such litigation, in part, often results from the Company's attempts to
enforce its lending agreements against borrowers and other parties to such
transactions. Litigation is subject to many uncertainties and it is possible
that some of the legal actions, proceedings or claims referred to above could be
decided against the Company. Although the ultimate amount for which the Company
may be held liable is not ascertainable, the Company believes that any resulting
liability should not materially affect the Company's financial position or
results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the
fourth quarter of 1994.
OPTIONAL ITEM.
EXECUTIVE OFFICERS OF REGISTRANT.
Set forth below is information with respect to those individuals who
serve as executive officers of FINOVA.
<TABLE>
<CAPTION>
Name Age Position and Background
- --------------------- ----- -----------------------------------------------------------------------------------
<S> <C> <C>
Samuel L. Eichenfield 58 Chairman, President and Chief Executive Officer since 1993 and Chairman and Chief
Executive Officer and a Director of The FINOVA Group Inc. since 1992; also Chairman,
President and Chief Executive Officer and a Director of FINOVA Capital for more than
five years.
Robert J. Fitzsimmons 54 Senior Vice President - Treasurer of The FINOVA Group Inc. or similar positions since
1992; also Senior Vice President - Treasurer or similar positions of FINOVA Capital
for more than five years and a Director of FINOVA Capital since 1992.
William J. Hallinan 52 Senior Vice President - General Counsel and Secretary or similar positions of The
FINOVA Group Inc. and FINOVA Capital since 1992; prior thereto for more than five
years served as Vice President - Taxes and Associate General Counsel or a similar
position of Dial.
Robert M. Korte 39 Senior Vice President - Strategy and Technology since 1994 and prior thereto was Vice
President Human and Corporate Development of The FINOVA Group Inc. since 1992; also
Vice President - Human and Corporate Development or in a similar positions of FINOVA
Capital since 1991, and prior thereto was Assistant Vice President - Administration.
Bruno A. Marszowski 53 Senior Vice President - Controller and Chief Financial Officer of The FINOVA Group
Inc. and FINOVA Capital since 1994 and prior thereto was Vice President - Controller
of The FINOVA Group Inc. since 1992; also, Vice President - Controller of FINOVA
Capital for more than five years and a Director thereof during 1992.
</TABLE>
(continued)
21
<PAGE> 24
<TABLE>
<CAPTION>
Name Age Position and Background
- ---------------- ----- -------------------------------------------------------------------------------------
<S> <C> <C>
Robert E. Radway 34 Senior Vice President - Corporate Development and Communications or similar positions
of The FINOVA Group Inc. since 1993; prior thereto was Manager, Corporate Finance
Division of CMS Companies, an investment management/merchant banking firm since 1990
and prior thereto was Vice President, Investment Banking Division of First Fidelity
Bancorporation (a bank holding company) since 1988.
Derek C. Bruns 35 Vice President - Internal Audit or similar positions of The FINOVA Group Inc. since
1992; prior thereto was Senior Manager - Audit Services or in a similar position at
Deloitte & Touche LLP for more than five years.
John J. Bonano 52 Group Vice President or similar positions of FINOVA Capital since 1993; prior thereto
was Senior Vice President, Asset Based Finance Division of U.S. Bancorp Financial,
Inc. since 1988.
J. Paul Buchanan 53 Group Vice President of FINOVA Capital since 1994; prior thereto was Executive Vice
President, or similar positions, of Bell Atlantic TriCon Leasing Corporation for more
than five years.
Matthew M. Breyne 37 Group Vice President or similar positions of FINOVA Capital for more than five years.
Jack Fields, III 40 Group Vice President or similar positions of FINOVA Capital for more than five years.
Thomas C. Parrinello 53 Group Vice President of FINOVA Capital since 1994; prior thereto was Executive Vice
President of Heller Financial for more than five years.
Martin G. Roth 57 Group Vice President or similar positions of FINOVA Capital for more than five years.
Gregory C. Smalis 42 Group Vice President - Portfolio Management or similar positions and a Director of
FINOVA Capital since 1993; prior thereto served as Managing Director of GEFG from
1992 and as Vice President - Credit of FINOVA Capital from 1987.
Paul A. Thulin 45 Senior Vice President of FINOVA Capital since 1994; prior thereto was Vice President
of Bell Atlantic TriCon Leasing Corporation for more than five years.
</TABLE>
22
<PAGE> 25
PART II
ITEM 5. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY & RELATED STOCKHOLDER MATTERS.
The principal market on which the common stock of The FINOVA Group Inc.
is traded is the New York Stock Exchange. The following tables summarize the
high and low market prices as reported on the New York Stock Exchange Composite
Tape and the cash dividends declared from January 1, 1993 through December 31,
1994:
<TABLE>
<CAPTION>
Sales Price Range of Common Stock
-------------------------------------------------------------
1994 1993
--------------------------- --------------------------
Quarters: High Low High Low
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
First $ 33-3/4 $ 28-1/4 $ 29-5/8 $ 23-5/8
Second 34-3/8 29-1/8 30-1/8 25-1/2
Third 39 33-1/8 31-7/8 28-1/4
Fourth 35-7/8 29-1/8 32 26-1/2
</TABLE>
<TABLE>
<CAPTION>
Dividends Declared on
Common Stock
-----------------------
1994 1993
------ ------
<S> <C> <C>
February $ 0.18 $ 0.16
April 0.16
May 0.18
August 0.18 0.18
November 0.20 0.18
------ ------
$ 0.74 $ 0.68
====== ======
</TABLE>
Following the Spin-Off, quarterly dividends have been paid on the first
business day of each calendar quarter. It is anticipated that FINOVA will
continue to pay regular quarterly dividends on the first business day of
January, April, July and October. In February 1995, the Board of Directors
declared a dividend of $0.20 per share, payable April 3, 1995, for shareholders
of record on March 1, 1995. The declaration of dividends and their amounts will
be at the discretion of the Board of Directors of FINOVA and there can be no
assurance that additional dividends will be declared.
FINOVA Capital is restricted in its ability to pay dividends to its
shareholder. The agreements pertaining to long-term debt of FINOVA Capital
include various restrictive covenants and require the maintenance of certain
defined financial ratios with which FINOVA Capital has complied. Under one of
these covenants, dividend payments are limited to 50 percent of accumulated
earnings after December 31, 1991.
As of March 13, 1995, there were approximately 28,627 holders of record
of The FINOVA Group Inc.'s common stock. The closing price of the common stock
on that date was $32-3/8.
ITEM 6. SELECTED FINANCIAL DATA.
The following table summarizes selected financial data of FINOVA which
have been derived from the audited Consolidated Financial Statements of FINOVA
for the five years ended December
23
<PAGE> 26
31, 1994. The information set forth below should be read in conjunction with the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements of FINOVA and the Notes
thereto included in Annex A, as well as the remainder of this Report. Per share
data for income and dividends have not been presented for 1991 and prior years
as The FINOVA Group Inc. was not a publicly held company prior to the Spin-Off.
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------------
1994 1993 1992 1991 1990
----------- ----------- ----------- ---------- ----------
OPERATIONS: (dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Interest earned from
financing $ 503,351 $ 255,216 $ 243,337 $ 251,472 $ 256,962
transactions
Interest margins earned 244,414 124,847 104,699 93,912 85,310
Provision for possible
credit losses (1) 16,670 5,706 6,740 77,687 10,529
Gains on sale of assets 9,045 5,439 3,362 6,684 12,678
Core income (2) 80,834 40,463 34,289 31,629 21,697
Income (loss) from
continuing 74,313 37,846 36,750 (38,742) 29,558
operations
Net income (loss) 74,313 37,347 48,957 (52,471) 29,558
Earnings per common
and equivalent share $ 2.94 $ 1.77 $ 2.31
Dividends declared per
common share $ 0.74 $ 0.68 $ 0.42
Dividend payout ratio 25.2% 38.4% 18.2%
Average outstanding common
and equivalent share 25,307,000 20,332,000 20,464,000
FINANCIAL POSITION:
Investment in financing
transactions $ 5,667,644 $ 2,846,571 $ 2,428,523 $2,281,872 $2,198,441
Nonaccruing contracts
and repossessed assets 168,761 102,607 100,422 111,296 163,519
Reserve and accrued
liabilities for possible
credit losses (1) (3) 122,233 64,280 69,291 87,600 77,098
Total assets 5,834,331 2,834,322 2,641,668 2,414,484 2,393,309
Deferred income taxes 188,887 178,972 172,727 198,366 214,825
Senior and subordinated
debt 4,573,354 2,079,286 1,882,349 1,706,470 1,510,675
Customer deposits and
short-term debt 16,424 63,075 175,161
--------- --------- --------- --------- ---------
Total debt 4,573,354 2,079,286 1,898,773 1,769,545 1,685,836
Redeemable preferred stock 25,000
Stockholders' equity 770,252 503,300 488,396 371,576 442,747
</TABLE>
24
<PAGE> 27
<TABLE>
<CAPTION>
December 31,
-------------------------------------------------
1994 1993 1992 1991 1990
-------------------------------------------------
<S> <C> <C> <C> <C> <C>
RATIOS:
Reserve and accrued liabilities for possible
credit losses/investment in financing
transactions and securitizations 2.1% 2.3% 2.9% 3.8% 3.5%
Nonaccruing contracts and repossessed assets/
investment in financing transactions and
securitizations 2.9% 3.6% 4.1% 4.9% 7.4%
Total debt to stockholder's equity 5.9x 4.1x 3.9x 4.8x 3.8x
Return on average equity 11.1% 7.5% 11.4% (12.9%) 6.8%
Return on average total assets 1.6% 1.4% 1.9% (2.2%) 1.3%
Equity to assets 13.2% 17.8% 18.5% 15.4% 18.5%
</TABLE>
- --------------------
NOTES:
(1) In the fourth quarter of 1991, the Company recorded a special provision for
possible credit losses of $65,000,000 and recorded write-offs of $15,000,000
related to nonearning assets in the GEFG portfolio and a $47,759,000
write-down to reduce Latin American assets to current market value.
(2) Core income is defined as domestic income from continuing operations plus
the charges made to deferred taxes applicable to leveraged leases in 1993
and the restructuring and other charges recorded in 1991 in connection with
the Spin-Off.
(3) Accrued liabilities of $13 million at December 31, 1994 represent an
allowance for estimated losses under certain recourse provisions of
securitizations.
--------------------
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
See pages 2 - 7 of Annex A.
ITEM 8. FINANCIAL STATEMENTS & SUPPLEMENTARY DATA.
1. Financial Statements - See Item 14 hereof and Annex A.
2. Supplementary Data - See Condensed Quarterly Results included
in Supplemental Selected Financial Data of Notes to
Consolidated Financial Statements included in Annex A.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
& FINANCIAL DISCLOSURE.
NONE.
25
<PAGE> 28
PART III
ITEM 10. DIRECTORS & EXECUTIVE OFFICERS OF THE REGISTRANT.
The information concerning the Company's directors required by this Item
is incorporated by reference from the Company's Proxy Statement issued in
connection with its 1995 Annual Meeting of Stockholders (the "Proxy Statement").
The information regarding the Company's executive officers required by
this item is found as an Optional Item in Part I, following Item 4 hereof.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item is incorporated by reference from
the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS & MANAGEMENT.
The information required by this item is incorporated by reference from
the Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS & RELATED TRANSACTIONS.
The information required by this item is incorporated by reference from
the Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K.
(a) Documents filed.
1. Financial Statements.
(i) The following financial statements of FINOVA are included in
Annex A:
<TABLE>
<CAPTION>
Annex
Page
-----
<S> <C>
Financial Highlights 1
Management's Discussion and Analysis of Financial
Condition and Results of Operations 2-8
Report of Management and Independent Auditors' Report 9-10
Consolidated Balance Sheet 11-12
Statement of Consolidated Operations 13
Statement of Consolidated Stockholders' Equity 14
Statement of Consolidated Cash Flows 15
Notes to Consolidated Financial Statements 16-42
Supplemental Selected Financial Data 43-44
</TABLE>
2. All Schedules have been omitted because they are not applicable
or the required information is shown in the financial
statements or notes thereto.
26
<PAGE> 29
3. Exhibits.
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S> <C>
(3.A) Certificate of Incorporation, as amended through the date of
this filing.*
(3.B) By-Laws, as amended through the date of this filing.*
(4.A) Instruments with respect to issues of long-term debt have not
been filed as exhibits to this Annual Report on Form 10-K if the
authorized principal amount of any one of such issues does not
exceed 10% of total assets of the Company and its subsidiaries
on a consolidated basis. The Company agrees to furnish a copy of
each such instrument to the Securities and Exchange Commission
upon request.
(4.B) Form of Common Stock Certificate of the Company*.
(4.C) Relevant portions of the Company's Certificate of Incorporation
and Bylaws included in Exhibits 3.A and 3.B above, respectively,
are hereby incorporated by reference.
(4.D) Rights Agreement dated as of February 15, 1992 between the
Company and the Rights Agent named therein (incorporated by
reference from the Company's Registration Statement on Form S-1,
SEC File No. 33-45452 (the "Registration Statement"), Annex V to
Prospectus and Exhibit 4.1).
(4.E) Indenture dated as of November 1, 1990 between FINOVA Capital
and the Trustee named therein (incorporated by reference from
Greyhound Financial Corporation's Registration Statement on Form
S-3, Registration No. 33-37743, Exhibit 4).
(4.F) Fourth Supplemental Indenture dated as of April 17, 1992 between
FINOVA Capital and the Trustee named therein, supplementing the
Indenture referenced in Exhibit 4.E above, is hereby
incorporated by reference from GFC Financial Corporation's
Annual Report on Form 10-K for the year 1992 (the "1992 10-K"),
Exhibit 4.F.
(4.G) Form of Indenture dated as of September 1, 1992 between FINOVA
Capital and the Trustee names therein (incorporated by reference
from the Greyhound Financial Corporation Registration Statement
on Form S-3, Registration No. 33-51216, Exhibit 4).
(4.H) 1992 Stock Incentive Plan of the Company as amended through the
date hereof, with a proposed amendment thereto incorporated from
the Proxy Statement.*+
(10.A) Sixth Amendment and Restatement dated as of May 16, 1994 of the
Credit Agreement dated as of May 31, 1976 among FINOVA Capital
and the lender parties thereto, and Bank of America National
Trust and Savings Association, Bank of Montreal, Chemical Bank,
Citibank, N.A. and National Westminster Bank USA, as agents (the
"Agents") and Citibank, N.A., as Administrative Agent
(incorporated by reference from the Corporation's Current Report
on Form 8-K dated May 23, 1994, Exhibit 10.1).
(10.A.1) First Amendment dated as of September 30, 1994, to the Sixth
Amendment and Restatement, noted in 10.A above.*
</TABLE>
27
<PAGE> 30
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S> <C>
(10.B) Credit Agreement (Short-Term Facility) dated as of May 16, 1994
among FINOVA Capital, the Lender parties thereto, the Agents and
Citibank, N.A., as Administrative Agent (incorporated by
reference from the Company's Report on Form 8-K dated May 23,
1994, Exhibit 10.2).
(10.B.1) First Amendment dated as of September 30, 1994 to the Credit
Agreement noted in 10.B above.*
(10.C.1) The Company's Executive Severance Plan for Tier 1 Employees.*+
(10.C.2) The Company's Executive Severance Plan for Tier 2 Employees.*+
(10.D) The Company's Management Incentive Plan.*+
(10.E) The Company's Performance Share Incentive Plan.*+
(10.F) Employment Agreement with Samuel L. Eichenfield, dated March 16,
1992, is hereby incorporated by reference from the 1992 10-K,
Exhibit 10.F.
(10.G) Employment Agreement with William J. Hallinan, dated February
25, 1992, is hereby incorporated by reference from the 1992
10-K, Exhibit 10.I.+
(10.H) Employment Agreement with Thomas C. Parrinello, dated February
14, 1992.*+
(10.I.1) Form on Resolutions of the Company's Board of Directors
(adopted on December 5, 1994) amending the Company's Retirement
Income, Capital Accumulation, Employees' Stock Ownership and
Supplemental Pension Plans.*+
(10.I.2) Form of Resolutions of the Company's Board of Directors
(adopted on February 9, 1995) amending the names of the
Company's various benefit plans.*+
(10.J) The Company's Retirement Income Plan.*+
(10.K) The Company's Supplemental Pension Plan.*+
(10.L) The Company's Employee Stock Ownership Plan and Trust.*+
(10.M) The Company's Capital Accumulation Plan.*+
(10.N) The Company's Directors Deferred Compensation Plan, is hereby
incorporated by reference from the 1992 10-K, Exhibit 10.O.+
(10.O) Form of the Company's 1992 Stock Incentive Plan Nonqualified
Stock Option Agreement (for exempt employees) (for August 25,
1992 and subsequent grants through August 10, 1994) (various
prices) is hereby incorporated by reference from the 1992 10-K,
Exhibit 10.FF.+
</TABLE>
28
<PAGE> 31
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S> <C>
(10.P) Form of the Company's 1992 Stock Incentive Plan Nonqualified
Stock Option Agreement (for nonexempt employees) (for August 25,
1992 and subsequent grants through August 10, 1994) (various
grants) is hereby incorporated by reference from the 1992 10-K,
Exhibit 10.GG.
(10.Q) A description of the Company's policies regarding compensation
of directors is incorporated from the Proxy Statement.+
(10.R) The Company's 1992 Deferred Compensation Plan is hereby
incorporated by reference from the 1992 10-K, Exhibit 10.II.+
(10.S) Interim Services Agreement dated January 28, 1992 among the
Company, The Dial Corp and others, is hereby incorporated by
reference from the 1992 10-K, Exhibit 10.JJ.
(10.T) Tax Sharing Agreement dated February 19, 1992 among the Company,
The Dial Corp and others, is hereby incorporated by reference
from the 1992 10-K, Exhibit 10.KK.
(10.U) Certificate of Designations of Series A Redeemable Preferred
Stock of FINOVA Capital, dated March 17, 1992, is hereby
incorporated by reference from the 1992 10-K, Exhibit 10.MM.
(10.V) Sublease dated as of April 1, 1991, among the Company, The Dial
Corp and others, relating to the Company's principal office
space, is hereby incorporated by reference from the 1992 10-K,
Exhibit 10.NN.
(10.W) Directors' Retirement Benefit Plan is hereby incorporated by
reference from the Company's Annual Report on Form 10-K for the
year ended December 31, 1993 (the "1993 10-K"), Exhibit 10.OO.+
(10.X) Stock Purchase Agreement between Bell Atlantic TriCon Leasing
Corporation and Greyhound Financial Corporation dated as of
March 4, 1994 is hereby incorporated by reference from the 1993
10-K, Exhibit 10.QQ.
(10.Y) Form of Assets Purchase Agreement between Bell Atlantic TriCon
Leasing Corporation and TriCon Capital Corporation is hereby
incorporated by reference from the 1993 10-K, Exhibit 10.RR.
(10.Z) Form of Distribution Agreement among the Company, Greyhound
Financial Corporation, The Dial Corp and certain other parties
named therein, dated as of January 28, 1992 (incorporated by
reference from the Registration Statement, Annex II to the
Prospectus and Exhibit 2.1).
(10.AA) Asset Purchase Agreement dated as of February 3, 1995 between
Transamerica Business Credit Corporation and FINOVA Capital.*
(10.BB) Stock Purchase Agreement among The FINOVA Group Inc., FINOVA
Capital and GE Capital Mortgage Corporation dated May 26, 1993,
incorporated by
</TABLE>
29
<PAGE> 32
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S> <C>
reference from the Company's Report on Form 8-K dated
July 15, 1993, Exhibit 2.
(10.CC) Directors' Charitable Awards Program.*+
(10.DD) Form of the Company's 1992 Stock Incentive Plan Stock Option
Agreements for grants subsequent to August 10, 1994 (for exempt
employees) (various prices). *+
(10.EE) Form of the Company's 1992 Stock Incentive Plan Stock Option
Agreements for grants subsequent to August 10, 1994 (for
non-exempt employees) (various prices).*
(10.FF) Form of the Company's 1992 Stock Incentive Plan Stock Option
Agreements for grants subsequent to August 10, 1994 (for
non-employee directors) (various prices).*+
(10.GG) Form of the Company's 1992 Stock Incentive Plan Restricted
Stock Agreements.*+
(11) Computation of Per Share Earnings.*
(12) Computation of Ratio of Income to Combined Fixed Charges and
Preferred Stock Dividends.*
(21) Subsidiaries of the Registrant.*
(25) Powers of Attorney.*
(27) Financial Data Schedule.*
</TABLE>
* Filed herewith + Relating to Management Compensation
(b) Reports on Form 8-K:
A Report on Form 8-K dated October 18, 1994 was filed by
Registrant, which reported under Items 5 and 7 the revenues, net income
and selected financial data and ratios for the nine months ended
September 30, 1994 (unaudited).
A Report on Form 8-K dated January 24, 1995 was filed by
Registrant, which reported under Items 5 and 7 the revenues, net income
and selected financial data and ratios for the twelve months ended
December 31, 1994 (unaudited).
A Report on Form 8-K dated January 25, 1995 was filed by
Registrant, which reported under Items 5 and 7 the name change from GFC
Financial Corporation to The FINOVA Group Inc. and from Greyhound
Financial Corporation to FINOVA Capital Corporation.
30
<PAGE> 33
A Report on Form 8-K dated February 3, 1995 was filed by
Registrant, which reported under Item 7 the Underwriting Agreement and
certain other information relating to the sale of FINOVA Capital's
$100,000,000 8% Notes due February 1, 2000.
A Report on Form 8-K dated February 9, 1995 was filed by
Registrant, which reported under Items 5 and 7 the definitive agreement
to acquire a substantial portion of the rediscount portfolio of the
Lender Finance Division of Transamerica Business Credit Corporation.
A Report on Form 8-K dated February 27, 1995 was filed by
Registrant, which reported under Item 7 the Underwriting Agreement and
certain other information relating to the sale of FINOVA Capital's
$150,000,000 Floating-Rate Notes due March 6, 1998.
31
<PAGE> 34
SIGNATURES
Pursuant to the requirements of Section 13 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 in the capacities
indicated, in Phoenix, Arizona on the 20th day of March, 1995.
THE FINOVA GROUP INC.
By: /s/ Samuel L. Eichenfield
------------------------------------------------
Samuel L. Eichenfield
Chairman, President and Chief Executive Officer
(Chief Executive Officer)
By: /s/ Bruno A. Marszowski
------------------------------------------------
Bruno A. Marszowski
Senior Vice President - Controller and Chief Financial Officer
(Chief Accounting and Financial Officer)
______________________
32
<PAGE> 35
Pursuant to the requirements of the Securities Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
* /s/ Samuel L. Eichenfield
_________________________________ ___________________________________
G. Robert Durham (Director) Samuel L. Eichenfield (Chairman)
March 20, 1995 March 20, 1995
* *
_________________________________ ___________________________________
James L. Johnson (Director) L. Gene Lemon (Director)
March 20, 1995 March 20, 1995
* *
_________________________________ ___________________________________
Kenneth R. Smith (Director) Robert P. Straetz (Director)
March 20, 1995 March 20, 1995
* *
_________________________________ ___________________________________
Shoshana B. Tancer (Director) John W. Teets (Director)
March 20, 1995 March 20, 1995
* Signed pursuant to Powers of Attorney dated February 9, 10 and 14, 1995.
/s/ Bruno A. Marszowski
____________________________
Bruno A. Marszowski
Attorney-in-Fact
March 20, 1995
33
<PAGE> 36
ANNEX A
<PAGE> 37
THE FINOVA GROUP INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Financial Highlights 1
Management's Discussion and Analysis of Financial
Condition and Results of Operations 2-8
Report of Management 9
Independent Auditors' Report 10
Consolidated Balance Sheet at December 31, 1994 and 1993 11-12
Statement of Consolidated Operations for the Years Ended
December 31, 1994, 1993 and 1992 13
Statement of Consolidated Stockholders' Equity for the
Years Ended December 31, 1994, 1993 and 1992 14
Statement of Consolidated Cash Flows for the Years Ended
December 31, 1994, 1993 and 1992 15
Notes to Consolidated Financial Statements for the Years
Ended December 31, 1994, 1993 and 1992 16-42
Supplemental Selected Financial Data 43-44
</TABLE>
<PAGE> 38
THE FINOVA GROUP INC.
FINANCIAL HIGHLIGHTS
(Dollars in Thousands, except per share data)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Years Ended December 31, 1994 (1) 1993 1992
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Interest margins earned $ 244,414 $ 124,847 $ 104,699
Selling, administrative and other operating expenses 113,018 58,158 50,728
Net income 74,313 37,347 48,957
FINANCIAL POSITION:
Average funds employed (AFE) 4,446,745 2,637,547 2,355,198
Ending funds employed (EFE) 5,667,644 2,846,571 2,428,523
Securitizations (2) 253,386
Average earning assets (3) 4,064,971 2,321,359 2,045,091
Reserve and accrued liabilities for possible credit losses (4) 122,233 64,280 69,291
Nonaccruing assets 168,761 102,607 100,422
New business 1,799,331 1,007,794 684,900
Factoring/floor planning volume 1,129,936
Write-offs 35,127 12,575 23,661
CAPITALIZATION:
Total debt 4,573,354 2,079,286 1,898,773
Stockholders' equity 770,252 503,300 488,396
PORTFOLIO QUALITY:
Write-offs as a % of AFE and average securitizations (5) 0.8% 0.5% 1.0%
Nonaccruing assets as a % of EFE and securitizations (2) 2.9% 3.6% 4.1%
Reserve and accrued liabilities (4) for possible credit
losses as a % of:
Ending funds employed and securitizations (2) 2.1% 2.3% 2.9%
Nonaccruing assets 72.4% 62.6% 69.0%
As a multiple of write-offs 3.5x 5.1x 2.9x
PERFORMANCE HIGHLIGHTS:
Return from continuing operations as a % of AFE (6) 1.8% 1.6% 1.7%
Interest margins earned as a % of average earning assets (3) 6.0% 5.4% 5.1%
Selling, administrative and other operating expenses as
a % of interest margins earned 46.2% 46.6% 48.5%
Aggregate cost of funds 6.3% 6.3% 7.2%
Ratio of income to combined fixed charges and preferred
stock dividends 1.6 1.5 1.3
Return on average equity 11.1% 7.5% 11.4%
Income per share (continuing operations) $ 2.94 $ 1.80 $ 1.71
Book value per share outstanding $ 27.83 $ 25.06 $ 24.14
Average outstanding common shares 25,307,000 20,332,000 20,464,000
Shares outstanding 27,677,000 20,080,000 20,236,000
======================================================================================================
</TABLE>
(1) Includes financial results from the acquisitions of Ambassador
(February 14, 1994) and TriCon (April 30, 1994).
(2) Securitizations are assets sold under securitization agreements and
managed by the Company.
(3) Average earning assets represents AFE excluding average deferred taxes
on leveraged leases and average nonaccruing assets.
(4) Accrued liabilities of $13 million at December 31, 1994 represent an
allowance for estimated losses under certain recourse provisions of
securitizations.
(5) Average contracts securitized were $183 million in 1994.
(6) AFE in this item, excludes average deferred taxes on leveraged leases
of $225 million, $215 million and $204 million for 1994, 1993 and 1992,
respectively.
1
<PAGE> 39
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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.
The Company is the successor to the former financial services
businesses of The Dial Corp ("Dial"). On March 18, 1992, Dial consummated the
spin-off (the "Spin-Off") of the Company by distributing one share of the
Company's common stock (the "shares") for every two shares of Dial common stock
held by each stockholder. Prior to the Spin-Off, Dial contributed to the
Company (i) all of the common stock of FINOVA Capital representing the
Company's core operations, (ii) Greyhound European Financial Group ("GEFG"),
Dial's European commercial and consumer finance businesses not previously
managed by the Company, (iii) Greyhound BID Holding Corp. ("Greyhound BID")
and (iv) Verex Corporation and subsidiaries ("Verex"), Dial's discontinued
mortgage insurance operations, which had been operated in a run-off mode by
Dial since 1988. The Company sold Verex in July 1993.
The historical consolidated financial statements of FINOVA have been
retroactively restated to include the accounts and results of operations of
FINOVA Capital, GEFG and Greyhound BID and the investment in Verex for all
periods presented as if a pooling of interests of companies under common
control occurred. All intercompany accounts and transactions have been
eliminated from the consolidated financial statements.
RESULTS OF OPERATIONS
1994 COMPARED TO 1993
Income from continuing operations increased 96% during 1994 to $74.3
million from $37.8 million in 1993. The 1994 results include income for
Ambassador and TriCon from the acquisition dates. Net income for the 1994
period rose to $74.3 million from $37.3 million in 1993, an increase of 99%.
Net income in 1993 included a $0.5 million loss from the Company's discontinued
mortgage insurance subsidiary sold in July 1993. Income from continuing
operations and net income in 1993 included a $4.9 million adjustment for tax
rate increases applicable to deferred income taxes generated by the Company's
leveraged lease portfolio.
2
<PAGE> 40
THE FINOVA GROUP INC.
INTEREST MARGINS EARNED. Interest margins earned, which represent the
difference between interest earned from financing transactions and interest
expense, increased to $244.4 million for 1994 from $124.8 million for 1993, an
increase of 96%. 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 $1.8 billion for 1994 compared
to $1.0 billion for 1993 (an increase of 80%).
Interest margins earned, measured as a percent of average earning
assets, were strong at 6.0%. This measurement compares to 5.4% for the 1993
period and reflects the contributions of the acquisitions made in 1994, the
continuing healthy returns of the charter financial operations and the
Company's access to lower cost capital. Growth in interest margins more than
offset the higher provisions for possible credit losses and the higher selling,
administrative and other operating expenses.
In early 1995, FINOVA Capital helped protect its margins on
floating-rate transactions by hedging an additional $750 million of
floating-rate debt to lock in the spread between the Company's lending and
borrowing rates. With this hedge, the Company helped to protect its margins on
$1.5 billion of floating-rate transactions (or approximately 50% of its
floating-rate liabilities), during the terms of those hedging transactions.
NON-INTEREST EXPENSE. Loss provisions, which increase the reserve for
possible credit losses ("reserve"), were greater by $11.0 million during 1994
compared to 1993. The greater loss provisions were consistent with the
requirements of a larger portfolio and the loss experience of the businesses
acquired. Higher interest margins generated by Ambassador and certain TriCon
businesses are used to cover the risk profiles associated with those
businesses. Management believes that reserve coverage (reserve and accrued
liabilities/nonaccruing assets) remains adequate at 72.4% of nonaccruing assets
and at 2.1% of funds employed and securitizations. Details of the write-offs
by line of business, as well as changes in the reserve for possible credit
losses, can be found in Note D of Notes to Consolidated Financial Statements.
Selling, administrative and other operating expenses increased by
approximately $54.9 million in 1994 consistent with the growth in assets. The
running rate of these expenses (measured as a percent of interest margins
earned) was 46.2% (for the combined entities) in 1994, an improvement over
46.6% in 1993 (which excluded TriCon and Ambassador). See Note N of Notes to
Consolidated Financial Statements.
GAINS ON SECURITIZATIONS AND SALE OF ASSETS. Gains on securitizations
and sale of assets were $3.6 million higher in 1994 compared to 1993. The
increase principally is the result of a $4.0 million ($2.4 million after-tax)
gain from the securitization of assets recorded in 1994.
During 1994, FINOVA Capital entered into one transaction resulting in
a gain on the securitization of selected assets. The securitization of assets
was consistent with TriCon's historical experience; however, the Company does
not currently intend to use asset securitizations as a form of financing.
Reduced utilization of securitizations will have the result of reducing net
income in the near term since no gain on the sale of assets will be recorded.
However, earnings from assets retained and not securitized would continue to be
recognized over the life of the assets.
INCOME TAXES. Income taxes for 1994 increased to $49.5 million from
$28.6 million in 1993.
3
<PAGE> 41
THE FINOVA GROUP INC.
This increase is attributable to: (a) higher income before income taxes; (b)
higher state income tax rates in 1994 because of the apportionment of the
Company's assets to states with higher income tax rates and (c) increased
foreign income taxes due to the increase in foreign income. The overall
effective income tax rate for the Company, including both federal and state
income taxes, approximates 40.0% for 1994 and 35.7% for 1993, excluding the
$4.9 million tax adjustment for the Company's leveraged lease portfolio. See
Note I of Notes to Consolidated Financial Statements.
1993 COMPARED TO 1992
Income from continuing operations for 1993, excluding a $4.9 million
adjustment for deferred taxes applicable to leveraged leases, rose to $42.7
million from $36.8 million in 1992, a 16% increase in earnings from continuing
operations. The $4.9 million adjustment in 1993 represented the effects of
increases in federal and state income tax rates in 1993 as they applied to
deferred income taxes generated by the Company's leveraged lease portfolio.
Income from continuing operations for 1993, including the adjustment for
deferred taxes, was $37.8 million.
Net income for 1993 was $37.3 million. Excluding the $4.9 million
deferred tax adjustment, net income for 1993 was $42.2 million compared to
$49.0 million in 1992. The primary reason for the lower earnings in 1993 was
the loss of $0.5 million reported from discontinued operations in 1993 compared
to income of $12.2 million in 1992. The $0.5 million loss for the year
consisted of $0.8 million of income from the discontinued mortgage insurance
operations and a loss of $1.3 million on the sale of that operation.
INTEREST MARGINS EARNED. Interest margins earned increased by 19% in
1993 compared to 1992. These margins were improved significantly by more
favorable debt costs in 1993 when compared to 1992 (approximately a 1%
reduction in the aggregate cost of debt). Also contributing to the improved
margins was the growth of the domestic portfolio and higher prepayment fees,
partially offset by the effects of larger foreign exchange gains reported by
GEFG in 1992 and the continued winding down of the GEFG portfolio.
The $12.3 million reduction in interest expense was attributable to
more favorable debt costs and the interest savings from the repayment of
commercial paper with the proceeds from the sale of the mortgage insurance
operations. The more favorable debt costs, in comparison to 1992, primarily
relate to the Company's ability to consistently maintain a matched position
throughout 1993 relative to financing its floating-rate assets with
floating-rate debt. During the second and third quarters of 1992, FINOVA,
because of the significant refinancing done in connection with the Spin-Off,
had to finance a major portion of its floating-rate assets with fixed-rate
debt. That fixed-rate debt was subsequently converted to floating-rate debt
through interest rate conversion agreements. However, the timing between the
issuance of fixed-rate debt and the execution of the interest rate conversion
agreements caused interest margins to shrink by approximately $2.8 million in
1992.
NON-INTEREST EXPENSE. Although the provision for possible credit
losses was lower in 1993 versus 1992, in the opinion of management, such
provision was adequate to cover the growth and risk in the portfolio. The
reserve for possible credit losses, which is increased by the loss provisions
and reduced by write-offs, was 2.3% of funds employed at December 31, 1993.
Details of the write-offs by line of business, as well as changes in the
reserve for possible credit losses, can be found in Note D of Notes to
Consolidated Financial Statements.
4
<PAGE> 42
THE FINOVA GROUP INC.
Selling, administrative and other operating expenses increased during
1993 due to the addition of the asset based lending operations acquired from
U.S. Bancorp expenses that were no longer allocated to discontinued operations
and legal expenses incurred in connection with certain problem accounts. See
Note N of Notes to Consolidated Financial Statements.
GAINS ON SALE OF ASSETS. Gains on sale of assets were higher in 1993
than in 1992 due to the amount and type of assets sold. Gains in 1993
primarily were derived from the sale of aircraft and other assets held for
sale.
INCOME TAXES. Income taxes, excluding the $4.9 million adjustment
applicable to deferred taxes, were higher in 1993 and more in the range of an
ongoing effective tax rate (approximately 36% of income before income taxes)
for the Company. The higher income taxes were attributable to the effects of a
1% increase in both federal and state income tax rates, which increased the
provision for taxes by approximately $1 million, and to higher income before
income taxes. Additionally, in 1992, income taxes were reduced by $3.1 million
representing tax adjustments related to the refinancing of the Company's debt.
See Note I of Notes to Consolidated Financial Statements.
FORMER MORTGAGE INSURANCE OPERATIONS. FINOVA sold all of the issued
and outstanding common stock of Verex in July 1993. The initial cash sale
price was approximately $215 million, before transaction costs. The sale price
was generally determined by the book value of Verex's assets plus a premium of
$6 million and an adjustment for the difference between market value and book
value of Verex's investment portfolio. Adjustments to the sale were made in the
fourth quarter of 1993 to reflect estimated transaction costs and additional
liabilities resulting in a $1.3 million loss on the sale of Verex.
The loss from discontinued operations for 1993 was $0.5 million
compared to income of $12.2 million in 1992. The $0.5 million loss for the
year consisted of $0.8 million of income from operations and the loss of $1.3
millon on the sale of the mortgage insurance operations. The $0.8 million in
income from the mortgage insurance operations represented income through the
sale date and the accrual of expenses necessary to complete the disposition of
the remaining assets and liabilities of the mortgage insurance operations which
were retained by FINOVA.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Funds employed increased by $2.9 billion to $5.7 billion at December
31, 1994 from $2.8 billion at December 31, 1993. This increase is attributable
to the acquisitions of TriCon ($1.8 billion) and Ambassador ($329 million) and
new business generated ($1.8 billion), less securitization of assets and
portfolio amortization.
The reserve and accrued liabilities for possible credit losses
increased by $58.0 million in 1994 to $122.2 million. The increase in the
reserve and accrued liabilities consisted of increases due to loss provisions
of $16.7 million which were applicable to portfolio growth, $62.6 million of
reserves and accrued liabilities acquired with TriCon and $10.4 million of
reserves acquired with Ambassador, partially offset by decreases due to
write-offs of $35.1 million.
Nonaccruing contracts and repossessed assets increased to $168.8
million at December 31, 1994 from $102.6 million at December 31, 1993,
primarily due to the inclusion of nonaccruing assets of TriCon ($60 million)
and Ambassador ($14.7 million). When measured as a percent of funds
5
<PAGE> 43
THE FINOVA GROUP INC.
employed and securitizations, nonearning assets declined to 2.9% at December
31, 1994 from 3.6% of funds employed at December 31, 1993. For more
information on write-offs and nonaccruing assets see Note D of Notes to
Consolidated Financial Statements.
The Company had total debt of approximately $4.6 billion or 5.9 times
its equity base of $770.3 million at December 31, 1994. The Company also had
deferred income taxes of $189 million, generally used to reduce debt and,
therefore, help finance lending activities.
Growth in funds employed is generally financed by internally generated
cash flow and additional borrowings. During 1994, FINOVA Capital issued $827.6
million in new senior debt, which, together with general corporate funds, net
commercial paper borrowings and $226.0 million of net proceeds from a secondary
equity offering, was used to finance new business, redeem or retire $1.2
billion of debt and acquire TriCon and Ambassador. The equity offering was
completed in May 1994 and was for 8,050,000 shares of The FINOVA Group Inc.'s
common stock (the "Offering").
FINOVA satisfies a significant portion of its cash requirements from a
diversified group of worldwide funding sources and is not dependent upon any
one lender. Additionally, FINOVA relies on the issuance of commercial paper as
a major funding source. During 1994, FINOVA Capital issued $9.5 billion of
commercial paper (with an average of $1.0 billion outstanding during the year)
and raised $827.6 million, as noted above, through new long-term financings of
one to seven year durations. At December 31, 1994 and 1993, commercial paper
and short-term bank borrowings totaling $2.0 billion and $516 million,
respectively, were supported by available unused revolving credit lines which
if not renewed are convertible to long-term debt at FINOVA's option. In 1994,
FINOVA Capital filed a shelf-registration statement with the Securities and
Exchange Commission that would allow for the issuance of up to $1.0 billion of
senior debt securities, $822 million of which remained available as of December
31, 1994.
FINOVA Capital currently maintains a three-year revolving credit
facility with numerous lenders, in the aggregate principal amount of $1.0
billion. Under the terms of this agreement, the Company has the option to
periodically select either domestic dollars or Eurodollars as the basis of
borrowings. Interest is based on the lenders' Prime rate for domestic dollar
advances or London interbank offered rates ("LIBOR") for Eurodollar advances.
The agreements also provide for a commitment fee on the unused credit.
Separately, FINOVA Capital also has a 364 day revolving credit facility with
the same lenders in the aggregate principal amount of $1.0 billion. In
addition, FINOVA Capital has another 364 day facility with the administrative
agent for $100 million. All of these facilities support FINOVA's outstanding
commercial paper and short-term borrowings. The Company intends to borrow
under the domestic revolving credit agreements to refinance commercial paper
and short-term bank loans to the extent that it experiences significant
difficulties in rolling over its outstanding commercial paper and short-term
bank loans. The Company has never borrowed under these facilities. The 364
day $1.1 billion revolving credit agreements will be subject to renewal in 1995
while the three year $1 billion credit facility is subject to renewal in 1997.
The agreements pertaining to long-term debt of FINOVA Capital include
various restrictive covenants and require the maintenance of certain defined
financial ratios with which FINOVA Capital has complied. Under one such
covenant, dividend payments are limited to 50 percent of accumulated earnings
after December 31, 1991.
6
<PAGE> 44
THE FINOVA GROUP INC.
FINOVA Capital's aggregate cost of funds remained constant at 6.3% for
1994 and 1993, notwithstanding rising interest rates generally in 1994. The
Company's cost of and access to capital is dependent, in a large part, on its
credit ratings. FINOVA Capital has maintained investment grade ratings since
1976, and recently received an upgrade in those ratings from Standard & Poor's
Ratings Group. Neither The FINOVA Group Inc. nor any of FINOVA Capital's
subsidiaries have applied for credit ratings. FINOVA Capital currently has
investment-grade ratings from the following agencies:
<TABLE>
<CAPTION>
Commercial Senior
Paper Debt
---------- ------
<S> <C> <C>
Duff & Phelps D1- A-
Fitch Investors Services, Inc. F1 A
Moody's Investors Service, Inc. P2 Baa2
Standard & Poor's Ratings Group A2 BBB+
</TABLE>
At December 31, 1994, FINOVA Capital had outstanding 57 interest rate
conversion agreements with notional principal amounts totaling $2.5 billion.
Twenty-six agreements with notional principal amounts of $1.0 billion were
arranged to effectively convert certain floating interest rate obligations into
fixed interest rate obligations and require interest payments on the stated
principal amount at rates ranging from 4.1% to 9.3% (remaining terms of one to
six years) in return for receipts calculated on the same notional amounts at
floating interest rates. In addition, 26 agreements with notional principal
amounts of $1.19 billion were arranged to effectively convert certain fixed
interest rate obligations into floating interest rate obligations and require
interest payments on the stated principal amount at the three month or six
month LIBOR (remaining terms of one to eight years) in return for receipts
calculated on the same notional amounts at fixed interest rates of 4.9% to
7.6%. FINOVA Capital has also entered into five basis swaps with notional
principal amounts of $254 million and remaining terms of one month to three
years.
In 1993, FINOVA Capital entered into four three-year interest rate
hedge agreements on $750 million of floating-rate borrowings. In early 1995,
FINOVA Capital hedged an additional $750 million of floating-rate debt to lock
in a spread between its lending and borrowing rates. FINOVA's assets are
primarily Prime based while a significant portion of its liabilities are either
LIBOR based or tied to the 30-day commercial paper composite rate. The
agreements enable FINOVA to hedge against a narrowing of the spread between the
Prime rate (lending rate) and its borrowing rates (LIBOR and commercial paper).
With this additional hedge, the Company helped to protect its margins on $1.5
billion of floating-rate transactions (or approximately 50% of its
floating-rate liabilities). For more information on derivative financial
instruments, see Note F of Notes to Consolidated Financial Statements.
The FINOVA Group Inc. announced in 1992 that it intended to repurchase
its securities on the open market, from time to time, to fund its obligations
pursuant to employee stock options, benefit plans and similar obligations. The
repurchase program commenced in the fourth quarter of 1992, with 602,800,
349,909 and 137,500 shares being acquired during the years ending December 31,
1994, 1993 and 1992, respectively. The program may be discontinued at any
time.
7
<PAGE> 45
THE FINOVA GROUP INC.
RECENT DEVELOPMENTS AND BUSINESS OUTLOOK
Following the Spin-Off in 1992, the Company decided to 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 GEFG 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, 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 $118 million.
In 1994, the Company raised an additional $226 million of equity
through the sale of 8,050,000 shares in a secondary offering, expanded its debt
sources through a $1 billion shelf registration with the Securities and
Exchange Commission ("SEC") and increased its revolving credit lines to $2.1
billion. As a result of the execution of its business strategy, management
believes that the Company now ranks among the largest independent commercial
finance companies, based on assets, in the United States, and can direct its
energies primarily to its principal business operations, including those
businesses acquired since 1993.
NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board ("FASB") has issued two
accounting standards which the Company will adopt effective January 1, 1995:
Statements of Financial Accounting Standards ("SFAS") Nos. 114 and 118,
"Accounting by Creditors for Impairment of a Loan" ("SFAS 114") and "Accounting
by Creditors for Impairment of a Loan - Income Recognition and Disclosures"
("SFAS 118"). These standards require that impaired loans which are within the
scope of these statements generally be measured based on the present value of
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. Presently, the 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. The impact of these
new standards, effective for fiscal years beginning after December 15, 1994,
which for the Company would be 1995, is not expected to have a material impact
on the Company's financial position or results of operations.
During 1994, FINOVA adopted SFAS No. 119, "Disclosures about
Derivative Financial Instruments and Fair Value of Financial Instruments." The
disclosures required by SFAS No. 119 are included in Notes F and M of Notes to
Consolidated Financial Statements.
New accounting standards adopted by FINOVA in 1993 included SFAS No.
112, "Employers' Accounting for Postemployment Benefits," which did not have
a material impact on the Company's financial position or results of operations.
8
<PAGE> 46
THE FINOVA GROUP INC.
MANAGEMENT'S REPORT ON
RESPONSIBILITY FOR FINANCIAL REPORTING
The management of The FINOVA Group Inc. is responsible for the
preparation, integrity and objectivity of the financial statements and other
financial information included in this Annual Report. The financial statements
are presented in accordance with generally accepted accounting principles
reflecting, where applicable, management's best estimates and judgments.
Management of the Company has established and maintains a system of
internal controls to reasonably assure the fair presentation of the financial
statements, the safeguarding of the Company's assets and the prevention or
detection of fraudulent financial reporting. The internal control structure is
supported by careful selection and training of personnel, policies and
procedures and regular review by both internal auditors and the independent
auditors.
The Board of Directors, through its Audit Committee, also oversees the
financial reporting of the Company and its adherence to established procedures
and controls. Periodically, the Audit Committee meets, jointly and separately,
with management, the internal auditors and the independent auditors to review
auditing, accounting and financial reporting matters.
The Company's financial statements have been audited by Deloitte &
Touche LLP, independent auditors. Management has made available to Deloitte &
Touche LLP all of the Company's financial records and related data and has made
valid and complete written and oral representations and disclosures in
connection with the audit.
Management believes it is essential to conduct its business in
accordance with the highest ethical standards, which are characterized and set
forth in the Company's written Code of Conduct. These standards are
communicated to and acknowledged by all of the Company's employees.
Samuel L. Eichenfield
Chairman, President and Chief Executive Officer
Bruno A. Marszowski
Senior Vice President - Controller and Chief Financial Officer
Derek C. Bruns
Vice President - Internal Audit
9
<PAGE> 47
THE FINOVA GROUP INC.
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of The FINOVA Group Inc.
We have audited the accompanying consolidated balance sheet of The
FINOVA Group Inc. and subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of The FINOVA Group Inc. and
subsidiaries at December 31, 1994 and 1993, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1994, in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Phoenix, Arizona
March 8, 1995
10
<PAGE> 48
THE FINOVA GROUP INC.
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
December 31, 1994 1993
------------------------------------------------------------------------------------
<S> <C> <C>
Cash and cash equivalents $ 49,875 $ 929
Investment in financing transactions:
Loans and other financing contracts, less unearned
income of $249,550 and $72,747, respectively 4,034,648 2,343,755
Direct financing leases 774,834 71,812
Operating leases 412,782 147,222
Leveraged leases 287,518 283,782
Factored receivables 157,862
- -------------------------------------------------------------------------------------
5,667,644 2,846,571
Less reserve for possible credit losses (109,245) (64,280)
- -------------------------------------------------------------------------------------
Investment in financing transactions - net 5,558,399 2,782,291
Other assets and deferred charges 226,057 51,102
- -------------------------------------------------------------------------------------
$5,834,331 $2,834,322
=====================================================================================
</TABLE>
See notes to consolidated financial statements.
11
<PAGE> 49
THE FINOVA GROUP INC.
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
December 31, 1994 1993
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Liabilities:
Accounts payable and accrued expenses $ 173,079 $ 49,131
Due to factored clients 91,049
Interest payable 37,710 23,633
Senior debt 4,573,354 1,992,496
Subordinated debt 86,790
Deferred income taxes 188,887 178,972
- ----------------------------------------------------------------------------------------
5,064,079 2,331,022
- ----------------------------------------------------------------------------------------
Stockholders' equity:
Common stock, $0.01 par value, 100,000,000 shares
authorized, 28,422,000 and 20,372,000 shares issued,
respectively 284 204
Additional capital 688,042 464,487
Retained income 109,830 54,901
Cumulative translation adjustments (4,726) (7,773)
Common stock in treasury, 745,000 and 292,000 shares,
respectively (23,178) (8,519)
- ----------------------------------------------------------------------------------------
770,252 503,300
- ----------------------------------------------------------------------------------------
$ 5,834,331 $ 2,834,322
========================================================================================
</TABLE>
See notes to consolidated financial statements.
12
<PAGE> 50
THE FINOVA GROUP INC.
STATEMENT OF CONSOLIDATED OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Years Ended December 31, 1994 1993 1992
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest and other income $ 386,566 $ 218,171 $ 210,873
Financing lease income 62,990 20,838 24,896
Operating lease income 53,795 16,207 7,568
- ----------------------------------------------------------------------------------------
Interest earned from financing transactions 503,351 255,216 243,337
Interest expense 222,200 123,853 136,107
Depreciation 36,737 6,516 2,531
- ----------------------------------------------------------------------------------------
Interest margins earned 244,414 124,847 104,699
Provision for possible credit losses 16,670 5,706 6,740
- ----------------------------------------------------------------------------------------
Net interest margins earned 227,744 119,141 97,959
Gains on securitizations and sale of assets 9,045 5,439 3,362
- ----------------------------------------------------------------------------------------
236,789 124,580 101,321
- ----------------------------------------------------------------------------------------
Selling, administrative and other operating
expenses 113,018 58,158 50,728
- ----------------------------------------------------------------------------------------
Income before income taxes 123,771 66,422 50,593
Income taxes 49,458 28,576 13,843
- ----------------------------------------------------------------------------------------
Income from continuing operations 74,313 37,846 36,750
(Loss) income from discontinued operations (499) 12,207
- ----------------------------------------------------------------------------------------
NET INCOME $ 74,313 $ 37,347 $ 48,957
========================================================================================
Earnings per common and equivalent share:
Income from continuing operations $ 2.94 $ 1.86 $ 1.80
Preferred dividends 0.06 0.09
- ----------------------------------------------------------------------------------------
Income from continuing operations after
preferred dividends 2.94 1.80 1.71
(Loss) income from discontinued operations (0.03) 0.60
- ----------------------------------------------------------------------------------------
EARNINGS PER COMMON AND EQUIVALENT SHARE $ 2.94 $ 1.77 $ 2.31
========================================================================================
DIVIDENDS DECLARED PER COMMON SHARE $ 0.74 $ 0.68 $ 0.42
========================================================================================
Average outstanding common and equivalent
shares 25,307,000 20,332,000 20,464,000
========================================================================================
</TABLE>
See notes to consolidated financial statements.
13
<PAGE> 51
THE FINOVA GROUP INC.
STATEMENT OF CONSOLIDATED STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Years Ended December 31, 1994 1993 1992
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK:
Balance, beginning of year $ 204 $ 204 $ 203
Issuance of common stock 80 1
- --------------------------------------------------------------------------------------------
Balance, end of year 284 204 204
- --------------------------------------------------------------------------------------------
ADDITIONAL CAPITAL:
Balance, beginning of year 464,487 465,955 376,136
Issuance of common stock 225,911 2,148
Net change in unamortized amount of restricted
stock (2,113) (223) (1,506)
Common stock in treasury issued in connection
with employee benefit plans (243) (1,245) (18)
Contributions from The Dial Corp 89,195
- --------------------------------------------------------------------------------------------
Balance, end of year 688,042 464,487 465,955
- --------------------------------------------------------------------------------------------
NET UNREALIZED INVESTMENT LOSSES:
Balance, beginning of year (387) ---
Change in net unrealized investment losses 387 (387)
- --------------------------------------------------------------------------------------------
Balance, end of year --- (387)
- --------------------------------------------------------------------------------------------
RETAINED INCOME:
Balance, beginning of year 54,901 32,524 (3,124)
Net income 74,313 37,347 48,957
Dividends (19,384) (14,970) (13,309)
- --------------------------------------------------------------------------------------------
Balance, end of year 109,830 54,901 32,524
- --------------------------------------------------------------------------------------------
CUMULATIVE TRANSLATION ADJUSTMENTS:
Balance, beginning of year (7,773) (6,685) (1,639)
Unrealized translation gain (loss) 3,047 (1,088) (5,046)
- --------------------------------------------------------------------------------------------
Balance, end of year (4,726) (7,773) (6,685)
- --------------------------------------------------------------------------------------------
COMMON STOCK IN TREASURY:
Balance, beginning of year (8,519) (3,215) ---
Purchase of shares (18,954) (10,162) (3,249)
Shares used in connection with employee
benefit plans 4,295 4,858 34
- --------------------------------------------------------------------------------------------
Balance, end of year (23,178) (8,519) (3,215)
- --------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY $770,252 $503,300 $488,396
============================================================================================
</TABLE>
See notes to consolidated financial statements.
14
<PAGE> 52
THE FINOVA GROUP INC.
STATEMENT OF CONSOLIDATED CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Years Ended December 31, 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 74,313 $ 37,347 $ 48,957
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for possible credit losses 16,670 5,706 6,740
Depreciation and amortization 46,470 9,318 4,501
Gains on securitizations and sale of assets (9,045) (5,439) (3,362)
Loss (income) from discontinued operations 499 (12,207)
Deferred income taxes 9,915 17,947 (4,837)
Change in assets and liabilities, net of effects from
subsidiaries purchased:
Increase in other assets (20,087) (6,290) (7,682)
(Decrease) increase in accounts payable (82,694) (14,246) 3,938
Increase (decrease) in interest payable 14,077 (5,429) 3,576
Other (4,548) (1,311) (3,841)
- -------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 45,071 38,102 35,783
- -------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Proceeds from sale of assets 35,106 5,681 22,657
Proceeds from sale of securitized assets 115,507
Principal collections on financing transactions 908,862 638,423 454,390
Expenditures for financing transactions (1,505,208) (1,007,794) (684,900)
Net change in short-term financing transactions (294,123)
Purchase of Asset Based Lending (69,808)
Purchase of Ambassador (246,285)
Purchase of TriCon (344,212)
Sale of Verex 171,500
Net advances to discontinued insurance subsidiary 57,321 (57,321)
Other 1,898 221 392
- -------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (1,328,455) (204,456) (264,782)
- -------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Long-term borrowings 827,550 200,000 644,091
Net borrowings under commercial paper 1,508,564 185,735 330,141
Repayment of long-term borrowings (1,186,191) (190,136) (829,212)
Issuance of common stock 225,991
(Redemption) issuance of preferred stock (25,000) 25,000
Proceeds from exercise of stock options 4,052 3,613 562
Common stock purchased for treasury (18,954) (10,162) (3,249)
Advances and contributions from The Dial Corp 55,275
Dividends (19,384) (14,970) (13,309)
Net change in due to factored clients (9,298)
- -------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 1,332,330 149,080 209,299
- -------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents 48,946 (17,274) (19,700)
Cash and cash equivalents, beginning of year 929 18,203 37,903
- -------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 49,875 $ 929 $ 18,203
=============================================================================================================
</TABLE>
See notes to consolidated financial statements.
15
<PAGE> 53
THE FINOVA GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(DOLLARS IN THOUSANDS IN TABLES)
NOTE A SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION -- 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 Company is the successor to the former financial services
businesses of The Dial Corp ("Dial"). On March 18, 1992, Dial consummated the
spin-off (the "Spin-Off") of the Company by distributing one share of the
Company's common stock (the "shares") for every two shares of Dial common stock
held by each stockholder. Prior to the Spin-Off, Dial contributed to the
Company (i) all of the common stock of FINOVA Capital representing the
Company's core operations, (ii) Greyhound European Financial Group ("GEFG"),
Dial's European commercial and consumer finance businesses not previously
managed by the Company, (iii) Greyhound BID Holding Corp. ("Greyhound BID")
and (iv) Verex Corporation and subsidiaries ("Verex"), Dial's discontinued
mortgage insurance operations, which had been operated in a run-off mode by
Dial since 1988. The Company sold Verex in July 1993.
The historical consolidated financial statements of FINOVA have been
retroactively restated to include the accounts and results of operations of
FINOVA Capital, GEFG and Greyhound BID and the investment in Verex for all
periods presented as if a pooling of interests of companies under common
control occurred. All intercompany accounts and transactions have been
eliminated from the consolidated financial statements.
These consolidated financial statements are prepared in accordance
with generally accepted accounting principles. Described below are those
accounting policies particularly significant to FINOVA, including those
selected from acceptable alternatives.
FINANCING TRANSACTIONS -- For loans and other financing contracts
earned income is recognized over the life of the contract, using the interest
method.
For leases classified as direct financing leases, the difference
between (a) aggregate lease rentals and (b) the cost of the related assets less
estimated residual value at the end of the lease term is recorded as unearned
income. Earned income is recognized over the life of the contracts using the
interest method.
16
<PAGE> 54
THE FINOVA GROUP INC.
For operating leases, earned income is recognized on a straight-line
basis over the lease term and depreciation is taken on a straight-line basis
over the estimated useful life.
Leases that are financed by nonrecourse borrowings and meet certain
other criteria are classified as leveraged leases. For leveraged leases,
aggregate rentals receivable are reduced by the related nonrecourse debt
service obligation including interest ("net rentals receivable"). The
difference between (a) the net rentals receivable and (b) the cost of the asset
less estimated residual value at the end of the lease term is recorded as
unearned income. Earned income is recognized over the life of the lease at a
constant rate of return on the positive net investment, which includes the
effects of deferred income taxes.
Fees received in connection with loan commitments are deferred in
accounts payable and accrued expenses until the loan is advanced and are then
recognized over the term of the loan as an adjustment of the yield. Fees on
commitments that expire unused are recognized at expiration.
Income recognition is generally suspended for leases, loans and other
financing contracts at the earlier of the date at which payments become 90 days
past due (other than consumer finance accounts of GEFG, which are considered
nonaccruing when 180 days past due and the accounts of Manufacturer and Dealer
Services, which are considered nonaccruing when 120 days past due) or when, in
the opinion of management, a full recovery of income and principal becomes
doubtful. Income recognition is resumed when the loan becomes contractually
current and performance is demonstrated to be resumed.
The reserve for possible credit losses is available to absorb credit
losses. The provision for possible credit losses is the charge to income to
increase the reserve for possible credit losses to the level that management
estimates to be adequate considering delinquencies, loss experience and
collateral. Other factors include changes in geographic and product
diversification, size of the portfolio and current economic conditions.
Accounts are either written-off or written-down when the probability of loss
has been established in amounts determined to cover such losses after giving
consideration to the customer's financial condition and the value of the
underlying collateral, including any guarantees. Any deficiency between the
carrying amount of an asset and the ultimate sales price of repossessed
collateral is charged to the reserve for possible credit losses. Recoveries of
amounts previously written-off as uncollectible are credited to the reserve for
possible credit losses.
Under certain limited recourse provisions of receivable transfer
agreements (securitizations), the Company repurchases defaulted leases and
subsequently classifies these leases as nonaccruing. At the time the defaulted
leases are repurchased, the Company transfers from accrued liabilities for
securitized assets to the reserve for possible credit losses, the amount of the
estimated loss relating to the repurchased assets. If the accounts have to be
written-down, they are charged to the reserve for possible credit losses.
Repossessed assets are carried at the lower of cost or fair value.
Loans classified as in-substance foreclosures are included in repossessed
assets. Loans are classified as in-substance foreclosed assets, even though
legal foreclosure has not occurred, when (i) the borrower has little or no
equity in the collateral at its current fair value, (ii) proceeds for repayment
are expected to come only from the operation or sale of the collateral and
(iii) it is doubtful that the borrower will
17
<PAGE> 55
THE FINOVA GROUP INC.
rebuild equity in the collateral or otherwise repay the loan in the foreseeable
future.
The Financial Accounting Standards Board ("FASB") has issued two new
accounting standards: Statements of Financial Accounting Standards ("SFAS")
Nos. 114 and 118, "Accounting by Creditors for Impairment of a Loan" ("SFAS
114") and "Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures" ("SFAS 118"). These standards require that
impaired loans that are within the scope of these statements generally be
measured based on the present value of 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. Presently, the 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. These new standards, effective for fiscal years beginning
after December 15, 1994, are not expected to have a material impact on the
Company's financial position or results of operations. Adoption of SFAS 114
and 118 will be applied by the Company, effective January 1, 1995. Under SFAS
114, assets classified as in-substance foreclosures will generally be
reclassified as impaired loans.
PENSION AND OTHER BENEFITS -- Trusteed, noncontributory pension plans
cover substantially all employees. Benefits are based primarily on final
average salary and years of service. Net periodic pension cost for FINOVA is
based on the provisions of SFAS No. 87, "Employers' Accounting for Pensions."
Funding policies provide that payments to pension trusts shall be at least
equal to the minimum funding required by applicable regulations.
Effective January 1, 1993, the Company adopted SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions," which
requires accrual of such benefits during the years the employees provide
services. Prior to 1993, the costs of such benefits were expensed as incurred.
The adoption of SFAS No. 106 had no material effect on the Company's financial
condition or results of operations.
Effective January 1, 1994, the Company adopted SFAS Statement No. 112,
"Employers' Accounting for Postemployment Benefits." Analogous to SFAS No. 106
for postretirement benefits, this standard requires companies to accrue for
estimated future postemployment benefits during the periods when employees are
working. Postemployment benefits are any benefits other than retirement
benefits that are provided after employment ceases. Prior to 1994, the costs
of such benefits were expensed as incurred. The adoption of SFAS No. 112 had
no material effect on the Company's financial condition or results of
operations.
SAVINGS PLAN -- The Company maintains The FINOVA Group Inc. Savings
Plan (the "Savings Plan"), a qualified 401(k) program. The Savings Plan is
available to substantially all employees. Voluntary wage reductions may be
elected by the employee ranging from 1% to 22% of taxable compensation. The
Company matching contributions are based on employee pre-tax salary reductions,
up to a maximum of 100% of the first 3% of salary reductions (increased to 6%
effective January 1, 1995).
EMPLOYEE STOCK OWNERSHIP PLAN -- Employees of the Company are eligible
to participate in the Employee Stock Ownership Plan in the month following the
last twelve consecutive month
18
<PAGE> 56
THE FINOVA GROUP INC.
period during which they have at least 1,000 hours of service with the Company.
Company contributions are made in the form of matching stock contributions of
100% of the first 3% of salary reduction contributions made by participants of
the Savings Plan.
Expenses under the Savings Plan and Employee Stock Ownership Plan were
$900,000 in 1994, $400,000 in 1993 and $300,000 in 1992.
INCOME TAXES -- Income taxes are provided based upon the provisions of
SFAS No. 109, "Accounting for Income Taxes" ("SFAS 109"). Under SFAS 109,
deferred tax assets and liabilities are recognized for the estimated future tax
effects attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax law.
CASH EQUIVALENTS -- The Company classifies highly liquid investments
with original maturities of three months or less from date of purchase as cash
equivalents.
EARNINGS PER COMMON AND EQUIVALENT SHARE -- Earnings per common and
equivalent share is based on net income after preferred stock dividend
requirements and the weighted average number of common shares outstanding
during the year giving effect to stock options considered to be dilutive common
stock equivalents. Fully diluted earnings per share is not materially
different from primary earnings per share.
DERIVATIVE FINANCIAL INSTRUMENTS -- The Company enters into derivative
financial instruments as part of its interest rate risk management. The
Company uses interest rate swaps and interest rate hedge agreements. These
interest rate derivatives are accounted for using settlement or matched swap
accounting. Periodic net cash settlements are recognized when they occur.
ACQUISITIONS -- During 1994, FINOVA Capital, in transactions accounted
for as purchases, acquired Ambassador Factors (February 14, 1994) and TriCon
(April 30, 1994). The consolidated financial statements include the results of
operations of the acquired companies since the date of acquisition and reflect
final adjustments for purchase accounting. The prior years 1993 and 1992
consolidated financial statements have not been restated for acquisitions made
subsequent to such dates. The unaudited pro forma results of operations of
these acquisitions are included in Note O to Notes to Consolidated Financial
Statements. Cost in excess of net assets ("goodwill") of acquired businesses
is being amortized using the straight-line method over 20 years. The
amortization of goodwill resulting from the acquisitions is tax deductible
under Section 197 of the Internal Revenue Code.
RECLASSIFICATIONS -- Certain reclassifications have been made to the
1993 and 1992 financial statements to conform to the 1994 presentation.
NOTE B DISCONTINUED OPERATIONS
Verex, which conducted FINOVA's mortgage insurance operations, ceased
writing new business as of January 1, 1988 but continued to write renewals
and settle valid claims in accordance with insurance contracts in force.
Accordingly, Verex was treated as a discontinued operation. On July 16, 1993,
FINOVA consummated the sale of Verex. Proceeds from the sale of Verex were
approximately $215,000,000. The sale price was generally determined by the
book value of Verex's assets plus a premium of $6,000,000 and an adjustment for
the difference between the market value and book value of Verex's investment
portfolio. The loss from discontinued operations for the year ended December
31, 1993 included all transaction costs and anticipated costs to complete
disposition of the remaining assets and liabilities of Verex retained by FINOVA.
19
<PAGE> 57
THE FINOVA GROUP INC.
NOTE C INVESTMENT IN FINANCING TRANSACTIONS
The Company provides secured financing to commercial and real estate
enterprises principally under financing contracts (such as loans and other
financing contracts, direct financing leases, operating leases, leveraged
leases and factored receivables). At December 31, 1994 and 1993, the carrying
amount of the investment in financing transactions, including the estimated
residual value of leased assets upon lease termination, was $5,667,644,000 and
$2,846,571,000 (before reserve for possible credit losses), respectively, and
consisted of the following percentage of carrying amount by line of business:
<TABLE>
<CAPTION>
- -------------------------------------------------------------
Percent of Total
Carrying Amount
- -------------------------------------------------------------
1994 1993
- -------------------------------------------------------------
<S> <C> <C>
Corporate Finance 13.8% 15.3%
Commercial Real Estate Finance 13.2% 19.6%
Transportation Finance 12.7% 21.2%
Resort Finance 12.0% 19.9%
Communications Finance 10.4% 18.9%
Medical Finance 8.3%
Manufacturer and Dealer Services (1) 5.7%
Commercial Equipment Finance (1) 5.3%
Franchise Finance (1) 5.3%
Commercial Finance 3.4%
Factoring Services 2.8%
Rediscount Finance 1.8% 0.7%
European Financial Services 1.8% 4.4%
Government Finance 1.7%
Inventory Finance 1.0%
Other 0.8%
- -------------------------------------------------------------
100.0% 100.0%
=============================================================
</TABLE>
(1) Excludes assets sold under securitization agreements that are managed
by the Company.
20
<PAGE> 58
THE FINOVA GROUP INC.
Aggregate installments on loans and other financing contracts, direct
financing leases, operating leases, leveraged leases and factored receivables
at December 31, 1994 (excluding repossessed assets of $85,758,000 and estimated
residual values) are due during each of the years ending December 31, 1995 to
1999 and thereafter as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 Thereafter
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Loans and other financing
contracts:
Commercial:
Fixed interest rate $ 209,944 $ 197,825 $ 173,295 $141,158 $129,900 $272,710
Floating interest rate 600,935 371,039 349,562 368,201 151,183 185,457
Real Estate:
Fixed interest rate 55,397 51,055 34,890 30,746 72,306 75,394
Floating interest rate 178,483 213,536 215,154 121,738 91,267 65,127
Operating and direct
financing leases,
primarily at fixed
interest rates 329,110 282,894 219,582 151,842 104,705 161,726
Leveraged leases 4,543 6,828 14,367 10,431 5,783 164,673
- -------------------------------------------------------------------------------------------------------------
$1,378,412 $1,123,177 $1,006,850 $824,116 $555,144 $925,087
=============================================================================================================
</TABLE>
The net investment in leveraged leases at December 31 consisted of the
following:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
1994 1993
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Rentals receivable $1,268,843 $1,377,107
Less principal and interest payable on nonrecourse debt (1,062,218) (1,165,466)
- ------------------------------------------------------------------------------------------------
Net rentals receivable 206,625 211,641
Estimated residual values 306,204 306,894
Less unearned income (225,311) (234,753)
- ------------------------------------------------------------------------------------------------
Investment in leveraged leases 287,518 283,782
Less deferred taxes arising from leveraged leases (226,115) (223,006)
- ------------------------------------------------------------------------------------------------
Net investment in leveraged leases $ 61,403 $ 60,776
================================================================================================
</TABLE>
The components of income from leveraged leases, after the effects of
interest on nonrecourse debt and other related expenses, for the years ended
December 31 were as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
1994 1993 1992
- -----------------------------------------------------------------
<S> <C> <C> <C>
Lease and other income $9,240 $11,376 $9,172
Income tax expense 3,143 8,363 2,757
- -----------------------------------------------------------------
</TABLE>
21
<PAGE> 59
THE FINOVA GROUP INC.
The investment in direct financing leases at December 31 consisted of
the following:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C>
Rentals receivable $885,148 $91,153
Estimated residual values 86,191 23,121
Unearned income (196,505) (42,462)
- -------------------------------------------------------------------------------
Investment in direct financing leases $774,834 $71,812
===============================================================================
</TABLE>
The investment in operating leases at December 31 consisted of the
following:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C>
Cost of assets $526,191 $157,823
Accumulated depreciation (113,409) (10,601)
- -------------------------------------------------------------------------------
Investment in operating leases $412,782 $147,222
===============================================================================
</TABLE>
The Company has a substantial number of loans and leases with payments
that fluctuate with changes in index rates, primarily Prime interest rates and
the London interbank offered rates ("LIBOR"). The investment in loans and
leases with floating interest rates (excluding nonaccruing contracts and
repossessed assets) at December 31 was as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C>
Receivables due on financing transactions $2,928,287 $1,661,602
Less unearned income (65,327) (25,928)
- -------------------------------------------------------------------------------
Investment in loans and leases $2,862,960 $1,635,674
===============================================================================
</TABLE>
Interest earned from financing transactions with floating interest
rates was approximately $269,000,000 in 1994, $154,000,000 in 1993 and
$127,000,000 in 1992. The adjustments, which arise from changes in index
rates, can have a significant effect on interest earned from financing
transactions; however, the effects on interest margins earned and net income
are substantially offset by related interest expense changes on debt
obligations with floating interest rates. The Company's matched funded policy
is more fully described in Note F.
At December 31, 1994, the Company had a committed backlog of new
business of approximately $764,000,000 compared to $420,000,000 at December 31,
1993. The committed backlog includes lines of credit totaling $540,000,000 and
$272,000,000 for December 31, 1994 and 1993, respectively. Historically, the
Company has booked a substantial portion of its backlog, although there can be
no assurance that such trend will continue. Loan commitments and lines of
credit have generally the same credit risk in extending loans to borrowers.
These commitments are subject to the same credit quality and collateral
requirements involved in normal lending transactions. Commitments generally
have a fixed expiration and usually require payment of a fee.
RECEIVABLE TRANSFER AGREEMENTS (SECURITIZATIONS) -- During 1994, the
Company transferred its interest in approximately $125,400,000 of its direct
finance lease portfolio for $135,000,000. These transfers provide limited
recourse for credit losses to the Company
22
<PAGE> 60
THE FINOVA GROUP INC.
and certain of its assets. As of December 31, 1994, $58,540,000 of finance
lease receivables were the sole collateral for certain limited recourse
provisions. In addition to such finance lease receivables, the Company has
recourse exposure at December 31, 1994 limited to $78,846,000. At December 31,
1994, an outstanding allowance for estimated losses under these recourse
provisions of $12,988,000 is included in accounts payable and accrued expenses.
The outstanding gross receivable balance of transferred receivables completed
and assumed in the acquisitions in 1994 was $253,386,000 at December 31, 1994.
The Company services these lease contracts for the transferee and has deferred
a portion of the proceeds to be recognized as service fee income over the term
of the agreements.
NOTE D RESERVE FOR POSSIBLE CREDIT LOSSES
The following is an analysis of the reserve for possible credit losses
for the years ended December 31:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
1994 1993 1992
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of year $ 64,280 $69,291 $87,600
Provision for possible credit losses 16,670 5,706 6,740
Write-offs (35,127) (12,575) (23,661)
Recoveries 1,898 717 749
Other (including addition of TriCon and Ambassador
reserves in 1994) 61,524 1,141 (2,137)
- ------------------------------------------------------------------------------------------------
Balance, end of year $109,245 $64,280 $69,291
================================================================================================
</TABLE>
Additionally, the Company has recorded accrued liabilities of
$12,988,000 that represent an allowance for estimated losses under certain
recourse provisions on $253,386,000 of assets securitized.
23
<PAGE> 61
THE FINOVA GROUP INC.
Write-offs by lines of business experienced by the Company during the
years ended December 31 are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
1994 1993 (1) 1992 (1)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Communications Finance $ 8,300 $ 1,488 $ 1,500
Manufacturer and Dealer Services 7,018
European Financial Services 5,140 5,026 15,838
Corporate Finance 4,233 3,741 1,000
Resort Finance 2,730
Franchise Finance 2,247
Commercial Real Estate Finance 1,461 2,320 4,417
Commercial Equipment Finance 1,257
Factoring Services 1,148
Commercial Finance 774
Inventory Finance 442
Medical Finance 377
Other 906
- ------------------------------------------------------------------------------------
$35,127 $12,575 $23,661
====================================================================================
Write-offs as a percentage of investment in
financing transactions and securitizations 0.59% 0.44% 0.97%
====================================================================================
</TABLE>
(1) The 1993 and 1992 periods exclude line of business write-offs for
acquisitions made subsequent to such dates.
An analysis of nonaccruing contracts and repossessed assets at
December 31 is as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
1994 1993 (1)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Nonaccruing contracts:
Domestic $ 73,938 $ 13,263
Foreign 9,065 12,320
- -----------------------------------------------------------------------------------------------
Total nonaccruing contracts 83,003 25,583
Repossessed assets 85,758 77,024
- -----------------------------------------------------------------------------------------------
Total nonaccruing contracts and repossessed assets $168,761 $102,607
===============================================================================================
Nonaccruing contracts and repossessed assets as a percentage of
investment in financing transactions and securitizations 2.9% 3.6%
===============================================================================================
</TABLE>
(1) The 1993 period excludes nonaccruing and repossessed assets for
acquisitions made subsequent to such dates.
In addition to the repossessed assets included in the above table, the
Company had repossessed assets, with a total carrying amount of $55,106,000 and
$48,956,000 at December 31,
24
<PAGE> 62
THE FINOVA GROUP INC.
1994 and 1993 which earned income of $3,316,000 and $2,700,000 during 1994 and
1993, respectively.
In the normal course of business, the Company has renegotiated and
modified certain contracts with respect to rates and other terms. The Company
had approximately $64,000,000, or 1.1% of ending funds employed and
securitizations in 1994, and $47,000,000, or 1.6% of ending funds employed in
1993, of these rewritten contracts requiring disclosure under the provisions of
SFAS No. 15, "Accounting by Debtors and Creditors for Troubled Debt
Restructurings". These contracts are yielding, on a weighted average basis, a
return of approximately 10.2%.
Had all contracts placed in a nonaccrual status outstanding at
December 31, 1994, 1993 and 1992, remained accruing, interest earned would have
been increased by approximately $14,000,000, $11,000,000 and $12,600,000,
respectively. Income recognized on these accounts was approximately $1,742,000,
$1,732,000 and $589,000 in 1994, 1993 and 1992, respectively.
Included in repossessed assets are in-substance foreclosures of
$35,400,000 and $31,700,000 at December 31, 1994 and 1993, respectively, which
were accounted for in the same manner as collateral that had been formally
repossessed, even though the Company did not hold legal title.
NOTE E DEBT
The Company satisfies its short-term financing requirements from the
issuance of commercial paper supported by bank lines of credit, other bank
loans and public notes. The Company's commercial paper borrowings are
supported by unused long-term revolving bank credit agreements totaling
$2,100,000,000. FINOVA Capital currently maintains a three-year revolving
credit facility with numerous lenders, in the aggregate principal amount of
$1,000,000,000. Under the terms of these agreements, the Company has the
option to periodically select either domestic dollars or Eurodollars as the
basis of borrowings. Interest is based on the lenders' Prime rate for domestic
dollar advances or London interbank offered rates ("LIBOR") for Eurodollar
advances. The agreements also provide for a commitment fee on the unused
credit. Separately, FINOVA Capital also has a 364 day revolving credit
facility with the same lenders in the aggregate principal amount of
$1,000,000,000. In addition, FINOVA Capital has another 364 day facility with
the administrative agent for $100,000,000. The 364 day $1,100,000,000
revolving credit agreements will be subject to renewal in 1995 while the three
year $1,000,000,000 credit facility is subject to renewal in 1997.
25
<PAGE> 63
THE FINOVA GROUP INC.
The following information pertains to all short-term financing,
including bank loans and commercial paper issued by FINOVA Capital for the
years ended December 31:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
1994 1993 1992
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum amount of short-term debt outstanding
during year $2,024,441 $516,386 $504,829
Average short-term debt outstanding during year 1,050,358 336,672 322,176
Weighted average short-term interest rates
at end of year:
Short-term borrowings 6.2% 3.5% 4.1%
Commercial paper* 6.0% 3.6% 4.2%
Weighted average interest rate on short-term debt
outstanding during year* 4.8% 3.5% 4.3%
- ------------------------------------------------------------------------------------------------
</TABLE>
* Exclusive of the cost of maintaining bank lines in support of
outstanding commercial paper and the effects of interest rate
conversion agreements.
Senior debt at December 31 was as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
1994 1993
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial paper and short-term bank loans supported
by unused long-term bank revolving credit agreements,
less unamortized discount $2,024,441 $ 516,386
Medium-term notes due to 2003, 4.5% to 10.2% 1,167,811 751,500
Term loans payable to banks due to 1996, 6.0% to 6.9% 130,000 150,000
Senior notes due to 2002, 6.75% to 16.0%, less
unamortized discount 1,233,013 555,666
Nonrecourse installment notes due to 2002, 10.6% (assets of
$25,648 and $25,613, respectively, pledged as collateral) 18,089 18,944
- -----------------------------------------------------------------------------------------------
Total senior debt $4,573,354 $1,992,496
===============================================================================================
</TABLE>
Subordinated debt outstanding at December 31, 1993, in the amount of
$86,790,000 (14.1%), was repaid in 1994.
Annual maturities of senior debt outstanding at December 31, 1994 due
through June 2003 (excluding the amount supported by the revolving credit
agreements expected to be renewed) approximate $568,767,000 (1995),
$399,116,000 (1996), $358,137,000 (1997), $347,960,000 (1998), $334,324,000
(1999) and $540,609,000 (thereafter).
The agreements pertaining to senior debt and revolving credit
agreements of FINOVA Capital include various restrictive covenants and require
the maintenance of certain defined financial ratios with which FINOVA Capital
has complied. Under one such covenant, dividend payments are limited to 50
percent of accumulated earnings after December 31, 1991. As of December 31,
1994, FINOVA Capital had $24,383,000 of excess accumulated earnings available
for distribution.
Total interest paid is not significantly different from interest
expense.
26
<PAGE> 64
THE FINOVA GROUP INC.
NOTE F DERIVATIVE FINANCIAL INSTRUMENTS
The Company enters into interest rate swaps and interest rate hedge
agreements as part of its interest rate risk management policy of match funding
its assets and liabilities. The derivative instruments utilized are
straightforward and involve little complexity. The Company continually
monitors its position relative to derivatives and utilizes derivative
instruments for non- trading purposes only.
The Company utilizes derivative instruments to minimize its exposure
to fluctuations in interest rates. The Company strives to minimize its overall
debt costs while limiting the short-term variability of interest expense and
funds required for debt service. To achieve this objective, the Company
diversifies its borrowing sources (short- and long-term debt with a fixed or a
variable rate) and maintains a portfolio that is matched funded. The Company's
matched funding policy generally requires that floating-rate assets be financed
with floating-rate liabilities and fixed-rate assets be financed with
fixed-rate liabilities. The Company's matched funding policy requires that the
difference between floating-rate liabilities and floating-rate assets, as
measured as a percent of investment in financing transactions ("funds
employed"), should not vary by more than 3% for any extended period. The
amount of derivatives used is a function of this 3% gap policy with the
maturities of the derivatives being correlated to the maturities of the assets
being financed.
The notional amounts of derivatives do not represent amounts exchanged
by the parties and, thus, are not a measure of FINOVA's exposure through its
use of derivatives. The amounts exchanged are determined by reference to the
notional amounts and the other terms of the derivatives.
Under interest rate swaps, the Company agrees to exchange with the
counterparty, at specified intervals, the payment streams calculated on a
specified notional amount, with at least one stream based on a floating
interest rate. Generic swap notional amounts do not change for the life of
the contract. Amortizing swap notional amounts amortize over the life of the
transaction. Basis swaps involve the exchange of floating-rate indices, such
as the Prime rate, the Commercial Paper Composite rate and LIBOR.
The Company purchased interest rate hedge agreements to reduce the
impact of increases in interest rates on its floating- rate debt. These
agreements effectively lock in a spread of approximately 2.3% between the
Company's borrowing rate, LIBOR, and its lending rate (Prime based). In early
1995, the Company further protected its margins on floating-rate transactions
by entering into basis swaps with a notional amount of $750,000,000 to lock in
the spread between the Company's lending and borrowing rates. With these
agreements, the Company protected its margins on $1,500,000,000 of
floating-rate transactions (or approximately 50% of its floating-rate
liabilities).
The Company's off-balance sheet derivative instruments involve credit
and interest rate risks. The credit risk would be the nonperformance by the
counterparties to the financial instruments. All financial instruments have
been entered into with major financial institutions, which are expected to
fully perform under the terms of the agreements, thereby mitigating the credit
risk from the transactions, although there can be no assurance that any such
institution will perform under its agreement. The Company's derivative policy
stipulates that the maximum exposure to any one
27
<PAGE> 65
THE FINOVA GROUP INC.
counterparty, relative to the derivative products, is limited on a net basis,
to 10% of the Company's outstanding debt at the time of that transaction.
Interest rate risks relate to changes in interest rates and the impact on
earnings. The Company mitigates interest rate risks through its matched
funding policy.
The use of derivatives decreased interest expense by $13,655,000, a
decrease in the aggregate cost of funds of 0.4% in 1994, $25,875,000, a
decrease in the aggregate cost of funds of 1.3% in 1993 and $8,155,000, a
decrease in the aggregate cost of funds of 0.4% in 1992. These reductions in
interest expense from off-balance sheet derivatives effectively alters
on-balance sheet costs and must be viewed as total interest rate management.
At December 31, 1994 and 1993, unamortized premiums amounted to $1,875,000 and
$3,138,000, respectively. There were no deferred gains or losses associated
with derivatives.
The following table provides annual maturities and weighted-average
interest rates for each significant derivative product type. The rates
presented are as of December 31, 1994. To the extent that rates change,
variable interest information will change.
28
<PAGE> 66
THE FINOVA GROUP INC.
DERIVATIVE MATURITIES AND WEIGHTED-AVERAGE INTEREST RATES
(Dollars in Millions)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
December Maturities of Derivative Products
31, ----------------------------------------------------------------
1994 1995 1996 1997 1998 1999 Thereafter
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
RECEIVED FIXED-RATE SWAPS:
Notional value $1,190 $ 40 $ 100 $ 275 $ 325 $ 250 $ 200
Weighted average received rate 6.66% 5.52% 5.34% 6.70% 6.83% 6.82% 7.00%
Weighted average pay rate 6.56% 7.00% 6.50% 6.50% 6.50% 6.50% 6.74%
PAY FIXED-RATE GENERIC SWAPS:
Notional value $ 780 $ 30 $ 325 $ 225 $ 100 $ 50 $ 50
Weighted average receive rate 6.58% 7.00% 6.56% 6.50% 6.75% 6.50% 6.50%
Weighted average pay rate 7.43% 9.05% 6.89% 7.32% 8.37% 7.98% 8.09%
PAY FIXED-RATE AMORTIZING SWAPS:
Notional value $ 242 $ 154 $ 70 $ 18
Weighted average receive rate 6.03% 6.03% 6.03% 6.03%
Weighted average pay rate 5.04% 4.83% 5.20% 6.18%
INTEREST RATE HEDGE AGREEMENTS:
Notional value $ 750 $ 750
Weighted average receive rate 2.50% 2.50%
Weighted average pay rate 2.50% 2.50%
BASIS SWAPS:
Notional value $ 254 $ 126 $ 128
Weighted average receive rate 5.91% 5.74% 6.08%
Weighted average pay rate 6.73% 6.52% 6.93%
TOTAL NOTIONAL VALUE $3,216 $ 350 $ 1,245 $ 518 $ 553 $ 300 $ 250
=================================================================================================================
Total weighted average rates on swaps
Receive rate 5.56% 5.95% 3.99% 6.59% 6.64% 6.77% 6.90%
=================================================================================================================
Pay rate 5.72% 6.05% 4.12% 6.85% 6.94% 6.75% 7.01%
=================================================================================================================
</TABLE>
29
<PAGE> 67
THE FINOVA GROUP INC.
ACTIVITY IN DERIVATIVE PRODUCTS
(Dollars in Millions)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Pay Fixed- Pay Fixed-
Received Rate Rate Interest
Fixed-Rate Generic Amortizing Rate Hedge Basis
Swaps Swaps Swaps Agreements Swaps TOTAL
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1991 $ 50 $ 205 $ $ $ $ 255
Expired (50) (50)
Additions 890 890
- -----------------------------------------------------------------------------------------------------
Balance, December 31, 1992 890 205 1,095
Expired (50) (25) (75)
Additions 300 750 1,050
- -----------------------------------------------------------------------------------------------------
Balance, December 31, 1993 1,140 180 750 2,070
Expired (50) (50) (148) (248)
Additions 100 650 390 254 1,394
- -----------------------------------------------------------------------------------------------------
Balance, December 31, 1994 $1,190 $ 780 $ 242 $ 750 $ 254 $3,216
=====================================================================================================
</TABLE>
NOTE G STOCKHOLDERS' EQUITY
At December 31, 1994 and 1993, The FINOVA Group Inc. had 28,421,703
and 20,371,703 shares of common stock issued, respectively, with 27,676,526 and
20,079,486 shares of common stock outstanding, respectively. Approximately
5,011,000 common shares were reserved for issuance under the 1992 Stock
Incentive Plan at December 31, 1994.
FINOVA has 5,000,000 shares of preferred stock authorized, none of
which was issued at December 31, 1994. The Board of Directors is authorized to
provide for the issuance of shares of preferred stock in series, to establish
the number of shares to be included in each series and to fix the designation,
powers, preferences and rights of the shares of each series. In connection
with the Company's stock incentive plan, 250,000 shares of preferred stock are
reserved for issuance of stock options.
NOTE H STOCK OPTIONS
During 1992, the Board of Directors of the Company adopted The FINOVA
Group Inc. 1992 Stock Incentive Plan (the "Plan") for the grant of options,
restricted stock and stock appreciation
30
<PAGE> 68
THE FINOVA GROUP INC.
rights to officers, directors and certain key employees. In connection with
the Spin-Off, shares of common stock were made available to provide new
options, restricted shares of common stock and stock appreciation rights to
employees of the Company or its subsidiaries in exchange for awards outstanding
under certain stock option and incentive plans of Dial. Each option was
adjusted so that the aggregate exercise price and the aggregate spread before
the Spin-Off was preserved at the time of the Spin-Off. For each share of Dial
restricted stock held by an employee, such employee received replacement shares
of FINOVA restricted stock with a market value intended to compensate for the
Spin-Off.
The Plan provides for the following types of awards: (a) stock
options (both incentive stock options and non-qualified stock options), (b)
stock appreciation rights, and (c) restricted stock. The Plan generally
authorizes the issuance of awards for up to 2-1/2 percent of the total number
of shares of common stock outstanding as of the first day of each year, with
some modifications. In addition, 250,000 shares of preferred stock are
reserved for awards under the Plan.
The stock options outstanding at December 31, 1994 were granted for
terms of ten years and generally become exercisable over two to three years
from the date of grant. Stock options are exercisable based on the market
value at the date of grant, unless a higher exercise price was established,
which has been the case for multi-year grants.
Information with respect to options granted and exercised from the
date of Spin-off to December 31, 1994 is as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Average Option
Shares Price Per Share
- -----------------------------------------------------------------------
<S> <C> <C>
Granted during 1992 (1) 892,908 $17.01
Exercised (41,235) 14.00
Canceled (23,590) 18.34
- -----------------------------------------------------------------------
Options outstanding at December 31, 1992 828,083 17.12
Granted 454,450 31.17
Exercised (166,839) 16.10
Canceled (103,580) 22.61
- -----------------------------------------------------------------------
Options outstanding at December 31, 1993 1,012,114 23.04
Granted 635,766 36.18
Exercised (66,418) 17.29
Canceled (119,857) 33.54
- -----------------------------------------------------------------------
Options outstanding at December 31, 1994 1,461,605 $28.12
=======================================================================
</TABLE>
(1) Includes 526,658 shares granted in exchange for awards outstanding
under certain stock option and incentive plans of Dial at an average
exercise price of $14.35.
31
<PAGE> 69
THE FINOVA GROUP INC.
At December 31, 1994, stock options with respect to 1,461,605 common
shares were outstanding at exercise prices ranging from $12.70 to $41.65 per
share, of which options to purchase 576,609 common shares were exercisable at
an average price of $19.24 per share.
Since the Spin-Off, the Board of Directors has granted only
performance based restricted stock, excluding the restricted stock converted
from previous Dial awards. Performance based restricted stock awards (104,820
shares in 1994, 38,629 in 1993 and 146,136 in 1992, excluding 64,586 shares
converted in the Spin-Off) vest generally over periods not exceeding five years
from the date of grant. The holder of the performance based restricted stock,
like restricted stock, has the right to receive dividends and vote the target
number of shares but may not sell, assign, transfer, pledge or otherwise
encumber the performance based restricted stock. All performance based
restricted stock grants since the Spin-Off were based on Company share
performance and may result in greater or lesser numbers of shares finally being
delivered to the holder, depending on that performance. The target number of
shares are deemed received on the grant date. Additional vestings over the
target are reported as new grants as of the vesting dates. Vestings below
target would be reported as a forfeiture of amounts below the target number of
shares.
NOTE I INCOME TAXES
Prior to the Spin-Off, Dial credited or charged the Company an amount
equal to the tax reductions realized or tax payments made by Dial as a result
of including the Company's tax results and credits in Dial's consolidated
federal and other applicable income tax returns. In all other respects, the
Company's tax provisions have been computed on a separate return basis.
The consolidated provision (benefit) for income taxes consist of the
following for the years ended December 31:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
1994 1993 1992
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
United States:
Federal $ 33,107 $ 9,783 $ 16,265
State 6,436 1,002 2,069
Foreign (156) 346
- ---------------------------------------------------------------------------
39,543 10,629 18,680
- ---------------------------------------------------------------------------
Deferred:
United States 10,003 17,947 (2,377)
Foreign (88) (2,460)
- ---------------------------------------------------------------------------
9,915 17,947 (4,837)
- ---------------------------------------------------------------------------
Provision for income taxes $ 49,458 $ 28,576 $ 13,843
===========================================================================
</TABLE>
Income taxes paid in 1994, 1993 and 1992 amounted to approximately
$41,213,000, $10,511,000 and $19,096,000, respectively.
32
<PAGE> 70
THE FINOVA GROUP INC.
The significant components of deferred tax liabilities and deferred
tax assets at December 31, 1994 and 1993 consisted of the following:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
1994 1993
- --------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Deferred income from leveraged leases $226,115 $223,006
Deferred income from lease financing 32,833 35,950
Other 8,353 622
- --------------------------------------------------------------------------------------
Gross deferred tax liability 267,301 259,578
- --------------------------------------------------------------------------------------
Deferred tax assets:
Reserve for possible credit losses 29,363 27,272
Investment in foreign subsidiary carrying value difference 23,193 23,193
Accrued expenses 11,400 15,121
Alternative minimum tax credit carryforward 6,183 6,291
Other 8,275 8,729
- --------------------------------------------------------------------------------------
Gross deferred tax asset 78,414 80,606
- --------------------------------------------------------------------------------------
Net deferred tax liability $188,887 $178,972
======================================================================================
</TABLE>
The federal statutory income tax rate is reconciled to the effective
income tax rate as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
1994 1993 1992
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal statutory income tax rate 35.0% 35.0% 34.0%
State income taxes 5.1% 3.4% 2.7%
Foreign tax effects 1.2% (2.0%) (2.4%)
Municipal income (1.2%)
Recognition of tax benefit on refinancing charges
accrued in 1991 (6.2%)
Other (0.1%) (0.7%) (0.7%)
- -------------------------------------------------------------------------------------
Current provision for income taxes 40.0% 35.7% 27.4%
Adjustments to deferred taxes 7.3%
- -------------------------------------------------------------------------------------
Provision for income taxes 40.0% 43.0% 27.4%
=====================================================================================
</TABLE>
33
<PAGE> 71
THE FINOVA GROUP INC.
NOTE J PENSION AND OTHER BENEFITS
PENSION BENEFITS
Net periodic pension cost (income) for the years ended December 31,
included the following components:
<TABLE>
<CAPTION>
United States Foreign
- --------------------------------------------------------------------------------------------------------------
1994 1993 1992 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Service cost benefits earned during period $1,508 $ 813 $ 738 $ 66 $ 215 $ 341
Interest cost on projected benefit obligation 1,217 1,063 878 308 293 345
Actual return on plan assets 78 (2,306) (1,781) 242 (736) (382)
Net amortization and deferral (1,538) 967 553 (544) 459 79
- --------------------------------------------------------------------------------------------------------------
Periodic pension cost 1,265 537 388 72 231 383
Curtailment loss (gain) 135 (777) 21
- --------------------------------------------------------------------------------------------------------------
Net periodic pension cost (income) $1,400 $(240) $ 388 $ 93 $ 231 $ 383
==============================================================================================================
</TABLE>
Assumptions regarding the determination of net periodic pension cost
(income) for the years ended December 31, were:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
United States Foreign
- -------------------------------------------------------------------------------------------------------------
1994 1993 1992 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Discount rate for obligation 7.75% 8.50% 9.00% 8.00% 9.00% 9.00%
Rate of increase in compensation levels 4.25% 5.50% 6.00% 6.00% 8.00% 8.00%
Long-term rate of return on assets 9.50% 9.50% 9.50% 8.00% 9.00% 9.00%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
The following table indicates the plans' funded status and amounts
recognized in the Company's consolidated balance sheet at December 31, 1994 and
1993:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
United States Foreign
- -------------------------------------------------------------------------------------------------------------
1994 1993 1994 1993
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligations $13,200 $12,000 $3,785 $3,440
=============================================================================================================
Accumulated benefit obligations $13,800 $12,600 $3,785 $3,440
=============================================================================================================
Projected benefit obligation $14,800 $14,400 $3,785 $3,755
Market value of plan assets, primarily equity and fixed
income securities 17,134 17,606 3,785 3,781
- -------------------------------------------------------------------------------------------------------------
Plan assets over projected benefit obligation $ 2,334 $ 3,206 $ -- $ 26
Unrecognized transition asset (390) (451) (105) (109)
Unrecognized prior service cost reduction (1,088) 404 72
Unrecognized net loss 2,707 1,804 105 101
- -------------------------------------------------------------------------------------------------------------
Prepaid pension costs $ 3,563 $ 4,963 $ -- $ 90
=============================================================================================================
</TABLE>
34
<PAGE> 72
THE FINOVA GROUP INC.
Assumptions regarding the funded status of pension plans as of
December 31, 1994 and 1993 are:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
United States Foreign
- -------------------------------------------------------------------------------------------------------------
1994 1993 1994 1993
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Discount rate for obligation 8.50% 7.75% 8.50% 8.00%
Rate of increase in compensation levels 5.00% 4.25% -- 6.00%
Long-term rate of return on assets 9.50% 9.50% -- 9.00%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
There are restrictions on the use of excess pension plan assets in the
event of a defined change in control of the Company.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
Effective January 1, 1993, the Company adopted the provisions of SFAS
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" ("OPEB"), which requires the accrual of retiree benefits during the
years the employees provide services. OPEB requires the recognition of a
transition obligation that represents the aggregate amount that would have
accrued in the years prior to adoption of OPEB had the standard been in effect
for those years. The Company elected to accrue the transition obligation over
20 years. The adoption of SFAS No. 106 has no cash impact because the plans
are not funded and the pattern of benefit payments did not change.
Net periodic postretirement benefit cost for the year ended December
31, 1994 and 1993 included the following components:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
1994 1993
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Service cost benefits earned during period $ 159 $ 55
Interest cost on accumulated postretirement benefit obligation 244 143
Net amortization and deferral 140 85
- ----------------------------------------------------------------------------------------
Net periodic postretirement benefit cost $ 543 $ 283
========================================================================================
</TABLE>
Assumptions regarding the determination of net periodic postretirement
benefit costs at December 31, 1994 and 1993 were:
<TABLE>
<CAPTION>
<S> <C> <C>
- ------------------------------------------------------------------------------------------
1994 1993
- ------------------------------------------------------------------------------------------
Discount rate for obligation 7.75% 8.50%
Rate of increase in compensation levels 4.25% 5.50%
Rate of increase in health care costs (1) 12.25% 14.00%
==========================================================================================
</TABLE>
(1) Rate of increase in health care costs was 12.25% in 1994, scaled down
to 6.25% by 2000 and thereafter.
35
<PAGE> 73
THE FINOVA GROUP INC.
The following table indicates the amounts recognized in the Company's
consolidated balance sheet at December 31, 1994 and 1993:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
1994 1993
- -----------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ 1,257 $ 1,680
Actives eligible for full benefits 183 230
Other actives 2,125 370
- -----------------------------------------------------------------------------
Total accumulated postretirement benefit obligation 3,565 2,280
Unrecognized transition obligation (1,523) (1,607)
Unrecognized prior service cost (1,547)
Unrecognized net gain (loss) 264 (437)
- -----------------------------------------------------------------------------
Accrued postretirement benefit cost $ 759 $ 236
=============================================================================
</TABLE>
Assumptions regarding the accrued postretirement benefit cost at
December 31, 1994 and 1993 were:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C>
Discount rate for obligation 8.50% 7.75%
Rate of increase in compensation levels 5.00% 4.25%
Rate of increase in health care costs (1) 12.25% 13.25%
- ---------------------------------------------------------------------------
</TABLE>
(1) Rate of increase in health care costs was 12.25% in 1994, scaled down
to 6.25% by 2000 and thereafter.
A one percentage point increase in the assumed health care cost trend
rate for each year would increase the accumulated postretirement benefit
obligation as of December 31, 1994 by approximately 5% and the ongoing annual
expense by approximately 3%.
NOTE K TRANSACTIONS WITH DIAL
Pursuant to the Spin-Off, the Company and Dial entered into several
agreements, including the Distribution Agreement, Tax Sharing Agreement,
Sublease Agreement, Interim Services Agreement and Trademark Assignment and
Agreement. These agreements do not result in significant additional expenses
over comparable third party services.
The Company leases its corporate office facilities from Dial under an
agreement which expires March 31, 2001. Annual rentals under the lease are
approximately $1,616,000 to 1996 and $1,806,000 thereafter.
36
<PAGE> 74
THE FINOVA GROUP INC.
NOTE L LITIGATION AND CLAIMS
The Company is party either as plaintiff or defendant to various
actions, proceedings and pending claims, including legal actions, certain of
which involve claims for compensatory, punitive or other damages in significant
amounts. Such litigation, in part, often results from the Company's attempts
to enforce its lending agreements against borrowers and other parties to such
transactions. Litigation is subject to many uncertainties and it is possible
that some of the legal actions, proceedings or claims referred to above could
be decided against the Company. Although the ultimate amount for which the
Company may be held liable is not ascertainable, the Company believes that any
resulting liability should not materially affect the Company's financial
position or results of operations.
NOTE M FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
"Disclosures About Fair Value of Financial Instruments." The estimated fair
value amounts have been determined by the Company using available market
information and valuation methodologies described below. However, considerable
judgment is required in interpreting market data to develop the estimates of
fair value. Accordingly, the estimates presented herein may not be indicative
of the amounts that the Company could realize in a current market exchange.
The use of different market assumptions or valuation methodologies may have a
material effect on the estimated fair value amounts.
The carrying amounts and estimated fair values of the Company's
financial instruments are as follows for the years ended December 31:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
1994 1993
- ------------------------------------------------------------------------------------------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance Sheet -
Financial Instruments:
Assets:
Loans and other financing contracts $3,810,781 $3,829,881 $2,192,192 $2,172,154
Liabilities:
Senior debt 4,573,354 4,510,043 1,992,496 2,149,387
Subordinated debt -- -- 86,790 88,390
Off-Balance Sheet -
Financial Instruments:
Interest rate swaps -- (47,937) -- 37,202
Interest rate hedge agreements -- (4,049) -- (841)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
The carrying values of cash and cash equivalents, factored
receivables, accounts payable and accrued expenses, due to factored clients and
interest payable approximate fair values due to
37
<PAGE> 75
THE FINOVA GROUP INC.
the short-term maturities of these instruments.
The methods and assumptions used to estimate the fair values of other
financial instruments are summarized as follows:
LOANS AND OTHER FINANCING CONTRACTS:
The fair value of loans and other financing contracts was
estimated by discounting expected cash flows using the current rates
at which loans of similar credit quality, size and remaining maturity
would be made as of December 31, 1994 and 1993. Management believes
that the risk factor embedded in the entry-value interest rates
applicable to performing loans for which there are no known credit
concerns results in a fair valuation of such loans on an entry value
basis. As of December 31, 1994 and 1993, the fair value of
nonaccruing contracts with a carrying amount of $83,003,000 and
$25,583,000, respectively, was not estimated because it is not
practicable to reasonably assess the credit adjustment that would be
applied in the marketplace for such loans. As of December 31, 1994
and 1993, the carrying amount of loans and other financing contracts
excludes repossessed assets with a total carrying amount of
$140,864,000 and $125,980,000, respectively.
SENIOR AND SUBORDINATED DEBT:
The fair value of senior and subordinated debt was estimated
by discounting future cash flows using rates currently available for
debt of similar terms and remaining maturities. The carrying values
of commercial paper and borrowings under revolving credit facilities,
if any, were assumed to approximate fair values due to their short
maturities.
INTEREST RATE SWAPS:
The fair values of interest rate swaps is based on quoted
market prices obtained from participating banks and dealers for
transactions of similar remaining duration.
INTEREST RATE HEDGE AGREEMENTS:
The fair values of interest rate hedge agreements is
based on quoted market prices obtained from participating banks and
dealers for transactions of similar remaining duration.
The fair value estimates presented herein were based on information
available as of December 31, 1994 and 1993. Although management is not aware
of any factors that would significantly affect the estimated fair values, such
values have not been updated since December 31, 1994 and 1993; therefore,
current estimates of fair value may differ significantly from the amounts
presented herein.
NOTE N SELLING, ADMINISTRATIVE AND OTHER OPERATING EXPENSES:
The following represents a summary of the major components of selling,
administrative and other operating expenses for the three years ended December
31:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
1994 1993 1992
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Salaries and employee benefits $ 63,891 $29,502 $27,247
Problem account costs 13,505 11,822 7,642
Depreciation and amortization 9,733 2,802 1,970
Professional services 7,357 2,201 2,868
Occupancy expense 6,124 4,160 4,494
Travel and entertainment 6,099 2,182 1,661
Other 6,309 5,489 4,846
- --------------------------------------------------------------------------
$113,018 $58,158 $50,728
==========================================================================
</TABLE>
38
<PAGE> 76
THE FINOVA GROUP INC.
NOTE O PURCHASE OF AMBASSADOR FACTORS AND TRICON CAPITAL CORPORATION.
On February 14, 1994, FINOVA Capital acquired Ambassador, which
represented Fleet Financial Group, Inc.'s ("Fleet") factoring and asset based
lending subsidiary. The cash purchase price of the acquisition was
$246,285,000, which included repayment of $170,000,000 intercompany balance due
from Ambassador to Fleet. In addition, FINOVA Capital assumed $101,471,000 due
to factored clients, $5,851,000 of accrued liabilities and $10,987,000 of
additional liabilities and transaction costs. The acquisition has been
accounted for as a purchase and created approximately $40,800,000 of goodwill,
which is being amortized on a straight line basis over 20 years. The
amortization of goodwill is tax deductible.
The acquisition was financed with proceeds received from the sale of
FINOVA's discontinued mortgage insurance subsidiary and cash generated from
operations. FINOVA, simultaneous with the acquisition, increased its
investment in FINOVA Capital by contributing $40,000,000 of intercompany loans
as additional paid in capital of FINOVA Capital.
On April 30, 1994, FINOVA Capital acquired all of the stock of TriCon
from Bell Atlantic Corporation ("Bell Atlantic"), in an all-cash transaction.
The cash purchase price of the acquisition was $344,212,000. In addition,
FINOVA Capital assumed outstanding indebtedness and liabilities of TriCon
totaling $1,500,650,000 and incurred additional liabilities and acquisition
costs of $41,301,000. The acquisition has been accounted for as a purchase and
created approximately $102,000,000 of goodwill, which is being amortized on a
straight line basis over 20 years. The amortization of goodwill is tax
deductible.
The cash purchase price was financed initially with the proceeds from
the issuance of $300,000,000 of debt and the remainder with internally
generated funds. A portion of the interim debt was replaced with the net
proceeds from a public offering completed in May 1994 of 8,050,000 shares of
the Company's common stock.
The following Pro Forma Statements of Consolidated Income (unaudited)
for the years ended December 31, 1994 and 1993 have been prepared to reflect
net income as adjusted to reflect the acquisitions of Ambassador and TriCon as
if such acquisitions had occurred on January 1, 1994 and 1993, respectively,
and give effect to the Offering as of such dates. The Pro Forma Statements of
Consolidated Income are unaudited and are not necessarily indicative of the
results that would have occurred if the acquisitions had been consummated as of
January 1, 1994 or January 1, 1993, nor are they necessarily indicative of the
results of future operations.
39
<PAGE> 77
THE FINOVA GROUP INC.
PRO FORMA STATEMENT OF CONSOLIDATED INCOME
YEAR ENDED DECEMBER 31, 1994
(Dollars in Thousands, except per share data)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Historical ProForma Adjustments(1)
- ---------------------------------------------------------------------------------------------------------------------------------
TriCon
Ambassador January
Company 1994 thru April Ambassador TriCon Pro
1994 Forma
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest earned from financing transactions $ 503,351 $ 3,072 $ 74,263 $ $(3,158) (7) $ 577,528
Interest expense and depreciation 258,937 563 37,711 271 (2) 1,538 (9) 299,020
- ---------------------------------------------------------------------------------------------------------------------------------
Interest margins earned 244,414 2,509 36,552 (271) (4,696) 278,508
Provision for possible credit losses 16,670 500 7,749 24,919
- ---------------------------------------------------------------------------------------------------------------------------------
Net interest margins earned 227,744 2,009 28,803 (271) (4,696) 253,589
Gains on securitizations and sale of assets 9,045 1,303 10,348
- ---------------------------------------------------------------------------------------------------------------------------------
236,789 2,009 30,106 (271) (4,696) 263,937
Selling, administrative and other operating 113,018 634 18,198 249 (3) 1,700 (10) 134,135
expenses 83 (4) 253 (8)
- ---------------------------------------------------------------------------------------------------------------------------------
123,771 1,375 11,908 (603) (6,649) 129,802
Income taxes 49,458 649 4,059 (241) (5) (2,660) (11) 51,166
(99) (6)
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 74,313 $ 726 $ 7,849 $ (263) $(3,989) $ 78,636
=================================================================================================================================
Earnings per common share (13) $ 2.94 $ 2.76
=================================================================================================================================
Average outstanding common and equivalent
shares (13) 25,307,000 28,461,000
=================================================================================================================================
</TABLE>
40
<PAGE> 78
THE FINOVA GROUP INC.
PRO FORMA STATEMENT OF CONSOLIDATED INCOME
YEAR ENDED DECEMBER 31, 1993
(Dollars in Thousands, except per share data)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Historical Pro Forma Adjustments
- -------------------------------------------------------------------------------------------------------------------------------
Company Ambassador TriCon Ambassador TriCon ProForma
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest earned from financing transactions $ 255,216 $ 35,235 $ 245,300 $ $ (7,667) (7) $ 529,584
1,500 (8)
Interest expense and depreciation 130,369 5,780 121,793 4,226 (2) 4,613 (9) 266,781
- -------------------------------------------------------------------------------------------------------------------------------
Interest margins earned 124,847 29,455 123,507 (4,226) (10,780) 262,803
Provision for possible credit losses 5,706 7,177 21,634 34,517
- -------------------------------------------------------------------------------------------------------------------------------
Net interest margins earned 119,141 22,278 101,873 (4,226) (10,780) 228,286
Gains on sale of assets 5,439 5,439
- -------------------------------------------------------------------------------------------------------------------------------
124,580 22,278 101,873 (4,226) (10,780) 233,725
Selling, administrative and other operating
expenses 58,158 8,125 48,128 2,990 (3) 5,100 (10) 124,260
1,000 (4) 759 (8)
- -------------------------------------------------------------------------------------------------------------------------------
66,422 14,153 53,745 (8,216) (16,639) 109,465
Income taxes 28,576 6,481 22,164 (3,286) (5) (6,656) (11) 43,215
(820) (6) (3,244) (12)
- -------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 37,846 7,672 31,581 (4,110) (6,739) 66,250
Loss from discontinued operations (499) (499)
Cumulative effect of changes in accounting
principles 480 5,530 6,010
- -------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 37,347 $ 8,152 $ 37,111 $ (4,110) $ (6,739) $ 71,761
===============================================================================================================================
Income from continuing operations after
preferred dividends per common share(13) $ 1.80 $ 2.29
===============================================================================================================================
Earnings per common share (13) $ 1.77 $ 2.48
===============================================================================================================================
Average outstanding and equivalent share(13) 20,332,000 28,382,000
===============================================================================================================================
</TABLE>
41
<PAGE> 79
THE FINOVA GROUP INC.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(1) Pro forma adjustments included in the Pro Forma Statement of
Consolidated Income for the year ended December 31, 1994 related to
the acquisitions of Ambassador and TriCon present the effects of the
one month and four months, respectively, not included in the Company's
historical financial statements.
ACQUISITION OF AMBASSADOR
(2) To record the estimated interest expense ($271,000 - 1994; $4,226,000
- 1993) arising from the debt incurred to fund the acquisition and the
repayment of the intercompany payable due to Fleet.
(3) To record tax deductible amortization of goodwill ($249,000 - 1994;
$2,990,000 - 1993) based on an amortization period of twenty years and
amortization of the covenant not to compete over one year.
(4) To record administrative expenses for additional employees and general
overhead ($83,000 - 1994; $1,000,000 - 1993).
(5) To record the income tax effect ($241,000 - 1994; $3,286,000 - 1993)
of Notes (2), (3) and (4) at the Company's effective incremental
income tax rate of 40%.
(6) To adjust income taxes for the lower state income tax rate applicable
to the Company ($99,000 - 1994; $820,000 - 1993).
ACQUISITION OF TRICON
(7) To reduce interest earned from financing transactions for the income
recorded on assets not purchased by the Company in 1994 and 1993
($3,158,000 - 1994; $7,667,000 - 1993).
(8) To reflect base fees ($1,500,000 - 1993) and incremental costs
($253,000 - 1994; $759,000 - 1993) related to an agreement to manage
leveraged leases for Bell Atlantic by TriCon.
(9) To record interest expense ($1,538,000 - 1994; $4,613,000 - 1993)
resulting from the additional debt issued to purchase TriCon and
certain debt to Bell Atlantic incurred to fund a deferred tax payment
and dividends, reduced by the interest savings applicable to the debt
not transferred in the TriCon acquisition.
(10) To record tax deductible amortization of goodwill ($1,700,000 - 1994;
$5,100,000 - 1993) based on an amortization period of twenty years.
(11) To record the income tax effect ($2,660,000 - 1994; $6,656,000 - 1993)
of Notes (7) through (10) at the Company's effective incremental
income tax rate of 40%.
(12) To reduce TriCon's income taxes for the effect of increases in income
tax rates for 1993 (principally the increase in the federal tax rate)
due to the deferred tax payment and the new tax basis in assets at the
beginning of the pro forma period ($3,244,000).
(13) Pro forma per share amounts are calculated assuming the 8,050,000
shares of the Company's common stock were issued at the beginning of
the respective periods.
42
<PAGE> 80
THE FINOVA GROUP INC.
SUPPLEMENTAL SELECTED FINANCIAL DATA
CONDENSED QUARTERLY RESULTS (UNAUDITED)
(Dollars in Thousands)
The following represents the condensed quarterly results for the two
years ended December 31, 1994:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest earned from financing transactions:
1994 $73,961 $121,891 $147,649 $159,850
1993 59,514 63,948 64,944 66,810
- ---------------------------------------------------------------------------------------------------
Interest expense:
1994 33,133 53,648 65,881 69,538
1993 30,568 31,423 30,788 31,074
- ---------------------------------------------------------------------------------------------------
Gains on securitizations and sale of assets:
1994 3 4,500 1,169 3,373
1993 2,061 179 --- 3,199
- ---------------------------------------------------------------------------------------------------
Non-interest expenses (includes provision for
possible credit losses):
1994 22,510 42,526 45,813 55,576
1993 17,591 16,614 15,883 20,292
- ---------------------------------------------------------------------------------------------------
Income from continuing operations:
1994 11,389 17,305 22,257 23,362
1993 8,545 10,323 6,750 (1) 12,228
- ---------------------------------------------------------------------------------------------------
Income (loss) from discontinued operations:
1993 1,338 2,870 --- (4,707)
- ---------------------------------------------------------------------------------------------------
Net income:
1994 11,389 17,305 22,257 23,362
1993 9,883 13,193 6,750 (1) 7,521
===================================================================================================
</TABLE>
(1) Income from continuing operations and net income for the third quarter
of 1993 included an adjustment of $4,857,000 representing the effect
of federal and state income tax rate increases applicable to deferred
income taxes generated by the Company's leveraged lease portfolio.
43
<PAGE> 81
THE FINOVA GROUP INC.
AVERAGE BALANCES/INTEREST MARGIN/AVERAGE ANNUAL RATES (UNAUDITED)
(Dollars in Thousands)
The following represents the breakdown of the Company's average
balance sheet, interest margins and average annual rates for the years ended
December 31, 1994 and 1993:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
December 31, 1994 (1) 1993
- -----------------------------------------------------------------------------------------------------------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents $ 28,886 $ $ 9,566 $
Investment in financing transactions 4,446,745 466,614 11.5% (2) 2,637,547 248,700 10.7% (2)
Less reserve (97,704) (66,786)
- -----------------------------------------------------------------------------------------------------------------------------------
Investment in financing transactions - net 4,349,041 2,570,761
Investment in and advances to Verex Corporation 110,656
Other assets and deferred charges 183,069 47,012
- -----------------------------------------------------------------------------------------------------------------------------------
$4,560,996 $2,737,995
===================================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Other liabilities $ 235,221 $ 73,235
Senior and subordinated debt 3,468,498 222,200 6.4% 1,980,562 123,853 6.3%
Deferred income taxes 190,710 175,850
- -----------------------------------------------------------------------------------------------------------------------------------
3,894,429 2,229,647
Redeemable preferred stock 12,500
Stockholders' equity 666,567 495,848
- -----------------------------------------------------------------------------------------------------------------------------------
$4,560,996 $2,737,995
===================================================================================================================================
Interest income/average earning assets (2) 466,614 11.5% 248,700 10.7%
Interest expense/average earning assets (2) (3) 222,200 5.5% 123,853 5.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Interest margins earned (3) $244,414 6.0% $124,847 5.4%
===================================================================================================================================
</TABLE>
(1) Includes financial results from the acquisitions of Ambassador (February
14, 1994) and TriCon (April 30, 1994).
(2) Average earning assets ($4,064,971 and $2,321,359 for 1994 and 1993,
respectively) are net of average deferred taxes on leveraged leases and
average nonaccruing assets.
(3) For the year ended December 31, 1994, excluding the impact of derivatives,
interest expense would have been $235,855 or 5.8% of average earning
assets and interest margins earned would have been $230,759 or 5.7% of
average earning assets. For the year ended December 31, 1993, excluding
the impact of derivatives, interest expense would have been $149,728 or
6.5% of average earning assets and interest margins earned would have
been $98,972 or 4.3% of average earning assets.
44
<PAGE> 82
THE FINOVA GROUP INC.
COMMISSION FILE NUMBER 1-11011
EXHIBIT INDEX
DECEMBER 31, 1994 FORM 10-K
<TABLE>
<CAPTION>
Exhibit No. Description
---------- -----------
<S> <C>
(3.A) Certificate of Incorporation, as amended through the date of this
filing.*
(3.B) By-Laws, as amended through the date of this filing.*
(4.A) Instruments with respect to issues of long-term debt have not been
filed as exhibits to this Annual Report on Form 10-K if the
authorized principal amount of any one of such issues does not
exceed 10% of total assets of the Company and its subsidiaries on a
consolidated basis. The Company agrees to furnish a copy of each
such instrument to the Securities and Exchange Commission upon
request.
(4.B) Form of Common Stock Certificate of the Company*.
(4.C) Relevant portions of the Company's Certificate of Incorporation and
Bylaws included in Exhibits 3.A and 3.B above, respectively, are
hereby incorporated by reference.
(4.D) Rights Agreement dated as of February 15, 1992 between the Company
and the Rights Agent named therein (incorporated by reference from
the Company's Registration Statement on Form S-1, SEC File No.
33-45452 (the "Registration Statement"), Annex V to Prospectus and
Exhibit 4.1).
(4.E) Indenture dated as of November 1, 1990 between FINOVA Capital and
the Trustee named therein (incorporated by reference from Greyhound
Financial Corporation's Registration Statement on Form S-3,
Registration No. 33-37743, Exhibit 4).
(4.F) Fourth Supplemental Indenture dated as of April 17, 1992 between
FINOVA Capital and the Trustee named therein, supplementing the
Indenture referenced in Exhibit 4.E above, is hereby incorporated by
reference from The FINOVA Group Inc.'s Annual Report on Form 10-K
for the year 1992 (the "1992 10-K"), Exhibit 4.F.
(4.G) Form of Indenture dated as of September 1, 1992 between FINOVA
Capital and the Trustee names therein (incorporated by reference
from the Greyhound Financial Corporation Registration Statement on
Form S-3, Registration No. 33-51216, Exhibit 4).
(4.H) 1992 Stock Incentive Plan of the Company as amended through the date
hereof, with a proposed amendment thereto incorporated from the
Proxy Statement.*+
</TABLE>
<PAGE> 83
<TABLE>
<CAPTION>
Exhibit No. Description
---------- -----------
<S> <C>
(10.A) Sixth Amendment and Restatement dated as of May 16, 1994 of the
Credit Agreement dated as of May 31, 1976 among FINOVA Capital and
the lender parties thereto, and Bank of America National Trust and
Savings Association, Bank of Montreal, Chemical Bank, Citibank,
N.A. and National Westminster Bank USA, as agents (the "Agents")
and Citibank, N.A., as Administrative Agent (incorporated by
reference from the Corporation's Current Report on Form 8-K dated
May 23, 1994, Exhibit 10.1).
(10.A.1) First Amendment dated as of September 30, 1994, to the Sixth
Amendment and Restatement, noted in 10.A above.*
(10.B) Credit Agreement (Short-Term Facility) dated as of May 16, 1994
among FINOVA Capital, the Lender parties thereto, the Agents and
Citibank, N.A., as Administrative Agent (incorporated by reference
from the Company's Report on Form 8-K dated May 23, 1994, Exhibit
10.2).
(10.B.1) First Amendment dated as of September 30, 1994 to the Credit
Agreement noted in 10.B above.*
(10.C.1) The Company's Executive Severance Plan for Tier 1 Employees.*+
(10.C.2) The Company's Executive Severance Plan for Tier 2 Employees.*+
(10.D) The Company's Management Incentive Plan.*+
(10.E) The Company's Performance Share Incentive Plan.*+
(10.F) Employment Agreement with Samuel L. Eichenfield, dated March 16,
1992, is hereby incorporated by reference from the 1992 10-K,
Exhibit 10.F.
(10.G) Employment Agreement with William J. Hallinan, dated February 25,
1992, is hereby incorporated by reference from the 1992 10-K,
Exhibit 10.I.+
(10.H) Employment Agreement with Thomas C. Parrinello, dated February 14,
1992.*+
(10.I.1) Form of Resolutions of the Company's Board of Directors (adopted on
December 5, 1994) amending the Company's Retirement Income, Capital
Accumulation, Employees' Stock Ownership and Supplemental Pension
Plans.*+
(10.I.2) Form of Resolutions of the Company's Board of Directors (adopted on
February 9, 1995) amending the names of the Company's various
benefit plans.*+
</TABLE>
<PAGE> 84
<TABLE>
<CAPTION>
Exhibit No. Description
--------- -----------
<S> <C>
(10.J) The Company's Retirement Income Plan.*+
(10.K) The Company's Supplemental Pension Plan.*+
(10.L) The Company's Employee Stock Ownership Plan and Trust.*+
(10.M) The Company's Capital Accumulation Plan.*+
(10.N) The Company's Directors Deferred Compensation Plan, is hereby
incorporated by reference from the 1992 10-K, Exhibit 10.O.+
(10.O) Form of the Company's 1992 Stock Incentive Plan Nonqualified Stock
Option Agreement (for exempt employees) (for August 25, 1992 and
subsequent grants through August 10, 1994) (various prices) is
hereby incorporated by reference from the 1992 10-K, Exhibit
10.FF.+
(10.P) Form of the Company's 1992 Stock Incentive Plan Nonqualified Stock
Option Agreement (for nonexempt employees) (for August 25, 1992 and
subsequent grants through August 10, 1994) (various grants) is
hereby incorporated by reference from the 1992 10-K, Exhibit
10.GG.
(10.Q) A description of the Company's policies regarding compensation of
directors is incorporated from the Proxy Statement.+
(10.R) The Company's 1992 Deferred Compensation Plan is hereby
incorporated by reference from the 1993 10-K, Exhibit 10.II.+
(10.S) Interim Services Agreement dated January 28, 1992 among the
Company, The Dial Corp and others, is hereby incorporated by
reference from the 1992 10-K, Exhibit 10.JJ.
(10.T) Tax Sharing Agreement dated February 19, 1992 among the Company,
The Dial Corp and others, is hereby incorporated by reference from
the 1992 10-K, Exhibit 10.KK.
(10.U) Certificate of Designations of Series A Redeemable Preferred Stock
of FINOVA Capital, dated March 17, 1992, is hereby incorporated by
reference from the 1992 10-K, Exhibit 10.MM.
(10.V) Sublease dated as of April 1, 1991, among the Company, The Dial
Corp and others, relating to the Company's principal office space,
is hereby incorporated by reference from the 1992 10-K, Exhibit
10.NN.
(10.W) Directors' Retirement Benefit Plan is hereby incorporated by
reference from the Company's Annual Report on Form 10- K for the
year ended December 31, 1993 (the "1993 10-K"), Exhibit 10.OO.+
</TABLE>
<PAGE> 85
<TABLE>
<CAPTION>
Exhibit No. Description
--------- -----------
<S> <C>
(10.X) Stock Purchase Agreement between Bell Atlantic TriCon Leasing
Corporation and Greyhound Financial Corporation dated as of March
4, 1994 is hereby incorporated by reference from the 1993 10-K,
Exhibit 10.QQ.
(10.Y) Form of Assets Purchase Agreement between Bell Atlantic TriCon
Leasing Corporation and TriCon Capital Corporation is hereby
incorporated by reference from the 1993 10-K, Exhibit 10.RR.
(10.Z) Form of Distribution Agreement among the Company, Greyhound
Financial Corporation, The Dial Corp and certain other parties
named therein, dated as of January 28, 1992 (incorporated by
reference from the Registration Statement, Annex II to the
Prospectus and Exhibit 2.1).
(10.AA) Asset Purchase Agreement dated as of February 3, 1995 between
Transamerica Business Credit Corporation and FINOVA Capital.*
(10.BB) Stock Purchase Agreement among The FINOVA Group Inc., FINOVA
Capital and GE Capital Mortgage Corporation dated May 26, 1993,
incorporated by reference from the Company's Report on Form 8-K
dated July 15, 1993, Exhibit 2.
(10.CC) Directors' Charitable Awards Program.*+
(10.DD) Form of the Company's 1992 Stock Incentive Plan Stock Option
Agreements for grants subsequent to August 10, 1994 (for exempt
employees) (various prices).*+
(10.EE) Form of the Company's 1992 Stock Incentive Plan Stock Option
Agreements for grants subsequent to August 10, 1994 (for non-exempt
employees) (various prices).*
(10.FF) Form of the Company's 1992 Stock Incentive Plan Stock Option
Agreements for grants subsequent to August 10, 1994 (for
non-employee directors) (various prices).*+
(10.GG) Form of the Company's 1992 Stock Incentive Plan Restricted Stock
Agreements.*+
(11) Computation of Per Share Earnings.*
(12) Computation of Ratio of Income to Combined Fixed Charges and
Preferred Stock Dividends.*
(21) Subsidiaries of the Registrant.*
(25) Powers of Attorney.*
(27) Financial Data Schedule.*
* Filed herewith + Relating to Management Compensation.
</TABLE>
<PAGE> 1
EXHIBIT 3.A
FORM OF
RESTATED CERTIFICATE OF INCORPORATION
OF
THE FINOVA GROUP INC.
1. The name of the corporation (which is hereinafter referred to as
the "Corporation") is "The FINOVA Group Inc."
2. The original Certificate of Incorporation was filed with the
Secretary of State of the State of Delaware on December 16, 1991, under the
name GFC Financial Corporation.
3. This Restated Certificate of Incorporation has been duly proposed
by resolutions adopted and declared advisable by the Board of Directors of the
Corporation, duly adopted by written consent of the sole stockholder of the
Corporation in lieu of a meeting and vote and duly executed and acknowledged by
the officers of the Corporation in accordance with the provisions of Sections
103, 228, 242 and 245 of the General Corporation Law of the State of Delaware
and, upon filing with the Secretary of State in accordance with Section 103,
shall thenceforth supercede the original Certificate of Incorporation and
shall, as it may thereafter be amended in accordance with its terms and
applicable law, be the Certificate of Incorporation of the Corporation.
4. The text of the Certificate of Incorporation of the Corporation is
hereby amended and restated to read in its entirety as follows:
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is:
The FINOVA Group Inc.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is The Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered
agent at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act or
activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware (the "GCL").
ARTICLE IV
The total number of shares of stock which the Corporation shall have
authority to issue is One Hundred and Five Million (105,000,000), consisting of
Five Million (5,000,000) shares of Preferred Stock, par value $.01 per share
(hereinafter referred to as "Preferred Stock"), and One Hundred Million
(100,000,000) shares of Common Stock, par value $.01 per share (hereinafter
referred to as "Common Stock").
The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized to provide for the
issuance of shares of Preferred Stock in series and, by filing a certificate
pursuant to the applicable law of the State of Delaware (hereinafter referred
to as "Preferred Stock Designation"), to establish from time to time the number
of shares to be included in each such series, and to fix the designation,
powers, preferences and rights of the shares of each such series and the
qualifications, limitations and restrictions thereof. The authority of the
Board of Directors with respect to each series shall include, but not be
limited to, determination of the following:
(a) The designation of the series, which may be by distinguishing
number, letter or title.
(b) The number of shares of the series, which number the Board of
Directors may thereafter (except where otherwise provided in the Preferred
Stock Designation) increase or decrease (but not below the number of shares
thereof then outstanding).
<PAGE> 2
(c) Whether dividends, if any, shall be cumulative or noncumulative
and the dividend rate of the series.
(d) Dates at which dividends, if any, shall be payable.
(e) The redemption rights and price or prices, if any, for shares of
the series.
(f) The terms and amount of any sinking fund provided for the
purchase or redemption of shares of the series.
(g) The amounts payable on, and the preferences, if any, of shares of
the series in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation.
(h) Whether the shares of the series shall be convertible into shares
of any other class or series, or any other security, of the Corporation or any
other corporation, and, if so, the specification of such other class or series
of such other security, the conversion price or prices or rate or rates, any
adjustments thereof, the date or dates at which such shares shall be
convertible and all other terms and conditions upon which such conversion may
be made.
(i) Restrictions on the issuance of shares of the same series or of
any other class or series.
(j) The voting rights, if any, of the holders of shares of the series.
The Common Stock shall be subject to the express terms of the
Preferred Stock and any series thereof. Each share of Common Stock shall be
equal to each other share of Common Stock. The holders of shares of Common
Stock shall be entitled to one vote for each such share upon all questions
presented to the stockholders.
Except as may be provided in this Certificate of Incorporation or in a
Preferred Stock Designation, or as may be required by law, the Common Stock
shall have the exclusive right to vote for the election of directors and for
all other purposes, and holders of Preferred Stock shall not be entitled to
receive notice of any meeting of stockholders at which they are not entitled to
vote.
The Corporation shall be entitled to treat the person in whose name
any share of its stock is registered as the owner thereof for all purposes and
shall not be bound to recognize any equitable or other claim to, or interest
in, such share on the part of any other person, whether or not the Corporation
shall have notice thereof, except as expressly provided by applicable law.
ARTICLE V
The Board of Directors is hereby authorized to create and issue,
whether or not in connection with the issuance and sale of any of its stock or
other securities or property, rights entitling the holders thereof to purchase
from the Corporation shares of stock or other securities of the Corporation or
any other corporation. The times at which and the terms upon which such rights
are to be issued will be determined by the Board of Directors and set forth in
the contracts or instruments that evidence such rights. The authority of the
Board of Directors with respect to such rights shall include, but not be
limited to, determination of the following:
(a) The initial purchase price per share or other unit of the stock
or other securities or property to be purchased upon exercise of such rights.
(b) Provisions relating to the times at which and the circumstances
under which such rights may be exercised or sold or otherwise transferred,
either together with or separately from, any other stock, or other securities
of the Corporation.
(c) Provisions which adjust the number or exercise price of such
rights or amount or nature of the stock or other securities or property
receivable upon exercise of such rights in the event of a combination, split or
recapitalization of any stock of the Corporation, a change in ownership of the
Corporation's stock or other securities or a reorganization, merger,
consolidation, sale of assets or other occurrence relating to the Corporation
or any stock of the Corporation, and provisions restricting the ability of the
Corporation to enter into any such transaction absent an assumption by the
other party or parties thereto of the obligations of the Corporation under such
rights.
2
<PAGE> 3
(d) Provisions which deny the holder of a specified percentage of the
outstanding stock or other securities of the Corporation the right to exercise
such rights and/or cause the rights held by such holder to become void.
(e) Provisions which permit the Corporation to redeem or exchange
such rights.
(f) The appointment of a rights agent with respect to such rights.
ARTICLE VI
In furtherance of, and not in limitation of, the powers conferred by
law, the Board of Directors is expressly authorized and empowered:
(a) to adopt, amend or repeal the Bylaws of the Corporation;
provided, however, that the Bylaws adopted by the Board of Directors under the
powers hereby conferred may be amended or repealed by the Board of Directors or
by the stockholders having voting power with respect thereto, provided further
that in the case of amendments by stockholders, the affirmative vote of the
holders of at least 80 percent of the voting power of the then outstanding
Voting Stock, voting together as a single class, shall be required to alter,
amend or repeal any provision of the Bylaws; and
(b) from time to time to determine whether and to what extent, and at
what times and places, and under what conditions and regulations, the accounts
and books of the Corporation, or any of them, shall be open to inspection of
stockholders; and, except as so determined or as expressly provided in this
Certificate of Incorporation or in any Preferred Stock Designation, no
stockholder shall have any right to inspect any account, book or document of
the Corporation other than such rights as may be conferred by applicable law.
The Corporation may in its Bylaws confer powers upon the Board of
Directors in addition to the foregoing and in addition to the powers and
authorities expressly conferred upon the Board of Directors by applicable law.
Notwithstanding anything contained in this Certificate of Incorporation to the
contrary, the affirmative vote of the holders of at least 80 percent of the
voting power of the then outstanding Voting Stock, voting together as a single
class, shall be required to amend, repeal or adopt any provision inconsistent
with paragraph (a) of this Article VI. For the purposes of this Certificate of
Incorporation, "Voting Stock" shall mean the outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of
directors.
ARTICLE VII
Subject to the rights of the holders of any series of Preferred Stock
or any other series or class of stock as set forth in the Certificate of
Incorporation to elect additional directors under specific circumstances, any
action required or permitted to be taken by the stockholders of the Corporation
must be effected at a duly called annual or special meeting of stockholders of
the Corporation and may not be affected by any consent in writing in lieu of a
meeting of such stockholders. Notwithstanding anything contained in this
Certificate of Incorporation to the contrary, the affirmative vote of at least
80 percent of the voting power of the then outstanding Voting Stock, voting
together as a single class, shall be required to amend, repeal or adopt any
provision inconsistent with this Article VII.
ARTICLE VIII
Subject to the rights of the holders of any series of Preferred Stock
or any other series or class of stock as set forth in the Certificate of
Incorporation to elect additional directors under specified circumstances, the
number of directors of the Corporation shall be fixed by the Bylaws of the
Corporation and may be increased or decreased from time to time in such a
manner as may be prescribed by the Bylaws.
Unless and except to the extent that the Bylaws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
The directors, other than those who may be elected by the holders of
any series of Preferred Stock or any other series or class of stock as set
forth in the Certificate of Incorporation, shall be divided into three classes,
as nearly equal in number as possible. One class of directors shall be
initially elected for a term expiring at the annual meeting of stockholders to
be held in 1993, another class shall be initially elected for
3
<PAGE> 4
a term expiring at the annual meeting of stockholders to be held in 1994, and
another class shall be initially elected for a term expiring at the annual
meeting of stockholders to be held in 1995. Members of each class shall hold
office until their successors are elected and qualified. At each succeeding
annual meeting of the stockholders of the Corporation, the successors of the
class of directors whose term expires at that meeting shall be elected by a
plurality vote of all votes cast at such meeting to hold office for a term
expiring at the annual meeting of stockholders held in the third year following
the year of their election.
Subject to the rights of the holders of any series of Preferred Stock
or any other series or class of stock as set forth in the Certificate of
Incorporation to elect additional directors under specified circumstances, any
director may be removed from office at any time, but only for cause and only by
the affirmative vote of the holders of at least 80 percent of the voting power
of the then outstanding Voting Stock, voting together as a single class.
Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of the holders of at least
80 percent of the voting power of the then outstanding Voting Stock, voting
together as a single class, shall be required to amend, repeal or adopt any
provision inconsistent with this Article VIII.
ARTICLE IX
Section 1. Vote Required for Certain Business Combinations.
(A) Higher Vote for Certain Business Combinations. In addition to
any affirmative vote required by law or this Certificate of Incorporation, and
except as otherwise expressly provided in Section 2 of this Article IX:
(i) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (a) any Interested
Stockholder (as hereinafter defined), or (b) any other corporation
(whether or not itself an Interested Stockholder) which is, or after
such merger or consolidation would be, an Affiliate (as hereinafter
defined) of an Interested Stockholder; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to
or with any Interested Stockholder, including all Affiliates of the
Interested Stockholder, of any assets of the Corporation or any
Subsidiary having an aggregate Fair Market Value (as hereinafter
defined) of $10,000,000 or more; or
(iii) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder, including all Affiliates of the Interested Stockholder,
in exchange for cash, securities or other property (or a combination
thereof) having an aggregate Fair Market Value of $10,000,000 or more;
or
(iv) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation proposed by or on behalf of an
Interested Stockholder or any Affiliates of an Interested Stockholder;
or
(v) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
other transaction (whether or not an Interested Stockholder is a party
thereto) which has the effect, directly or indirectly, of increasing
the proportionate share of the outstanding shares of any class of
equity or convertible securities of the Corporation or any Subsidiary
which are directly or indirectly owned by any Interested Stockholder
or one or more Affiliates of the Interested Stockholder;
shall require the affirmative vote of the holders of at least 66 2/3% of the
voting power of the then outstanding Voting Stock, voting together as a single
class, including the affirmative vote of the holders of at least 66% of the
voting power of the then outstanding Voting Stock not owned directly or
indirectly by any Interested Stockholder or any Affiliate of any Interested
Stockholder. Such affirmative vote shall be required notwithstanding the fact
that no vote may be required, or that a lesser percentage may be permitted, by
law or in any agreement with any national securities exchange or otherwise.
4
<PAGE> 5
(B) Definition of "Business Combination." The term "Business
Combination" as used in this Article IX shall mean any transaction described in
any one or more of clauses (i) through (v) of paragraph A of this Section 1.
Section 2. When Higher Vote is Not Required.The provisions of Section
1 of this Article IX shall not be applicable to any particular Business
Combination, and such Business Combination shall require only such affirmative
vote as is required by law or any other provision of this Certificate of
Incorporation, if the conditions specified in either of the following paragraph
(A) or (B) are met:
(A) Approval by Continuing Directors. The Business Combination shall
have been approved by a majority of the Continuing Directors (as hereinafter
defined).
(B) Price and Procedure Requirements. All of the following
conditions shall have been met:
(i) The aggregate amount of the cash and the Fair Market
Value (as hereinafter defined) as of the date of the consummation of
the Business Combination of consideration other than cash, to be
received per share by holders of Common Stock in such Business
Combination, shall be at least equal to the highest of the following:
(a) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested Stockholder
for any shares of Common Stock acquired by it (1) within the
two-year period immediately prior to the first public
announcement of the proposal of such Business Combination (the
"Announcement Date"), or (2) in the transaction in which it
became an Interested Stockholder, whichever is higher;
(b) the Fair Market Value per share of Common Stock
on the Announcement Date or on the date on which the
Interested Stockholder became an Interested Stockholder (the
"Determination Date"), whichever is higher; and
(c) (if applicable) the price per share equal to the
Fair Market Value per share of Common Stock determined
pursuant to paragraph (B)(i)(b) above, multiplied by the ratio
of (1) the highest per share (including any brokerage
commissions, transfer taxes and soliciting dealers' fees) paid
by the Interested Stockholder for any shares of Common Stock
acquired by it within the two-year period immediately prior to
the Announcement Date to (2) the Fair Market Value per share
of Common Stock on the first day in such two-year period upon
which the Interested Stockholder acquired any shares of Common
Stock.
(ii) The aggregate amount of the cash and the Fair Market
Value as of the date of the consummation of the Business Combination
of consideration other than cash to be received per share by holders
of shares of any other class, other than Common Stock or Excluded
Preferred Stock, of outstanding Voting Stock shall be at least equal
to the highest of the following (it being intended that the
requirements of this paragraph (B)(ii) shall be required to be met
with respect to every such class of outstanding Voting Stock, whether
or not the Interested Stockholder has previously acquired any shares
of a particular class of Voting Stock):
(a) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested Stockholder
for any shares of such class of Voting Stock acquired by it
(1) within the two-year period immediately prior to the
Announcement Date, or (2) in the transaction in which it
became an Interested Stockholder, whichever is higher;
(b) (if applicable) the highest preferential amount
per share to which the holders of shares of such class of
Voting Stock are entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation;
5
<PAGE> 6
(c) the Fair Market Value per share of such class of
Voting Stock on the Announcement Date or on the Determination
Date, whichever is higher; and
(d) (if applicable) the price per share equal to the
Fair Market Value per share of such class of Voting Stock
determined pursuant to paragraph (B)(ii)(c) above, multiplied
by the ratio of (1) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by the Interested Stockholder for any shares of
such class of Voting Stock acquired by it within the two-year
period immediately prior to the Announcement Date to (2) the
Fair Market Value per share of such class of Voting Stock on
the first day in such two-year period upon which the
Interested Stockholder acquired any shares of such class of
Voting Stock.
(iii) The consideration to be received by holders of a
particular class of outstanding Voting Stock (including Common Stock
and other than Excluded Preferred Stock) shall be in cash or in the
same form as the Interested Stockholder has previously paid for shares
of such class of Voting Stock. If the Interested Stockholder has paid
for shares of any class of Voting Stock with varying forms of
consideration, the form of consideration for such class of Voting
Stock shall be either cash or the form used to acquire the largest
number of shares of such class of Voting Stock previously acquired by
it.
(iv) After such Interested Stockholder has become an
Interested Stockholder and prior to the consummation of such Business
Combination: (a) there shall have been no failure to declare and pay
at the regular date therefor any full quarterly dividends (whether or
not cumulative) on any outstanding preferred stock, except as approved
by a majority of the Continuing Directors; (b) there shall have been
no reduction in the annual rate of dividends paid on the Common Stock
(except as necessary to reflect any subdivision of the Common Stock),
except as approved by a majority of the Continuing Directors; (c)
there shall have been an increase in the annual rate of dividends as
necessary fully to reflect any recapitalization (including any reverse
stock split), reorganization or any similar reorganization which has
the effect of reducing the number of outstanding shares of the Common
Stock, unless the failure so to increase such annual rate is approved
by a majority of the Continuing Directors; and (d) such Interested
Stockholder shall not have become the Beneficial Owner of any
additional Voting Stock except as part of the transaction which
results in such Interested Stockholder becoming an Interested
Stockholder.
(v) After such Interested Stockholder has become an
Interested Stockholder, such Interested Stockholder shall not have
received the benefit, directly or indirectly (except proportionately
as a shareholder), of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax advantages
provided by the Corporation, whether in anticipation of or in
connection with such Business Combination or otherwise.
(vi) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the
Securities Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions replacing such Act, rules or
regulations) shall be mailed to shareholders of the Corporation at
least thirty (30) days prior to the consummation of such Business
Combination (whether or not such proxy or information statement is
required to be marked pursuant to such Act or subsequent provisions).
Section 3. Certain Definitions. For purposes of this Article IX:
(A) "Person" shall mean any individual, firm, corporation or other
entity.
(B) "Interested Stockholder" shall mean any Person (other than the
Corporation or any Subsidiary) who or which:
(i) itself, or along with its Affiliates, is the Beneficial
Owner, directly or indirectly, of more than 10% of the then
outstanding Voting Stock; or
(ii) is an Affiliate of the Corporation and at any time
within the two-year period immediately prior to the date in question
was itself, or along with its
6
<PAGE> 7
Affiliates, the Beneficial Owner, directly or indirectly, of 10% or
more of the then outstanding Voting Stock; or
(iii) is an assignee of or has otherwise succeeded to any
Voting Stock which was at any time within the two-year period
immediately prior to the date in question beneficially owned by an
Interested Stockholder, if such assignment or succession shall have
occurred in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities Act
of 1933.
(C) "Beneficial Owner" shall have the meaning ascribed to such term
in Rule 13d-3 of the General Rules and Regulations of the Securities Exchange
Act of 1934, as in effect on February 1, 1992. In addition, a Person shall be
the "Beneficial Owner" of any Voting Stock which such Person or any of its
Affiliates or Associates has (a) the right to acquire (whether such right is
exercisable immediately or only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (b) the right to
vote pursuant to any agreement, arrangement or understanding (but neither such
Person nor any such Affiliate or Associate shall be deemed to be the Beneficial
Owner of any shares of Voting Stock solely by reason of a revocable proxy
granted for a particular meeting of stockholders, pursuant to a public
solicitation of proxies for such meeting, and with respect to which shares
neither such Person nor any such Affiliate or Associate is otherwise deemed the
Beneficial Owner).
(D) For the purpose of determining whether a Person is an Interested
Stockholder pursuant to paragraph (B) of this Section 3, the number of shares
of Voting Stock deemed to be outstanding shall include shares deemed owned
through application of paragraph C of this Section 3 but shall not include any
other shares of Voting Stock which may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion rights, warrants
or options or otherwise.
(E) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as in effect on February 1, 1992.
(F) "Subsidiary" shall mean any corporation of which a majority of
any share of equity security is owned, directly or indirectly, by the
Corporation, provided, however, that for the purposes of the definition of
Interested Stockholder set forth in paragraph (B) of this Section 3, the term
"Subsidiary" shall mean only a corporation of which a majority of each share of
equity security is owned, directly or indirectly, by the Corporation.
(G) "Continuing Director" shall mean any member of the Board of
Directors of the Corporation (the "Board") who is unaffiliated with the
Interested Stockholder and was a member of the Board prior to the time that the
Interested Stockholder became an Interested Stockholder, and any director who
is thereafter chosen to fill any vacancy on the Board or who is elected and
who, in either event, is unaffiliated with the Interested Stockholder and in
connection with his or her initial assumption of office is recommended for
appointment or election by a majority of Continuing Directors then on the
Board.
(H) "Fair Market Value" shall mean (i) in the case of stock, the
highest closing sale price during the 30-day period immediately preceding the
date in question of a share of such stock on the Composite Tape for New York
Stock Exchange listed stocks, or, if such stock is not quoted on the Composite
Tape, on the New York Stock Exchange, or, if such stock is not listed on such
exchange, on the principal United States securities exchange registered under
the Securities Exchange Act of 1934 on which such stock is listed, or, if such
stock is not listed on any such exchange, the highest closing bid quotation
with respect to a share of such stock during the 30-day period preceding the
date in question on the National Association of Securities Dealers, Inc.
Automated Quotations System or any system then in use in its stead, or if no
such quotations are available, the fair market value on the date in question of
a share of such stock as determined by the Board in accordance with Section 4
of this Article IX; and (ii) in the case of property other than cash or stock,
the fair market value of such property on the date in question as determined by
the Board in accordance with Section 4 of this Article IX.
(I) In the event of any Business Combination in which the Corporation
survives, the phrase "other consideration to be received" as used in paragraphs
(B)(i) and (ii) and Section 2 of this Article IX shall include the shares of
Common Stock and/or the shares of any other class of outstanding Voting Stock
retained by the holders of such shares.
7
<PAGE> 8
(J) "Excluded Preferred Stock" means any series of Preferred Stock
with respect to which a majority of the Continuing Directors have approved a
Preferred Stock Designation creating such series that expressly provides that
the provisions of this Article IX shall not apply.
Section 4. The Continuing Directors of the Corporation shall have the
power and duty to determine for the purposes of this Article IX, on the basis
of information known to them after reasonable inquiry, all facts necessary to
determine compliance with this Article IX, including, without limitation (i)
whether a Person is an Interested Stockholder, (ii) the number of shares of
Voting Stock beneficially owned by any Person, (iii) whether a Person is an
Affiliate or Associate of another, (iv) whether the applicable conditions set
forth in paragraph (B) of Section 2 of this Article IX have been met with
respect to any Business Combination, (v) the Fair Market Value of stock or
other property in accordance with paragraph (H) of Section 3 of this Article
IX, and (vi) whether the assets which are the subject of any Business
Combination have, or the consideration to be received for the issuance or
transfer of securities by the Corporation or any Subsidiary in any Business
Combination has, an aggregate Fair Market Value of $10,000,000 or more.
Section 5. No Effect on Fiduciary Obligations of Interested
Stockholders. Nothing contained in this Article IX shall be construed to
relieve any Interested Stockholder from any fiduciary obligation imposed
by law.
Section 6. Amendment, Repeal, etc. Notwithstanding any other
provisions of this Certificate of Incorporation or the Bylaws of the
Corporation (and notwithstanding the fact that a lesser percentage may be
permitted by law, this Certificate of Incorporation or the Bylaws of the
Corporation), but in addition to any affirmative vote of the holders of any
particular class of the Voting Stock required by law or this Certificate of
Incorporation, the affirmative vote of the holders of 66% of the voting power
of the shares of the then outstanding Voting Stock voting together as a single
class, including the affirmative vote of the holders of 66% of the voting power
of the then outstanding Voting Stock not owned directly or indirectly by any
Interested Stockholder or any Affiliate of any Interested Stockholder, shall be
required to amend or repeal, or adopt any provisions inconsistent with, this
Article IX of this Certificate of Incorporation.
ARTICLE X
Each person who is or was or had agreed to become a director or
officer of the Corporation, or each such person who is or was serving or who
had agreed to serve at the request of the Board of Directors or an officer of
the Corporation as an employee or agent of the Corporation or as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise (including the heirs, executor, administrators or
estate of such person), shall be indemnified by the Corporation, in accordance
with the Bylaws of the Corporation, to the fullest extent permitted from time
to time by the General Corporation Law of the State of Delaware as the same
exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than said law permitted the Corporation to
provide prior to such amendment) or any other applicable laws as presently or
hereafter in effect. Without limiting the generality or the effect of the
foregoing, the Corporation may enter into one or more agreements with any
person which provide for indemnification greater or different than that
provided in this Article X. Any amendment or repeal of this Article X shall not
adversely affect any right or protection existing hereunder in respect of any
act or omission occurring prior to such amendment or repeal.
8
<PAGE> 9
ARTICLE XI
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General Corporation
Law of the State of Delaware, or (iv) for any transaction from which the
director derived an improper personal benefit. Any amendment or repeal of this
Article XI shall not adversely affect any right or protection of a director of
the Corporation existing hereunder in respect of any act or omission occurring
prior to such amendment or repeal.
ARTICLE XII
Except as may be expressly provided in this Certificate of
Incorporation, the Corporation reserves the right at any time and from time to
time to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation or a Preferred Stock Designation, and any other
provisions authorized by the laws of the State of Delaware at the time in force
may be added or inserted, in the manner now or hereafter prescribed herein or
by applicable law, and all rights, preferences and privileges of whatsoever
nature conferred upon stockholders, directors or any other persons whomsoever
by and pursuant to this Certificate of Incorporation in its present form or as
hereafter amended are granted subject to the right reserved in this Article
XII; provided, however, that any amendment or repeal of Article X or Article XI
of this Certificate of Incorporation shall not adversely affect any right or
protection existing hereunder in respect of any act or omission occurring prior
to such amendment or repeal; and provided further that no Preferred Stock
Designation shall be amended after the issuance of any shares of the series of
Preferred Stock created thereby, except in accordance with the terms of such
Preferred Stock Designation and the requirements of applicable law.
IN WITNESS WHEREOF, said GFC Finacal Corporation has caused this
Restated Certificate of Incorporation to be signed by its President and
attested by its Secretary and has caused its corporate seal to be hereunto
affixed, this 21st day of February, 1992.
GFC Financial Corporation
By: /s/ PHILIP S. PELANEK
----------------------------
President
Attest: /S/ F. EMERSON
-------------------------
Secretary
9
<PAGE> 1
EXHIBIT 3.B
AMENDED AND RESTATED
BYLAWS
OF
THE FINOVA GROUP INC.
A DELAWARE CORPORATION
<PAGE> 2
ARTICLE I
OFFICES AND RECORDS
Section 1.1. Delaware Office . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Other Offices . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.3. Books and Records . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
STOCKHOLDERS
Section 2.1. Annual Meeting (AMENDED 11/94) . . . . . . . . . . . . . . 1
Section 2.2. Special Meeting . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.3. Place of Meeting . . . . . . . . . . . . . . . . . . . . . 1
Section 2.4. Notice of Meeting . . . . . . . . . . . . . . . . . . . . . 2
Section 2.5. Quorum and Adjournment . . . . . . . . . . . . . . . . . . 2
Section 2.6. Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.7. Notice of Stockholder Business and Nominations . . . . . . 2
Section 2.8. Procedure for Election of Directors . . . . . . . . . . . . 5
Section 2.9. Inspectors of Elections; Opening and Closing the Polls . . 5
Section 2.10. No Stockholder Action by Written Consent . . . . . . . . . 5
ARTICLE III
BOARD OF DIRECTORS
Section 3.1. General Powers . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.2. Number, Tenure and Qualifications . . . . . . . . . . . . . 6
Section 3.3. Regular Meetings . . . . . . . . . . . . . . . . . . . . . 6
Section 3.5. Notice (AMENDED 4/93) . . . . . . . . . . . . . . . . . . . 6
Section 3.6. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.7. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.8. Executive Committee . . . . . . . . . . . . . . . . . . . . 7
Section 3.9. Removal . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV
OFFICERS
Section 4.1. Elected Officers . . . . . . . . . . . . . . . . . . . . . 7
Section 4.2. Election and Term of Office . . . . . . . . . . . . . . . . 8
Section 4.3. Chairman of the Board . . . . . . . . . . . . . . . . . . . 8
Section 4.4. President . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.5. Secretary . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.6. Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . 9
-0-
<PAGE> 3
Section 4.7. Removal . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.8. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE V
STOCK CERTIFICATES AND TRANSFERS
Section 5.1. Stock Certificates and Transfers . . . . . . . . . . . . . 9
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6.2. Dividends . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.3. Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.4. Waiver of Notice . . . . . . . . . . . . . . . . . . . . . 11
Section 6.5. Audits . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.6. Resignations . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.7. Indemnification and Insurance . . . . . . . . . . . . . . . 11
ARTICLE VII
AMENDMENTS
Section 7.1. Amendments . . . . . . . . . . . . . . . . . . . . . . . . 13
-1-
<PAGE> 4
AMENDED AND RESTATED
BYLAWS
OF
THE FINOVA GROUP INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
ARTICLE I
OFFICES AND RECORDS
SECTION 1.1. DELAWARE OFFICE. The principal office of the
Corporation in the State of Delaware shall be located in the City of
Wilmington, County of New Castle, and the name and address of its registered
agent is The Corporation Trust Company, 1209 Orange Street, Wilmington,
Delaware.
SECTION 1.2. OTHER OFFICES. The Corporation may have such other
offices, either within or without the State of Delaware, as the Board of
Directors may designate or as the business of the Corporation may from time to
time require.
SECTION 1.3. BOOKS AND RECORDS. The books and records of the
Corporation may be kept at the Corporation's headquarters in Phoenix, Arizona
or at such other locations outside the State of Delaware as may from time to
time be designated by the Board of Directors.
ARTICLE II
STOCKHOLDERS
SECTION 2.1. ANNUAL MEETING (AMENDED 11/94). Commencing in 1994, the
annual meeting of the stockholders of the Corporation shall be held on the
second Thursday in May of each year, if not a legal holiday, and if a legal
holiday then on the next succeeding business day, at 9:00 a.m., local time, at
the principal executive offices of the Corporation, or at such other date,
place and/or time as may be fixed by resolution of the Board of Directors.
SECTION 2.2. SPECIAL MEETING. Subject to the rights of the holders
of any series of preferred stock, par value $.01 per share, of the Corporation
(the "Preferred Stock") or any other series or class of stock as set forth in
the Certificate of Incorporation to elect additional directors under specified
circumstances, special meetings of the stockholders may be called only by the
Chairman of the Board or by the Board of Directors pursuant to a resolution
adopted by a majority of the total number of directors which the Corporation
would have if there were no vacancies (the "Whole Board").
SECTION 2.3. PLACE OF MEETING. The Board of Directors may designate
the place of meeting for any meeting of the stockholders. If no designation is
made by
-1-
<PAGE> 5
the Board of Directors, the place of meeting shall be the principal office of
the Corporation.
SECTION 2.4. NOTICE OF MEETING. Written or printed notice, stating
the place, day and hour of the meeting and the purpose or purposes for which
the meeting is called, shall be prepared and delivered by the Corporation not
less than ten days nor more than sixty days before the date of the meeting,
either personally, or by mail, to each stockholder of record entitled to vote
at such meeting. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail with postage thereon prepaid, addressed to
the stockholder at his address as it appears on the stock transfer books of the
Corporation. Such further notice shall be given as may be required by law.
Meetings may be held without notice if all stockholders entitled to vote are
present, or if notice is waived by those not present. Any previously scheduled
meeting of the stockholders may be postponed by resolution of the Board of
Directors upon public notice given prior to the time previously scheduled for
such meeting of stockholders.
SECTION 2.5. QUORUM AND ADJOURNMENT. Except as otherwise provided by
law or by the Certificate of Incorporation, the holders of a majority of the
voting power of the outstanding shares of the Corporation entitled to vote
generally in the election of directors (the "Voting Stock"), represented in
person or by proxy, shall constitute a quorum at a meeting of stockholders,
except that when specified business is to be voted on by a class or series
voting as a class, the holders of a majority of the voting power of the shares
of such class or series shall constitute a quorum for the transaction of such
business. The chairman of the meeting or a majority of the shares of Voting
Stock so represented may adjourn the meeting from time to time, whether or not
there is such a quorum (or, in the case of specified business to be voted on by
a class or series, the chairman or a majority of the shares of such class or
series so represented may adjourn the meeting with respect to such specified
business). No notice of the time and place of adjourned meetings need be given
except as required by law. The stockholders present at a duly organized
meeting may continue to transact business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum.
SECTION 2.6. PROXIES. At all meetings of stockholders, a stockholder
may vote by proxy executed in writing by the stockholder or as may be permitted
by law, or by his duly authorized attorney-in-fact. Such proxy must be filed
with the Secretary of the Corporation or his representative at or before the
time of the meeting.
SECTION 2.7. NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS.
(A) Annual Meetings of Stockholders. (1) Nominations of persons
for election to the Board of Directors of the Corporation and the proposal of
business to be considered by the stockholders may be made at an annual meeting
of stockholders (a) pursuant to the Corporation's notice of meeting delivered
pursuant to Section 2.4 of these Bylaws, (b) by or at the direction of the
Chairman or the
-2-
<PAGE> 6
Board of Directors or (c) by any stockholder of the Corporation who is entitled
to vote at the meeting, who complied with the notice procedures set forth in
clauses (2) and (3) of this paragraph (A) and this Bylaw and who was a
stockholder of record at the time such notice is delivered to the Secretary of
the Corporation.
(2) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (c) of paragraph
(A)(1) of this Bylaw, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to the Secretary at the principal executive offices
of the Corporation not less than seventy days nor more than ninety days prior
to the first anniversary of the preceding year's annual meeting; provided,
however, that in the event that the date of the annual meeting is advanced by
more than twenty days, or delayed by more than seventy days, from such
anniversary date, notice by the stockholder to be timely must be so delivered
not earlier than the ninetieth day prior to such annual meeting and not later
than the close of business on the later of the seventieth day prior to such
annual meeting or the tenth day following the day on which public announcement
of the date of such meeting is first made. Such stockholder's notice shall set
forth (a) as to each person whom the stockholder proposes to nominate for
election or reelection as a director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
including such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected; (b) as to any other
business that the stockholder proposes to bring before the meeting, a brief
description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest
in such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (c) as to the stockholder giving the notice
and the beneficial owner, if any, on whose behalf the nomination or proposal is
made (i) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner and (ii) the class and number
of shares of the Corporation which are owned beneficially and of record by such
stockholder and such beneficial owner. Notwithstanding anything to the
contrary in this paragraph of this Bylaw, nothing shall require the Corporation
to include any such stockholder nominations or other business in any proxy or
proxy statement unless such nomination or business is required to be included
pursuant to rules under Regulation 14A of the Exchange Act.
(3) Notwithstanding anything in the second sentence of paragraph
(A)(2) of this Bylaw to the contrary, in the event that the number of directors
to be elected to the Board of Directors of the Corporation is increased and
there is no public announcement naming all of the nominees for director or
specifying the size of the increased Board of Directors made by the Corporation
at least eighty days prior to the first anniversary of the preceding year's
annual meeting, a stockholder's notice required by this Bylaw shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to
-3-
<PAGE> 7
the Secretary at the principal executive offices of the Corporation not later
than the close of business on the tenth day following the day on which such
public announcement is first made by the Corporation.
(B) Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought
before the meeting pursuant to the Corporation's notice of meeting pursuant to
Section 2.4 of these Bylaws. Nominations of persons for election to the Board
of Directors may be made at a special meeting of stockholders at which
directors are to be elected pursuant to the Corporation's notice of meeting (a)
by or at the direction of the Board of Directors or (b) by any stockholder of
the Corporation who is entitled to vote at the meeting, who complies with the
notice procedures set forth in this Bylaw and who is a stockholder of record at
the time such notice is delivered to the Secretary of the Corporation.
Nominations by stockholders of persons for election to the Board of Directors
may be made at such a special meeting of stockholders if the stockholder's
notice as required by paragraph (A)(2) of this Bylaw shall be delivered to the
Secretary at the principal executive offices of the Corporation not earlier
than the ninetieth day prior to such special meeting and not later than the
close of business on the later of the seventieth day prior to such special
meeting or the tenth day following the day on which public announcement is
first made of the date of the special meeting and of the nominees proposed by
the Board of Directors to be elected at such meeting.
(C) General. (1) Only persons who are nominated in accordance
with the procedures set forth in this Bylaw shall be eligible to serve as
director and only such business shall be conducted at a meeting of stockholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this Bylaw. Except as otherwise provided by law, the Restated
Certificate of Incorporation or these Bylaws, the chairman of the meeting shall
have the power and duty to determine whether a nomination or any business
proposed to be brought before the meeting was made in accordance with the
procedures set forth in this Bylaw and, if any proposed nomination or business
is not in compliance with this Bylaw, to declare that such defective proposal
or nomination shall be disregarded.
(2) For purposes of this Bylaw, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant
to Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Bylaw, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Bylaw. Nothing in this Bylaw shall be deemed to affect any
rights of stockholders to request inclusion of proposals in the Corporation's
proxy statement pursuant to Rule 14a-8 under the Exchange Act.
-4-
<PAGE> 8
SECTION 2.8. PROCEDURE FOR ELECTION OF DIRECTORS. Election of
directors at all meetings of the stockholders at which directors are to be
elected shall be by written ballot, and, except as otherwise set forth in the
Certificate of Incorporation with respect to the right of the holders of any
series of Preferred Stock or any other series or class of stock to elect
additional directors under specified circumstances, a plurality of the votes
cast thereat shall elect. Except as otherwise provided by law, the Certificate
of Incorporation or these Bylaws, all matters other than the election of
directors submitted to the stockholders at any meeting shall be decided by a
majority of the votes cast with respect thereto.
SECTION 2.9. INSPECTORS OF ELECTIONS; OPENING AND CLOSING THE POLLS.
(A) The Board of Directors by resolution shall appoint one or more
inspectors, which inspector or inspectors may include individuals who serve the
Corporation in other capacities, including, without limitation, as officers,
employees, agents or representatives of the Corporation, to act at the meeting
and make a written report thereof. One or more persons may be designated as
alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate has been appointed to act, or if all inspectors or
alternates who have been appointed are unable to act, at a meeting of
stockholders, the chairman of the meeting shall appoint one or more inspectors
to act at the meeting. Each inspector, before discharging his or her duties,
shall take and sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of his or her ability. The
inspectors shall have the duties prescribed by the General Corporation Law of
the State of Delaware.
(B) The chairman of the meeting shall fix and announce at the
meeting the date and time of the opening and the closing of the polls for each
matter upon which the stockholders will vote at a meeting.
SECTION 2.10. NO STOCKHOLDER ACTION BY WRITTEN CONSENT. Subject to
the rights of the holders of any series of Preferred Stock or any other series
or class of stock as set forth in the Certificate of Incorporation to elect
additional directors under specific circumstances, any action required or
permitted to be taken by the stockholders of the Corporation must be effected
at an annual or special meeting of stockholders of the Corporation and may not
be affected by any consent in writing by such stockholders.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.1. GENERAL POWERS. The business and affairs of the
Corporation shall be managed by or under the direction of its Board of
Directors. In addition to the powers and authorities by these Bylaws expressly
conferred upon them, the Board of Directors may exercise all such powers of the
Corporation and do all such
-5-
<PAGE> 9
lawful acts and things as are not by law or by the Certificate of Incorporation
or by these Bylaws required to be exercised or done by the stockholders.
SECTION 3.2. NUMBER, TENURE AND QUALIFICATIONS. Subject to the
rights of the holders of any series of Preferred Stock, or any other series or
class of stock as set forth in the Certificate of Incorporation, to elect
directors under specified circumstances, the number of directors shall be fixed
from time to time exclusively pursuant to a resolution adopted by a majority of
the Whole Board, but shall consist of not more than seventeen nor less than
three directors. The directors, other than those who may be elected by the
holders of any series of Preferred Stock, or any other series or class of stock
as set forth in the Certificate of Incorporation, shall be divided, with
respect to the time for which they severally hold office, into three classes,
as nearly equal in number as possible, with the term of office of the first
class to expire at the 1993 annual meeting of stockholders, the term of office
of the second class to expire at the 1994 annual meeting of stockholders and
the term of office of the third class to expire at the 1995 annual meeting of
stockholders. Each director shall hold office until his or her successor shall
have been duly elected and qualified. At each annual meeting of stockholders,
commencing with the 1993 annual meeting, (i) directors elected to succeed those
directors whose terms then expire shall be elected for a term of office to
expire at the third succeeding annual meeting of stockholders after their
election, with each director to hold office until his or her successor shall
have been duly elected and qualified, and (ii) if authorized by a resolution of
the Board of Directors, directors may be elected to fill any vacancy on the
Board of Directors, regardless of how such vacancy shall have been created.
SECTION 3.3. REGULAR MEETINGS. A regular meeting of the Board of
Directors shall be held without other notice than this Bylaw immediately after,
and at the same place as, each annual meeting of stockholders. The Board of
Directors may, by resolution, provide the time and place for the holding of
additional regular meetings without other notice than such resolution.
SECTION 3.5. NOTICE (AMENDED 4/93). Notice of any special
meeting shall be given to each director at his business or residence in writing
or by telegram or by telephone communication. If mailed, such notice shall be
deemed adequately delivered when deposited in the United States mails so
addressed, with postage thereon prepaid, at least five days before such
meeting. If by telegram, such notice shall be deemed adequately delivered when
the telegram is delivered to the telegraph company at least twenty- four hours
before such meeting. If by facsimile transmission, such notice shall be
transmitted at least twenty-four hours before such meeting. If by telephone,
the notice shall be given at least twelve hours prior to the time set for the
meeting. If by hand delivery, the notice shall be delivered at least
twenty-four hours prior to the time set for the meeting. Neither the business
to be transacted at, nor the purpose of, any regular or special meeting of the
Board of Directors need be specified in the notice of such meeting, except for
amendments to these Bylaws as provided under Section 7.1 of Article VII hereof.
A meeting may be held at any time without notice if all the directors are
present or if those not present waive notice of the meeting in writing, either
before or after such meeting."
-6-
<PAGE> 10
SECTION 3.6. QUORUM. A whole number of directors equal to at least a
majority of the Whole Board shall constitute a quorum for the transaction of
business, but if at any meeting of the Board of Directors there shall be less
than a quorum present, a majority of the directors present may adjourn the
meeting from time to time without further notice. The act of the majority of
the directors present at a meeting at which a quorum is present shall be the
act of the Board of Directors. The directors present at a duly organized
meeting may continue to transact business until adjournment, notwithstanding
the withdrawal of enough directors to leave less than a quorum.
SECTION 3.7. VACANCIES. Subject to the rights of the holders of any
series of Preferred Stock, or any other series or class of stock as set forth
in the Certificate of Incorporation, to elect additional directors under
specified circumstances, and unless the Board of Directors otherwise
determines, vacancies resulting from death, resignation, retirement,
disqualification, removal from office or other cause, and newly created
directorships resulting from any increase in the authorized number of
directors, may be filled only by the affirmative vote of a majority of the
remaining directors, through less than a quorum of the Board of Directors, and
directors so chosen shall hold office for a term expiring at the annual meeting
of stockholders at which the term of office of the class to which they have
been elected expires and until such director's successor shall have been duly
elected and qualified. No decrease in the number of authorized directors
constituting the Whole Board shall shorten the term of any incumbent director.
SECTION 3.8. EXECUTIVE COMMITTEE. The Board of Directors,
immediately following each annual meeting of stockholders or a special meeting
of the same held in lieu of the annual meeting for the election of directors,
shall meet and shall appoint from its number an Executive Committee of such
number of members as from time to time may be selected by the Board, to serve
until the next annual or special meeting at which a majority of directors is
elected or until the respective successor of each is duly appointed. The
Executive Committee shall possess and may exercise all the powers and authority
of the Board of Directors in the management and direction of the business and
affairs of the Corporation, except as limited by law and except for the power
to change the membership or to fill vacancies in the Board or said Committee.
The Board shall have the power at any time to change the membership of said
Committee, to fill vacancies in it or to make rules for the conduct of its
business.
SECTION 3.9. REMOVAL. Subject to the rights of the holders of any
series of Preferred Stock, or any other series or class of stock as set forth
in the Certificate of Incorporation, to elect additional directors under
specified circumstances, any director, or the entire Board of Directors, may be
removed from office at any time, but only for cause and only by the affirmative
vote of the holders of at least 80 percent of the voting power of the then
outstanding Voting Stock, voting together as a single class.
-7-
<PAGE> 11
ARTICLE IV
OFFICERS
SECTION 4.1. ELECTED OFFICERS. The elected officers of the
Corporation shall be a Chairman of the Board, a President, a Secretary, a
Treasurer, and such other officers as the Board of Directors from time to time
may deem proper. The Chairman of the Board shall be chosen from the directors.
All officers chosen by the Board of Directors shall each have such powers and
duties as generally pertain to their respective offices, subject to the
specific provisions of this Article IV. Such officers shall also have powers
and duties as from time to time may be conferred by the Board of Directors or
any committee thereof.
SECTION 4.2. ELECTION AND TERM OF OFFICE. The elected officers of
the Corporation shall be elected annually by the Board of Directors at the
regular meeting of the Board of Directors held after each annual meeting of the
stockholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as convenient. Subject to
Section 4.7 of these Bylaws, each officer shall hold office until his successor
shall have been duly elected and shall have qualified or until his death or
until he shall resign.
SECTION 4.3. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the stockholders and of the Board of Directors. The
Chairman of the Board shall be responsible for the general management of the
affairs of the Corporation and shall perform all duties incidental to his
office which may be required by law and all such other duties as are properly
required of him by the Board of Directors. Except where by law the signature
of the President is required, the Chairman of the Board shall possess the same
power as the President to sign all certificates, contracts, and other
instruments of the Corporation which may be authorized by the Board of
Directors. He shall make reports to the Board of Directors and the
stockholders, and shall perform all such other duties as are properly required
of him by the Board of Directors. He shall see that all orders and resolutions
of the Board of Directors and of any committee thereof are carried into effect.
SECTION 4.4. PRESIDENT. The President shall act in a general
executive capacity and shall assist the Chairman of the Board in the
administration and operation of the Corporation's business and general
supervision of its policies and affairs. The President shall, in the absence
of or because of the inability to act of the Chairman of the Board, perform all
duties of the Chairman of the Board and preside at all meetings of stockholders
and the Board of Directors. The President may sign, alone or with the
Secretary, or an Assistant Secretary, or any other proper officer of the
Corporation authorized by the Board of Directors, certificates, contracts, and
other instruments of the Corporation as authorized by the Board of Directors.
SECTION 4.5. SECRETARY. The Secretary shall give, or cause to be
given, notice of all meetings of stockholders and Directors and all other
notices required by law or by these Bylaws, and in case of his absence or
refusal or neglect so to do,
-8-
<PAGE> 12
any such notice may be given by any person thereunto directed by the Chairman
of the Board or the President, or by the Board of Directors, upon whose request
the meeting is called as provided in these Bylaws. He shall record all the
proceedings of the meetings of the Board of Directors, any committees thereof
and the stockholders of the Corporation in a book to be kept for that purpose,
and shall perform such other duties as may be assigned to him by the Board of
Directors, the Chairman of the Board or the President. He shall have the
custody of the seal of the Corporation and shall affix the same to all
instruments requiring it, when authorized by the Board of Directors, the
Chairman of the Board or the President, and attest to the same.
SECTION 4.6. TREASURER. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the Corporation. The
Treasurer shall deposit all moneys and other valuables in the name and to the
credit of the Corporation in such depositaries as may be designated by the
Board of Directors. The Treasurer shall disburse the funds of the Corporation
as may be ordered by the Board of Directors, the Chairman of the Board, or the
President, taking proper vouchers for such disbursements. The Treasurer shall
render to the Chairman of the Board, the President and the Board of Directors,
whenever requested, an account of all his transactions as Treasurer and of the
financial condition of the Corporation. If required by the Board of Directors,
the Treasurer shall give the Corporation a bond for the faithful discharge of
his duties in such amount and with such surety as the Board of Directors shall
prescribe.
SECTION 4.7. REMOVAL. Any officer elected by the Board of Directors
may be removed by a majority of the members of the Whole Board whenever, in
their judgment, the best interests of the Corporation would be served thereby.
No elected officer shall have any contractual rights against the Corporation
for compensation by virtue of such election beyond the date of the election of
his successor, his death, his resignation or his removal, whichever event shall
first occur, except as otherwise provided in an employment contract or an
employee plan.
SECTION 4.8. VACANCIES. A newly created office and a vacancy in any
office because of death, resignation, or removal may be filled by the Board of
Directors for the unexpired portion of the term at any meeting of the Board of
Directors.
ARTICLE V
STOCK CERTIFICATES AND TRANSFERS
SECTION 5.1. STOCK CERTIFICATES AND TRANSFERS.
(A) The interest of each stockholder of the Corporation shall be
evidenced by certificates for shares of stock in such form as the appropriate
officers of the Corporation may from time to time prescribe. The shares of the
stock of the
-9-
<PAGE> 13
Corporation shall be transferred on the books of the Corporation by the holder
thereof in person or by his attorney, upon surrender for cancellation of
certificates for the same number of shares, with an assignment and power of
transfer endorsed thereon or attached thereto, duly executed, with such proof
of the authenticity of the signature as the Corporation or its agents may
reasonably require or upon satisfaction of the requirements of subsection (C)
below.
(B) The certificates of stock shall be signed, countersigned and
registered in such manner as the Board of Directors may by resolution
prescribe, which resolution may permit all or any of the signatures on such
certificates to be in facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate has ceased to be such officer, transfer agent or registrar before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer, transfer agent or registrar at the date of
issue.
(C) In the event of the loss, theft, or destruction of any
certificates representing shares of the Corporation or of any predecessor
corporation, the Corporation may issue (or, in the case of any such shares as
to which a transfer agent and/or registrar have been appointed, may direct such
transfer agent and/or registrar to countersign, register and issue) a new
certificate, and cause the same to be delivered to the owner of the shares
represented thereby, provided that the owner shall have submitted such evidence
showing, or an affidavit reciting, the circumstances of the alleged loss,
theft, or destruction, and his ownership of the certificate, as the Corporation
considers satisfactory, together with any other facts that the Corporation
considers pertinent, and further provided that a bond of indemnity, with or
without surety, shall have been provided in form and amount satisfactory to the
Corporation (and to its transfer agent and/or registrar, if applicable), unless
the shares represented by the certificate lost, stolen, or destroyed have at
the time of the issuance of the new certificate a market value of $500 or less
(as determined by the Corporation on the basis of such information as it may
select), in which case the requirement of a bond may be waived in the
Corporation's discretion. The Corporation may act through its Chief Executive
Officer, President, any Vice President, its Secretary or any Assistant
Secretary, or its Treasurer or any Assistant Treasurer for any purpose of this
Section 5.1(C), and it may delegate all or any discretion or duties hereunder
to a transfer agent and/or registrar.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.1. FISCAL YEAR. The fiscal year of the Corporation shall
begin on the first day of January and end on the thirty-first day of December
of each year.
-10-
<PAGE> 14
SECTION 6.2. DIVIDENDS. The Board of Directors may from time to time
declare, and the Corporation may pay, dividends on its outstanding shares in
the manner and upon the terms and conditions provided by law and its Restated
Certificate of Incorporation.
SECTION 6.3. SEAL. The corporate seal may bear in the center of the
emblem of some object, and shall have inscribed thereunder the words "Corporate
Seal" and around the margin thereof the words "The FINOVA Group Inc. --
Delaware 1991".
SECTION 6.4. WAIVER OF NOTICE. Whenever any notice is required to be
given to any stockholder or director of the Corporation under the provisions of
the General Corporation Law of the State of Delaware, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice. Neither the business to be transacted at, nor the
purpose of, any annual or special meeting of the stockholders of the Board of
Directors need be specified in any waiver of notice of such meeting.
SECTION 6.5. AUDITS. The accounts, books and records of the
Corporation shall be audited upon the conclusion of each fiscal year by an
independent certified public accountant selected by the Board of Directors, and
it shall be the duty of the Board of Directors to cause such audit to be made
annually.
SECTION 6.6. RESIGNATIONS. Any director or any officer, whether
elected or appointed, may resign at any time by serving written notice of such
resignation on the Chairman of the Board, the President or the Secretary, and
such resignation shall be deemed to be effective as of the close of business on
the date said notice is received by the Chairman of the Board, the President,
or the Secretary or at such later date as is stated therein. No formal action
shall be required of the Board of Directors or the stockholders to make any
such resignation effective.
SECTION 6.7. INDEMNIFICATION AND INSURANCE. (A) Each person who was
or is made a party or is threatened to be made a party to or is involved in any
action, suit, or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or
she or a person of whom he or she is the legal representative is or was a
director, officer or employee of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of any
other corporation or a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the General Corporation Law
of the State of Delaware as the same exists or may hereafter be amended (but,
in the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against all
expense, liability and
-11-
<PAGE> 15
loss (including, without limitation, attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that except as provided in
paragraph (B) of this Bylaw with respect to proceedings seeking to enforce
rights to indemnification, the Corporation shall indemnify any such person
seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation.
(B) If a claim under paragraph (A) of this Bylaw is not paid in full
by the Corporation within thirty days after a written claim has been received
by the Corporation, the claimant may at any time thereafter bring suit against
the Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than
an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the General
Corporation Law of the State of Delaware for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense shall
be on the Corporation. Neither the failure of the Corporation (including its
Board of Directors, independent legal counsel or stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the General Corporation Law of the
State of Delaware, nor an actual determination by the Corporation (including
its Board of Directors, independent legal counsel or stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that the claimant has not met the applicable
standard of conduct.
(C) Following any "change in control" of the Corporation of the type
required to be reported under Item 1 of Form 8-K promulgated under the Exchange
Act, any determination as to entitlement to indemnification shall be made by
independent legal counsel selected by the claimant, which independent legal
counsel shall be retained by the Board of Directors on behalf of the
Corporation.
(D) The right to indemnification and the payment of expenses incurred
in defending a proceeding in advance of its final disposition conferred in this
Bylaw shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise.
-12-
<PAGE> 16
(E) The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the General Corporation Law of the State of Delaware.
(F) The Corporation may, to the extent authorized from time to time
by the Board of Directors, grant rights to indemnification, and rights to be
paid by the Corporation the expenses incurred in defending any proceeding in
advance of its final disposition, to any agent of the Corporation to the
fullest extent of the provisions of this Bylaw with respect to the
indemnification and advancement of expenses of directors, officers and
employees of the Corporation.
(G) The right to indemnification conferred in this Bylaw shall be a
contract right and shall include the right to be paid by the Corporation the
expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that if the General Corporation Law of the
State of Delaware requires, the payment of such expenses incurred by a director
or officer in his or her capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such person while a
director or officer, including, with limitation, service to an employee benefit
plan) in advance of the final disposition of a proceeding, shall be made only
upon delivery to the Corporation of an undertaking by or on behalf of such
director or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified
under this Bylaw or otherwise.
(H) Any amendment or repeal of this Article VI shall not adversely
affect any right or protection existing hereunder in respect of any act or
omission occurring prior to such amendment or repeal.
ARTICLE VII
AMENDMENTS
SECTION 7.1. AMENDMENTS. These Bylaws may be amended, added to,
rescinded or repealed at any meeting of the Board of Directors or of the
stockholders, provided notice of the proposed change was given in the notice of
the meeting and, in the case of a meeting of the Board of Directors, in a
notice given no less than twenty-four hours prior to the meeting; provided,
however, that, in the case of amendments by stockholders, notwithstanding any
other provisions of these Bylaws or any provision of law which might otherwise
permit a lesser vote or no vote, but in addition to any affirmative vote of the
holders of any particular class or series of the stock required by law, the
Certificate of Incorporation or these Bylaws, the affirmative vote of the
holders of at least 80 percent of the voting power of the then outstanding
Voting Stock, voting together as a single class, shall be required to alter,
amend or repeal any provision of these Bylaws.
-13-
<PAGE> 17
Dated as of March 15, 1995
/s/ WILLIAM J. HALLINAN
_____________________________________
William J. Hallinan, Secretary
-14-
<PAGE> 1
EXHIBIT 4.B
[FORM OF FACE OF SPECIMEN CERTIFICATE]
COMMON STOCK COMMON STOCK
INCORPORATED UNDER THE LAWS PAR VALUE $0.01
OF THE STATE OF DELAWARE
__________________
SHARES
THIS CERTIFICATE IS TRANSFERABLE CUSIP 317928 10 9
IN CHICAGO, LOS ANGELES SEE REVERSE FOR
OR NEW YORK CERTAIN DEFINITIONS
[ DRAWING OF GEORGE WASHINGTON ]
THE FINOVA GROUP INC.
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
The Finova Group Inc., transferable on the books of the Corporation by the
holder hereof in person or by duly authorized attorney upon surrender of this
Certificate properly endorsed. This Certificate is not valid unless
countersigned by a Transfer Agent and registered by a Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
Dated:
/s/ S. EICHENFIELD /s/ W.J. HALLINAN
_________________________ [CORPORATE LOGO] ____________________
CHAIRMAN SECRETARY
Countersigned and Registered:
HARRIS TRUST AND SAVINGS BANK
(CHICAGO)
Transfer Agent and Registrar
By:________________________
AUTHORIZED SIGNATURE
NUMBER
FG ______________
[CORPORATE SEAL]
<PAGE> 2
[FORM OF REVERSE OF SPECIMEN CERTIFICATE]
THE FINOVA GROUP INC.
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS,
A FULL STATEMENT OF THE DESIGNATIONS, PREFERENCES, LIMITATIONS AND RELATIVE
RIGHTS OF EACH CLASS OF CAPITAL STOCK OR SERIES THEREOF OF THE COMPANY
AUTHORIZED TO BE ISSUED AND THE VARIATIONS IN THE RELATIVE RIGHTS AND
PREFERENCES BETWEEN THE SHARES OF EACH SUCH SERIES SO FAR AS THE SAME HAVE
BEEN FIXED AND DETERMINED AND OF THE AUTHORITY OF THE BOARD OF DIRECTORS TO
FIX AND DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES,
SUCH REQUEST MAY BE MADE TO THE COMPANY OR TO THE TRANSFER AGENT.
This certificate also evidences and entitles the holder hereof to certain
rights as set forth in a Rights Agreement between The Finova Group Inc.,
formerly GFC Financial Corporation, and Bank One of Arizona, NA, formerly The
Valley National Bank of Arizona, dated as of February 16, 1992 (the "Rights
Agreement"), the terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal executive offices of The
Finova Group Inc. Under certain circumstances, as set forth in the Rights
Agreement, such rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. The Finova Group Inc. will mail to
the holder of this certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor. Under certain circumstances, as
set forth in the Rights Agreement, rights beneficially owned by Acquiring
Persons (as defined in the Rights Agreement) may become null and void.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations;
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
TOD - transfer on death
UNIF GIFT MIN ACT - ____________Custodian____________
(Cust) (Minor)
under Uniform Gifts to Minors
Act _____________________________
(State)
UNIF TRF MIN ACT - ___________Custodian_____________
(Cust) (Minor)
(until age ______) under Uniform
Transfers to Minors Act _________
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, ____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
<TABLE>
<S> <C>
___________________________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)
___________________________________________________________________________________________________
___________________________________________________________________________________________________
___________________________________________________________________________________________shares
of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and
appoint
_____________________________________________________________________________________________Attorney
to transfer the said stock on the books of the within named Company with full power of substitution
in the premises.
Dated _____________________________ X________________________________________
X________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF
THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed
By_________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS,
SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
MEDALLION PROGRAM, PURSUANT TO SEC RULE 17AD-15.
___________________________________________________________________________________________________
</TABLE>
<PAGE> 1
EXHIBIT 4.H
GFC FINANCIAL CORPORATION
1992 STOCK INCENTIVE PLAN
<PAGE> 2
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 GFC Financial Corporation, 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.
2
<PAGE> 3
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).
3
<PAGE> 4
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
4
<PAGE> 5
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
5
<PAGE> 6
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
6
<PAGE> 7
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.
7
<PAGE> 8
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
8
<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.
9
<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.
(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
10
<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,
11
<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).
12
<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.
13
<PAGE> 1
EXHIBIT 10.A.1
GREYHOUND FINANCIAL CORPORATION
FIRST AMENDMENT DATED AS OF SEPTEMBER 30, 1994
TO SIXTH AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT
This FIRST AMENDMENT TO SIXTH AMENDMENT AND RESTATEMENT OF CREDIT
AGREEMENT (this "Amendment") is dated as of September 30, 1994 and entered into
by and among GREYHOUND FINANCIAL CORPORATION, a Delaware corporation (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 (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 (i) the definition of
"Margin" in Section 1.01 of the Credit Agreement be amended, (ii) the fees
referred to in Section 2.10 of the Credit Agreement be amended and (iii) the
Commitment of certain Lenders be increased;
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. NEW DEFINITIONS. Section 1.01 of the Credit Agreement is hereby
amended by deleting therefrom the definition of the term "Margin" and
substituting the following therefor:
"`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:
1
<PAGE> 2
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 -15.00 -15.00
Level 2 -17.50 -17.50
Level 3 -20.00 -20.00
Level 4 -35.00 -10.00
Level 5 0.00 50.00
</TABLE>
Table B
Eurodollar 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 22.50 35.00
Level 2 32.50 45.00
Level 3 42.50 55.00
Level 4 65.00 90.00
Level 5 100.00 150.00
</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."
B. AMENDMENT TO SECTION 2.01. Section 2.01(a) of the Credit Agreement is
hereby amended by replacing the phrase "the signature pages" appearing therein
with the phrase "Schedule 2".
C. 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:
2
<PAGE> 3
" with respect to each day that (i) Level 1 is
applicable, 0.15% per annum, (ii) Level 2 is applicable, 0.175%
per annum, (iii) Level 3 is applicable, 0.20% per annum, (iv)
Level 4 is applicable, 0.35% per annum, or (v) Level 5 is
applicable, 0.50% per annum".
D. ADDITION OF SCHEDULE; CHANGES TO COMMITMENTS. The Credit
Agreement is hereby amended by adding thereto a new Schedule 2 in the form of
Annex I to this Amendment. The Commitments set forth on the signature pages to
the Agreement are hereby deleted and the Commitments set forth on Schedule 2 are
substituted therefor.
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
3
<PAGE> 4
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 or after October 3, 1994 on which all of the following conditions
precedent shall have been satisfied (such date being referred to herein as the
"First Amendment Effective Date"):
A. On or before the First 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 First 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 First 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.
4
<PAGE> 5
B. The Lenders and their respective counsel shall have received
originally executed copies of one or more favorable written opinions of W. J.
Hallinan, Vice President-General Counsel and Secretary of the Company, in form
and substance reasonably satisfactory to the Agents and their counsel, dated as
of the First Amendment Effective Date and setting forth substantially the
matters in the opinions designated in Annex II to this Amendment and as to such
other matters as the Agents acting on behalf of the Lenders may reasonably
request.
C. On or before the First 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.
D. On or before the First Amendment Effective Date, the Company
shall have paid to the Administrative Agent for distribution to each Lender
party to this Amendment, an amount equal to (i) 0.05% multiplied by the amount
set forth opposite such Lender's name under Column A of Annex III plus (ii)
0.10% multiplied by the amount set forth opposite such Lender's name under
Column B of Annex III to this Amendment.
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.
5
<PAGE> 6
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 the Lenders.
[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:
GREYHOUND FINANCIAL CORPORATION
/s/
By__________________________
Title_______________________
/s/
By__________________________
Title_______________________
The Lenders:
CITIBANK, N.A. (Individually and as an Agent
and Administrative Agent)
/s/
By ___________________________
Title_________________________
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
/s/
By ___________________________
Title ________________________
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (as an Agent)
/s/
By ___________________________
Title ________________________
BANK OF MONTREAL (Individually
and as an Agent)
/s/
By ___________________________
Title ________________________
CHEMICAL BANK (Individually
and as an Agent)
/s/
By ___________________________
Title ________________________
NATIONAL WESTMINSTER BANK USA
(Individually and as an Agent)
/s/
By ___________________________
Title ________________________
BANK OF AMERICA ILLINOIS
/s/
By ___________________________
Title_________________________
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
/s/
By ___________________________
Title_________________________
CREDIT SUISSE
/s/
By ___________________________
Title_________________________
/s/
By ___________________________
Title_________________________
S-1
<PAGE> 8
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
LOS ANGELES AGENCY
/s/
By ___________________________
Title_________________________
NATIONSBANK OF GEORGIA, N.A.
/s/
By ___________________________
Title_________________________
UNION BANK OF SWITZERLAND LOS ANGELES BRANCH
/s/
By____________________________
Title_________________________
/s/
By____________________________
Title_________________________
WESTDEUTSCHE LANDESBANK GIROZENTRALE -
NEW YORK AND CAYMAN ISLANDS BRANCHES
/s/
By____________________________
Title_________________________
/s/
By____________________________
Title_________________________
CREDIT LYONNAIS SAN FRANCISCO BRANCH
/s/
By ___________________________
Title_________________________
FIRST INTERSTATE BANK OF ARIZONA, N.A.
/s/
By ___________________________
Title_________________________
NATIONAL WESTMINSTER BANK PLC
/s/
By ___________________________
Title_________________________
ROYAL BANK OF CANADA
/s/
By ___________________________
Title_________________________
SOCIETE GENERALE
/s/
By ___________________________
Title_________________________
BANK ONE, ARIZONA, N.A.
/s/
By ___________________________
Title_________________________
DRESDNER BANK AG LOS ANGELES AGENCY
/s/
By ___________________________
Title_________________________
/s/
By ___________________________
Title_________________________
UNION BANK
/s/
By ___________________________
Title_________________________
S-2
<PAGE> 9
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.,
LOS ANGELES AGENCY
/s/
By____________________________
Title_________________________
/s/
By____________________________
Title_________________________
THE MITSUBISHI TRUST AND BANKING CORPORATION,
ACTING THROUGH ITS LOS ANGELES AGENCY
/s/
By ___________________________
Title_________________________
ARAB BANKING CORPORATION
/s/
By ___________________________
Title_________________________
THE BANK OF NOVA SCOTIA
/s/
By ___________________________
Title_________________________
FIRST FIDELITY BANK, NATIONAL ASSOCIATION
/s/
By ___________________________
Title_________________________
BANK HAPOALIM, B.M., LOS ANGELES BRANCH
/s/
By____________________________
Title_________________________
/s/
By____________________________
Title_________________________
BANK OF AMERICA ARIZONA
/s/
By ___________________________
Title_________________________
BANK OF HAWAII
/s/
By ___________________________
Title_________________________
BANQUE NATIONALE DE PARIS
/s/
By____________________________
Title_________________________
/s/
By____________________________
Title_________________________
COMERICA BANK
/s/
By ___________________________
Title_________________________
CREDIT AGRICOLE
/s/
By ___________________________
Title_________________________
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK
/s/
By ___________________________
Title_________________________
S-3
<PAGE> 10
KREDIETBANK N.V.
/s/
By ___________________________
Title_________________________
/s/
By ___________________________
Title_________________________
NBD BANK, N.A.
/s/
By ___________________________
Title_________________________
ISTITUTO BANCARIO SAN PAOLO DI TORINO S.P.A.
/s/
By____________________________
Title_________________________
/s/
By____________________________
Title_________________________
SANWA BANK, LTD.
/s/
By____________________________
Title_________________________
UNITED STATES NATIONAL BANK OF OREGON
/s/
By____________________________
Title_________________________
ABN AMRO BANK N.V., LOS ANGELES INTERNATIONAL BRANCH
/s/
By____________________________
Title_________________________
By____________________________
Title_________________________
BANK OF IRELAND
/s/
By____________________________
Title_________________________
THE BANK OF CALIFORNIA, N.A.
/s/
By____________________________
Title_________________________
FUJI BANK, LTD.
/s/
By____________________________
Title_________________________
THE SAKURA BANK, LTD.
/s/
By____________________________
Title_________________________
BANQUE PARIBAS
/s/
By____________________________
Title_________________________
COMPAGNIE FINANCIERE DE CIC ET DE L'UNION EUROPEENNE
/s/
By____________________________
Title_________________________
/s/
By____________________________
Title_________________________
S-4
<PAGE> 11
SUMITOMO BANK, LTD.
/s/
By____________________________
Title_________________________
DEUTSCHE BANK AG NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES
/s/
By____________________________
Title_________________________
/s/
By____________________________
Title_________________________
COMMERZBANK
/s/
By____________________________
Title_________________________
THE DAI-ICHI KANGYO BANK, LTD.
LOS ANGELES AGENCY
/s/
By____________________________
Title_________________________
MONTE DEI PASCHI DI SIENA
/s/
By____________________________
Title_________________________
/s/
By____________________________
Title_________________________
THE SUMITOMO TRUST AND BANKING CO., LTD.,
LOS ANGELES AGENCY
/s/
By____________________________
Title_________________________
S-5
<PAGE> 12
ANNEX I
TO FIRST AMENDMENT
TO CREDIT AGREEMENT (SHORT TERM FACILITY)
SCHEDULE 2
TO FIRST AMENDMENT TO CREDIT AGREEMENT
(SHORT TERM FACILITY)
<TABLE>
<CAPTION>
COMMITMENT LENDERS
----------- -------
<S> <C>
$60,000,000 CITIBANK, N.A.
$60,000,000 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
$60,000,000 BANK OF MONTREAL
$60,000,000 CHEMICAL BANK
$25,000,000 NATIONAL WESTMINSTER BANK USA
$5,000,000 BANK OF AMERICA ILLINOIS
$50,000,000 THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
$25,000,000 CREDIT SUISSE
$37,500,000 THE INDUSTRIAL BANK OF JAPAN, LIMITED, LOS ANGELES AGENCY
$32,500,000 NATIONSBANK OF GEORGIA, N.A.
$27,500,000 UNION BANK OF SWITZERLAND LOS ANGELES BRANCH
$27,500,000 WESTDEUTSCHE LANDESBANK GIROZENTRALE - NEW YORK AND CAYMAN ISLANDS BRANCHES
$25,000,000 CREDIT LYONNAIS SAN FRANCISCO BRANCH
$25,000,000 FIRST INTERSTATE BANK OF ARIZONA, N.A.
$25,000,000 NATIONAL WESTMINSTER BANK PLC
$25,000,000 ROYAL BANK OF CANADA
$25,000,000 SOCIETE GENERALE
$20,000,000 BANK ONE, ARIZONA, N.A.
$17,500,000 DRESDNER BANK AG LOS ANGELES AGENCY
$25,000,000 UNION BANK
$15,000,000 THE LONG-TERM CREDIT BANK OF JAPAN, LTD., LOS ANGELES AGENCY
$15,000,000 THE MITSUBISHI TRUST AND BANKING CORPORATION, acting through its LOS ANGELES AGENCY
$12,500,000 ARAB BANKING CORPORATION
$25,000,000 THE BANK OF NOVA SCOTIA
$12,500,000 FIRST FIDELITY BANK, NATIONAL ASSOCIATION
$10,000,000 BANK HAPOALIM, B.M., LOS ANGELES BRANCH
$10,000,000 BANK OF AMERICA ARIZONA
$12,500,000 BANK OF HAWAII
$10,000,000 BANQUE NATIONALE DE PARIS
$10,000,000 COMERICA BANK
$15,000,000 CREDIT AGRICOLE
$10,000,000 DG BANK DEUTSCHE GENOSSENSCHAFTSBANK
$15,000,000 KREDIETBANK N.V.
$10,000,000 NBD BANK, N.A.
$10,000,000 ISTITUTO BANCARIO SAN PAOLO DI TORINO S.P.A.
</TABLE>
Annex I-1
<PAGE> 13
<TABLE>
<CAPTION>
<S> <C>
$10,000,000 SANWA BANK, LTD.
$10,000,000 UNITED STATES NATIONAL BANK OF OREGON
$10,000,000 ABN AMRO BANK N.V., LOS ANGELES INTERNATIONAL BRANCH
$7,500,000 BANK OF IRELAND
$7,500,000 THE BANK OF CALIFORNIA, N.A.
$10,000,000 FUJI BANK, LTD.
$5,000,000 THE SAKURA BANK, LTD.
$15,000,000 BANQUE PARIBAS
$12,500,000 COMPAGNIE FINANCIERE DE CIC ET DE L'UNION EUROPEENNE
$5,000,000 SUMITOMO BANK, LTD.
$27,500,000 DEUTSCHE BANK AG NEW YORK AND/OR CAYMAN ISLANDS BRANCHES
$10,000,000 COMMERZBANK AG, LOS ANGELES BRANCH
$5,000,000 THE DAI-ICHI KANGYO BANK, LTD. LOS ANGELES AGENCY
$5,000,000 MONTE DEI PASCHI DI SIENA
$10,000,000 THE SUMITOMO TRUST AND BANKING CO., LTD., LOS ANGELES AGENCY
Total Commitments:
$1,000,000,000
</TABLE>
Annex I-2
<PAGE> 14
ANNEX III
TO FIRST AMENDMENT TO SIXTH AMENDED AND
RESTATED CREDIT AGREEMENT
AMOUNTS FOR PURPOSES OF CALCULATION IN SECTION 3D
<TABLE>
<CAPTION>
COLUMN A COLUMN B
AMOUNT FOR AMOUNT FOR
PURPOSES OF PURPOSES OF
CALCULATION IN CALCULATION IN
SECTION 3D(I) SECTION 3D(II) LENDERS
- -------------- -------------- --------
<S> <C> <C>
$13,000,000 $47,000,000 CITIBANK, N.A.
$60,000,000 $0 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
$60,000,000 $0 BANK OF MONTREAL
$55,500,000 $4,500,000 CHEMICAL BANK
$25,000,000 $0 NATIONAL WESTMINSTER BANK USA
$5,000,000 $0 BANK OF AMERICA ILLINOIS
$50,000,000 $0 THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
$25,000,000 $0 CREDIT SUISSE
$37,500,000 $0 THE INDUSTRIAL BANK OF JAPAN LIMITED, LOS ANGELES AGENCY
$32,500,000 $0 NATIONSBANK OF GEORGIA, N.A.
$27,500,000 $0 UNION BANK OF SWITZERLAND LOS ANGELES BRANCH
$27,500,000 $0 WESTDEUTSCHE LANDESBANK GIROZENTRALE - NEW YORK
AND CAYMAN ISLANDS BRANCHES
$25,000,000 $0 CREDIT LYONNAIS SAN FRANCISCO BRANCH
$25,000,000 $0 FIRST INTERSTATE BANK OF ARIZONA, N.A.
$25,000,000 $0 NATIONAL WESTMINSTER BANK PLC
$25,000,000 $0 ROYAL BANK OF CANADA
$25,000,000 $0 SOCIETE GENERALE
$20,000,000 $0 BANK ONE, ARIZONA, N.A.
$17,500,000 $0 DRESDNER BANK AG LOS ANGELES AGENCY
$17,500,000 $7,500,000 UNION BANK
$15,000,000 $0 THE LONG-TERM CREDIT BANK OF JAPAN, LTD., LOS ANGELES AGENCY
$15,000,000 $0 THE MITSUBISHI TRUST AND BANKING CORPORATION,
acting through its LOS ANGELES AGENCY
$12,500,000 $0 ARAB BANKING CORPORATION
$12,500,000 $12,500,000 THE BANK OF NOVA SCOTIA
$12,500,000 $0 FIRST FIDELITY BANK, NATIONAL ASSOCIATION
$10,000,000 $0 BANK HAPOALIM, B.M., LOS ANGELES BRANCH
$10,000,000 $0 BANK OF AMERICA ARIZONA
$10,000,000 $2,500,000 BANK OF HAWAII
$10,000,000 $0 BANQUE NATIONALE DE PARIS
$10,000,000 $0 COMERICA BANK
$10,000,000 $5,000,000 CREDIT AGRICOLE
</TABLE>
Annex III -1
<PAGE> 15
<TABLE>
<CAPTION>
<S> <C> <C>
$10,000,000 $0 DG BANK DEUTSCHE GENOSSENSCHAFTSBANK
$10,000,000 $5,000,000 KREDIETBANK N.V.
$10,000,000 $0 NBD BANK, N.A.
$10,000,000 $0 ISTITUTO BANCARIO SAN PAOLO DI TORINO S.P.A.
$10,000,000 $0 SANWA BANK, LTD.
$10,000,000 $0 UNITED STATES NATIONAL BANK OF OREGON
$10,000,000 $0 ABN AMRO BANK N.V., LOS ANGELES INTERNATIONAL BRANCH
$7,500,000 $0 BANK OF IRELAND
$5,000,000 $2,500,000 THE BANK OF CALIFORNIA, N.A.
$5,000,000 $5,000,000 FUJI BANK, LTD.
$5,000,000 $0 THE SAKURA BANK, LTD.
$15,000,000 $0 BANQUE PARIBAS
$10,500,000 $2,000,000 COMPAGNIE FINANCIERE DE CIC ET DE L'UNION EUROPEENNE
$5,000,000 $0 SUMITOMO BANK, LTD.
$27,500,000 $0 DEUTSCHE BANK AG NEW YORK AND/OR CAYMAN ISLANDS BRANCHES
$10,000,000 $0 COMMERZBANK AG, LOS ANGELES BRANCH
$5,000,000 $0 THE DAI-ICHI KANGYO BANK, LTD. LOS ANGELES AGENCY
$5,000,000 $0 MONTE DEI PASCHI DI SIENA
$10,000,000 $0 THE SUMITOMO TRUST AND BANKING CO., LTD., LOS ANGELES AGENCY
</TABLE>
Annex III-2
<PAGE> 1
EXHIBIT 10.B.1
GREYHOUND FINANCIAL CORPORATION
FIRST AMENDMENT DATED AS OF SEPTEMBER 30, 1994
TO CREDIT AGREEMENT (SHORT TERM FACILITY)
This FIRST AMENDMENT TO CREDIT AGREEMENT (SHORT TERM FACILITY)
(this "Amendment") is dated as of September 30, 1994 and entered into by and
among GREYHOUND FINANCIAL CORPORATION, a Delaware corporation (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 (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 (i) the definition of
"Margin" in Section 1.01 of the Credit Agreement be amended, (ii) the fees
referred to in Section 2.09 of the Credit Agreement be amended and (iii) the
Commitments of certain Lenders be increased;
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. NEW DEFINITIONS. Section 1.01 of the Credit Agreement is
hereby amended by deleting therefrom the definition of the term "Margin" and
substituting the following therefor:
"'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:
-1-
<PAGE> 2
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 -12.50 -12.50
Level 2 -13.75 -13.75
Level 3 -15.00 -15.00
Level 4 -25.00 0.00
Level 5 10.00 60.00
</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 to 50%
----- ------------- ---------------
<S> <C> <C>
Level 1 25.00 37.50
Level 2 36.25 48.75
Level 3 47.50 60.00
Level 4 75.00 100.00
Level 5 110.00 160.00
</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 2.01. Section 2.01(a) of the Credit
Agreement is hereby amended by replacing the phrase "the signature pages"
appearing therein with the phrase "Schedule 2".
C. 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:
2
<PAGE> 3
"with respect to each day that
(i) Level 1 is applicable, 0.125% per annum,
(ii) Level 2 is applicable, 0.1375% per annum,
(iii) Level 3 is applicable, 0.15% per annum,
(iv) Level 4 is applicable, 0.25% per annum, or
(v) Level 5 is applicable, 0.40% per annum".
D. ADDITION OF SCHEDULE; CHANGES TO COMMITMENTS. The Credit
Agreement is hereby amended by adding thereto a new Schedule 2 in the form of
Annex I to this Amendment. The Commitments set forth on the signature pages to
the Agreement are hereby deleted and the Commitments set forth on Schedule 2
are substituted therefor.
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
3
<PAGE> 4
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 or after October 3, 1994 on which all of the following conditions
precedent shall have been satisfied (such date being referred to herein as the
"First Amendment Effective Date"):
A. On or before the First 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 First 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 First 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.
4
<PAGE> 5
B. The Lenders and their respective counsel shall have
received originally executed copies of one or more favorable written opinions
of W.J. Hallinan, Vice President-General Counsel and Secretary of the Company,
in form and substance reasonably satisfactory to the Agents and their counsel,
dated as of the First Amendment Effective Date and setting forth substantially
the matters in the opinions designated in Annex II to this Amendment and as to
such other matters as the Agents acting on behalf of the Lenders may reasonably
request.
C. On or before the First 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.
D. On or before the First Amendment Effective Date, the
Company shall have paid to the Administrative Agent for distribution to each
Lender party to this Amendment, an amount equal to (i) 0.05% multiplied by the
amount set forth opposite such Lender's name under Column A of Annex III plus
(ii) 0.10% multiplied by the amount set forth opposite such Lender's name under
Column B of Annex III to this Amendment.
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
5
<PAGE> 6
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 the Lenders.
[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:
GREYHOUND FINANCIAL CORPORATION
/s/
By __________________________
Title _______________________
/s/
By __________________________
Title _______________________
The Lenders:
CITIBANK, N.A. (Individually and as
an Agent and Administrative Agent)
/s/
By __________________________
Title _______________________
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
/s/
By __________________________
Title _______________________
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION (as an
Agent)
/s/
By __________________________
Title _______________________
BANK OF MONTREAL (Individually
and as an Agent)
/s/
By __________________________
Title _______________________
CHEMICAL BANK (Individually
and as an Agent)
/s/
By __________________________
Title _______________________
NATIONAL WESTMINSTER BANK USA
(Individually and as an Agent)
/s/
By __________________________
Title _______________________
BANK OF AMERICA ILLINOIS
/s/
By __________________________
Title _______________________
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
/s/
By __________________________
Title _______________________
CREDIT SUISSE
/s/
By __________________________
Title _______________________
/s/
By __________________________
Title _______________________
S-1
<PAGE> 8
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
LOS ANGELES AGENCY
/s/
By __________________________
Title _______________________
NATIONSBANK OF GEORGIA, N.A.
/s/
By __________________________
Title _______________________
UNION BANK OF SWITZERLAND LOS ANGELES BRANCH
/s/
By __________________________
Title _______________________
/s/
By __________________________
Title _______________________
WESTDEUTSCHE LANDESBANK GIROZENTRALE -
NEW YORK AND CAYMAN ISLANDS BRANCHES
/s/
By __________________________
Title _______________________
/s/
By __________________________
Title _______________________
CREDIT LYONNAIS SAN FRANCISCO BRANCH
/s/
By __________________________
Title _______________________
FIRST INTERSTATE BANK OF ARIZONA, N.A.
/s/
By __________________________
Title _______________________
NATIONAL WESTMINSTER BANK PLC
/s/
By __________________________
Title _______________________
ROYAL BANK OF CANADA
/s/
By __________________________
Title _______________________
SOCIETE GENERALE
/s/
By __________________________
Title _______________________
BANK ONE, ARIZONA, N.A.
/s/
By __________________________
Title _______________________
DRESDNER BANK AG LOS ANGELES AGENCY
/s/
By __________________________
Title _______________________
/s/
By __________________________
Title _______________________
UNION BANK
/s/
By __________________________
Title _______________________
S-2
<PAGE> 9
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., LOS ANGELES AGENCY
/s/
By____________________________
Title_________________________
/s/
By____________________________
Title_________________________
THE MITSUBISHI TRUST AND BANKING CORPORATION,
ACTING THROUGH ITS LOS ANGELES AGENCY
/s/
By ___________________________
Title_________________________
ARAB BANKING CORPORATION
/s/
By ___________________________
Title_________________________
THE BANK OF NOVA SCOTIA
/s/
By ___________________________
Title_________________________
FIRST FIDELITY BANK, NATIONAL ASSOCIATION
/s/
By ___________________________
Title_________________________
BANK HAPOALIM, B.M., LOS ANGELES BRANCH
/s/
By____________________________
Title_________________________
/s/
By____________________________
Title_________________________
BANK OF AMERICA ARIZONA
/s/
By ___________________________
Title_________________________
BANK OF HAWAII
/s/
By ___________________________
Title_________________________
BANQUE NATIONALE DE PARIS
/s/
By____________________________
Title_________________________
/s/
By____________________________
Title_________________________
COMERICA BANK
/s/
By ___________________________
Title_________________________
CREDIT AGRICOLE
/s/
By ___________________________
Title_________________________
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK
/s/
By ___________________________
Title_________________________
S-3
<PAGE> 10
KREDIETBANK N.V.
/s/
By ___________________________
Title_________________________
/s/
By ___________________________
Title_________________________
NBD BANK, N.A.
/s/
By ___________________________
Title_________________________
ISTITUTO BANCARIO SAN PAOLO DI TORINO S.P.A.
/s/
By____________________________
Title_________________________
/s/
By____________________________
Title_________________________
SANWA BANK, LTD.
/s/
By____________________________
Title_________________________
UNITED STATES NATIONAL BANK OF OREGON
/s/
By____________________________
Title_________________________
ABN AMRO BANK N.V., LOS ANGELES INTERNATIONAL BRANCH
/s/
By____________________________
Title_________________________
/s/
By____________________________
Title_________________________
BANK OF IRELAND
/s/
By____________________________
Title_________________________
THE BANK OF CALIFORNIA, N.A.
/s/
By____________________________
Title_________________________
FUJI BANK, LTD.
/s/
By____________________________
Title_________________________
THE SAKURA BANK, LTD.
/s/
By____________________________
Title_________________________
BANQUE PARIBAS
/s/
By____________________________
Title_________________________
COMPAGNIE FINANCIERE DE CIC ET DE L'UNION EUROPEENNE
/s/
By____________________________
Title_________________________
/s/
By____________________________
Title_________________________
S-4
<PAGE> 11
SUMITOMO BANK, LTD.
/s/
By____________________________
Title_________________________
DEUTSCHE BANK AG NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES
/s/
By____________________________
Title_________________________
/s/
By____________________________
Title_________________________
COMMERZBANK
/s/
By____________________________
Title_________________________
THE DAI-ICHI KANGYO BANK, LTD. LOS ANGELES AGENCY
/s/
By____________________________
Title_________________________
MONTE DEI PASCHI DI SIENA
/s/
By____________________________
Title_________________________
/s/
By____________________________
Title_________________________
THE SUMITOMO TRUST AND BANKING CO., LTD.,
LOS ANGELES AGENCY
/s/
By____________________________
Title_________________________
S-5
<PAGE> 12
ANNEX I
TO FIRST AMENDMENT TO CREDIT AGREEMENT
(SHORT TERM FACILITY)
SCHEDULE 2
TO SIXTH AMENDED AND RESTATED CREDIT AGREEMENT
<TABLE>
<CAPTION>
COMMITMENT LENDERS
---------- -------
<S> <C>
$60,000,000 CITIBANK, N.A.
$60,000,000 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
$60,000,000 BANK OF MONTREAL
$60,000,000 CHEMICAL BANK
$25,000,000 NATIONAL WESTMINSTER BANK USA
$5,000,000 BANK OF AMERICA ILLINOIS
$50,000,000 THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
$25,000,000 CREDIT SUISSE
$37,500,000 THE INDUSTRIAL BANK OF JAPAN, LIMITED, LOS ANGELES AGENCY
$32,500,000 NATIONSBANK OF GEORGIA, N.A.
$27,500,000 UNION BANK OF SWITZERLAND LOS ANGELES BRANCH
$27,500,000 WESTDEUTSCHE LANDESBANK GIROZENTRALE - NEW YORK AND CAYMAN ISLANDS BRANCHES
$25,000,000 CREDIT LYONNAIS SAN FRANCISCO BRANCH
$25,000,000 FIRST INTERSTATE BANK OF ARIZONA, N.A.
$25,000,000 NATIONAL WESTMINSTER BANK PLC
$25,000,000 ROYAL BANK OF CANADA
$25,000,000 SOCIETE GENERALE
$20,000,000 BANK ONE, ARIZONA, N.A.
$17,500,000 DRESDNER BANK AG LOS ANGELES AGENCY
$25,000,000 UNION BANK
$15,000,000 THE LONG-TERM CREDIT BANK OF JAPAN, LTD., LOS ANGELES AGENCY
$15,000,000 THE MITSUBISHI TRUST AND BANKING CORPORATION, acting through its LOS ANGELES AGENCY
$12,500,000 ARAB BANKING CORPORATION
$25,000,000 THE BANK OF NOVA SCOTIA
$12,500,000 FIRST FIDELITY BANK, NATIONAL ASSOCIATION
$10,000,000 BANK HAPOALIM, B.M., LOS ANGELES BRANCH
$10,000,000 BANK OF AMERICA ARIZONA
$12,500,000 BANK OF HAWAII
$10,000,000 BANQUE NATIONALE DE PARIS
$10,000,000 COMERICA BANK
$15,000,000 CREDIT AGRICOLE
$10,000,000 DG BANK DEUTSCHE GENOSSENSCHAFTSBANK
$15,000,000 KREDIETBANK N.V.
$10,000,000 NBD BANK, N.A.
$10,000,000 ISTITUTO BANCARIO SAN PAOLO DI TORINO S.P.A.
</TABLE>
Annex I -1
<PAGE> 13
<TABLE>
<S> <C>
$10,000,000 SANWA BANK, LTD.
$10,000,000 UNITED STATES NATIONAL BANK OF OREGON
$10,000,000 ABN AMRO BANK N.V., LOS ANGELES INTERNATIONAL BRANCH
$7,500,000 BANK OF IRELAND
$7,500,000 THE BANK OF CALIFORNIA, N.A.
$10,000,000 FUJI BANK, LTD.
$5,000,000 THE SAKURA BANK, LTD.
$15,000,000 BANQUE PARIBAS
$12,500,000 COMPAGNIE FINANCIERE DE CIC ET DE L'UNION EUROPEENNE
$5,000,000 SUMITOMO BANK, LTD.
$27,500,000 DEUTSCHE BANK AG NEW YORK AND/OR CAYMAN ISLANDS BRANCHES
$10,000,000 COMMERZBANK
$5,000,000 THE DAI-ICHI KANGYO BANK, LTD. LOS ANGELES AGENCY
$5,000,000 MONTE DEI PASCHI
$10,000,000 THE SUMITOMO TRUST AND BANKING CO., LTD., LOS ANGELES AGENCY
Total Commitments:
$1,000,000,000
</TABLE>
Annex I-2
<PAGE> 14
ANNEX III
TO FIRST AMENDMENT TO CREDIT AGREEMENT
(SHORT TERM FACILITY)
AMOUNTS FOR PURPOSES OF CALCULATION IN SECTION 3D
<TABLE>
<CAPTION>
COLUMN A COLUMN B
AMOUNT FOR AMOUNT FOR
PURPOSES OF PURPOSES OF
CALCULATION IN CALCULATION IN
SECTION 3D(i) SECTION 3D(ii) LENDERS
- -------------- -------------- -------
<S> <C> <C>
$13,000,000 $47,000,000 CITIBANK, N.A.
$60,000,000 $0 BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
$60,000,000 $0 BANK OF MONTREAL
$55,500,000 $4,500,000 CHEMICAL BANK
$25,000,000 $0 NATIONAL WESTMINSTER BANK USA
$5,000,000 $0 BANK OF AMERICA ILLINOIS
$50,000,000 $0 THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
$25,000,000 $0 CREDIT SUISSE
$37,500,000 $0 THE INDUSTRIAL BANK OF JAPAN, LIMITED, LOS ANGELES AGENCY
$32,500,000 $0 NATIONSBANK OF GEORGIA, N.A.
$27,500,000 $0 UNION BANK OF SWITZERLAND LOS ANGELES BRANCH
$27,500,000 $0 WESTDEUTSCHE LANDESBANK GIROZENTRALE - NEW YORK
AND CAYMAN ISLANDS BRANCHES
$25,000,000 $0 CREDIT LYONNAIS SAN FRANCISCO RANCH
$25,000,000 $0 FIRST INTERSTATE BANK OF ARIZONA, N.A.
$25,000,000 $0 NATIONAL WESTMINSTER BANK PLC
$25,000,000 $0 ROYAL BANK OF CANADA
$25,000,000 $0 SOCIETE GENERALE
$20,000,000 $0 BANK ONE, ARIZONA, N.A.
$17,500,000 $0 DRESDNER BANK AG LOS ANGELES AGENCY
$17,500,000 $7,500,000 UNION BANK
$15,000,000 $0 THE LONG-TERM CREDIT BANK OF JAPAN, LTD., LOS ANGELES AGENCY
$15,000,000 $0 THE MITSUBISHI TRUST AND BANKING CORPORATION, acting through its
LOS ANGELES AGENCY
$12,500,000 $0 ARAB BANKING CORPORATION
$12,500,000 $12,500,000 THE BANK OF NOVA SCOTIA
$12,500,000 $0 FIRST FIDELITY BANK, NATIONAL ASSOCIATION
$10,000,000 $0 BANK HAPOALIM, B.M., LOS ANGELES BRANCH
$10,000,000 $0 BANK OF AMERICA ARIZONA
$10,000,000 $2,500,000 BANK OF HAWAII
$10,000,000 $0 BANQUE NATIONALE DE PARIS
$10,000,000 $0 COMERICA BANK
$10,000,000 $5,000,000 CREDIT AGRICOLE
</TABLE>
Annex III -1
<PAGE> 15
<TABLE>
<S> <C> <C>
$10,000,000 $0 DG BANK DEUTSCHE GENOSSENSCHAFTSBANK
$10,000,000 $5,000,000 KREDIETBANK N.V.
$10,000,000 $0 NBD BANK, N.A.
$10,000,000 $0 ISTITUTO BANCARIO SAN PAOLO DI TORINO S.P.A
$10,000,000 $0 SANWA BANK, LTD.
$10,000,000 $0 UNITED STATES NATIONAL BANK OF OREGON
$10,000,000 $0 ABN AMRO BANK N.V., LOS ANGELES INTERNATIONAL BRANCH
$7,500,000 $0 BANK OF IRELAND
$5,000,000 $2,500,000 THE BANK OF CALIFORNIA, N.A.
$5,000,000 $5,000,000 FUJI BANK, LTD.
$5,000,000 $0 THE SAKURA BANK, LTD.
$15,000,000 $0 BANQUE PARIBAS
$10,500,000 $2,000,000 COMPAGNIE FINANCIERE DE CIC ET DE L'UNION EUROPEENNE
$5,000,000 $0 SUMITOMO BANK, LTD.
$27,500,000 $0 DEUTSCHE BANK AG NEW YORK AND/OR CAYMAN ISLANDS BRANCHES
$10,000,000 $0 COMMERZBANK
$5,000,000 $0 THE DAI-ICHI KANGYO BANK, LTD. LOS ANGELES AGENCY
$5,000,000 $0 MONTE DEI PASCHI
$10,000,000 $0 THE SUMITOMO TRUST AND BANKING CO., LTD., LOS ANGELES AGENCY
</TABLE>
Annex III-2
<PAGE> 1
EXHIBIT 10.C.1
(TIER 1 EMPLOYEES)
GFC FINANCIAL CORPORATION
EXECUTIVE SEVERANCE PLAN
1. PURPOSE: To provide management continuity by inducing selected
Executives to remain in the employ of GFC Financial Corporation ("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
1
<PAGE> 2
consideration by The Chairman of the Corporation. Each such Executive's
participation shall be evidenced by a certificate ("Certificate") issued by the
Corporation, 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.
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
2
<PAGE> 3
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"), 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
3
<PAGE> 4
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.
4
<PAGE> 5
5. 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
5
<PAGE> 6
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.
(c) 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 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
6
<PAGE> 7
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.
(d) For purposes of this Agreement, "Window Period" means the 30-day
period following the first anniversary of the Change of Control.
7
<PAGE> 8
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,
(b) by the Executive for Good Reason, 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) within eighteen months
after a Change of Control of the Corporation.
7. BENEFIT ENTITLEMENTS:
(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 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 as
cash bonus (whether or not deferred) under the Corporation's Management
Incentive Plan and Performance Unit 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
8
<PAGE> 9
(ii) Two if the termination is voluntary during the Window Period.
(b) EMPLOYEE PLANS: The Executive's participation in life, accident,
health, compensation deferral, automobile, club membership, and financial
counseling plans of 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
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 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
9
<PAGE> 10
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 GFC Financial Corporation Retirement Income Plan,
or the applicable subsidiary pension plan in which the Executive
participates (in either case, the "Retirement Plan"), 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 Plan (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 Plan, in each case using actuarial
assumptions no less favorable to the Executive than those used in the
Retirement Plan 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
10
<PAGE> 11
the Retirement Plan 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 pension plan 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);
11
<PAGE> 12
(iii) the total qualified and unqualified benefits actually payable to
the Executive or his beneficiaries under the Retirement Plan.
All Special Retirement Benefits and other benefits provided for herein are
provided on the 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 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
12
<PAGE> 13
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 1973 Stock Option Plan,
its 1983 Stock Option and Incentive Plan, its 1992 Stock Incentive Plan and any
later or successor plan or plans (collectively, the "Stock Incentive Plans"),
will be exercisable in full for a period of 90 days (i) following the date of a
Change of Control of the Corporation or (ii) commencing on 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.
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'
Articles of Incorporation, as the case may be, shall indemnify the Executive for
his reasonable
13
<PAGE> 14
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 him 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 him 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
14
<PAGE> 15
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.
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
15
<PAGE> 16
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.
16
<PAGE> 17
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
pension benefits, supplemental executive retirement benefits, disability
benefits, retiree benefits 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 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 eighteen 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.
17
<PAGE> 1
EXHIBIT 10.C.2
(TIER 2 EMPLOYEES)
GFC FINANCIAL CORPORATION
EXECUTIVE SEVERANCE PLAN
1. PURPOSE: To provide management continuity by inducing selected
Executives to remain in the employ of GFC Financial Corporation ("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
1
<PAGE> 2
consideration by The Chairman of the Corporation. Each such Executive's
participation shall be evidenced by a certificate ("Certificate") issued by the
Corporation, 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.
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
2
<PAGE> 3
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 through 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"), 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
3
<PAGE> 4
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.
4
<PAGE> 5
5. 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
5
<PAGE> 6
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.
(c) 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 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
6
<PAGE> 7
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 involuntarily by the Corporation without Cause (other
than as a consequence of his death or disability, or of his retirement at or
after his normal
7
<PAGE> 8
retirement date under the Corporation's or a subsidiary's retirement plan), or
by the Executive for Good Reason, in each case, within eighteen months after a
Change of Control of the Corporation.
7. BENEFIT ENTITLEMENTS:
(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 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 as cash bonus (whether or not deferred) under the Corporation's
Management Incentive Plan and Performance Unit Plan or similar short and long
term cash incentive plans or arrangements providing for performance bonus
payments during the preceding four years.
(b) EMPLOYEE PLANS: The Executive's participation in life, accident,
health, compensation deferral, automobile, club membership, and financial
counseling plans of 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
8
<PAGE> 9
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 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) The total retirement benefits that would be paid to the Executive
or his beneficiaries under the GFC Financial Corporation Retirement Income
Plan, or the applicable subsidiary pension plan in which the Executive
participates (in either case, the "Retirement Plan"), if either (x) the two
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 Plan (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 Plan, in each case using actuarial assumptions no less
favorable to the Executive than those used in the Retirement Plan
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
9
<PAGE> 10
under this subsection (c)(i);
(ii) the total qualified and unqualified benefits actually payable to
the Executive or his beneficiaries under the Retirement Plan.
All Special Retirement Benefits and other benefits provided for herein are
provided on the 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
10
<PAGE> 11
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 1973 Stock Option Plan,
its 1983 Stock Option and Incentive Plan, its 1992 Stock Incentive Plan and any
later or successor plan or plans (collectively, the "Stock Incentive Plans"),
will be exercisable in full for a period of 90 days (i) following the date of a
Change of Control of the Corporation or (ii) commencing on 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.
8. INDEMNIFICATION: If litigation is brought to enforce or interpret
11
<PAGE> 12
any provision contained herein, the Corporation or applicable subsidiary, to the
extent permitted by applicable law and the Corporation's or subsidiaries'
Articles of Incorporation, as the case may be, shall indemnify the Executive for
his 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 him 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 him 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
12
<PAGE> 13
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.
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
13
<PAGE> 14
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.
14
<PAGE> 15
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
pension benefits, supplemental executive retirement benefits, disability
benefits, retiree benefits 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 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 eighteen 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.
15
<PAGE> 1
EXHIBIT 10.D
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 1994 are generally eligible for 50% of their
pro-rata bonus.
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>
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
<PAGE> 2
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 exceed
[ omitted ]. The maximum performance level, 187% achievement, is for the
Company's TSR to exceed [ 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 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.
<PAGE> 3
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:
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. 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.
<PAGE> 1
EXHIBIT 10.E
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 pre-defined
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 Unit or Units 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 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 Units 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:
<PAGE> 2
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 pro-rata 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 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.
<PAGE> 3
(d) 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 pre-established 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), 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) 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) 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.
(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, 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.
<PAGE> 4
(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.
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.
<PAGE> 1
EXHIBIT 10.H
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into as of the 14th day of
February, 1994 between GREYHOUND FINANCIAL CORPORATION, a Delaware corporation,
("GFC") on behalf of itself and, following the closing of the Acquisition
discussed below, on behalf of Fleet Factors Corp., d/b/a Ambassador Factors
Corp. and its successors ("Ambassador") and THOMAS C. PARRINELLO ("Executive").
WITNESSETH:
WHEREAS, upon consummation of the acquisition by GFC of the stock of
Ambassador from Fleet Financial Group, Inc. (the "Acquisition"), Ambassador
will be engaged in the factoring and financing business as a subsidiary of GFC;
and
WHEREAS, Executive is an officer of Heller Financial ("Previous
Employer"); and
WHEREAS, Executive will be, promptly following consummation of the
Acquisition, elected a Senior Executive Vice President of Ambassador by the
Board of Directors of Ambassador (the "Board") and a Senior Vice President of
GFC by the GFC Board of Directors (the "GFC Board"); and
WHEREAS, Executive has agreed to render services to Ambassador or any
successor affiliated with GFC under this Agreement; and
WHEREAS, the purpose of this Agreement is to provide a statement in
writing of the respective responsibilities and agreements of GFC, Ambassador
and Executive with respect to Executive's employment by Ambassador and its
successors.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained in this Agreement, GFC, on behalf of itself and Ambassador upon the
Acquisition, and Executive agree as follows:
1. Employment and Term.
Executive shall serve as Senior Executive Vice President of
Ambassador. The term of Executive's employment shall commence no later than 35
days after the consummation of the Acquisition (the "Effective Date") and will
continue until the third anniversary of the Effective Date (the "Term"). As
used herein, "Ambassador" includes any successor entity, unless expressly
stated to the contrary. In addition, promptly following the Acquisition, or
sooner if possible, the GFC Board shall elect Executive as a Senior Vice
President of GFC.
<PAGE> 2
2. Duties
(a) As Senior Executive Vice President of Ambassador,
Executive shall devote all of his business time to the responsibilities
delegated to Executive by the Board, the Chairman of the Board or the Chief
Executive Officer of Ambassador. Executive shall report directly to the
Chairman and Chief Executive Officer of GFC. During the initial phase, up to 6
months, of the Term, Executive shall act as a Senior Executive Vice President
performing duties with respect to Ambassador traditionally delegated to chief
operating officers of a company. It is intended that during the initial
phase, Howard Rubin shall act as the President of Ambassador. Upon Mr. Rubin's
resignation or following the initial term, whichever occurs earlier, and for
the balance of the Term, Executive shall act as President of Ambassador and
shall be elected to the Board. Executive shall be responsible for the
day-to-day management of the affairs of Ambassador, subject to the direction of
the Board, the Chairman and Chief Executive Officer of Ambassador and direction
of any parent corporation. Additional titles within Ambassador may be granted
to Executive if Ambassador remains a distinct operating entity.
(b) Notwithstanding the above, GFC may merge, consolidate
or sell the stock or assets of Ambassador with or into GFC or any other
affiliated entity, or otherwise dissolve or liquidate Ambassador without
restriction, and Executive's title(s) given to him with respect to Ambassador
may be changed by the new board of directors, in its discretion. It is
intended, in that event, that Executive would retain the title of Senior Vice
President of GFC (unless GFC revises the titles of similar positions generally,
in which case Executive shall be given the equivalent title), and that he
would not carry over titles or Board positions assigned to him at Ambassador.
Executive's general duties shall continue with respect to Ambassador's
operations to be as outlined above without regard to the status of Ambassador
as a separate legal entity or the title(s) given Executive. Nothing herein,
however, shall restrict the Company's right to allocate rights, duties and
responsibilities among its various subsidiaries, divisions and personnel.
3. Compensation, Benefits and Business Expenses.
Ambassador shall pay and provide to Executive as compensation
for his services:
(a) A reimbursement up to $50,000 in the event and to the
extent the Previous Employer does not pay all or part of Executive's 1993
annual bonus to which he would have been entitled had he remained with Previous
Employer, substantiated to GFC's satisfaction; Executive shall be entitled to
the difference between the bonus he actually receives from Previous Employer
and the amount he otherwise would have been entitled;
(b) A base salary ("Base Compensation") of $200,000 per year.
Base Compensation shall be subject to merit increases from time to time as
determined by the Board. Executive's Base Compensation shall be reviewed
annually for the express purpose of considering increases. Base Compensation
shall be payable in such installments as are fixed for salaried employees of
Ambassador generally;
-2-
<PAGE> 3
(c) Incentive awards, options and restricted or performance
stock and incentive plans participation in accordance with terms and provisions
of such plans as shall be adopted from time to time by the Board or the
stockholders of Ambassador, including, without limitation, participation in
Ambassador's Management Incentive Plan ("MIP") and GFC's Performance Share
Incentive Plan ("PSIP"). Executive shall participate in the Ambassador's MIP
at a target percentage of 40% of annual earnings from Base Compensation (as
adjusted from time to time) and in GFC's 1994-1996 and subsequent PSIPs at a
target percentage of 30% of Base Compensation;
(d) (i) Pension benefits, health insurance, fitness
programs, life insurance, accidental death and dismemberment benefits, in each
case in accordance with the terms and provisions of such plans and the policies
of Ambassador Factors; and (ii), executive medical benefits, deferred
compensation plans and reimbursement of dues and expenses for club memberships
in accordance with the terms and provisions of such plans and the policies of
Ambassador or, if none, of GFC; and
(e) Prompt reimbursement in accordance with Ambassador
policies of his reasonable travel and business expenses incurred in connection
with his employment hereunder.
4. Community Service.
Executive shall be free to serve as a director or officer or
both of such not-for-profit corporations as he may desire and to join and
participate in such committees for community or national affairs as he may
select.
5. Conflicts.
Executive shall not be engaged in or employed by any other
person, firm or corporation, in any other business or enterprise whatsoever
during the term of this Agreement without the written permission of GFC.
Executive shall not at any time, in any manner, directly or indirectly,
publish, communicate or disclose to any person, firm or corporation any
confidential or non- public information of any kind concerning any matter
relating to the business of Ambassador, GFC, or any of their affiliates
(collectively, the "Company"), the publication, communication or disclosure of
which may adversely affect the interests of the Company.
6. Use of Information and Name.
Executive recognizes and acknowledges that the name, trade or
service marks, records and confidential plans of the Company's business
together with its list of customers constitute valuable, special and unique
assets of the Company's business. Accordingly, at no time either during or
after the term of this Agreement, shall Executive use such name, marks, records
or plans of the Company's business nor the list of customers of the Company or
disclose them or
-3-
<PAGE> 4
any part thereof to any person, firm, corporation, association or other entity
for any reason or purpose whatsoever.
7. Default by Company.
In the event Ambassador commits a breach or default under this
Agreement, and provided Executive shall not have first breached or defaulted
under this Agreement, Ambassador shall nevertheless make each and every payment
of Base Compensation which would have been otherwise payable to the end of the
Term plus a pro-rata amount of MIP calculated at target performance through the
date any termination of employment arising from such breach or default.
8. Resignation.
In the event Executive wishes to resign as Senior Executive
Vice President or any successive position of Ambassador, or as Senior Vice
President of GFC, he may do so by providing the Board or the GFC Board with at
least one hundred eighty (180) days' written notice of his decision to resign
(not to exceed the remaining term of this Agreement), and this Agreement shall
terminate as of the date specified in the notice. In the event that such
notice is given by Executive he shall, if requested by the Board, participate
during the remainder of his employment in the recruitment of a successor and in
an orderly transition of administration of Executive's duties with Ambassador.
9. Termination.
(a) Ambassador or GFC may terminate this Agreement at any
time if:
(i) Executive, by reason of physical or mental illness, shall
have been unable to perform satisfactorily the services to be rendered by him
hereunder for a consecutive period of one hundred eighty (180) days; or
(ii) Executive, after notice, shall continue to violate or
fail to comply with any of the material terms or provisions hereof; or
(iii) Executive shall be convicted of a felony involving
moral turpitude (meaning a crime that includes the commission of an act of
gross depravity or dishonesty); provided, however, Executive may be suspended
from employment without pay during the pendency of any proceeding which could
result in any such adjudication or conviction.
(b) Any party may terminate this Agreement if the closing
of the Acquisition shall not have occurred by February 28, 1994.
10. Non-Competition.
-4-
<PAGE> 5
If Executive leaves the employ of Ambassador prior to the
normal expiration date of the Term, or if his employment is terminated by
Ambassador or GFC for cause pursuant to paragraph 9 of this Agreement,
Executive shall not directly or indirectly (including without limitation being
employed by an entity that does any of the following) solicit or assist in the
solicitation of any customers, active identified prospective customers or
employees of the Company, nor shall Executive directly or indirectly (as noted
above) use or disclose any confidential information concerning the Company or
its customers, suppliers, personnel, policies, procedures business plans or
prospects, or otherwise held in confidence. This restriction, along with the
restrictions contained in sections 5 (excluding the first sentence) and 6,
shall survive the termination of this Agreement.
11. Entire Agreement.
This Agreement constitutes the entire agreement, and
understanding with respect to the employment of Executive by Ambassador and
appointment as an officer of GFC and supersedes any and all prior agreements
and understandings, whether oral or written, relating thereto. This Agreement
shall not be modified or amended except by written agreement signed by
Executive and by a representative of GFC pursuant to a duly adopted resolution
of its Board authorizing approval of such modification or amendment.
12. Partial Invalidity.
The invalidity, by statute, court decision or otherwise, of
any term or provision of this Agreement shall not affect the validity or
enforceability of any other term or provision hereof.
13. Governing Law.
This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Arizona.
14. Assigns.
This Agreement shall be binding upon and inure to the benefit
of Executive and his estate, and GFC and Ambassador, but neither this Agreement
nor any rights arising hereunder may be assigned or pledged by Executive
without consent of Ambassador. Notwithstanding the foregoing, Executive
acknowledges and understands that Executive is bound by this Agreement until
the closing of the Acquisition even though the obligation to hire Executive is
contingent on that event.
15. Arbitration.
(a) All controversies or claims arising between the parties,
including without limitation, claims arising out of or relating to this
Agreement, the subject matter hereof, and the arbitrability of any claim, shall
be settled by arbitration as
-5-
<PAGE> 6
provided below. The arbitration and all preliminary proceedings related
thereto shall be conducted in accordance with such rules as may be agreed upon
by the parties, or, failing agreement on such rules, in accordance with the
Rules for Commercial Arbitration of the American Arbitration Association
("AAA"), as amended from time to time and as modified by this Agreement. The
dispute shall be presented to a single arbitrator sitting in New York City.
(b) The parties shall select the arbitrator within fifteen
(15) days after demand for arbitration is made by a party. If the parties are
unable to jointly agree on an arbitrator within that period, then either party
may request that the AAA select the arbitrator. Each arbitrator shall possess
substantive legal experience in the principal issues in dispute.
(c) Any discovery permitted shall be limited to information
directly relevant to the controversy in arbitration. In the event of discovery
disputes, the arbitrator is directed to issue such orders as are appropriate to
limit discovery in accordance with the foregoing and as are reasonable in light
of the issues in dispute, the amount in controversy, and other relevant
considerations. To the extent the parties are unable to agree on the scope of
discovery, the arbitrator shall require the party seeking discovery on an issue
to present the legal and factual basis for the claim and shall permit the party
opposing discovery to respond. The arbitrator shall permit discovery on an
issue only if the arbitrator concludes that there is a reasonable and good
faith basis in law and in fact for bringing such allegations and that the
discovery appears likely to present substantive evidence regarding that claim.
The arbitrator may permit limited discovery to permit investigation of some of
the claims or to determine whether a claim has sufficient basis in law or in
fact to warrant further discovery, but shall issue appropriate orders to
restrict the scope of such discovery. The federal or state rules or procedure
and evidence shall not apply to the arbitration proceedings, including without
limitation the rules of discovery. The arbitrator shall consider claims of
privilege, work product and other restrictions on discovery as appear to be
warranted.
(d) The arbitrator shall award the prevailing party its
attorneys' and experts' fees and disbursements incurred in resolving the
dispute (including those of in-house counsel and experts) and shall award
double costs and expenses or other sanctions to the extent the arbitrator finds
any claim advanced in the proceedings to be frivolous or without a good faith
basis in fact and in law when such claim was first presented for arbitration.
(e) Except as may otherwise be agreed in writing by the
parties or as ordered by the arbitrator upon substantial justification shown,
the hearing for the dispute shall be held within ninety (90) days of submission
of the dispute to arbitration. The arbitrator shall render the final award
within thirty (30) days following conclusion of the hearing and any required
post- hearing briefing or other proceedings ordered by the arbitrator. The
arbitrator shall state the factual and legal basis for the award. The decision
of the arbitrator shall be final and binding, except as provided in the Federal
Arbitration Act, 9 U.S.C. Section 1, et seq., and except for
-6-
<PAGE> 7
errors of law based on the findings of fact. Final judgment may be entered
upon such an award in any court of competent jurisdiction, but entry of such
judgment shall not be required to make such award effective. The parties
hereby irrevocably submit to the exclusive jurisdiction and venue of the state
and federal courts located in New York, New York. THE PARTIES EXPRESSLY WAIVE
THEIR RIGHTS TO A TRIAL BY JURY.
IN WITNESS WHEREOF, the parties have caused this Employment Agreement
to be executed as of the day and year first above written.
A T T E S T:
/s/ /s/ THOMAS C. PARRINELLO
By:___________________ ________________________________
THOMAS C. PARRINELLO
GREYHOUND FINANCIAL CORPORATION,
on behalf of itself and following consummation
of the Acquisition noted above, of
Fleet Factors Corp., d/b/a
Ambassador Factors Corp.
A T T E S T:
/s/ /s/ S. EICHENFIELD
By:_____________________ By: ____________________________
Ratified and Approved,
this ___ day of February, 1994:
Ambassador Factors Corp.
(formerly known as Fleet
Factors Corp.)
/s/
By ____________________
-7-
<PAGE> 1
EXHIBIT 10.I.1
RESOLUTIONS FOR BOARD OF GFC FINANCIAL CORPORATION
To Amend the GFC Financial Corporation Retirement Income Plan and Trust, the
GFC Financial Corporation Capital Accumulation Plan and Trust, the GFC
Financial Corporation Employees' Stock Ownership Plan and Trust, and the GFC
Financial Corporation Supplemental Pension Plan
RESOLVED, that the Board of Directors hereby delegates
discretionary authority to the Chief Executive Officer of the
Company and the Committee appointed in accordance with the
provisions of the GFC Financial Corporation Retirement Income
Plan and Trust (the "Defined Benefit Plan") to amend the
provisions of the Defined Benefit Plan (1) to reduce the
formula for benefit accruals beginning on or after January 1,
1995 from 1.25% of five year final average pay plus .50% of
five year final average pay less covered compensation times a
maximum of 30 years of credited service to 1.0% of five year
final average pay plus .50% of five year final average pay
less covered compensation times a maximum of 35 years of
credited service, provided that no accrued benefit of any
participant shall be reduced below the accrued benefit
determined as of December 31, 1994 and (2) to provide a
grandfathered benefit for all participants who are within one
year of normal retirement or early retirement eligibility as
of January 1, 1995 equal to the greater of the benefit accrued
as of December 31, 1994 plus accruals under the new formula or
1.10% of five year final average pay plus .50% of five year
final average pay less covered compensation times a maximum of
35 years of credited service;
FURTHER RESOLVED, that the Board of Directors hereby delegates
discretionary authority to the Chief Executive Officer of the
Company and the Committee appointed in accordance with the
provisions of the Defined Benefit Plan to further amend the
Defined Benefit Plan or in the alternative to provide benefits
outside the Defined Benefit Plan to any participant in the
Defined Benefit Plan who is subjected to hardship as a result
of the amendment in the rate of benefit accruals for plan
years beginning on or after January 1, 1995;
FURTHER RESOLVED the Board of Directors hereby delegates
discretionary authority to the Chief Executive Officer of the
Company and the Committees appointed in accordance with
provisions of the GFC Financial Corporation Capital
Accumulation Plan and Trust (the "401(k)") and the GFC
Financial Corporation Employees' Stock Ownership Plan and
Trust (the "ESOP") to amend the provisions of the 401(k) and
the ESOP (1) to define compensation for purposes of employee
pre-tax deferrals and employer contributions to include
Management Incentive Plan and Sales Incentive Plan payments
for all 401(k) and ESOP participants, (2) to match 100% of
employee pre-tax deferrals up to 6% of compensation including
Management Incentive Plan and Sales Incentive Plan payments,
and (3) to allow participants in the 401(k) and ESOP to direct
the investment of any employer match which exceeds 3% of
compensation including Management Incentive Plan and Sales
Incentive Plan payments among any of the investment
alternatives offered under the 401(k);
<PAGE> 2
FURTHER RESOLVED, that the Board of Directors hereby delegates
discretionary authority to the Chief Executive Officer of the
Company and the Committee appointed in accordance with
provisions of the GFC Financial Corporation Supplemental
Pension Plan (the "SERP") to amend the provisions of the SERP
to replace the current benefit schedules with a single formula
of 1.75% of five year final average pay (including pay above
any Internal Revenue Code limitations on qualified plans)
times a maximum of 35 years of credited service less any
benefit payable under the Defined Benefit Plan, subject to the
terms of an individual employment agreements with any employee
of the Company, its subsidiaries and affiliates who is
eligible to participate in the SERP;
FURTHER RESOLVED, that the Chief Executive Officer and the
Committees of the respective Plans are hereby authorized to
amend and restate each of the Plans in their entirety to
incorporate all required provisions under the Internal Revenue
Code of 1986, and any subsequent statutes or pronouncements of
the Internal Revenue Service, the Department of Labor or the
Pension Benefit Guaranty Corporation, as applicable (the
"Code"), as well as the amendments authorized by these
resolutions, to issue any required notices to plan
participants, including but not limited to any notices
required under Section 204(h) of the Employee Retirement
Income Security Act, to make the operation of the Plans
uniform to the extent practicable, to take such steps as they
deem necessary and appropriate to effectuate these
resolutions, to take any and all actions necessary to seek
Internal Revenue Service approval of the documentation for and
operation of the respective Plans as applicable, and to
prepare and execute any amendments or documents necessary to
obtain such approval on behalf of the Company and any of its
subsidiaries or affiliates who have adopted the Plans;
FURTHER RESOLVED, that all terms used in these resolutions
shall have the meanings given under the provisions of the
respective Plans in operation;
FURTHER RESOLVED, that the terms of the Defined Benefit Plan,
the terms of the 401(k) Plan, the terms of the ESOP, and the
terms of the SERP (sometimes collectively referred as the
Plans") shall each be amended to allow the Chief Executive
Officer of the Company and the Committees appointed under each
of the Plans acting in concert to make all plan amendments
necessary on behalf of the Company and any of its subsidiaries
or affiliates who have adopted the Plans to clarify any aspect
of the Plans, to comply with tax qualification or other legal
requirements, to provide a uniform benefit structure for all
employees of the Company, its subsidiaries and affiliates as
appropriate, to facilitate the administration of each of the
Plans, or to implement appropriate changes in the design of
the Plans, provided that such amendments do not significantly
increase the cost of the Plans or adversely affect their
status under the Code. The authority to make any amendments,
on behalf of the Company and any of its subsidiaries or
affiliates who have adopted the Plans, which significantly
increase the cost of the Plans shall remain with the Board of
Directors of the Company.
<PAGE> 1
EXHIBIT 10.I.2
FORM OF RESOLUTIONS FOR BENEFIT PLAN NAMES CHANGES
FURTHER RESOLVED, that the officers of the Corporation, or any
one or more of them, are authorized to change (a) the name of the GFC
Financial Corporation Retirement Income Plan to "The FINOVA Group Inc.
Pension Plan," (b) the name of the GFC Financial Corporation Flexible
Compensation Plan to "The FINOVA Group Inc. Flexible Compensation
Plan," (c) the name of the GFC Financial Corporation Supplemental
Executive Retirement Plan to "The FINOVA Group Inc. Supplemental
Executive Retirement Plan," (d) the name of the GFC Financial
Corporation Severance Pay Plan to "The FINOVA Group Inc. Severance Pay
Plan," (e) the name of the GFC Financial Corporation Tuition
Reimbursement Plan to "The FINOVA Group Inc. Tuition Reimbursement
Plan," (f) the name of the GFC Financial Corporation Wrap-Around
Employee Benefit Plan to "The FINOVA Group Inc. Wrap-Around Employee
Benefit Plan," and (g) the GFC Financial Corporation Capital
Accumulation Plan to "The FINOVA Group Inc. Savings Plan" rather than
to "The FINOVA Group Inc. Capital Accumulation Plan," as appropriate
and at such time or times as any such officer deems such change to be
advisable.
<PAGE> 1
EXHIBIT 10.J
GFC FINANCIAL CORPORATION RETIREMENT INCOME PLAN
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Article Section Page
- ------- ------- ----
<S> <C> <C> <C>
1 Introduction
------------
1.1 History, Purpose and Applicability 1
1.2 Effect of Appendices 2
2 Definitions
-----------
2.1 Definitions 3
2.2 Other Defined Terms 12
2.3 Construction 12
3 Participation and Service
-------------------------
3.1 Participation 13
3.2 Service 14
3.3 Credited Service 14
3.4 Break in Service 15
3.5 Authorized Leave of Absence 19
3.6 Proof of Age 19
3.7 Transfer 19
3.8 Hours of Service 20
4 Requirements for Retirement Benefits
------------------------------------
4.1 Normal Retirement 22
4.2 Early Retirement 22
4.3 Deferred Vested Pension 23
4.4 Commencement of Benefits 23
5 Amount of Retirement Benefits 24
-----------------------------
5.1 Normal Retirement Pension 24
5.2 Early Retirement Pension 24
5.3 Deferred Vested Pension 24
5.4 Form of Pension 24
6 Manner of Payment and Other Benefits
------------------------------------
6.1 Payment of Pensions 25
6.2 Death Before Pension Payments Commence 28
6.3 Special Rule for Employee-Paid Death
Benefits 29
6.4 Optional Form of Payment 30
6.5 Small Pensions 33
6.6 Reemployment and Continued Employment
After Eligibility for Normal Retirement
Benefits 33
6.7 Time Limits for Payment of Benefits 35
6.8 Limitations on Benefits 38
7 Plan Financing
--------------
7.1 Contributions 40
7.2 Assets of the Trust Fund 40
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Article Section Page
------- ------- ----
<S> <C> <C> <C>
8 Administration
--------------
8.1 Allocation of Responsibility Among
Fiduciaries for Plan and Fund
Administration 42
8.2 Appointment of Committee 43
8.3 Claims Procedure 43
8.4 Records and Reports 43
8.5 Other Committee Powers and Duties 44
8.6 Rules and Decisions 45
8.7 Committee Procedures 45
8.8 Authorization of Benefit Payments 45
8.9 Application and Forms for Pension 45
8.10 Facility of Payment 46
8.11 Indemnification 46
9 Miscellaneous
-------------
9.1 No Guarantee of Employment 47
9.2 Rights to Fund Assets 47
9.3 Nonforfeitability of Benefits 47
9.4 Exclusions and Separability 47
9.5 Non-Alienation 48
10 Amendment and Termination
-------------------------
10.1 Amendment of the Plan 49
10.2 Discontinuance of Contributions or
Termination of Plan 49
10.3 Action Upon Discontinuance of
Contributions or Termination of Plan 49
11 Successor Employer and Merger or
-------------------------------
Consolidation of Plans
----------------------
11.1 Successor Employer 54
11.2 Plan Assets 54
12 Top-Heavy Provisions
--------------------
12.1 Application 56
12.2 Key Employees 57
12.3 Top-Heavy Compensation 58
12.4 Top-Heavy Group 58
12.5 Additional Rules 59
12.6 Combined Limit on Benefits and
Contributions 59
12.7 Vesting Requirements 60
12.8 Minimum Benefit Accrual 60
</TABLE>
<PAGE> 4
GFC FINANCIAL CORPORATION RETIREMENT INCOME PLAN
ARTICLE 1.
Introduction
1.1 History, Purpose and Applicability. This Plan has been
established to receive a direct transfer of assets from the
Dial Companies Retirement Income Plan and thereafter to
provide a separate but similar, tax-qualified defined benefit
plan for Employees of GFC Financial Corporation and Verex
Corporation who were formerly covered by such Prior Plan and
any related company thereof which is a Participating Employer.
To carry out this purpose, the Plan shall be treated as a
continuation of the Dial Companies Retirement Income Plan for
purposes of determining the eligibility, vesting, and benefits
of the Plan's Participant's and other Eligible Employees and
their Beneficiaries. Accordingly, the Service, Credited
Service, Compensation, and other factors affecting an Eligible
Employee's eligibility, vesting and benefits under this Plan
shall, with respect to periods prior to February 1, 1992 be
the same as previously determined as of January 31, 1992 under
the Dial Companies Retirement Income Plan as in effect on such
date (after giving effect, if applicable, to any subsequent
modifications made with retroactive effect as of a date prior
to February 1, 1992, in order to retain that Prior Plan's
qualification). Consistent with its treatment as a continuing,
qualified plan, this Plan's receipt of assets and liabilities
from the Dial Companies Retirement Income Plan is conditioned
on its compliance with the requirements of Code sections
414(l) and 411(d)(6). Therefore, this Plan shall preserve all
Accrued Benefits and all legally-protected forms of benefit
payment and other valuable rights that existed as of January
31, 1992, under the Dial Companies Retirement Income Plan and
were then transferred to this Plan.
Except as otherwise provided, the accrual of benefits and
other provisions of this Plan shall apply only to Employees of
GFC Financial Corporation and Verex Corporation who are
credited with at least one Hour of Service on or after
February 1, 1992. As a specific exception, this Plan has, in
connection with the initial transfer of assets and liabilities
to it, assumed responsibility for the payment of benefits to
retirees and other former Employees who are working for GFC
Financial Corporation or Verex Corporation (or a predecessor
to either of them) when they terminated their employment with
vested benefits under a Prior Plan. Thus, this Plan shall
determine and pay the benefits of such retirees and other
former Employees under the Prior Plan rules applicable to
them, except to the extent, if any, that such rules are
modified in order to comply with legal requirements for
benefit payments or with other rules of this Plan that are, as
a matter of Plan designs and consistent with the legal
protections of Code section 411(d)(6), made specifically
applicable hereunder with respect to such retirees and other
former Employees.
1.2 Effect of Appendices. This Plan document is supplemented by
various appendices that provide additional information and, in
some cases, override general Plan provisions in particular
circumstances. In the event of a conflict between a Plan
provision and a provision in an appendix, the provision in the
appendix shall govern with respect to the Employees or the
circumstances specified in the appendix, and the Plan
provision shall continue to govern with respect to other
Employees or circumstances.
-1.1-
<PAGE> 5
Article 2. Definitions
2.1 Definitions. Whenever used in this Plan, the following words
and phrases shall have the respective meanings stated below
unless a different meaning is expressly provided (as in the
case of a modified definition that applies for purposes of a
particular appendix) or is plainly required by the context:
(a) "Accrued Benefit" means the benefit payable to a
Participant in the normal annuity form determined
under sections 5.1 and 6.1, commencing at Normal
Retirement Age (or the later Retirement age
applicable to a Participant who works after his
Normal Retirement Age), as determined under the
benefit formula and other rules under the Plan and
the appendix applicable to the Participant.
(b) "Actuarial Equivalent" means a benefit having the
same value as the benefit which it replaces. The
determination that one benefit has the same value as
the benefit that it replaces shall be made in
accordance with generally accepted actuarial methods
as follows. In cases where specific assumptions or
factors are set forth in the Plan and identified as
being applicable to a particular benefit or
situation, the specifically applicable Plan
provisions shall be followed. In other cases, the
determination shall be made based upon the 1971
Towers, Perrin, Forster & Crosby Forecast Mortality
Table (using a set-back of six years when reflecting
the probability of the mortality of a Beneficiary and
no set-back when reflecting the probability of the
mortality of a Participant) and a 7.5 percent
interest assumption; except that where a benefit is
payable as a lump sum or as a survivor Pension to an
Eligible Spouse that is based on Participant
contributions to the Plan, the applicable interest
rate shall be the interest rate which would be used
by the Pension Benefit Guaranty Corporation (as of
the first day of the Plan Year that contains the
distribution date) for purposes of determining the
present value of a lump sum distribution on plan
termination. Notwithstanding the above, the Committee
may provide tables designed to simplify the
calculation of Actuarial Equivalent values (without
changing the result) with respect to any provision of
the Plan and attach such tables as exhibits to the
Plan, indicating the provisions of the Plan to which
they relate.
(c) "Actuary" means the individual enrolled actuary, or
firm including one or more enrolled actuaries,
selected by the Company to provide actuarial services
in connection with the administration of the Plan.
(d) "Adoption Date" means the date on which this Plan is
adopted, which date is February 1, 1992.
(e) "Authorized Leave of Absence" means any absence of up
to one year (treating a longer approved absence as
equal to one year for purposes of the Plan)
authorized by the Employer under the Employer's
standard personnel practices, provided that all
persons under similar circumstances must be treated
alike in the granting of such Authorized Leaves of
Absence, and provided further that the Participant
returns to active employment within the period
specified under the terms of the absence, or if no
period is specified thereunder, within the time which
accords with the Employer's policy with respect to
permitted absences. If an Employee does not return to
active employment with the Employer within the time
specified above, the leave of absence shall not
constitute an Authorized Leave of Absence and the
absence shall be treated as a termination of
employment, provided, however, that a leave of
absence due
-2.1-
<PAGE> 6
to service in the Armed Forces of the United States
shall be treated as an Authorized Leave of Absence to
the extent required by federal law if the Employee
has complied with all applicable requirements to be
entitled to such treatment and to reemployment
following his completion of such military service.
(f) "Average Monthly Compensation" means the result
obtained by dividing the total Compensation of a
Participant during his last 60 consecutive months of
Credited Service by 60 (or, if less, the number of
actual months of the Participant's latest continuous
period of Credited Service).
(g) "Beneficiary" means the person or persons entitled to
receive any benefits that become payable under the
Plan on account of a Participant's death, as
determined in accordance with, and subject to the
requirements of, Article 6, including the requirement
to obtain the consent of the Participant's Eligible
Spouse in certain cases. If benefits are due on
account of a Participant's death and no Beneficiary
has been designated or the designated Beneficiary did
not survive the Participant, then the Beneficiary
shall be the surviving Eligible Spouse of the
Participant, or if the deceased Participant has no
surviving Eligible Spouse, his estate. If a
Beneficiary dies while receiving death benefits and
further death benefits are due under the Plan
following such Beneficiary's death, such benefits
shall be paid to the deceased Beneficiary's estate.
(h) "Code" means the Internal Revenue Code, as amended
and in effect from time to time. Where the context so
requires, a reference to a particular provision of
the Code shall be deemed to refer to the applicable
successor provision.
(i) "Company" means GFC Financial Corporation.
(j) "Committee" means the persons appointed pursuant to
Article 8 to assist in the administration of the Plan
as provided therein.
(k) "Compensation" means:
(1) For all purposes of the Plan, except as
otherwise specified, the regular basic
earnings paid by an Employer to a
Participant for personal services as an
Eligible Employee rendered during the period
considered as Service as an Eligible
Employee including sales commissions, and
the amount, if any, of salary reduction
elected by the Participant under Code
section 125 or 401(k), but excluding
overtime earnings, bonuses and other special
items such as expense allowances,
contributions made by the Employer to or
under any form of employee benefits program,
and all forms of extraordinary compensation
paid to the Participant. However, with
respect to years prior to 1989, Compensation
(or the similar term that was used under the
Prior Plan) shall be as defined in the Prior
Plan.
(2) For purposes of applying the limits of
section 415 of the Code as described in
section 6.8, Compensation means, generally,
the Participant's taxable W-2 earnings as an
Employee for the applicable year, and
includes such modifications as may be
required to conform to the definition used
for purposes of Code section 415(b)(3) and
the regulations thereunder.
-2.2-
<PAGE> 7
(3) For purposes of determining whether an
individual is a highly compensated employee,
described in Code section 414(q),
Compensation means the same as in paragraph
(2) above plus all Code section 401(k)
elective deferrals and all Code section 125
salary reduction amounts, if any, under a
plan maintained by the Company or a Related
Company, provided that such treatment and
the determination of Compensation in general
shall be applied on a consistent basis in
accordance with Code section 414(q)(7) and
the regulations thereunder.
Compensation in excess of $200,000 (or such
other amount as may be prescribed under the
Code) for any year beginning on or after
January 1, 1989, shall be disregarded to the
extent required by Code section 401(a)(17);
and such limit shall be prorated to the
extent required with respect to periods of
less than 12 months.
(l) "Covered Compensation" means the average (without
indexing) of the Participant's taxable wage bases in
effect for each calendar year during the 35-year
period ending with the calendar year in which the
Participant attains or will attain Social Security
retirement age, as determined under Code section
401(l)(5)(E). In determining a Participant's Covered
Compensation for any Plan Year, the taxable wage base
for the current and any subsequent Plan Year is
assumed to be the same as the taxable wage base in
effect as of the beginning of the Plan Year for which
the determination is being made. A Participant's
Covered Compensation for a Plan Year after the
35-year period is equal to his Covered Compensation
for the Plan Year in which the Participant attained
Social Security retirement age. A Participant's
Covered Compensation for a Plan Year before the
35-year period is the taxable wage base in effect as
of the beginning of the Plan Year. Covered
Compensation is automatically adjusted each Plan Year
and, thus, increases in Covered Compensation will not
be treated as causing a prohibited decrease in the
Participant's Accrued Benefit under Code section
411(d)(6) or Code section 411(b)(1)(G). To the extent
required by law, each Participant shall be given a
reasonable opportunity to submit actual Social
Security earnings and have them substituted for the
estimated earnings that would otherwise be used under
the Plan.
(m) "Credited Service" means the period of a
Participant's employment considered in determining
the amount of benefit payable to or on behalf of a
Participant in accordance with section 3.3.
(n) "Disabled Participant" means a Participant who, by
reason of becoming disabled, either qualifies, and
continues to qualify, for benefits under the
provisions of the long-term disability Plan for
Employees of the Company and certain Related
Companies, or, if he is not eligible to participate
in such disability plan, he suffers a disability, as
defined in the appendix applicable to him.
(o) "Effective Date" means the later of February 1, 1992,
or the date on which the provisions of this Plan
become effective with respect to a Participating
Employer, as set forth in the applicable appendix for
such Employer.
(p) "Eligible Employee" means any Employee of an Employer
in a class specified as eligible under the applicable
appendix, provided that an Eligible Employee shall
not include:
-2.3-
<PAGE> 8
(1) An Employee covered by a collective
bargaining agreement which does not provide
for his participation in this Plan,
(2) A Leased Employee,
(3) A nonresident alien, or
(4) A person who is on a leave of absence that
is not an Authorized Leave of Absence.
(q) "Eligible Spouse" means:
(1) In the case of a Participant who dies before
his or her annuity starting date, the
husband or wife to whom the Participant had
been married throughout the one-year period
ending on the date of the Participant's
death, and
(2) In the case of a Participant who lives to
his or her annuity starting date, the
husband or wife to whom the Participant is
married on such date.
(r) "Employee" means any person employed by the Company
or a Related Company, including a Leased Employee to
the extent required by Code section 414(n) or 414(o)
and related qualification requirements affecting the
Plan, and also including an individual who is absent
from work during a final period of paid vacation
which will be followed immediately by such
individual's termination of employment.
(s) "Employer" means the Company and any Participating
Employer.
(t) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended and in effect from time to
time. Where the context so requires, a reference to a
particular provision of ERISA shall refer to the
applicable successor provision.
(u) "Fiduciary" means any natural or legal person
described in section 3(21) of ERISA, but in each case
only with respect to the specific responsibilities
that make the person a Fiduciary, as provided herein.
(v) "Fund" or "Trust Fund" means the Plan assets held by
the Trustee under the Trust Agreement.
(w) "Leased Employee" means a person who is not otherwise
an Employee but whose services are leased by the
Company or a Related Company under conditions
requiring the person to be treated as an Employee for
certain limited purposes pursuant to sections 414(n)
and 414(o) of the Code and related qualification
requirements affecting the Plan.
(x) "Normal Retirement Age" means age 65.
(y) "Normal Retirement Date" means the first day of the
month coincident with or next following the
Participant's attainment of Normal Retirement Age.
(z) "Participant" means an Employee who has satisfied
the eligibility requirements and is participating
in the Plan pursuant to Article 3.
(aa) "Participating Employer" means any Related Company
that has been designated by the Company and has
agreed to participate in the Plan with respect to its
Eligible Employees, as indicated in the appendix
applicable to it.
-2.4-
<PAGE> 9
(bb) "PBGC" means the Pension Benefit Guaranty Corporation
established under Title IV of ERISA.
(cc) "Pension" means a series of equal monthly amounts
payable to a person entitled to receive benefits
under the Plan.
(dd) "Plan" means the GFC Financial Corporation
Retirement Income Plan.
(ee) "Plan Year" means the calendar year.
(ff) "Primary Social Security Benefit" means the monthly
amount available to the Participant at age 65 (or
upon actual Retirement, if later), as determined
without regard to any increase in the wage base or
benefit levels after the determination date under the
provisions of Title II of the Social Security Act in
effect on the earlier of the Adoption Date or the
Participant's termination of employment, subject to
any additional rules of the Prior Plan for
calculating this amount and subject further to any
transition rules in the applicable appendix.
(gg) "Prior Plan" means the Dial Companies Retirement
Income Plan and any predecessor defined benefit plan
as such plan applied to persons covered by this Plan.
(hh) "Related Company" or "Affiliate" means a corporation
or other employer which is controlled by or under
common control with the Company or is in the same
affiliated service group or is otherwise required to
be aggregated with the Company in accordance with
Code section 414 (including subsection (b), (c), (m),
or (o) thereof) but only for the purposes and to the
extent required by any such provision of section 414
and a related qualification requirement affecting the
Plan (including subsection 415(h) of the Code, which
requires the substitution of a 50 percent ownership
requirement for the usual 80 percent ownership
requirement in identifying a Related Company for the
purposes of certain limitations on contributions or
benefits under the Plan).
(ii) "Retirement" means termination of employment for a
reason other than death after a Participant has
attained Normal Retirement Age or, in the case of
early Retirement where his benefit payments commence
prior to his Normal Retirement Date, after he has
attained age 55 and has completed 10 or more years of
Service.
(jj) "Service" means the period of a Participant's
employment considered in determining his vesting in
benefits, as described in sections 3.2 and 4.3.
(kk) "Trust Agreement" means the agreement between the
Company and the Trustee outlining the duties and
responsibilities of the Trustee and the manner in
which the Trust Fund is held.
(ll) "Trustee" means the natural person or persons or
legal entity with trust powers that is designated to
hold the assets of the Plan pursuant to the Trust
Agreement.
2.2 Other Defined Terms. In addition to the foregoing
definitions, other defined terms may be established and
defined in the context of the primary Plan provisions in which
they are applicable.
2.3 Construction. Except when otherwise indicated by the context,
any masculine or feminine term shall also include the other
gender, and the use of any term in the singular or plural
shall also include the opposite number. Moreover, if any
aspect of a definition depends on a Prior Plan's usage of the
same or a similar term, the reference in this Plan shall be
deemed to indicate the appropriate term in the Prior Plan,
regardless of the name used.
-2.5-
<PAGE> 10
Article 3. Participation and Service
3.1 Participation. Any Eligible Employee who as of the Effective
Date has both attained age 21 and completed a 12-month period
of not less than 1,000 Hours of Service, determined under
section 3.8, shall continue to be or shall become a
Participant on the Effective Date. Thereafter, any Eligible
Employee shall become a Participant on the January 1 or July 1
immediately following the date as of which he has both
attained age 21 and completed a 12-month period of at least
1,000 Hours of Service, determined under section 3.8.
Any 12-month period between an Employee's date of hire or
rehire and an anniversary thereof shall be used to determine
whether he has satisfied the requirement to complete a
12-month period of not less than 1,000 Hours of Service.
Once begun, participation as an active Participant shall
continue until a Participant is no longer an Eligible
Employee. This shall be so even if the Participant transfers
to a category of employment that causes him to be covered by a
different appendix or otherwise causes a change in the way his
Accrued Benefit is determined with respect to future Credited
Service. A Participant who is an Employee but not an Eligible
Employee or who is a former Employee entitled to receive a
Pension under the Plan shall continue as an inactive
Participant. An inactive Participant can, if still an
Employee, continue to accumulate Service but not Credited
Service. A Participant may be covered as an active Participant
under only one appendix at a time and shall be treated as
inactive with respect to any appendix and benefit formula that
does not currently cover him. An inactive Participant does not
include a former Employee who had not earned enough Service to
become entitled to receive a Pension following his termination
of employment.
3.2 Service. A Participant's vesting in benefits under section 4.3
shall be determined by his Service. Subject to the Break in
Service provisions of section 3.4, Service is the last period
of continuous, uninterrupted employment measured in years,
months and days of service as an Employee with an Employer, or
a Related Company, commencing with the Employee's last date of
hire and ending on the Employee's "Severance from Service
Date," which shall be the earlier of (i) the date the Employee
quits, retires, is discharged, or dies; or (ii) the first
anniversary of the Employee's absence from employment for
another reason such as vacation, holiday, sickness,
disability, Authorized Leave of Absence, or layoff. A
Participant's Service for periods prior to the Effective Date
shall be determined under the Plan or Prior Plan provisions
applicable to the Participant immediately prior to the
Effective Date. If an Employee quits, is discharged or retires
on or within 12 months after the first date of an absence from
employment and then returns to employment as an Employee of an
Employer or a Related Company before the first anniversary of
such absence, the Employee's Service (but not his Credited
Service described in section 3.3) shall include the period of
the Employee's absence from employment. Service shall include
the period during which a Participant is on an Authorized
Leave of Absence and any
-3.1-
<PAGE> 11
period of vacation for which compensation is paid upon
retirement or other termination of employment, which
retirement or other termination shall be deemed to occur at
the end of such vacation period. If an entity is a Related
Company, but not an Employer, Service shall not include any
period during which the entity was not a Related Company. In
no event shall the same continuous period be counted more than
once in determining an Employee's Service.
3.3 Credited Service. The amount of the benefit payable to or on
behalf of a Participant shall be determined on the basis of
his Credited Service. Credited Service shall be the period or
periods of employment described as Service and not excluded as
Credited Service pursuant to section 3.2, except that:
(a) Except as otherwise provided by the benefit formula
applicable to a Participant, Credited Service shall
not exceed 30 years;
(b) Credited Service for periods prior to the Effective
Date shall be determined under the Plan or Prior Plan
provisions applicable to the Participant immediately
prior to the Effective Date;
(c) Service with a Related Company which is not at the
time a Participating Employer shall not be Credited
Service;
(d) Credited Service shall not include periods of Service
as an Employee who is not an Eligible Employee or
periods of Service after a Participant has ceased to
be an active Participant pursuant to section 3.1; and
(e) Credited Service shall be determined separately with
respect to each appendix that covers a Participant
and the period or periods for which the Participant
is so covered, so that there will be no duplication
of Credited Service for the same period unless such
duplication is expressly provided. In this regard,
Credited Service for a period of Service as an
Eligible Employee prior to the initial date of
participation in the Plan or a Prior Plan shall be
counted to the extent required under the rules of the
first appendix under which the Eligible Employee
earned Credited Service after becoming a Participant
and shall not be counted for purposes of any other
appendix that subsequently applies to the Eligible
Employee.
3.4 Break in Service. For purposes of eligibility to participate
under section 3.1, a period of 12 consecutive months measured
from an Employee's date of employment as an Employee or an
anniversary of such date shall constitute a Break in Service
if the Employee is not credited with at least 501 Hours of
Service during such period. For purposes of a Participant's
vesting under sections 3.2 and 4.3 and retention of prior
Credited Service under section 3.3, a period of 12 consecutive
months beginning immediately after the Participant's period of
Service ends, or after any anniversary thereof, shall
constitute a Break in Service if the Participant is not
employed as an Employee by an Employer or a Related Company
during such 12-month period. Years of eligibility credit under
3.2
<PAGE> 12
section 3.1 and Service and Credited Service under sections
3.2 and 3.3 that an Employee accumulated prior to a Break in
Service shall continue to count thereafter to the extent
provided by the following rules.
(a) Vested Participants: A former Employee who satisfied
the requirements of the Plan for vested benefits at
the time of a Break in Service, and who is again
employed as an Employee for at least a 12-month
period after his date of reemployment, shall receive
such prior eligibility credit, Service, and Credited
Service from his date of reemployment, and shall be
entitled to participate again in the Plan from such
date, provided he is still an Eligible Employee, and
provided further, that his prior Credited Service
shall not be counted if he previously received a
lump-sum distribution of the value of his vested
Pension pursuant to section 6.5 and he does not repay
to the Plan the full amount of such distribution,
plus interest at the rate determined pursuant to Code
section 411(c)(2)(C), before the earlier of (i) five
years after the date of his reemployment, or (ii) his
completion of five consecutive Breaks in Service
commencing after the date of the distribution.
(b) Non-Vested Participants: For a former Participant
who had not fulfilled the requirements for vested
benefits at the time of a Break in Service and who
again is employed for at least a 12-month period
after the date of reemployment, eligibility credit,
Service, and Credited Service accumulated prior to
the Break in Service shall not be restored if the
Participant's absence began before January 1, 1989,
and they would not have been restored under the Plan
or Prior Plan provisions applicable to the
Participant if he had returned to employment on
December 31, 1988. In other cases, the Participant's
prior eligibility credit, Service, and Credit Service
shall be restored only if at least one of the
following is applicable:
(1) the number of his consecutive Breaks in
Service was less than five years, or
(2) the number of his consecutive Breaks in
Service was less than the aggregate number
of years of his pre-Break eligibility credit
or Service, or
(3) his absence from employment was due to a
"maternity or a paternity leave" and the
number of his consecutive Breaks in Service
was less than six years, or
(4) his absence was due to a "maternity or
paternity leave" and the number of his
consecutive Breaks in Service was less than
the aggregate number of years of his
pre-Break eligibility credit or Service plus
one year.
Notwithstanding the foregoing, a former Participant
whose prior eligibility credit, Service and Credited
Service were disregarded under rules of a
-3.3-
<PAGE> 13
Prior Plan or a prior version of this Plan shall not
have such eligibility credit, Service or Credited
Service reinstated as a result of this subsection
3.4(b).
(c) Other Employees: For a former Employee who had not
become a Participant at the time of a Break in
Service, upon reemployment for at least a 12-month
period after the date of reemployment, his pre-Break
period of employment shall be restored for the
purpose of determining eligibility credit and Service
at the time his participation in the Plan commences
only if such eligibility credit and Service would
have been restored under subsection 3.4(b) in the
event that he had been a non-vested Participant at
the time of his Break in Service.
For the purpose of this subsection 3.4(c), the years
to be compared in applying the rules of subsection
3.4(b) shall be the 12-month period between the date
the Employee's employment commenced prior to the
Break in Service, and the first anniversary thereof,
and succeeding 12-month periods between anniversaries
of such date.
(d) Participation: A former Participant or other
Employee who met the eligibility requirements of
section 3.1 on his date of reemployment and has his
pre-Break Service reinstated following his
reemployment shall recommence participation in the
Plan as of the date of reemployment as an Eligible
Employee. Otherwise, a reemployed Employee's
participation shall commence in accordance with the
provisions of section 3.1, recognizing any prior
period of employment that has not been canceled in
accordance with the foregoing provisions. Eligibility
credit, Service and Credited Service that are
required to be restored following reemployment
pursuant to subsection 3.4(a), (b), or (c) shall be
credited as of the date of reemployment as an
Employee, but only in the event that the rehired
Employee becomes a Participant.
(e) Maternity or Paternity leave: For the purposes of
this Plan, "maternity or paternity leave" means
termination of employment or absence from work due to
the pregnancy of the Employee, the birth of a child
of the Employee, the placement of a child in
connection with the adoption of the child by an
Employee, or the caring for an Employee's child
during the period immediately following the child's
birth or placement for adoption. The Committee shall
determine, under rules of uniform application and
based on information provided to the Committee by the
Employee, whether or not the Employee's termination
of employment or absence from work is due to
"maternity or paternity leave."
(f) No Pension During Employment: Subject to the
provisions of section 6.6 and 6.7, no Pension payment
shall be made during a period of employment. The
Pension payable upon a Participant's subsequent
Retirement shall be reduced by the Actuarial
Equivalent of any benefit payments he received prior
to his Normal Retirement Date.
-3.4-
<PAGE> 14
3.5 Authorized Leave of Absence. An Authorized Leave of Absence
shall not constitute a Break in Service and shall be
considered as Service and Credited Service under the Plan,
provided that the Employee actually returns to employment with
the Employer in accordance with the terms of his leave of
absence, and provided further that with respect to an
Authorized Leave of Absence due to service in the Armed Forces
of the United States, the Employee must comply with all of the
requirements of Federal Law in order to be entitled to
reemployment.
3.6 Proof of Age. Each Employee shall be required to furnish to
the Employer a birth certificate issued by the proper public
authority, or other evidence of age satisfactory to the
Employer and Committee.
3.7 Transfer. A Participant hereunder who transfers to a job
classification that results in a change in the appendix to
which he is subject, shall continue to be a Participant, but
from the date of such transfer, shall cease to earn Credited
Service, Compensation and Average Monthly Compensation, for
purposes of determining benefits under the appendix that no
longer applies to him, and shall begin earning Credited
Service, Compensation and Average Monthly Compensation from
such date of transfer for purposes of determining benefits
under the new appendix that has begun to apply to him.
Participant who transfers to a job classification to which
this Plan is not applicable or to a Related Company which is
not an Employer shall no longer be entitled to be covered as
an active Participant under the Plan. Such transferred
Employee may not withdraw from the Plan the contributions, if
any, heretofore made by him under prior provisions of the Plan
or a Prior Plan. Following such transfer, such a transferred
Employee shall be subject to the following provisions.
(a) The Accrued Benefit hereunder to the date of such
transfer, based on Credited Service, Compensation and
Average Monthly Compensation to such date shall be
preserved. Service shall continue to accrue in
accordance with section 3.2 of this Plan.
(b) There shall be no transfer of money or other assets
between this Plan and any other plan with respect to
a transferred Participant. This Plan shall make the
Pension payments provided under each applicable
appendix, but shall not make payments owed by another
plan.
No benefits shall be accrued under this Plan by an Employee
transferred from a Related Company not an Employer under this
Plan in respect of his Service prior to the date he becomes
covered hereunder in accordance with the provisions of section
3.1; and all rights and benefits, if any, in respect of such
Service shall be as specified in the applicable retirement
program of the Related Company, if any.
3.8 Hours of Service. Under this Article 3, Hours of Service
shall include the following:
-3.5-
<PAGE> 15
(a) Each hour for which an Employee is paid, or entitled
to payment, for the performance of duties for the
Employer.
(b) Up to 501 hours for any single continuous period
during which the Employee performs no duties but is
directly or indirectly paid or entitled to payment by
the Employer (regardless of whether employment has
terminated) due to vacation, holiday, illness,
incapacity including disability, layoff, jury duty,
military duty or Authorized Leave of Absence;
including any period for which payment is made under
a plan solely for the purposes of complying with
workmen's compensation or disability insurance laws,
but excluding any period for which a payment is made
or due under this Plan or under a plan maintained
solely for the purpose of complying with unemployment
compensation laws, or solely to reimburse the
Employee for medical or medically-related expenses.
An Employee shall be deemed to be "directly or
indirectly paid, or entitled to payment by the
Employer" regardless of whether such payment is (i)
made by or due from the Employer directly, or (ii)
made indirectly through a trust fund, insurer or
other entity to which the Employer contributes or
pays premiums.
(c) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to
by the Employer, without duplication of hours
provided above, and subject to the 501-hour
restriction for periods described in the foregoing
subsection (b).
In determining Hours of Service for Employees who are
not paid by the hour and whose actual hours are not
counted, such Employees shall receive credit for 45
Hours of Service for each week in which they have at
least one Hour of Service. The foregoing provisions
shall be administered in accordance with Department
of Labor Regulation, 29 CFR section 2530.200b-2.
-3.6-
<PAGE> 16
Article 4. Requirements For Retirement Benefits
4.1 Normal Retirement. Upon attainment of Normal Retirement Age
while still an Employee, a Participant shall be fully vested
in his Accrued Benefit, regardless of the number of his years
of Service at the time. A Participant shall be eligible for a
normal Retirement Pension if his employment is terminated on
or after his 65th birthday, or if the provisions of section
6.6 become applicable. Upon submission of the appropriate
information and elections in writing in the manner approved by
the Committee, payment of a Participant's normal Retirement
Pension shall commence as of the first day of the month
coinciding with or next following the date of Retirement.
4.2 Early Retirement. A Participant shall be eligible for an early
Retirement Pension if his employment is terminated on or after
his 55th birthday and after he has completed ten or more years
of Service. Upon submission of the appropriate information and
elections in writing in the manner approved by the Committee,
payment of a Participant's early Retirement Pension shall
commence as of the first day of the month coinciding with or
next following his Retirement, or as of the first day of any
subsequent month which precedes his Normal Retirement Date.
The Participant's early Retirement Pension shall commence as
of the beginning of the month requested, but the amount
thereof shall be reduced for early commencement as provided in
the applicable appendix. Notwithstanding the foregoing, in no
event will a Participant who continues to be employed by an
Employer on the Effective Date and who had attained age 55 on
or before such date receive an early Retirement Pension which
is less than his Accrued Benefit as determined under the Plan
or Prior Plan immediately prior to the Effective Date.
4.3 Deferred Vested Pension. A Participant shall be eligible for
a deferred vested Pension in accordance with the provisions of
Section 5.3 if his employment is terminated before death or
Retirement and after he has completed at least five years of
Service.
4.4 Commencement of Benefits. Subject to the rules of Article 6,
payment of any benefit provided under this Plan shall commence
no later than the 60th day after the end of the Plan Year in
which the Participant both has attained age 65 and terminated
his employment with the Employer.
-4.1
<PAGE> 17
Article 5. Amount of Retirement Benefits
5.1 Normal Retirement Pension. The monthly amount of the normal
Retirement Pension in the form of an annuity for the
Participant's life shall be determined by the applicable
benefit formula in the appendix pertaining to the Participant.
5.2 Early Retirement Pension. As provided in section 4.2, the
monthly amount of a reduced early Retirement Pension shall be
determined in accordance with the applicable appendix.
5.3 Deferred Vested Pension. The monthly amount of a Participant's
deferred vested Pension in the form of an annuity for the
Participant's life commencing as of his Normal Retirement Date
shall be determined by the applicable benefit formula in the
appendix pertaining to the Participant and the Compensation,
Credited Service, and other relevant information for the
Participant up to his termination of employment. If a vested
Participant has at least ten years of Service, he may direct
the Committee to authorize commencement of his Pension as of
the beginning of any calendar month within the 10-year period
preceding his Normal Retirement Date and following his
termination of employment. In such case, his Pension shall
commence as of the date requested, but the amount thereof
shall be reduced as provided in the appendix.
5.4 Form of Pension. Notwithstanding the use of an annuity for
the life of the Participant to make an initial determination
of the amount of a Participant's Pension pursuant to this
Article 5, the actual form and amount of Pension payments is
subject to Article 6, including the rules for the 50 Percent
Joint and Survivor Pension of a Participant who has an
Eligible Spouse.
-5.1-
<PAGE> 18
Article 6. Manner of Payment and Other Benefits
6.1 Payment of Pensions. If a Participant has an Eligible Spouse
on the date his Pension payments commence, his Pension shal
be paid in the form of a 50 Percent Joint and Survivor
Pension, unless he elects otherwise in writing and his
Eligible Spouse consents to such election.
Under a 50 Percent Joint and Survivor Pension, a reduced
amount shall be paid to the Participant for his lifetime; and
his Eligible Spouse, if surviving at the Participant's death,
shall be entitled to receive thereafter a lifetime
survivorship Pension in a monthly amount equal to 50 percent
of the reduced monthly amount which had been payable to the
Participant. The reduced amount payable to the Participant
under the 50 Percent Joint and Survivor Pension shall be
determined so that the aggregate of the Pension payments
expected to be made to the Participant and his Eligible Spouse
shall be the Actuarial Equivalent of the single-life Pension
determined under Article 5. The last payment of a 50 Percent
Joint and Survivor Pension shall be made as of the first day
of the month in which the death of the last to die of the
Participant and his Eligible Spouse occurs.
In lieu of the 50 Percent Joint and Survivor Pension, a
Participant with an Eligible Spouse may elect in writing,
during the 90-day period prior to the date his Pension
payments are to commence, and only with the consent of his
Eligible Spouse, to receive a monthly amount in the form of
the single-life Pension computed under Article 5. A
Participant entitled to receive a normal or an early
Retirement Pension may also elect instead an optional form of
benefit under section 6.4. However, if a Participant with an
Eligible Spouse elects a single-life Pension or an optional
form of benefit under section 6.4, (other than the 100 Percent
Joint and Survivor Pension in Option 1 with the Participant's
Eligible Spouse as the Beneficiary), then his election shall
be canceled and his Pension shall be paid in the form of a 50
Percent Joint and Survivor Pension unless, within the 90-day
period preceding his Pension commencement date, his Eligible
Spouse consents to his optional election and to the designated
Beneficiary in cases where such Beneficiary is not the
Eligible Spouse. Moreover, if the written information
pertaining to the election is not furnished in a timely manner
as described below, the election period shall not end until 90
days after the necessary information is provided.
A Participant may revoke any election made under this section
6.1 without the consent of his Eligible Spouse, at any time
preceding the date the Participant's Pension commences if the
purpose of such revocation is to reinstate coverage under the
50 Percent Joint and Survivor Pension. On the date Pension
payments are to commence hereunder, any election made under
this section shall be irrevocable.
The Eligible Spouse's consent to any election made pursuant to
this Plan and requiring the Eligible Spouse's consent shall be
in writing, shall acknowledge the effect of such consent, and
shall include a specific acceptance of the Participant's
-6.1-
<PAGE> 19
designation of a Beneficiary if such Beneficiary is not the
Eligible Spouse. In addition, the Eligible Spouse's signature
on the written consent must be witnessed by a notary public or
a Plan representative approved by the Committee. The Eligible
Spouse's consent need not be obtained if the Committee is
satisfied that there is no Eligible Spouse, that the Eligible
Spouse cannot be located, or because of any other
circumstances which may be prescribed in regulations issued by
the Secretary of the Treasury. Except as otherwise provided,
an Eligible Spouse's consent to the designation of another
Beneficiary under this Plan shall be valid only with respect
to the particular Beneficiary designated by the Participant.
If such Beneficiary is subsequently changed, a new consent by
the Eligible Spouse will be required, unless a general consent
is given in accordance with applicable regulations. A general
consent shall include an acknowledgment that the Eligible
Spouse has the right to limit consent to a specific
Beneficiary and/or a specific optional form of benefit, where
applicable, and voluntarily relinquishes such right. The
Eligible Spouse's consent to any election of a Participant
pursuant to this Plan, once made, may not be revoked by the
Eligible Spouse.
Within a reasonable period of time (not less than 90 days)
preceding the date his Pension commences, and subject to
regulations issued by the Secretary of the Treasury, a
Participant who has an Eligible Spouse shall be furnished, in
writing, (1) a general description of the 50 Percent Joint and
Survivor Pension, (2) a general description of the
circumstances in which it will be paid, (3) notice of the
Participant's right, prior to the commencement of benefits, to
elect to receive his benefits in another form (subject to the
Eligible Spouse's consent) and his right to revoke this
election and reinstate the 50 Percent Joint and Survivor
Pension prior to the benefit commencement date, (4) a general
description of the Eligible Spouse's right to consent or
withhold consent to an election of another form of benefit or
the designation of a Beneficiary other than the Eligible
Spouse, and the inability of the Eligible Spouse to revoke
such consent for a particular election, once the consent has
been given, and (5) a notification that the Committee must
furnish to the Participant, upon his request prior to his
benefit commencement date, a written explanation in
nontechnical language of the terms and conditions of the 50
Percent Joint and Survivor Pension and the financial effect
upon his benefit payments of making such an election.
If a Participant does not have an Eligible Spouse on the date
his Pension payments commence, he shall receive his
single-life Pension computed under Article 5, subject to his
right, if any, to elect an optional form of benefit. The last
payment of the single-life Pension shall be made as of the
first day of the month in which the death of the Participant
occurs.
6.2 Death Before Pension Payments Commence. Upon the death of a
Participant before his Pension payments have commenced
(whether before or after his termination of employment), a
survivor Pension shall be payable to the Participant's
Eligible Spouse, if any, provided that the Participant's death
occurred after he had become vested in an Accrued Benefit
(whether by reason of his attainment of Normal Retirement Age,
his completion of the number of years
-6.2-
<PAGE> 20
of Service required under section 4.3 to become eligible to
receive a deferred vested Pension, or otherwise).
The Pension payable to an Eligible Spouse of such a
Participant who was age 55 or older on the date of his death
shall be equal to the amount the Eligible Spouse would have
been entitled to receive had the Participant retired
immediately preceding death and commenced to receive a normal
Retirement Pension or an early Retirement Pension under
section 4.1 or 4.2, whichever is applicable, in the form of
the 50 Percent Joint and Survivor Pension under the provisions
of section 6.1. The Pension payable to such an Eligible
Spouse shall commence as of the first day of the month
coinciding with or next following the Participant's death and
shall continue until the beginning of the month in which the
death of the Eligible Spouse occurs.
The Pension payable to an Eligible Spouse of such a
Participant who was younger than age 55 on the date of his
death shall be equal to the amount the Eligible Spouse would
have been entitled to receive had the Participant (a)
terminated employment immediately prior to death; (b)
commenced to receive a deferred vested Pension under the
provisions of section 5.3 and under the 50 Percent Joint and
Survivor provisions of section 6.1 as of the beginning of the
month coincidental with or next following the date he would
have attained age 55; and (c) then died immediately
thereafter. The foregoing Pension shall commence as of the
beginning of the month coincident with or next following the
date the Participant would have attained age 55 and shall
continue until the beginning of the month in which the death
of the Eligible Spouse occurs.
Notwithstanding the above, an Eligible Spouse of a Participant
who dies prior to his Normal Retirement Age may elect to defer
commencement of his or her survivor Pension under this section
6.2 to the first day of any month subsequent to the applicable
commencement date set forth hereinabove, but in no event
beyond the date that would have been the Participant's Normal
Retirement Date. In such event, the amount of the survivor
Pension shall be adjusted to reflect the deferred commencement
date and the age the Participant would have attained as of
such date.
6.3 Special Rule for Employee-Paid Death Benefits. This section
pertaining to death benefits attributable to Employee
contributions shall not apply in the case of a Participant's
death after the commencement of Pension benefits in a form
provided under the Plan. If a Participant made contributions
under a Prior Plan and such contributions remain in the Plan,
the Plan shall provide a minimum death benefit based on such
contributions in the case of the death of such Participant
prior to the commencement of any Pension payments.
If the deceased Participant had no Eligible Spouse, this death
benefit shall be paid as a single lump sum to the
Participant's Beneficiary. The payment shall be made as soon
as practicable following the Participant's death in an amount
equal to the Participant's remaining contributions plus
interest at the rate determined in accordance with Code
section 411(c)(2)(C).
-6.3-
<PAGE> 21
The same amount, computed as of the payment commencement date
specified below, shall be used to determine a minimum death
benefit if the deceased Participant had an Eligible Spouse.
If not payable in an immediate lump sum pursuant to section
6.5, this amount shall be converted to its Actuarial
Equivalent and paid at the same time and manner applicable to
the survivor Pension of an Eligible Spouse of a vested
Participant described in section 6.2, provided that this
minimum survivor Pension shall be in lieu of, rather than in
addition to, any survivor Pension payable under section 6.2.
Therefore, if the Participant had an Eligible Spouse and was
vested in an Employer-paid Pension at his death, the minimum
death benefit payable to the Eligible Spouse pursuant to this
section 6.3 shall apply only if it exceeds the amount
otherwise payable under section 6.2. In addition, however,
the amount of the Participant's remaining contributions plus
interest at the rate determined in accordance with Code
section 411(c)(2)(C), as of the Participant's death, shall
constitute a nonforfeitable minimum amount for the total
payments made following the Participant's death. If the
Participant's Eligible Spouse dies before receiving total
payments at least equal to this minimum amount, the difference
between the amount of death benefits previously paid and the
nonforfeitable minimum shall be paid as a lump sum to the
estate of the Eligible Spouse as soon as practicable after the
Eligible Spouse's death.
6.4 Optional Form of Payment. By filing a timely election with
the Committee in accordance with section 6.1 and the form
prescribed by the Committee, a Participant who is or is about
to be eligible to receive a Pension (other than by reason of
being a Disabled Participant) may designate his spouse or any
person as his contingent annuitant or designated Beneficiary
and elect to receive a Pension payable in accordance with one
of the following options, in lieu of the Pension to which he
may otherwise become entitled:
(a) Option 1: The Participant shall receive a reduced
Pension payable for life, and payments in the amount
of 100 percent of such reduced amount shall, after
the Participant's death, be continued for life to
the contingent annuitant who has been designated as
the Participant's Beneficiary.
(b) Option 2: the Participant shall receive a reduced
pension payable for life, and payments in the amount
of 50 percent of such reduced Pension shall, after
the Participant's death, be continued for life to
the contingent annuitant who has been designated as
the Participant's Beneficiary.
(c) Option 3: The Participant shall receive a reduced
Pension payable for the greater of 120 months and the
Participant's lifetime with the provision that if the
Participant dies before receiving payments for the
120 months, the value of such remaining payments will
be paid to the Participant's designated Beneficiary
during the balance of the 120 months remaining. Such
Beneficiary designation shall be revocable by the
Participant during his lifetime without the need for
the consent of such designated Beneficiary except
that the consent of the Eligible Spouse shall be
required for any such revocation or redesignation
that results in a Beneficiary other than the Eligible
Spouse.
-6.4-
<PAGE> 22
(d) Option 4: If the Participant made contributions to a
Prior Plan that allowed the Participant to withdraw
such contributions upon termination of employment and
receive a reduced Pension as a result of such
withdrawal, such right of withdrawal shall continue
under the Plan, and related benefit calculations and
other rights and features shall comply with current
requirements of Code section 411 (including
subsection (c) thereof).
The aggregate of the Pension payments expected to be paid to a
Participant and his contingent annuitant or other designated
Beneficiary under any of the above options shall be the
Actuarial Equivalent of the Pension which the Participant is
otherwise entitled to receive upon Retirement.
Subject to the limits of section 6.1, an election of an option
under this section 6.4 shall take effect on the date the
Participant's Pension is to commence. An option may be
elected, changed or revoked any time prior to the
Participant's Pension commencement date. Notwithstanding the
above, a Participant may, subject to the guidelines prescribed
by the Committee, name a new designated Beneficiary under
Option 3 after the Pension commencement date and prior to his
death.
If the contingent annuitant or designated Beneficiary under
any elected option is other than the Participant's Eligible
Spouse, then the Eligible Spouse must consent to the
Participant's optional election and any change in such
election and to the specific contingent annuitant or
designated Beneficiary. In addition, an election under Option
3 shall be ineffective regardless of whether the Eligible
Spouse is the designated Beneficiary unless such Eligible
Spouse consents to such Option 3. Any election requiring the
Eligible Spouse's consent in accordance with this paragraph
shall comply with the rules of section 6.1 regarding an
election and consent with respect to a benefit other than the
50 Percent Joint and Survivor Pension.
An election made pursuant to this section 6.4 shall become
inoperative (i) if the Participant's employment terminates
before he is eligible for either a normal or early Retirement
Pension, (ii) if the Participant or his contingent annuitant
or designated Beneficiary dies before the option becomes
effective; or (iii) if the Eligible Spouse does not consent to
the optional election or to a specific contingent annuitant or
other designated Beneficiary requiring his or her consent. If
an option under this section becomes effective, it will be in
place of any benefit otherwise payable under this Plan.
Notwithstanding any provisions hereof to the contrary, if the
contingent annuitant or other designated Beneficiary is other
than the Participant's spouse and if the value of the
Participant's benefit under any of the above options will be
less than 51 Percent of the value of his single-life Pension,
the optional benefit shall be adjusted so that the value of
the Participant's benefit under the option will be equal to 51
Percent of the value of the Participant's single-life Pension.
-6.5-
<PAGE> 23
6.5 Small Pensions. If the Actuarial Equivalent lump-sum value of
a Pension payable under this Plan is $3,500 or less and
payment in another form has not commenced, the Committee shall
direct that, in lieu of such Pension, such lump sum shall be
paid, but subject to the following. A lump-sum settlement of
a small amount may be made any time after the Participant's
termination of employment, even though the Participant and/or
his Eligible Spouse is not otherwise entitled to commencement
of a Pension at such time under other provisions of the Plan.
However, a lump-sum settlement pursuant to this section 6.5
shall not be made once a Participant's benefits have commenced
in another form. A lump-sum payment under this section may be
made notwithstanding any other Plan provisions and shall be in
lieu of any other Pension or benefit payable under the Plan.
If a lump-sum settlement is made pursuant to the provisions of
this section, the Committee shall provide each recipient
receiving such a settlement with an official notice supplied
by the Secretary of the Treasury which specifies certain
information regarding the federal income tax treatment of
certain Plan benefits.
6.6 Reemployment and Continued Employment After Eligibility for
Normal Retirement Benefits. Except as required by section
6.7, for certain Participants who have attained age 70 1/2, no
Participant, regardless of his vesting status hereunder, shall
receive a Pension payment for any month including or following
the month in which he completes the requirements for a normal
Retirement Pension, if during such month he completes at least
40 hours of employment with the Employer or receives payment
for vacation, holiday, illness, incapacity including
disability, layoff, jury duty, military duty or leave of
absence for at least 40 hours in any calendar month.
On the subsequent termination of employment of a Participant
who was eligible for a benefit on his prior termination of
employment, the benefit shall be reduced by the Actuarial
Equivalent of the benefit payments, if any, previously made to
such Participant before his normal Retirement Date. In no
event shall the Participant's benefit be a lower monthly
benefit than he was receiving before his reemployment (both
benefits being calculated under the same form of payment)
unless the Participant received a lump-sum distribution for
the benefit earned before reemployment. The form of payment
of any benefit to which the Participant may become entitled
shall be determined in accordance with the provisions of
Article 6 without regard to the form in which his benefit had
previously been paid.
If a Participant who continues to be employed or who is
reemployed after his normal Retirement Date by the Employer
and who had completed the requirements for a Pension receives
remuneration for less than 40 hours in any given calendar
month, such Participant is considered to be in Retirement and
entitled to Pension payments hereunder. Any employment by the
Participant during the month he receives remuneration for less
than 40 hours of employment and for any month hereafter shall
be disregarded as Service and Credited Service hereunder.
-6.6-
<PAGE> 24
Upon the death of a Participant who continues his employment
beyond his Normal Retirement Date and who is not considered in
Retirement in accordance with the foregoing provisions in this
section, the provisions of section 6.2 (relating to death
before Pension payments commence) shall apply unless the
Participant has already begun to receive Pension payments
under section 6.1 or an elected optional form under section
6.4, and such form of payment continues in effect. In these
latter circumstances, the form of payment in effect at the
Participant's death shall determine the death benefits, if
any, that are payable from the Plan.
Any Participant, who either remains employed by the Employer
after attaining Normal Retirement Age (or is rehired after
attaining Normal Retirement Age) and who performs 40 or more
Hours of Service per calendar month shall be provided with a
notice in cases where such notice is required under Department
of Labor Regulations, 29 CFR section 2520.203-3, relating to
the suspension of benefits. Such notice shall inform the
Participant that the normal Retirement benefit payments to
which the Participant is entitled are not being paid (or are
being suspended in the case of a Participant who was receiving
benefits and is rehired after attaining Normal Retirement Age)
because of the Participant's continued employment or
reemployment. The notice shall also describe the applicable
Plan provisions and shall provide information about the
consequences of the benefit suspension in the manner
prescribed in the Department of Labor Regulations.
6.7 Time Limits for Payment of Benefits. To comply with the legal
restrictions of Code 401(a)(9) and 401(a)(14) and the
regulations thereunder, all benefit payments must comply with
the following rules for commencement and required minimum
distributions notwithstanding any other Plan provision.
(a) Benefit Commencement Requirements. Payment of
benefits shall begin as soon as practicable after
the Participant is entitled to receive them (and has
properly filed a benefits election form) but not
later than 60 days after the last day of the Plan
Year in which occurs the latest of:
(1) the Participant's attainment of age 65;
(2) the Participant's 10th anniversary of
participation in the Plan; or
(3) the Participant's termination of employment;
provided, however, that if the amount of the
payments required to commence on a date
determined under this section cannot be
ascertained or the person entitled thereto
cannot be located by that date, a payment
retroactive to that date may be made no later
than 60 days after the earliest date on which
such amount can be ascertained or such person
located.
Notwithstanding the foregoing, the distribution of the
Participant's vested Pension must begin not later than the
April 1 following the calendar year in which the Participant
attains age 70 1/2 even if the Participant has not incurred a
termination
-6.7-
<PAGE> 25
of employment by such date, provided that this sentence shall
not require any distribution before April 1, 1990, except if
the Participant was a 5 percent owner, as defined in Code
section 401(a)(9)(C), in any calendar year during which or
after he attained age 66 1/2, and further provided that if the
Participant attained age 70 1/2 before January 1, 1988 and was
not a 5 percent owner at any time after attaining age 66 1/2,
then distribution of his accrued benefit shall not be required
to begin until the April 1 following the calendar year in
which the Participant attains age 70 1/2 or, if later, in
which he has a termination of employment.
(b) Death Distribution Rules. The following rules must
be satisfied by any distribution that is made on
account of the death of a Participant.
(1) If the Participant dies after distribution of
benefits has commenced, the remaining portion
of such benefits (if any) will continue to be
distributed at least as rapidly as under the
method of distribution being used prior to
the Participant's death.
(2) If the Participant dies before distribution
of benefits commences, the entire benefit
will be distributed no later than five years
after the Participant's death except to the
extent that distribution is made in
accordance with (A) or (B) below:
(A) if any portion of the benefit is
payable to a designated Beneficiary,
distributions may be made in
substantially equal installments
over the life or life expectancy of
the designated Beneficiary
commencing no later than one year
after the death of the Participant;
(B) if the designated Beneficiary is the
Participant's surviving spouse, the
distributions shall begin not later
than the date on which the
Participant would have attained age
70 1/2, and, if the spouse dies
before payments begin, subsequent
distributions shall be made as if
the spouse had been the Participant.
(3) For purposes of paragraph (2), payments will
be calculated by use of the return multiples
specified in section 1.72-9 of the Treasury
Regulations. Life expectancy of a surviving
spouse may be recalculated annually, but in
the case of any other designated Beneficiary,
such life expectancy will be calculated at
the time payment first commences without
further recalculation.
(4) For purposes of this subsection (b), any
amount paid to a child of the Participant
will be treated as if it had been paid to the
surviving spouse if the amount becomes
payable to the surviving spouse when the
child reaches the age of majority.
-6.8-
<PAGE> 26
(c) The timing and amount of all benefit payments
described in subsections (a) and (b) above shall be
determined so as to comply with the minimum
requirements of the regulations under Code sections
401(a)(9) and 401(a)(14).
6.8 Limitations on Benefits.
(a) General Rule. In no event shall the annual
Retirement benefit payable to a Participant under
this Plan, together with that provided under all
qualified defined benefit plans maintained or
previously maintained by the Company or a Related
Company, for any "limitation year," which shall be
the calendar year, exceed the maximum annual benefit
permitted under Code section 415 (including any
applicable grandfathering rules).
For purposes of adjusting the maximum annual benefit limit as
required under Code section 415 for retirement benefit
commencement before or after Social Security Retirement Age,
the interest rate assumption shall be 5 percent. Social
Security Retirement Age means the earliest age at which the
Participant could receive unreduced benefits under section
216(l) of the Social Security Act.
(b) Combined Plan Limit. In the event that the
Participant participates or participated in a defined
contribution plan or plans maintained or previously
maintained by the Company or a Related Company, and
the sum of the Participant's defined contribution
fraction and defined benefit fraction (as such terms
are defined in Code section 415(e)) exceeds 1.0 for
any Plan Year, the total annual Retirement benefit
otherwise allowable under this Plan shall be reduced,
before any reductions in defined contribution
accounts, to an amount which results in the sum of
the Participant's defined contribution fraction and
defined benefit fraction (determined after such
downward reduction of the Participant's allowable
annual retirement benefit) equaling 1.0.
(c) Order of Defined Benefit Plan Reductions. In the
event that the Participant participates in any other
defined benefit plan of the Company or a Related
Company, and the Participant's aggregate annual
retirement benefit under this Plan and such other
plan exceeds the limits permitted under Code section
415, such Participant's benefit shall be first
reduced under this Plan.
-6.9-
<PAGE> 27
Article 7. Plan Financing
7.1 Contributions. The Employer shall make contributions in such
amounts and at such times as determined by the Company's board
of directors in accordance with a funding method and policy to
be established by said board or its delegate which will be
consistent with Plan objectives. Forfeitures arising under
this Plan because of termination of employment before a
Participant becomes eligible for a Pension, or for any other
reason, shall be applied to reduce the cost of the Plan, not
to increase the benefits otherwise payable to Participants.
No contributions shall be required or permitted under the Plan
from any Participant. Notwithstanding the foregoing, the
following rules shall apply to Participants who made mandatory
Employee contributions under a Prior Plan (all of which
Participants are now fully vested in an Accrued Benefit that
exceeds their Code section 411(C)(2) Accrued Benefit derived
from their own contributions). The Employee contributions of
such Participants shall continue to be credited with interest
at the annual rate of 5 percent, except that the higher rate
specified in Code section 411(c)(2)(c)(iii) shall be
substituted for 5 percent for Plan Years beginning after
December 31, 1987, but only to the extent that this
substitution is necessary to determine the minimum,
nonforfeitable death benefit described in section 6.2 for a
Participant who dies prior to the commencement of his benefit
payments.
7.2 Assets of the Trust Fund. All contributions made by the
Employer under this Plan shall be paid to the Trustee and
deposited in the Trust Fund. However, contributions by the
Employer are expressly conditioned upon their current
deductibility under Code section 404. Upon the Employer's
request, a contribution which was made by a mistake of fact,
or conditioned upon its deductibility under section 404 of the
Code shall be returned to the Employer within one year after
the payment of the contribution, or the disallowance of the
deduction (to the extent disallowed), whichever is applicable.
Except as otherwise provided above and in subsection 10.3(d),
all assets of the Trust Fund, including investment income,
shall be retained for the exclusive benefit of Participants
and their Beneficiaries, shall be used to pay benefits to such
persons or to pay administrative expenses to the extent not
paid by the Employer, and shall not revert to or inure to the
benefit of the Employer.
-7.1-
<PAGE> 28
Article 8. Administration
8.1 Allocation of Responsibility Among Fiduciaries for Plan and
Fund Administration. The Fiduciaries shall have only those
specific powers, duties, responsibilities, and obligations as
are specifically given them under this Plan or the Trust. The
Employer shall have the sole responsibility for making the
contributions necessary to provide benefits under the Plan as
specified in Article 7. The Company shall have the sole
authority to select the funding medium for the Plan, appoint
members of the Committee, and amend or terminate, in whole or
in part, this Plan or the Trust. The Company shall have the
final responsibility for administration of the Plan, which
responsibility is specifically described in this Plan and the
Trust. The Committee shall have the specific delegated powers
and duties described in the further provisions of this Article
8, and such further powers and duties as hereinafter be
delegated to it by the Company. The Trustee shall have
responsibilities as set forth in the Trust.
Each Fiduciary warrants that any directions given, information
furnished, or action taken by it shall be in accordance with
the provisions of the Plan or the Trust, as the case may be.
Furthermore, each Fiduciary may rely upon such direction,
information or action of another Fiduciary as being proper
under this Plan or the Trust, and is not required to inquire
into the propriety of any such direction, information or
action. It is intended under this Plan and the Trust that
each Fiduciary shall be responsible for the proper exercise of
its own responsibilities and obligations under this Plan and
the Trust and shall not be responsible for any act or failure
to act of another Fiduciary. No Fiduciary guarantees the Fund
in any manner against investment loss or depreciation in asset
value.
8.2 Appointment of Committee. A Committee consisting of at least
three persons shall be appointed by and serve at the pleasure
of the Chief Executive Officer of the Company to assist in the
administration of the Plan. All usual and reasonable expenses
of the Committee shall be paid in whole or in part by the
Company. Any members of the Committee who are Employees shall
not receive compensation with respect to their services for
the Committee.
8.3 Claims Procedure. The Committee shall establish a reasonable
claims procedure in accordance with this section 8.3 and
ERISA. The Committee and local representatives appointed by
it shall make all determinations as to the right of any person
to a benefit. Claims for benefits may be submitted to the
appropriate local representative designated by the Committee.
Any denial by the Committee or its designee of a Participant
or Beneficiary's claim for benefits under the Plan shall be
stated in writing and delivered or mailed to the Participant
or Beneficiary; and such notice shall set forth the specific
reasons for the denial, written in a manner designed to be
understood without legal or actuarial counsel. In addition,
the claims representative shall afford a reasonable
opportunity to any Participant or Beneficiary whose claim for
benefits has been denied for a review of the decision denying
the claim, and in the event of continued disagreement, either
may appeal to the Committee or its designee whose decision
shall be final. The Committee
-8.1-
<PAGE> 29
may prescribe reasonable time periods in which the Participant
must make claim for denied benefits or to request a review or
appeal of a decision to deny benefits, consistent with
applicable law.
8.4 Records and Reports. The Company (or the Committee if so
designated by the Company) shall exercise such authority and
responsibility as it deems appropriate in order to comply with
ERISA and governmental regulations issued thereunder relating
to records of Participants' Service, Accrued Benefits and the
percentage of such benefits which are nonforfeitable under the
Plan; notifications to Participants; annual registration with
the Internal Revenue Service; annual reports to the Department
of Labor; and reports to the PBGC.
8.5 Other Committee Powers and Duties. The Committee shall have
such duties and powers as may be necessary to discharge its
duties hereunder, including, but not by way of limitation, the
following:
(a) to construe and interpret the Plan, resolve any
ambiguities, and decide all questions as to
eligibility and the determination of the amount,
manner and time of payment of any benefits hereunder;
(b) to prescribe procedures to be followed by
Participants or Beneficiaries filing applications
for benefits;
(c) to prepare and distribute, in such manner as the
Committee determines to be appropriate, information
explaining the Plan;
(d) to receive from the Employer and from Participants
such information as shall be necessary for the proper
administration of the Plan;
(e) to furnish the Employer, upon request, such annual
reports with respect to the administration of the
Plan as are reasonable and appropriate;
(f) to receive and review the periodic valuation of the
Plan made by the Actuary;
(g) to receive, review and keep on file (as it deems
convenient or proper) financial reports received from
the Trustee;
(h) to appoint or employ individuals to assist in the
administration of the Plan and any other agents it
deems advisable, including legal and actuarial
counsel.
The Committee shall have no power to add to, subtract from or
modify any of the terms of the Plan, or to change or add to
any benefits provided by the Plan, or to waive or fail to
apply any requirements of eligibility for a Pension under the
Plan. All decisions, interpretations, and actions of the
Committee pursuant to the Plan shall be conclusive and binding
on all persons, and shall be given the maximum deference
allowed by law.
-8.2-
<PAGE> 30
8.6 Rules and Decisions. The Committee may adopt such rules as it
deems necessary, desirable, or appropriate. All rules and
decisions of the Committee shall be uniformly and consistently
applied to all Participants in similar circumstances. When
making a determination or calculation, the Committee shall be
entitled to rely upon information furnished by a Participant
or Beneficiary, the Company, the Employer, the legal counsel
of the Company, the Actuary, or the Trustee.
8.7 Committee Procedures. The Committee may act at a meeting or
in writing without a meeting. The Chief Executive Officer of
the Company shall appoint one of its members as chairman, and
such chairman shall appoint a secretary, who may or may not be
a Committee member, and advise the Trust of such actions in
writing. The secretary shall keep a record of all meetings
and forward all necessary communications to the Employer, the
Trustee or the Actuary. The Committee may adopt such bylaws
and regulations as it deems desirable for the conduct of its
affairs. All decisions of the Committee shall be made by the
vote of the majority, including actions in writing taken
without a meeting.
8.8 Authorization of Benefit Payments. The Company (or the
Committee if so designated by the Company) shall issue
directions to the Trustee concerning all benefits which are to
be paid from the Fund pursuant to the provisions of the Plan,
and warrants that all such directions are in accordance with
this Plan.
8.9 Application and Forms for Pension. The Committee may require
a Participant or Beneficiary to complete and file with the
Committee an application for Pension and all other forms
approved by the Committee, and to furnish all pertinent
information requested by the Committee. The Committee may
rely upon all such information so furnished it, including the
Participant's or Beneficiary's current mailing address.
8.10 Facility of Payment. Whenever, in the opinion of the Company
and the Committee, a person entitled to receive any payment of
a benefit or installment thereof hereunder is under a legal
disability or is incapacitated in any way so as to be unable
to manage his financial affairs, the Trustee may be directed
to make payments to such person or to his legal representative
or to a relative or friend of such person for his benefit, or
the Committee may direct the Trustee to apply the payment for
the benefit of such person in such manner as the Company and
the Committee consider advisable. Any payment of a benefit or
installment thereof in accordance with the provisions of this
section shall be a complete discharge of any liability for the
making of such payment under the provisions of the Plan.
8.11 Indemnification. The board of directors of the Company, the
Committee, and the individual members thereof shall be
indemnified by the Company and each Employer, and not from the
Fund against any and all liabilities arising by reason of any
act or failure to act made in good faith pursuant to the
provisions of the Plan, including expenses reasonably incurred
in the defense of any claim relating thereto.
-8.3-
<PAGE> 31
Article 9. Miscellaneous
9.1 No Guarantee of Employment. Nothing contained in this Plan
shall be construed as a contract of employment between the
Employer and any Employee, or as a right of any Employee to be
continued in the employment of the Employer, or as a
limitation of the right of the Employer to discharge any of
its Employees, with or without cause.
9.2 Rights to Fund Assets. No Employee shall have any right to,
or interest in, any assets of the Fund upon termination of his
employment or otherwise, except as provided from time to time
under this Plan, and then only to the extent of the benefits
payable to such Employee under the Plan. Except as otherwise
may be provided under Title IV of ERISA, all payments of
benefits as provided for in this Plan shall be made solely
out of the assets of the Fund and none of the Fiduciaries
shall be liable therefore in any manner.
9.3 Nonforfeitability of Benefits. Subject only to the specific
provisions of this Plan, nothing shall be deemed to divest a
Participant during his lifetime of his right to any
nonforfeitable benefit to which he becomes entitled in
accordance with the provisions of this Plan.
9.4 Exclusions and Separability. Each provision hereof shall be
independent of each other provision hereof, and if any
provision of this Plan proves to be, or is held by any court,
or tribunal, board or authority of competent jurisdiction to
be void or invalid as to any Participant or group of
Participants, and the decision is no longer subject to appeal,
such provision shall be disregarded and shall be deemed to be
null and void and no part of this Plan; but such invalidation
of any such provision shall not otherwise impair or affect
this Plan or any of the other provisions or terms hereof.
9.5 Non-Alienation.
(a) Except as permitted by the Plan in accordance with
Code section 401(a)(13) and ERISA section 206(d), no
benefit payable at any time under the Plan shall be
subject to the debts or liabilities of a Participant
or his or her Beneficiary, and any attempt to
alienate, sell, transfer, assign, pledge, or
otherwise encumber any such benefit, whether
presently or thereafter payable, shall be void.
Subject to the foregoing exception, no benefit under
the Plan shall be subject in any manner to
attachment, garnishment, or encumbrance of any kind.
(b) In accordance with procedures consistent with Code
section 414(p) that are established by the Committee
(including procedures requiring prompt notification
of the affected Participant and each potential
alternate payee of the Plan's receipt of a domestic
relations order and its procedures for determining
the qualified status of such order), judicial orders
for purposes of enforcing family support obligations
or pertaining to domestic relations (which orders do
not alter the amount, timing or form of benefit other
than to have it commence at the earliest permissible
date) shall be honored by the Plan if the Committee
determines that they constitute qualified domestic
relations orders.
-9.1-
<PAGE> 32
Article 10. Amendment and Termination
10.1 Amendment of the Plan. The Company reserves the right to
amend the Plan at any time and from time to time by action of
its board of directors or the authorized agent of such board.
In addition, the Committee may make amendments, retroactively
if necessary or appropriate, to permit the Plan and Trust Fund
to meet the requirements for qualification and tax exemption
under the Code or to satisfy the requirements of ERISA or any
other applicable law, as now in effect or hereafter amended or
superseded, and the regulations thereunder. The Committee may
also make minor amendments to clarify the Plan, comply with
tax qualification or other legal requirements, facilitate its
administration, or implement appropriate changes in the Plan
design, provided that such amendments do not significantly
increase the cost of the Plan or adversely affect its
qualification. No amendment shall cause any part of the Trust
Fund to be used (prior to the satisfaction of all Plan
liabilities) for, or diverted to, purposes other than for the
exclusive benefit of Participants and their Beneficiaries.
Retroactive Plan amendments may not decrease the Accrued
Benefit of any Participant determined as of the time the
amendment is adopted, unless approved by the Secretary of
Labor.
10.2 Discontinuance of Contributions or Termination of Plan . The
Company expects the Plan to be permanent and to continue
indefinitely, but since future conditions affecting the
Company and Participating Employees cannot be anticipated or
foreseen, the Company reserves the right to forever terminate
its obligations under the Plan either fully or in part,
including its obligation to finance benefits under this Plan.
10.3 Action Upon Discontinuance of Contributions or Termination of
Plan.
(a) If the Company determines in its sole discretion that
the Plan has been terminated partially or completely,
within the meaning of regulations under Code section
411, the Company shall determine the date of such
termination and the Participants affected by the
termination. The Accrued Benefits of all
Participants affected by the termination who were
Employees on the date thereof shall be fully vested
to the extent then funded. In addition, the Company
in its sole discretion may vest the Accrued Benefits
of a group of Participants because they are affected
by a business divestiture, layoff or other similar
transaction, in which case the partial termination
rules set forth in this section shall apply (even
when a true "partial termination" has not occurred).
The Company or its delegate shall document in writing
any such decision to vest certain Participants in
their Accrued Benefits and the reasons therefor. The
Company's action in any one event shall not be
considered as establishing a precedent or requiring a
similar action in another event. The discontinuance
of contributions by any Employer shall not, in the
absence of a determination by the Company under this
section, terminate the Plan or operate to
-10.1-
<PAGE> 33
accelerate any payments or distributions to or for
the benefit of Participants.
(b) Upon a complete termination of the Plan, the assets
of the Trust Fund shall be liquidated (after
provision is made for the expenses of liquidation) to
provide for the payment of benefits to each
Participant or Beneficiary in accordance with the
priority categories specified in ERISA section 4044
and the regulations thereunder.
(c) No liquidation of assets or payment of benefits (or
the provision therefor) shall actually be made until
the Company has determined that all applicable
requirements of the Code and ERISA governing
termination of plans (including, without limitation,
the requirements summarized in subsection (d) below)
have been, or are being, complied with and that
appropriate authorizations, waivers, exemptions or
variances have been, or are being, obtained.
(d) In the event of Plan termination, the benefits of any
highly compensated employee or highly compensated
former employee (within the meaning of Code section
414(q) and related regulations) shall be limited to a
benefit that is not discriminatory under Code section
401(a)(4) and related regulations. In addition, if a
Participant is among the 25 most highly compensated
persons who are employed by the Company and its
Affiliates at any time during the Plan Year, or based
on his Compensation at the time of his retirement or
other termination of employment would still be among
the 25 most highly compensated persons if so
employed, then payment to or with respect to such
Participant shall not exceed annual payments under a
single life annuity equal to the Participant's
Accrued Benefit unless:
(1) After payments to or with respect to all
Participants whose benefits may be restricted
under this subsection for the Plan Year, the
value of Plan assets exceeds 110 percent of
the value of the Plan's current liabilities,
(2) Payments to or with respect to the
Participant are less than 1 percent of the
value of the Plan's current liabilities, or
(3) Another exception under applicable
regulations permits the payment to
Participant without regard to such
limitation.
(4) The amounts allocated in accordance with
subsection (2) shall be applied for the
benefit of each such person by the purchase
of nontransferable annuity contracts, or, to
the extent permitted by law, by such other
methods as the Committee may deem appropriate
at the time of the complete termination of
the Plan.
-10.2-
<PAGE> 34
(5) The surplus assets, if any, of the Trust
Fund, after allocations have been made for
the satisfaction of all Plan liabilities,
shall be paid as a reversion to the Company,
provided, however, that if a "Change of
Control," as defined below, has occurred,
then any such balance of the Fund which
remains shall instead be allocated and
distributed to Participants who were actively
(including those on authorized vacation or
leave) employed by an Employer on the date
such Change of Control occurred. Such funds
shall be allocated on the basis of the
Accrued Benefit otherwise payable to each
such Participant and shall be distributed in
the form benefits are otherwise payable under
the Plan to such Participant. For the
purposes of the Plan, a "Change of Control"
shall be deemed to have taken place if
without the prior approval of the Company's
board of directors:
(i) any person, including a "Group," as
defined in Section 13(d)(3) of the
Securities Exchange Act of 1934,
becomes the beneficial owner of
shares of the Company having 25
percent or more of the total number
of votes that may be cast by holders
of common stock upon any corporate
action proposed to shareholders for
approval or adoption; or
(ii) as the result of, or in connection
with, any cash tender or securities
exchange offer, merger or other
business combination, sale of assets
or contested election, or any
combination of the foregoing
transactions (Transaction), the
persons who were directors of the
Company before the Transaction shall
cease to constitute a majority of
the board of directors of the
Company or any successor
corporation. Notwithstanding any
provision in the Plan to the
contrary, after a Change of Control,
the Plan may not be amended or
modified in any fashion, directly or
indirectly, to obviate the foregoing
provisions which provide upon Plan
termination for the reversion of any
excess Plan assets to Participants
who are active Participants as of
the date a Change of Control occurs.
-10.3-
<PAGE> 35
Article 11. Successor Employer and
Merger or Consolidation of Plans
11.1 Successor Employer. In the event of the dissolution, merger,
consolidation or reorganization of the Company, provision may
be made by which the Plan will be continued by the successor;
and, in that event, such successor shall be substituted for
the Company under the Plan. The substitution of the successor
shall constitute an assumption of Plan liabilities by the
successor and the successor shall have all the powers, duties
and responsibilities of the Company under the Plan.
11.2 Plan Assets. In the event of any merger or consolidation of
the Plan with, or transfer in whole or in part of the assets
and liabilities of the Fund or trust fund held under, any
other plan of deferred compensation maintained or to be
established for the benefit of all or some of the Participants
of this Plan, the Plan shall be so merged or consolidated, or
the assets of the Fund applicable to such Participants shall
be transferred, only if:
(a) each Participant would (if either this Plan or the
other plan then terminated) receive a benefit
immediately after the merger, consolidation or
transfer which is equal to or greater than the
benefit he would have been entitled to receive
immediately before the merger, consolidation or
transfer (if this Plan had then terminated), and the
determination of such benefits shall be made in the
manner and at the time prescribed in regulations
issued under ERISA;
(b) resolutions of the boards of directors of the Company
under this Plan, and of any new or successor employer
of the affected Participants, shall authorize such
transfer of assets; and, in the case of the new or
successor employer of the affected Participants, its
resolutions shall include an assumption of
liabilities with respect to such Participants'
inclusion in the new employer's plan; and
(c) such other plan and trust are qualified and
tax-exempt under sections 401(a) and 501(a)
of the Code.
-11.1-
<PAGE> 36
Article 12. Top-Heavy Provisions
12.1 Application. If as of the Determination Date in any Plan Year
after December 31, 1983:
(a) the sum of the present values of Accrued Benefits of
Employees who are Key Employees for such Plan Year
exceeds 60 percent of the sum of the present values
of Accrued Benefits of all Employees and their
Beneficiaries, or
(b) the Plan is part of a Top-Heavy Group, then the
following provisions under this Article shall apply
for such Plan Year. The foregoing notwithstanding,
these provisions shall not apply to the Plan in any
Plan Year during which it is part of an Aggregation
Group (as defined in section 12.4(a)), whether or not
it is top-heavy as a single plan, unless the
Aggregation Group of which it is a part is top-heavy
in such Plan Year.
The date for determining the applicability of this Article
("Determination Date") is the last day of the preceding Plan
Year.
The present value of any Participant's or Key Employee's
Accrued Benefit as of any Determination Date shall be
calculated (i) as of the most recent Actuarial Valuation Date
which is within a 12 month period ending on the Determination
Date, (ii) as if his employment terminated as of such
Actuarial Valuation Date, (iii) without regard to the
qualified preretirement survivor annuity provided pursuant to
Code section 417(e) or any other nonproportional subsidy
provided under this Plan, and (iv) using the definition of
Actuarial Equivalent contained in section 2.1(b).
The term "Actuarial Valuation Date" shall mean the valuation
date used for computing Plan costs for minimum funding.
12.2 Key Employees. The term "Key Employee" means any Employee or
former Employee (or his Beneficiary) who at any time during a
Plan Year or any of the four preceding Plan Years is:
(a) An officer of the Company or its Affiliates who
receives Top-Heavy Compensation during the Plan Year
of more than 50 percent of the amount in effect under
Code section 415(b)(1)(A) for such Plan Year;
provided, however, no more than the lesser of (i) 50
Employees, or (ii) the greater of three Employees or
10 percent of all Employees are to be treated as
officers;
(b) One of the ten Employees owning the largest interests
in the Company or an Affiliate, if such Employee owns
more than a one-half percent interest in the Company
and receives Top-Heavy Compensation during the Plan
-12.1-
<PAGE> 37
Year which exceeds the dollar limit specified in Code
section 415(c)(1)(A);
(c) A 5 percent owner of the Company or an Affiliate; or
(d) A 1 percent owner of the Company or an Affiliate who
receives Top-Heavy Compensation during the Plan Year
of more than $150,000.
An Employee is considered to own more than a 5 percent
interest if the Employee owns more than 5 percent of the
Company's outstanding stock or stock possessing 5 percent of
the total combined voting power of all of the Company and
Affiliates' stock. An Employee is also treated as owning
stock owned by certain members of the Employee's family as
provided in Code section 318. The same rules apply to
determine whether an Employee is a 1 percent owner.
For purposes of paragraph (b) above, if two Employees have the
same ownership in the Company or Affiliate, the Employee
having the greater Top-Heavy Compensation from the Company and
Affiliates shall be treated as having a larger interest.
Any Employee who is not a Key Employee shall be a "non-Key
Employee." If an Employee ceases to be a Key Employee, such
Employee's Accrued Benefit shall be disregarded under the top-
heavy plan computation for any Plan Year following the last
Plan Year for which he was treated as a Key Employee.
12.3 Top-Heavy Compensation. The term "Top-Heavy Compensation"
means compensation under Code section 415(c) without taking
into account the exclusions from taxable compensation provided
by Code sections 125, 402(a)(8) and 402(h)(l)(B).
12.4 Top-Heavy Group. For purposes of determining whether the Plan
is part of a top-heavy group as described in section 12.1, the
following rules shall apply:
(a) Aggregation Group. All plans maintained by the
Company or an Affiliate are aggregated to determine
whether the plans, as a group, are top-heavy. The
aggregation group shall include any plan which covers
a Key Employee and any other plan which enables a
plan covering a Key Employee to meet the requirements
of section 401(a)(4) or 410 of the Code.
(b) Top-Heavy Group. An aggregation group is a top-heavy
group if, as of the Determination Date, (1) the sum
of the account balances of Key Employees under all
defined contribution plans included in the group
exceeds 60 percent of the account balances of all
participants under all such plans in the group, or
(2) the present value of the accumulated accrued
benefits for Key Employees under all defined benefit
plans in the group exceeds 60 percent of the present
value of the accumulated accrued benefits for all
participants under all such plans in the group.
-12.2-
<PAGE> 38
In any Plan Year, in testing for top-heaviness under
section 12.1(a) or (b), the Company may in its
discretion take into account accumulated accrued
benefits and account balances in any other plan
maintained by it or an Affiliate, so long as such
expanded aggregation group continues to meet the
requirements of sections 401(a)(4) and 410 of the
Code.
12.5 Additional Rules. In determining the present value of the
accumulated accrued benefits under a defined benefit plan and
the sum of the account balances under a defined contribution
plan, Employer contributions and Employee contributions (other
than voluntary deductible employee contributions) shall be
taken into account. The present value of the accrued benefit
in a defined benefit plan or the account balance in a defined
contribution plan will include any amount distributed to an
Employee or Beneficiary within the five year period ending on
the Determination Date as well as any distributions from a
terminated plan which, if it had not been terminated, would
have been included in the aggregation group, but shall not
include any rollover initiated by an Employee and made after
December 31, 1983. On and after January 1, 1987, the accrued
benefit or account balance of any Employee or former Employee
who has not performed services for the Company or an Affiliate
during the five-year period ending on the Determination Date
shall not be taken into account. If such Employee later
returns to service, his total account balance or accrued
benefit shall be included in such determination.
12.6 Combined Limit on Benefits and Contributions. If this Plan is
determined to be top-heavy in any Plan Year under the
provisions of section 12.1 or 12.4, and if the value of the
accrued benefits of Key Employees exceeds 60 percent of the
value of all accrued benefits, then the combined limit on
benefits and contributions under section 415(e) of the Code
for any Key Employee who participates in both a defined
benefit plan and a defined contribution plan which are
included in a Top-Heavy Group as provided in section 12.3
above shall be the lesser of 1.0 (as applied to the dollar
limit) or 1.4 (as applied to the limit based upon
compensation).
12.7 Vesting Requirements. If this Plan is determined to be
top-heavy in any Plan Year, then the interest of each
Participant in his Accrued Benefit shall vest in increments in
accordance with the following schedule:
<TABLE>
<CAPTION>
Number of Years Percentage
of Vesting Service Vested
------------------ ----------
<S> <C>
Less than 3 0%
3 or more 100%
</TABLE>
Once the above schedule applies to a Participant, it will
continue to apply to him, whether or not the Plan is top-
heavy in any subsequent year, for as long as he remains a
Participant.
-12.3-
<PAGE> 39
12.8 Minimum Benefit Accrual. As of any Determination Date for a
Plan Year during which this Plan is top-heavy, the Accrued
Benefit of any Participant who is a non-Key Employee shall be
not less than the lesser of (i) 2 percent of the Participant's
average annual Top-Heavy Compensation (determined as of such
Determination Date with respect to all Top-Heavy Compensation
for the period of consecutive years after December 31, 1983
during which the Plan is top-heavy, not exceeding five, in
which the Participant had the greatest aggregate Top-Heavy
Compensation), times the number of years of Service which were
completed by the Participant within all years beginning on or
after January 1, 1984, in which this Plan is top-heavy or (ii)
20 percent of the Participant's average annual Top-Heavy
Compensation for such period as of such Determination Date. A
minimum Accrued Benefit calculated under this section in any
Plan Year shall not decrease in a later Plan Year. Moreover,
a minimum Accrued Benefit provided by this Plan shall be
independent of any top-heavy minimum benefits provided by
other plans of the Company and its Affiliates and thus shall
not be reduced, offset, or otherwise affected by such benefits
under other plans.
-12.4-
<PAGE> 40
GFC FINANCIAL CORPORATION RETIREMENT INCOME PLAN
GFC FINANCIAL CORPORATION
Appendix A
1. Applicability. This appendix supplements the above Plan and
provides the benefit formula and other special rules applicable to Eligible
Employees of the Company.
2. Definitions. The definitions in the Plan, as modified below,
shall apply for purposes of this appendix.
(a) "Accrued Benefit" shall be as defined in the Plan and
determined under section 4 of this appendix, subject to the additional rules in
section 6 of this appendix in the case of a deferred vested Participant
described in such section 6, and subject further to the following transition
rules for adjusting the Prior Plan's December 31, 1988 Accrued Benefit due to
subsequent changes in Average Monthly Compensation.
(1) The Prior Plan's December 31, 1988 Accrued Benefit
shall be determined as if the Participant had
terminated employment on December 31, 1988, and shall
be based on the benefit formula of the Prior Plan as
in effect on November 15, 1988 (without regard to any
amendments made after that date).
(2) In any case in which the Primary Social Security
Benefit offset exceeds 50 percent of the Accrued
Benefit prior to the application of the offset, the
Accrued Benefit in (1) above shall be adjusted by
reducing that offset to 50 percent.
(3) The adjusted Accrued Benefit in (2) above shall be
further adjusted for changes in Average Monthly
Compensation by multiplying it by a fraction (not
less than one), the numerator of which is the
Participant's
<PAGE> 41
current Average Monthly Compensation, and the
denominator of which is the Participant's Average
Monthly Compensation determined as if the Participant
terminated employment on December 31, 1988 (using the
current definition of Average Monthly Compensation in
both the numerator and the denominator).
(b) "Average Monthly Compensation" shall be as defined in the Plan
except that the period considered is subject to the rules in sections 3 and
section 8 of this appendix.
(c) "Compensation" shall be as defined in the Plan except that
overtime earnings and bonuses paid after 1988 shall be included and treated as
Compensation instead of being excluded as provided in the Plan.
(d) "Prior Plan" shall be as defined in the Plan with respect to this
appendix.
Other definitions in the Plan shall remain unchanged.
3. Employment Transfers. The Plan shall be modified as follows
with respect to Participants who transfer from the Company, to a Related
Company or to a job classification, where they are no longer eligible under
this appendix. As long as such Participants continue to be Employees following
such a transfer, any subsequent Compensation and Average Monthly Compensation
that they earn from the Company or a Related Company shall continue to be
counted in determining their benefits under this appendix.
4. Amount of Normal Retirement Pension. For purposes of section
5.1 of the Plan, the monthly amount of the Normal Retirement Pension for the
life of a Participant with respect to Compensation and Credited Service covered
by this appendix shall be equal to the sum of (a) and (b), subject to any
minimum that may apply pursuant to (c) or (d) below:
<PAGE> 42
(a) Credited Service after 1988. Credited Service after 1988 is
limited to 30 years minus any previous Credited Service so that the overall
limit of 30 years continues to apply to all Credited Service rather than to
portions of a Participant's total Credited Service. A Participant's Accrued
Benefit with respect to Credited Service earned under this appendix after 1988
shall be equal to the sum of (1) plus (2) below:
(1) 1.25 percent of the lesser of the Participant's Average
Monthly Compensation or his Covered Compensation, multiplied
by his Credited Service after 1988, plus
(2) 1.75 percent of the excess, if any, of the Participant's
Average Monthly Compensation over his Covered Compensation,
multiplied by his Credited Service after 1988.
Notwithstanding the foregoing, the Accrued Benefit
under this paragraph (a) shall not be less than the amount determined by
continuing to apply the formula in paragraph (b) (or paragraph (c), if
applicable) of this section 4 in lieu of the formula in (1) and (2) above with
respect to Compensation and Credited Service earned between January 1, 1989,
and the Adoption Date. However, because of the adoption of Model Amendment 2
in IRS Notice 88-131, this transition rule for determining the Accrued Benefit
is not available for any Participant who is a highly compensated employee
described in Code section 414(q). Between January 1, 1989, and the Adoption
Date, the Accrued Benefit of such a highly compensated Participant shall not
exceed the Accrued Benefit earned by such Participant under the Prior Plan and
transferred to this Plan as of December 31, 1988. On or after the Adoption
Date, the Accrued Benefit attributable to Credited Service and Compensation
earned after 1988 for such a highly compensated Participant shall be determined
under
<PAGE> 43
subparagraphs (1) and (2) of this paragraph (a).
(b) Credited Service before 1989. Except as provided in paragraph
(c) below with respect to certain Participants who were at least 50 years old
on January 1, 1986, and subject to the modification in section 6 with respect
to deferred vested Participants, a Participant's Accrued Benefit with respect
to Credited Service earned under this appendix before 1989 shall be equal to
the difference between (1) and (2) below:
(1) 1.834 percent of the Participant's Average Monthly
Compensation multiplied by his Credited Service
earned before 1989 (which shall not exceed 30 years),
subject to a maximum of 55 percent; less (2) 1.667
percent of his Primary Social Security Benefit
multiplied by his Credited Service earned before
1989, subject to a maximum of 50 percent.
(c) If a Participant was both an active Participant in the Prior
Plan and age 50 or older on January 1, 1986, the monthly amount of the portion
of his Accrued Benefit that is determined under paragraph (b) with respect to
Credited Service earned before 1989 shall not be less than the amount computed
as follows:
(1) The monthly "Basic Retirement Income," as defined and
computed under the Greyhound Employees' Retirement
Income Plan on December 31, 1985, but using "Final
Average Monthly Compensation" and "Credited Service"
as of the calculation date determined as the earlier
of December 31, 1988, or the date of the Participant's
termination of employment (as if the Prior Plan of
December 31, 1985, continued in force until such
date), multiplied by a fraction the numerator of which
is the Participant's Service for the period prior to
January 1, 1986, and the denominator of which is the
Participant's total Service as of such
<PAGE> 44
calculation date, plus
(2) The monthly amount computed in accordance with
paragraph (b) above, but using Average Monthly
Compensation and Credited Service as of the
calculation date specified in (1) above, multiplied
by a fraction the numerator of which is the
Participant's Service for the period after December
31, 1985, and the denominator of which is the
Participant's total Service as of such calculation
date (determined as provided in (1) above).
The sum of the fractions referred to in subparagraphs
(1) and (2) of this paragraph (c) shall equal one, it
being intended that periods of Credited Service which
are used to compute the normal Retirement Pension
shall not overlap. Notwithstanding the foregoing,
when calculating the portion of a Participant's
Accrued Benefit in accordance with subparagraph
(c)(1), the 30-year Credited Service limitation
contained in subparagraph (b)(1) shall not be taken
into account.
The amount of Pension determined for a Participant
who retirees after age 65 and does not have an Hour
of Service on or after January 1, 1988, shall be the
same as the amount that would have been payable had
his Retirement occurred on his Normal Retirement
Date.
(d) In no event shall a Participant's Accrued Benefit and
other rights protected by Code section 411(d)(6) be less than they were as of
December 31, 1988, under the Prior Plan as then in effect including any
grandfather provisions traceable to earlier versions of the Prior Plan.
<PAGE> 45
5. Amount of Early Retirement Pension. For purposes of section
5.2 of the plan, the monthly amount of the early Retirement Pension for the
life of a Participant with respect to Compensation and Credited Service covered
by this appendix shall be equal to the normal Retirement Pension calculated
under the section 4 of this appendix. If payment of an early Retirement
Pension commences prior to the Participant's Normal Retirement Date, the amount
of the Pension shall be reduced by (i) 0.25 percent for each month that the
commencement date of the Pension is on or after the first day of the month of
the Participant's 62nd birthday and precedes the Participant's Normal
Retirement Date; plus (ii) 0.4167 percent for each month that the commencement
date of the Pension precedes the first day of the month of the Participant's
62nd birthday; provided, however, that for purposes of reducing the portion of
a Participant's benefit that is computed under subparagraph (c)(1) of section 4
of this appendix, the reductions shall be as provided in the Prior Plan as in
effect on December 31, 1985.
6. Amount of Deferred Vested Pension. This section applies for
purposes of section 5.3 of the Plan in order to determine the Accrued Benefit
and deferred vested Pension of a Participant who terminates employment with a
right to a vested Pension with a deferred commencement date if the Participant
is not at the time eligible to receive a normal or early Retirement Pension.
The amount of the deferred vested Pension commencing as of the Normal
Retirement Date of such a Participant and continuing for the life of the
Participant with respect to Compensation and Credited Service covered by this
appendix, shall be equal to his Accrued Benefit at termination of employment
(determined in accordance with section 4 of this appendix as modified by the
following). The Accrued Benefit of such a Participant with respect to Credited
Service earned under this appendix before 1989 shall be the amount that could
be payable upon the Participant's attainment of age 65 under paragraph (b)
<PAGE> 46
of section 4 in this appendix, considering the Participant's Average Monthly
Compensation as of December 31, 1988, and the Credited Service that the
Participant would have at age 65 assuming continuous covered employment under
this appendix until that age and subject to the 30-year limit on Credited
Service but not the December 31, 1988 cut-off of said paragraph (b), and
multiplying that amount by the following fraction. The numerator of the
fraction is the Participant's Credited Service as of December 31, 1988, and the
denominator of the fraction is the Participant's total Credited Service to age
65, as determined under the immediately preceding sentence, but without regard
to the 30-year limit.
Such a Participant may request the Committee to authorize commencement of his
Pension as of the beginning of any calendar month within the 10-year period
preceding his Normal Retirement Date. In such case, his Pension shall commence
as of the date requested, but the amount thereof shall be reduced as provided
in section 5 of this appendix.
7. Death Benefits. For purposes of section 6.2 of the Plan, a
special rule shall apply if a Participant who was an Employee on December 31,
1985, dies before his Pension payments have commenced, is survived by an
Eligible Spouse, and has 20 or more years of Service at the time of his death.
If such a Participant is younger than age 55 at the time of his death, the
Pension payable to the Participant's Eligible Spouse shall be determined as if
the deceased Participant had been age 55, had begun to receive an early
Retirement Pension in the form of a 50 Percent Joint and Survivor Pension under
the provisions of section 6.1, and had died immediately thereafter. This rule
has the effect of accelerating the commencement, without reducing the amount,
of the Pension that would otherwise have become payable to the Eligible Spouse
on the 55th anniversary of the Participant's birth.
8. Disabled Participants. If an active Participant becomes a
Disabled Participant, he shall continue to receive credit for Service and
Credited Service for the period in which he is a Disabled Participant and is
not receiving benefit payments under the Plan, but the credit for such period
shall not extend beyond his Normal Retirement Age. In addition, for purposes
of determining the Average Monthly Compensation of such a Disabled Participant,
the Compensation being paid immediately prior to his becoming a Disabled
Participant shall be deemed to continue during the period for which Service and
Credited Service continue.
<PAGE> 47
GFC FINANCIAL CORPORATION RETIREMENT INCOME PLAN
VEREX CORPORATION
Appendix B
1. Applicability. This appendix supplements the above Plan and
provides the benefit formula and other special rules applicable to Eligible
Employees of Verex Corporation.
2. Definitions. The definitions in the Plan, as modified below,
shall apply for purposes of this appendix.
(a) "Accrued Benefit" shall be as defined in the Plan and
determined under section 4 of this appendix, subject to the additional rules in
section 6 of this appendix in the case of a deferred vested Participant
described in such section 6, and subject further to the following transition
rules for adjusting the Prior Plan's December 31, 1988 Accrued Benefit due to
subsequent changes in Average Monthly Compensation.
(1) The Prior Plan's December 31, 1988 Accrued Benefit
shall be determined as if the Participant had
terminated employment on December 31, 1988, and shall
be based on the benefit formula of the Prior Plan as
in effect on November 15, 1988 (without regard to any
amendments made after that date).
(2) In any case in which the Primary Social Security
Benefit offset exceeds 50 percent of the Accrued
Benefit prior to the application of the offset, the
Accrued Benefit in (1) above shall be adjusted by
reducing that offset to 50 percent.
(3) The adjusted Accrued Benefit in (2) above shall
befurther adjusted for changes in Average Monthly
Compensation by multiplying it by a fraction (not less
than one), the numerator of which is the Participant's
current Average Monthly Compensation, and the
denominator of which is the Participant's Average
Monthly Compensation determined as if the Participant
terminated employment on December 31, 1988 (using the
current definition of Average Monthly Compensation in
both the numerator and the denominator).
(b) "Average Monthly Compensation" shall be as defined in the Plan
except that the period considered shall be subject to the rules in section 7 of
this appendix.
(c) "Compensation" shall be as defined in the Plan except that
sales commissions shall be excluded for purposes of subsection 2.1(k)(1).
(d) "Prior Plan" shall be as defined in the Plan with respect to
this appendix.
Other definitions in the Plan shall remain unchanged.
3. Participation. Participation by Eligible Employees shall be
as described in section 3.1 of the Plan except that the minimum age requirement
shall be age 18 instead of age 21.
4. Amount of Normal Retirement Pension. For purposes of section
5.1 of the Plan, the monthly amount of the normal Retirement Pension for the
life of a Participant with respect to Compensation and Credited Service covered
by this appendix shall be equal to the sum of (a) and (b) below, subject to any
minimum that may apply pursuant to (c) or (d) below.
<PAGE> 48
(a) Credited Service after 1988. Credited Service after 1988 is
limited to 30 years minus any previous Credited Service so that the overall
limit of 30 years continues to apply to all Credited Service rather than to
portions of a Participant's total Credited Service. A Participant's Accrued
Benefit with respect to Credited Service earned under this appendix after 1988
shall be equal to the sum of (1) plus (2) below:
(1) 1.25 percent of the lesser of the Participant's
Average Monthly Compensation or his Covered Compensation, multiplied by his
Credited Service after 1988, plus
(2) 1.75 percent of the excess, if any, of the
Participant's Average Monthly Compensation over his Covered Compensation,
multiplied by his Credited Service after 1988.
Notwithstanding the foregoing, the Accrued Benefit under this
paragraph (a) shall not be less than the amount determined by continuing to
apply the formula in paragraph (b) (or paragraph (c), if applicable) of this
section 4 in lieu of the formula in (1) and (2) above with respect to
Compensation and Credited Service earned between January 1, 1989, and the
Adoption Date. However, because of the adoption of Model Amendment 2 in IRS
Notice 88-131, this transition rule for determining the Accrued Benefit is not
available for any Participant who is a highly compensated employee described in
Code section 414(q). Between January 1, 1989, and the Adoption Date, the
Accrued Benefit of such a highly compensated Participant shall not exceed the
Accrued Benefit earned by such Participant under the Prior Plan and transferred
to this Plan as of December 31, 1988. On or after the Adoption Date, the
Accrued Benefit attributable to Credited Service and Compensation earned after
1988 for such a highly compensated Participant shall be determined under
subparagraphs (1) and (2) of this paragraph (a).
(b) Credited Service before 1989. Except as provided in paragraph
(c) below with respect to certain Participants who were at least 50 years old
on April 1, 1986, and subject to the modification in section 6 with respect to
deferred vested Participants, a Participant's Accrued Benefit with respect to
Credited Service earned under this appendix before 1989 shall be equal to the
difference between (1) and (2) below:
(1) 1.834 percent of the Participant's Average Monthly
Compensation multiplied by his Credited Service earned before 1989 (which shall
not exceed 30 years), subject to a maximum of 55 percent; less
(2) 1.667 percent of his Primary Social Security Benefit
multiplied by his Credited Service earned before 1989, subject to a maximum of
50 percent.
(c) If a Participant was both an active Participant in the Prior
Plan and age 50 or older on April 1, 1986, the monthly amount of the portion of
his Accrued Benefit that is determined under paragraph (b) with respect to
Credited Service earned before 1989 shall not be less than the amount computed
as follows:
(1) The monthly income benefit, as defined and computed
under the Prior Plan of March 31, 1986, but using "Average Monthly Compensation"
and "Credited Service" as of the calculation date determined as the earlier of
December 31, 1988, or the date of the Participant's termination of employment
(as if the Prior Plan of March 31, 1986, continued in force until such date),
multiplied by a fraction the numerator of which is the Participant's Service for
the period prior to April 1, 1986, and the denominator of which is the
Participant's total Service as of such calculation date, plus
(2) The monthly amount computed in accordance with
paragraph (b) above, but using Average Monthly Compensation and Credited Service
as of the calculation date specified in (1) above, multiplied by a fraction the
numerator of which is the
2
<PAGE> 49
Participant's Service for the period after March 31, 1986, and the denominator
of which is the Participant's total Service as of such calculation date
(determined as provided in (1) above).
The sum of the fractions referred to in subparagraphs (1) and
(2) of this paragraph (c) shall equal one, it being intended that periods of
Credited Service which are used to compute the normal Retirement Pension shall
not overlap. Notwithstanding the foregoing, when calculating the portion of a
Participant's Accrued Benefit in accordance with subparagraph (c)(1), the
30-year Credited Service limitation contained in subparagraph (b)(1) shall not
be taken into account.
As provided in the Prior Plan of March 31, 1986, the monthly
income benefit for purposes of subparagraph (c)(1) above is equal to a
Participant's Credited Service (not to exceed 30 years), multiplied by 0.75
percent, multiplied by the sum of (i) Average Monthly Compensation, plus (ii)
Average Monthly Compensation in excess of the covered compensation determined
from the table below.
<TABLE>
<CAPTION>
Year of Participant's
65th Birthday Covered Compensation
<S> <C>
1984-1991 $600
1992-1998 $650
1999-2003 $700
2004 or later $750
</TABLE>
The amount of Pension determined for a Participant who retirees
after age 65 and does not have an Hour of Service on or after January 1, 1988,
shall be the same as the amount that would have been payable had his Retirement
occurred on his Normal Retirement Date.
(d) In no event shall a Participant's Accrued Benefit and other
rights protected by Code section 411(d)(6) be less than they were as of December
31, 1988, under the Prior Plan as then in effect including any grandfather
provisions traceable to earlier versions of the Prior Plan.
5. Amount of Early Retirement Pension. For purposes of section
5.2 of the plan, the monthly amount of the early Retirement Pension for the life
of a Participant with respect to Compensation and Credited Service covered by
this appendix shall be equal to the normal Retirement Pension calculated under
the section 4 of this appendix. If payment of an early Retirement Pension
commences prior to the Participant's Normal Retirement Date, the amount of the
Pension shall be reduced by (i) 0.25 percent for each month that the
commencement date of the Pension is on or after the first day of the month of
the Participant's 62nd birthday and precedes the Participant's Normal Retirement
Date; plus (ii) 0.4167 percent for each month that the commencement date of the
Pension precedes the first day of the month of the Participant's 62nd birthday;
provided, however, that for purposes of reducing the portion of a Participant's
benefit that is computed under subparagraph (c)(1) of section 4 of this
appendix, the reductions shall be as provided in the Prior Plan as in effect on
March 31, 1986.
3
<PAGE> 50
6. Amount of Deferred Vested Pension. This section applies for
purposes of section 5.3 of the Plan in order to determine the Accrued Benefit
and deferred vested Pension of a Participant who terminates employment with a
right to a vested Pension with a deferred commencement date if the Participant
is not at the time eligible to receive a normal or early Retirement Pension. The
amount of the deferred vested Pension commencing as of the Normal Retirement
Date of such a Participant and continuing for the life of the Participant with
respect to Compensation and Credited Service covered by this appendix, shall be
equal to his Accrued Benefit at termination of employment (determined in
accordance with section 4 of this appendix as modified by the following). The
Accrued Benefit of such a Participant with respect to Credited Service earned
under this appendix before 1989 shall be the amount that could be payable upon
the Participant's attainment of age 65 under paragraph (b) of section 4 in this
appendix, considering the Participant's Average Monthly Compensation as of
December 31, 1988, and the Credited Service that the Participant would have at
age 65 assuming continuous covered employment under this appendix until that age
and subject to the 30-year limit on Credited Service but not the December 31,
1988 cut-off of said paragraph (b), and multiplying that amount by the following
fraction. The numerator of the fraction is the Participant's Credited Service
as of December 31, 1988, and the denominator of the fraction is the
Participant's total Credited Service to age 65, as determined under the
immediately preceding sentence, but without regard to the 30-year limit. Such a
Participant may request the Committee to authorize commencement of his Pension
as of the beginning of any calendar month within the 10-year period preceding
his Normal Retirement Date. In such case, his Pension shall commence as of the
date requested, but the amount thereof shall be reduced as provided in section 5
of this appendix.
7. Disabled Participants. If an active Participant becomes a
Disabled Participant, he shall continue to receive credit for Service and
Credited Service for the period in which he is a Disabled Participant and is not
receiving benefit payments under the Plan, but the credit for such period shall
not extend beyond his Normal Retirement Age. In addition, for purposes of
determining the Average Monthly Compensation of such a Disabled Participant, the
Compensation being paid immediately prior to his becoming a Disabled Participant
shall be deemed to continue during the period for which Service and Credited
Service continue.
4
<PAGE> 51
AMENDMENT TO THE
GFC FINANCIAL CORPORATION
RETIREMENT INCOME PLAN
WHEREAS, the GFC Financial Corporation Retirement Income Plan
(hereinafter called the "Plan") became effective as of March 18, 1992; and
WHEREAS, under Article 10 of the Plan, GFC Financial Corporation
(hereinafter called the "Employer") has reserved the right to amend the Plan;
WHEREAS, the Board of Directors of the Employer has delegated
authority to the Chief Executive Officer and the Committee appointed under
Article 8 of the Plan to amend the formula for benefit accruals and to make all
plan amendments necessary to comply with the Internal Revenue Code tax
qualification and other legal requirements;
NOW, THEREFORE, the Plan is amended as follows:
1. Section 2.1(k) is amended by adding the following
subparagraphs (4) and (5), based upon the model amendment language provided in
Revenue Procedure 94-13 to comply with Code section 401(a)(17), as amended by
the Omnibus Budget Reconciliation Act of 1993:
"(4) In addition to other applicable limitations set forth
in the Plan, and notwithstanding any other provision of the Plan to
the contrary, for Plan Years beginning on or after January 1, 1994,
the annual Compensation of each Participant taken into account under
the Plan shall be limited to the OBRA '93 annual compensation limit,
to the extent required by Code section 401(a)(17). The OBRA '93
annual compensation limit is $150,000, as adjusted by the Commissioner
for increases in the cost of living in accordance with Code section
401(a)(17)(B). The cost-of-living adjustment in effect for a calendar
year applies to any period, not exceeding 12 months, over which
compensation is determined
<PAGE> 52
('determination period') beginning in such calendar year. If a
determination period consists of fewer than 12 months, the OBRA '93
annual compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the determination period,
and the denominator of which is 12.
"For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Code section 401(a)(17)
shall mean the OBRA '93 annual compensation limit set forth in this
provision.
"If Compensation for any prior determination period is taken
into account in determining a Participant's benefits accruing in the
current Plan Year, the Compensation for that prior determination period
is subject to the OBRA '93 annual compensation limit in effect for that
prior determination period. For this purpose, for determination
periods beginning before the first day of the first Plan Year beginning
on or after January 1, 1994, the OBRA '93 annual compensation limit is
$150,000.
"(5) Notwithstanding any other provision in the Plan, each
'section 401(a)(17) Participant's' Accrued Benefit under the Plan will
be the sum of:
"(A) the Participant's Accrued Benefit as of
December 31, 1993, frozen in accordance with section 1.401(a)(4)-13 of
the regulations, and
"(B) the Participant's Accrued Benefit determined
under the benefit formula applicable for the Plan Years beginning on
or after January 1, 1994, as applied to the Participant's years of
Credited Service for Plan Years beginning on or after January 1, 1994,
for purposes of benefit accruals.
2
<PAGE> 53
"A 'section 401(a)(17) Participant' is a Participant whose
current Accrued Benefit as of a date on or after the first day of the
first Plan Year beginning on or after January 1, 1994, is based on
Compensation for a year beginning before 1994 that exceeded $150,000."
2. The following Section 6.9 is added to the Plan, based upon the
model amendment language provided in Revenue Procedure 93-12 to comply with
Code Section 401(a)(31) as added by the Unemployment Compensation Amendments of
1992:
"6.9 Direct Rollovers.
"(a) General Rule.
"Section 1(a). This Section 6.9 applies to
distributions made on or after January 1, 1993. Notwithstanding any
provision of the Plan to the contrary that would otherwise limit a
distributee's election, a distributee may elect, at the time and in the
manner prescribed by the Committee to have any portion of an eligible
rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.
"(b) Definitions.
"(1) 'Eligible rollover distribution' means
any distribution of all or any portion of the balance to the credit of
the distributee, except that an eligible rollover distribution does not
include: any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or the joint lives (or
joint life expectancies) of the distributee and the distributee's
designated beneficiary,
3
<PAGE> 54
or for a specified period of ten years or more; any distribution to
the extent such distribution is required under Code section 401(a)(9);
and the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
"(2) 'Eligible retirement plan' means an individual
retirement account described in section 408(a) of the Code, an
individual retirement annuity described in section 408(b) of the Code,
an annuity plan described in section 403(a) of the Code, or a qualified
trust described in section 401(a) of the Code, that accepts the
distributee's eligible rollover distribution. However, in the case of
an eligible rollover distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or individual
retirement annuity.
"(3) 'Distributee' means an employee or former
employee. In addition, the employee's or former employee's surviving
spouse and the employee's or former employee's spouse or former spouse
who is the alternate payee under a qualified domestic relations order,
as defined in Code section 414(p), are distributees with regard to the
interest of the spouse or former spouse.
"(4) 'Direct rollover' means a payment by the Plan
to the eligible retirement plan specified by the distributee."
3. Section 12.3 is amended by adding the following phrase at its
conclusion, ", subject to the limitations of Code section 401(a)(17) described
in Section 2.1(k)", effective as of January 1, 1989.
4. The first sentence of Section 4 of Appendix A (which applies
with respect to GFC
4
<PAGE> 55
Financial Corporation, Greyhound Financial Corporation, Ambassador Factors
Corp., GFC Portfolio Services, Inc., Greyhound Financial Capital Corporation,
Wisconsin Hotel Operating Company, and TriCon Capital Corporation) is amended,
effective January 1, 1995, by inserting the phrase ", for Plan Years before
1995," between the phrases "shall be equal" and "to the sum", and by inserting,
immediately before the first colon, the phrase ", and for Plan Years after
1994, shall be equal to the amount described in (e), subject to (f)".
5. Section 4 of Appendix A is amended, effective January 1, 1995,
by adding the following paragraphs (e) and (f) at its conclusion:
"(e) Subject to paragraph (f), for Plan Years after 1994,
a Participant's Accrued Benefit shall equal the sum of (1) plus (2):
"(1) For Credited Service Before 1995. The
Participant's Accrued Benefit as of December 31, 1994, determined as
if the Participant had terminated employment with the Employer on
December 31, 1994, based on the applicable benefit formula under the
Plan in effect on that date. Notwithstanding any other provision of
the Plan, no changes in Compensation or Average Monthly Compensation
after December 31, 1994 shall be taken into account in determining any
portion of the Participant's Accrued Benefit as of December 31, 1994.
"(2) For Credited Service after 1994. Credited
Service after 1994 is limited to 35 years minus any Credited Service
before 1995, so that the overall limit of 35 years applies to all
Credited Service. A Participant's Accrued Benefit with respect to such
Credited Service earned after 1994 shall be equal to the sum of (A)
plus (B) below:
5
<PAGE> 56
"(A) 1.00 percent of the lesser of the
Participant's Average Monthly Compensation or his Covered Compensation,
multiplied by his Credited Service after 1994, plus
"(B) 1.50 percent of the excess, if any,
of the Participant's Average Monthly Compensation over his Covered
Compensation, multiplied by his Credited Service after 1994.
"(e) Notwithstanding paragraph (d), for Plan Years after
1994, the Accrued Benefit for a Participant who meets the requirements
of subparagraph (1) shall not be less than the amount described in
subparagraph (2).
"(1) The minimum benefit described in subparagraph
(2) shall be provided to any Participant who, on January 1, 1995, (A)
has attained age 64 or more, or (B) has attained age 54 or more and has
been credited with nine or more years of Service.
"(2) The Accrued Benefit for a Participant who
meets the requirements of subparagraph (1) shall not be less than:
"(A) 1.10 percent of the lesser of the
Participant's Average Monthly Compensation or his Covered Compensation,
multiplied by his Credited Service (not in excess of 35 years), plus
"(B) 1.60 percent of the excess, if any,
of the Participant's Average Monthly Compensation over his Covered
Compensation, multiplied by his Credited Service (not in excess of 35
years)."
6. Section 7 of Appendix A is deleted effective as of the date
this amendment is executed.
Executed at Phoenix, Arizona, this 15th day of December, 1994.
GFC Financial Corporation
/s/ SAMUEL L. EICHENFIELD
----------------------------------------
Samuel L. Eichenfield,
Chief Executive Officer
/s/ DE ANN CLARK
----------------------------------------
De Ann Clark, Committee Member
/s/ ROBERT M. KORTE
----------------------------------------
Robert M. Korte, Committee Member
/s/ BRUNO A. MARSZOWSKI
----------------------------------------
Bruno A. Marszowski, Committee Member
/s/ WILLIAM C. ROCHE
----------------------------------------
William C. Roche, Committee Member
7
<PAGE> 57
GFC FINANCIAL CORPORATION
RETIREMENT INCOME PLAN
ADOPTION AGREEMENT
This Adoption Agreement is made as of the Commencement Date between
the GFC Financial Corporation Retirement Income Plan ("Plan") established as of
March 18, 1992, by GFC Financial Corporation ("Company"), and Greyhound
Financial Corporation ("Employer") as set forth below.
RECITALS
WHEREAS, the Plan has been created to benefit certain Employees who
are actively employed by GFC Financial Corporation and certain of its
Affiliates; and
WHEREAS, Employer, as an Affiliate, wishes its Employees to have the
opportunity to participate in the Plan, effective as of the Commencement Date,
set forth below; and
WHEREAS, Company wishes to designate Employer to be a participating
Employer in the Plan;
NOW, THEREFORE, in consideration of the agreements hereinafter recited
and made, and for other good and valuable considerations, the receipt and
sufficiency of which are by the parties hereby acknowledged, the Plan, by
Company, and Employer agree as follows:
AGREEMENT
1. Subject to the provisions of the Plan, the applicable appendix
thereto, ERISA, and other applicable law, Employer shall participate in the
Plan commencing on March 18, 1992 (hereinafter the "Commencement Date").
2. For purposes of the Plan, the term Eligible Employee shall be
as provided in the Plan and in the applicable appendix, as the case may be.
3. For the purposes of the Plan, the term Compensation shall be
as provided in the Plan and in the applicable appendix, as the case may be.
<PAGE> 58
4. Employer shall make contributions to the Trustee at such times
and in such amounts provided in the Plan and as directed by the Committee.
5. By execution of this Adoption Agreement, Employer agrees to be
bound by all of the terms and conditions of the Plan and Trust which, by this
reference are made a part hereof as if set forth in their entirety herein. The
terms used in this Adoption Agreement shall have the same meaning as set forth
in the Plan, unless expressly otherwise provided herein.
Greyhound Financial Corporation
By /s/ SAMUEL L. EICHENFIELD Date
----------------------------------- -------------
Chief Executive Officer
GFC Financial Retirement Income Plan
By /S/ ROBERT M. KORTE Date
----------------------------------- -------------
Committee Chairman
By /S/ SAMUEL L. EICHENFIELD Date
----------------------------------- -------------
2
<PAGE> 59
GFC FINANCIAL CORPORATION
RETIREMENT INCOME PLAN
ADOPTION AGREEMENT
This Adoption Agreement is made as of the Commencement Date between
the GFC Financial Corporation Retirement Income Plan ("Plan") established as of
March 18, 1992, by GFC Financial Corporation ("Company") and Verex Assurance,
Inc. ("Employer") as set forth below.
RECITALS
WHEREAS, the Plan has been created to benefit certain Employees who
are actively employed by GFC Financial Corporation and certain of its
Affiliates; and
WHEREAS, Employer, as an Affiliate, wishes its Employees to have the
opportunity to participate in the Plan, effective as of the Commencement Date,
set forth below; and
WHEREAS, Company wishes to designate Employer to be a participating
Employer in the Plan;
NOW, THEREFORE, in consideration of the agreements hereinafter recited
and made, and for other good and valuable considerations, the receipt and
sufficiency of which are by the parties hereby acknowledged, the Plan, by
Company, and Employer agree as follows:
AGREEMENT
1. Subject to the provisions of the Plan, the applicable appendix
thereto, ERISA, and other applicable law, Employer shall participate in the
Plan commencing on March 18, 1992 (hereinafter the "Commencement Date").
2. For purposes of the Plan, the term Eligible Employee shall be
as provided in the Plan and in the applicable appendix, as the case may be.
3. For the purposes of the Plan, the term Compensation shall be
as provided in the Plan and in the applicable appendix, as the case may be.
4. Employer shall make contributions to the Trustee at such times
and in such amounts provided in the Plan and as directed by the Committee.
<PAGE> 60
5. By execution of this Adoption Agreement, Employer agrees to be
bound by all of the terms and conditions of the Plan and Trust which, by this
reference are made a part hereof as if set forth in their entirety herein. The
terms used in this Adoption Agreement shall have the same meaning as set forth
in the Plan, unless expressly otherwise provided herein.
Verex Assurance, Inc.
By /s/ SAMUEL L. EICHENFIELD Date
---------------------------------- ------------
Chief Executive Officer
GFC Financial Retirement Income Plan
By /s/ ROBERT M. KORTE Date
---------------------------------- ------------
Committee Chairman
By /s/ SAMUEL L. EICHENFIELD Date
---------------------------------- ------------
GFC Financial Corporation
2
<PAGE> 1
EXHIBIT 10.K
GFC FINANCIAL CORPORATION
SUPPLEMENTAL PENSION PLAN
1. PURPOSE AND ELIGIBILITY
The purpose of the GFC Financial Corporation Supplemental Pension Plan
(hereinafter referred to as the "Plan") is to provide deferred compensation to
Eligible Employees as defined below, subject to all the terms and conditions
hereof on and after March 18, 1992.
It is the intention of the GFC Financial Corporation (hereinafter referred
to as the "Company") that Eligible Employees are those employees designated
pursuant to Paragraph 2. Eligible Employees shall in all cases be part of a
select group of management or highly-compensated employees of the Company, or
any of its subsidiaries or affiliates (hereinafter referred, to as
"Subsidiaries") because it is the intention of the Company that the Plan be
eligible for exemption under Parts 1, 2, 3 and 4 of Title I of ERISA pursuant to
ERISA Sections 3(36), 4(b) (5), 201(2), 201(7), 301(a) (3), 301(a) (9) and U.S.
Department of Labor regulations.
It is also the intention of the Company that the Plan be at all times
unfunded, that any Eligible Employee's rights under the Plan be at all times
those of a general creditor of the Company or applicable Subsidiary only, and
that there be no elections with respect to any benefits under the Plan by
Eligible Employees.
Subject to rights and benefits expressly fixed by the terms hereof, the
Company also intends that the Plan may be amended or terminated and that the
benefits may be reduced or eliminated as the Board of Directors of the Company
determines from time to time that the individual's rights may be altered.
The Plan and the benefits provided hereunder are in lieu of and not in
addition to any Plan of benefits formerly made available to any Eligible
Employee under any nonqualified deferred compensation plan sponsored by or
through the Dial Corp or any of its subsidiaries, successor or assigns.
2. PARTICIPATION
An employee of the Company (or any of its Subsidiaries) may become eligible
to participate in the Plan (referred to herein as "Eligible Employees") when
approved by the Board
1
<PAGE> 2
of Directors of the Company (or a committee thereof), or by the Chief Executive
Officer of the Company, as specifically designated in each Schedule of Benefits
(which is attached hereto, and by this reference made a part hereof), except
that only the Board of Directors of the Company may approve the participation of
The Chairman of the Board in any Schedule of Benefits, other than Schedule A,
hereunder. A List of Eligible Employees with respect to each Schedule of
Benefits is correspondingly denominated and attached as an exhibit to the Plan
(referred to herein as "Exhibit") and each such Exhibit shall be periodically
updated.
Notwithstanding the foregoing, no Board of Directors action or Exhibit is
required with respect to participation in Schedule of Benefits A, attached
hereto.
3. FUNDING
No fund shall be established to provide for the payment of benefits under
the Plan. No, trust, other than one which will not cause the Plan to be "funded"
under applicable Internal Revenue Service and U.S. Department of Labor
regulations and rules, shall be created. Any rights of an Eligible Employee or
any other person claiming by or through him or her shall be those of a general
creditor of the Company or Subsidiary only. The Company or applicable Subsidiary
may create book reserves or take such other steps as it deems appropriate to
provide for its expected liabilities under the Plan.
4. BENEFITS
Benefits shall be payable by the Company or applicable Subsidiary in
accordance with the terms and conditions of the Plan and as described in the
Schedule, or Schedules, of Benefits. Except as otherwise expressly provided in
the Schedule, or Schedules, of Benefits, the Plan shall make monthly payments to
an Eligible Employee at the same time such Eligible Employee receives his or her
pension benefits under the Qualified Plan defined in the Schedule, or Schedules,
of Benefits. In no event shall monthly payments under the Plan begin before such
Eligible Employee has attained the age of 55 and has actually left the employ of
the Company and its Subsidiaries.
5. OPTIONAL FORM
The form of benefit payment elected under the Qualified Plan shall be
deemed made under the Plan (including the beneficiary designation in connection
with such form of benefit payment, if applicable) and shall prevail for the
2
<PAGE> 3
purposes of the Plan. Notwithstanding the foregoing, no lump sum distributions
shall occur or be permitted hereunder.
6. SURVIVOR'S BENEFIT
If while covered by this Plan, for purposes other than a terminated vested
benefit, an Eligible Employee dies and if on the date of his or her death such
Employee, a) has 20 or more years of service, or (b) is 55 years of age or
older; then his or her Eligible Spouse, as defined in the Qualified Plan and
determined by the Committee in its sole discretion, shall be entitled to the
following monthly survivor's benefit. The survivor's benefit shall be calculated
by assuming that the Eligible Employee (i) was 55 years of age (or his actual
age if older) on the date of death; (ii) retired under the Qualified Plan on the
first day of the month following his or her death; and (iii) elected a Single
Life Annuity. The Eligible Spouse will be entitled to receive 1/2 of this
benefit which shall be further reduced by 1/6 of 1% for each month the Eligible
Spouse is more than 60 months younger than the Eligible Employee.
The survivor's benefit under this Paragraph 6 shall be reduced by any
spousal survivor's benefit payable from any qualified plan (including the
Qualified Plan; but not including a Section 401(k) plan sponsored by the Company
or any of its Subsidiaries) when such benefit becomes payable as determined by
the Committee in its sole discretion.
7. VESTING
In addition to all the terms and conditions of the Plan, no Eligible
Employee or beneficiary shall be entitled to a benefit under the Plan unless
such Eligible Employee has actually attained fully vested status in the
Qualified Plan as determined by the Committee.
8. ADMINISTRATION, AMENDMENT, MODIFICATION, AND TERMINATION OF THE PLAN
The Board of Directors of the Company shall appoint the Committee, which
shall consist of a minimum of three persons. the Board of Directors of the
Company may terminate the Plan at any time. Any amounts accrued or vested under
the plan prior to any such termination shall continue to be subject to the
terms, conditions, and elections in effect under the Plan when the Plan was
terminated. The Plan may be amended at any time or from time to time by the
Board of Directors of the Company. The Company shall have full power and
authority to interpret and
3
<PAGE> 4
administer the plan, to promulgate rules of Plan administration, to adopt a
claims procedure, to conclusively settle any disputes as to rights or benefits
arising from the Plan, and to make such decisions or take such action as the
Company, in its sole discretion, reasonably deems necessary or advisable to aid
in the proper administration and maintenance of the plan.
9. MISCELLANEOUS
The Plan, and any determination made by the Committee or the Company in
connection therewith, shall be binding upon each Eligible Employee, his or her
beneficiary or beneficiaries, heirs, executors, administrators, successors and
assigns. Notwithstanding the foregoing sentence, no benefit under the Plan may
be sold, assigned, transferred, conveyed, hypothecated, encumbered, anticipated
or otherwise dispensed with, and any attempt to do so shall be void. No such
benefit payment shall be, prior to actual receipt thereof by the Eligible
Employee, or his or her beneficiary or beneficiaries, as the case may be, in any
manner subject to the debts, contracts, liabilities or engagements of such
Eligible Employee or beneficiary(ies). The Plan shall not constitute, nor be
deemed to constitute, a contract of employment between the Company, or any of
its Subsidiaries, and any Eligible Employee, nor shall any provisions hereof
restrict the right of the Company or any of its Subsidiaries to discharge any
Eligible Employee from his or her employment, with or without cause.
4
<PAGE> 5
SCHEDULE OF BENEFITS A
Employees who participate in the GFC Financial Corporation Retirement
Income Plan (the "Qualified Plan") automatically become Eligible Employees under
this Schedule if their benefits under the Qualified Plan are limited by Internal
Revenue Code 401(a)(17) or 415. The Company shall administratively identify in
its sole discretion the Eligible Employees under this Schedule, based on the
effect of such Internal Revenue Code provisions on their Qualified Plan
benefits, and shall list them on Exhibit A. Exhibit A shall not require separate
approval of the Board of Directors or the Chairman of the Company. It is
contemplated that Eligible Employees may become ineligible based on their
failure to meet the criteria for eligibility set forth herein at any given time
and listing on Exhibit A at any given time does not itself vest any employee or
continue participation in the Plan.
The amount of benefit attributable to this Schedule and payable to an
Eligible Employee pursuant to Paragraph 4 of the Plan shall be equal to (A) less
(B):
Where (A) equals the monthly pension based on the benefit schedule(s)
and rules of the Qualified Plan applicable to the Eligible Employee at the
time of his or her retirement except that (i) Final Average Earnings shall
be determined without regard to the annual limit of $200,000 (as adjusted)
that applies under the Qualified Plan pursuant to Internal Revenue Code
401(a)(17) and (ii) the pension computed in this manner shall not be
reduced on account of the Internal Revenue Code 415 limitations that apply
under the Qualified Plan, and (B) equals the Eligible Employee's monthly
pension calculated under all the terms and conditions of the Qualified
Plan.
5
<PAGE> 6
GFC FINANCIAL CORPORATION
SUPPLEMENTAL PENSION PLAN
ADOPTION AGREEMENT
This Adoption Agreement is made as of the Commencement Date between the
GFC Financial Corporation Supplemental Pension Plan ("Plan") established as of
March 18, 1992, by GFC Financial Corporation ("Company") and Greyhound
Financial Corporation ("Employer") as set forth below.
RECITALS
WHEREAS, the Plan has been created to benefit certain Employees who
are actively employed by GFC Financial Corporation and certain of its
Affiliates; and
WHEREAS, Employer, as an Affiliate, wishes its Employees to have the
opportunity to participate in the Plan, effective as of the Commencement Date,
set forth below; and
WHEREAS, Company wishes to designate Employer to be a participating
Employer in the Plan;
NOW, THEREFORE, in consideration of the agreements hereinafter recited
and made, and for other good and valuable considerations, the receipt and
sufficiency of which are by the parties hereby acknowledged, the Plan, by
Company, and Employer agree as follows:
AGREEMENT
1. Subject to the provisions of the Plan, the applicable appendix
thereto, ERISA, and other applicable law, Employer shall participate in the
Plan commencing on March 18, 1992 (hereinafter the "Commencement Date").
2. For purposes of the Plan, the term Eligible Employee shall be as
provided in the Plan and in the applicable appendix, as the case may be.
3. For the purposes of the Plan, the term Compensation shall be as
provided in the Plan and in the applicable appendix, as the case may be.
<PAGE> 7
4. Employer shall make contributions to the Trustee at such times and
in such amounts provided in the Plan and as directed by the Committee.
5. By execution of this Adoption Agreement, Employer agrees to be bound
by all of the terms and conditions of the Plan and Trust which, by this
reference are made a part hereof as if set forth in their entirety herein. The
terms used in this Adoption Agreement shall have the same meaning as set forth
in the Plan, unless expressly otherwise provided herein.
<TABLE>
<S> <C>
Greyhound Financial Corporation
By /s/ S. Eichenfield Date
------------------------------------------ --------------
Chief Executive Officer
GFC Financial Corporation Supplemental Pension Plan
By /s/ Robert M. Korte Date
------------------------------------------ --------------
Committee Chairman
By /s/ S. Eichenfield Date
------------------------------------------ --------------
GFC Financial Corporation
</TABLE>
<PAGE> 1
EXHIBIT 10.L
GFC FINANCIAL CORPORATION
EMPLOYEES' STOCK OWNERSHIP PLAN
(Effective March 18, 1992)
<PAGE> 2
GFC FINANCIAL CORPORATION
EMPLOYEES' STOCK OWNERSHIP PLAN
(Effective March 18, 1992)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Section Page
- ------- ------- -----
<S> <C> <C>
1 Establishment of Plan I-
---------------------
1.1 Establishment of the Plan 1
1.2 Purpose of the Plan 1
1.3 Applicability of the Plan 1
2 Definitions II-
-----------
2.1 Definitions 1
2.2 Gender and Number 7
3 Participation and Service III-
-------------------------
3.1 Date of Participation 1
3.2 Duration 1
3.3 Transfers 1
3.4 Months of Employment 2
4 Employer Contributions, Other Benefits
--------------------------------------
and Their Allocation IV-
--------------------
4.1 Employer Contributions 1
4.2 Allocation of Employer Contributions
and Stock 2
4.3 Release from Exempt Loan
Suspense Account 3
4.4 Allocation of Shares Released from
Exempt Loan Suspense Account 4
4.5 Limitation on Aggregate Allocations to
Highly Compensated Employees 5
4.6 Limitations on Annual Additions 5
4.7 Limitations on Employer Matching
Contributions 7
4.8 Correcting Contributions 10
4.9 Return of Contributions 10
4.10 No Employee Contributions 11
4.11 Securities Law Limitations on
Allocations 11
5 Vesting and Benefits V-
--------------------
5.1 Vesting 1
5.2 Distribution Upon Separation from
Service 1
5.3 Deadline for Distributions and
Other Rules 1
5.4 Diversification 4
5.5 Put Options and Rights of First Refusal 4
5.6 Missing Persons 5
5.7 Use of Exempt Loan Proceeds 6
</TABLE>
-i-
<PAGE> 3
GFC FINANCIAL CORPORATION
EMPLOYEES' STOCK OWNERSHIP PLAN
(Effective March 18, 1992)
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
Article Section Page
- ------- ------- -----
<S> <C> <C>
6 Investment and Voting Rights VI-
----------------------------
6.1 Investment Policy 1
6.2 Securities Transactions 1
6.3 Rights, Warrants, or Options 1
6.4 Dividends 1
6.5 Voting and Other Rights 2
7 Accounting and Valuation of Assets VII-
----------------------------------
7.1 Accounts 1
7.2 Valuation of Assets 1
7.3 Accounting for Changes in Value 2
7.4 Allocation of Stock Dividends and Splits 2
7.5 Other Allocation Matters 2
8 Financing
--------- VIII-
8.1 Financing 1
8.2 Employer Contributions 1
8.3 Non-Reversion 1
8.4 Custody of Assets 1
8.5 Payment of Expenses 2
8.6 Absence of Guaranty 2
8.7 Exempt Loan Transactions 2
9 Administration IX-
--------------
9.1 Allocation of Responsibility Among
Fiduciaries for Plan and
Trust Administration 1
9.2 Appointment of Committee 2
9.3 Committee Procedures 2
9.4 Rules and Decisions 2
9.5 Subcommittees 3
9.6 Other Agents 3
9.7 Records and Reports 3
9.8 Claims Procedure 3
9.9 Committee's Powers and Duties 4
9.10 Investment Responsibilities 5
9.11 Committee's Decisions Conclusive 5
9.12 Authorization of Benefit Payments 5
9.13 Application and Forms for Benefits 5
9.14 Facility of Payment 6
9.15 Indemnification of the Committee 6
</TABLE>
-ii-
<PAGE> 4
GFC FINANCIAL CORPORATION
EMPLOYEES' STOCK OWNERSHIP PLAN
(Effective March 18, 1992)
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
Article Section Page
- ------- ------- -----
<S> <C> <C>
10 Amendment, Termination, or Merger
---------------------------------
of the Plan X-
-----------
10.1 Amendment and Termination 1
10.2 Distribution on Termination 1
10.3 Successor Employer 2
10.4 Plan Merger or Transfer 2
11 Adoption of Plan XI-
----------------
11.1 Adoption Agreement 1
12 Top-Heavy Provisions XII-
--------------------
12.1 Application 1
12.2 Key Employees 1
12.3 Top-Heavy Group 2
12.4 Additional Rules 3
12.5 Ceiling on Includable Compensation 4
12.6 Code Section 415(h) Adjustment 4
12.7 Minimum Contribution Requirement 4
13 Miscellaneous XIII-
-------------
13.1 Nonguarantee of Employment 1
13.2 Rights to Trust Assets 1
13.3 Nonforfeitability of Benefits 1
13.4 No Examination of Employer 1
13.5 Investment Risk 1
13.6 Non-Alienation 2
13.7 Severability 3
13.8 Service of Legal Process 3
13.9 Headings of Articles and Sections 3
13.10 Applicable Law 3
</TABLE>
-iii-
<PAGE> 5
GFC FINANCIAL CORPORATION
EMPLOYEES' STOCK OWNERSHIP PLAN
(Effective March 18, 1992)
Article 1. Establishment of Plan
1.1 Establishment of the Plan. GFC FINANCIAL CORPORATION (the
"Company"), hereby establishes the GFC FINANCIAL CORPORATION EMPLOYEES' STOCK
OWNERSHIP PLAN (hereinafter referred to as the "Plan") effective as of March
18, 1992
1.2 Purpose of the Plan. The assets of the Plan shall be invested
primarily in common stock or other qualifying employer securities of the
Company, as defined herein ("Stock"). Benefits under the Plan shall be payable
in the form of such Stock except for cash distributions that are made in lieu
of fractional shares. In this manner, the Plan is intended to permit Eligible
Employees to share in the financial success of the Company through a Stock
ownership interest in the Company. For tax purposes, this Plan is intended to
qualify as an employee stock ownership plan that meets the requirements of
sections 401(a), 401(m), and 4975(e)(7), of the Code and that includes a trust
which is exempt from tax under section 501(a) of the Code.
1.3 Applicability of the Plan. The provisions set forth herein
are applicable only to Eligible Employees in the employ of the Company and
participating Affiliates on or after March 18, 1992. With respect to any
Employe who has an Account balance attributable to assets transferred directly
to this Plan from another plan such as The Dial Corp Employees' Stock Ownership
Plan, this Plan shall, to the full extent legally required, be treated as a
continuation of the plan from which the balance was transferred and shall
include all the Employee's years of participation in such other plan prior to
his or her participation in this Plan and shall preserve all the Employee's
legally protected, valuable rights with respect to the transferred balance in
accordance with section 10.4 of this Plan and Code sections 414(l) and
411(d)(6) as well as any other applicable laws.
I-1-
<PAGE> 6
Article 2. Definitions
2.1 Definitions. These definitions are in addition to the
definitions of any other terms that appear elsewhere in the Plan. Whenever
used in the Plan the following terms shall have the respective meanings set
forth below unless otherwise required by the context in which they are used:
(a) "Account" means any individual Account or collective
aggregation of Accounts maintained pursuant to Article 7 and
other provisions of this Plan in order to reflect interests in
the Trust Fund and consisting of any of the following
categories of Accounts as well as any subaccounts thereunder
and any additional Accounts that are approved by the
Committee:
(1) the "Account" for each Participant or Beneficiary
which represents his allocable share of Stock and
other assets held in the Trust Fund as of any date,
excluding any Stock or other assets attributable to
amounts in the Exempt Loan Suspense Account or a 415
Suspense Account that have not yet been credited to
any Participant's individual Account as of such date;
(2) the "Exempt Loan Suspense Account" which reflects the
proceeds of an Exempt Loan and the Stock acquired
with such proceeds, to the extent that allocations
have not yet been made therefrom to the Accounts of
Participants in accordance with section 4.4; and
(3) the "415 Suspense Account" which reflects amounts
that cannot be allocated currently to Participant's
Accounts due to the limitations of Code section 415,
as described in section 4.6(d).
(b) "Affiliate" means a corporation or other employer which is
controlled by or under common control with the Company, is a
member of the same affiliated service group, or is otherwise
required to be aggregated with the Company as a single
employer, as determined under sections 414 and 1563 of the
Code, as modified by
-II.1-
<PAGE> 7
section 415(h). Any other organization which is permitted to
treat Stock as "employer securities" under Code section 409(l)
shall be also treated as an Affiliate if it adopts the Plan
pursuant to section 11.1.
(c) "Beneficiary" means the person or persons (who may be
named contingently or successively) designated by a
Participant to receive his Account in the event of his death.
Each Participant, may designate a Beneficiary on a form
prescribed by the Committee, and such designation will be
effective when filed with the Committee, and shall revoke all
prior designations by the same Participant. The Committee
shall require that a married Participant who designates a
Beneficiary other than his spouse obtain and submit to the
Committee the spouse's written consent to the designation of
each such Beneficiary on a form that discloses to the spouse
the potential effect of such consent and is witnessed by a
Plan representative or a notary public. Notwithstanding the
foregoing, spousal consent to a Participant's Beneficiary
designation shall not be required if it is established to the
satisfaction of the Committee that spousal consent cannot be
obtained because there is no spouse, because the spouse cannot
be located, or because of such other circumstances as may be
treated similarly in regulations issued by the Secretary of
the Treasury. Any consent by a spouse or any determination
that the consent is not required shall be effective only with
respect to such spouse. If no Beneficiary is designated at
the time of the Participant's death, or if no person so
designated shall survive the Participant, the Beneficiary
shall be the Participant's surviving spouse, or if the
deceased Participant has no surviving spouse, his estate.
(d) "Board of Directors" or "Board" means the Board of Directors
of the Company.
-II.2-
<PAGE> 8
(e) "Code" means the Internal Revenue Code of 1986, as amended
from time to time and in effect. Where the context so
requires, a reference to a particular Code section shall refer
to a successor Code provision to such section.
(f) "Committee" means the Committee appointed by the Company to
administer the Plan in accordance with the provisions of
Article 9 of this Plan.
(g) "Company" means GFC Financial Corporation.
(h) "Compensation" means the base salary and wages or commissions
paid during a Plan Year or other specified period to a
Participant by the Employer for services rendered, including
amounts of salary reduction elected by the Participant under a
Code section 401(k) cash or deferred arrangement or under a
Code section 125 cafeteria plan of the Company or an
Affiliate, but excluding all other amounts contributed to or
received under a pension plan or other plan of deferred
compensation of the Employer, and also excluding bonus, tips,
overtime compensation, and other special items of
compensation. Compensation shall be limited in accordance
with Code section 401(a)(17) and related regulations so that
the annual amount of Compensation taken into account for each
Employee under the Plan does not exceed $200,000, as adjusted
for cost-of-living changes.
(i) "Disability" means a physical or mental condition which, in
the judgment of the Committee, based on such competent medical
evidence as the Committee may require, renders an individual
unable to engage in any substantial gainful activity for the
Company for which he is reasonably fitted by education,
training, or experience and which impairment is likely to
result in death or to be of long, continued duration for a
period of at least 12 months.
(j) "Effective Date" means March 18, 1992, or such other date as
may be specified in an Employer's adoption agreement.
-II.3-
<PAGE> 9
(k) "Eligible Employee" means any Employee of the Company or
another Employer, but excluding any Leased Employee and any
Employee covered by a collective bargaining agreement where
retirement benefits were the subject of good faith bargaining
between representatives of the Employer and the union, unless
such agreement expressly provides for participation by the
Employee in the Plan.
(l) "Employee" means any person employed by the Company or an
Affiliate, including any Leased Employee to the extent
required by section 414(n) of the Code.
(m) "Employer" means the Company and any Affiliate which adopts
this Plan in accordance with section 11.1.
(n) "ERISA" means the Employee Retirement Income Security Act of
1974, as from time to time amended. Where the context
so requires, a reference to a particular ERISA section shall
be deemed to refer to a successor ERISA provision to such
section.
(o) "Exempt Loan" means a loan to the Plan or Trust which is not
prohibited by Code section 4975(c) because it is used to
finance the acquisition of Stock or refinance such a loan and
otherwise meets the requirements set forth in Code section
4975(d)(3) and the Regulations promulgated thereunder.
(p) "Hour of Service" means any hour for which the Employee is
paid or entitled to payment for the performance of duties, for
the Company or an Affiliate, as determined in accordance with
reasonable standards and policies from time to time adopted by
the Committee under Department of Labor Regulation sections 29
C.F.R. 2530.200b-(2) and (3), which are incorporated into this
Plan by this reference.
(q) "Interested Party" means a party in interest as defined in
ERISA section 3(14) or a disqualified person as defined in
Code section 4975(e)(2).
(r) "Leased Employee" means a person who, although not a common
law employee, performs services for the Company or an
Affiliate pursuant to an agreement with a leasing
-II.4-
<PAGE> 10
organization described in Code section 414(n)(2), if such
person has performed the services on substantially a full-time
basis for a period of at least one year, the services are of a
type historically performed by Employees, and the person is
required to be treated as an Employee pursuant to Code section
414(n), but such person shall be treated as an Employee under
this Plan only for the period and the purposes to which such
requirements apply.
(s) "Normal Retirement Age" means age 65.
(t) "Participant" means any Eligible Employee who has met the
requirements to become a Participant as set forth in section
3.1 hereof, and shall include, where appropriate to the
context, any former or inactive Participant described in
sections 3.2 and 3.3.
(u) "Plan Year" means the calendar year or any portion thereof in
which the Plan is in existence.
(v) "Separation from Service" shall mean any termination of the
employment relationship between an Employee and the Company
and all its Affiliates and shall be deemed to occur upon the
earlier of:
(1) the date upon which the Employee quits, is
discharged, retires, or dies; or
(2) the first anniversary of the first day of a period in
which the Employee is (and remains) absent from the
service of the Company and its Affiliates for any
reason (such as vacation, sickness, layoff, or leave
of absence granted by the Company or an Affiliate)
not enumerated in clause (1) above.
An Employee of an Employer who transfers to another Employer
or to a non-participating Affiliate shall not be treated as
having a Separation from Service. An Employee who is on leave
of absence from work with the Company or an Affiliate in order
to serve the Armed Forces of the United States shall not have
a Separation from Service unless he fails to report for work
at the end of such leave and prior to expiration of the period
-II.5-
<PAGE> 11
in which he has reemployment rights under law. The absence of
any Employee who fails to return to work within the allotted
time shall be subject to the provisions of clause (2) above.
(w) "Stock" means the common stock or other securities of the
Company, provided that such common stock or other securities
constitute "qualifying employer securities" for purposes of
both section 4975(e)(8) of the Code and section 407(d)(5) of
ERISA.
(x) "Total Compensation" means the compensation received from the
Company or an Affiliate during a Plan Year or other specified
period for services rendered, as determined in accordance with
Code sections 414(s) and 415(c)(3), and generally includes all
compensation reportable on federal form W-2 or its equivalent,
but excluding (1) any amount contributed by the Employer to
any pension plan or plan of deferred compensation (including
this Plan), (2) reimbursements for expenses or allowances
(including automobile allowances and moving allowances), and
(3) any amount paid by the Employer for other fringe benefits,
such as health and welfare, hospitalization, and group life
insurance benefits, or perquisites that receive special tax
treatment. Total Compensation shall be limited in accordance
with Code section 401(a)(17) and related regulations so that
the annual limitation of $200,000, as adjusted, that is
specified in section 2.1(h) shall not be exceeded. Moreover,
for any year that Total Compensation is considered in
measuring nondiscrimination for purposes of a Code provision
(including sections 401(m)(3)(B) and 414(q)(7)) that uses
"compensation," as defined by Code section 414(s), the Company
shall, except as otherwise prohibited, add Code section 401(k)
and 125 salary reduction amounts to other amounts that are
considered in determining Total Compensation.
(y) "Trust" means the trust created by the Trust Agreement.
-II.6-
<PAGE> 12
(z) "Trust Agreement" means any agreement in the nature of a trust
established to form a part of the Plan to receive, hold,
invest, and dispose of the Trust Fund.
(aa) "Trust Fund" means the assets of every kind and description
held under any Trust Agreement forming a part of the Plan,
including any subfund consisting of unallocated Stock and
other assets that are accounted for in the Exempt Loan
Suspense Account or a 415 Suspense Account.
(bb) "Trustee" means any person or persons selected by the Company
to act as trustee under any Trust Agreement at any time of
reference.
(cc) "Valuation Date" means the last day of each month and such
other dates as may be declared by the Committee for purposes
of determining the fair market value of the Trust Fund and
accounting hereunder.
(dd) "Valuation Period" means a period beginning either on the
Effective Date or on the day immediately following a Valuation
Date and ending on the next subsequent Valuation Date.
2.2 Gender and Number. Except when otherwise indicated by the
context, any masculine or feminine terminology herein shall also include the
opposite gender, and the definition of any term herein in the singular or
plural shall also include the opposite number.
-II.7-
<PAGE> 13
Article 3. Participation and Service
3.1 Date of Participation. Every Eligible Employee, on the
Effective Date, shall become a Participant on that date, and shall continue to
be a Participant on and after that date for as long as the Plan permits. Every
other Eligible Employee shall become a Participant on the first day of the
calendar quarter ("Entry Date") coincident with or next following the latest to
occur of (a) or (b) below:
(a) The date he becomes an Eligible Employee and receives credit
for an Hour of Service in that capacity;
(b) The date the Employee completes twelve months of employment
with the Company or an Affiliate, including any months during
a prior period of employment.
3.2 Duration. An Employee who becomes a Participant shall remain
a Participant until he has a Separation from Service. A Participant or an
Employee other than an Eligible Employee who has completed the service
requirement of section 3.1 shall, if he has a Separation from Service and is
subsequently reemployed as an Eligible Employee, become a Participant as of the
date of his reemployment. An Employee who has not completed such service
requirement on the date of his Separation from Service shall become a
Participant after his rehire on the date determined pursuant to section 3.1.
3.3 Transfers. An Employee who transfers to employment that
causes him to become an Eligible Employee and who has completed the
requirements set forth in section 3.1 as of the date of his transfer shall
become a Participant on the Entry Date coinciding with or next following such
transfer. Every other Employee who transfers to employment that causes him to
become an Eligible Employee shall become a Participant on the date determined
pursuant to section 3.1.
-III.1-
<PAGE> 14
Any Participant who (i) transfers out of employment with the Employer and who
remains an Employee of a non-participating Affiliate, or (ii) transfers to a
status in which he is an Employee but not an Eligible Employee, shall become an
inactive Participant. If a Participant becomes an inactive Participant, his
Account balance shall continue to be held under the Plan until he becomes
entitled to a distribution under other provisions of this Plan, but his
Compensation while an inactive Participant shall not be counted in making
contributions or allocations that are limited to a specified percentage of
Compensation.
3.4 Months of Employment. For purposes of determining months of
employment under section 3.1, an Employee shall be credited with months of
service for the period of time during which the employment relationship exists
between the Employee and the Company or the Affiliate, the length of which
shall be determined, in completed years, months, and days, by counting the
number of anniversaries of the date on which credit for service begins during
the following periods of service:
(1) Credit shall be given to an Employee for the period of time
beginning on the date he first performs an Hour of Service and
ending on the date of such Employee's Separation from Service.
(2) In cases where an Employee's continuous service is interrupted
a period of absence from work the following special rules
shall apply:
(A) If an Employee has been absent from work for any
reason for a period of 12 months or fewer, measured
from the last day such Employee is paid by the
Company or an Affiliate, such entire period of
absence shall be counted for purposes of determining
the Employee's months of service.
(B) If an Employee has been absent from work for any of
the reasons set forth in section 2.1(v)(2) for a
period of more than 12 months, measured from the last
day such Employee is reemployed or returns to work
for the Company or an Affiliate, there shall be
established for such Employee an adjusted
-III.2-
<PAGE> 15
employment commencement date that reflects the months of service with
which such Employee was credited prior to his absence from work.
(i) If the Employee returns to work on or prior
to the date such leave of absence expires or
is terminated, or 10 days after his recall or
such other period as may be specified by the
applicable collective bargaining agreement,
as the case may be, the period of such leave
of absence or layoff which exceeds 12 months
shall not be counted as months of service.
(ii) If the Employee does not return to work on or
prior to the date such leave of absence
expires or is terminated, or within 10 days
after his recall from layoff or such other
period as may be specified by the applicable
collective bargaining agreement, the
Employee's Separation from Service date shall
be the date specified in section 2.1(v)(2).
The Employee's months of service shall then
be determined under the rules set forth in
this section 3.4.
(C) If an Employee has been absent from work as a result
of service in the Armed Forces of the United States,
to the extent required by federal law, such period of
military service shall be counted as months of
service if such Employee returns to work on or prior
to his discharge from the Armed Forces and within the
period specified by federal law.
(3) Credit for months of employment shall be given to an Employee
after a Separation from Service for any period beginning on
the date the Employee first performs an Hour of Service after
his rehire and ending on the date the Employee has a
Separation from Service thereafter as provided in section
2.1(v).
-III.3-
<PAGE> 16
(4) Whenever the total number of months of employment of an
Employee must be ascertained under this Plan, all
noncontinuous periods which are credited to such Employee
under paragraph (1) above, shall be aggregated. For purposes
of aggregating such periods, the completed years, months and
days credited to an Employee during any period of service
shall be added to the number of completed years, months and
days credited to him during any other noncontinuous period of
service.
-III.4-
<PAGE> 17
Article 4. Employer Contributions,
Other Benefits and Their Allocation
4.1 Employer Contributions. Each Employer shall contribute Stock or
cash, or both, to the Trust Fund in accordance with this section 4.1. Some or
all of the Employer contributions under this section 4.1 shall be required to be
paid in cash and applied to repay any outstanding Exempt Loan to the extent
necessary to comply with the terms thereof. Except to the extent of current cash
needs of the Plan, cash contributions that are not used to repay an Exempt Loan
shall be invested in Stock as soon as practicable after they are paid so that
the Plan shall continue to have its assets invested primarily in Stock. To
satisfy Exempt Loan requirements, the Company shall ensure that Employer
contributions shall be made at such times and in such manner as may be required
by the terms of an outstanding Exempt Loan, after taking into account any
dividends on Stock or other funds under the Plan that are used to make Exempt
Loan repayments consistent with the terms of the Plan and the Exempt Loan. If
the Company determines that additional Employer contributions in excess of the
amount otherwise payable as basic matching contributions described in the next
paragraph below are required for this purpose of complying with the terms of an
outstanding Exempt Loan, each Employer's share of such additional amount
shall be in proportion to its basic matching contributions unless the Company
instead determines a different sharing and specifies the portion of the
additional amount to be paid by each Employer. Except as may otherwise be
required by such an Exempt Loan, the amount of Employer contributions for
any Plan Year shall net exceed the amount currently deductible under
Code section 404(a) (applied without regard to section 404(a) (5) relating
to nonqualified plans).
As determined by the company, each Employer shall make basic matching
contributions on the matchable Code section 401(k) deferrals under the GFC
Financial Corporation Capital Accumulation Plan on behalf of Participants
employed by the Employer. Such deferrals shall be treated as matchable to the
IV-1
<PAGE> 18
extent that, for any Participant, they do not exceed 3 percent of his
Compensation for the month for which they are made. The basic matching
contributions shall be made monthly, beginning with contributions for the month
of March, 1992, in an amount such that the contributions, together with any
dividends on Stock in the Exempt Loan Suspense Account, permit monthly
allocations of Stock that is attributable to such contributions or such
dividends and that has, at the time of the determination, a fair market value
equal to 100 percent (or such other percentage amount as may be specified in the
Employer's adoption agreement for the Plan) of the matchable Code section 401(k)
deferrals for the month of the Participants employed by the Employer.
Notwithstanding the foregoing, contributions may be made during the same Plan
Year but prior to the month for which they are treated as basic matching
contributions if such advance contributions are necessary to comply with the
terms of an Exempt Loan or are otherwise appropriate, as determined by the
Company, and if such advance contributions have not previously been treated as
basic matching contributions or used in determining allocations to Participants'
Accounts.
If so required by the Company, each Employer shall make an additional
contribution to the Plan to the extent necessary to provide an allocation of
Stock for the Plan Year to the Account of each affected Participant in an amount
having sufficient value to allow the Employer to obtain a tax deduction under
Code section 404(k)(2)(C) with respect to the dividends that have been paid on
Stock allocated to the Participant's Account and used for the purpose of
repaying an Exempt Loan.
4.2 Allocation of Employer Contributions and Stock. Employer
contributions that are used to repay an Exempt Loan shall result in an
allocation of Stock to the Accounts of Participants in accordance with section
4.4. Employer contributions that are not used to repay Exempt Loan (and any
Stock acquired with such contributions) shall be allocated to the Account of
each Participant employed by the Employer in proportion to (i) his matchable
Code section 401(k) deferrals (as
IV-2
<PAGE> 19
described in section 4.1) for the month for which the allocation is made,
divided by (ii) all such Code section 401(k) deferrals for the month of all
Participants employed by the Employer. This allocation is subject to the
ordering rules for allocations of Employer contributions and other Annual
Additions, as provided in sections 4.5 and 4.6, and also to the limitations on
Employer matching contributions, as provided in section 4.7. Allocations to
Participant's Accounts under this section 4.2 shall be made as of the Valuation
Date corresponding to the last day of each month for which Employer
contributions are paid.
4.3 Release from Exempt Loan Suspense Account. Stock acquired with the
proceeds of an Exempt Loan shall be added to and maintained in the Exempt Loan
Suspense Account and shall thereafter be released from such Account and
allocated to the Accounts of Participants as follows:
(a) For each month until the Exempt Loan is fully repaid, the number of
shares of Stock released from the Exempt Loan Suspense Account
shall equal the number of unreleased shares immediately before such
release for the current month Year multiplied by the "Release
Fraction." As used herein, the Release Fraction shall be a
fraction the numerator of which is the amount of principal and
interest paid on the Exempt Loan for such current month and the
denominator of which is the sum of the numerator plus the principal
and interest to be paid on such Exempt Loan for all future months
during the duration of the term of such exempt Loan (determined
without reference to any possible extensions or renewals thereof).
Notwithstanding the foregoing, if such Exempt Loan is repaid with
the proceeds of a subsequent Exempt Loan (the "Substitute Loan"),
such repayment shall not operate to release all such Stock in the
Exempt Loan Suspense Account, but, rather, such release shall be
effected pursuant to the foregoing provisions of this section 4.3
on the basis of payments of principal and interest on such
Substitute Loan.
IV-3
<PAGE> 20
(b) If required by any pledge or similar agreement, then in lieu of
applying the provisions with respect to an Exempt Loan or
Substitute Loan, shares shall be released from the Exempt Loan
Suspense Account as the principal amount of such loan is repaid
(and without regard to interest payments), provided the following
three conditions are satisfied:
(1) The Exempt Loan must provide for annual payments of principal
and interest at a cumulative rate that is not less rapid in
time than level annual payments of such amounts for ten years.
(2) The interest portion of any payment is disregarded only to the
extent it would be treated as interest under standard loan
amortization tables.
(3) If the Exempt Loan is renewed, extended or refinanced, the sum
of the expired duration of the Exempt Loan and the renewal,
extension or new Exempt Loan period must not exceed ten years.
(c) It is intended that the provisions of this section 4.3 shall be
applied and construed in a manner consistent with the requirements
and provisions of Treasury Regulation section 54.4975-7(b) (8), and
any successor regulation thereto. All Stock released from the
Exempt Loan Suspense Account during any Plan Year shall be
allocated among Participants as prescribed by section 4.4.
4.4 Allocation of Shares Released from Exempt Loan Suspense Account.
Shares of Stock released from the Exempt Loan Suspense Account for a month in
accordance with section 4.3 shall be held in the Trust Fund on an unallocated
basis until allocated by the Committee as of the last day of each month. Except
as provided in section 6.4 with respect to Stock that is released as the result
of dividend payments on allocated shares of Stock, the allocation of such
released shares among the Accounts of eligible Participants shall be made in
proportion to their Code section 401(k) deferrals under the GFC Financial
Corporation Capital Accumulation Plan (to the extent that such contributions do
not
IV-4
<PAGE> 21
exceed 3 percent of their Compensation for the month) in the same manner as
would be required for Employer contributions for the Plan Year under the rules
of section 4.2.
4.5 Limitation on Aggregate Allocations to Highly Compensated
Employees. The aggregate amount of Employer contributions for a taxable year of
the Employer allocated to the Accounts of Participants who are Highly
Compensated Employees shall not exceed one-third of the aggregate Employer
contri-butions made under section 4.1 with respect to the taxable year on behalf
of all Participants. Amounts in excess of such limitation shall be allocated, in
a manner similar to that described in section 4.2, to other Participants not
described in the first sentence of this section 4.5 who are entitled to an
allocation, on the basis proportional to their matchable Code section 401(k)
deferrals (as described in section 4.2) for the Plan Year.
4.6 Limitations on Annual Additions. The provisions of this section 4.6
shall apply to calendar years (which shall be the "limitation years" under this
Plan for purposes of Code section 415).
(a) Annual Addition. "Annual Addition" means, for any Participant for
any Plan Year, an annual addition as defined in Code sections
415(c) (2) and 415(c) (6), generally including the sum of:
(1) all Company and Affiliate contributions made for the
Participant under "any defined contribution plan" for the
year, but excluding any Employer contributions used to pay
interest on an Exempt Loan to the extent permitted by Code
section 415(c)(6);
(2) the Participant's after-tax contributions for the year to "any
defined contribution plan; or
(3) any forfeitures allocated to him for the year under "any
defined contribution plan," but excluding any forfeitures of
Stock acquired with
IV-5
<PAGE> 22
the proceeds of an Exempt Loan to the extent permitted by Code
section 415(c) (6); and
(4) contributions to an individual, post-retirement medical
account for the Participant, to the extent required by Code
section 415(I) or 419A(d)(2).
"Any defined contribution plan" means all qualified defined
contribution plans of the Employers and Affiliates that are
considered as one plan under Code sections 414 and 415.
(b) Limitation. Notwithstanding the foregoing provisions of this
Article 4, for any Plan Year the Annual Addition of a Participant
shall not exceed the lesser of --
(1) the sum of
(A) $30,000 (or other amount for a particular Plan Year as
may be determined under Code sections 415(c) (1) and
415(d) and related regulations) plus, to the extent
permitted by the application of Code section 415(c) (6),
an additional amount determined as
(B) the lesser of --
(i) the above dollar amount, or
(ii) the amount of Stock contributed to this Plan or
purchased with cash contributed to this Plan and
allocated to the Participant's Account, or
(2) 25 percent of the Participant's Total Compensation for such
Plan Year.
(c) Additional Limitation. If in any Plan Year a Participant is both a
participant in any defined contribution plan and a participant in
any qualified defined benefit plan of the Employer or an Affiliate,
the sum of the defined benefit plan fraction (as defined in Code
section 415(e)(2)) and the defined contribution fraction (as
defined in Code section 415(e)(3)) shall not exceed the number one.
In calculating the defined contribution fraction, the
IV-6
<PAGE> 23
Committee may, at its discretion, make the election provided under
Code section 415(e)(6).
(d) Reduction in Annual Additions - Elimination of Excess Amounts. If
the limitations of subsection (b) or (c) are exceeded when this
Plan is considered in combination with another qualified plan, the
excess shall be eliminated by first applying the provisions of such
other defined contribution plan or defined benefit plan that are
applicable to reduce the Annual Additions or annual benefit under
such other plan (except to the extent that this may be prohibited
by law or by the terms of an annuity contract for a terminated
plan). Thereafter, if the excess is not completely eliminated, the
following provisions of this subsection 4.6(d) shall be applicable.
If the limitations of subsection 4.6(b) or 4.6(c) are exceeded, the
excess Employer contributions allocated to the Participant's
Account for the year pursuant to section 4.2 must be first
reallocated to other Participants on a basis proportional to
Compensation for the year. Then, if the foregoing reallocation
fails to prevent such limitations from being exceeded with respect
to each Plan Participant for the limitation year, the remaining
excess amounts must be held unallocated in a 415 Suspense Account.
If a 415 Suspense Account is in existence at any time during a
particular limitation year, other than the limitation year
described in the preceding sentence, all amounts in the 415
Suspense Account must be allocated to Participants' Accounts in
proportion to Compensation for such year (subject to the
limitations of section 415) before any Employer contributions or
other benefits which would result in Annual Additions may be made
to the Plan for that limitation year.
4.7 Limitation on Employer Matching Contributions. The Committee shall
require testing and adjustments pursuant to this
IV-7
<PAGE> 24
section 4.7 to ensure that Employer contributions that are treated as matching
contributions under Code section 401(m) and the regulations thereunder satisfy
the nondiscrimination requirements of said Code section and regulations as well
as any other applicable requirements of the Code that limit such contributions
to an employee stock ownership plan such as this Plan. To this end, the
Committee shall ensure that the Contribution Percentage for the Plan Year of
Participants who are Highly Compensated Employees does not exceed the
Contribution Percentage of all other Participants by more than the greater of:
(a) 1.25 times, or
(b) the lesser of (i) 2 percentage points, or (ii) 2 times.
For purposes of the Plan, the term "Contribution Percentage" for each group of
Participants shall mean the average of the ratios, expressed as percentages and
calculated separately for each Participant in such group, of the aggregate of
(1) the Code section 401(m) Employer matching contributions made on the
Participant's behalf for the Plan Year and (2) any after-tax contributions of
the Participant for the Plan Year under a plan that is tested together with this
Plan (there being no such after-tax contributions under this Plan), to (3) the
Participant's Total Compensation for the Plan Year. To the extent that they may
be considered under this Plan, the Company may elect, in computing Contribution
Percentages, to treat Code section 401(k) elective deferrals and Code section
401(m)((4)(C) qualified nonelective contributions as Employer matching
contributions.
Also for purposes of the Plan, the term "Highly Compensated Employee" shall have
the meaning specified in Code section 414(q). To the extent required by Code
section 414(q)(6), a Highly Compensated Employee who is a 5 percent owner or
among the 10 Employees with the greatest Total Compensation for the year and
family members of such Employee shall be aggregated and shall have a
Contribution Percentage that is the greater of (1) the percentage determined by
combining the contributions and Total Compensation of all eligible family
members who are Highly
IV-8
<PAGE> 25
Compensated Employees, or (2) the percentage determined by combining the
contributions and Total Compensation of all eligible family members. If excess
contributions are required to be returned to any such family members pursuant to
this section, the return shall be made in accordance with applicable regulations
to family members whose contributions and Total Compensation were used to
determine the Contribution Percentage that required the return of excess
amounts, in proportion to their contributions.
If, at the end of the Plan Year, the Contribution Percentage of Highly
Compensated Employees exceeds the maximum Contribution Percentage permitted
under this section for the Plan Year, then, before the end of the following Plan
Year, the excess Employer matching contributions (and any income and investment
gain or loss attributable thereto) shall be distributed to the Participants who
are Highly Compensated Employees in the order of their Contribution Percentages,
beginning with the Highly Compensated Employee with the highest Contribution
Percentage, until the limitations of this section are met. Except as otherwise
required by the Code, any amount so distributed shall be included in the
recipient Employee's taxable wages for the Plan Year for which the contribution
was made. The distribution described in this section may be made notwithstanding
any other Plan provision.
In the event that this Plan satisfies the requirements of section 410(b) of the
Code only if aggregated with one or more other plans, or if one or more other
plans satisfy such requirements only if aggregated with this Plan, then this
section 4.7 shall be applied by determining the Contribution Percentages of all
eligible Participants as if all such plans were a single plan. If a Highly
Compensated Employee participates in two or more plans of an Employer or
Affiliate to which contributions subject to the rules of this section are made
on his behalf, all such plans shall be treated as one plan in determining such
Employee's Contribution Percentage. Any Employee required to be taken into
consideration under Code section 401(m)(5) shall be treated as an
IV-9
<PAGE> 26
eligible Employee for purposes of this section. As applicable, excess
contributions under this section 4.7 shall be determined after first determining
excess deferrals under Code section 402(g) and then determining excess deferrals
under Code section 401(k)(3). Moreover, all determinations under this section
4.7 shall comply with Code section 401(m) and applicable regulations thereunder,
including such regulations as are necessary to prevent the multiple use of the
alternative percentage limitations in Code sections 401(k)(3)(A)(ii)(II) and
401(m)(2)(A)(ii) with respect to Highly Compensated Employees. Nothing herein
shall require or permit the aggregation of this plan with a plan other than
another Code section 4975(e)(7) employee stock ownership plan in a manner that
violates the qualification requirements applicable to such a plan.
4.8 Correcting Contributions. In addition to other Employer
contributions, an Employer shall pay a special, correcting contribution to the
Trustee when directed to do so by the Committee in order to restore an amount to
a missing person pursuant to section 5.6 or to correct a mistake or omission in
the allocation of contributions hereunder which cannot, when discovered, be
corrected by revising prior allocations.
4.9 Return of Contributions. To the extent permitted under section
403(c) of ERISA, contributions are conditioned on a determination by the
Internal Revenue Service that the form of Plan meets the requirements of Code
sections 401(a), 401(m), and 4975(e)(7). If a timely application for a
determination letter on the initial qualification of the Plan under such Code
sections results in a denial of qualification by the Internal Revenue Service,
the amounts allocated to Participants' Accounts shall be returned to the
Employer within one year after the date of such denial. In addition, if a
contribution is made to the Trust Fund by a mistake of fact, such contribution
may be returned to the Employer within one year after the payment of the
contribution, and if an Employer contribution is conditioned on obtaining a
current deduction which is denied in a final determination, such contribution
shall, at the request of the Company or the
IV-10
<PAGE> 27
Committee, be returned to the Employer within one year after such denial of
deduction.
4.10 No Employee Contributions. Contributions by Employees are
neither required nor permitted under this Plan.
4.11 Securities Law Limitations on Allocations. The Plan is intended to
comply with the requirements for exemption from liability under section 16(b) of
the Securities Exchange Act of 1934 ("1934 Act") in the case of any transaction
that is reportable under section 16(a) of the 1934 Act. As of September 1, 1992,
the Company has chosen, for purposes of liability under section 16(b) of the
Exchange Act, to apply the new section 16 rules that became effective May 1,
1991, for reporting purposes. Accordingly, the Plan shall be interpreted and
administered so as to preserve such exemption under Rule 16b-3 or any other
applicable rules and regulations promulgated pursuant to section 16 of the 1934
Act with respect to any Plan transaction that is reportable by a Participant,
Beneficiary, or other person, including, if applicable, the Trust, who is a
Company officer, director or ten percent beneficial owner subject to section 16
of the 1934 action (hereinafter, a "Section 16 Insider"). This section of the
Plan provides special rules allowing the Plan to satisfy certain conditions for
exemption from section 16(b) liability. This section also contains references to
other Plan sections that, in addition to be included in the Plan for other
reasons, enable the plan to satisfy other conditions for such exemption.
The Plan is a written pension or retirement plan with broad-based Employee
participation and objective, nondiscriminatory rules that are subject to the
Code's qualification requirements and the requirements of ERISA, including ERISA
reporting rules that make the Plan subject to an annual audit by independent
accountants and ERISA fiduciary rules that protect the interests of all Plan
Participants and Beneficiaries, including Section 16 Insiders. Article 3 of the
Plan provides rules for determining eligibility to participate, as it relates to
Section 16 Insiders and other
IV-11
<PAGE> 28
Employees; and Articles 4 through 8 contain detailed rules for Plan
contributions, benefits, investments, and accounting that include rules setting
forth the method for determining the price and amount of Stock that can be
allocated to the Accounts of Section 16 Insiders and other Employees.
Accordingly, the Plan satisfies the general conditions for 16(b) exemption
relating to a written plan described in Rules 16(b)-3(a)(1) that is exempt from
the Rule 16b-3(b) requirement to obtain approval by the Company's security
holders. Moreover, the imitations in Article 4 of the Plan, including the Code
section 415 limitations that are expressed in section 4.6 of the Plan, operate
in conjunction with other Plan provisions relating to contributions and benefits
in a manner that permits a determination of the maximum number of shares of
Stock that can be provided to Section 16 Insiders under the Plan each year.
Therefore, to the extent that current rules continue to subject the Plan to a
requirement similar to that in a former Rule 16b-3(c) to specify the maximum
number of shares that the Plan makes available to Section 16 Insiders, the Plan
satisfies such requirement. In addition, section 13.6 of the Plan restricts the
assignment of Plan benefits in a manner required by the Code and ERISA. In the
event that the Plan is ever deemed to issue derivative securities, section 13.6
shall be interpreted and applied with respect to Section 16 Insiders in a manner
that also satisfies the requirements to include a transferability restriction,
as described in Rule 16b-3(a)(2).
The Plan's rules for contributions, benefits, investments, and accounting in
Articles 4 through 8 collectively provide a formula that uses objective criteria
to determine the amount, price and timing of Stock allocations to Section 16
Insiders and other Participants in a manner that satisfies Rule
16b-3(c)(2)(ii)(A). Notwithstanding section 10.1 or any other Plan provision, to
the extent required by Rule 16b-3(c)(2)(ii)(B), such Plan provisions shall not
be amended more than once every six months, other than to comport with changes
in the Code, ERISA, or the rules thereunder. Moreover, the Committee is
authorized to approve and enforce administrative restrictions that, without
discriminating in favor of Section 16 Insiders for purposes of Plan
IV-12
<PAGE> 29
qualification under the Code, ensure compliance with the requirement of Rule
16b-3(c)(1) to satisfy a six-month holding requirement with respect to the grant
and award transactions of Section 16 Insiders under the Plan or ensure
compliance with a requirement of Rule 16b-3(d) with respect to
Participant-directed transactions of Section 16 Insiders that must meet such
requirement as a condition for exemption under section 16(b) of the 1934 Act. In
order to permit compliance with Rule 16b-3(d) the restrictions that the
Committee may apply to Stock-related transactions of Section 16 Insiders may
include requirements that cause them to make an irrevocable election six months
in advance, to cease further Plan participation or Stock purchases for six
months, or to make elections for intra-Plan investment transfers no more often
than every six months and during a specified period in which recently released
financial data for the Company is available to the Public.
In addition to the foregoing, the Plan is intended to comply with the following
rules in order to ensure that it will be exempt from any requirement to obtain
approval by the Company's security holders even if it is not treated as a
pension or retirement plan. Thus, the following limitation shall apply
notwithstanding other plan provisions for allocations. In no event shall Stock
be allocated to the Account of a Section 16 Insider if such allocation would
cause the aggregate fair market value of Stock that is held in the Trust and
credited to the Accounts of Section 16 Insiders to equal or exceed twenty
percent of the market value of all Stock held in the Trust. Any reduction in the
number of shares of Stock in the Accounts of Section 16 Insiders that is
necessary to comply with this limitation shall be made on a proportionate basis
for all such Section 16 Insiders and shall be allocated among the remaining
Participants in the same manner as shares of Stock are allocated in connection
with Employer matching contributions pursuant to section 4.2.
IV-13
<PAGE> 30
Article 5. Vesting and Benefits
5.1 Vesting. The interest of a Participant in amounts properly
allocated to his Account shall be fully vested and nonforfeitable at all times,
including a Participant's attainment of Normal Retirement Age while still an
Employee.
5.2 Distribution Upon Separation from Service. Except as specifically
provided in special circumstances, the Plan does not permit in-service
withdrawals or other benefit payments during a Participant's employment as an
Employee. Upon a Participant's Separation from Service there shall be
distributed to him (or his Beneficiary in the event of his death), as of the
Valuation Date specified in section 5.3, the entire balance credited to the
Participant's Account. The distribution shall be made in the whole shares of
Stock credited to his Account or purchased with his share of cash or other
non-Stock assets pursuant to the next following sentence, plus a supplemental
cash payment for any fractional share credited to his accounts and his allocable
share of any non-Stock assets of the Trust Fund to the extent that the value of
such allocable share is not sufficient to purchase additional Stock for the
distribution. If the value of the allocable share of non-Stock assets credited
to the Participant's Account is sufficient to acquire additional whole shares of
Stock, such value shall be used to acquire and distribute Stock plus a
supplemental cash payment with a value equal to a fractional share of Stock. The
distribution shall be payable as a lump sum distribution in accordance with and
subject to the remaining provisions of this Article 5.
5.3 Deadline for Distributions and Other Rules.
(a) The lump sum distribution from a Participant's Account will
normally be made as of the Valuation Date coincident with or next
following the Participant's Separation from Service, provided,
however, that, the timing of the distribution shall be delayed to
the extent necessary to satisfy the rules below.
-V.1-
<PAGE> 31
(b) Any distribution which cannot be reasonably ascertained and made by
the required date shall be made as soon as administratively
possible thereafter.
(c) Notwithstanding other Plan provisions, distributions shall comply
with Code section 409(o). Accordingly, unless the Participant
otherwise elects, the distribution of the Participant's Account
balance will commence not later than one year after the close of
the Plan Year (i) in which the Participant has a Separation from
Service by reason of the attainment of Normal Retirement Age,
Disability, or death, or (ii) which is the fifth Plan Year
following the Plan Year in which the Participant otherwise has a
Separation from Service, except that this clause shall not apply if
the Participant is reemployed by the Company or an Affiliate before
such year. For purposes of this subsection 5.3(c), the Account
balance of a Participant shall not include any Stock acquired with
the proceeds of an Exempt Loan until the close of the Plan Year in
which such loan is repaid in full. Moreover, unless the
Participant elects otherwise, the distribution of the Participant's
Account balance will be in substantially equal periodic payments
(not less frequently than annually) over a period not longer than
the greater of (i) five years, or (ii) in the case of a Participant
with an Account balance in excess of $500,000, five years plus one
additional year (but not more than five additional years) for each
$100,000 or fraction thereof by which such balance exceeds $500,000
(subject to cost-of-living adjustments of the foregoing $500,000
figure by the Secretary of the Treasury).
(d) An immediate distribution (as determined in accordance with
Code section 411(a)(11)) of a Participant's Account balance in
excess of $3,500 shall not be made to a Participant without his
written consent. To the extent required by Code section
411(a)(11), the Committee shall consult with, and honor the
election of a delayed distribution date in the case of, any
Partici-
-V.2-
<PAGE> 32
pant who does not consent to an immediate distribution of an
Account balance which exceeds $3,500. Moreover, if the Participant
dies before the distribution of benefits has begun, the
distribution shall be made not later than five years after the
Participant's death. In any event, unless the Participant elects
otherwise, distribution of his benefits shall begin not later than
the 60th day after the close of the Plan Year in which occurs the
latest of (i) the Participant's Separation from Service, (ii) the
tenth anniversary of the year in which the Participant commenced
participation in the Plan, or (iii) the Participant's 65 birthday.
Moreover, if the Participant is no longer an Employee and has
attained age 70-1/2 before or during a year that includes the date
of his Separation from Service or in a year that begins after a
Separation from Service occurring prior to the year in which the
Participant attained age 70-1/2, then distribution shall begin by
April 1 of the following year. If the Participant is a 5 percent
owner of the Employer and has not had a Separation from Service by
the end of the year in which he reaches age 70-1/2, his
distribution shall begin by April 1 of the following year,
regardless of whether or not he has then had a Separation from
Service. After 1988, the requirement to begin distributions by a
specified date in accordance with the immediately preceding
sentence shall also apply to Employees other than 5 percent owners
of the Employer once they have reached age 70-1/2. Any
distribution that is begun pursuant to this paragraph to a
Participant who is still an Employee and has attained age 70-1/2,
shall satisfy the minimum distribution requirements of Code section
401(a)(9) and the regulations thereunder. Distributions that are
required to be made to a Participant prior to Separation from
Service pursuant to this section 5.3(d) and Code section 401(a)(9)
shall be made in a number of whole shares of Stock that is
-V.3-
<PAGE> 33
determined by rounding up, to the next higher whole number, the
minimum number of full and fractional shares that are required by
the Code to be distributed from such Account.
5.4 Diversification. Any Participant who has attained age 55 and
completed 10 years of Plan participation shall have the right to diversify the
investment of his Account in a manner that satisfies Code section 401(a)(28).
Such a Participant may elect within 90 days after the close of each Plan Year in
the qualification election period (as defined in section 401(a)(28) of the Code)
to diversify 25 percent of his Account, less any amount to which a prior
election applies. In the case of the last year to which an election applies, 50
percent shall be substituted for 25 percent. Unless the Committee establishes at
least three investment options, the Plan shall meet the requirements of section
401(a)(28) by distributing the portion of the Account covered by the election to
the Participant within the 90-day period after the election is made.
5.5 Put Options and Rights of First Refusal. If Stock is distributed
from the Plan at a time when it is not readily tradable on an established public
market, then the provisions of this section shall apply in the case of a
Participant or any other distributee of the Stock who may be legally subject to
the following rules.
(a) The distributee shall have the right to require that the Employer
repurchase such Stock under reasonable payment terms and at a price
per share determined in accordance with section 7.2 . This put
option shall continue during a period of at least 60 days following
the date of distribution of the Stock and, if not exercised within
such period of 60 days, during the
-V.4-
<PAGE> 34
first 60 days in the following Plan year. This right shall be
granted in accordance with Code section 409(h) and all applicable
regulations.
(b) Stock acquired with the proceeds of an Exempt Loan shall be subject
to a right of first refusal whereby the Employer shall be entitled
to purchase such Stock at a selling price and under other terms not
less favorable to the seller than (i) the purchase price and other
terms offered by a buyer other than the Employer pursuant to a good
faith offer to purchase the Stock, or (ii) if more favorable to the
seller than (i), the value of the Stock determined in accordance
with section 7.2. The right of first refusal must lapse no later
than 14 days after the holder of the Stock gives written notice to
the Employer that an offer by a third party to purchase the Stock
has been received.
5.6 Missing Persons. If the Committee shall be unable, within two years
after the Participant's distribution becomes due, to make payment because the
identity or whereabouts of the Participant or Beneficiary cannot be ascertained,
the Committee may direct that such Participant's Account balance shall be
forfeited and all liability for the payment thereof shall terminate; provided,
however, that in the event of the subsequent reappearance of the Participant or
Beneficiary, the amount forfeited shall be paid to such person in a single sum.
The amount of any forfeited Account balance shall be added to Employer
contributions and allocated together with such contributions in the manner
specified in section 4.2. Reinstatement of a benefit shall be accomplished in
accordance with section 4.7 by the making of a special, correcting contribution
in an appropriate amount to provide for the distribution.
-V.5-
<PAGE> 35
5.7 Use of Exempt Loan Proceeds. The proceeds of an Exempt Loan must
be used within a reasonable time after receipt by the Plan only for any or all
of the following purposes:
(a) to acquire Stock;
(b) to repay the Exempt Loan;
(c) to repay a prior Exempt Loan in a transaction creating a substitute
Loan, as described in section 4.3.
Except as provided in section 5.5 or as otherwise required by applicable law, no
Stock acquired with the proceeds of an Exempt Loan may be subject to a put,
call, or other option or buy-sell or similar arrangement while held by and when
distributed from the Plan.
-V.6-
<PAGE> 36
Article 6. Investment and Voting Rights
6.1 Investment Policy. The Trust Fund shall be invested primarily in
Stock. Participants shall not have any right to direct investments.
6.2 Securities Transactions. The Trustee may buy or sell Stock in a
transaction on the open market or with the Company or any other person,
including an Interested Party, provided that no commission shall be paid in
connection with a transaction with the Company or any other Interested Party,
and the value of Stock shall be determined in accordance with section 7.2 in the
case of a transaction with an Interested Party. No more than "adequate
consideration," as determined pursuant to section 3(18) of ERISA, shall be paid
in a transaction involving an acquisition of Stock from a Party in Interest.
Neither the Employer, nor the Committee, nor any Trustee shall have any
responsibility or duty to time any transaction involving Stock in order to
anticipate market conditions or changes in Stock value, nor shall any such
person have any responsibility or duty to sell Stock held in the Trust Fund in
order to maximize return or minimize loss.
6.3 Rights, Warrants, or Options. Stock rights (including warrants and
options) issued with respect to Stock shall, in the discretion of the Trustee,
be exercised by the Trustee on behalf of Participants to the extent that cash is
available, or shall be sold or exchanged.
6.4 Dividends. Stock dividends shall be allocated to each Participant's
Account and each suspense Account in proportion to the Stock in that Account
that gave rise to the dividend. Cash dividends on unallocated Stock (Stock that
has not yet been allocated to the Accounts of Participants) shall first be used
to make payments on outstanding Exempt Loans, if any, in which case the shares
of Stock released from the Exempt Loan Suspense Account as a result of such
payments shall be allocated in the same manner as Employer matching
contributions, as provided in sections 4.2 and 4.4. After the repayment of all
outstanding
VI-1
<PAGE> 37
Exempt Loans, such cash dividends on unallocated Stock shall next be used to pay
reasonable expenses of Plan administration, if such are to be paid from the
Trust Fund rather than by the Company, and shall then be allocated to the
Accounts of Participants in proportion to the number of shares of allocated
Stock in their Account (or, if there is no such allocated Stock at the time, in
proportion to matchable Code section 401(k) deferrals in the same manner that
Employer contributions for the month of the dividend would be allocated pursuant
to section 4.2). Cash dividends on allocated Stock shall first be used to make
payments on outstanding Exempt Loans, in which case, notwithstanding the normal
rules of section 4.4, the shares of Stock released from the Exempt Loan Suspense
Account as a result of such payments shall be allocated to the Accounts of
Participants in proportion to the number of shares of such allocated Stock on
which the dividend was paid. After the repayment of all outstanding Exempt
Loans, such cash dividends on allocated Stock shall be passed through to the
Participants to whose Accounts the Stock giving rise to the dividends was
allocated, provided that the pass-through satisfies the Code section 404(k)
requirements for a tax deduction with respect to such dividends. If such
deduction requirements no longer applyor cannot be satisfied, such cash
dividends (or the shares of Stock acquired with them) shall be allocated to the
Accounts of the Participants to whom they would have been passed through
pursuant to the immediately preceding sentence.
6.5 Voting Rights in Stock:
(a) Each Participant (whose account has allocated to it any
shares of Stock) and each Beneficiary or alternate payee (within the meaning of
section 414(p) of the Code) having a presently enforceable interest in the
Accounts of a Participant is, for purposes of this Section 6.5, hereby
designated a "named fiduciary," within the meaning of Section 403(a)(1) of ERISA
(hereinafter referred to as a "Named Fiduciary"), for purposes of performing the
fiduciary duties described by this Section 6.5. Pursuant to the provisions of
Section 9.1 hereof, each Named Fiduciary shall be the sole Fiduciary responsible
for performing
VI-2
<PAGE> 38
the fiduciary duties assigned hereunder, and no other Plan Fiduciary shall be
responsible to ensure that such Named Fiduciaries discharge their duties
hereunder.
(b) Each Named Fiduciary shall be responsible to direct the
Trustee in writing as to the manner in which Stock allocated to his or her
Accounts (or to the Accounts in which the Named Fiduciary has an interest, but
only to the extent of his or her interest in such Accounts), and each Named
Fiduciary who is a Participant shall also be responsible to direct the Trustee
in writing as to the manner in which each Participant's proportionate share (as
determined in Section 6.5(f)) of Stock, if any, that is contributed to or
acquired by the Plan that is not yet allocated (including Stock held in a
suspense Account described in sub-section 2.1(a) (hereinafter sometimes referred
to as "Unallocated Stock")), is to be voted on each matter brought before an
annual or a special shareholders' meeting and to revoke such instruction to the
extent permitted under the terms of such vote. Such instruction or revocation
thereof shall apply (i) to the total number of shares (including fractional
shares) of Stock allocated to each Named Fiduciary's Accounts (or to the
Accounts in which the Named Fiduciary has an interest, but only to the extent of
his or her interest in such Accounts), whether or not vested, and (ii) to each
Participant's proportionate share of Unallocated Stock, if any, as of the record
date for the shareholders' meeting or such earlier date which shall be
designated by the Committee which the Committee, in its sole discretion, deems
appropriate for reasons of administrative convenience.
(c) Within a reasonable time before each shareholder's meeting,
the Committee shall cause each Named Fiduciary to be notified of each occasion
for directing the Trustee regarding the voting of Stock. Information provided to
each Named Fiduciary shall include all proxy solicitation and other materials
distributed by the Company or by management and others who may solicit proxies
to shareholders with regard to such exercise of voting rights, together with a
form stating the number of shares of Stock attributable, for voting purposes, to
such Named Fiduciary and requesting directions on how such
VI-3
<PAGE> 39
shares of Stock held by the Trustee in the Trust shall be voted. The Committee
shall use its reasonable best efforts to cause each Participant entitled to
direct the Trustee to receive such notices and forms.
(d) Upon timely receipt of written directions from Named
Fiduciaries, the Trustee shall, on each such matter, vote as directed the
appropriate number of shares (as determined under this Section 6.5 and including
fractional shares) of Stock held by the Trustee in the Trust, and the Trustee
shall have no discretion in such matter. To the extent that a Named Fiduciary
does not direct the Trustee with respect to the voting of Stock attributable,
for voting purposes, to such Named Fiduciary, such Named Fiduciary shall be
deemed to have exercised his or her fiduciary prerogative to refrain from having
such Stock voted and the Trustee shall not vote such shares of Stock. The
Trustee shall have no discretion in such matter.
(e) In the case of a merger, tender offer, or other major
corporate transaction requiring approvalby more than the majority normally
required for other shareholder votes, the instructions received by the Trustee
(or the Trustee's designate) from Named Fiduciaries shall be held by the Trustee
(or the Trustee's designate) in confidence and shall not be divulged or released
to any person, including officers or employees of the Employer; provided,
however, that to the extent necessary for the operation of the Plan, such
instructions may be relayed by the Trustee (or the Trustee's designate) to a
record keeper, auditor or other person providing services to the Plan if such
person (i) is not the Employer, and (ii) agrees not to divulge such directions
to any other person, including employees, officers and directors of the
Employer.
(f) Solely for purposes of directing the Trustee to vote
Unallocated Stock, the proportionate share of any Participant in such Stock held
in the Trust shall be a fraction, the numerator of which shall be the number of
shares allocated to such Participant's Accounts and the denominator of which
shall be the number of such shares allocated to all Participants' Accounts,
whether or not vested, as of the record date for the shareholder's
VI-4
<PAGE> 40
meeting at which shares are to be voted, or such earlier date which shall be
designated by the Committee which the Committee, in its sole discretion deems
appropriate for reasons of administrative convenience.
VI-5
<PAGE> 41
Article 7. Accounting and Valuation of Assets
7.1 Accounts. A system of accounting satisfactory to the Committee and
consistent with generally acceptable trust accounting principles shall be
maintained so as to reflect in a separate Account (with appropriate subaccounts,
as needed) for each Participant his beneficial interest in the Trust Fund and so
as to reflect also the current balance in each suspense Account described in
subsection 2.1(a) and in any other Accounts that may be established under the
Plan. Allocations to Accounts shall be made in accordance with sections 4.2,
4.4, 6.4 and 7.4, as applicable.
7.2 Valuation of Assets. All assets of the Trust Fund shall be valued
at their fair market value as of each Valuation Date for purposes of this
Article and shall also be valued as of the date of any transaction between the
Plan and an Interested Party. A Valuation Date requiring the determination of
the fair market value of Stock and other Trust Fund assets for purposes of
accounting pursuant to this Article shall occur at least annually. The fair
market value of Stock shall be the closing price of such Stock in public trading
on the most recent date on which the Stock was traded, as reported in the Wall
Street Journal or another publication of general circulation providing
information about the public trading prices of Stock that is selected by the
Committee; provided, however, that if Stock ceases to be publicly traded or if
it is being valued in connection with a transaction between the Plan and an
Interested Party, its fair market value shall be determined in good faith by the
Committee based on all relevant factors for determining the fair market value of
securities in accordance with Treasury Regulations section 54.4975-11(d)(5) and
the fiduciary requirements of ERISA.
-VII.1-
<PAGE> 42
7.3 Accounting for Changes in Value.
(a) Except as otherwise provided in this Article, the income, profit,
gain and other increments to the Trust Fund for a Valuation Period
reduced by the expenses, losses and other decreases in the Trust
Fund for a Valuation Period shall be allocated to Accounts on the
Valuation Date on which that Valuation Period ends in the
proportion that each individual Account value as of the next
preceding Valuation Date reduced by any disbursements from that
Account during the Valuation Period bears to the total value of all
Accounts as of that date reduced by such disbursements.
(b) Any change in value of Stock which has been allocated to an Account
of a Participant and any income attributable to that Stock shall
not be part of the general allocation described in the prior
subparagraph (a), but shall be allocated directly to the Account.
7.4 Allocation of Stock Dividends and Splits. Stock received by the
Trust as a result of a stock split or stock dividend shall be allocated as of
the Valuation Date coinciding with or next following the date of such split or
dividend, to each Account on such date in an amount which shall bear
substantially the same proportion to the total number of shares received as the
number of shares in the Account immediately before such date bears to the total
number of shares allocated to all Accounts immediately before such date.
7.5 Other Allocation Matters.
(a) In the event an Employer contribution, dividend, amount of sale
proceeds, or other amount is received before the Valuation Date as
of which it is to be allocated to Accounts under the Plan, the
Committee may direct the Trustee to hold such amount in a separate
investment fund. In such event, any change in value of that
separate investment fund shall be allocated with and in the same
manner as the amount itself.
-VII.2-
<PAGE> 43
(b) Notwithstanding the preceding provisions of this Article, the
Committee may determine to allocate the portion of the net increase
or decrease in value of the Trust Fund allocable to Accounts under
the Plan based on a modified allocation procedure, provided that
any such modified allocation procedure shall result in equitable
and nondiscriminatory allocation.
(c) The Committee, or the Trustee at the direction of the Committee,
shall maintain adequate records of the cost basis of Stock acquired
by the Trustee, the number of shares of Stock in each Account as of
each Valuation Date for which Account balances are determined, the
dollar value of Account balances as of each such Valuation Date,
and any other information that the Committee deems important, which
information may, without limitation, include the identity of shares
acquired with the proceeds of an Exempt Loan.
-VII.3-
<PAGE> 44
Article 8. Financing
8.1 Financing. The Company shall maintain a Trust Fund to provide
the benefits under the Plan, by entering into one or more Trust Agreements.
Any such Trust Agreement is designated as and shall constitute a part of this
Plan, and all rights which may accrue to any person under this Plan shall be
subject to all the terms and provisions of such Trust Agreement. A Trustee
shall be appointed by the Company and shall have such powers as provided in the
Trust Agreement. The Company may modify any Trust Agreement from time to time
to accomplish the purpose of the Plan and may replace any Trustee and appoint a
successor Trustee or Trustees.
8.2 Employer Contributions. Each Employer shall make such
contributions to the Trust Fund as are required by this Plan, subject to the
right of the Company to discontinue the Plan.
8.3 Non-Reversion. Anything in this Plan to the contrary
notwithstanding, it shall be impossible at any time for the contributions of an
Employer or any part of the Trust Fund to revert to the Company or an Affiliate
or to be used for or diverted to any purpose other than the exclusive benefit
of Participants or their Beneficiaries, except in the case of a return of
contributions and other assets pursuant to section 4.8 or a return of an
unallocated amount from a suspense Account pursuant to the Plan termination
provisions of section 10.2 hereof.
8.4 Custody of Assets. All cash, certificates for shares of Stock
and other assets of this Plan, shall be held in the possession of the Trustee.
Transferable securities may be registered in the name of the Trustee or in the
name of its nominee, and need not be evidenced by a certificate if the transfer
agent does not customarily issue certificates upon
- VIII.1-
<PAGE> 45
request by owners of record. In the sole discretion of the Trustee,
investments in securities may be represented by a single certificate.
8.5 Payment of Expenses. All expenses of establishing and
maintaining the Plan and the Trust which are not paid out of the Trust Fund, as
directed by the Committee in accordance with the requirements of ERISA, shall
be paid by the Company (and by other Employers to the extent required by the
Company).
8.6 Absence of Guaranty. Each Participant (and his Beneficiary)
assumes all risk connected with any decrease in the market value of any assets
held under the Plan. Neither the Company nor the Employer in any way
guarantees the Trust Fund from loss or depreciation, or the payment of any
amount that may be or become due to any person from the Trust Fund. The Trust
Fund shall be the sole source of distributions to be made under this Plan.
8.7 Exempt Loan Transactions. The Company may direct the Trustee
to incur a loan on behalf of the Trust, provided that such loan qualifies as an
Exempt Loan. An Exempt Loan shall be used primarily for the benefit of
Participants and Beneficiaries and shall be structured to withstand the special
scrutiny specified in Treasury Regulation 54.4975-7(b)(2)(ii) and similar
standards that apply under ERISA. The proceeds of each Exempt Loan shall be
used only for a purpose permitted in section 5.7. Any Exempt Loan shall
provide for a reasonable rate of interest and an ascertainable period of
maturity, and shall be without recourse against the Plan, except to the extent
of the Employer contributions, as adjusted for any earnings and other
investment gains or losses, that are held in the Plan. Any such loan shall be
secured solely by shares of Stock acquired with the proceeds of the Exempt Loan
and shares of such Stock that were used as collateral on a prior Exempt Loan
which was repaid with the proceeds of the current Exempt Loan. Such Stock
pledged as collateral shall be placed in an Exempt Loan Suspense Account and
released and allocated pursuant to section 4.4.
-VIII.2-
<PAGE> 46
Payments of principal and interest on any loan under this section shall be made
by the Trustee at the direction of the Committee solely from: (i) Employer
contributions available to meet obligations under the loan, (ii) earnings from
the investment of such contributions, (iii) dividends and other earnings
attributable to Stock held in the Trust Fund, (iv) the proceeds of a Substitute
Loan, and (v) the proceeds of the sale of any Stock pledged as collateral for
the loan, provided that nothing herein shall be deemed to authorize such a sale
if it is not permissible under the fiduciary requirements of ERISA and the
qualification requirements of the Code. The contributions and earnings
available to pay an Exempt Loan must be accounted for separately by the
Committee until the Exempt Loan is repaid. The repayment schedule of an Exempt
Loan, in light of the potential sources of funds for the loan repayment, must
not be such as would deplete the assets of the Plan and the Trust Fund.
Moreover, in the event of default under an Exempt Loan, the fair market value
of Stock and other assets transferred in satisfaction of the Exempt Loan must
not exceed the amount of the Exempt Loan which remains outstanding, plus
accrued interest thereon. If the lender is an Interested Party, the Exempt
Loan must provide for a transfer of Plan assets upon default only if and to the
extent of the failure of the Trust to satisfy the payment schedule of the
Exempt Loan.
-VIII.3-
<PAGE> 47
Article 9. Administration
9.1 Allocation of Responsibility Among Fiduciaries for Plan and
Trust Administration. The Fiduciaries of the Plan (within the meaning of
section 3(21) of ERISA) shall have only those specific powers, duties,
responsibilities and obligations as are specifically given them under the Plan
or the Trust. The Board of Directors shall have the sole authority to appoint
and remove the Trustee. The Chief Executive Officer of the Company shall have
the sole authority to appoint and remove the Committee, and any investment
manager which may be provided for under and defined in the Trust. The Company
shall have the final responsibility for administration of the Plan, which
responsibility is specifically described in this Plan and the Trust. The
Committee, appointed pursuant to section 9.2, hereof, shall have the specific
delegated powers and duties described in the further provisions of this Article
9, and such further powers and duties as hereinafter may be delegated to it by
the Company. The Trustee shall have sole responsibility for the administration
of the Trust and the management of the assets held under the Trust, all as
specifically provided in the Trust. Each Fiduciary warrants that any direction
given, information furnished, or action taken by it shall be in accordance with
the provisions of the Plan or the Trust, as the case may be, authorizing or
providing for such direction, information or action. Furthermore, each
Fiduciary may rely upon any such direction, information or action of another
Fiduciary as being proper under this Plan or the Trust, and is not required
under the Plan or the Trust to inquire into the propriety of any such
direction, information or action. It is intended under the Plan and the Trust
that each Fiduciary shall be responsible for the proper exercise of its own
powers, duties, responsibilities and obligations under this Plan and the Trust
and shall not be responsible for any act or failure to act of another
Fiduciary. No Fiduciary guarantees the Trust Fund in any manner against
investment loss or depreciation in asset value.
-IX.1-
<PAGE> 48
9.2 Appointment of Committee. A Committee consisting of at least
three persons shall be appointed by and serve at the pleasure of the Chief
Executive Officer of the Company to assist in the administration of the Plan.
All usual and reasonable expenses of the Committee may be paid in whole or in
part by the Employer, and any expenses not paid by the Employer shall be paid
by the Trustee out of the principal or income of the Trust Fund. Any members
of the Committee who are Employees shall not receive compensation with respect
to their services for the Committee.
9.3 Committee Procedures. The Committee may act at a meeting or
in writing without a meeting. The Committee shall elect one of its members as
chairman, appoint a secretary, who may or may not be a Committee member, and
advise the Trustee of such actions in writing. The secretary shall keep a
record of all meetings and forward all necessary communications to the
Employer, or the Trustee. The Committee may adopt such bylaws and regulations
as it deems desirable for the conduct of its affairs. All decisions of the
Committee shall be made by the vote of the majority including actions in
writing taken without a meeting. A dissenting Committee member who, within a
reasonable time after he or she has knowledge of any action or failure to act
by the majority, registers his or her dissent in writing delivered to the other
Committee members, the Employer and the Trustee shall not be responsible for
any such action or failure to act.
9.4 Rules and Decisions. The Committee may adopt such rules as it
deems necessary, desirable or appropriate. All rules and decisions of the
Committee shall be uniformly and consistently applied to all Participants and
Beneficiaries in similar circumstances. When making a determination or
calculation, the Committee shall be entitled to rely upon information furnished
by a Participant or Beneficiary, the Employer, the legal counsel of any such
person or the Trustee.
-IX.2-
<PAGE> 49
9.5 Subcommittees. The Committee may appoint one or more
subcommittees and delegate such of its power and duties as it deems desirable
to any such subcommittee, in which case every reference herein made to the
Committee shall be deemed to mean or include the subcommittees as to matters
within their jurisdiction. The members of any such subcommittee shall consist
of such officers or other employees of the Company and such other persons as
the Committee may appoint.
9.6 Other Agents. The Committee may also appoint one or more
persons or agents to aid it in carrying out its duties as Plan administrator
and Named Fiduciary, as defined in ERISA, and delegate such of its power and
duties as it deems desirable to such person or agents.
9.7 Records and Reports. The Company (or the Committee if so
designated by it) shall exercise such authority and responsibility as it deems
appropriate in order to comply with ERISA, other applicable law and
governmental regulations issued thereunder relating to records of Participant's
employment, Account balances, notifications to Participants, and annual reports
to the Internal Revenue Service and Department of Labor. Each Employer agrees
to abide by the directions of the Company, or its designee, in the exercise of
its responsibilities hereunder.
9.8 Claims Procedure. The Committee shall make all determinations
as to the right of any person to a benefit. Any denial by the Committee of the
claim for benefits under the Plan by a Participant or Beneficiary shall be
stated in writing by the Committee and delivered or mailed to the Participant
or Beneficiary at his or her last address shown on Plan records; and such
notice shall set forth the specific reasons for the denial, written to the best
of the Committee's ability in a manner that may be understood without legal or
actuarial counsel. In addition, the Committee shall afford a reasonable
opportunity to any Participant or Beneficiary whose claim for benefits has been
denied for a review of the decision denying the claim and, in the
-IX.3-
<PAGE> 50
event of continued disagreement, may appeal to the Company (or an appellate
benefits review committee appointed by it) whose decision shall be final.
9.9 Committee's Powers and Duties. The Committee shall have
responsibility for the general administration of the Plan and for carrying out
its provisions. The Committee shall have such powers and duties as may be
necessary to discharge its functions hereunder, including but not limited to,
the following:
(a) To construe and interpret the Plan, to decide all questions of
eligibility and determine the amount, manner and time of
payment of any benefits hereunder;
(b) To make a determination as to the right of any person to an
allocation, and the amount thereof;
(c) To obtain from Employees and Employers such information as
shall be necessary for the proper administration of the Plan
and, when appropriate, to furnish such information promptly to
the Trustee or other persons entitled thereto;
(d) To prescribe procedures to be followed by Participants and
Beneficiaries in requesting benefits;
(e) To prepare and distribute, in such manner as the Company
determines to be appropriate, information explaining the Plan;
(f) To establish and maintain such accounts in the name of each
Participant as are necessary;
(g) To instruct the Trustee with respect to the payment of
benefits hereunder;
(h) To provide for any required bonding of fiduciaries and other
persons who may from time to time handle Plan assets;
(i) To prepare and file any reports required by ERISA, the Code,
or other applicable laws;
(j) To engage an independent public accountant to conduct such
examinations and to render such opinions as may be required by
ERISA and to perform such other functions as the Committee may
deem appropriate;
-IX.4-
<PAGE> 51
(k) To employ agents and advisers, including without limitation
attorneys, valuation experts, and employee benefit
consultants, to assist in any aspect of interpreting or
administering the Plan;
(l) To allocate contributions and Trust Fund gains or losses to
the Accounts of Participants; and
(m) To take all reasonable steps to correct any errors or
omissions that may arise in the operation of the Plan.
9.10 Investment Responsibilities. Subject to any requirements of the
Plan and the Trust Agreement regarding investment in Stock and the Trustee's
reliance on instructions of the Committee as to matters such as contributions,
accounting, and distributions, the Trustee shall have the authority and
responsibility to invest and manage the Trust Fund.
9.11 Committee's Decisions Conclusive. The Committee shall exercise
its powers hereunder in a uniform and nondiscriminatory manner. Any and all
disputes with respect to the Plan which may arise involving Participants, or
their Beneficiaries shall be referred to the Committee and its decision shall be
final, conclusive and binding. Furthermore, if any question arise as to the
meaning, interpretation or application of any provision hereof, the decision of
the Committee with respect thereto shall be final.
9.12 Authorization of Benefit Payments. The Committee shall issue
directions to the Trustee concerning all benefits which are to be paid from the
Trust Fund pursuant to the provisions of the Plan, and shall warrant to the
Trustee that all such directions are in accordance with the Plan.
9.13 Application and Forms for Benefits. The Committee may require a
Participant or Beneficiary to complete and file with the Committee an
application for a benefit on the forms approved by the Committee, and to furnish
all pertinent information requested by the Committee, as a condition precedent
to payment of benefits. The Committee may rely upon all such information so
-IX.5-
<PAGE> 52
furnished it, including the Participant's or Beneficiary's current mailing
address.
9.14 Facility of Payment. Whenever, in the Committee's opinion, a
person entitled to receive any payment of a benefit or installment thereof
hereunder is under a legal disability or is incapacitated in any way so as to be
unable to manage his or her financial affairs, the Committee may direct the
Trustee to make payments to such person or to his or her legal representative or
to a relative or friend of such person for his or her benefit, or the Committee
may direct the Trustee to apply the payment for the benefit of such person in
such manner as the Committee considers advisable. Any payment of a benefit or
installment thereof in accordance with the provisions of this section shall be a
complete discharge of any liability for the making of such payment under the
provisions of the Plan
9.15 Indemnification of the Committee. The Committee and the
individual members thereof shall be indemnified by the Employer and not from the
Trust Fund against any and all liability arising by reason of any act or failure
to act made in good faith pursuant to the provisions of the Plan, including
expenses reasonably incurred in the defense of any claim relating thereto.
-IX.6-
<PAGE> 53
Article 10. Amendment, Termination, or Merger of the Plan
10.1 Amendment and Termination. The Company expects the Plan to be
permanent and continue indefinitely. However, since future conditions affecting
the Company cannot be anticipated or foreseen, the Company must necessarily and
does hereby reserve the right to amend, modify or terminate the Plan at any time
by action of its Board of Directors. The Chief Executive Officer of the Company
may make any modifications or amendments to the Plan that are necessary or
appropriate to meet the requirements of any law or of the Internal Revenue Code
of 1986 as now in effect or hereafter amended, or any amendment which does not
significantly increase benefit levels or costs. No amendment of the Plan shall
cause any part of the Trust Fund to be used for, or diverted to, purposes other
than for the exclusive benefit of the Participants or their Beneficiaries
covered by the Plan. Plan amendments may not decrease the Account balance of
any Participant, nor eliminate any valuable right such as an optional form of
benefit payment to the extent that it is legally protected against elimination
by amendment.
10.2 Distribution on Termination. Upon termination of the Plan in
whole or in part (after an initial determination has been obtained from the
Internal Revenue Service that the Plan constitutes a qualified defined
contribution plan), or upon complete discontinuance of Employer contributions to
the Plan (after such initial determination has been obtained), the value of the
proportionate interest in the Trust Fund of each Participant affected by such
termination or discontinuance shall be determined by the Committee as of the
date of such termination or discontinuance. The Accounts of such Participants
shall continue to be fully vested and nonforfeitable, and thereafter
distribution shall be made to such Participants as soon as practicable,
consistent with the payout requirements and restrictions of the Code, including
the requirements that generally prohibit distributions of amounts in excess of
$3,500 without the Participant's consent.
-X.1-
<PAGE> 54
Moreover, if the Plan terminates while there are any amounts remaining
unallocated to Participants' Accounts, such amounts shall be allocated to
Participants to the extent possible under section 415 for the Plan Year of the
termination. Any amounts remaining unallocated shall then be used to reduce
the balance of any outstanding Exempt Loans and thereafter shall be withdrawn
from the Plan by the Company or its successor in interest.
10.3 Successor Employer. In the event of the dissolution, merger,
consolidation or reorganization of an Employer, provision may be made in the
sole discretion of the Company by which the Plan and Trust will be continued by
the successor; and, in that event, such successor shall be substituted for
Employer under the Plan. The substitution of the successor shall constitute an
assumption of Plan liability by the successor and the successor shall have all
of the powers, duties and responsibilities of the Employer under the Plan.
10.4 Plan Merger or Transfer. This Plan shall not merge or
consolidate with, or transfer assets and liabilities to, or accept a transfer
from, any other employee benefit plan unless each the transaction complies with
Code section 401(a)(12) and 414(l), and, accordingly, each Participant in this
plan would (if either this Plan or the other plan then terminated) receive a
benefit immediately after the merger, consolidation, or transfer, and retain
other rights protected by Code section 411(d)(6), which are not less than the
benefit and the rights to which the Participant would have been entitled
immediately before the merger, consolidation, or transfer or assets (if either
this Plan or the other plan had then terminated).
Pursuant to this section and consistent with the agreement between the Company
and The Dial Corp ("Dial") in connection with Dial's distribution of this
Company's Stock to Dial stockholders, the Committee may allow this Plan to
accept a transfer from The Dial Corp Employees' Stock Ownership Plan in the
form of Stock (and cash or other assets acceptable to the Committee that, upon
receipt by this Plan, can be reinvested in Stock within a
-X.2-
<PAGE> 55
reasonable time). Amounts attributable to any such assets transferred from The
Dial Corp Employees' Stock Ownership Plan shall, as provided in section 6.1, be
invested in and remain in Stock while held under this Plan. To the extent
required by Code section 411(d)(6), such amounts shall be deemed to include the
transferred assets and any assets derived from them (including any assets into
which the transferred assets have been converted, and any dividends,
distributions or earnings other than dividends or distributions that can be
traced to the transferred assets). To the extent required by Code section
411(d)(6), such amounts shall also be subject to a Participant or Beneficiary's
right to have them converted to Dial common stock and distributed in that form
when the Participant or Beneficiary becomes entitled to a distribution under
this Plan. However, neither the foregoing nor any other Plan provision shall
be construed as requiring the Plan to make any investment or distribution that
would adversely affects its qualification or as requiring the Plan to expand a
Participant or Beneficiary's rights to Plan investments or distributions beyond
the rights that would be legally required in the absence of any specific
references to the Plan's receipt of a transfer of assets from The Dial Corp
Employees' Stock Ownership Plan.
-X.3-
<PAGE> 56
Article 11. Adoption of Plan
11.1 Adoption Agreement. Subject to the approval of the Company, and
consistent with the provisions of ERISA and other applicable law, an Affiliate
may adopt the Plan for all or any specified group its Eligible Employees by
entering into an adoption agreement in the form and substance prescribed by the
Committee. The adoption agreement may include such modification of the Plan
provisions with respect to such Eligible Employees as the Committee approves
after having determined that no prohibited discrimination or other threat to the
qualification of the Plan is likely to result.
The Company may prospectively revoke or modify any Employer's participation in
the Plan at any time and for any or no reason, without regard to the terms of
any adoption agreement, or terminate the Plan with respect to such Employer's
Employee Participants. By execution of an Adoption Agreement (each of which by
this reference shall become a part of the Plan), the Employer agrees to be
bound by all the terms and conditions of the Plan.
-XI.1-
<PAGE> 57
Article 12. Top-Heavy Provisions
12.1 Application. If as of the Determination Date in any Plan Year
beginning on or after January 1, 1984 (a) the sum of the Account balances of
Participants who are "Key Employees" for such Plan Year exceeds 60 percent of
the sum of the Account balances of all Employees and their Beneficiaries, or (b)
the Plan is part of a top-heavy group, then the following provisions under this
Article 12 shall apply for such Plan Year. The foregoing notwithstanding, the
provisions of this Article 12 shall not apply to the Plan in any Plan Year
during which it is part of an aggregation group (as defined in section 12.3(a)),
whether or not it is top- heavy as a single plan, unless the aggregation group
of which it is a part is top-heavy in such Plan Year.
The "Determination Date" is the date for determining the applicability of this
Article 12 in any Plan Year and is the last day of the preceding Plan Year.
12.2 Key Employees. For purposes of this Article 12, the term "Key
Employee" means any Employee or former Employee (and the Beneficiary of such an
Employee) who at any time during a Plan Year or any of the four preceding Plan
Years is:
(a) an officer of the Company or its Affiliates whose Compensation
during the relevant Plan Year exceeded 150 percent of the
dollar limitation under Code section 415(c)(1)(A); provided,
however, that no more than the lesser of 50 Employees, or the
greater of three Employees or 10 percent of all Employees are
to be treated as officers;
(b) one of the 10 Employees having Compensation for the relevant
Plan Year in excess of the dollar limitation in effect under
Code section 415(c)(1)(A) and owning the largest interests in
the Company or an Affiliate; provided, however, that if 2
Employees have the same interest in the Company or Affiliate,
then the Employee
-XII.1-
<PAGE> 58
with the greater Compensation shall be treated as having the
larger interest;
(c) a 5 percent owner of the Company or an Affiliate; or
(d) a 1 percent owner of the Company or an Affiliate having
Compensation for the relevant Plan Year of more than $150,000.
An Employee is considered to be a "5 percent owner" if the
Employee owns (or is considered as owning within the meaning
of Code section 318) more than 5 percent of the outstanding
stock of the Company or an Affiliate or stock possessing more
than 5 percent of the total combined voting power of all of
the Company or Affiliates' stock. For purposes of this
paragraph, "stock" shall also mean the appropriate ownership
interest of any Employer or Affiliate which is not a
corporation. The same rules apply to determine whether an
Employee is a 1 percent owner.
If an Employee who has not had a Separation from Service ceases to be a Key
Employee, such Employee's Account balance shall be disregarded under the
top-heavy plan computation for any Plan Year following the last Plan Year for
which he was treated as a Key Employee. For Plan Years beginning after 1984,
the account balances and accrued benefits of any Employee or former Employee,
who has not performed services for the Company or an Affiliate at any time
during the 5 -year period ending on the Determination Date, will not be taken
into account to determine whether the Plan or aggregation group is top-heavy.
12.3 Top-Heavy Group. For purposes of determining whether the Plan is
part of a top-heavy group, the following rules shall apply:
(a) Aggregation Group. All plans maintained by the Company or an
Affiliate are aggregated to determine whether the plans, as a
group, are top-heavy. The aggregation group shall include any
plan which covers a Key Employee and any other plan which
enables a plan
-XII.2-
<PAGE> 59
covering a Key Employee to meet the requirements of Code
section 401(a)(4) or 410.
(b) Top-Heavy Group. An aggregation group is a top-heavy group
if, as of the Determination Date, the sum of the account
balances of Key Employees under all defined contribution plans
included in the group and the present value of the accumulated
accrued benefits for Key Employees under all defined benefit
plans in the group exceeds 60 percent of the present value of
a similar sum determined for all Employees and their
Beneficiaries under all such plans in the group. When
aggregating plans under this section, the value of account
balances and accrued benefits will be calculated with
reference to the respective determination dates (of the plans
in the aggregation group) that fall within the same calendar
year.
In any Plan Year, in testing for top-heaviness under this Article 12, the
Company may in its discretion take into account accumulated accrued benefits
and account balances in any other plan maintained by it or an Affiliate, so
long as such expanded aggregation group continues to meet the requirements of
Code sections 401(a)(4) and 410.
12.4 Additional Rules. In determining the present value of the
accrued benefits under a defined benefit plan and the sum of the account
balances under a defined contribution plan, Employer contributions and voluntary
Employee contributions shall be taken into account and any rollover contribution
or similar transaction initiated by the Employee and made after December 31,
1983 which results in a transfer to this Plan shall not be taken into account,
except to the extent required by Code section 416 and the regulations
thereunder. To the extent required by Code section 416(g)(3), the present value
of the accrued benefit in a defined benefit plan or the account balance in a
defined contribution plan will include any amount distributed to an Employee and
Beneficiary within the 5 year period ending on the Determination Date.
-XII.3-
<PAGE> 60
12.5 Ceiling on Includible Compensation. If this Plan is determined
to be top-heavy in any Plan Year, then in no event shall Compensation in excess
of $200,000, adjusted for increases in the cost-of-living pursuant to Code
section 416(d)(2), be taken in account under the Plan for such Plan Year.
12.6 Code Section 415(h) Adjustment. If this Plan is determined to be
top-heavy in any Plan Year, then the combined limits of Code section 415(e) and
section 4.6(c) of the Plan shall be applied in accordance with Code section
416(h)(1) by substituting "1.0" for "1.25" in computing the defined benefit
fraction and the defined contribution fraction under Plan section 4.6(c) and
paragraphs 2(B) and 3(B) of Code section 415(e).
12.7 Minimum Contribution Requirement.
(a) If the Plan is part of a top-heavy group in any Plan Year,
then Employees covered only by a defined contribution plan of
an Employer shall receive the defined contribution minimum
described in subsection 12.7(b). Employees covered by both
defined contribution and defined benefit plans of an Employer
shall receive both the defined contribution minimum described
in subsection 12.7(b) and the defined benefit minimum as
described in the defined benefit plan in which that Employee
participates, provided however, that in determining whether
the defined benefit minimum requirement has been met, the
benefits provided to each Employee under all the employers'
defined benefit plans shall be aggregated.
(b) If this Plan is determined to be top-heavy in any Plan Year,
then the Employer's contribution, represented as a percentage
of Compensation for the Plan Year, allocated to the Account of
each Participant, who is not a Key Employee and who is an
Employee on the last day of the Plan Year, shall not be less
than (i) 3% of Total Compensation, or, if less, (ii) the
highest percentage of Total Compensation for the Plan Year
represented by the Employer contribution for the Plan
-XII.4-
<PAGE> 61
Year allocated to any Key Employee. Compliance with this
subsection shall be determined by aggregating the allocations
of all Employer contributions made to the accounts of a
Participant for the Plan Year under all defined contribution
plans of the employer. For this purpose, salary reduction
contributions made at the election of the Participant to the
GFC Financial Corporation Capital Accumulation Plan or similar
plan of any Plan Year beginning before 1985 shall be
disregarded, but such contributions for all subsequent Plan
Years shall be taken into account.
-XII.5-
<PAGE> 62
Article 13. Miscellaneous
13.1 Nonguarantee of Employment. Nothing contained in this Plan shall
be construed as a contract of employment between the Employer and any Employee,
or as a right of any Employee to be continued in the employment of the Employer,
or as a limitation of the right of the Employer to discharge any of its
Employees, with or without cause.
13.2 Rights to Trust Assets. No Employee, Participant or Beneficiary
shall have any right to, or interest in, any assets of the Trust Fund at any
time, including upon termination of his or her employment or otherwise, except
as provided from time to time under the Plan, and then only to the extent of the
benefits properly payable under the Plan to a Participant or Beneficiary out of
the assets of the Trust Fund. All payments of benefits as provided for in the
Plan shall be made solely out of the assets of the Trust Fund to the extent
sufficient, and none of the Fiduciaries or Employers shall be liable therefor in
any manner.
13.3 Nonforfeitability of Benefits. Subject only to the specific
provisions of the Plan, nothing shall be deemed to divest a Participant of his
or her right to the nonforfeitable benefit to which he or she become entitled in
accordance with the terms of the Plan.
13.4 No Examination of Employer. Neither this Plan nor any action
taken thereunder shall be construed as giving any person the right to an
accounting or to examine the books or affairs of the Employer.
13.5 Investment Risk. The Participants and their Beneficiaries shall
assume all risks in connection with any decrease in the value of any assets or
funds which may be invested or reinvested in the Trust Fund which supports this
Plan.
-XIII.1-
<PAGE> 63
13.6 Non-Alienation. No benefit payable at any time under the Plan
shall be subject to the debts or liabilities of a Participant or his
Beneficiary. Any attempt to alienate, sell, transfer, assign, pledge, or
otherwise encumber any such benefit, whether presently or thereafter payable,
shall be void. No benefit under the Plan shall be subject in any manner to
alienation, sale, transfer, assignment, pledge, attachment, garnishment, or
encumbrance of any kind, except that a judicial order pertaining to domestic
relations (which order does not alter the amount, timing or form of a benefit,
other than to have it commence as soon as practicable and legally permissible)
shall be honored by the Plan if the Committee determines that such order is a
qualified domestic relations order, as defined in Code section 414(p). The
Committee shall establish reasonable procedures consistent with the requirements
of Code section 414(p) to determine the qualified status of domestic relations
orders and to administer distributions under such qualified orders. Such
procedures shall provide for the notification of the Participant and any
alternate payee of the receipt of domestic relations orders and the Plan's
procedures for determining the qualified status of such orders and shall provide
for the segregation in a separate Account in the Plan of any amount which would
have been payable to an alternate payee during the period of such determination
if the order had already been found to be qualified. Upon determination that a
domestic relations order is qualified, the Committee shall, in accordance with
the terms of the order, segregate the interest assigned to each alternate payee
in a separate Account for his benefit pending the payment of benefits from such
Account pursuant to the order, and shall treat each alternate payee as a
Beneficiary with respect to any Account maintained for him under the Plan.
Treatment as a Beneficiary means that an alternate payee shall not have the
rights of a Participant unless such rights are also available to a Beneficiary
who has not himself been a Participant or an alternate payee under the Plan. To
the extent consistent with Code section 414(p)(10) and the terms of a qualified
domestic relations order, amounts assigned to an alternate payee under such an
order shall be paid out immediately to the alternate payee rather than held in
the Trust Fund and
-XIII.2-
<PAGE> 64
such payment shall not violate any rule of the regarding the timing of benefit
payments.
13.7 Severability. In the event any provision of this Plan shall be
held illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining parts of this Plan, and it shall be construed and enforced
as if such illegal or invalid provision had never been inserted herein.
13.8 Service of Legal Process. The members of the Committee and the
Secretary of the Company are hereby designated agent of the Plan for the purpose
of receiving service of summons, subpoena or other legal process.
13.9 Headings of Articles and Sections. The headings of sections and
subsections are included solely for convenience of reference, and if there is
any conflict between such headings and the text of the Plan, the text shall
control.
13.10 Applicable Law. The Plan and all rights hereunder shall be
governed, construed and administered in accordance with the laws of the State of
Arizona with the exception that any Trust Agreement which may constitute a part
of the Plan shall be construed and enforced in all respects under and by the
laws of the State in which the Trustee thereunder is located.
-XIII.3-
<PAGE> 65
FIRST AMENDMENT TO THE
GFC FINANCIAL CORPORATION
EMPLOYEES' STOCK OWNERSHIP PLAN
WHEREAS, the GFC Financial Corporation Employees' Stock
Ownership Plan (hereinafter called the "Plan") became effective as of March
18, 1992; and
WHEREAS, under Article 10 of the Plan, GFC Financial
Corporation (hereinafter called the "Company") has reserved the right to amend
the Plan in whole or in part at any time and from time to time, subject to
certain restrictions set forth in the Plan; and
WHEREAS, pursuant to Section 9.1 of the Plan the Board of
Directors of the Company has delegated the authority to the Company's Chief
Executive Officer to amend the Plan provisions governing the procedures for the
voting of shares of stock of the Company held by the Plan or its related Trust,
NOW THEREFORE, the Chief Executive Officer deems it advisable
to amend the Plan in the manner hereinafter set forth below and, hereby adopts
this First Amendment on behalf of the Company as follows:
In order to amend section 6.5 of the Plan, pages VI-2 through
VI-3 of the existing Plan are removed and replaced by the attached replacement
pages VI-2 through VI-5, which are incorporated herein by this reference.
The terms used in this First Amendment which are defined in
the Plan shall have the same meaning given to such terms in the Plan.
Except as modified by this First Amendment, the Plan shall
continue in full force and effect and the Plan and all amendments
-1-
<PAGE> 66
thereto shall be read, taken and construed as one and the same document.
Executed at Phoenix, Arizona as of this ____ day of March,
1993 to be effective as of January 1, 1993.
GFC FINANCIAL CORPORATION
/S/ S. EICHENFIELD
By__________________________________
Its: Chief Executive Officer
The "Company"
-2-
<PAGE> 67
GFC FINANCIAL CORPORATION
EMPLOYEES' STOCK OWNERSHIP PLAN
UCA 1992 AND OBRA 1993
AMENDMENTS
WHEREAS, the GFC Financial Corporation Employees' Stock
Ownership Plan (hereinafter called the "Plan") became effective as of March
18, 1992; and
WHEREAS, under Article 10 of the Plan, GFC Financial
Corporation (hereinafter called the "Company") has reserved the right to amend
the Plan in whole or in part at any time and from time to time, subject to
certain restrictions set forth in the Plan; and
WHEREAS, pursuant to Section 9.1 of the Plan the Board of
Directors of the Company has delegated the authority to the Company's Chief
Executive Officer and the Committee appointed pursuant to the term of the Plan
to amend the Plan to maintain its qualified status under the Internal Revenue
Code,
NOW THEREFORE, the Chief Executive Officer and the Committee
deem it advisable to amend the Plan in the manner hereinafter set forth:
PART I. In order to comply with the requirements of Internal Revenue Code
Section 401(a)(31), the Plan is hereby amended by the adoption of the following
IRS Model Amendment under Rev. Proc. 93-12, effective as of January 1, 1993:
"Article 14. Direct Rollovers.
Section 14.1. This Article applies to distributions made on
or after January 1, 1993. Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a Distributee's election under this
Article, a Distributee may elect, at the time and in the manner prescribed by
the Plan Administrator, to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement Plan specified by the
Distributee in a Direct Rollover.
Section 14.2. Definitions.
(a) "Eligible Rollover Distribution": An Eligible Rollover
Distribution is any distribution of all or any portion of the balance to the
credit of the Distributee, except that an Eligible Rollover Distribution does
not include: any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or
life expectancy) of the Distributee or the joint lives (or joint life
expectancies) of the Distributee and the Distributee's designated beneficiary,
or for a specified period of ten years or more; any distribution to the extent
such distribution is required under
<PAGE> 68
section 401(a)(9) of the Code; and the portion of any distribution that is not
includible in gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
(b) "Eligible Retirement Plan": An Eligible Retirement Plan
is an individual retirement account described in section 408(a) of the Code, an
individual retirement annuity described in section 408(b) of the Code, an
annuity plan described in section 403(a) of the Code, or a qualified trust
described in section 401(a) of the Code, that accepts the Distributee's
Eligible Rollover Distribution. However, in the case of an Eligible Rollover
Distribution to the surviving spouse, an Eligible Retirement Plan is an
individual retirement account or individual retirement annuity.
(c) "Distributee": A Distributee includes an employee or
former employee. In addition, the employee's or former employee's surviving
spouse and the employee's or former employee's spouse or former spouse who is
the alternate payee under a qualified domestic relations order, as defined in
section 414(p) of the Code, are distributees with regard to the interest of the
spouse or former spouse.
(d) "Direct Rollover": A Direct Rollover is a payment by the
Plan to the Eligible Retirement Plan specified by the Distributee."
PART II. In order to comply with the requirements of Internal Revenue Code
Sections 411(a)(11) and 417, the Plan is further hereby amended by the adoption
of the following IRS Model Amendment under Rev. Proc. 93-47 effective as of
January 1, 1993:
"Section 14.3. Waiver of Thirty Day Notice.
If a distribution is one to which sections 401(a)(11)
and 417 of the Code do not apply, such distribution may commence less than 30
days after the notice required under Regulations Section 1.411-11(c) is given,
provided that:
(1) the Plan Administrator clearly informs the
Participant that the Participant has a right
to a period of at least 30 days after
receiving the notice to consider the decision
of whether or not to elect a distribution
(and, if applicable, a particular
distribution option), and
(2) the Participant, after receiving the notice,
affirmatively elects a distribution."
PART III. In order to comply with the requirements of Internal Revenue Code
Section 401(a)(17), the Plan is hereby amended by the addition of the following
IRS Model Amendment under Rev. Proc. 94-13 effective as of January 1, 1994:
<PAGE> 69
"Article 15. Limitations on Pensionable Compensation.
In addition to other applicable limitations set forth in the
Plan, and notwithstanding any other provision of the Plan to the contrary, for
Plan Years beginning on or after January 1, 1994, the annual Compensation of
each employee taken into account under the Plan shall not exceed the OBRA '93
annual compensation limit. The OBRA '93 annual compensation limit is $150,000,
as adjusted by the Commissioner for increases in the cost of living in
accordance with Section 401(a)(17)(B) of the Internal Revenue Code. The
cost-of-living adjustment in effect for a calendar year applies to any period,
not exceeding 12 months, over which Compensation is determined (determination
period) beginning in such calendar year. If a determination period consists of
fewer than 12 months, the OBRA '93 annual compensation limit will be multiplied
by a fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any
reference in this plan to the limitation under Section 401(a)(17) of the Code
shall mean the OBRA '93 annual compensation limit set forth in this provision.
If Compensation for any prior determination period is taken
into account in determining an employee's benefits accruing in the current plan
year, the Compensation for that prior determination period is subject to the
OBRA '93 annual compensation limit in effect for that prior determination
period. For this purpose, for determination periods beginning before the first
day of the first Plan Year beginning on or after January 1, 1994, the OBRA '93
annual compensation limit is $150,000."
Dated this 28th day of December, 1994.
GFC Financial Corporation
/S/ SAMUEL L. EICHENFIELD
_______________________________________
Samuel L. Eichenfield,
Chief Executive Officer
/S/ DE ANN CLARK
_______________________________________
De Ann Clark, Committee Member
/S/ ROBERT M. KORTE
_______________________________________
Robert M. Korte, Committee Member
/S/ BRUNO A. MARSZOWSKI
_______________________________________
Bruno A. Marszowski, Committee Member
<PAGE> 70
GFC FINANCIAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
ADOPTION AGREEMENT
This Adoption Agreement is made as of the date last set forth
below between the GFC Financial Corporation Employee Stock Ownership Plan
established as of March 18, 1992 by GFC Financial Corporation (hereinafter the
"Plan") and Greyhound Financial Corporation (Employer) set forth below.
RECITALS
WHEREAS, the Plan has been created to benefit certain
Employees who are actively employed by GFC Financial Corporation and certain of
its Affiliates; and
WHEREAS, Employer, as an Affiliate, wishes its Employees to
have the opportunity to participate in the Plan, effective as of the
Commencement Date, set forth below;
NOW, THEREFORE, in consideration of the agreements hereinafter
recited and made, and for other good and valuable considerations, the receipt
and sufficiency of which are by the parties hereby acknowledged, the Plan, by
its Committee, and Employer agree as follows:
AGREEMENT
1. Subject to the approval of the Chief Executive
Officer of Greyhound Financial Corporation and consistent with provisions of
the Plan, ERISA, and other applicable law, Employer shall participate in the
Plan commencing on March 18, 1992 (hereinafter the "Commencement Date").
2. For purposes of the Plan, the term Eligible Employee
shall be as provided in the Plan.
3. For the purposes of the Plan, the term Compensation
shall be as provided in the Plan.
<PAGE> 71
4. At its option, Employer shall make timely
contributions to the Trustee for the Accounts of its Eligible Employees who
participate in the Plan at such times and in such amounts provided in the Plan
and as directed by the Committee. The amount of the Employer's monthly
contribution to the Employer Contribution Account of an Eligible Employee shall
be equal to 100% of the monthly contribution to such Employee's Salary
Reduction Contribution Account subject to a maximum of 3%.
5. By execution of this Adoption Agreement, Employer
agrees to be bound by all of the terms and conditions of the Plan and Trust
which, by this reference are made a part hereof as if set forth in their
entirety herein. The terms used in this Adoption Agreement shall have the same
meaning as set forth in the Plan, unless expressly otherwise provided herein.
Signed this 6th day of May, 1992 by:
Greyhound Financial Corporation
By /s/ S. EICHENFIELD
_______________________________
Chief Executive Officer
GFC Financial Corporation Employee
Stock Ownership Plan
By /s/ ROBERT M. KORTE
_______________________________
Committee Chairman
-2-
<PAGE> 72
GFC FINANCIAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
ADOPTION AGREEMENT
This Adoption Agreement is made as of the date last set forth
below between the GFC Financial Corporation Employee Stock Ownership Plan
established as of March 18, 1992 by GFC Financial Corporation (hereinafter the
"Plan") and Verex Assurance, Inc. (Employer) set forth below.
RECITALS
WHEREAS, the Plan has been created to benefit certain
Employees who are actively employed by GFC Financial Corporation and certain of
its Affiliates; and
WHEREAS, Employer, as an Affiliate, wishes its Employees to
have the opportunity to participate in the Plan, effective as of the
Commencement Date, set forth below;
NOW, THEREFORE, in consideration of the agreements hereinafter
recited and made, and for other good and valuable considerations, the receipt
and sufficiency of which are by the parties hereby acknowledged, the Plan, by
its Committee, and Employer agree as follows:
AGREEMENT
1. Subject to the approval of the Chief Executive
Officer of Greyhound Financial Corporation and consistent with provisions of
the Plan, ERISA, and other applicable law, Employer shall participate in the
Plan commencing on ______________, 1992 (hereinafter the "Commencement Date").
2. For purposes of the Plan, the term Eligible Employee
shall be as provided in the Plan.
3. For the purposes of the Plan, the term Compensation
shall be as provided in the Plan.
<PAGE> 73
4. At its option, Employer shall make timely
contributions to the Trustee for the Accounts of its Eligible Employees who
participate in the Plan at such times and in such amounts provided in the Plan
and as directed by the Committee. The amount of the Employer's monthly
contribution to the Employer Contribution Account of an Eligible Employee shall
be equal to 100% of the monthly contribution to such Employee's Salary
Reduction Contribution Account subject to a maximum of 3%.
5. By execution of this Adoption Agreement, Employer
agrees to be bound by all of the terms and conditions of the Plan and Trust
which, by this reference are made a part hereof as if set forth in their
entirety herein. The terms used in this Adoption Agreement shall have the same
meaning as set forth in the Plan, unless expressly otherwise provided herein.
Signed this ___ day of _________, 1992 by:
Verex Assurance, Inc
By /s/ S. EICHENFIELD
_______________________________
Chief Executive Officer
GFC Financial Corporation Employee
Stock Ownership Plan
By /s/
_______________________________
Committee Chairman
2
<PAGE> 74
GFC FINANCIAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
ADOPTION AGREEMENT
This Agreement adopting the GFC Financial Corporation Employee
Stock Ownership Plan established as of March 18, 1992 (the "Plan") is made by
Greyhound Financial Capital Corporation (the "Employer") and approved by GFC
Financial Corporation as of the date set forth below.
RECITALS
WHEREAS, the Plan has been created to benefit certain
Employees who are actively employed by GFCFC and certain of its Affiliates; and
WHEREAS, Employer, as an Affiliate, wishes its Employees to
have the opportunity to participate in the Plan, effective as of the
Commencement Date, set forth below;
NOW, THEREFORE, in consideration of the agreements hereinafter
recited and made, and for other good and valuable considerations, the receipt
and sufficiency of which are by the parties hereby acknowledged, the Plan, by
its Committee, GFCFC and Employer agree as follows:
AGREEMENT
1. Subject to the approval of the Chief Executive
Officer of Greyhound Financial Capital Corporation and consistent with
provisions of the Plan, ERISA, and other applicable law, Employer shall
participate in the Plan commencing on February 1, 1993 (hereinafter the
"Commencement Date").
2. For purposes of the Plan, the term Eligible Employee
shall be as provided in the Plan, provided that the service of any Employee of
the Employer who is an "GFC Employee" within the meaning of Schedule 2.1 of the
Stock Purchase Agreement among U.S. Bancorp, U.S. Bancorp Financial, Inc., and
Greyhound Financial Corporation shall include eligibility service prior to
January 14, 1993 with U.S. Bancorp Financial, Inc. and with any entity for
<PAGE> 75
which eligibility service is credited under the U.S. Bancorp Employee
Investment Plan (the "Bancorp Plan") as adopted for employees of U.S. Bancorp
Financial, Inc..
3. For the purposes of the Plan, the term Compensation
shall be as provided in the Plan.
4. The Employer may make timely contributions to the
Trustee for the Accounts of its Eligible Employees who participate in the Plan
at such times and in such amounts as are provided in the Plan and as are
directed by the Committee. The amount of the Employer's monthly contribution
to the Employer Contribution Account of an Eligible Employee shall be equal to
100% of the monthly contribution to such Employee's Salary Reduction
Contribution Account under the GFC Financial Corporation Capital Accumulation
Plan, subject to a maximum of 3% of Compensation.
5. By execution of this Adoption Agreement, Employer
agrees to be bound by all of the terms and conditions of the Plan and Trust
which, by this reference are made a part hereof as if set forth in their
entirety herein. The terms used in this Adoption Agreement shall have the same
meaning as set forth in the Plan, unless expressly otherwise provided herein.
Signed this 1st day of February, 1993 by:
GFC Financial Corporation
By /s/ S. EICHENFIELD
____________________________________
Chief Executive Officer
Greyhound Financial Capital Corporation
By /s/ S. EICHENFIELD
____________________________________
Chief Executive Officer
GFC Financial Corporation Employee
Stock Ownership Plan
By /s/
____________________________________
Committee Chairman
-2-
<PAGE> 76
GFC FINANCIAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
ADOPTION AGREEMENT
This Agreement adopting the GFC Financial Corporation Employee
Stock Ownership Plan established as of March 18, 1992 (the "Plan") is made by
GFC Portfolio Services, Inc. (the "Employer") and approved by GFC Financial
Corporation ("GFCFC") as of the date set forth below.
RECITALS
WHEREAS, the Plan has been created to benefit certain
Employees who are actively employed by GFCFC and certain of its Affiliates; and
WHEREAS, Employer, as an Affiliate, wishes its Employees to
have the opportunity to participate in the Plan, effective as of the
Commencement Date, set forth below;
NOW, THEREFORE, in consideration of the agreements hereinafter
recited and made, and for other good and valuable considerations, the receipt
and sufficiency of which are by the parties hereby acknowledged, the Plan, by
its Committee, GFCFC and Employer agree as follows:
AGREEMENT
1. Subject to the approval of the Chief Executive
Officer of GFC Portfolio Services, Inc. and consistent with provisions of the
Plan, ERISA, and other applicable law, Employer shall participate in the Plan
commencing on June 1, 1993 (hereinafter the "Commencement Date").
2. For purposes of the Plan, the term Eligible Employee
shall be as provided in the Plan.
3. For the purposes of the Plan, the term Compensation
shall be as provided in the
<PAGE> 77
Plan.
4. The Employer make timely contributions to the Trustee
for the Accounts of its Eligible Employees who participate in the Plan at such
times and in such amounts as are provided in the Plan and as are directed by
the Committee. The amount of the Employer's monthly contribution to the
Employer Contribution Account of an Eligible Employee shall be equal to 100% of
the monthly contribution to such Employee's Salary Reduction Contribution
Account under the GFC Financial Corporation Capital Accumulation Plan, subject
to a maximum of 3% of Compensation.
5. By execution of this Adoption Agreement, Employer
agrees to be bound by all of the terms and conditions of the Plan and Trust
which, by this reference are made a part hereof as if set forth in their
entirety herein. The terms used in this Adoption Agreement shall have the same
meaning as set forth in the Plan, unless expressly otherwise provided herein.
Signed this 18th day of May, 1993 by:
GFC Financial Corporation
By /s/ S. EICHENFIELD
_________________________________
Chief Executive Officer
GFC Portfolio Services, Inc.
By /s/ S. EICHENFIELD
_________________________________
Chief Executive Officer
GFC Financial Corporation Employee
Stock Ownership Plan
By /s/
_________________________________
Committee Chairman
<PAGE> 78
GFC FINANCIAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
ADOPTION AGREEMENT
This Agreement adopting the GFC Financial Corporation Employee
Stock Ownership Plan established as of March 18, 1992 (the "Plan") is made by
TriCon Capital Corporation (hereinafter the "Employer") and approved by GFC
Financial Corporation (hereinafter "GFCFC") as of the date last set forth
below.
RECITALS
WHEREAS, the Plan has been created to benefit certain
Employees who are actively employed by GFC Financial Corporation and certain of
its Affiliates; and
WHEREAS, Employer, as an Affiliate, wishes its Employees to
have the opportunity to participate in the Plan, effective as of the
Commencement Date, set forth below;
WHEREAS, GFCFC, has approved certain modifications of the
Plan, as set forth below, for the benefit of the Employees of the Employer;
NOW, THEREFORE, in consideration of the agreements hereinafter
recited and made, and for other good and valuable consideration, the receipt
and sufficiency of which are by the parties hereby acknowledged, the Plan, by
its Committee, GFCFC, and the Employer agree as follows:
AGREEMENT
1. Subject to the approval of the Chairman of TriCon
Capital Corporation, consistent with provisions of the Plan, as amended herein
with the approval of GFC Financial Corporation, and consistent with ERISA, and
other applicable law, the Employer shall participate in the Plan commencing on
May 1, 1994 (hereinafter the "Commencement Date").
<PAGE> 79
2. For purposes of the Plan, the term Eligible Employee
shall be as provided in the Plan, provided that the service of any Employee of
the Employer who is a "Transferred Employee" within the meaning of the Asset
Purchase Agreement between Bell Atlantic TriCon Leasing Corporation and the
Employer shall include eligibility service prior to May 1, 1994 with Bell
Atlantic TriCon Leasing Corporation and with any affiliate of Bell Atlantic
TriCon Leasing Corporation which entitled the Transferred Employee to service
credit under the April 20, 1990 Revisions of the Bell Atlantic Savings Plan for
Salaried Employees as amended and restated effective as of January 1, 1990,
except as otherwise noted (hereinafter the "Bell Atlantic Plan").
3. For the purposes of the Plan, the term Compensation
shall be as provided in the salary definition and Appendix II under the Bell
Atlantic Plan.
4. The Employer shall make Basic Matching Contributions
to the Trustee for the Accounts of its Eligible Employees who participate in
the Plan in the percentages per payroll period provided in Section 5(c) and
Appendix III under the Bell Atlantic Plan, at such times as directed by the
Committee.
5. By execution of this Adoption Agreement, Employer
agrees to be bound by all of the terms and conditions of the Plan and Trust
which, by this reference are made a part hereof as if set forth in their
entirety herein, as amended as provided herein. The terms used in this
Adoption Agreement shall have the same meaning as set forth in the Plan, unless
expressly otherwise provided herein.
Signed this 30th day of April, 1994 by:
GFC Financial Corporation
By /s/ S. EICHENFIELD
__________________________________
Chief Executive Officer
-2-
<PAGE> 80
TriCon Capital Corporation
By /s/ S. EICHENFIELD
__________________________________
Chairman
GFC Financial Corporation Employee
Stock Ownership Plan
By /s/
__________________________________
Committee Chairman
-3-
<PAGE> 81
GFC FINANCIAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
ADOPTION AGREEMENT
This Agreement adopting the GFC Financial Corporation Employee
Stock Ownership Plan established as of March 18, 1992 (the "Plan") is made by
Ambassador Factors Corporation (hereinafter the "Employer") and approved by GFC
Financial Corporation (hereinafter "GFCFC") as of the date last set forth
below.
RECITALS
WHEREAS, the Plan has been created to benefit certain
Employees who are actively employed by GFC Financial Corporation and certain of
its Affiliates; and
WHEREAS, Employer, as an Affiliate, wishes its Employees to
have the opportunity to participate in the Plan, effective as of the
Commencement Date, set forth below;
NOW, THEREFORE, in consideration of the agreements hereinafter
recited and made, and for other good and valuable consideration, the receipt
and sufficiency of which are by the parties hereby acknowledged, the Plan, by
its Committee, GFCFC, and the Employer agree as follows:
AGREEMENT
1. Subject to the approval of the Chairman of Ambassador
Factors Corporation and consistent with ERISA, and other applicable law, the
Employer shall participate in the Plan commencing on February 14, 1994
(hereinafter the "Commencement Date").
2. For purposes of the Plan, the term Eligible Employee
shall be as provided in the Plan, provided that the service of any Employee of
the Employer who is an "Employee" within the meaning of Section 5.10(b) of the
Stock Purchase Agreement among GFC Financial Corporation, Greyhound Financial
Corporation and Fleet Financial Group, Inc. shall include eligibility service
prior to February 14, 1994 with Fleet Factors Corp. and with any entity for
<PAGE> 82
which eligibility service is credited under the Fleet Financial Group, Inc.
Savings Plan (the "Fleet Plan") as adopted for employees of Fleet Factors Corp.
3. For the purposes of the Plan, the term Compensation
shall be as provided in the Plan.
4. The Employer may make contributions to the Trustee
for the Accounts of its Eligible Employees who participate in the Plan at such
times and in such amounts as are provided in the Plan and as are directed by
the Committee. The amount of the Employer's monthly contribution to the
Employer Contribution Account of an Eligible Employee shall be equal to 100% of
the monthly contribution to such Employee's Salary Reduction Account under the
GFCFC Financial Corporation Capital Accumulation Plan, subject to a maximum of
3% of Compensation.
5. By execution of this Adoption Agreement, Employer
agrees to be bound by all of the terms and conditions of the Plan and Trust
which, by this reference are made a part hereof as if set forth in their
entirety herein. The terms used in this Adoption Agreement shall have the same
meaning as set forth in the Plan, unless expressly otherwise provided herein.
Signed this 14th day of February, 1994 by:
<TABLE>
<S> <C>
GFC Financial Corporation GFC Financial Corporation Employee
Stock Ownership Plan
By /s/ S. EICHENFIELD By /s/
______________________________ ______________________________
Chief Executive Officer Committee Chairman
Ambassador Factors Corporation
By /s/ S. EICHENFIELD
______________________________
Chairman
</TABLE>
-2-
<PAGE> 83
GFC FINANCIAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
ADOPTION AGREEMENT
This Agreement adopting the GFC Financial Corporation Employee
Stock Ownership Plan established as of March 18, 1992 (the "Plan") is made by
Wisconsin Hotel Operating Corporation (the "Employer") and approved by GFC
Financial Corporation ("GFCFC") as of the date set forth below.
RECITALS
WHEREAS, the Plan has been created to benefit certain
Employees who are actively employed by GFC Financial Corporation and certain of
its Affiliates; and
WHEREAS, Employer, as an Affiliate, wishes its Employees to
have the opportunity to participate in the Plan, effective as of the
Commencement Date, set forth below;
NOW, THEREFORE, in consideration of the agreements hereinafter
recited and made, and for other good and valuable considerations, the receipt
and sufficiency of which are by the parties hereby acknowledged, the Plan, by
its Committee, GFCFC and Employer agree as follows:
AGREEMENT
1. Subject to the approval of the Chief Executive
Officer of Wisconsin Hotel Operating Corporation and consistent with provisions
of the Plan, ERISA, and other applicable law, Employer shall participate in the
Plan commencing on July 16, 1993 (hereinafter the "Commencement Date").
2. For purposes of the Plan, the term Eligible Employee
shall be as provided in the Plan.
3. For the purposes of the Plan, the term Compensation
shall be as provided in the
<PAGE> 84
Plan.
4. The Employer may make timely contributions to the
Trustee for the Accounts of its Eligible Employees who participate in the Plan
at such times and in such amounts as are provided in the Plan and as are
directed by the Committee. The amount of the Employer's monthly contribution
to the Employer Contribution Account of an Eligible Employee shall be equal to
100% of the monthly contribution to such Employee's Salary Reduction
Contribution Account under the GFC Financial Corporation Capital Accumulation
Plan, subject to a maximum of 3% of Compensation.
5. By execution of this Adoption Agreement, Employer
agrees to be bound by all of the terms and conditions of the Plan and Trust
which, by this reference are made a part hereof as if set forth in their
entirety herein. The terms used in this Adoption Agreement shall have the same
meaning as set forth in the Plan, unless expressly otherwise provided herein.
Signed this 16th day of July, 1993 by:
GFC Financial Corporation
By /s/ S. EICHENFIELD
__________________________________
Chief Executive Officer
Wisconsin Hotel Operating Corporation
By /s/ S. EICHENFIELD
__________________________________
Chief Executive Officer
GFC Financial Corporation Employee
Stock Ownership Plan
By /s/
__________________________________
Committee Chairman
-2-
<PAGE> 1
EXHIBIT 10.AA
[EXECUTION COPY]
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT"), dated as of February
3, 1995, between Transamerica Business Credit Corporation, a Delaware
corporation, having its principal place of business at 225 North Michigan
Avenue, Suite 2100, Chicago, Illinois 60601 (the "SELLER"), and FINOVA Capital
Corporation, a Delaware corporation having its principal place of business at
1850 N. Central Avenue, Suite 1159, P.O. Box 2209, Phoenix, Arizona 85002-2209
(the "BUYER").
W I T N E S S E T H :
WHEREAS, the Seller has previously provided financing to the Borrowers
(as hereinafter defined) in the form of loans secured by, among other things,
chattel paper or security interests therein, equipment and accounts receivable,
and is a party to, or otherwise possesses an interest in certain loan and line
of credit agreements, and any and all other security agreements, guarantees,
letters of credit, documents, instruments, and other agreements executed or
furnished in connection with such loan agreements, all of which are identified
in SCHEDULE 1 hereto (all such loans being collectively referred to herein as
"LOANS," and all such agreements, guarantees, letters of credit, documents and
instruments, including such loan and line of credit agreements, as amended,
supplemented or otherwise modified through the date hereof, being collectively
referred to herein as the "LOAN DOCUMENTS"); and
WHEREAS, the Seller desires to sell to the Buyer and the Buyer desires
to purchase from the Seller all of the Seller's right, title and interest in
and to the Loans, and under the Loan Documents, but excluding the Excluded
Liabilities (as hereafter defined) and, with respect to the Seller's Consumer
Rediscount Group (the "CRG"), certain business records concerning the Borrowers
and certain business information and records including, without limitation, the
customer lists and prospect lists of the CRG concerning loans of a type similar
to the Loans with respect to which the CRG has issued a written proposal or
commitment (the "PURCHASED RIGHTS"), upon the terms and conditions set forth
herein.
<PAGE> 2
NOW, THEREFORE in consideration of the promises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Sale, Assignment and Assumption.
(a) Subject to the satisfaction of the conditions in
paragraphs 5 and 6 hereof, on the Closing Date (as hereafter defined), the
Seller will irrevocably sell, transfer, assign and convey to the Buyer, its
successors and assigns, and the Buyer will purchase and receive, all right,
title, and interest of the Seller in and to the Purchased Rights and all
indebtedness owed to the Seller evidenced thereby and all of the Seller's right
to receive any distributions of cash, securities, obligations or other property
of any kind in respect of the Purchased Rights and thereupon the Buyer will
perform in accordance with their terms the Assumed Liabilities, except as such
performance may be prohibited or excused by Law (as hereafter defined).
"ASSUMED LIABILITIES" means all claims, costs, expenses (including reasonable
attorneys' and other professionals' and experts' fees and expenses (including
allocated costs and expenses of internal attorneys, professionals and
experts)), losses, judgments, settlements, damages, taxes, commitments,
liabilities and obligations (collectively, "CLAIMS") of the Seller of any kind
or nature, accrued or contingent, now existing or hereafter arising from or
related to any of the Loans or the Loan Documents, excluding only the Excluded
Liabilities (as hereafter defined), and expressly including any act or omission
of the Seller or any of its agents or employees taken at the direction or
deemed direction of the Buyer in accordance with paragraph 2(a) hereof, but
only to the extent or as a consequence of such direction.
(b) The Purchased Rights do not include any Claim by a
third party asserting any liability or damage relating to any Loan or Purchased
Right which Claim is based on the actual or alleged act or omission (including
any actual or alleged negligence or misconduct or any breach of contract) of
the Seller or any of its agents or employees prior to the Closing Date, but
excluding any act or omission of the Seller or any of its agents or employees
taken at the direction or deemed direction of the Buyer in accordance with
paragraph 2(a) hereof (the "EXCLUDED LIABILITIES").
(c) This sale (i) is, as of the Closing Date, intended to
be a presently effective sale and assignment, (ii) is a sale without recourse
to or warranty by the Seller of any kind whatsoever except as expressly
provided in this Agreement and (iii) shall entitle the Buyer to collect and
receive all payments or other distributions and to exercise and enforce all
rights and remedies in respect of the Purchased Rights from and after the
Closing Date.
-2-
<PAGE> 3
(d) The aggregate purchase price paid to the Seller for the
Purchased Rights shall be (i) 107% of the principal balance of the Loans (net
of the amount of participating interest in the Loans granted to third parties),
which principal balance shall be determined by reference to the Loan Documents
and the books and records maintained by the Seller with respect thereto, plus
(ii) the amount of all unpaid interest accrued on the principal balance of the
Loans since the last scheduled interest payment dates applicable to the Loans,
plus (iii) any amount payable by the Buyer pursuant to paragraph 4(b) hereof
(collectively, the "PURCHASE PRICE"). As a condition to the effectiveness of
this Agreement, the Buyer shall pay within one business day of the date hereof
to the Seller a deposit to be credited toward the Purchase Price in the amount
of $350,000 (the "Deposit").
(e) On the closing date, which shall occur by the fifth
business day following the satisfaction of the conditions to closing specified
in paragraphs 5 and 6 hereof, but in no event later than the latest of (i)
March 15, 1995, (ii) April 15, 1995, if the HSR ACT Consent (as hereafter
defined) is required but has not yet been obtained and (iii) such later date as
the Seller and the Buyer shall agree in writing (the "CLOSING DATE") at the
offices of the Seller at 13760 Noel Road, Dallas, Texas, the Buyer shall pay
the Purchase Price less the amount of the Deposit by wire transfer to the
account of the Seller at:
First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670
Account No. 5260213
ABA No. 071000013
Reference: A. DiMartino
(f) With respect to any Loan (i) with an outstanding
principal balance as of the Closing Date in excess of $10,000,000 that is
prepaid as a result of a third party refinancing during the six-month period
following the Closing Date and (ii) in connection with which the Buyer has used
its reasonable best efforts during such period to remain as the lender (each a
"PREPAID LOAN"), an adjustment shall be made to the Purchase Price in an amount
equal to 7% of the outstanding principal balance of such Prepaid Loan as of the
Closing Date. The amount of the adjustment determined under this paragraph
shall be paid by the Seller to the Buyer on the first business day that is six
months after the Closing Date.
(g) The parties shall make the following post-closing
adjustments to the Purchase Price:
(i) In the event that, within sixty days after the Closing
Date, either party delivers to the other
-3-
<PAGE> 4
party a written notice asserting that the amount of the aggregate
principal balance of the Loans (which amount is used to calculate the
Purchase Price) certified by the Buyer under paragraph 6(c)(xi) hereof
was incorrect on the date thereof, along with a detailed summary of the
facts and calculations supporting the assertion in such notice and a
statement of the correct (in the notifying party's opinion) aggregate
amount of the principal balance of the Loans as of the Closing Date,
then within ten days after the receipt of such notice, the noticed
party shall inform the notifying party whether the noticed party agrees
with the assertion in the notice and the statement of the correct
aggregate amount of the principal balance of the Loans. In the event
that the parties agree, they shall make arrangements with one another
for the prompt transfer of funds between themselves so as to adjust the
Purchase Price based on the correct aggregate amount of the principal
balance of the Loans as of the Closing Date. In the event that the
parties disagree, they shall use their best efforts to negotiate in
good faith a resolution to the disagreement. In the event that the
parties thereafter cannot resolve their disagreement, each shall have
its respective rights and remedies hereunder and under applicable Law.
(ii) Except as provided in subparagraph (i) above, in the
event that any other amounts required to be paid or credited under this
Agreement cannot be precisely determined and confirmed by the parties
by the Closing Date, the parties shall make such determination promptly
following the Closing Date and transfer such amounts as may be required
hereunder.
2. Servicing of the Loans, Conduct of Business.
(a) From the date hereof until the Closing Date, the Seller
shall service and administer the Loans in accordance with its current servicing
standards and practices and the reasonable requests of the Buyer (which shall be
made in writing), if any; provided, however, that the Seller shall be absolved
of its obligation to maintain such standards or practices to the extent the
Buyer so informs the Seller in writing. Further, without the prior written
consent of the Buyer, the Seller shall not (i) except as required by law or by
the terms of any of the Loan Documents, (A) release any collateral from the lien
securing, or (B) compromise or settle any Claims of the Seller with respect to,
any of the Loans, in each case which would have a material adverse effect on the
rights of the Seller with respect to the Loans, (ii) initiate, complete or
otherwise take any action with respect to a foreclosure of any of the collateral
securing any of the Loans,
-4-
<PAGE> 5
except to the extent that, in the Seller's reasonable judgment, such actions
are required as the result of actions taken prior to the date hereof, or (iii)
sell or encumber or contract to sell or encumber any Loan, or any portion
thereof or any interest therein, except in each case to the extent that the
Seller has disclosed its undertaking of such action in writing to the Buyer
prior to the date hereof; and provided, further, however, that, except for
amendments, waivers or modifications (x) currently being negotiated or
documented or (y) that, in the reasonable judgment of the Seller, do not have a
material adverse effect on the rights of the Seller under the applicable Loan
Documents, the Seller shall not amend, waive or modify the Loan Documents
without the Buyer's prior written consent. SCHEDULE 2 hereto contains a list
of all such future actions and pending amendments, waivers and modifications as
of the date hereof. The Seller, as servicer, shall notify the Buyer in the
event that, in the Seller's judgment, an action prohibited under clause (i),
(ii) or (iii) above should be taken to protect the value of any Loan or in the
event that the Seller, as servicer, desires to obtain the Buyer's consent to
any action taken or proposed to be taken by the Seller in connection with the
servicing of the Loans. Within five days after the Buyer's receipt of the
Seller's notification, the Buyer shall direct the Seller whether to take such
action. If written direction is not received by the Seller by the later of (i)
five days after the Buyer's receipt of the Seller's notification and (ii) five
days after the Buyer's receipt of all information reasonably requested by the
Buyer (which request shall be delivered to the Seller within five days after
the Buyer's receipt of the Seller's notice) to enable it to make an informed
decision thereon, the Buyer shall be deemed to have directed the Seller to take
such action as the Seller, in its reasonable judgment, determines is
appropriate (including, without limitation, no action). From and after the
Closing Date, the Seller shall have no obligation for servicing the Loans,
except to the extent otherwise provided herein or agreed in writing by the
parties.
(b) Subject to the foregoing, from and after the date hereof
and through the Closing Date, the Seller shall (i) conduct its business
relationships with respect to any of the Purchased Rights, the Borrowers,
prospective borrowers and the Seller's employees consistent with the current
ordinary course of business practices and standards of the Seller, (ii) not
terminate any of the Seller's employees engaged in connection with the servicing
of the Loans, except for cause or to the extent the Seller reasonably deems such
employees to be unnecessary for the servicing of the Loans, (iii) use reasonable
efforts consistent with the Seller's business judgment to preserve intact the
presently existing business responsible for the origination, retention and
servicing of the Loans or the origination of loans, (iv) not make any loan or
extend any line of credit (with respect to which a commitment to provide
-5-
<PAGE> 6
financing did not exist as of the date hereof) to any of the Borrowers or any
other borrower of a type evidenced by the Loan Documents other than to the
borrowers specified in SCHEDULE 3 hereto (the "EXCLUDED BORROWERS") without the
Buyer's prior written consent, (v) not make any material changes to its
lending, accounting, or tax practices or standards, except in accordance with
generally accepted accounting principles or as required by Law, and (vi) not
increase or agree to increase by more than 5% the compensation or benefits
payable to its employees specified in SCHEDULE 4 hereto (the "DESIGNATED
EMPLOYEES"), except as specified in such schedule, or make or agree to make any
other changes in the terms of their employment, without the Buyer's prior
written consent.
3. The Seller's Employees.
(a) The Buyer may, in its discretion, employ, as employees
of the Buyer or any of its affiliates, with such employment to begin on or after
the Closing Date, up to fifteen of the Designated Employees (the Designated
Employees who are employed by the Buyer or any of its affiliates are hereafter
referred to as the "ENGAGED EMPLOYEES") on terms acceptable to the Buyer and any
such employee. The Engaged Employees shall receive credit for prior service with
the Seller to the same extent recognized by the Seller's pension plan (as
specified in SCHEDULE 4 hereto) for vesting and eligibility purposes under the
Buyer's pension plan, if any, in effect from time to time, but not for accruing
additional benefits thereunder. The Buyer shall have no liability or obligation
under any employment, consulting or severance agreements established by the
Seller. As between the Seller and the Buyer, the Seller shall be liable for all
obligations to its employees, former employees, participants and their
respective dependents and beneficiaries arising under any of the Seller's
employee benefit plans, including, without limitation, any obligations for
salary, bonuses, vacation, pensions, options, retirement and disability or other
benefits or payments, or severance under any plan, policy or contract of the
Seller, for all such persons, whether an Engaged Employee or otherwise, except
with regard to such benefits or obligations of the Buyer or its affiliates to
Engaged Employees accruing after the commencement of their employment with the
Buyer or one of its affiliates. The Seller shall be responsible for any notices
and liabilities arising out of the Worker Adjustment and Retraining Notification
Act or any similar state or local employment Law. The Buyer shall have no
obligation to hire any employees of the Seller and shall have no liability to
the Seller for failure to do so.
(b) Neither the Seller nor the Buyer shall, for a period of
one year after the Closing Date, solicit for employment or otherwise invite
employment applications from any employee of the other party hereto as of the
Closing Date, except that (i)
-6-
<PAGE> 7
the Buyer may solicit for employment the Designated Employees and (ii) either
party may solicit employees of the other party who, at the time of such
solicitation, are no longer employed by such other party. The foregoing shall
not limit or restrict the Buyer's right to confer with the Seller's employees
while conducting its due diligence review, as described in paragraph 6(a)
hereof, or to contact certain of the Seller's employees, as designated by the
Seller in writing, following the Closing Date, in connection with the Seller's
agreement under paragraph 12 hereof.
(c) The Buyer shall be entitled, during its due diligence
review, as described in paragraph 6(a) hereof, to review the personnel files of
an employee of the Seller if, and only if, (i) the employee is a Designated
Employee, (ii) the employee consents in writing (the "CONSENT") to the review of
the employee's personnel file by the Buyer, and (iii) the employee waives in
writing (the "WAIVER") any Claim that such employee may have against the Seller
under any Law relating, in any way, to the review of such employee's personnel
file by the Buyer. Each of the Consent and the Waiver shall be in form and
substance satisfactory to the Seller and the Buyer. Upon confirmation by the
Buyer that the condition specified in paragraph 6(b) hereof has been satisfied,
the Buyer shall be permitted at reasonable times and upon reasonable notice to
the Seller to conduct further employment interviews with Designated Employees at
the Buyer's Dallas office or other locations approved by the Seller.
4. No Competition.
(a) Neither the Seller nor any of its present or future
affiliates shall, for a period of two years beginning on the Closing Date, make
any loans, or otherwise provide financing of the type evidenced by the Loan
Documents, to any person or entity who or which as of the Closing Date is a
borrower (i) under any of the Loan Documents (collectively, the "BORROWERS")
other than the Excluded Borrowers, or (ii) of the Buyer's Rediscount Group
(collectively, the "BUYER'S BORROWERS"). The Buyer shall provide the Seller
with a list of the Buyer's Borrowers before the Closing Date. In the event that
a court of competent jurisdiction finds any provision of paragraph 3(b) or this
paragraph to be unenforceable, the provision shall be deemed to be conformed to
the maximum period and scope permitted by applicable Law.
(b) Until the Closing Date, the Buyer shall neither
solicit any Borrower with respect to the extension of credit nor make or offer
to make any loan or otherwise provide any financing of a type evidenced by the
Loan Documents to any Borrower, except with respect to the Buyer's loan proposal
to C. L. Thaxton & Sons, Inc. In the event the Buyer makes a loan to C. L.
Thaxton & Sons, Inc. by the Closing Date, the Buyer
-7-
<PAGE> 8
shall pay to the Seller, as a component of the Purchase Price, an amount equal
to 7% of the outstanding principal amount of such loan as of the Closing Date.
5. Conditions Precedent to the Seller's Obligations. The
obligation of the Seller to sell and assign the Purchased Rights by the Closing
Date shall be subject to the following conditions:
(a) The Buyer shall have delivered to the Seller each of the
following, in form and substance satisfactory to the Seller;
(i) a certified copy of the resolutions of the board of
directors of the Buyer approving this Agreement and authorizing the
Buyer to execute and deliver this Agreement and the documents and
instruments contemplated hereby and to perform the Buyer's obligations
hereunder and thereunder together with a certificate of incumbency, a
certificate of good standing and other evidence of corporate or
regulatory authority as the Seller or its counsel may reasonably
request;
(ii) copies of all documents evidencing other corporate
action and governmental consents or approvals, or notifications to or
filings with any court or governmental agency, if any, that are
required with respect to this Agreement or the transactions
contemplated hereby including, without limitation, any filing required
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), except that the Buyer may omit any
confidential materials from such copies furnished to the Seller
contained in such filings; and
(iii) a certificate of the Buyer reaffirming as of the
Closing Date its representations and warranties made herein, as if such
representations and warranties were made as of the Closing Date;
(b) the Seller shall have received the amount due to the
Seller under paragraph 1 hereof;
(c) the Buyer shall not have materially breached any
covenants hereunder required to be performed by it through the Closing Date; and
(d) the parties shall have obtained any consent required
pursuant to the HSR Act (the "HSR ACT CONSENT"), or any waiting period imposed
thereby shall have expired, and no stop order or similar injunction directing
that the transaction not
-8-
<PAGE> 9
proceed shall have been entered or asserted by any governmental entity, court
or arbitrator of competent jurisdiction.
6. Conditions Precedent to the Buyer's Obligations. The
obligation of the Buyer to purchase the Purchased Rights by the Closing Date
shall be subject to the following conditions:
(a) the Buyer and its auditors and other agents shall have
been given access for up to five consecutive days (of which no more than three
shall be business days) at the premises of the Seller to complete due diligence,
including, without limitation, (i) interviewing the Designated Employees, (ii)
subject to the prior delivery of the Consents and the Waivers to the Seller,
reviewing the employee personnel files of such employees, (iii) reviewing the
Loan Documents and related books, records, and correspondence and (iv) reviewing
and analyzing the Purchased Rights;
(b) the results of the due diligence referred to in
subparagraph (a) above shall not, in the reasonable judgment of the Buyer,
differ materially and adversely from the information regarding the Purchased
Rights provided to the Buyer on or before the date hereof which results shall be
deemed not to differ materially and adversely unless the Buyer has notified the
Seller to the contrary within seven days of the first date on which the Buyer
has had access to the Seller's premises to conduct due diligence;
(c) the Seller shall have delivered to the Buyer each of the
following, in form and substance satisfactory to the Buyer:
(i) to the extent in the possession of the Seller, originals
or copies of each of the Loan Documents (other than the notes referred
to in the following clause) and, except for privileged or confidential
documents reasonably designated by the Seller and specified in SCHEDULE
5 hereto which schedule shall contain a description of the item
withheld, the names of the author and any addressee, the date thereof,
and a description thereof to enable the Buyer to assess the claim of
privilege or confidentiality but which does not reveal information that
is itself privileged or confidential, supporting business files
(including computerized records and environmental reports and similar
materials) concerning the Loans;
(ii) either the original notes as defined or referred to in
the Loan Documents, endorsed to the Buyer without warranty or recourse
(except as expressly provided herein) or, where such notes are not in
the
-9-
<PAGE> 10
possession of the Seller, lost note affidavits in the form of EXHIBIT A
hereto;
(iii) Notices of Assignment relating to each of the loans
included in the Purchased Rights, in the form of EXHIBIT B hereto
(prepared by the Buyer and acceptable to the Seller), duly executed by
the Seller;
(iv) copies of the most recent tax, judgment and Uniform
Commercial Code search reports obtained by the Seller with respect to
the Borrowers and copies of all UCC-1 financing statements naming the
Seller as secured party, and all related continuation, assignment,
release and termination statements, filed with respect to the Purchased
Rights, in each case to the extent such reports and statements are in
the possession of the Seller;
(v) executed UCC-3 statements assigning the Seller's security
interests (prepared by the Buyer and acceptable to the Seller) plus a
limited power of attorney in the form of EXHIBIT C hereto, authorizing
the Buyer to execute additional UCC statements as may be required in
connection with the Loans and the transactions contemplated hereby;
(vi) a certificate of the Seller reaffirming as of the Closing
Date its representations and warranties made herein, as if such
representations and warranties were made as of the Closing Date;
(vii) a duly executed bill of sale conveying all of the
Seller's right, title and interest in and to the filing cabinets and
other furniture containing any of the Loan Documents or the supporting
business records;
(viii) all items of collateral securing any of the Loans in the
Seller's possession, with, as appropriate, endorsements in blank,
assignments and other documents required to transfer the Seller's
interest in such collateral to the Buyer or the Buyer's permitted
designee;
(ix) a certificate of the Secretary or Assistant Secretary of
the Seller certifying (A) that such individual is the duly elected,
qualified and acting Secretary or Assistant Secretary of the Seller and
has the custody of the corporate records and minutes of the Seller, (B)
the name of the person who has been properly designated, elected and
assigned to the corporate office of the Seller indicated in such
certificate, that such person holds such office as of
-10-
<PAGE> 11
the date of the certificate and that the specimen signature appearing
beside the name of such officer is the true and correct signature of
such officer, and (C) that (I) the Seller is authorized to execute,
deliver and perform its obligations under this Agreement and (II) the
officer specified in such certificate is authorized to execute on
behalf of the Seller this Agreement and any and all ancillary and
supporting documents related to this Agreement;
(x) copies of all documents evidencing other corporate action
and governmental consents or approvals, or notifications to or filings
with any court or governmental agency, if any, that are required with
respect to this Agreement or the transactions contemplated hereby;
(xi) a certificate of a duly authorized officer of the Seller
certifying to the Seller's knowledge after due inquiry, including a
diligent search of the Seller's records relating to the Purchased
Rights (hereafter referred to as "DUE INQUIRY"), the aggregate amount
of the principal balance of the Loans, and that such amount was the
amount used to calculate the Purchase Price under paragraph 1(d)(i)
hereof; and
(xii) Schedules 1 through 13 hereto, which shall be in form and
substance satisfactory to the Buyer in its sole and absolute
discretion.
(d) from the date hereof through the Closing Date, no events
shall have occurred, and no facts or circumstances shall have arisen or been
discovered by the Seller or the Buyer, which would have a material adverse
effect on the Purchased Rights and the Seller shall have represented that, to
its knowledge after Due Inquiry, no such event has occurred and no such facts or
circumstances have arisen;
(e) except as specified in SCHEDULE 6 hereto, from the date
hereof through the Closing Date, the Seller shall not have consented to or
become aware of any change in the identity of any of the Borrowers;
(f) from the date hereof through the Closing Date, the
Seller shall (i) have conducted its business relationships with respect to any
of the Purchased Rights and the Borrowers consistent with its current ordinary
course of business practices and standards and (ii) not have made any changes to
its lending, accounting or tax practices or standards, except in accordance with
generally accepted accounting principles or as required by Law;
-11-
<PAGE> 12
(g) from the date hereof through the Closing Date, the
Seller shall not have terminated its commitment to provide financing under any
of the Loan Documents;
(h) the parties shall have obtained the HSR Act Consent or
any waiting period imposed thereby shall have expired, and no stop order or
similar injunction directing that the transaction not proceed shall have been
entered or asserted by any governmental entity, court or arbitrator of competent
jurisdiction; and
(i) the Seller shall not have materially breached any
covenants hereunder required to be performed by it through the Closing Date.
7. Not an Extension of Credit. This Agreement constitutes a
sale of one hundred (100%) percent of the ownership interest of the Seller in
the Purchased Rights and shall in no way be construed as an extension of credit
by the Buyer to the Seller.
8. Representations and Warranties of the Seller. The Seller
hereby represents and warrants to the Buyer and its successors and permitted
assigns that:
(a) the Seller is the sole legal, record and beneficial
owner of the Purchased Rights, free and clear of all liens, claims, interests,
contractual subordinations and encumbrances of any kind (collectively, "LIENS")
and has made no prior assignment, pledge, or other disposition of the Purchased
Rights to any person or entity, in whole or in part, except in each case as
specified in SCHEDULE 7 hereto;
(b) the Seller is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware
with the requisite power and authority to execute, deliver and perform its
obligations under this Agreement, to consummate the transactions contemplated
herein, and to own the Purchased Rights and to conduct its business as it is
now being conducted;
(c) the Seller is duly qualified or otherwise authorized as
a foreign corporation to conduct the business conducted by it and is in good
standing in each jurisdiction in which qualification or authorization to conduct
its business is required under applicable Law, except jurisdictions where the
failure to be so qualified would not be expected to have a material adverse
effect on the Purchased Rights;
(d) the execution, delivery and consummation by the Seller
of this Agreement have been duly authorized by all necessary action on the part
of the Seller and do not and will
-12-
<PAGE> 13
not (i) require any consent or approval of any affiliates, subsidiaries,
participants or stockholders of the Seller or of any Borrower, except as has
been obtained or will have been obtained by the Closing Date, (ii) violate any
material provision of the charter or by-laws of the Seller or any law, rule,
regulation, order, judgment, injunction, decree, determination or award
(collectively, "LAWS") presently in effect having applicability to the Seller
or (iii) result in a material breach or constitute a material default under any
indenture or loan or credit agreement or other material agreement or instrument
to which the Seller is a party (including the Loan Documents) or by which it is
bound or result in the creation of any Lien on the Purchased Rights;
(e) no authorizations, consents or approvals from, or
notifications to or filings with, any court, governmental agency or other person
or entity are or will be necessary to the valid execution, delivery or
performance by the Seller of this Agreement, including, without limitation, any
Bulk Sales Act or similar notice requirements except for the HSR Act Consent;
(f) this Agreement constitutes the legal, valid and binding
obligation of the Seller, enforceable against the Seller in accordance with its
terms, except as may be limited by bankruptcy, reorganization, receivership,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and by principles of equity and commercial reasonableness regardless
of whether considered in a proceeding in equity or at law;
(g) the documents specified in SCHEDULE 1 hereto constitute
the only material documents which evidence the Loans and the Purchased Rights,
and, except as specified in SCHEDULE 8 hereto, there are no other documents or,
to the Seller's knowledge after discussions with current employees, verbal
agreements which would materially and adversely affect the Purchased Rights or
materially modify the Loans or the Loan Documents;
(h) except as specified in SCHEDULE 9 hereto, none of the
Loans or the Loan Documents have been amended or modified since December 1,
1994;
(i) (A) each of the Loan Documents is legal, valid and
binding and enforceable in accordance with its terms with respect to the Seller
as lender and (B) to the Seller's knowledge, each of the Loan Documents is
legal, valid and enforceable in accordance with its terms with respect to the
Borrowers and the other loan parties, in each case, except as enforcement may be
limited by bankruptcy, insolvency, moratorium, arrangement or other similar laws
of general application applying to creditors, or to principles of equity or
commercial
-13-
<PAGE> 14
reasonableness, regardless of whether enforcement is sought in a proceeding at
law or in equity;
(j) except as specified in SCHEDULE 10 hereto, to the
Seller's knowledge, the collateral securing the Loans is located where it is
purported by the Borrowers to be located under the Loan Documents;
(k) to the Seller's knowledge, upon the execution and
delivery of this Agreement, the Seller will have conveyed to the Buyer a
security interest in all of the collateral securing or purported to secure the
Loans;
(l) to the Seller's knowledge, there are no pending or
threatened proceedings or Claims under Laws relating to the
environment or hazardous waste that affect any collateral securing the Loans;
(m) the Seller is a sophisticated seller with respect to
the Purchased Rights and has adequate information concerning the business and
financial condition of the Borrowers to make an informed decision regarding the
sale of the Purchased Rights, and has independently, and without reliance upon
the Buyer, and based on such information as the Seller has deemed appropriate,
made its own analysis and decision to enter into this Agreement, except that the
Seller has relied upon the representations and warranties of the Buyer contained
in this Agreement;
(n) without implying characterization of the Purchased Rights
hereunder as a "security" within the meaning of any applicable securities laws,
no offer to sell or solicitation of any offer to buy the Purchased Rights has
been made by the Seller in a manner which would violate the registration
requirements of Section 5 of the Securities Act of 1933, as amended, and the
offer, sale and transfer of the Purchased Rights to the Buyer in accordance with
the provisions of this Agreement do not require registration under any Federal
or state securities law;
(o) except as specified in SCHEDULE 11 hereto, to the
Seller's knowledge, there are no payment defaults or other defaults which would
or could reasonably be expected to, individually or in the aggregate, materially
and adversely affect any of the Loans or the Purchased Rights;
(p) all Loans made by the Seller since December 1, 1994
were made in conformity with its lending practices and in its ordinary course of
business as in effect as of such date;
-14-
<PAGE> 15
(q) except as specified in SCHEDULE 12 hereto, no action,
suit, investigation, claim, litigation or proceeding is pending or, to the
Seller's knowledge, threatened, which involves any claim asserted by any
Borrower against the Seller with respect to a Loan;
(r) except as specified in SCHEDULE 13 hereto, there are
no outstanding commitments to make a loan similar to the Loans presently in
effect or likely to be issued by the CRG prior to the Closing Date other than
commitments to the Excluded Borrowers;
(s) to the Seller's knowledge after Due Inquiry, the UCC
financing and other statements to be delivered by the Seller on the Closing Date
under paragraph 6(c)(iv) hereof are all the UCC financing and related statements
filed or in the process of being filed by or on behalf of the Seller or any
prior lender in connection with the Loans other than expired or superseded
statements;
(t) SCHEDULE 4 hereto contains a complete and accurate list
of each Designated Employee's date of hire, the number of years of service of
such employee for purposes of the Seller's pension plan, whether such employee
held continuous service for the Seller's pension plan calculation purposes, and
such employee's current salary and 1994 bonus, if any;
(u) except as specified in SCHEDULE 4 hereto, the Seller
has not granted any increases in salary or overall compensation to any
Designated Employee in excess of 5% of such employee's previous level within one
year preceding the Closing Date; and
(v) no broker, finder, investment banker or other person or
entity is entitled, based on arrangements made by or on behalf of the Seller, to
any brokerage, finder, origination or other similar fee or commission in
connection with the transactions contemplated hereby or with respect to the
Loans.
9. Representations and Warranties of the Buyer. The
Buyerrepresents and warrants to the Seller and its successors and permitted
assigns that:
(a) the Buyer is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware, with all
requisite power and authority to execute, deliver and perform its obligations
under this Agreement and to consummate the transactions contemplated herein;
(b) the execution, delivery and consummation by the Buyer
of this Agreement have been duly authorized by all necessary action on the part
of the Buyer and do not and will not
-15-
<PAGE> 16
(i) require any consent or approval of any affiliates, subsidiaries, parent or
stockholders of the Buyer, except as has been obtained or will have been
obtained by the Closing Date, (ii) violate any material provisions of any Laws
presently in effect having applicability to the Buyer or (iii) result in a
material breach or constitute a material default under any indenture or loan or
credit agreement or other material agreement or instrument to which the Buyer
is a party or by which it is bound;
(c) no authorizations, consents or approvals from, or
notifications to or filings with, any court, governmental agency or other person
or entity are or will be necessary to the valid execution, delivery or
performance by the Buyer of this Agreement except for the HSR Act Consent;
(d) this Agreement constitutes the legal, valid and binding
obligation of the Buyer, enforceable against the Buyer in accordance with its
terms, except as may be limited by bankruptcy, reorganization, receivership,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and by principles of equity and commercial reasonableness regardless
of whether considered in a proceeding in equity or at law;
(e) the Buyer (i) has such knowledge and experience in
financial matters that it is capable of evaluating and has sufficient
information to evaluate the merits and risks of the purchase of the Purchased
Rights, (ii) is knowledgeable concerning the rights and remedies of a lender
under a credit facility, (iii) shall purchase the Purchased Rights on the basis
of its own independent investigation, evaluation, and credit determination and
the representations, warranties and covenants of the Seller contained herein,
(iv) except as expressly set forth in paragraph 8 hereof and the documents and
certificates delivered by the Seller in connection herewith, has not sought,
received, or relied upon any verbal or written representation or warranty or
information or statements from the Seller regarding or relating to the parties
to the Loan Documents, their businesses, operations, or future prospects, or the
consideration that might be paid or distributed in respect of the Loan
Documents, and (v) is aware that the Purchase Price may differ from the amount
ultimately received by the Buyer on account of the Purchased Rights;
(f) the Buyer is an "accredited investor" within the meaning
of Section 2(15) of the Securities Act of 1933; without implying
characterization of the Purchased Rights hereunder as a "security" within the
meaning of any applicable securities laws, the Buyer is not purchasing the
Purchased Rights with a view to resale or distribution in a manner that would
violate applicable securities laws; and
-16-
<PAGE> 17
(g) no broker, finder, investment banker or other person or
entity is entitled, based on arrangements made by or on behalf of the Buyer, to
any brokerage, finder, origination or other similar fee or commission in
connection with the transactions contemplated hereby or with respect to the
Loans other than arrangements for which the Buyer is solely responsible and
hereby indemnifies the Seller.
10. Subsequent Payment or Distribution. In the event tSeller shall
receive or obtain any payment or distribution with respect to the Purchased
Rights after the Closing Date, including cash, securities, obligations, or other
property of any kind, the Seller shall accept and hold such payment or
distribution in trust on behalf of the Buyer and for the benefit of the Buyer as
the Buyer's agent and to deliver the same forthwith to the Buyer in the same
form received, with the endorsement, when necessary or appropriate (which
endorsement shall not thereby render the Seller liable as an accommodation party
under Section 3-414 of the Uniform Commercial Code or otherwise), of the Seller.
In the event the Seller shall receive any documents, instruments, notices, or
correspondence relating to the Purchased Rights after the Closing Date, the
Seller shall promptly forward such materials to the Buyer at its address
specified below.
11. Confidentiality.
(a) The Buyer and the Seller will hold, and will cause each
of their respective directors, officers, employees, agents, counsel and other
representatives (each, a "RELATED PARTY" and collectively, the "RELATED
PARTIES") to hold, in strict confidence, unless compelled to disclose by Law,
all documents and information (oral or written) concerning the other party, the
Loans or the transactions contemplated hereby furnished or disclosed by such
other party or its Related Parties in connection with the transactions
contemplated by this Agreement (except to the extent that such information (i)
is or becomes generally available to the public other than as a result of a
breach of this paragraph or (ii) is or becomes available on a non-confidential
basis from a source other than the other party or its Related Parties provided
that such source was not known by the party receiving such information after due
inquiry, to be prohibited from disclosing such information under a contractual
or other legal obligation), and each party will use such information solely for
the purpose of evaluating or consummating the transactions contemplated hereby
and not release or disclose such information to any other person, except its
officers, directors, employees, agents, counsel or other representatives who
need to know such information in connection with this Agreement and evaluating
the transactions contemplated hereby, all of whom shall be informed of the
confidential nature of such information and directed to treat it confidentially,
and who
-17-
<PAGE> 18
shall agree to be bound by the terms of this paragraph, except that such
restrictions shall not apply to the Buyer with respect to the disclosure of its
ownership of the Purchased Rights or engagement of the Engaged Employees and
the use of such information in connection therewith from and after the Closing
Date. Unless and until the transactions contemplated by this Agreement are
consummated, such confidence shall be maintained to the extent required above,
and such information shall not be used to the detriment of the other party. If
the transactions contemplated by this Agreement are not consummated by the
Closing Date, all information subject to this paragraph 11 (including, without
limitation, all documents, memoranda, computer files, notes and other writings
and all copies thereof) shall be returned to the other party immediately upon
the request of the other party or shall be destroyed and certified to have been
so destroyed. Each party shall be deemed to have satisfied its obligation to
hold confidential information concerning or supplied by the other party if it
exercises the same care as it takes to preserve confidentiality for its own
similar information.
(b) In the event that the Buyer, the Seller or their
respective Related Parties are requested, or become legally compelled, to
disclose any of the information subject to the restrictions hereunder, such
party shall provide the other party with prompt notice before such information
is disclosed so that the other party may seek a protective order or other
appropriate remedy or waive compliance with the terms of this paragraph 11. In
the event that such protective order or other remedy is not obtained or that
such party, in its sole discretion, waives any provisions of this paragraph, the
party required or requested to disclose such information shall exercise
reasonable efforts to obtain reasonable assurance that confidential treatment
shall be accorded such information and furnish only that portion of the
information which it is advised by counsel to be legally required.
(c) No publication, press release or public announcement of
any nature shall be issued pertaining to this Agreement or the transactions
contemplated hereby without the prior written consent of the other party hereto
(which shall not be unreasonably withheld) or except as required by Law or by
obligations pursuant to any listing agreement with any securities exchange or
any securities exchange regulation, in which case the party proposing to issue
such publication or press release or make such announcement shall use reasonable
efforts to consult with the other party before issuing any such publication or
press release.
(d) If either party hereto decides not to proceed with the
transactions contemplated by this Agreement, it shall promptly notify the other
party and at any time thereafter it
-18-
<PAGE> 19
shall, upon such other party's request, promptly deliver to such other party
all copies of all written material constituting information subject to this
paragraph 11 and destroy all documents, memoranda, computer files, notes and
other writings whatsoever prepared by it or its Related Parties based on, or
containing, any such information, whereupon it shall promptly advise the other
party in writing that such destruction has been completed.
(e) The Buyer and the Seller acknowledge that any breach or
threatened breach of this paragraph 11 by a party or its Related Parties will
cause irreparable injury to the other party and remedies at law may be
inadequate to protect them against any actual or threatened breach of this
Agreement by a party or its Related Parties, and, without prejudice to any other
rights and remedies otherwise available to a party, each agrees to the granting
of equitable relief, including injunctive relief and specific performance, in
the other party's favor without proof of actual damages, and each party further
agrees to waive, and to use its best efforts to cause its Related Parties to
waive, any requirement for the securing or posting of any bond in connection
with such remedy. In the event of litigation relating to this paragraph 11, if
a court of competent jurisdiction determines in a final, nonappealable judgment
or order that this paragraph 11 has been breached by a party or by its Related
Parties, then it will additionally reimburse the other party and its Related
Parties for their costs and expenses (including, without limitation, legal fees
and expenses) incurred in connection with all such litigation.
12. Further Assurances. From and after the date hereparties shall
use reasonable efforts to satisfy promptly the conditions to closing to be
satisfied by each of them. Upon confirmation by the Buyer that the condition
specified in paragraph 6(b) hereof has been satisfied, a representative of the
Buyer shall be permitted access to the premises of the Seller for up to three
one-half days per week during normal business hours up to and including the
Closing Date to observe the business and operations of the CRG and to discuss
the same with a representative of the Seller knowledgeable of such business and
operations. From and after the Closing Date, the Seller shall execute and
deliver all such documents and any items of collateral securing the Loans in its
possession and take all such further actions as the Buyer may reasonably deem
necessary, from time to time, to carry out the intent and purposes of this
Agreement and to consummate the transactions contemplated hereby. Without
limiting the foregoing, this covenant includes providing written factual
information regarding the history of the Loans and the Purchased Rights. The
Seller shall not destroy any Loan-related records not furnished to the Buyer
hereunder, including tax and accounting records, except in conformity with the
Seller's record retention policy.
-19-
<PAGE> 20
13. Notices. All notices between the parties pursuant Agreement
shall be in writing and shall be deemed to have been duly given (a) when
delivered, if sent by registered or certified mail (return receipt requested),
(b) when delivered, if delivered personally or by telecopier transmission with a
copy sent by overnight courier or (c) on the next business day, if sent by
overnight mail or overnight courier, in each case to the parties at the
following addresses:
If to the Seller:
Transamerica Business Credit Corporation
Lender Finance Division
225 North Michigan Avenue, Suite 2100
Chicago, Illinois 60601
Attention: Legal Department
Telecopier: (312) 329-6737
Telephone: (312) 329-6500
If to the Buyer:
FINOVA Capital Corporation
1850 N. Central Avenue, Suite 1159
P.O. Box 2209
Phoenix, Arizona 85002-2209
Attention: Senior Vice President - General Counsel
Telecopier: (602) 207-4099
Telephone: (602) 207-4900
The parties may designate from time to time by notice delivered in accordance
with this paragraph other and additional places to which notices shall be sent.
14. Miscellaneous.
(a) This Agreement and the exhibits and schedules hereto
constitute the complete agreement of the parties hereto with respect to the
subject matter hereof and supersede all verbal or written prior or
contemporaneous negotiations, promises, covenants, agreements, or
representations. This Agreement cannot be amended, modified, or supplemented
except by an instrument in writing executed by the parties hereto. No waiver of
any provision of this Agreement, or consent to any departure by the Seller or
the Buyer therefrom, shall be effective unless it is in writing and signed by
the party to be charged thereby, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No failure on the part of either party to exercise, and no delay in
exercising, any right hereunder or under any related document shall operate as a
waiver thereof by such party, nor shall any single or partial exercise of any
right hereunder or under any other related document preclude any other
-20-
<PAGE> 21
or further exercise thereof or the exercise of any other right. The rights and
remedies of each party provided herein are cumulative and are in addition to,
and not exclusive of, any rights or remedies provided by law.
(b) The terms of this Agreement shall be binding upon and
shall inure to the benefit of the Seller and the Buyer, and their respective
successors and assigns. All representations and warranties made herein shall
survive the consummation of the transactions contemplated herein. This Agreement
may be executed in counterparts each of which when so executed shall be an
original, but all such counterparts shall together constitute but one and the
same instrument. This Agreement may be executed and delivered by telecopier and
shall be effective upon receipt of the respective counterparts sent by such
method. Notwithstanding the above, the Seller and the Buyer shall not, without
the other party's prior written consent, assign their rights or delegate the
performance of their obligations hereunder, except to their respective
affiliates in which case the assignor shall continue to be bound by all of its
obligations hereunder. Nothing herein shall restrict the Buyer's rights to
sell, assign or otherwise dispose of after the Closing Date any of the Loans or
any of the other Purchased Rights.
(c) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to
principles of conflicts of law (other than Section 5-1401 of the New York
General Obligations Law).
(d) Paragraph headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
(e) Each of the Seller and the Buyer shall be responsible
for any and all costs and expenses (including attorneys' fees and expenses) paid
or incurred by it in connection with the preparation and execution of this
Agreement and in connection with the transactions contemplated hereby, except as
provided herein to the contrary.
15. Termination; HSR Act Consent.
(a) This Agreement may be terminated and abandoned at any
time prior to the closing hereof:
(i) by the mutual written consent of the Seller and
the Buyer;
(ii) by either the Seller or the Buyer, (A)(I) by
March 15, 1995, if the HSR Act Consent has been obtained by such date or neither
party has given the notice specified in paragraph 15(b) hereof or (II) April 15,
1995, if
-21-
<PAGE> 22
the HSR Act Consent is required but has not been obtained and the terminating
party has complied with all of its filing and reporting obligations with
respect thereto and (B) the terminating party has performed or tendered
performance of all of the conditions applicable to it under paragraph 5 or 6
hereof, as the case may be;
(iii) by either the Seller or the Buyer in the event
any court of competent jurisdiction or other federal, state or local
governmental body shall have issued an order, decree or ruling or taken any
other action restraining, enjoining, or otherwise prohibiting the transactions
contemplated hereby and such order, decree or ruling or other action shall have
become final and nonappealable after the affected party or parties have made all
reasonable efforts to contest and appeal the issuance of such order, decree,
ruling or other action; and
(iv) the Buyer or the Seller if (A) the other party
shall have failed to comply in any material respect with any of the covenants or
agreements contained in this Agreement to be complied with by such other party
at or prior to such date of termination within five business days following
receipt by the noncomplying party of written notice of such failure to comply or
(B) any representation or warranty of the other party shall not be true in all
material respects when made or at the time of termination (provided such breach
has not been cured within five business days following receipt by the breaching
party of written notice of the breach).
(b) If the Buyer or the Seller believes that the HSR Consent
is required, it shall so notify the other party in writing within three business
days of the date hereof, whereupon the parties shall make all filings and
provide all information required to obtain such consent within ten days of the
date hereof and thereafter promptly take all actions necessary to obtain such
consent.
(c) In the event of any termination and abandonment of this
Agreement pursuant to this paragraph 15, the terminating party shall promptly
give written notice thereof to the other party and this Agreement shall
forthwith become void and have no effect, and neither party to this Agreement
will have any liability to the other hereunder, except with respect to any
breach of any provisions of this Agreement and as provided in subparagraph (d)
hereof. Notwithstanding the foregoing, the provisions of paragraphs 11 and 16
hereof shall survive the termination and abandonment of this Agreement.
(d) The Deposit shall be (i) returned to the Buyer in the
event of a termination and abandonment of this Agreement by the Buyer in
accordance with paragraph 15(a) hereof and (ii) retained by the Seller in the
event of a termination and
-22-
<PAGE> 23
abandonment of this Agreement by the Seller in accordance with paragraph
15(a)(iv) hereof.
16. Indemnification.
(a) The Seller shall indemnify, defend and hold the Buyer
(including the Buyer's affiliates, successors and assigns and their respective
directors, officers, employees (including the Engaged Employees), shareholders,
counsel, and other representatives) harmless from and against and in respect of:
(i) any and all Claims that it may suffer, sustain, incur or become subject to,
arising out of, in connection with or due to any material breach of a
representation or warranty of the Seller contained in this Agreement without
regard to whether any such action or inaction giving rise to such Claim is
initiated prior to or after the Closing Date, (ii) all Claims with respect to
any material breach of a covenant of the Seller contained in this Agreement, and
(iii) all Claims directly relating to the Excluded Liabilities, provided that
the Seller shall not be liable under clause (i) or (ii) for Claims that are each
in an amount less than $25,000 or $100,000 in the aggregate.
(b) The Buyer shall indemnify, defend and hold the Seller
(including the Seller's affiliates, successors and assigns and their respective
directors, officers, employees, shareholders, counsel, and other
representatives) harmless from and against and in respect of: (i) any and all
Claims that it may suffer, sustain, incur or become subject to, arising out of,
in connection with or due to any material breach of a representation or warranty
of the Buyer contained in this Agreement without regard to whether any such
action or inaction giving rise to a Claim is initiated prior to or after the
Closing Date, (ii) all Claims with respect to a material breach of a covenant of
the Buyer contained in this Agreement, and (iii) all Claims directly relating to
the Assumed Liabilities other than those resulting from the Seller's breaches of
the representations, warranties and covenants made by it hereunder, provided
that the Buyer shall not be liable under clause (i) or (ii) for Claims that are
each in an amount less than $25,000 or $100,000 in the aggregate.
(c) Except as provided in paragraph 16(d), if there occurs
an event which a party asserts is an indemnifiable event pursuant to this
paragraph 16, including any action or proceeding commenced by a third party, the
Buyer or, as the case may be, the Seller (each an "INDEMNIFIED PARTY") shall
notify the other party obligated to provide indemnification (the "INDEMNIFYING
PARTY") promptly, provided, that the failure to give prompt notice shall not
relieve the Indemnifying Party of its obligations hereunder except to the extent
such failure actually prejudices the Indemnifying Party hereunder. In case any
such action shall be brought against any Indemnified Party and it shall notify
the Indemnifying Party of the commencement
-23-
<PAGE> 24
thereof, the Indemnifying Party shall be entitled to participate therein and,
if permitted by the Indemnified Party, to assume the defense thereof, at its
sole cost and expense, with counsel reasonably satisfactory to the Indemnified
Party (provided that the Indemnifying Party first agrees in writing to pay the
full amount of indemnification with respect to such action to the Indemnified
Party). After notice from the Indemnifying Party to the Indemnified Party of
such election so to assume the defense thereof, the Indemnified Party shall
have the right to retain its own separate counsel, but the fees and expenses of
such counsel shall be at the Indemnified Party's expense unless (i) the
Indemnifying Party and the Indemnified Party shall have agreed in writing to
the contrary, (ii) the Indemnifying Party has failed within a reasonable time
to retain counsel reasonably satisfactory to the Indemnified Party, or (iii)
the named party in any such proceeding (including any impleaded parties)
include both the Indemnified Party and the Indemnifying Party and
representation of both parties by the same counsel could be inappropriate due
to actual or potential differing interests between them. In any matter
described above where the Indemnified Party has obtained counsel to represent
it in addition to counsel obtained by the Indemnifying Party, counsel selected
by the Indemnifying Party shall be required to cooperate fully with counsel
selected by the Indemnified Party in such matter. So long as the Indemnifying
Party is defending in good faith any claim for which indemnification is sought,
the Indemnifying Party shall not be liable for any claim settled without its
consent, which consent shall not be unreasonably withheld.
(d) (i) In the event of a Claim by a third person
relating to the Purchased Rights which Claim has arisen from facts occurring
both before and after the Closing Date, which Claim could reasonably be likely
to relate directly to the Excluded Liabilities, the Buyer shall give the Seller
prompt written notice of such Claim (whether such Claim involves the
commencement of an action or proceeding, a counterclaim or otherwise) and the
Buyer shall have the right to conduct the defense of such Claim; provided,
however, that the failure to provide prompt notice as provided herein will not
relieve the Seller of its obligation hereunder except to the extent that such
failure actually prejudices the Seller. The defense of such Claim relating to
events prior to the Closing Date or to the Excluded Liabilities shall be at the
sole cost and expense of the Seller. The Buyer shall have the right to
participate in the defense of any such Claim and to retain its own separate
counsel with respect thereto (and to assume the defense of any such Claim in the
event that the Seller has failed within a reasonable time to retain counsel
reasonably satisfactory to the Buyer), but the fees and expenses of such counsel
shall be borne by the Indemnifying Party. In any matter described above where
the Buyer has obtained counsel to represent it in addition to counsel
-24-
<PAGE> 25
obtained by the Seller, counsel selected by the Seller shall be required to
cooperate fully with counsel selected by the Buyer.
(ii) In the event of a Claim referred to in the first
sentence of paragraph 16(d) hereof, the Buyer and the Seller promptly shall
negotiate in good faith their respective shares of the cost and expense of such
resulting liability or settlement based on the extent to which the liability or
settlement relates directly to the Excluded Liabilities. No such settlement
shall be effected by any party without the prior written consent of the other
party, which consent shall not be unreasonably withheld. Neither the Seller nor
the Buyer shall be entitled to call into question the validity of any finding by
the relevant court or other forum of competent jurisdiction as a defense to the
sharing of any such liability.
17. Seller's Default. In the event the Seller materially ba
representation, warranty or covenant hereunder, then the Buyer may avail itself
of any legal or equitable rights that the Buyer may have under this Agreement
with respect to the Seller, except the Buyer shall have no right to incidental
or consequential damages or to any award for lost profits. Notwithstanding
anything herein contained to the contrary, in no event shall the Seller have any
liability hereunder or at law or in equity in excess of the Purchase Price, paid
to and retained by the Seller, except that these limitations shall not apply to
any liability of the Seller arising out of or relating to the Excluded
Liabilities.
18. Waiver of Trial by Jury. THE PARTIES HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE (TO THE EXTENT PERMITTED BY APPLICABLE LAW)
ANY RIGHT THAT EITHER PARTY MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING
UNDER OR RELATING TO THIS AGREEMENT AND ANY SUCH DISPUTE SHALL BE TRIED BEFORE A
JUDGE SITTING WITHOUT A JURY.
19. Severability. Any provision of this Agreement invalid, illegal
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability,
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering any other provision of this Agreement invalid, illegal
or unenforceable in any other jurisdiction.
-25-
<PAGE> 26
20. No Third Party Beneficiaries. Except for paragraph 16, which
is intended to benefit and to be enforceable by any Indemnified Party, nothing
in this Agreement, expressed or implied, is intended to or shall confer on any
person other than the parties hereto and their respective successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
IN WITNESS WHEREOF, the Seller and the Buyer have caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.
TRANSAMERICA BUSINESS CREDIT CORPORATION
/s/ STEVEN A. READ
By:________________________________________
Steven A. Read
President
FINOVA CAPITAL CORPORATION
/s/ ROBERT E. RADWAY
By:________________________________________
Robert E. Radway
Senior Vice President
[Schedules omitted.]
-26-
<PAGE> 1
EXHIBIT 10.M
GFC FINANCIAL CORPORATION CAPITAL ACCUMULATION PLAN
INDEX
<TABLE>
<CAPTION>
Article Description Page
- ------- ----------- ----
<S> <C> <C>
I Purpose
-------
1.1 Establishment of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
II Definitions and Construction
----------------------------
2.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
Actual Deferral Percentages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
Adoption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2
Aggregate Limit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2
Annual Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2
Authorized Leave of Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-3
Average Contribution Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-3
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-3
CODA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-4
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-4
Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-4
Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-4
Contribution Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-5
Contribution Percentage Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-5
Dial Corp Stock Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-6
Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-6
Elective Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-6
Eligible Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-7
Eligible Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-7
Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-7
Employee Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-7
Employee Contribution Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-7
Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-8
Employer Contribution Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-8
Employer Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-8
Excess Aggregate Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-8
Excess Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-9
Excess Elective Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-10
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-10
Entry Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-10
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-10
Family Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-10
Fiduciaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-10
Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-11
Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-13
Investment Fund(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-13
Matching Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-13
Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-13
Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-13
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-13
Qualified Matching Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-14
Qualified Non-elective Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-14
</TABLE>
-i-
<PAGE> 2
<TABLE>
<S> <C> <C>
Salary Reduction Contribution Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-14
Special Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-14
Trust (or Trust Fund) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-14
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-14
Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-15
Vested Rollover Contribution Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-15
Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-15
2.2 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-15
------------
III Participation
-------------
3.1 Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1
3.3 Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-2
3.4 Suspension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-2
IV Contributions
-------------
4.1 Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1
4.2 Code Section 401(k) Salary Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1
4.3 Employee Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-5
4.4 After-Tax Salary Deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-5
4.5 Rollover Amount From Other Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-6
V Allocations to Participant's Account
------------------------------------
5.1 Individual Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
5.2 Account Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
5.3 Actual Deferral Percentage Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-3
5.4 Average Contribution Percentage Test . . . . . . . . . . . . . . . . . . . . . . . . . . . V-6
5.5 Distribution of Excess Aggregate Contributions . . . . . . . . . . . . . . . . . . . . . . V-9
5.6 Distribution of Excess Elective Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . V-10
5.7 Distribution of Excess Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . V-12
5.8 Recharacterization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-13
5.9 Maximum Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-14
5.10 Recognition of Different Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . V-17
5.11 Top-Heavy Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-18
VI Benefits
--------
6.1 Entitlement to Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1
6.2 Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1
6.3 Payment of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-2
6.4 Designation of Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-3
6.5 Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-5
6.6 Debiting of Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-8
6.7 Required Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-8
6.8 Distribution Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-8
6.9 Loans to Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-10
</TABLE>
-ii-
<PAGE> 3
<TABLE>
<S> <C> <C>
VII Investment Options, Trust Fund
------------------------------
7.1 Investment Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1
7.2 Investment of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-2
7.3 Investment Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-2
7.4 Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-2
7.5 Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-3
7.6 Tender Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-3
7.7 Voting of Employer Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-4
7.8 Special Rules for Assets Transferred from Dial Plans . . . . . . . . . . . . . . . . . . . . VII-7
VIII Administration
--------------
8.1 Allocation of Responsibility Among Fiduciaries for Plan and Trust . . . . . . . . . . . . . . VIII-1
8.2 Appointment of Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-2
8.3 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-2
8.4 Records and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-3
8.5 Other Committee Powers and Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-3
8.6 Rules and Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-4
8.7 Committee Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-5
8.8 Authorization of Benefit Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-5
8.9 Application and Forms for Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-5
8.10 Facility of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-6
8.11 Indemnification of the Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-6
IX Miscellaneous
-------------
9.1 Nonguarantee of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-1
9.2 Rights to Trust Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-1
9.3 Nonalienation of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-1
9.4 Nonforfeitability of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-2
X Amendments and Action by Employer
---------------------------------
10.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-1
10.2 Action by GFC Financial Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-1
XI Successor Employer and Merger or
--------------------------------
Consolidation of Plans
----------------------
11.1 Successor Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-1
11.2 Conditions Applicable to Plan Mergers, Consolidations, or Asset Transfers . . . . . . . . . . XI-1
XII Plan Termination
----------------
12.1 Right to Terminate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XII-1
12.2 Partial Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XII-1
12.3 Liquidation of the Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XII-1
XIII Adoption of Plan
----------------
13.1 Adoption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XIII-1
</TABLE>
-iii-
<PAGE> 4
GFC FINANCIAL CORPORATION CAPITAL ACCUMULATION PLAN
Article I. - Purpose
1.1 Establishment of the Plan. Effective March 18, 1992, (the "Effective
Date"), the Employer adopted the "Plan" as set forth herein.
Except as otherwise provided, the Plan provisions set forth herein are
applicable only to Eligible Employees in the employ of the Company or its
Affiliates on or after March 18, 1992. With respect to any Employee who has had
a balance transferred directly to this Plan from the Dial Companies Capital
Accumulation Plan or the U.S. Bancorp Employee Investment Plan, this Plan shall,
to the full extent legally required, be treated as a continuation of the plan
from which the balance was transferred and shall preserve all his legally
protected valuable rights with respect to the transferred balance in accordance
with Code sections 414(l) and 411(d)(6) as well as any other applicable laws.
The GFC Financial Corporation Capital Accumulation Plan Trust, as
established by trust agreement executed effective as of March 18, 1992 ("Trust")
is intended to form a part of the Plan.
The Plan and Trust are intended to meet the requirements of Sections
401(a), 401(k) and 501(a) of the Internal Revenue Code of 1986, as amended.
I-1
<PAGE> 5
ARTICLE II. - DEFINITIONS AND CONSTRUCTION
2.1 DEFINITIONS: Where the following words and phrases appear in this Plan,
they shall have the respective meanings set forth in this Article, unless the
context clearly indicates to the contrary.
(a) Account(s): One or all of the Employee Contribution Account, Employer
Contribution Account, Salary Reduction Contribution Account and Vested Rollover
Contribution Account, as the case may be, and as appropriate in the context of
each provision of the Plan containing such term, for each Participant.
(b) Actual Deferral Percentage: shall mean, for a specified group of
Participants for a Plan Year, the average of the ratios (calculated separately
for each Participant in such group) of (1) the amount of Employer contributions
actually paid over to the Trust on behalf of such Participant for the Plan Year
to (2) the Participant's Compensation for such Plan Year (whether or not the
Employee was a Participant for the entire Plan Year). Employer contributions on
behalf of any Participant shall include: (1) any Elective Deferrals made
pursuant to the Participant's deferral election, including Excess Elective
Deferrals of Highly Compensated Employees, but excluding Elective Deferrals that
are taken into account in the Contribution Percentage test (provided the ADP
test is satisfied both with and without exclusion of these Elective Deferrals);
and (2) at the election of the Employer, Qualified Non-elective Contributions
and Qualified Matching Contributions. For purposes of computing Actual Deferral
Percentages, an Employee who would be a
II-1
<PAGE> 6
Participant but for the failure to make Elective Deferrals shall be treated as a
Participant on whose behalf no Elective Deferrals are made.
(c) Adoption Agreement: The agreement executed by each Affiliate Employer
in order to adopt the Plan pursuant to the provisions of Article XIII.
(d) Affiliate: An entity which, by reason of Code Section 414(b), 414(c),
or 414(m), is treated as a single Employer with GFC Financial Corporation.
(e) Aggregate Limit: The sum of (i) 125 percent of the greater of the ADP
of the Non-highly Compensated Employees for the Plan Year or the ACP of
Non-highly Compensated Employees under the plan subject to Code Section 401(m)
for the Plan Year beginning with or within the Plan Year of the CODA and (ii)
the lesser of 200% or two plus the lesser of such ADP or ACP. "Lesser" is
substituted for "greater" in "(i)" above, and "greater" is substituted for
"lesser" after "two plus the" in "(ii)" if it would result in a larger Aggregate
Limit.
(f) Annual Additions: With respect to each Year, the total of the Employer
contributions allocated to a Participant's Salary Reduction Contribution
Account, Employee Contribution Account and Employer Contribution Account.
Amounts allocated, after March 31, 1984, to an individual medical account, as
defined in Section 415(l)(2) of the Code, which is part of a pension or annuity
plan maintained by the Employer are treated as Annual Additions to a defined
contribution plan. Also amounts derived from contributions paid or accrued after
December 31, 1985, in
II-2
<PAGE> 7
taxable years ending after such date, which are attributable to post-retirement
medical benefits, allocated to the separate account of a key Employee, as
defined in Section 419A(d)(3) of the Code, under a welfare benefit fund, as
defined in Section 419(e) of the Code, maintained by the Employer are treated as
Annual Additions to a defined contribution plan. For this purpose, any excess
amount applied under Section 5.9(b) in the Year to reduce Employer contributions
will be considered Annual Additions for such Year.
(g) Authorized Leave of Absence: Any absence authorized by the Employer
under the Employer's standard personnel practices provided that all persons
under similar circumstances must be treated alike in the granting of such
Authorized Leaves of Absence and provided further that the Employee returns to
employment with the Employer or retires within the period of authorized absence.
An absence due to service in the Armed Forces of the United States shall be
considered an Authorized Leave of Absence provided that the Employee complies
with all of the requirements of federal law in order to be entitled to
reemployment and provided further that the Employee returns to employment with
the Employer within the period provided by such law.
(h) Average Contribution Percentage: The average of the Contribution
Percentages of the Eligible Participants in a group.
(i) Beneficiary: A person or persons (natural or otherwise) designated by a
Participant in accordance with the provisions of Section 6.4 to receive any
death benefit payable under this Plan.
II-3
<PAGE> 8
(j) CODA: A cash or deferred arrangement as described in Section 401(k) of
the Code.
(k) Code: The Internal Revenue Code of 1986, as amended.
(l) Committee: The persons appointed pursuant to Article VIII to assist the
GFC Financial Corporation in the administration of the Plan in accordance with
said Article.
(m) Compensation: Subject to the other provisions of the Plan and except as
defined in the Adoption Agreement of an Employer in accordance with Article
XIII, hereof, the total of all amounts paid to a Participant by the Employer for
personal services as would be reported on the Participant's Federal Income Tax
Withholding Statement (Form W-2) had Participant not been a Participant under
the Plan or any Plan sponsored by the Employer which is qualified under Sections
125 or 129 of the Code and excluding fringe benefits, overtime, bonuses and any
benefits paid under this Plan. For purposes of allocating the Employer's
contribution for the Year in which a Participant begins or resumes
Participation, Compensation allocable to time periods before his or her
Participation began or resumed shall be disregarded.
The annual Compensation of each Participant taken into account under the Plan
for any year shall not exceed $200,000, as adjusted by the Secretary of Treasury
at the same time and in the same manner as under Section 415(d) of the Code. If,
as a result of the application of such rules the adjusted $200,000 limitation is
exceeded, then the limitation shall be prorated among affected individuals in
proportion to each such individual's
II-4
<PAGE> 9
Compensation as determined under this Section prior to the application of this
limitation. In determining the Compensation of a Participant for purposes of
this limitation, the rules of Section 414(q)(6) of the Code shall apply, except
in applying such rules, the term "Family" shall include only the spouse of the
Participant and any lineal descendants of the Participant who have not attained
age 19 before the close of the year.
(n) Contribution Percentage: The ratio (expressed as a percentage) of the
Participant's Contribution Percentage Amounts to the Participant's Compensation
for the Plan Year (whether or not the Employee was a Participant for the entire
Plan Year).
(o) Contribution Percentage Amounts: The sum of the Employee Contributions,
Matching Contributions, and Qualified Matching Contributions (to the extent not
taken into account for purposes of the ADP test) made under the plan on behalf
of the Participant for the Plan Year. Such Contribution Percentage Amounts shall
include forfeitures of Excess Aggregate Contributions or Matching Contributions
allocated to the Participant's account which shall be taken into account in the
year in which such forfeiture is allocated. The Employer may include Qualified
Non-elective Contributions in the Contribution Percentage Amounts. The Employer
also may elect to use Elective Deferrals in the Contribution Percentage Amounts
so long as the ADP test is met before the Elective Deferrals are used in the ACP
test and continues to be met following the exclusion of those Elective Deferrals
that are used to meet the ACP test.
II-5
<PAGE> 10
(p) Dial Corp Stock Account: The account maintained pursuant to Section
7.1, hereof, to record for a Participant his or her shares of common stock of
The Dial Corp transferred to the Plan as of March 18, 1992 from the Dial
Companies Capital Accumulation Plan.
(q) Disability: A physical or mental condition which, in the sole judgement
of the Committee, based upon medical reports and other evidence satisfactory to
the Committee, permanently prevents an Employee from satisfactorily performing
his or her usual duties for the Employer and the duties of any other position or
job for the Employer for which such Employee is qualified by reason of his or
her training, education or experience.
(r) Elective Deferrals: Any Employer contributions made to the plan at the
election of the Participant, in lieu of cash compensation, and shall include
contributions made pursuant to a salary reduction agreement or other deferral
mechanism. With respect to any taxable year, a Participant's Elective Deferral
is the sum of all Employer contributions made on behalf of such Participant
pursuant to an election to defer under any qualified CODA as described in
Section 401(k) of the Code, any simplified Employee pension cash or deferred
arrangement as described in 402(h)(1)(B), any eligible deferred compensation
plan under Section 457, any plan as described under Section 501(c)(18), and any
Employer contributions made on the behalf of a Participant for the purchase of
an annuity contract under Section 403(b) pursuant to a salary reduction
agreement.
II-6
<PAGE> 11
(s) Eligible Employee: Any Employee whose customary employment is for not
less than 1000 hours of service (as defined in Section 3.1) per year and for a
regular fixed compensation, except an Employee who is covered by a collective
bargaining agreement.
(t) Eligible Participant: Any Employee who is eligible to make an Employee
Contribution, or an Elective Deferral (if the Employer takes such contributions
into account in the calculation of the Contribution Percentage), or to receive a
Matching Contribution (including forfeitures) or a Qualified Matching
Contribution. If an Employee Contribution is required as a condition of
participation in the plan, any Employee who would be a Participant in the plan
if such Employee made such a contribution shall be treated as an Eligible
Participant on behalf of whom no Employee Contributions are made.
(u) Employee: Any person who is actively employed by an Employer or an
Affiliate.
(v) Employee Contribution: Any contribution made to the Plan by or on
behalf of a Participant that is included in the Participant's gross income in
the year in which made and that is maintained under a separate account to which
earnings and losses are allocated.
(w) Employee Contribution Account: The account maintained pursuant to
Section 4.3, hereof, to record for a Participant his or her after-tax
contributions and adjustments relating thereto.
II-7
<PAGE> 12
(x) Employer: GFC Financial Corporation, or any Affiliate that has adopted
the Plan.
(y) Employer Contribution Account: The account maintained pursuant to
Section 4.1(b), hereof, to record for a Participant his or her share of the
contributions of the Employer, if any, and adjustments relating thereto.
(z) Employer Stock: The common stock, $0.01 par value, of GFC Financial
Corporation.
(aa) Excess Aggregate Contributions: Shall mean, with respect to any Plan
Year, the excess of:
(1) The aggregate Contribution Percentage Amounts taken into account in
computing the numerator of the Contribution Percentage actually made on behalf
of Highly Compensated Employees for such Plan Year, over
(2) The maximum Contribution Percentage Amounts permitted by the ACP test
(determined by reducing contributions made on behalf of Highly Compensated
Employees in order of their Contribution Percentages beginning with the highest
of such percentages).
Such determination shall be made after first determining Excess Elective
Deferrals and then determining Excess Contributions.
In computing the Average Contribution Percentage, the Employer shall take into
account, and include as Contribution Percentage Amounts Elective
II-8
<PAGE> 13
Deferrals, and Qualified Non-elective Contributions under this plan or any other
plan of the Employer, as provided by regulations.
Forfeitures of Excess Aggregate Contributions shall be:
(1) Applied to reduce Employer contributions for the Plan Year in which the
excess arose, but allocated as in (2), below, to the extent the excess exceeds
Employer contributions or the Employer has already contributed for such Plan
Year.
(2) Allocated, after all other forfeitures under the plan, to the Matching
Contribution account of each Non-highly Compensated Participant who made
Elective Deferrals or Employee Contributions in the ratio which each such
Participant's Compensation for the Plan Year bears to the total Compensation of
all such Participants for such Plan Year.
The Employer may elect to make Qualified Non-elective Contributions under the
plan on behalf of Employees.
(bb) Excess Contribution: Shall mean, with respect to any Plan Year, the
excess of:
(1) The aggregate amount of Employer contributions actually taken into account
in computing the ADP of Highly Compensated Employees for such Plan Year over
(2) The maximum amount of such contributions permitted by the ADP test
(determined by reducing contributions made on behalf of Highly Compensated
II-9
<PAGE> 14
Employees in order of the ADPs, beginning with the highest of such percentages).
(cc) Excess Elective Deferrals: shall mean those Elective Deferrals that
are includible in a Participant's gross income under Section 402(g) of the Code
to the extent such Participant's Elective Deferrals for a taxable year exceed
the dollar limitation under such Code section. Excess Elective Deferrals shall
be treated as annual additions under the plan.
(dd) Effective Date: March 18, 1992, the date on which the provisions of
this Plan became effective, or with respect to an Affiliate who adopts the Plan
on a later date, the date set forth in the Adoption Agreement.
(ee) Entry Date: The first day of each calendar month.
(ff) ERISA: Public Law No. 93-406, the Employee Retirement Income Security
Act of 1974, as amended.
(gg) Family Member: A member of the Employee's family as defined in Section
414(q)(6) of the Code.
(hh) Fiduciaries: The Committee and the Trustee, but only with respect to
the specific responsibilities of each for Plan and Trust administration, all as
described in Section 8.1, and, to the extent required by Section 7.7, each
Participant, Beneficiary or Alternate Payee (within the meaning of section
414(p) of the Code).
II-10
<PAGE> 15
(ii) Highly Compensated Employee: Includes active Highly Compensated
Employees and former Highly Compensated Employees. An active Highly Compensated
Employee includes any Employee who performs service for the Employer during the
determination year and who during the look-back year: (i) received compensation
from the Employer in excess of $75,000 as adjusted pursuant to Section 415(d) of
the Code); (ii) received compensation from the Employer in excess of $50,000 (as
adjusted pursuant to Section 415(d) of the Code) and was a member of the
top-paid group for such year; or (iii) was an officer of the Employer and
received compensation during such year that is greater than 50% of the dollar
limitation in effect under Section 415(b)(1)(A) of the Code. The term Highly
Compensated Employee also includes: (i) Employees who are both described in the
preceding sentence if the term "determination year" is substituted for the term
"look-back year" and the Employee is one of the 100 Employees who receive the
most compensation from the Employer during the determination year; and (ii)
Employees who are 5-percent owners at any time during the look-back year or
determination year. If no officer has satisfied the compensation requirements of
(iii) above during either a determination year or look-back year, the highest
paid officer for such year shall be treated as a Highly Compensated Employee.
For this purpose, the determination year shall be the Plan Year. The look-back
year shall be the twelve-month period immediately preceding the determination
year. A former Highly Compensated Employee includes any Employee who separated
from service (or was deemed to have separated) prior to the determination year,
performs no service for the Employer during the determination year, and was an
active Highly Compensated Employee for either the separation year or any
determination year ending on or after the Employee's 55th birthday.
II-11
<PAGE> 16
If an Employee is, during a determination year or look-back year, a Family
Member of either a 5-percent owner who is an active or former Employee or a
Highly Compensated Employee who is one of the 10 most Highly Compensated
Employees ranked on the basis of compensation paid by the Employer during such
year, then the Family Member and the 5-percent owner or top ten Highly
Compensated Employee shall be aggregated. In such case, the Family Member and
5-percent owner or top ten Highly Compensated Employee shall be treated as a
single Employee receiving compensation and Plan contributions or benefits equal
to the sum of such compensation and contributions or benefits of the Family
Member and 5-percent owner or top ten Highly Compensated Employee. For purposes
of this Section, Family member includes the spouse, lineal ascendants and
descendants of the Employee or former Employee and the spouses of such lineal
ascendants and descendants.
The determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of Employees in the top-paid group,
the top 100 Employees, the number of Employees treated as officers and the
compensation that is considered, will be made in accordance with Section 414(q)
of the Code and the regulations thereunder.
The Employer may elect to use the calendar year to determine whether an Employee
is a Highly Compensated Employee in the look-back year (as defined in Treasury
Regulations under Section 414(q) of the Code) calculation. The calendar year
used will be the calendar year ending with or within the determination year (as
defined in the regulations under Section 414(q) of the Code). The determination
year shall be the months (if any) in the current Plan Year which follow the end
of the calendar year look back year. If the Employer elects to make the calendar
year calculation election with
II-12
<PAGE> 17
respect to any plan, entity or arrangement, such election must apply with
respect to all plans, entities and arrangements of the Employer.
(jj) Income: The net gain or loss of the Trust Fund from investments, as
reflected by interest payments, dividends, realized and unrealized gains and
losses on securities, other investment transactions and expenses paid from the
Trust Fund. In determining the Income of the Trust Fund as of any date, assets
shall be valued on the basis of their fair market value.
(kk) Investment Fund(s): The investment funds described in Section 7.1.
(ll) Matching Contribution: An Employer contribution made to this or any
other defined contribution plan on behalf of a Participant on account of an
Employee Contribution made by such Participant, or on account of a Participant's
Elective Deferral, under a plan maintained by the Employer.
(mm) Participant: An Employee participating in the Plan in accordance with
the provisions of Section 3.1.
(nn) Participation: The period commencing as of the date the Employee
became a Participant and ending on the date his or her employment with the
Employer terminated in accordance with Section 3.2, hereof.
(oo) Plan: The GFC Financial Corporation Capital Accumulation Plan, the
Plan set forth herein, as amended from time to time.
II-13
<PAGE> 18
(pp) Qualified Matching Contributions: Matching Contributions which are
subject to the distribution and nonforfeitability requirements under Section
401(k) of the Code when made.
(qq) Qualified Non-elective Contributions: Contributions (other than
Matching Contributions or Qualified Matching Contributions) made by the Employer
and allocated to Participants' Accounts that the Participants may not elect to
receive in cash until distributed from the Plan; that are nonforfeitable when
made; and that are distributable only in accordance with the distribution
provisions that are applicable to Elective Deferrals and Qualified Matching
Contributions.
(rr) Salary Reduction Contribution Account: The account maintained to
record for a Participant his or her pre-tax salary reduction contributions made
by the Employer pursuant to Section 4.1(a) and 4.2 hereof, and adjustments
relating thereto.
(ss) Special Valuation Date: The date on which a special valuation is made
pursuant to Section 5.2.
(tt) Trust (or Trust Fund): The fund known as the GFC Financial Corporation
Capital Accumulation Plan Trust, maintained in accordance with the terms of the
trust agreement, as from time to time amended, which constitutes a part of the
Plan.
(uu) Trustee: The corporation or individuals appointed by the Board of
Directors of GFC Financial Corporation to administer the Trust.
II-14
<PAGE> 19
(vv) Valuation Date: The last day of each calendar month or the business
day on which a valuation of the assets of the Plan may occur, as the context
dictates.
(ww) Valuation Period: The period beginning on a Valuation Date and ending
on the next subsequent Valuation Date.
(xx) Vested Rollover Contribution Account: The account maintained pursuant
to Section 4.5, hereof, to record for a Participant rollover amounts transferred
to the Trust Fund and adjustments relating thereto.
(yy) Year: The 12-month period commencing on January 1 and ending on
December 31.
2.2 CONSTRUCTION: The words "hereof," "herein," "hereunder," and other
similar compounds of the word "here" shall mean and refer to the entire Plan and
not to any particular provision or Section. Article and Section headings are
included for convenience of reference and are not intended to add to, or
subtract from, the terms of the Plan.
II-15
<PAGE> 20
ARTICLE III. - PARTICIPATION
3.1 PARTICIPATION: An Eligible Employee shall become a Participant as of
the later of the Effective Date or the first Entry Date coincident with or next
following the last twelve consecutive month period during which he or she has at
least 1,000 Hours of Service, as determined under Section 3.3, provided that
said Eligible Employee has entered into a duly executed salary reduction
agreement under Section 4.2 in advance of the Effective Date or the applicable
Entry Date and has fulfilled the Plan's enrollment procedures as provided by the
Committee. Any 12-month period between an Employee's date of hire or rehire and
an anniversary thereof shall be used to determine whether he has satisfied the
requirement to complete a 12-month period of not less than 1,000 Hours of
Service.
3.2 BREAK IN SERVICE: For purposes of eligibility to participate under
section 3.1, a period of 12 consecutive months measured from an Employee's date
of employment as an Employee or an anniversary of such date shall constitute a
Break in Service if the Employee is not credited with at least 501 Hours of
Service during such period. Years of eligibility credit under section 3.1 that
an Employee accumulated prior to a Break in Service shall continue to count
thereafter to the extent provided by the following rules:
(a) Participants: A former Employee who satisfied the requirements of the Plan
for eligibility at the time of a Break in Service, and who is again employed as
an Employee for at least a 12-month period after his date of reemployment, shall
receive such prior eligibility credit from his date of reemployment, and shall
be entitled to participate again in the Plan from such date, provided he is
still an Eligible Employee.
III-1
<PAGE> 21
(b) Other Employees: For a former Employee who had not become a Participant at
the time of a Break in Service and who again is employed for at least a 12-month
period after the date of reemployment, eligibility credit accumulated prior to
the Break in Service shall be restored only if at least one of the following is
applicable:
(1) the number of his consecutive Breaks in Service was less than five
years, or
(2) the number of his consecutive Breaks in Service was less than the
aggregate number of years of his pre-Break eligibility credit, or
(3) his absence from employment was due to a "maternity or a paternity
leave" and the number of his consecutive Breaks in Service was less
than six years, or
(4) his absence was due to a "maternity or paternity leave" and the number
of his consecutive Breaks in Service was less than the aggregate
number of years of his pre-Break eligibility credit plus one year.
(c) Maternity or paternity leave: For the purposes of this Plan, "maternity or
paternity leave" means termination of employment or absence from work due to the
pregnancy of the Employee, the birth of a child of the Employee, the placement
of a child in connection with the adoption of the child by an Employee, or the
caring for an Employee's child during the period immediately following the
child's birth or placement for adoption. The Committee shall determine, under
rules of uniform application and based on information provided to the Committee
by the Employee, whether or not the Employee's termination of employment or
absence from work is due to "maternity or paternity leave."
III-2
<PAGE> 22
3.3 HOURS OF SERVICE: Under this Article III, Hours of Service shall include the
following:
(a) Each hour for which an Employee is paid, or entitled to payment, for the
performance of duties for the Employer.
(b) Up to 501 hours for any single continuous period during which the Employee
performs no duties but is directly or indirectly paid or entitled to payment by
the Employer (regardless of whether employment has terminated) due to vacation,
holiday, illness, incapacity including disability, layoff, jury duty, military
duty or Authorized Leave of Absence; including any period for which payment is
made under a plan solely for the purposes of complying with workmen's
compensation or disability insurance laws, but excluding any period for which a
payment is made or due under this Plan or under a plan maintained solely for the
purpose of complying with unemployment compensation laws, or solely to reimburse
the Employee for medical or medically-related expenses. An Employee shall be
deemed to be "directly or indirectly paid, or entitled to payment by the
Employer" regardless of whether such payment is (i) made by or due from the
Employer directly, or (ii) made indirectly through a trust fund, insurer or
other entity to which the Employer contributes or pays premiums. (c) Each hour
for which back pay, irrespective of mitigation of damages, is either awarded or
agreed to by the Employer, without duplication of hours provided above, and
subject to the 501-hour restriction for periods described in the foregoing
subsection (b).
In determining Hours of Service for Employees who are not paid by the hour
and whose actual hours are not counted, such Employees shall receive credit for
45 Hours of Service for each week in which they have at least one Hour of
Service. The foregoing provisions shall be administered in accordance with
Department of Labor Regulation, 29 CFR section 2530.200b-2.
III-3
<PAGE> 23
3.4 TRANSFERS: For the purposes of determining eligibility to Participate
in the Plan under this Article III, an Eligible Employee shall receive credit
for employment with an Employer or an Affiliate.
3.5 SUSPENSION: If a Participant (i) elects to defer distribution of his or
her benefit pursuant to Section 6.3(c), (ii) is transferred to employment with
an Affiliate that has not adopted the Plan, (iii) ceases to be an Eligible
Employee, (iv) goes on an unpaid maternity or paternity leave under ERISA
Section 203(b), (v) receives a hardship withdrawal in accordance with Section
6.5, or (vi) commences an Authorized Leave of Absence, as reasonably determined
by the Committee, his or her Participation under the Plan shall be suspended,
provided, however, that during the period of his or her employment in such
ineligible status or position: (a) he or she shall cease to have any right to
make contributions pursuant to Article IV, hereof; (b) his or her Employer
Contribution Account shall receive no Employer contribution allocation under
Section 5.2(c); (c) he or she shall continue to participate in Income
allocations pursuant to Section 5.2(a); (d) the withdrawal privileges under the
provisions of Article VI, other than the loan provision of Section 6.9, shall
continue to apply except for a Participant who has deferred distribution of his
or her benefit pursuant to Section 6.3(c); and (d) the investment Fund transfer
provisions of Section 7.3 shall continue to apply.
3.6 Participation On and After May 1, 1993. Effective May 1, 1993, each
Employee who is an Eligible Employee and each individual who becomes an Eligible
Employee, and who is not an "insider" within the meaning of section 16b of the
Securities Act of 1934, shall become a Participant upon the later of May 1, 1993
or the Entry Date coincident with or next
III-4
<PAGE> 24
following the date on which such Eligible Employer enters into a duly executed
salary reduction agreement under Section 4.1 and has fulfilled the Plan's
enrollment procedures as provided by the Committee.
III-5
<PAGE> 25
ARTICLE IV. - CONTRIBUTIONS
4.1 EMPLOYER CONTRIBUTIONS: (a) For each Year, the Employer shall
contribute an amount to a Participant's Salary Reduction Contribution Account
equal to the total amount of contributions agreed to be made by it pursuant to a
salary reduction agreement under Section 4.2 entered into between the Employer
and the Participant for such Year. Contributions made by Employer for a given
payroll period pursuant to salary reduction agreements under Section 4.2 shall
be promptly deposited in the Trust Fund as soon as practicable after the payroll
period to which they relate.
(b) In addition, for each Year, each Employer may contribute such additional
amounts to the Participants' Employer Contribution Accounts as its Board of
Directors shall determine in its sole discretion from time to time. Such
additional contributions with respect to each Participant may be conditioned
upon and keyed to the amount of contributions agreed to by such Participant
under Section 4.2. Such additional contributions shall be allocated among
Participants either with regard to a uniform percentage of each Participant's
Compensation; or with regard to a uniform percentage of the amount of
contributions agreed to by the Participant under Section 4.2; or a combination
of the two. The formulation decided upon by the Board of Directors shall operate
in a nondiscriminatory manner. Such additional contributions shall be deemed
made on account of a Year if either (a) the Board of Directors of the particular
Employer determines the amount of such contribution by appropriate action and
announces the amount in writing to its Employees before the close of such Year,
or (b) the Employer designates such amount in writing to the Trustee as payment
on account of such Year or (c) the Employer claims such amount as a deduction on
its federal tax
IV-1
<PAGE> 26
return for such Year. All additional contributions of an Employer shall be paid
to the Trustee and payment shall be made not later than the time prescribed by
law for filing the federal income tax return of the Employer, including any
extensions which have been granted for the filing of such tax return. Amounts
credited to a Participant's Employer Contribution Account shall be 100% vested
and non-forfeitable at all times.
4.2 CODE SECTION 401(K) SALARY REDUCTION: (a) In addition to the other
terms and conditions herein, each Eligible Employee shall enter into prior to
the Entry Date that such Eligible Employee's Participation under the Plan is to
commence pursuant to Section 3.1 a written salary reduction agreement with the
Employer which will be applicable to Compensation for payroll periods after such
Entry Date within such Year. The terms of any such salary reduction agreement
shall provide for the purposes of Section 4.1(a) hereof that the Eligible
Employee as a Participant agrees to accept a reduction in salary from the
Employer equal to any dollar amount or percentage of his Compensation per
payroll period, not to exceed 12% of such Compensation, or be less than the
lesser of 1% of such Compensation or One Hundred Twenty Dollars ($120.00) per
calendar quarter; provided that for periods beginning on or after May 1, 1993,
the reduction in salary may not exceed 22% of such Compensation, or be less than
1% of such C Compensation. In consideration of such agreement, the Employer will
make a salary reduction contribution to the Participant's Salary Reduction
Contribution Account on behalf of the Participant for such Year in an amount
equal to the total amount by which the Participant's Compensation from the
Employer was reduced during the Year pursuant to the salary reduction agreement.
Amounts credited to a Participant's Salary Reduction Contribution Account are
intended to qualify for income tax deferral under
IV-2
<PAGE> 27
Section 401(k) of the Code and, as such, shall be 100% vested and
non-forfeitable at all times. If a Participant enters into a salary reduction
agreement with the Employer for a given Year, his or her Compensation for such
Year for all other purposes of this Plan, except with respect to a salary
deduction agreement under Section 4.4, hereof, shall be equal to his or her
Compensation after application of the salary reduction agreement.
(b) Unless otherwise amended or terminated in accordance with (ii), below, a
Participant's salary reduction agreement shall be deemed automatically renewed
from year to year, while this Plan remains in force and effect. Further, salary
reduction agreements shall include, but not by way of limitation, and be
governed by the following:
(i) A salary reduction agreement shall apply to each payroll period
during which an effective salary reduction agreement is on file with
the Employer.
(ii) A salary reduction agreement may be amended or terminated by a
Participant only once in any calendar month if the purpose of the
amendment is to decrease or increase the amount of such Participant's
Compensation which is subject to salary reduction during the remainder
of such Year.
(iii) Any amendment or termination of a salary reduction agreement
shall be effective on the following Entry date after at least 5 working
days prior written notice by a Participant in the form required by
Employer.
IV-3
<PAGE> 28
(iv) The Employer may amend or revoke its salary reduction agreement
with any Participant at any time, if the Committee determines that such
revocation or amendment is necessary to insure that a Participant's
Additions for any Year will not exceed the limitations of Section 415
of the Code or to insure that the discrimination tests of Section
401(k) and 401(m) of the Code or to insure that the limits of Section
402(g) of the Code are met for such Year.
(v) The Employer may revoke its salary reduction agreements with all
Participants or amend its salary reduction agreements with all
Participants on a uniform basis, if it determines that the limits of
Sections 402 or 415 of the Code may be exceeded in any Year.
(vi) Except as provided above, a salary reduction agreement applicable
to any given Year, once made, may not be revoked or amended by the
Participant.
(vii) No amounts may be withdrawn by a Participant from any of his
Accounts, except as provided in Section 6.5, hereof. All withdrawal
elections shall be made by a Participant on forms supplied by the
Committee for that purpose.
(c) The Committee may from time to time alter and/or add to the requirements for
salary reduction agreements expressed in Section 4.2(b). The Employer shall
abide by the Committee's determinations and directions with respect to all
matters covered in salary reduction agreements.
IV-4
<PAGE> 29
4.3 EMPLOYEE CONTRIBUTIONS: Subject to the provisions of Section 4.4,
hereof, a Participant may contribute each Year to an Employee Contribution
Account an amount pursuant to a written salary deduction agreement under
Section 4.4 not intended to qualify for income tax deferral under Code Section
401(k), but to be subtracted from such Participant's Compensation on an
after-tax basis. Amounts credited to a Participant's Employee Contribution
Account shall remain 100% vested and non-forfeitable at all times.
4.4 AFTER-TAX SALARY DEDUCTION: A Participant may elect to enter into a
written salary deduction agreement with Employer which shall be in the form and
substance acceptable to Employer and the Committee and will be applicable to all
payroll periods within a Year. A salary deduction agreement may be amended or
terminated in a manner consistent with the terms of Section 4.2(b). The terms of
such salary deduction agreement shall provide, among other things, that for the
purposes of Section 4.3 the Participant agrees to accept a deduction from salary
from the Employer equal to any whole percentage of his Compensation per payroll
period, not to exceed the limits of Section 415 of the Code.
IV-5
<PAGE> 30
4.5 ROLLOVER AMOUNT FROM OTHER PLANS: (a) An Employee eligible to
Participate in the Plan, regardless of whether he or she has satisfied the
Participation requirements of Section 3.1, may, with the approval of the
Committee, in its sole and exclusive discretion, transfer to the Trust Fund a
"Qualifying Rollover Distribution," defined in Section 402(a)(5)(D)(i) of the
Code as "1 or more distributions (I) within one taxable year of the Employee on
account of a termination of the plan of which the trust is a part or, in the
case of a profit-sharing stock bonus plan, a complete discontinuance of
contributions under such plan, or (II) which constitutes a lump sum distribution
within the meaning of subsection (e)(4)(A) (determined without reference to
subparagraphs (B) and (H) of subsection (e)(4) which, in part, defines lump sum
distribution as "the distribution or payment within one taxable year of the
recipient of the balance to the credit of an Employee which becomes payable to
the recipient (i) on account of the Employee's death, (ii) after the Employee
attains age 59-1/2, (iii) on account of the Employee's separation from service,
or (iv) after the Employee has become disabled", provided that such distribution
is from a plan which meets the requirements of Section 401(a) of the Code (the
"Other Plan"). The procedure approved by the Committee shall provide that such a
transfer may be made only if the following conditions are met: (a) the transfer
occurs on or before the 60th day following the Employee's receipt of the
distribution from the Other Plan; and (b) the amount transferred is equal to any
portion of the distribution the Employee received from the Other Plan, subject
to the maximum rollover provision of Section 402(a)(5)(B) of the Code, limiting
such amount to the fair market value of all property received in such a
distribution reduced by Employee contributions, as defined in Section
402(a)(5)(d)(ii) of the Code.
IV-6
<PAGE> 31
(b) Notwithstanding the foregoing, if an Employee had deposited a distribution
previously received from an Other Plan into an individual retirement account
("IRA"), as defined in Section 408 of the Code, he or she may transfer the
amount of such distribution, plus earnings thereon from the IRA, to this Plan;
provided such rollover amount is deposited with the Trustee on or before the
60th day following receipt thereof from the IRA.
(c) The Committee shall develop such procedures, and may require such
information from an Employee desiring to make or effectuate any transfer under
this Section 4.5, as it deems necessary or desirable to determine that the
proposed transfer will meet the requirements of this Section. Upon approval by
the Committee, the amount transferred shall be deposited in the Trust Fund and
shall be credited to a Vested Rollover Contribution Account. Such account shall
be 100% vested in the Employee, shall share in Income allocations in accordance
with Section 5.2(a), but shall not share in Employer contribution allocations.
Upon termination of employment, the total amount of the Employee's Vested
Rollover Contribution Account shall be distributed in accordance with Article
VI.
(d) Upon such a transfer by an Employee who is otherwise eligible to participate
in the Plan but who has not yet completed the Participation requirements of
Section 3.1, his or her Vested Rollover Contribution Account shall represent his
or her sole interest in the Plan until he or she becomes a Participant.
IV-7
<PAGE> 32
ARTICLE V. - ALLOCATIONS TO PARTICIPANT'S ACCOUNT
5.1 INDIVIDUAL ACCOUNTS: The Committee shall create and maintain adequate
records to disclose the interest in the Trust of each Participant and
Beneficiary. Such records shall be in the form of individual Accounts, and
credits and charges shall be made to such Accounts in the manner herein
described. When appropriate, a Participant shall have four separate Accounts, an
Employer Contribution Account, an Employee Contribution Account, a Salary
Reduction Contribution Account and a Vested Rollover Contribution Account. Where
necessary, the Committee shall create and maintain Accounts for funds
transferred from prior employer's plans or subaccounts adequate to distinguish
between funds for the purposes of the Plan (e.g., funds transferred from U.S.
Bancorp, Qualified Matching Contribution and Matching Contribution subaccounts
of the Employer Contribution Account). The maintenance of individual Accounts
and subaccounts is only for accounting purposes, and a segregation of the assets
of the Trust Fund to each Account or subaccount shall not be required.
Distributions and withdrawals made from an Account shall be charged to the
Account as of the date paid.
5.2 ACCOUNT ADJUSTMENTS: The Accounts of Participants shall be adjusted as
frequently than daily, recognizing the Participant's elections pursuant to
Section 5.5, hereof, in accordance with the following:
(a) Income: The Income of the Trust Fund for each Valuation Period shall be
allocated to the Accounts of Participants who had unpaid balances in their
Accounts at the end of the Valuation Period in proportion to the balances in
such Accounts at the beginning of the Valuation Period plus
V-1
<PAGE> 33
one-half of the contributions made during such Valuation Period, but after first
reducing each such Account balance by any distributions from the Account during
such Valuation Period and recognizing the Participant's elections pursuant to
Section 5.5, hereof. Each valuation shall be based on the fair market value of
assets in the Trust Fund on the Valuation Date.
(b) Salary Reduction Contributions: The Employer contributions for a calendar
month made pursuant to a salary reduction agreement entered into with a
Participant under Section 4.2 shall be allocated to the Participant's Salary
Reduction Contribution Account monthly.
(c) Additional Employer Contributions: As of the last day of the Year the
Employer's additional contribution, if any, which exceeds the contributions
allocated to Salary Reduction Contribution Accounts of Participants under
Section 4.1(a), shall be allocated among the Employer Contribution Accounts of
Participants in accordance with Section 4.1(b).
(d) Contributions: A Participant's contributions shall be allocated to his or
her Employee Contribution Account in the same manner as Salary Reduction
Contributions.
(e) Alternative Method: Notwithstanding the foregoing, the Committee may, in its
sole and exclusive discretion, require an alternative method of allocating
Income and contributions to Accounts if such method more accurately reflects the
value of such Accounts.
5.3 ACTUAL DEFERRAL PERCENTAGE TEST: Notwithstanding any other provisions
of the Plan,
V-2
<PAGE> 34
(a) the Actual Deferral Percentage (hereinafter "ADP") for Participants who are
Highly Compensated Employees for each Plan Year and the ADP for Participants who
are Non-highly Compensated Employees for the same Plan Year must satisfy one of
the following tests:
(i) The ADP for Participants who are Highly Compensated Employees for the
Plan Year shall not exceed the ADP for Participants who are Non- highly
Compensated Employees for the same Plan Year multiplied by 1.25; or
(ii) The ADP for Participants who are Highly Compensated Employees for the
Plan Year shall not exceed the ADP for Participants who are Non-highly
Compensated Employees for the same Plan Year multiplied by 2.0, provided
that the ADP for Participants who are Highly Compensated Employees does not
exceed the ADP for Participants who are Non-highly Compensated Employees by
more than two (2) percentage points.
V-3
<PAGE> 35
(b) The ADP for any Participant who is a Highly Compensated Employee for the
Plan Year and who is eligible to have Elective Deferrals (and Qualified
Non-elective Contributions or Qualified Matching Contributions, or both, if
treated as Elective Deferrals for purposes of the ADP test) allocated to his or
her accounts under two or more arrangements described in Section 401(k) of the
Code, that are maintained by the Employer, shall be determined as if such
Elective Deferrals (and, if applicable, such Qualified Non-elective
Contributions or Qualified Matching Contributions, or both) were made under a
single arrangement. If a Highly Compensated Employee participates in two or more
cash or deferred arrangements that have different Plan Years, all cash or
deferred arrangements ending with or within the same calendar year shall be
treated as a single arrangement.
(c) In the event that this Plan satisfies the requirements of Sections 401(k),
401(a)(4), or 410(b) of the Code only if aggregated with one or more other
plans, or if one or more other plans satisfy the requirements of such Sections
of the Code only if aggregated with this plan, then this Section shall be
applied by determining the ADP of Employees as if all such plans were a single
plan. For Plan Years beginning after December 31, 1989, plans may be aggregated
in order to satisfy Section 401(k) of the Code only if they have the same Plan
Year.
(d) For purposes of determining the ADP of a Participant who is a 5-percent
owner or one of the ten most highly-paid Highly Compensated Employees, the
Elective Deferrals (and Qualified Non-elective Contributions or Qualified
Matching Contributions, or both, if treated as Elective Deferrals for purposes
of the ADP test) and Compensation of such Participant shall include the Elective
Deferrals (and, if applicable,
V-4
<PAGE> 36
Qualified Non-elective Contributions and Qualified Matching Contributions, or
both) and Compensation for the Plan Year of Family Members (as defined in
Section 414(q)(6) of the Code). Family Members, with respect to such Highly
Compensated Employees, shall be disregarded as separate Employees in determining
the ADP both for Participants who are Non-highly Compensated Employees and for
Participants who are Highly Compensated Employees.
(e) For purposes of determining the ADP test, Elective Deferrals, Qualified
Non-elective Contributions and Qualified Matching Contributions must be made
before the last day of the twelve-month period immediately following the Plan
Year to which contributions relate.
(f) The Employer shall maintain records sufficient to demonstrate satisfaction
of the ADP test and the amount of Qualified Non-elective Contributions or
Qualified Matching Contributions, or both, used in such test.
(g) The determination and treatment of the ADP amounts of any Participant shall
satisfy such other requirements as may be prescribed by the Secretary of the
Treasury.
(h) Qualified Matching Contributions and Qualified Non-elective Contributions
may be taken into account as Elective Deferrals for purposes of calculating the
Actual Deferral Percentages.
V-5
<PAGE> 37
5.4 AVERAGE CONTRIBUTION PERCENTAGE TEST: Notwithstanding any other
provision of the Plan,
(a) Employee Contributions and Matching Contributions must meet the
nondiscrimination requirements of Section 401(a)(4) of the Code, and the Average
Contribution Percentage (hereinafter ACP) test of Section 401(m) of the Code.
The ACP test is required in addition to the ADP test under Code Section 401(k).
Qualified Matching Contributions and Qualified Non-elective Contributions used
to satisfy the ADP test may not be used to satisfy the ACP test.
(b) The ACP for Participants who are Highly Compensated Employees for each Plan
Year and the ACP for Participants who are Non-highly Compensated Employees for
the same Plan Year must satisfy one of the following tests:
(i) The ACP for Participants who are Highly Compensated Employees for the
Plan Year shall not exceed the ACP for Participants who are Non-highly
Compensated Employees for the same Plan Year multiplied by 1.25; or
(ii) The ACP for Participants who are Highly Compensated Employees for the
Plan Year shall not exceed the ACP for Participants who are non-highly
Compensated Employees for the same Plan Year multiplied by two (2),
provided that the ACP for Participants who are Highly Compensated Employees
does not exceed the ACP for Participants who are Non-highly Compensated
Employees by more than two (2) percentage points.
V-6
<PAGE> 38
(c) Multiple Use: If one or more Highly Compensated Employees participate in
both a CODA and a plan subject to the ACP test maintained by the Employer and
the sum of the ADP and ACP of those Highly Compensated Employees subject to
either or both tests exceeds the Aggregate Limit, then the ACP of those Highly
Compensated Employees who also participate in a CODA will be reduced (beginning
with such Highly Compensated Employee whose ACP is the highest) so that the
limit is not exceeded. The amount by which each Highly Compensated Employee's
Contribution Percentage Amounts is reduced shall be treated as an Excess
Aggregate Contribution. The ADP and ACP of the Highly Compensated Employees are
determined after any corrections required to meet the ADP and ACP tests.
Multiple use does not occur if either the ADP or ACP of the Highly Compensated
Employees does not exceed 1.25 multiplied by the ADP and ACP of the Non-highly
Compensated Employees.
(d) For purposes of this Section, the Contribution Percentage for any
Participant who is a Highly Compensated Employee and who is eligible to have
Contribution Percentage Amounts allocated to his or her account under two or
more plans described in Section 401(a) of the Code, or arrangements described in
Section 401(k) of the Code that are maintained by the Employer, shall be
determined as if the total of such Contribution Percentage Amounts was made
under each plan. If a Highly Compensated Employee participates in two or more
cash or deferred arrangements that have different plan years, all cash or
deferred arrangements ending with or within the same calendar year shall be
treated as a single arrangement.
V-7
<PAGE> 39
(e) In the event that this plan satisfies the requirements of Sections 401(m),
401(a)(4) or 410(b) of the Code only if aggregated with one or more other plans,
or if one or more other plans satisfy the requirements of such Sections of the
Code only if aggregated with this plan, then this Section shall be applied by
determining the Contribution Percentage of Employees as if all such plans were a
single plan. For plan years beginning after December 31, 1989, plans may be
aggregated in order to satisfy Section 401(m) of the Code only if they have the
same Plan Year.
(f) For purposes of determining the Contribution percentage of a Participant who
is a five-percent owner or one of the ten most highly-paid Highly Compensated
Employees, the Contribution Percentage Amounts and Compensation of such
Participant shall include the Contribution Percentage Amounts and Compensation
for the Plan Year of Family Members (as defined in Section 414(q)(6) of the
Code). Family Members, with respect to Highly Compensated Employees, shall be
disregarded as separate Employees in determining the Contribution Percentage
both for Participants who are Non-highly Compensated Employees and for
Participants who are Highly Compensated Employees.
(g) For purposes of determining the Contribution Percentage test, Employee
Contributions are considered to have been made in the Plan Year in which
contributed to the trust. Matching Contributions and Qualified Non-elective
Contributions will be considered made for a Plan Year if made no later than the
end of the twelve-month period beginning on the day after the close of the Plan
Year.
V-8
<PAGE> 40
The Employer shall maintain records sufficient to demonstrate satisfaction of
the ACP test and the amount of Qualified Non-elective Contributions or Qualified
Matching Contributions, or both, used in such test.
The determination and treatment of the Contribution Percentage of any
Participant shall satisfy such other requirements as may be prescribed by the
Secretary of the Treasury.
5.5 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS:
(a) Notwithstanding any other provisions of this Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable thereto, shall be
forfeited, if forfeitable, or if not forfeitable, distributed no later than the
last day of each Plan Year to Participants to whose accounts such Excess
Aggregate Contributions were allocated for the preceding Plan Year. Excess
Aggregate Contributions shall be allocated to Participants who are subject to
the family member aggregation rules of Section 414(q)(6) of the Code in the
manner prescribed by the regulations. If such Excess Aggregate Contributions are
distributed more than 2-1/2 months after the last day of the Plan Year in which
such excess amounts arose, a ten (10) percent excise tax will be imposed on the
Employer maintaining the plan with respect to those amounts. Excess Aggregate
Contributions shall be treated as Annual Additions under the Plan.
(b) Excess Aggregate Contributions shall be adjusted for any income or loss up
to the end of the Plan Year for which they were determined to occur (exclusing
any gap period after the end of that Plan Year and up to the date of
distribution in the subsequent Plan Year). The income or loss
V-9
<PAGE> 41
allocable to Excess Aggregate Contributions shall be determined under the Plan's
normal method of accounting.
(c) Forfeitures of Excess Aggregate Contributions may either be reallocated to
the Accounts of Non-highly Compensated Employees or applied to reduce Employer
contributions.
(d) Excess Elective Deferrals shall be adjusted for any income or loss up to the
end of the Plan year for which they were determined to occur (excluding any gap
period after the end of that Plan Year and up to the date of distribution in the
subsequent Plan Year). The income or loss allocable to Excess Elective Deferrals
shall be determined under the Plan's normal method of accounting.
(e) In addition, in lieu of distributing Excess Contributions as provided in the
Plan, or Excess Aggregate Contributions as provided in the Plan, the Employer
may make Qualified Non-elective Contributions on behalf of Non-highly
Compensated Employees that are sufficient to satisfy either the Actual Deferral
Percentage test or the Average Contribution Percentage Test, or both, pursuant
to the regulations under the Code.
5.6 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS: (a) No Participant shall be
permitted to have Elective Deferrals made under this Plan, or any other
qualified plan maintained by the Employer, during any taxable year in excess of
the dollar limitation contained in Section 402(g) of the Code in effect at the
beginning of such taxable year.
V-10
<PAGE> 42
(b) A Participant may assign to this plan any Excess Elective Deferrals made
during a taxable year of the Participant by notifying the Committee on or before
the date specified in Section 5.6(e) of the amount of the Excess Elective
Deferrals to be assigned to the Plan.
(c) Notwithstanding any other provision of the Plan, Excess Elective Deferrals,
plus any income and minus any loss allocable thereto, shall be distributed no
later than April 15 to any Participant to whose account Excess Elective
Deferrals were assigned for the preceding year and who claims Excess Elective
Deferrals for such taxable year.
(d) Excess Elective Deferrals shall be adjusted for any income or loss up to the
end of the Plan Year for which they were determined to occur (excluding any gap
period after the end of that Plan Year and up to the date of distribution in the
subsequent Plan Year). The income or loss allocable to Excess Elective Deferrals
shall be as determined under the Plan's normal method of accounting.
(e) Participants who claim Excess Elective Deferrals for the preceding taxable
year must submit their claims in writing to the Committee by March 15.
V-11
<PAGE> 43
5.7 DISTRIBUTION OF EXCESS CONTRIBUTIONS: (a) Notwithstanding any other
provision of this Plan, Excess Contributions, plus any income and minus any loss
allocable thereto, shall be distributed no later than the last day of each Plan
Year to Participants to whose accounts such Excess Contributions were allocated
for the preceding Plan Year. If such excess amounts are distributed more than
2-1/2 months after the last day of the Plan Year in which such excess amounts
arose, a ten (10) percent excise tax will be imposed on the Employer maintaining
the Plan with respect to such amounts. Such distributions shall be made to
Highly Compensated Employees on the basis of the respective portions of the
Excess Contributions attributable to each of such Employees. Excess
Contributions shall be allocated to Participants who are subject to the family
member aggregation rules of Section 414(q)(6) of the Code in the manner
prescribed by the regulations.
(b) Excess Contributions (including the amounts recharacterized) shall be
treated as Annual Additions under the Plan.
(c) Excess Contributions shall be adjusted for any income or loss up to the end
of the Plan Year for which they were determined to occur (excluding any gap
period after the end of that Plan Year and up to the date of distribution in the
subsequent Plan Year). The income or loss allocable to Excess Contributions
shall be as determined under the Plan's normal method of accounting.
(d) Excess Contributions shall be distributed from the accounts to which the
Participant's Elective Deferrals and Qualified Matching Contributions (if
applicable) were allocated in proportion to the Participant's Elective
V-12
<PAGE> 44
Deferrals and Qualified Matching Contributions (to the extent used in the ADP
test) for the Plan Year. Excess Contributions shall be distributed from the
Participant's Qualified Non-elective Contribution account only to the extent
that such Excess Contributions exceed the balance in the Participant's Elective
Deferral account and Qualified Matching Contribution account.
5.8 RECHARACTERIZATION: (a) Participant may treat his or her Excess
Contributions as an amount distributed to the Participant and then contributed
by the Participant to the plan. Recharacterized amounts will remain
nonforfeitable and subject to the same distribution requirements as Elective
Deferrals. Amounts may not be recharacterized by a Highly Compensated Employee
to the extent that such amount in combination with other Employee Contributions
made by that Employee would exceed any stated limit under the Plan on Employee
Contributions. Recharacterization must occur no later than two and one-half
months after the last day of the Plan Year in which such Excess Contributions
arose and is deemed to occur no earlier than the date the last Highly
Compensated Employee is informed in writing of the amount recharacterized and
the consequences thereof. Recharacterized amounts will be taxable to the
Participant for the
V-13
<PAGE> 45
Participant's tax year in which the Participant would have received them in
cash.
5.9 MAXIMUM ADDITIONS: (a) Notwithstanding anything contained herein to the
contrary, the total Annual Additions made to the Salary Reduction Contribution
Account, Employer Contribution Account, Employee Contribution Account of a
Participant for any Year shall not exceed the lesser of $30,000.00 or 25 percent
of the Participant's Compensation (as defined in Code Section 415 and after
application of the salary reduction agreement set forth in Section 4.2) for such
Year, except that such $30,000 shall be increased as permitted by Internal
Revenue Service regulations to reflect cost-of-living adjustments.
(b) If such Additions exceed the above limitations, the contributions for the
Year which cause the excess shall be returned to the Participant in the
following order:
(i) Any contributions to such Participant's Employee Contribution Account,
to the extent they would reduce the excess amount, will be returned to the
Participant.
(ii) If after the application of paragraph (i) an excess amount still
exists, any contributions to such Participant's Salary Reduction
Contribution Account, to the extent they would reduce the excess amount,
will be returned to the Participant.
V-14
<PAGE> 46
(iii) If after the application of paragraph (ii) an excess amount still
exists, and the Participant is covered by the Plan at the end of the Year,
the excess amount in Participant's account will be used to reduce Employer
contributions to such Participant's Employer Contribution Account, for such
Participant in the next Year, and each succeeding Year if necessary.
(iv) If after the application of paragraph (ii) an excess amount still
exists, and the Participant is not covered by the Plan at the end of the
Year, the excess amount will be held unallocated in a suspense account. The
suspense account will be applied to reduce future Employer contributions of
that Participant's Employer to Employer Contribution Accounts for all
remaining Participants in the next Year, and each succeeding Year if
necessary. If a suspense account is in existence at any time during the
Year pursuant to this Section, it will not participate in the allocation of
the Trust Income.
(c) Notwithstanding the foregoing, the otherwise permissible annual Additions
for any Participant under this Plan may be further reduced to the extent
necessary, as determined by the Committee, to prevent disqualification of the
Plan under Section 415 of the Code, which imposes the following additional
limitations on the benefits payable to Participants who also may be
participating in other tax-qualified pension, profit-sharing, savings or stock
bonus plans maintained by the Employer or any of the members of the controlled
group of corporations (for the purposes of this Section "Employers") of which
the Employer is a part: If an individual is a Participant at any time in both a
defined benefit plan and a defined contribution plan maintained by any of the
Employers, the sum
V-15
<PAGE> 47
of the defined benefit plan fraction and the defined contribution plan fraction
for any Year may not exceed 1.0. The defined benefit plan fraction for any Year
is a fraction, the numerator of which is the Participant's projected annual
benefit under the plan (determined at the close of the Year) and the denominator
of which is the lesser of (i) the product of 1.25, multiplied by the dollar
limitation in effect under Section 415(b)(1)(A) of the Code, or (ii) the product
of 1.4, multiplied by the amount which may be taken into account under Section
415(b)(1)(B) of the Code with respect to such Participant under the Plan for
such Year. The defined contribution plan fraction for any year is a fraction,
the numerator of which is the sum of the annual Additions to the Participant's
accounts as of the close of the Year, and the denominator of which is the sum of
the lesser of the following amounts determined for such year and for each prior
year of service with the Employer; (i) the product of 1.25, multiplied by the
dollar limitation in effect under Section 415(c)(1)(A) of the Code for such
year, or (ii) the product of 1.4, multiplied by the amount which may be taken
into account under Section 415(c)(1)(B) with respect to such Participants under
the Plan for such year. When the term "Annual Additions" is used in the context
of other defined contribution plans under this Section, it shall have the same
meaning as set forth in Section 2.3(b), hereof, but with respect to Employer
contributions and Employee contributions made under such other plans. For
purposes of this limitation, all defined benefit plans of the Employers, whether
or not terminated, are to be treated as one defined benefit plan and all defined
contribution plans of the Employers, including the Plan whether or not
terminated, are to be treated as one defined contribution plan. As such, annual
benefits and Annual Additions of such plans are to be aggregated for the
purposes of determining the defined benefit plan fraction and the
V-16
<PAGE> 48
defined contribution plan fraction. The extent to which Annual Additions under
the Plan shall be reduced, as compared with the extent to which annual benefits
or Annual Additions under any defined benefit plans or any other defined
contribution plans shall be reduced in order to achieve compliance with the
limitations of Code Section 415 shall be dependent on the provisions of such
other plans. To the extent any such other plan or plans provide for a reduction
first in benefits from or Annual Additions to such other plan or plans, the
necessary reductions shall be under such other plan or plans. To the extent any
such other plan or plans do not provide for a reduction first in benefits from
or Annual Additions to such other plan or plans, the reduction in Annual
Additions necessary to achieve compliance with Code Section 415 shall be under
the Plan. If the reduction is under the Plan, the Committee shall advise
affected Participants of any additional limitations on their Annual Additions
required by this Section 5.9.
5.10 RECOGNITION OF DIFFERENT INVESTMENT FUNDS: (a) Subject to the terms
and conditions herein stated, and as provided in Article VII, initially four
Investment Funds shall be established by the Trustee and each Participant shall
direct what portion of the aggregate of his or her Account balances shall be
deposited in each such Investment Fund. The Committee may direct the Trustee to
change the number and type of Investment Funds made available under the Plan
from time to time. Consequently, when appropriate, a Participant shall have a
percentage of the aggregate of his or her Salary Reduction Contribution Account,
Vested Rollover Contribution Account and/or Employee Contribution Account in
each such Investment Fund and the allocations described in Section 5.2 shall be
V-17
<PAGE> 49
adjusted in such manner as is appropriate to recognize the existence of such
Investment Funds.
(b) Because Participants have a choice of Investment Funds, any reference in
this Plan to a Salary Reduction Contribution Account, a Vested Rollover
Contribution Account or an Employee Contribution Account shall be deemed to mean
and include all accounts of a like nature which are maintained for the
Participant under each Investment Fund.
(c) A Participant's Employer Contribution Account balance shall be invested only
in the Employer Stock, and the Participant shall have no choice of Investment
Funds with respect to such balance.
5.11 TOP-HEAVY PROVISIONS: (a) The following provisions shall become
effective in any Year in which the Plan is determined to be a Top-Heavy Plan,
notwithstanding any contrary provision in the Plan. The Plan will be considered
a Top-Heavy Plan for the Year if as of the last day of the preceding Year, (1)
the value of the sum of Salary Reduction Contribution Accounts, Employer
Contribution Accounts and Employee Contribution Accounts (but not including any
allocations to be made as of such last day of the Year except contributions
actually made on or before that date and allocated pursuant to Section 5.2) of
Participants who are Key Employees (as defined in Section 416(i) of the Code)
exceeds 60% of the value of the sum of Salary Reduction Contribution Accounts,
Employer Contribution Accounts and Employee Contribution Accounts (but not
including any allocations to be made as of such last day of the Year except
contributions actually made on or before that date and allocated pursuant to
Section 5.2) of all Participants (the "60% Test") or (2) the Plan is part of a
required
V-18
<PAGE> 50
aggregation group (within the meaning of Section 416(g) of the Code and the
required aggregation group is top-heavy. However, and notwithstanding the result
of the 60% Test, the Plan shall not be considered a Top-Heavy Plan for any Year
in which the Plan is a part of a required or permissive aggregation group
(within the meaning of Section 416(g) of the Code) which is not top-heavy.
(b) Notwithstanding any contrary provision of the Plan, and except as otherwise
provided in (c) and (d) below, for any Year during which the Plan is deemed a
Top-Heavy Plan, Employer contributions pursuant to Section 5.2(c) which are
allocated to Employer Contribution Accounts on behalf of any Participant who is
not a Key Employee shall not be less than the lesser of:
(i) Three percent of such Participant's Compensation; or
(ii) In the case where the Employer has no defined benefit plan which
designates the Plan to satisfy Section 416(f) of the Code, the largest
percentage of Employer contributions as a percentage of the first $200,000
of the Key Employee's Compensation allocated on behalf of any Key Employee
for that Year.
The above mentioned minimum allocation is determined without regard to any
Social Security contribution. The minimum allocation shall be made even though,
under other Plan provisions, the Participant would not otherwise be entitled to
receive an allocation, or would have received a lesser allocation for the Year.
V-19
<PAGE> 51
(c) The provisions of (b), above, shall not apply to any Participant who was not
employed by the Employer on the last day of the Year preceding the Year the Plan
is considered to be a Top-Heavy Plan.
(d) The provisions of (b), above, shall not apply to any Participant to the
extent the Participant is covered under any other plan or plans of the Employer
and the Employer has provided in the Adoption Agreement that the minimum
allocation or benefit requirement applicable to top-heavy plans will be met in
the other plan or plans.
(e) The minimum allocation required in (b), above, (to the extent required to be
nonforfeitable under Section 416(b) of the Code) may not be forfeited under Code
Section 411(a)(3)(B) or 411(a)(3)(D).
(f) If a Participant's termination of employment occurs while the Plan is a
Top-Heavy Plan, such Participant's vested percentage in his Employer
Contribution Account shall not be less than the percentage determined in
accordance with the following table:
<TABLE>
<CAPTION>
Vested Forfeited
Years of Service Percentage Percentage
---------------- ---------- ----------
<S> <C> <C>
less than 2 0% 100%
2 but less than 3 20% 80%
3 but less than 4 40% 60%
4 but less than 5 60% 40%
5 but less than 6 80% 20%
6 or more 100% 0%
</TABLE>
(g) For any Year in which the Plan is a Top-Heavy Plan, the compensation
limitation described in Section 416(d) of the Code shall apply.
V-20
<PAGE> 52
(h) If the Plan becomes a Top-Heavy Plan and subsequently ceases to be such, the
vesting schedule in Subsection (f) of this Section to the extent it is more
favorable than any vesting schedule that may be contained in the Plan shall
continue to apply in determining the vested percentage of any Participant who
had at least five years of Service as of December 31 in the last Year of
top-heaviness. For other Participants, said more favorable schedule shall apply
only to their Employer Contribution Account balance as of such December 31. For
the purposes of Subsection (f), Year of Service shall be defined in the same
manner as the term Year of Service is used for vesting purposes in the event the
Plan is amended to include a vesting provision.
(i) Notwithstanding any contrary provisions contained herein, for any Year in
which the Plan is a Top-Heavy Plan, any benefits to which the Participant who is
a Key Employee is entitled shall commence not later than the Participant's
taxable year in which he or she attains age 70-1/2, whether or not his or her
employment has terminated in such year. If a benefit distribution under the Plan
is made to a Key Employee before he or she attains age 59-1/2, and during a Year
in which the Plan is a Top-Heavy Plan, the Participant shall be advised by the
Committee that an additional income tax may be imposed equal to 10% of the
portion of the amount so received which is included in his or her gross income
for such taxable year, unless such distribution is made on account of death or
Disability.
(j) For any Year in which the Plan is a Top-Heavy Plan, Section 5.4(c) shall be
read by substituting the number "1.00" for the number "1.25" wherever it appears
therein except such substitution shall not have the
V-21
<PAGE> 53
effect of reducing any benefit accrued under a defined benefit plan prior to the
first day of the Year in which this provision becomes applicable.
(k) Neither Elective Deferrals nor Matching Contributions may be taken into
account for the purpose of satisfying the minimum top-heavy contribution
requirement.
V-22
<PAGE> 54
ARTICLE VI. - BENEFITS
6.1 ENTITLEMENT TO BENEFITS: If a Participant's employment with the
Employer is terminated for any reason, he or she shall be vested in the entire
amount in each of his or her Accounts as of the Valuation Date or Special
Valuation Date which occurs on or following such termination of employment as
determined in accordance with Section 5.2(a), hereof. Except as provided in
Section 6.3(c), hereof, payment of benefits shall commence promptly after such
termination of employment, but in no event shall such Participant be entitled to
receive such entire amount sooner than 45 days after such Valuation Date.
6.2 DEATH: (a) In the event that the termination of employment of a
Participant is caused by his or her death, his or her Beneficiary shall be
vested in, and paid the entire amount of, each of the deceased Participant's
Accounts as of the Valuation Date or Special Valuation Date which occurs on or
following such termination of employment as determined in accordance with
Section 5.2(a), hereof, but in no event shall such Beneficiary be entitled to
receive such entire amount earlier than the later of (i) 45 days after such
Valuation Date, or (ii) the date the Committee is reasonably satisfied that such
Beneficiary is otherwise entitled to receive such entire amount.
(b) Payment of benefits due under this Section shall be made in accordance with
Section 6.3.
VI-1
<PAGE> 55
6.3 PAYMENT OF BENEFITS: (a) Upon a Participant's or Beneficiary's
entitlement to payment of benefits under Section 6.1 or 6.2 he or she shall file
with the Committee his or her written application therefor on such form or
forms, and subject to such reasonable conditions, as the Committee shall
provide. The Committee shall make payment of benefits in lump sum only, provided
that any benefits, rights or features protected under Code Section 411(d)(6) for
Accounts transferred from a prior employer's plan shall continue to be available
but only as to the Accounts so transferred.
(b) The Committee shall follow a Participant's Beneficiary designation made
pursuant to Section 6.4. Payment to a Participant's Beneficiary shall be made or
commence as soon as practicable after a Participants death and upon such proofs
of death and entitlement to benefits as the Committee may require, but in event
later than five years after the Participant's death.
(c) If the total value of the Participant's Accounts is $3,500 or less, the
Committee shall direct the distribution of such amount to the Participant in a
lump sum distribution without the consent of the Participant. Notwithstanding
the foregoing sentence, a Participant who is age 55 or older and whose
employment is terminated (other than by death) or a Participant whose employment
is terminated because of Disability may elect to defer the lump sum distribution
he or she is entitled to under the Plan for any length of time allowable under
applicable law, subject to Section 6.7. Any such elections shall be made in
accordance with the rules and procedures the Committee may prescribe.
If the total value of the Participant's Account is in excess of $3,500, no
distribution shall be made to the Participant before he attains age 62 without
his written consent. Unless the Participant elects otherwise, distribution of
his benefits shall begin not later than the 60th day after the close of the Plan
Year in which occurs the latest of (i) the Participant's Separation from
Service, (ii) the tenth anniversary of the year in which the Participant
commenced participation in the Plan, or (iii) the Participant's 65th birthday.
(d) The amount which a Participant or Beneficiary is entitled to receive at any
time and from time to time may be paid, in the discretion of the Participant or
Beneficiary, in cash or in Employer Stock, or in any combination thereof,
provided, however, payment in Employer Stock may be
VI-2
<PAGE> 56
limited to the extent a Participant's Account balances are invested in whole
shares of such Employer Stock under Section 7.1(i), and the Committee may
require that all such Employer Stock be transferred to such Participant or
Beneficiary.
6.4 DESIGNATION OF BENEFICIARY: (a) Each Participant from time to time may
designate any person or persons (who may be designated contingently or
successively and who may be an entity other than a natural person) as his or her
Beneficiary or Beneficiaries to whom his Plan benefits are paid if he or she
dies before receipt of all such benefits. Each Beneficiary designation shall be
in the form prescribed by the Committee, will be effective only when filed with
the Committee during the Participant's lifetime, and, if the Committee allows,
may specify the method of payment of his or her benefits to the Beneficiary.
Each Beneficiary designation filed with the Committee will cancel all
Beneficiary designations previously filed with the Committee. The revocation of
a Beneficiary designation by a Participant no matter how effected, shall not
require the consent of any designated Beneficiary unless the Beneficiary
affected is the Participant's spouse, in which case such spouse's consent shall
be required to effect any such revocation in accordance with Section 6.4(c). By
designating a Beneficiary or Beneficiaries as hereunder provided, a Participant
grants the Committee the discretion, in good faith, to make benefit payment(s)
to any Beneficiary or Beneficiaries named by such Participant despite any
dispute by any person or persons claiming such benefits, and holds the Plan, the
Employer and the Committee harmless from any claims arising out of any such good
faith payment(s) of benefits. Each Participant by designating a Beneficiary or
Beneficiaries, authorizes the Committee to retain any
VI-3
<PAGE> 57
benefits otherwise payable in the Trust Fund or, in its sole discretion,
pay-over such benefits to a court or other tribunal of competent jurisdiction
pending the final and binding disposition of any dispute as to the proper
Beneficiary or Beneficiaries by agreement of the parties or by a judgement of
such court or other tribunal of competent jurisdiction, as the case may be.
(b) If any Participant fails to designate a Beneficiary in the manner provided
above, or if the Beneficiary or Beneficiaries designated by a deceased
Participant die(s) before him or her or before complete distribution of the
Participant's benefits, the Committee, in its sole discretion, may direct the
Trustee to distribute such Participant's benefits (or the balance thereof) in
the following order to:
(i) The surviving spouse of such Participant or, if not living,
(ii) The estate of such Participant.
(c) Notwithstanding anything contained herein to the contrary, a Participant may
not name as a Beneficiary someone other than his or her spouse, and such
designation shall have no effect, unless his or her spouse consents thereto, in
a signed writing which is notarized or witnessed by a Plan representative, or if
the Committee determines in its sole discretion that such consent is not
obtainable for good cause shown, consistent with applicable law.
VI-4
<PAGE> 58
6.5 WITHDRAWALS: (a) Subject to Subsections (b), (c), (d), and (e) of this
Section 6.5, any Participant may make a withdrawal of all or part of his or her
Employee Contribution Account, Salary Reduction Contribution Account and Vested
Rollover Contribution Account, provided, however, that withdrawals must be made
of all amounts in each classification below (listed in descending order) before
amounts in the next lower classification may be withdrawn.
(i) Employee Contribution Account.
(ii) Salary Reduction Contribution Account.
(iii) Vested Rollover Contribution Account.
(b) A Participant must have attained age 59-1/2 or have been determined by the
Committee to have a "hardship" in accordance with Section 6.5(d) in order to
qualify for a withdrawal under Section 6.5(a) with respect to his or her Salary
Reduction Contribution Account and/or Vested Rollover Contribution Account
balances. Except for a Participant who is age 59-1/2 or older and who withdraws
his entire Account balances, a Participant may not withdraw any amounts from his
or her Employer Contribution Account.
(c) Application for withdrawals shall be made on such forms as the Committee
prescribes and as permitted herein, and may be made once each calendar month.
Except as provided in Section 6.5(e), distribution of withdrawals shall be made
in a lump sum within 45 days following the Valuation Date or Special Valuation
Date immediately following receipt by the Committee of a properly completed
application. Withdrawal
VI-5
<PAGE> 59
distributions shall be based on the value of the Participant's Account(s) as of
the Valuation Date or the Special Valuation Date occurring in the same calendar
month as the application is received, and subject to the provisions of Section
6.6, may be made in the discretion of the Participant in the form of cash, or in
Employer Stock or in any combination thereof, provided, however, payment in
Employer Stock shall be limited to the extent a Participant's Account balances
are invested in whole shares of such Employer Stock under Section 7.1(i) and the
Committee may require that all such Employer Stock be transferred to such
Participant or Beneficiary.
(d) Distribution of Elective Deferrals (and earnings thereon accrued as of
December 31, 1988) may be made to a Participant in the event of hardship. For
the purposes of this Section, hardship is defined as an immediate and heavy
financial need of the Employee where such Employee lacks other available
resources. The following are the only financial needs considered immediate and
heavy: deductible medical expenses (within the meaning of Section 213(d) of the
Code) of the Employee, the Employee's spouse, children, or dependents; the
purchase (excluding mortgage payments) of a principal residence for the
Employee; payment of tuition for the next twelve months of post-secondary
education for the Employee, the Employee's spouse, children or dependents; or
the need to prevent the eviction of the Employee from, or a foreclosure on the
mortgage of, the Employee's principal residence. A distribution will be
considered as necessary to satisfy an immediate and heavy financial need of the
Employee only if:
VI-6
<PAGE> 60
(i) The Employee has obtained all distributions other than hardship
distributions, and all nontaxable loans under all plans maintained by the
Employer:
(ii) All plans maintained by the Employer provide that the Employee's
Elective Deferrals (and Employee Contributions) will be suspended for
twelve months after the receipt of the hardship distribution;
(iii) The distribution is not in excess of the amount of an immediate and
heavy financial need; and
(iv) All plans maintained by the Employer provide that the Employee may not
make Elective Deferrals for the Employee's taxable year immediately
following the taxable year of the hardship distribution in excess of the
applicable limit under Section 402(g) of the Code for such taxable year
less the amount of such Employee's Elective Deferrals for the taxable year
of the hardship distribution.
A distribution based upon financial hardship cannot exceed the amount required
to meet the immediate financial need created by the hardship and not reasonably
available from other resources of the Participant. Entitlement to a distribution
based on financial hardship shall be determined by the Committee in its sole and
exclusive discretion. The Committee may require such reasonable proof of
immediate financial need as it deems necessary to uniformly and fairly
administer this Section 6.5, as a condition precedent to any distribution by
reason of financial hardship.
VI-7
<PAGE> 61
(e) Notwithstanding anything contained in Section 6.5(b) regarding the age of a
Participant or financial hardship, to the contrary, a Participant may withdraw
all or a portion of his or her Employee Contribution Account once each calendar
month regardless of his or her age or the existence of any financial hardship if
such Participant satisfies all of the other terms and conditions contained in
this Section 6.5.
6.6 DEBITING OF INVESTMENT FUNDS: If a Participant making less than a total
withdrawal of his or her Accounts under Section 6.5 has his or her Accounts
invested in more than one Investment Fund, the amount withdrawn from his or her
Accounts shall be debited, on a pro rata basis, against each Investment Fund in
which such Accounts are invested.
6.7 REQUIRED DISTRIBUTIONS: Distribution of Account balances of a
Participant will be made by April 1 of the year following the calendar year in
which the Participant attains age 70-1/2, and any balances that arise thereafter
will be distributed by each December 31 thereafter. If the Participant has not
yet terminated employment and has balances invested in Employer Stock under the
Common Stock Fund, the distribution of such balances shall, to the maximum
extent possible, be made in whole shares of Employer Stock.
6.8 DISTRIBUTION REQUIREMENTS: (a) Elective Deferrals, Qualified
Non-elective Contributions, and Qualified Matching Contributions and income
allocable to each, must comply with the distribution requirements under Section
401(k)(2)(B) of the Code.
VI-8
<PAGE> 62
(b) Elective Deferrals, Qualified Non-elective Contributions, and Qualified
Matching Contributions, and income allocable to each are not distributable to a
Participant or his or her Beneficiary or Beneficiaries in accordance with such
Participant's or Beneficiary or Beneficiaries' election, earlier than upon
separation from service, death or disability.
(c) Such amounts may also be distributed upon:
(i) Termination of the Plan without the establishment of another defined
contribution plan.
(ii) The disposition by a corporation to an unrelated corporation of
substantially all of the assets (within the meaning of Section 409(d)(2)
of the Code) used in a trade or business of such corporation if such
corporation continues to maintain this Plan after the disposition, but
only with respect to Employees who continue employment with the
corporation acquiring such assets.
(iii) The disposition by a corporation to an unrelated entity of such
corporation's interest in a subsidiary (within the meaning of Section
409(d)(3) of the Code) if such corporation continues to maintain this plan,
but only with respect to Employees who continue employment with such
subsidiary.
(iv) The attainment of age 59-1/2 in the case of a profit-sharing plan.
(v) The hardship of the Participant subject to the provisions of Section
6.5(d) of the Plan.
VI-9
<PAGE> 63
All distributions that may be made pursuant to one or more of the fore-going
distributable events are subject to the spousal and Participant consent
requirements (if applicable) contained in Sections 401(a)(11) and 417 of the
Code.
6.9 LOANS TO PARTICIPANTS: (a) The Committee may, in its sole discretion,
and upon such terms and conditions as it may require, direct the Trustee to loan
a Participant an amount which, when added to all loans outstanding under the
Plan and made by the Participant does not exceed the allowable portion, as
determined under the following table, of the Participant's total Account
balances:
<TABLE>
<CAPTION>
Maximum Loan
(Allowable Portion of Total
Total Vested Balance Account Balances)
- -------------------- ---------------------------
<S> <C>
0 - 999 0%
$1,000 or more 50% but not to
exceed $50,000
</TABLE>
(b) If the Participant participates in another plan or plans by the Employer or
any of the members of the controlled group of corporations of which the Employer
is a part which allow(s) loans, the maximum loan limits reflected in the above
table apply in the aggregate to the Plan and any such other plan or plans less
any Matching Contributions made under the Plan.
(c) For purposes of this Section, "Total Account Balance" means the total dollar
value, as of the Valuation Date or Special Valuation Date coinciding with or
immediately preceding the date of the loan, of the Participant's Accounts.
VI-10
<PAGE> 64
(d) Although used in determining the Total Account Balances, the Employer
Contribution Account balance is not available for loan.
(e) All loans shall be subject to the approval of the Committee which shall
investigate each application for a loan.
(f) In addition to such rules and regulations as the Committee may adopt, all
loans shall comply the following terms and conditions:
1. An application for a loan by a Participant shall be made in writing to the
Committee whose action thereon shall be final.
2. The period of repayment for any loan shall be arrived at by mutual agreement
between the Committee and the borrower, but such period in no event shall exceed
five years, except that such five-year repayment rule shall not apply to any
loan used for the purpose of establishing or preserving a home which is the
Participant's principal residence.
3. Each loan shall be made against collateral being the assignment of the
borrower's entire right, title and interest in and to the Trust Fund, supported
by the borrower's collateral promissory note for the amount of the loan,
including interest, payable to the order of the Trustee.
4. Each loan shall bear interest at a rate to be fixed by the Committee and, in
determining the interest rate, the Committee shall take into consideration
interest rates currently being charged. The Committee shall not discriminate
among Participants in the matter of interest rates; but loans granted at
different times may bear different interest rates if, in
VI-11
<PAGE> 65
the opinion of the Committee, the difference in rates is justified by a change
in general economic conditions.
5. No distribution, other than a hardship withdrawal which is approved by the
Committee pursuant to Section 6.5 shall be made to any Participant or to a
Beneficiary of any such Participant unless and until all unpaid loans, including
accrued interest thereon, have been repaid.
6. Notwithstanding anything contained herein to the contrary, a Participant may
not obtain a loan unless it is consented to by his or her spouse in a signed
writing which is notarized or witnessed by a Plan representative or if the
Committee determines in its sole discretion that such consent is not obtainable
for good cause shown, consistent with applicable law.
VI-12
<PAGE> 66
ARTICLE VII. - INVESTMENT OPTIONS, TRUST FUND
7.1 INVESTMENT OPTIONS: Each Participant shall designate the Investment
Fund(s) under which contributions made pursuant to Sections 4.1(a), and 4.3,
hereof, are to be invested. Initially, there shall be five such investment
funds, as hereinafter indicated:
(i) A Common Stock Fund, consisting of Employer Stock;
(ii) Two Equity Funds, consisting of common stock and other equity
securities, held directly or indirectly; and
(iii) A Fund, consisting of interest bearing accounts, certificates of
deposit, or bonds, debentures and other evidences of indebtedness issued by
corporations and governmental units.
(iv) A Fixed Fund, consisting of "guaranteed" investment contracts with
insurance companies.
Following the transfer of assets to this Plan from plans of The Dial Corp
("Dial") and the Committee's decision to establish a new Investment Fund in
connection therewith, the new Investment Fund indicated below shall be added to
the foregoing list:
(v) A Dial Common Stock Fund consisting of Dial common stock. This
Investment Fund shall be subject to the special rules in Section 7.8.
VII-1
<PAGE> 67
The Committee and the Trustees may change Investment Funds or add Investment
Funds at any time.
7.2 INVESTMENT OF CONTRIBUTIONS: (a) Each Participant may elect with
respect to future contributions to his Employee Contribution Account, Salary
Reduction Contribution Account and Vested Rollover Contribution Account to have
the aggregate contributions to such Account(s) invested in increments of 5% of
the total contributions in an Investment Fund or Funds.
(b) Each Participant may make such elections by filing an election form with the
Committee in the form prescribed by it, upon becoming a Participant. Such
elections may be changed as frequently as daily in accordance with procedures
established by the Committee and the Trustee.
7.3 INVESTMENT TRANSFERS: (a) Subject to all of the other provisions herein
contained, each Participant may elect as frequently as daily to have the assets
in any or all Investment Fund(s), in increments of 5% of the total, transferred
to any one or more other Investment Fund(s).
(b) Each Participant may change his election by properly completing and filing
an election form with the Committee in the form prescribed by it or by
contacting the Trustee in accordance with procedures established by the
Committee.
7.4 TRANSFER OF ASSETS: The Committee shall direct the Trustee to transfer
monies or other property from the appropriate Investment Funds to the other
Investment Funds as may be necessary to carry out the aggregate
VII-2
<PAGE> 68
transfer transactions after such Committee has caused the necessary entries to
be made in the Participants' Accounts and in the Investment Funds and has
reconciled offsetting transfer elections, in accordance with uniform rules
therefor established by such Committee.
7.5 TRUST FUND: (a) All contributions under this Plan shall be paid to the
Trustee and deposited in the Trust Fund. However, all contributions made by the
Employer are expressly conditioned upon the continued qualification of the Plan
under the Code, including any amendments to the Plan. Upon the Employer's
request, a contribution which was made by a mistake of fact, or conditioned upon
qualification of the Plan or any amendment thereof shall be returned to the
Employer within one year after the payment of the contribution, or the denial of
the qualification, whichever is applicable.
(b) Except as provided above, all assets of the Trust Fund, including investment
Income, shall be retained for the exclusive benefit of Participants and
Beneficiaries and shall be used to pay benefits to such persons or to pay
administrative expenses of the Plan and Trust Fund to the extent not paid by the
Employer and shall not revert to or inure to the benefit of the Employer.
7.6 TENDER OFFERS: As soon as practicable after the commencement of a
tender offer or exchange offer ("Offer") for shares of Employer Stock, the
Committee shall use its reasonable best efforts to cause each Participant (who
has an Account allocated in whole or in part to Employer Stock) to be advised in
writing of the terms of the Offer, together with forms by which the Participant
may instruct the Committee to instruct the
VII-3
<PAGE> 69
Trustee, or revoke such instruction, to tender shares credited to his or her
Account, to the extent permitted under the terms of any such Offer. The Trustee
shall follow the directions of the Committee but the Trustee shall not tender
shares for which no instructions are received. In advising Participants of the
terms of the Offer, the Committee may include statements from the management of
GFC Financial Corporation setting forth its position with respect to the Offer.
The giving of instructions to the Trustee to tender shares of Employer Stock and
the tender thereof shall not be deemed a withdrawal or suspension from the Plan
or a forfeiture of any portion of the Participant's interest in the Plan. The
number of shares of Employer Stock to which a Participant may provide
instructions shall be the total number of shares credited to his or her
Account(s), whether or not the shares are vested, as of the close of business on
the day preceding the date on which the tender offer commences or such earlier
date which shall be designated by the Committee which the Committee, in its sole
discretion, deems appropriate for reasons of administrative convenience. Any
securities received by the Trustee as a result of a tender of shares hereunder
shall be held, and any cash so received shall be invested in short-term
investments, for the account of each Participant with respect to whom shares of
Employer Stock were tendered pending any reinvestment by the Trustee, as it may
deem appropriate, consistent with the purposes of the Plan.
7.7 VOTING RIGHTS IN EMPLOYER STOCK:
(a) Each Participant (whose Account has allocated to it any shares of
Employer Stock) and each Beneficiary or alternate payee (within the meaning of
section 414(p) of the Code) having a presently enforceable interest in the
Accounts of a Participant is, for purposes of this Section
VII-4
<PAGE> 70
7.7 hereby designated a "named fiduciary," within the meaning of Section
403(a)(1) of ERISA (hereinafter referred to as a "Named Fiduciary") and shall be
a Fiduciary (within the meaning of Section 2.1(hh)), for purposes of performing
the fiduciary duties described by this Section 7.7. Pursuant to the provisions
of Section 8.1, each Named Fiduciary shall be the sole Fiduciary responsible for
performing the fiduciary duties assigned hereunder, and no other Plan Fiduciary
shall be responsible to ensure that such Named Fiduciaries discharge their
duties hereunder.
(b) Each Named Fiduciary shall be responsible to direct the Trustee in
writing as to the manner in which the Employer Stock allocated to his or her
Accounts (or to the Accounts in which the Named Fiduciary has an interest, but
only to the extent of his or her interest in such Accounts) is to be voted on
each matter brought before an annual or a special shareholders' meeting and to
revoke such instruction to the extent permitted under the terms of such vote.
Such instruction or revocation thereof shall apply to the total number of shares
(including fractional shares) of Employer Stock allocated to each Named
Fiduciary's Accounts (or to the Accounts in which the Named Fiduciary has an
interest, but only to the extent of his or her interest in such Accounts),
whether or not vested, as of the record date for the shareholders' meeting or
such earlier date which shall be designated by the Committee which the
Committee, in its sole discretion, deems appropriate for reasons of
administrative convenience.
(c) Within a reasonable time before each shareholder's meeting, the
Committee cause each Named Fiduciary to be notified of each occasion for
directing the Trustee regarding the voting of Employer Stock. Information
provided to each Named Fiduciary shall include all proxy solicitation and other
materials distributed by the Employer or by management and others who may
solicit proxies to shareholders with regard
VII-5
<PAGE> 71
to such exercise of voting rights, together with a form stating the number of
shares of Employer Stock attributable, for voting purposes, to such Named
Fiduciary and requesting directions on how such shares of Employer Stock held by
the Trustee in the Trust shall be voted. The Committee shall use its reasonable
best efforts to cause each Named Fiduciary entitled to direct the Trustee to
receive such notices and forms.
(d) Upon timely receipt of written directions from Named Fiduciaries, the
Trustee shall, on each such matter, vote as directed the appropriate number of
shares (as determined under this Section 7.7 and including fractional shares) of
Employer Stock held by the Trustee in the Trust, and the Trustee shall have no
discretion in such matter. To the extent that a Named Fiduciary does not direct
the Trustee with respect to the voting of Employer Stock attributable, for
voting purposes, to such Named Fiduciary, such Named Fiduciary shall be deemed
to have exercised his or her fiduciary prerogative to refrain from having such
Employer Stock voted and the Trustee shall not vote such shares of Employer
Stock. The Trustee shall have no discretion in such matter.
(e) In the case of a merger, tender offer, or other major corporate
transaction requiring approval by more than the majority normally required for
other shareholder votes, the instructions received by the Trustee (or the
Trustee's designate) from Named Fiduciaries shall be held by the Trustee (or the
Trustee's designate) in confidence and shall not be divulged or released to any
person, including officers or employees of the Employer; provided, however, that
to the extent necessary for the operation of the Plan, such instructions may be
relayed by the Trustee (or the Trustee's designate) to a record keeper, auditor
or other person providing services to the Plan if such person (i) is not the
Employer, and (ii)
VII-6
<PAGE> 72
agrees not to divulge such directions to any other person, including employees,
officers and directors of the Employer.
7.8 SPECIAL RULES FOR ASSETS TRANSFERRED FROM DIAL PLANS:
(a) The following rules shall apply if the Plan receives Dial common stock and
other assets from Dial plans as provided in Section 11.2. In connection with
Dial's distribution of Employer Stock to its shareholders, Participants for whom
Dial common stock is received from Dial plans shall be allowed to elect to keep
or dispose of such stock in this Plan. Such an election shall initially be
offered as soon as practicable, and a similar election shall be offered
thereafter on each regular investment election date of the Plan. Any such
election shall be subject to the additional rules and restrictions below.
(b) For Participants who elect to dispose of Dial stock, the following
investment rules shall apply.
(i) If such Dial stock was in a Participant's Employer Contribution
Account, it shall be replaced with Employer Stock (by means of either a
sale and reinvestment or an arm's-length exchange with a person who is not
a party in interest under ERISA or a disqualified person under the Code)
and invested in the Common Stock Fund. Thereafter, such Employer Stock in
the Employer Contribution Accounts of such Participants will be subject to
the Plan's normal rules requiring such investments to remain in Employer
Stock, as provided in Section 5.10(c), and to the Plan's normal rules for
making distributions of balances in the Employer Contribution Account that
are invested in this manner.
VII-7
<PAGE> 73
(ii) If such Dial stock was in a Participant's Employee Contribution
Account, Salary Reduction Contribution Account, or Vested Rollover
Contribution Account, it shall be sold in an arm's-length transaction
and the proceeds shall be reinvested in available Investment Funds
according to the Participant's most recent investment election for
Elective Deferrals (or a special investment election if there is no
such election for Elective Deferrals) and shall thereafter be subject
to the Plan's normal rules for investments and distributions of
balances in such Accounts.
(c) For Participants who elect to keep Dial stock, it shall be invested in the
Dial Common Stock Fund and retained for them in a special subaccount of the
Account in which it is held until an investment transfer out of the Dial Common
Stock Fund is elected in accordance with the rules of this Article VII
(including any special rules below that may apply) or until the time for
distribution under the rules of the Plan. Notwithstanding the foregoing,
however, the balance of a Participant's Account that is invested in the Dial
Common Stock Fund may be cashed out for the purpose of making a loan to the
Participant in any case where this treatment would apply to a similar Account
balance that is invested in Employer Stock in the Common Stock Fund. Such
cash-outs for the purpose of making a loan shall be subject to rules similar to
those that would apply if the balance were invested in Employer Stock. When a
distribution is due from the Dial Common Stock Fund following a Participant's
termination of employment, the usual rules of the Plan shall apply, except that
the Participant or Beneficiary shall be allowed to elect to receive the
distribution from such Investment Fund in the form of whole shares of Dial
common stock (plus cash in lieu of any fractional share) instead of receiving it
in cash. The
VII-8
<PAGE> 74
dividends on Dial common stock and any other earnings of the Dial
Common Stock Fund shall be reinvested in other Investment funds as provided
below.
(i) If the Dial stock to be kept is in a Participant's Employer
Contribution Account, the dividends on such stock and any other
earnings of the Dial Common Stock Fund for such Account shall be
reinvested in the Common Stock Fund for the purpose of acquiring
Employer Stock. Under a special investment rule, a Participant may
elect to transfer funds in his or her Employer Contribution Account out
of the Dial Common Stock Fund on any regular investment election date
of the Plan, but only for the purpose of moving such funds into the
Common Stock Fund and acquiring Employer Stock thereunder. Funds in a
Participant's Employer Contribution Account may not be transferred from
the Common Stock Fund or any other Investment Fund into the Dial Common
Stock Fund. Therefore, except in the case of stock dividends, stock
splits, or nontaxable distributions with respect to dial stock, no Dial
stock or other assets shall be added to the Dial Common Stock for a
Participant's Employer Contribution Account.
(ii) If the Dial stock to be kept is in a Participant's Employee
Contribution Account, Salary Reduction Contribution Account, or Vested
Rollover Account, the dividends on such stock and any other earnings of
the Dial Common Stock Fund for such Accounts shall be reinvested in
other Investment Funds according to the Participant's most recent
investment election for Elective Deferrals (or a special investment
election if there is no such election for Elective Deferrals).
Participants shall be allowed to transfer funds for the Accounts
VII-9
<PAGE> 75
listed in the preceding sentence into or out of the Dial Common Stock
Fund under the same rules that apply to investment transfer between or
among other Investment Funds for such Accounts.
(d) The Committee shall establish special rules and accounting procedures as
necessary to preserve any distribution forms or other valuable rights that are
protected by Code Section 411(d)(6) with respect to amounts attributable to
assets transferred directly to this Plan from a Dial plan, including, to the
extent applicable, rule requiring (i) the tracking of such amounts in special
accounts, and (ii) with respect to amounts that can be traced to The Dial Corp
Employees' Stock Ownership Plan, the preservation of the Code Section 401(a)(28)
right of diversification, the Code Section 4975(e)(7) right to receive
distributions in the form of Dial common stock, and the Code Section 409(o)
right to receive a distribution that complies with certain timing requirements.
VII-10
<PAGE> 76
ARTICLE VIII. - ADMINISTRATION
8.1 ALLOCATION OF RESPONSIBILITY AMONG FIDUCIARIES FOR PLAN AND TRUST
ADMINISTRATION: The Fiduciaries shall have only those specific powers, duties,
responsibilities and obligations as are specifically given them under the Plan
or the Trust. The Board of Directors of GFC Financial Corporation shall have
the sole authority to appoint and remove the Trustee. GFC Financial
Corporation shall have the sole authority to appoint and remove the Committee,
and any Investment Manager which may be provided for under and defined in the
Trust, and to amend or terminate, in whole or in part, this Plan or the Trust.
GFC Financial Corporation shall have the final responsibility for
administration of the Plan, which responsibility is specifically described in
this Plan and the Trust. The Committee, appointed pursuant to Section 8.2,
hereof, shall have the specific delegated powers and duties described in the
further provisions of this Article VIII, and such further powers and duties as
hereinafter may be delegated to it by GFC Financial Corporation. The Trustee
shall have sole responsibility for the administration of the Trust and the
management of the assets held under the Trust, all as specifically provided in
the Trust. Each Fiduciary warrants that any direction given, information
furnished, or action taken by it shall be in accordance with the provisions of
the Plan or the Trust, as the case may be, authorizing or providing for such
direction, information or action. Furthermore, each Fiduciary may rely upon
any such direction, information or action of another Fiduciary as being proper
under this Plan or the Trust, and is not required under the Plan or the Trust
to inquire into the propriety of any such direction, information or action. It
is intended under the Plan and the Trust that each Fiduciary shall be
responsible for the proper exercise of its own
VIII-1
<PAGE> 77
powers, duties, responsibilities and obligations under this Plan and the Trust
and shall not be responsible for any act or failure to act of another
Fiduciary. No Fiduciary guarantees the Trust Fund in any manner against
investment loss or depreciation in asset value.
8.2 APPOINTMENT OF COMMITTEE: A Committee consisting of at least
three persons shall be appointed by and serve at the pleasure of the Chairman
of the Board of GFC Financial Corporation to assist in the administration of
the Plan. All usual and reasonable expenses of the Committee may be paid in
whole or in part by the Employer, and any expenses not paid by the Employer
shall be paid by the Trustee out of the principal or income of the Trust Fund.
Any members of the Committee who are Employees shall not receive compensation
with respect to their services for the Committee.
8.3 CLAIMS PROCEDURE: The Committee shall make all determinations as
to the right of any person to a benefit. Any denial by the Committee of the
claim for benefits under the Plan by a Participant or Beneficiary shall be
stated in writing by the Committee and delivered or mailed to the Participant
or Beneficiary at his or her last address shown on Plan records; and such
notice shall set forth the specific reasons for the denial, written to the best
of the Committee's ability in a manner that may be understood without legal or
actuarial counsel. In addition, the Committee shall afford a reasonable
opportunity to any Participant or Beneficiary whose claim for benefits has been
denied for a review of the decision denying the claim and, in the event of
continued disagreement, may appeal to GFC Financial Corporation (or a benefits
review committee appointed by it) whose decision shall be final.
VIII-2
<PAGE> 78
8.4 RECORDS AND REPORTS: GFC Financial Corporation (or the Committee
if so designated by it) shall exercise such authority and responsibility as it
deems appropriate in order to comply with ERISA, other applicable law and
governmental regulations issued thereunder relating to records of Participant's
employment, Account balances, notifications to Participants' and annual reports
to the Internal Revenue Service and Department of Labor. Each Employer agrees
to abide by the directions of GFC Financial Corporation or its designee, in the
exercise of its responsibilities hereunder.
8.5 OTHER COMMITTEE POWERS AND DUTIES: The Committee shall have such
duties and powers as may be necessary to discharge its duties hereunder,
including, but not by way of limitation, the following:
(a) To construe and interpret the Plan, decide all questions of eligibility
and determine the amount, manner and time of payment of any benefits hereunder;
(b) To prescribe procedures to be followed by Participants and Beneficiaries
filing applications for benefits;
(c) To prepare and distribute, in such manner as the Committee determines to
be appropriate, information explaining the Plan;
VIII-3
<PAGE> 79
(d) To receive from the Employer and from Participants and Beneficiaries such
information as shall be necessary for the proper administration of the Plan;
(e) To furnish the Employer, upon request, such annual reports with respect to
the administration of the Plan as are reasonable and appropriate;
(f) To receive, review and keep on file (as it deems convenient or proper)
reports of the financial condition, and of the receipts and disbursements, of
the Trust Fund from the Trustee; and
(g) To appoint or employ individuals to assist in the administration of the
Plan and any other agents it deems advisable, including legal and actuarial
counsel.
The Committee shall have no power to add to, subtract from or modify any of the
terms of the Plan, or to change or add to any benefits provided by the Plan, or
to waive or fail to apply any requirements of eligibility for a benefit under
the Plan.
8.6 RULES AND DECISIONS: The Committee may adopt such rules as it
deems necessary, desirable or appropriate. All rules and decisions of the
committee shall be uniformly and consistently applied to all Participants and
Beneficiaries in similar circumstances. When making a determination or
calculation, the Committee shall be entitled to rely upon information furnished
by a Participant or Beneficiary, the Employer, the legal counsel of any such
person or the Trustee.
VIII-4
<PAGE> 80
8.7 COMMITTEE PROCEDURES: The Committee may act at a meeting or in
writing without a meeting. The Committee shall elect one of its members as
chairman, appoint a secretary, who may or may not be a Committee member, and
advise the Trustee of such actions in writing. The secretary shall keep a
record of all meetings and forward all necessary communications to the
Employer, or the Trustee. The Committee may adopt such bylaws and regulations
as it deems desirable for the conduct of its affairs. All decisions of the
Committee shall be made by the vote of the majority including actions in
writing taken without a meeting. A dissenting Committee member who, within a
reasonable time after he or she has knowledge of any action or failure to act
by the majority, registers his or her dissent in writing delivered to the other
committee members, the Employer and the Trustee shall not be responsible for
any such action or failure to act.
8.8 AUTHORIZATION OF BENEFIT PAYMENTS: The Committee shall issue
directions to the Trustee concerning all benefits which are to be paid from the
Trust Fund pursuant to the provisions of the Plan, and shall warrant to the
Trustee that all such directions are in accordance with the Plan.
8.9 APPLICATION AND FORMS FOR BENEFITS: The Committee may require a
Participant or Beneficiary to complete and file with the Committee an
application for a benefit on the forms approved by the Committee, as a
condition precedent to payment of benefits. The Committee may rely upon all
such information so furnished it, including the Participant's or Beneficiary's
current mailing address.
VIII-5
<PAGE> 81
8.10 FACILITY OF PAYMENT: Whenever, in the Committee's opinion, a
person entitled to receive any payment of a benefit or installment thereof
hereunder is under a legal disability or is incapacitated in any way so as to be
unable to manage his or her financial affairs, the Committee may direct the
Trustee to make payments to such person or to his or her legal representative or
to a relative or friend of such person for his or her benefit, or the Committee
may direct the Trustee to apply the payment for the benefit of such person in
such manner as the Committee may direct the Trustee to apply the payment for the
benefit of such person in such manner as the Committee considers advisable. Any
payment of a benefit or installment thereof in accordance with the provisions of
this Section shall be a complete discharge of any liability for the making of
such payment under the provisions of the Plan.
8.11 INDEMNIFICATION OF THE COMMITTEE: The Committee and the
individual members thereof shall be indemnified by the Employer and not from the
Trust Fund against any and all liability arising by reason of any act or failure
to act made in good faith pursuant to the provisions of the Plan, including
expenses reasonably incurred in the defense of any claim relating thereto.
VIII-6
<PAGE> 82
ARTICLE IX. - MISCELLANEOUS
9.1 NONGUARANTEE OF EMPLOYMENT: Nothing contained in the Plan shall
be construed as a contract of employment between the Employer and any Employee,
or as a right of any Employee to be continued in the Employment of the
Employer, or as a limitation of the right of the Employer to discharge any of
its Employees, with or without cause.
9.2 RIGHTS TO TRUST ASSETS: No Employee, Participant, or Beneficiary
shall have any right to, or interest in, any assets of the Trust Fund at any
time, including upon termination of his or her employment or otherwise, except
as provided from time to time under the Plan, and then only to the extent of
the benefits properly payable under the Plan to a Participant or Beneficiary
out of the assets of the Trust Fund. All payment of benefits as provided for
the in Plan shall be made solely out of the assets of the Trust Fund to the
extent sufficient, and none of the Fiduciaries or Employers shall be liable
therefore in any manner.
9.3 NONALIENATION OF BENEFITS: (a) Except as provided in Article VI
or as required by law, benefits payable under the Plan shall not be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution or levy of any kind, either
voluntary or involuntary, prior to actually being received by the person
entitled to the benefit under the terms of the Plan; and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or
otherwise dispose of any right to benefits payable hereunder, shall be void.
The Trust Fund shall not in any manner be liable for, or
IX-1
<PAGE> 83
subject to, the debts, contracts, liabilities, engagements or torts of any
person entitled to benefits hereunder.
9.4 NONFORFEITABILITY OF BENEFITS: Subject only to the specific
provisions of the Plan, nothing shall be deemed to divest a Participant of his
or her right to the nonforfeitable benefit to which he or she becomes entitled
in accordance with the provisions of the Plan.
IX-2
<PAGE> 84
ARTICLE X. - AMENDMENTS AND ACTION BY EMPLOYER
10.1 AMENDMENTS: GFC Financial Corporation reserves the right to make
from time to time any amendment or amendments to the Plan which do not cause (i)
any adverse consequences to any Participant's rights in his or her Account
balances and Funds in which such balances are invested, or (ii) any part of the
Trust Fund to be used for, or diverted to, any purpose other than the exclusive
benefit of Participants or their Beneficiaries, provided, however, that GFC
Financial Corporation may make any amendment it determines necessary or
desirable, with or without retroactive effect, to comply with the Code and other
applicable law
10.2 ACTION BY GFC FINANCIAL CORPORATION: Any action by GFC Financial
Corporation under the Plan may be by resolution of its Board of Directors, or by
any person or persons duly authorized by resolution of said Board to take such
action.
X-1
<PAGE> 85
ARTICLE XI. - SUCCESSOR EMPLOYER AND MERGER
OR CONSOLIDATION OF PLANS
11.1 SUCCESSOR EMPLOYER: In the event of the dissolution, merger,
consolidation or reorganization of an Employer, provision may be made in the
sole discretion of GFC Financial Corporation by which the Plan and Trust will be
continued by the successor; and, in that event, such successor shall be
substituted for Employer under the Plan. The substitution of the successor
shall constitute an assumption of Plan liability by the successor and the
successor shall have all of the powers, duties and responsibilities of the
Employer under the Plan.
11.2 CONDITIONS APPLICABLE TO PLAN MERGERS, CONSOLIDATIONS, OR ASSET
TRANSFERS: In the event of any merger or consolidation of the Plan with or
transfer in whole or in part of the assets and liabilities of the Trust Fund and
another trust fund held under any plan of deferred compensation maintained or to
be established for the benefit of all or some of the Participants of the Plan,
the assets of the Trust Fund applicable to such Participants shall be merged or
consolidated with, or affected by a transfer to or from the other trust fund
only if:
(i) Each Participant would (if either this Plan or the other plan
then terminated) receive a benefit immediately after the merger,
consolidation or transfer, and retain other rights protected by Code
Section 411(d)(6), which are not less than the benefit and the rights
to which the Participant would have been entitled immediately before
the merger, consolidation, or transfer (if either this Plan or the
other plan had then terminated);
XI-1
<PAGE> 86
(ii) Resolutions of the board of directors of the Employer (or a new
or successor employer) of the affected Participants authorize the
transaction and, in the case of a plan of a new or successor employer,
assume the liabilities with respect to such Participants'
participation in the new plan; and
(iii) Such other plan is qualified under Section 401(a) of the Code
and includes a provision similar to that in Section 11.2(i) above.
Pursuant to this Section 11.2 and consistent with the agreement between the
Company and Dial in connect with Dial's distribution of Employer Stock to its
stockholders, the Committee may allow this Plan to receive certain assets from
Dial plans in accordance with the following rules. The assets and related
account balances in the Dial Companies Capital Accumulation Plan relating to
Participants who were previously covered by that plan shall be transferred in
their entirety to the Accounts of such Participants in this Plan. In addition,
the assets and the related account balances in The Dial Corp Employees' Stock
Ownership Plan relating to Participants who were previously covered by that
plan, other than Employer Stock, which shall be transferred to the Company's
Employee Stock Ownership Plan rather than to this Plan, shall be transferred to
the Accounts of such participants in this Plan.
XI-2
<PAGE> 87
ARTICLE XII. - PLAN TERMINATION
12.1 RIGHT TO TERMINATE: In accordance with the procedures set forth
in this Article, GFC Financial Corporation may terminate the Plan at any time in
its entirety or with respect to any Employer or group of Employees or
Participants. The Board of Directors of an Employer may terminate the Plan at
any time with respect to its Employees or any group of its Employees or
Participants, provided such Employer has made all contributions due to the Plan
to the date of such termination.
12.2 PARTIAL TERMINATION: Upon termination of the Plan by GFC
Financial Corporation or by the Employer with respect to such Employer or a
group of Employees or Participants of such Employer, the Trustee shall, in
accordance with the directions of the Committee, allocate and segregate for the
benefit of the Participants with respect to which the Plan is being terminated
the proportionate interest of such Participants in the Trust Fund. The funds so
allocated and segregated shall be used by the Trustee to pay benefits to or on
behalf of Participants in accordance with Section 12.3.
12.3 LIQUIDATION OF THE TRUST FUND: (a) Upon termination or partial
termination of the Plan, the accounts of all P articipants affected thereby
shall become fully vested, and the Committee may direct the Trustee: (a) to
continue to administer the Trust fund and pay Account balances in accordance
with Article VI to Participants affected by the termination upon their
termination of employment or to their Beneficiaries upon such a Participant's
death, until the Trust Fund has been liquidated; or (b) to distribute the assets
remaining in the Trust Fund, after payment of any
XII-1
<PAGE> 88
expenses properly chargeable thereto, to Participants and Beneficiaries in
proportion to their respective Account balances or rights thereto.
(b) In case the Committee directs liquidation of the Trust Fund pursuant to
(a) above, the expenses of administering the Plan and Trust, if not paid by the
Employer, shall be paid from the Trust Fund.
(c) The Trustee may delay distribution of assets under Section 12.3 pending
receipt of written determination by the Internal Revenue Service that the Plan
is qualified upon termination.
XII-2
<PAGE> 89
ARTICLE XIII. - ADOPTION OF PLAN
13.1 ADOPTION AGREEMENT: (a) Subject to the approval of GFC Financial
Corporation and consistent with the provisions of ERISA and other applicable
law, an Affiliate may adopt the Plan for its Eligible Employees by entering into
an Adoption Agreement in the form and substance prescribed by the Committee. To
the extent approved by the Committee, each Affiliate may:
(i) Modify the definition of Eligible Employee set forth in Section
2.2(d) hereof, with respect to its Employees; and
(ii) Modify the definition of Compensation set forth in Section 2.3(d),
hereof, with respect of its Employees.
Any such modification shall be reflected in the Adoption Agreement and may be
amended from time to time by a written supplement to the Adoption Agreement with
the approval of the Committee. Each Employer may determine the level of Employer
contributions to be made by the Employer to the Employer Contribution Accounts
of its Eligible Employees in each Year.
(b) The Committee may prospectively require that all provisions of the Plan be
uniformly applied to an Employer, as set forth in the Plan, notwithstanding any
modification provisions in an Adoption Agreement. GFC Financial Corporation may
prospectively revoke or modify any Employer's participation in the Plan at any
time and for any or no reason, without regard to the terms of any Adoption
Agreement, or terminate the Plan with respect to such Employer's Employee
Participants.
XIII-1
<PAGE> 90
(c) By Execution of an Adoption Agreement (each of which by this reference shall
become a part of the Plan), the Employer agrees to be bound by all the terms and
conditions of the Plan.
XIII-2
<PAGE> 91
FIRST AMENDMENT TO THE
GFC FINANCIAL CORPORATION
CAPITAL ACCUMULATION PLAN
WHEREAS, the GFC Financial Corporation Capital Accumulation Plan
(hereinafter called the "Plan") became effective as of March 18, 1992; and
WHEREAS, under Article X of the Plan, GFC Financial Corporation
(hereinafter called the "Employer") has reserved the right to amend the Plan in
whole or in part at any time and from time to time, subject to certain
restrictions set forth in the Plan; and
WHEREAS, pursuant to section 10.2 of the Plan the Board of Directors of
the Employer has delegated the authority to the Plan Committee to amend the Plan
provisions governing the procedures for the voting of shares of stock of the
Employer held by the Plan or its related Trust,
NOW THEREFORE, the Committee deems it advisable to amend the Plan in
the manner hereinafter set forth and, hereby adopts this First Amendment on
behalf of the Employer as follows:
In order to amend section 2.1(hh) of the Plan, pages II-10 through
II-11 of the existing Plan are removed and replaced by the attached replacement
pages II-10 and II-11, which are incorporated herein by this reference.
In order to amend section 7.7 of the Plan, pages VII-4 through VII-9 of
the existing Plan are removed and replaced by the attached replacement pages
VII-4 through VII-10, which are incorporated herein by this reference.
The terms used in this First Amendment, which are defined in the Plan,
shall have the same meaning given to such terms in the Plan.
-1-
<PAGE> 92
Except as modified by this First Amendment, the Plan shall continue in
full force and effect and the Plan and all amendments thereto shall be read,
taken and construed as one and the same document.
Executed at Phoenix, Arizona as of this ____ day of March, 1993 to be
effective as of January 1, 1993.
GFC FINANCIAL CORPORATION
/s/ ROBERT KORTE
------------------------------------
Robert Korte, Committee Member
/s/ DEBBIE INMAN
------------------------------------
Debbie Inman, Committee Member
/s/ LINDA DARDAP
------------------------------------
Linda Darda, Committee Member
For the "Employer"
-2-
<PAGE> 93
GFC FINANCIAL CORPORATION
CAPITAL ACCUMULATION PLAN
UCA 1992 AND OBRA 1993
AMENDMENTS
WHEREAS, the GFC Financial Corporation Capital Accumulation Plan
(hereinafter called the "Plan") became effective as of March 18, 1992; and
WHEREAS, under Article 10 of the Plan, GFC Financial Corporation
(hereinafter called the "Company") has reserved the right to amend the Plan in
whole or in part at any time and from time to time, subject to certain
restrictions set forth in the Plan; and
WHEREAS, pursuant to Section 9.1 of the Plan the Board of Directors of
the Company has delegated the authority to the Company's Chief Executive Officer
and the Committee appointed pursuant to the term of the Plan to amend the Plan
to maintain its qualified status under the Internal Revenue Code,
NOW THEREFORE, the Chief Executive Officer and the Committee deem it
advisable to amend the Plan in the manner hereinafter set forth:
PART I. In order to comply with the requirements of Internal Revenue Code
Section 401(a)(31), the Plan is hereby amended by the adoption of the following
IRS Model Amendment under Rev. Proc. 93-12, effective as of January 1, 1993:
"Article XIV. Direct Rollovers.
Section 14.1. This Article applies to distributions made on or after
January 1, 1993. Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a Distributee's election under this Article, a Distributee
may elect, at the time and in the manner prescribed by the Plan Administrator,
to have any portion of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan specified by the Distributee in a Direct Rollover.
Section 14.2. Definitions.
(a) "Eligible Rollover Distribution": An Eligible
Rollover Distribution is any distribution of all or any portion of the balance
to the credit of the Distributee, except that an Eligible Rollover Distribution
does not include: any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for the life
(or life expectancy) of the Distributee or the joint lives (or joint life
expectancies) of the Distributee and the Distributee's designated beneficiary,
or for a specified period of ten years or more; any distribution to the extent
such distribution is required under
-1-
<PAGE> 94
section 401(a)(9) of the Code; and the portion of any distribution that is not
includible in gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
(b) "Eligible Retirement Plan": An Eligible Retirement Plan is an
individual retirement account described in section 408(a) of the Code, an
individual retirement annuity described in section 408(b) of the Code, an
annuity plan described in section 403(a) of the Code, or a qualified trust
described in section 401(a) of the Code, that accepts the Distributee's Eligible
Rollover Distribution. However, in the case of an Eligible Rollover Distribution
to the surviving spouse, an Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.
(c) "Distributee": A Distributee includes an employee or former
employee. In addition, the employee's or former employee's surviving spouse and
the employee's or former employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in section 414(p)
of the Code, are distributees with regard to the interest of the spouse or
former spouse.
(d) "Direct Rollover": A Direct Rollover is a payment by the Plan
to the Eligible Retirement Plan specified by the Distributee."
PART II. In order to comply with the requirements of Internal Revenue Code
Sections 411(a)(11) and 417, the Plan is further hereby amended by the
adoption of the following IRS Model Amendment under Rev. Proc. 93-47 effective
as of January 1, 1993:
"Section 14.3. Waiver of Thirty Day Notice.
If a distribution is one to which sections 401(a)(11) and 417
of the Code do not apply, such distribution may commence less than 30 days after
the notice required under Regulations Section 1.411-11(c) is given, provided
that:
(1) the Plan Administrator clearly informs the
Participant that the Participant has a right to a
period of at least 30 days after receiving the notice
to consider the decision of whether or not to elect a
distribution (and, if applicable, a particular
distribution option), and
(2) the Participant, after receiving the notice,
affirmatively elects a distribution."
PART III. In order to comply with the requirements of Internal Revenue Code
Section 401(a)(17), the Plan is hereby amended by the addition of the following
IRS Model Amendment under Rev. Proc. 94-13 effective as of January 1, 1994:
<PAGE> 95
"Article XV. Limitations on Pensionable Compensation.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual Compensation of each employee
taken into account under the Plan shall not exceed the OBRA '93 annual
compensation limit. The OBRA '93 annual compensation limit is $150,000, as
adjusted by the Commissioner for increases in the cost of living in accordance
with Section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not exceeding 12
months, over which Compensation is determined (determination period) beginning
in such calendar year. If a determination period consists of fewer than 12
months, the OBRA '93 annual compensation limit will be multiplied by a fraction,
the numerator of which is the number of months in the determination period, and
the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in
this plan to the limitation under Section 401(a)(17) of the Code shall mean the
OBRA '93 annual compensation limit set forth in this provision.
If Compensation for any prior determination period is taken into
account in determining an employee's benefits accruing in the current plan year,
the Compensation for that prior determination period is subject to the OBRA '93
annual compensation limit in effect for that prior determination period. For
this purpose, for determination periods beginning before the first day of the
first Plan Year beginning on or after January 1, 1994, the OBRA '93 annual
compensation limit is $150,000."
Dated this 28th day of December, 1994.
GFC Financial Corporation
/s/ SAMUEL L. EICHENFIELD
-----------------------------------------------
Samuel L. Eichenfield,
Chief Executive Officer
/s/ DE ANN CLARK
-----------------------------------------------
De Ann Clark, Committee Member
/s/ ROBERT M. KORTE
-----------------------------------------------
Robert M. Korte, Committee Member
/s/ BRUNO A. MARSZOWSKI
-----------------------------------------------
Bruno A. Marszowski, Committee Member
<PAGE> 96
GFC FINANCIAL CORPORATION
CAPITAL ACCUMULATION PLAN
ADOPTION AGREEMENT
This Agreement adopting the GFC Financial Corporation Capital
Accumulation Plan established as of March 18, 1992 (hereinafter the "Plan") is
made by TriCon Capital Corporation (hereinafter the "Employer") and approved by
GFC Financial Corporation (hereinafter "GFCFC")as of the date last set forth
below.
RECITALS
WHEREAS, the Plan has been created to benefit certain Employees who
are actively employed by GFC Financial Corporation and certain of its
Affiliates; and
WHEREAS, Employer, as an Affiliate, wishes its Employees to have the
opportunity to participate in the Plan, effective as of the Commencement Date,
set forth below;
WHEREAS, GFCFC, has approved certain modifications of the Plan, as
set forth below, for the benefit of the Employees of the Employer;
NOW, THEREFORE, in consideration of the agreements hereinafter recited
and made, and for other good and valuable consideration, the receipt and
sufficiency of which are by the parties hereby acknowledged, the Plan, by its
Committee, GFCFC, and the Employer agree as follows:
AGREEMENT
1. Subject to the approval of the Chairman of TriCon Capital
Corporation and consistent withprovisions of the Plan as amended herein with the
approval of GFC Financial Corporation, and consistent with ERISA, and other
applicable law, Employer shall participate in the Plan commencing on May 1, 1994
(hereinafter the "Commencement Date").
2. For purposes of the Plan, the term Eligible Employee shall be as
provided in the Plan, provided that the service of any Employee of the Employer
who is a "Transferred Employee" within the meaning of the Assets Purchase
Agreement between Bell Atlantic TriCon Leasing Corporation and the Employer
shall include eligibility service prior to May 1, 1994 with Bell Atlantic TriCon
Leasing Corporation and with any affiliate of Bell Atlantic TriCon
<PAGE> 97
Leasing Corporation which entitled the Transferred Employee to service credit
under the April 20, 1990 Revisions of the Bell Atlantic Savings Plan for
Salaried Employees as amended and restated effective as of January 1, 1990,
except as otherwise noted (hereinafter the "Bell Atlantic Plan").
3. For the purposes of the Plan, the term Compensation shall be
as provided in the salary definition and Appendix II under the Bell
Atlantic Plan.
4. Employer shall make Salary Reduction Contributions and After-Tax
Salary Deductions to the Trustee for the Accounts of its Eligible Employees who
participate in the Plan in the percentages per payroll period provided in
Sections 4(a) and 4(b) of the Bell Atlantic Plan, at such times as directed by
the Committee.
5. All optional forms of distribution provided under the Bell Atlantic
Plan shall, to the extent required under Internal Revenue Code Section
411(d)(6), be preserved under the Plan for the benefits of Eligible Employees
which are transferred from the Bell Atlantic Plan to this Plan.
6. By execution of this Adoption Agreement, Employer agrees to be bound
by all of the terms and conditions of the Plan and Trust which, by this
reference are made a part hereof as if set forth in their entirety herein, as
amended as provided herein. The terms used in this Adoption Agreement shall have
the same meaning as set forth in the Plan, unless expressly otherwise provided
herein.
Signed this 30th day of April, 1994 by:
GFC Financial Corporation
By /s/ S. EICHENFIELD
-----------------------
Chief Executive Officer
2
<PAGE> 98
TriCon Capital Corporation
By /s/ S. EICHENFIELD
----------------------------
Chairman
GFC Financial Corporation Capital
Accumulation Plan
By /s/
----------------------------
Committee Chairman
3
<PAGE> 99
GFC FINANCIAL CORPORATION
CAPITAL ACCUMULATION PLAN
ADOPTION AGREEMENT
This Agreement adopting the GFC Financial Corporation Capital
Accumulation Plan established as of March 18, 1992 (hereinafter the "Plan") is
made by Ambassador Factors Corporation (hereinafter the "Employer") and approved
by GFC Financial Corporation (hereinafter "GFCFC") as of the date last set forth
below.
RECITALS
WHEREAS, the Plan has been created to benefit certain Employees who are
actively employed by GFC Financial Corporation and certain of its Affiliates;
and
WHEREAS, Employer, as an Affiliate, wishes its Employees to have the
opportunity to participate in the Plan, effective as of the Commencement Date,
set forth below;
NOW, THEREFORE, in consideration of the agreements hereinafter recited
and made, and for other good and valuable consideration, the receipt and
sufficiency of which are by the parties hereby acknowledged, the Plan, by its
Committee, GFCFC, and the Employer agree as follows:
AGREEMENT
1. Subject to the approval of the Chairman of Ambassador Factors
Corporation and consistent with consistent with ERISA, and other applicable
law, Employer shall participate in the Plan commencing on February 14, 1994
(hereinafter the "Commencement Date").
2. For purposes of the Plan, the term Eligible Employee shall be as
provided in the Plan, provided that the service of any Employee of the Employer
who is an "Employee" within the meaning of Section 5.10(b) of the Stock Purchase
Agreement among GFC Financial Corporation, Greyhound Financial Corporation and
Fleet Financial Group, Inc. shall include eligibility service prior to February
14, 1994 with Fleet Factors Corp. and with any entity for which eligibility
service
<PAGE> 100
is credited under the Fleet Financial Group, Inc. Savings Plan (the
"Fleet Plan") as adopted for employees of Fleet Factors Corp.
3. For purposes of the Plan, the term Compensation shall be as
provided in the Plan.
4. The Employer may make contributions to the Trustee for the Accounts
of its Eligible Employees who participate in the Plan at such times and in such
amounts as are provided in the Plan and as are directed by the Committee.
5. By execution of this Adoption Agreement, Employer agrees to be bound
by all of the terms and conditions of the Plan and Trust which, by this
reference are made a part hereof as if set forth in their entirety herein. The
terms used in this Adoption Agreement shall have the same meaning as set forth
in the Plan, unless expressly otherwise provided herein.
Signed this 14th day of February, 1994 by:
GFC Financial Corporation
By /s/ S. EICHENFIELD
------------------------------
Chief Executive Officer
Ambassador Factors Corporation
By /s/ S. EICHENFIELD
------------------------------
Chairman
GFC Financial Corporation Capital
Accumulation Plan
By /s/
------------------------------
Committee Chairman
<PAGE> 101
GFC FINANCIAL CORPORATION
CAPITAL ACCUMULATION PLAN
ADOPTION AGREEMENT
This Agreement adopting the GFC Financial Corporation Capital
Accumulation Plan established as of March 18, 1992 (the "Plan") is made by
Wisconsin Hotel Operating Corporation (the "Employer") and approved by GFC
Financial Corporation ("GFCFC") as of the date set forth below.
RECITALS
WHEREAS, the Plan has been created to benefit certain Employees who
are actively employed by GFCFC and certain of its Affiliates; and
WHEREAS, Employer, as an Affiliate, wishes its Employees to have the
opportunity to participate in the Plan, effective as of the Commencement Date,
set forth below;
NOW, THEREFORE, in consideration of the agreements hereinafter recited
and made, and for other good and valuable considerations, the receipt and
sufficiency of which are by the parties hereby acknowledged, the Plan, by its
Committee, GFCFC and Employer agree as follows:
AGREEMENT
1. Subject to the approval of the Chief Executive Officer of Wisconsin
Hotel Operating Corporation and consistent with provisions of the Plan, ERISA,
and other applicable law, Employer shall participate in the Plan commencing on
July 16, 1993 (hereinafter the "Commencement Date").
2. For purposes of the Plan, the term Eligible Employee shall be
as provided in the Plan.
3. For the purposes of the Plan, the term Compensation shall be
as provided in the Plan.
<PAGE> 102
4. The Employer may make contributions to the Trustee for
the Accounts of its Eligible Employees who participate in the Plan at such
times and in such amounts as are provided in the Plan and as are directed by
the Committee.
5. By execution of this Adoption Agreement, Employer agrees
to be bound by all of the terms and conditions of the Plan and Trust which, by
this reference are made a part hereof as if set forth in their entirety herein.
The terms used in this Adoption Agreement shall have the same meaning as set
forth in the Plan, unless expressly otherwise provided herein.
Signed this 16th day of July, 1993 by:
GFC Financial Corporation
By /s/ S. EICHENFIELD
----------------------------------
Chief Executive Officer
Wisconsin Hotel Operating Corporation
By /s/ S. EICHENFIELD
----------------------------------
Chief Executive Officer
GFC Financial Corporation Capital
Accumulation Plan
By /s/
----------------------------------
Committee Chairman
<PAGE> 103
GFC FINANCIAL CORPORATION
CAPITAL ACCUMULATION PLAN
ADOPTION AGREEMENT
This Agreement adopting the GFC Financial Corporation Capital
Accumulation Plan established as of March 18, 1992 (the "Plan") is made by
Greyhound Financial Capital Corporation (the "Employer") and approved by GFC
Financial Corporation ("GFCFC") as of the date set forth below.
RECITALS
WHEREAS, the Plan has been created to benefit certain Employees who
are activelyemployed by GFCFC and certain of its Affiliates; and
WHEREAS, Employer, as an Affiliate, wishes its Employees to have the
opportunity to participate in the Plan, effective as of the Commencement Date,
set forth below;
NOW, THEREFORE, in consideration of the agreements hereinafter recited
and made, and for other good and valuable considerations, the receipt and
sufficiency of which are by the parties hereby acknowledged, the Plan, by its
Committee, GFCFC and Employer agree as follows:
AGREEMENT
1. Subject to the approval of the Chief Executive Officer of Greyhound
Financial Capital Corporation and consistent with provisions of the Plan, ERISA,
and other applicable law, Employer shall participate in the Plan commencing on
February 1, 1993 (hereinafter the "Commencement Date").
2. For purposes of the Plan, the term Eligible Employee shall be as
provided in the Plan, provided that the service of any Employee of the Employer
who is an "GFC Employee" within the meaning of Schedule 2.1 of the Stock
Purchase Agreement among U.S. Bancorp, U.S. Bancorp Financial, Inc., and
Greyhound Financial Corporation shall include eligibility service prior to
January 14, 1994 with U.S. Bancorp Financial, Inc. and with any entity for which
eligibility
<PAGE> 104
service is credited under the U.S. Bancorp Employee Investment Plan (the
"Bancorp Plan") as adopted for employees of U.S. Bancorp Financial, Inc..
3. For the purposes of the Plan, the term Compensation shall be
as provided in the Plan.
4. The Employer may make contributions to the Trustee for the Accounts
of its Eligible Employees who participate in the Plan at such times and in such
amounts as are provided in the Plan and as are directed by the Committee.
5. By execution of this Adoption Agreement, Employer agrees to be bound
by all of the terms and conditions of the Plan and Trust which, by this
reference are made a part hereof as if set forth in their entirety herein. The
terms used in this Adoption Agreement shall have the same meaning as set forth
in the Plan, unless expressly otherwise provided herein.
Signed this 1st day of February, 1993 by:
GFC Financial Corporation
By /s/ S. EICHENFIELD
------------------------------
Chief Executive Officer
Greyhound Financial Capital Corporation
By /s/ S. EICHENFIELD
------------------------------
Chief Executive Officer
GFC Financial Corporation Capital
Accumulation Plan
By /s/
------------------------------
Committee Chairman
2
<PAGE> 105
GFC FINANCIAL CORPORATION
CAPITAL ACCUMULATION PLAN
ADOPTION AGREEMENT
This Agreement adopting the GFC Financial Corporation Capital
Accumulation Plan established as of March 18, 1992 by GFC Financial Corporation
(the "Plan") is made by GFC Portfolio Services, Inc. (the "Employer") and
approved by GFC Financial Corporation ("GFCFC") as of the date set forth below.
RECITALS
WHEREAS, the Plan has been created to benefit certain Employees who are
actively employed by GFCFC and certain of its Affiliates; and
WHEREAS, Employer, as an Affiliate, wishes its Employees to have the
opportunity to participate in the Plan, effective as of the Commencement Date,
set forth below;
NOW, THEREFORE, in consideration of the agreements hereinafter recited
and made, and for other good and valuable considerations, the receipt and
sufficiency of which are by the parties hereby acknowledged, the Plan, by its
Committee, GFCFC and Employer agree as follows:
AGREEMENT
1. Subject to the approval of the Chief Executive Officer of GFC
Portfolio Services, Inc. and consistent with provisions of the Plan, ERISA, and
other applicable law, Employer shall participate in the Plan commencing on June
1, 1993 (hereinafter the "Commencement Date").
2. For purposes of the Plan, the term Eligible Employee shall be
as provided in the Plan.
3. For the purposes of the Plan, the term Compensation shall be
as provided in the Plan.
<PAGE> 106
4. The Employer may make contributions to the Trustee for
the Accounts of its Eligible Employees who participate in the Plan at such
times and in such amounts as are provided in the Plan and as are directed by
the Committee.
5. By execution of this Adoption Agreement, Employer agrees
to be bound by all of the terms and conditions of the Plan and Trust which, by
this reference are made a part hereof as if set forth in their entirety herein.
The terms used in this Adoption Agreement shall have the same meaning as set
forth in the Plan, unless expressly otherwise provided herein.
Signed this 18th day of May, 1993 by:
GFC Financial Corporation
By /s/ S. EICHENFIELD
---------------------------------
Chief Executive Officer
GFC Portfolio Services, Inc.
By /s/ S. EICHENFIELD
---------------------------------
Chief Executive Officer
GFC Financial Corporation Capital
Accumulation Plan
By /s/
---------------------------------
Committee Chairman
<PAGE> 1
EXHIBIT 10.CC
THE FINOVA GROUP INC.
DIRECTOR'S CHARITABLE AWARD PROGRAM
1. PURPOSE OF THE PROGRAM
The FINOVA Group Inc. Director's Charitable Award Program (the "Program")
allows each eligible Director of The FINOVA Group Inc. (the "Company") to
recommend that the Company make a donation of up to $1,000,000 to the
eligible tax-exempt organization(s) (the "Donee(s)") selected by the
Director, with the donation to be made, in the Director's name, in ten equal
annual installments, with the first installment to be made as soon as is
practicable after the Director's death. The purpose of the Program is to
recognize the interest of the Company and its Directors in supporting worthy
educational institutions and other charitable organizations.
2. ELIGIBILITY
All persons serving as Directors of the Company as of January 1, 1995, shall
be eligible to participate in the Program. All Directors who join the
Company's Board of Directors after that date shall be immediately eligible to
participate in the Program upon election to the Board.
3. RECOMMENDATION OF DONATION
When a Director becomes eligible to participate in the Program, he or she
shall make a written recommendation to the Company, on a form approved by the
Company for this purpose, designating the Donee(s) which he or she intends to
be the recipient(s) of the Company donation to be made on his or her behalf.
A Director may revise or revoke any such recommendation prior to his or her
death by signing a new recommendation form and submitting it to the Company.
4. AMOUNT AND TIME OF DONATION
Each eligible Director may choose one organization to receive a Company
donation of $1,000,000, or two or more organizations to receive donations
aggregating $1,000,000. Each recommended organization must be recommended to
receive a donation of at least $100,000. The donation will be
-1-
<PAGE> 2
made by the Company in ten equal annual installments, with the first
installment to be made as soon as is practicable after the Director's death.
If a Director recommends more than one organization to receive a donation,
each will receive a prorated portion of each annual installment. Each annual
installment payment will be divided among the recommended organizations in
the same proportions as the total donation amount has been allocated among
the organizations by the Director.
5. DONEES
In order to be eligible to receive a donation, a recommended organization
must initially, and at the time a donation is to be made, qualify to receive
tax-deductible donations under the Internal Revenue Code, and be reviewed and
approved by the Director's Charitable Award Program Committee (the
"Committee"). A recommendation will be approved unless it is determined, in
the exercise of good faith judgment, that a donation to the organization
would be detrimental to the best interests of the Company. If an organization
recommended by a Director ceases to qualify as a Donee, and if the Director
does not submit a form to change the recommendation before his or her death,
the amount recommended to be donated to the organization will instead be
donated to the Director's remaining recommended qualified Donee(s) on a
prorated basis. If none of the recommended organizations qualify, the
donation will be made to the organization(s) selected by the Company.
6. VESTING
To be vested in the Program, a Director must complete 60 full months of
service as a Director (including service prior to adoption of the Program).
Also, a Director will become fully vested if he or she dies or becomes
disabled while serving as a Director, or if he or she retires at the
mandatory retirement age. If a Director voluntarily terminates Board service
before becoming vested, no donation will be made on his or her behalf.
-2-
<PAGE> 3
7. FUNDING AND PROGRAM ASSETS
The Company may fund the Program or it may choose not to fund the Program. If
the Company elects to fund the Program in any manner, neither the Directors
nor their recommended Donee(s) shall have any rights or interests in any
assets of the Company identified for such purpose. Nothing contained in the
Program shall create, or be deemed to create, a trust, actual or
constructive, for the benefit of a Director or any Donee recommended by a
Director to receive a donation, or shall give, or be deemed to give, any
Director or recommended Donee any interest in any assets of the Program or
the Company. If the Company elects to fund the Program through life insurance
policies, a participating Director agrees to cooperate and fulfill the
enrollment requirements necessary to obtain insurance on his or her life.
8. AMENDMENT OR TERMINATION
The Board of Directors of the Company may, at any time, without the consent
of the Directors participating in the Program, amend, suspend, or terminate
the Program.
9. ADMINISTRATION
The Program shall be administered by the Committee. The Committee shall have
plenary authority in its discretion, but subject to the provisions of the
Program, to prescribe, amend, and rescind rules, regulations and procedures
relating to the Program. The determinations of the Committee on the foregoing
matters shall be conclusive and binding on all interested parties.
The Committee shall be composed of three employees of the Company, to be
selected by the Chief Executive Officer of the Company.
-3-
<PAGE> 4
10. GOVERNING LAW
The Program shall be construed and enforced according to the laws of
Arizona, and all provisions thereof shall be administered according to the
laws of said state.
11. EFFECTIVE DATE
The Program effective date is January 1, 1995. The recommendation of a
Director will not be effective until he or she completes all Program
enrollment requirements.
-4-
<PAGE> 1
EXHIBIT 10.DD
GFC FINANCIAL CORPORATION
1992 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
DATE
(NQ)
The FINOVA Group Inc. (Company), a Delaware corporation, hereby grants to
________ (Grantee) the option (Option) to purchase from the Company, pursuant
to the GFC Financial Corporation 1992 Stock Incentive Plan (Plan), at the price
of $_______ per share (Option Price) 500 shares of its Common Stock of the par
value of $.01 each (Common Stock) through the exercise of this Option in
accordance with the terms and conditions hereinafter set forth.
1. OPTION PERIOD AND TERMINATION OF EMPLOYMENT OF GRANTEE. The period
during which this Option may be exercised (Option Period) is the period
beginning on the date hereof and ending ten (10) years from such date, subject
to paragraph 2 below, and during this period this Option may be exercised only
by the Grantee personally and while a director or an employee of the Company or
an affiliate thereof, except that:
(a) If the Grantee ceases to be a director or an employee of the
Company or any subsidiary or affiliate of the Company for any reason, excluding
death, disability, retirement and termination of employment for cause, the
option rights hereunder (as they exist on the day the Grantee ceases to be such
a director or employee) may be exercised only within a period of three (3)
months thereafter, subject to the notice requirements set forth below, or prior
to the expiration of the Option Period, whichever shall occur sooner. If
Grantee is an employee and is terminated for cause, all the option rights
hereunder shall expire immediately upon the giving to such Grantee of notice of
such termination.
(b) If the Grantee ceases to be a director or an employee of the
Company or any subsidiary or affiliate of the Company due to death, or dies
within the three month or three year periods referred to in Sections (a) or (c)
of this paragraph, the option rights hereunder (as they exist immediately prior
to the Grantee's death) may be exercised by the Grantee's personal
representative only during a period of twelve (12) months thereafter, subject
to the notice requirements set forth below, or prior to the expiration of the
Option Period, whichever shall occur sooner.
(c) If the Grantee ceases to be a director or an employee of the
Company or any subsidiary or affiliate of the Company by reason of disability
or retirement, the option rights hereunder (as they exist on the day the
Grantee ceases to be such director or employee) may be exercised only within a
period of three (3) years thereafter, subject to the notice requirements set
forth below, or prior to the expiration of the Option Period, whichever shall
occur sooner.
<PAGE> 2
2. METHOD OF EXERCISE OF THIS OPTION. This Option may be exercised in the
manner hereinafter prescribed, in whole or in part, at any time or from time to
time, during the Option Period as follows:
(a) 34% of the shares hereby optioned at any time after one year from
the date hereof;
(b) 33% of the shares hereby optioned at any time after two years from
the date hereof:
(c) the balance of the shares hereby optioned at any time after three
years from the date hereof; provided that 50 shares, or the total number of
shares remaining unpurchased hereunder, if less than 50 shares, is the minimum
number which may be purchased hereunder at any one time. This Option shall not
be exercisable prior to the expiration of one year from the date of grant,
except as otherwise specified in the Plan. Notwithstanding the above, in the
event the Grantee ceases to be a director or an employee of the Company or any
subsidiary or affiliate of the Company due to death, disability or retirement,
the entire Option shall become exercisable upon such occurrence. All purchases
hereunder must be completed within the time periods prescribed herein for the
exercise thereof.
On or before the expiration of the Option Period specified herein, written
notice of the exercise of this Option with respect to all or a part of the
Common Stock hereby optioned may be mailed or delivered to the Company by the
Grantee in substantially the form attached hereto or in such other form as the
Company may require, properly completed and among other things stating the
number of shares of Common Stock with respect to which the Option is being
exercised, and specifying the method of payment for such Common Stock. The
notice must be mailed or delivered prior to the expiration of this Option.
Before any stock certificates shall be issued, the entire purchase price of
the Common Stock purchased shall be paid to the Company. Certificates,
registered in the name of the purchaser for the Common Stock purchased, will be
issued to the purchaser as soon as practicable thereafter. Failure to pay the
purchase price for any Common Stock within the time specified in said notice
shall result in forfeiture of the Grantee's right to purchase the Common Stock
at a later date and the number of shares of Common Stock which may thereafter
be purchased hereunder shall be reduced accordingly.
The purchase price may be paid either entirely in cash or in whole or in
part with unrestricted Common Stock already owned by the Grantee. If the
Grantee elects to pay the purchase price entirely in cash, he will be notified
of the purchase price by the Company. If the Grantee elects to pay the
purchase price either substantially all with Common Stock or partly with Common
Stock and the balance in cash, he will be notified by the Company of the fair
market value of the Common Stock on the exercise
<PAGE> 3
date and the amount of Common Stock or cash payable. Within five business days
after the exercise date, the Grantee shall deliver to the Company either cash
or Common Stock certificates, in negotiable form, at least equal in value to
the purchase price, or that portion thereof to be paid for with Common Stock,
together with cash sufficient to pay the full purchase price. Only full shares
of Common Stock shall be utilized for payment purposes.
To the extent permissible under applicable tax, securities, and other laws,
the Company may, in its sole discretion, permit Grantee to satisfy a tax
withholding requirement by surrendering Shares, including Shares to which
Grantee is entitled as a result of the exercise of this Option, in such manner
as the Company shall choose in its discretion to satisfy such requirement.
3. NON-TRANSFERABILITY OF THIS OPTION. This Option may not be assigned,
encumbered or transferred, in whole or in part, except by the Grantee's will or
in accordance with the applicable laws of descent and distribution, or pursuant
to a beneficiary designation effected in accordance with Company policy.
4. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION OF COMPANY. The Common Stock
covered by this Option is, at the option of the Company, either authorized but
unissued or reacquired Common Stock. In the event of any merger,
reorganization, consolidation, recapitalization, stock dividend, stock split,
extraordinary distribution with respect to the Common Stock or other change in
corporate structure affecting the Common Stock during the Option Period, the
number of shares of Common Stock which may thereafter be purchased pursuant to
this Option and the purchase price per share, shall be appropriately adjusted,
or other appropriate substitutions shall be made, and the determination of the
Board of Directors of the Company, or the Executive Compensation Committee of
the Board of Directors, as the case may be, as to any such adjustments shall be
final, conclusive and binding upon the Grantee.
5. EFFECT OF CHANGE IN CONTROL. (a) In the event of a Change in Control
(as defined in the Plan), this Option (to the extent outstanding as of the date
such Change in Control is determined to have occurred) if not then exercisable
and vested shall become fully exercisable and vested to the full extent of the
original grant.
(b) Notwithstanding any other provision of the Plan, during the
60-day period from and after a Change in Control (the "Exercise Period"), the
Grantee shall have the right, whether or not this Option is fully exercisable
and in lieu of the payment of the exercise price for the shares of Common Stock
being purchased under the Option and by giving notice to the Company, to elect
(within the Exercise Period) to surrender all or part of the 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 (as defined in the Plan) per
share of Common Stock on the date of such election shall exceed the exercise
price per share of Common Stock under the Option (the "Spread") multiplied by
the number of shares of Common Stock granted under the Option as to which the
right granted hereunder shall have been exercised; provided, however, that
<PAGE> 4
if the Change in Control is within six months of the date of grant of a
particular Option held by a Grantee who is an officer or director of the
Company and is subject to Section 16(b) of the Securities Exchange Act of 1934
no such election shall be made by such Grantee with respect to such 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 an Option held by a
Grantee who is an officer or director of the Company and is subject to Section
16(b), such Option shall be canceled in exchange for a cash payment to the
Grantee, 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
Common Stock granted under the Option.
6. PLAN AND PLAN INTERPRETATIONS AS CONTROLLING. This Option and the
terms and conditions herein set forth are subject in all respects to the terms
and conditions of the Plan, which are controlling. The Plan provides that the
Executive Compensation Committee of the Board of Directors may from time to
time make changes therein, interpret it and establish regulations for the
administration thereof; provided that no such amendment shall impair the rights
of any Grantee under an Option without the Grantee's consent, except an
amendment for purposes of compliance with the federal securities laws. The
Grantee, by acceptance of this Option, agrees to be bound by said Plan and such
Board actions.
This Option may not be exercised whenever such exercise or the issuance
of any of the optioned shares would be contrary to law or the regulations of
any governmental authority having jurisdiction.
IN WITNESS WHEREOF, THE FINOVA GROUP INC. has caused this Option to be
duly executed in its name and dated as of the date of grant hereof.
Dated: THE FINOVA GROUP INC.
________________________________________
By: S. EICHENFIELD
ATTEST: Chairman
________________________________
Secretary or Assistant Secretary
<PAGE> 1
EXHIBIT 10.EE
GFC FINANCIAL CORPORATION
1992 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
DATE
(NQ)
The FINOVA Group Inc. (Company), a Delaware corporation, hereby grants to
________ (Grantee) the option (Option) to purchase from the Company, pursuant
to the GFC Financial Corporation 1992 Stock Incentive Plan (Plan), at the price
of $_______ per share (Option Price) 100 shares of its Common Stock of the par
value of $.01 each (Common Stock) through the exercise of this Option in
accordance with the terms and conditions hereinafter set forth.
1. OPTION PERIOD AND TERMINATION OF EMPLOYMENT OF GRANTEE. The period
during which this Option may be exercised (Option Period) is the period
beginning on the date hereof and ending ten (10) years from such date, subject
to paragraph 2 below, and during this period this Option may be exercised only
by the Grantee personally and while a director or an employee of the Company or
an affiliate thereof, except that:
(a) If the Grantee ceases to be a director or an employee of the
Company or any subsidiary or affiliate of the Company for any reason, excluding
death, disability, retirement and termination of employment for cause, the
option rights hereunder (as they exist on the day the Grantee ceases to be such
a director or employee) may be exercised only within a period of three (3)
months thereafter, subject to the notice requirements set forth below, or prior
to the expiration of the Option Period, whichever shall occur sooner. If
Grantee is an employee and is terminated for cause, all the option rights
hereunder shall expire immediately upon the giving to such Grantee of notice of
such termination.
(b) If the Grantee ceases to be a director or an employee of the
Company or any subsidiary or affiliate of the Company due to death, or dies
within the three month or three year periods referred to in Sections (a) or (c)
of this paragraph, the option rights hereunder (as they exist immediately prior
to the Grantee's death) may be exercised by the Grantee's personal
representative only during a period of twelve (12) months thereafter, subject
to the notice requirements set forth below, or prior to the expiration of the
Option Period, whichever shall occur sooner.
(c) If the Grantee ceases to be a director or an employee of the
Company or any subsidiary or affiliate of the Company by reason of disability
or retirement, the option rights hereunder (as they exist on the day the
Grantee ceases to be such director or employee) may be exercised only within a
period of three (3) years thereafter, subject to the notice requirements set
forth below, or prior to the expiration of the Option Period, whichever shall
occur sooner.
<PAGE> 2
2. METHOD OF EXERCISE OF THIS OPTION. This Option may be exercised in the
manner hereinafter prescribed, in whole or in part, at any time or from time to
time, during the Option Period as follows:
(a) 50% of the shares hereby optioned at any time after one year from
the date hereof;
(b) the balance of the shares hereby optioned at any time after two
years from the date hereof; provided that 50 shares, or the total number of
shares remaining unpurchased hereunder, if less than 50 shares, is the minimum
number which may be purchased hereunder at any one time. This Option shall not
be exercisable prior to the expiration of one year from the date of grant,
except as otherwise specified in the Plan. All purchases hereunder must be
completed within the time periods prescribed herein for the exercise thereof.
On or before the expiration of the Option Period specified herein, written
notice of the exercise of this Option with respect to all or a part of the
Common Stock hereby optioned may be mailed or delivered to the Company by the
Grantee in substantially the form attached hereto or in such other form as the
Company may require, properly completed and among other things stating the
number of shares of Common Stock with respect to which the Option is being
exercised, and specifying the method of payment for such Common Stock. The
notice must be mailed or delivered prior to the expiration of this Option.
Before any stock certificates shall be issued, the entire purchase price of
the Common Stock purchased shall be paid to the Company. Certificates,
registered in the name of the purchaser for the Common Stock purchased, will be
issued to the purchaser as soon as practicable thereafter. Failure to pay the
purchase price for any Common Stock within the time specified in said notice
shall result in forfeiture of the Grantee's right to purchase the Common Stock
at a later date and the number of shares of Common Stock which may thereafter
be purchased hereunder shall be reduced accordingly.
The purchase price may be paid either entirely in cash or in whole or in
part with unrestricted Common Stock already owned by the Grantee. If the
Grantee elects to pay the purchase price entirely in cash, he will be notified
of the purchase price by the Company. If the Grantee elects to pay the
purchase price either substantially all with Common Stock or partly with Common
Stock and the balance in cash, he will be notified by the Company of the fair
market value of the Common Stock on the exercise date and the amount of Common
Stock or cash payable. Within five business days after the exercise date, the
Grantee shall deliver to the Company either cash or Common Stock certificates,
in negotiable form, at least equal in value to the purchase price, or that
portion thereof to be paid for with Common Stock, together with cash sufficient
to pay the full purchase price. Only full shares of Common Stock shall be
utilized for payment purposes.
<PAGE> 3
To the extent permissible under applicable tax, securities, and other laws,
the Company may, in its sole discretion, permit Grantee to satisfy a tax
withholding requirement by surrendering Shares, including Shares to which
Grantee is entitled as a result of the exercise of this Option, in such manner
as the Company shall choose in its discretion to satisfy such requirement.
3. NON-TRANSFERABILITY OF THIS OPTION. This Option may not be assigned,
encumbered or transferred, in whole or in part, except by the Grantee's will or
in accordance with the applicable laws of descent and distribution, or pursuant
to a beneficiary designation effected in accordance with Company policy.
4. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION OF COMPANY. The Common Stock
covered by this Option is, at the option of the Company, either authorized but
unissued or reacquired Common Stock. In the event of any merger,
reorganization, consolidation, recapitalization, stock dividend, stock split,
extraordinary distribution with respect to the Common Stock or other change in
corporate structure affecting the Common Stock during the Option Period, the
number of shares of Common Stock which may thereafter be purchased pursuant to
this Option and the purchase price per share, shall be appropriately adjusted,
or other appropriate substitutions shall be made, and the determination of the
Board of Directors of the Company, or the Executive Compensation Committee of
the Board of Directors, as the case may be, as to any such adjustments shall be
final, conclusive and binding upon the Grantee.
5. EFFECT OF CHANGE IN CONTROL. (a) In the event of a Change in Control
(as defined in the Plan), this Option (to the extent outstanding as of the date
such Change in Control is determined to have occurred) if not then exercisable
and vested shall become fully exercisable and vested to the full extent of the
original grant.
(b) Notwithstanding any other provision of the Plan, during the
60-day period from and after a Change in Control (the "Exercise Period"), the
Grantee shall have the right, whether or not this Option is fully exercisable
and in lieu of the payment of the exercise price for the shares of Common Stock
being purchased under the Option and by giving notice to the Company, to elect
(within the Exercise Period) to surrender all or part of the 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 (as defined in the Plan) per
share of Common Stock on the date of such election shall exceed the exercise
price per share of Common Stock under the Option (the "Spread") multiplied by
the number of shares of Common Stock granted under the Option as to which the
right granted hereunder shall have been exercised; provided, however, that if
the Change in Control is within six months of the date of grant of a particular
Option held by a Grantee who is an officer or director of the Company and is
subject to Section 16(b) of the Securities Exchange Act of 1934 no such
election shall be made by such Grantee with respect to such 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 an Option held by a Grantee who is an officer or
director of the Company and is subject to Section 16(b),
<PAGE> 4
such Option shall be canceled in exchange for a cash payment to the Grantee,
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 Common
Stock granted under the Option.
6. PLAN AND PLAN INTERPRETATIONS AS CONTROLLING. This Option and the
terms and conditions herein set forth are subject in all respects to the terms
and conditions of the Plan, which are controlling. The Plan provides that the
Executive Compensation Committee of the Board of Directors may from time to
time make changes therein, interpret it and establish regulations for the
administration thereof; provided that no such amendment shall impair the rights
of any Grantee under an Option without the Grantee's consent, except an
amendment for purposes of compliance with the federal securities laws. The
Grantee, by acceptance of this Option, agrees to be bound by said Plan and such
Board actions.
This Option may not be exercised whenever such exercise or the issuance
of any of the optioned shares would be contrary to law or the regulations of
any governmental authority having jurisdiction.
IN WITNESS WHEREOF, THE FINOVA GROUP INC. has caused this Option to be
duly executed in its name and dated as of the date of grant hereof.
Dated: THE FINOVA GROUP INC.
______________________________________
By: S. EICHENFIELD
ATTEST: Chairman
________________________________
Secretary or Assistant Secretary
<PAGE> 1
EXHIBIT 10.FF
GFC FINANCIAL CORPORATION
1992 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
DATE
(NQ)
The FINOVA Group Inc. (Company), a Delaware corporation, hereby grants
to 1~ (Grantee) the option (Option) to purchase from the Company, pursuant to
the GFC Financial Corporation 1992 Stock Incentive Plan (Plan), at the price of
$________ per share (Option Price) 1,000 shares of its Common Stock of the par
value of $.01 each (Common Stock) through the exercise of this Option in
accordance with the terms and conditions hereinafter set forth.
1. OPTION PERIOD AND TERMINATION OF EMPLOYMENT OF GRANTEE. The
period during which this Option may be exercised (Option Period) is the period
beginning on the date hereof and ending ten (10) years from such date, subject
to paragraph 2 below, and during this period this Option may be exercised only
by the Grantee personally and while a director or an employee of the Company or
an affiliate thereof, except that:
(a) If the Grantee ceases to be a director or an employee of
the Company or any subsidiary or affiliate of the Company for any reason,
excluding death, disability, retirement and termination of employment for
cause, the option rights hereunder (as they exist on the day the Grantee ceases
to be such a director or employee) may be exercised only within a period of
three (3) months thereafter, subject to the notice requirements set forth
below, or prior to the expiration of the Option Period, whichever shall occur
sooner. If Grantee is an employee and is terminated for cause, all the option
rights hereunder shall expire immediately upon the giving to such Grantee of
notice of such termination.
(b) If the Grantee ceases to be a director or an employee of
the Company or any subsidiary or affiliate of the Company due to death, or dies
within the three month or three year periods referred to in Sections (a) or (c)
of this paragraph, the option rights hereunder (as they exist immediately prior
to the Grantee's death) may be exercised by the Grantee's personal
representative only during a period of twelve (12) months thereafter, subject
to the notice requirements set forth below, or prior to the expiration of the
Option Period, whichever shall occur sooner.
(c) If the Grantee ceases to be a director or an employee of
the Company or any subsidiary or affiliate of the Company by reason of
disability or retirement, the option rights hereunder (as they exist on the day
the Grantee ceases to be such director or employee) may be exercised only
within a period of three (3) years thereafter, subject to the notice
requirements set forth below, or prior to the expiration of the Option Period,
whichever shall occur sooner.
<PAGE> 2
2. METHOD OF EXERCISE OF THIS OPTION. This Option may be exercised
in the manner hereinafter prescribed, in whole or in part, at any time or from
time to time, during the Option Period as follows:
100% of the shares hereby optioned at any time after six (6) months
from the date hereof.
On or before the expiration of the Option Period specified herein,
written notice of the exercise of this Option with respect to all or a part of
the Common Stock hereby optioned may be mailed or delivered to the Company by
the Grantee in substantially the form attached hereto or in such other form as
the Company may require, properly completed and among other things stating the
number of shares of Common Stock with respect to which the Option is being
exercised, and specifying the method of payment for such Common Stock. The
notice must be mailed or delivered prior to the expiration of this Option.
Before any stock certificates shall be issued, the entire purchase
price of the Common Stock purchased shall be paid to the Company.
Certificates, registered in the name of the purchaser for the Common Stock
purchased, will be issued to the purchaser as soon as practicable thereafter.
Failure to pay the purchase price for any Common Stock within the time
specified in said notice shall result in forfeiture of the Grantee's right to
purchase the Common Stock at a later date and the number of shares of Common
Stock which may thereafter be purchased hereunder shall be reduced accordingly.
The purchase price may be paid either entirely in cash or in whole or
in part with unrestricted Common Stock already owned by the Grantee. If the
Grantee elects to pay the purchase price entirely in cash, he will be notified
of the purchase price by the Company. If the Grantee elects to pay the
purchase price either substantially all with Common Stock or partly with Common
Stock and the balance in cash, he will be notified by the Company of the fair
market value of the Common Stock on the exercise date and the amount of Common
Stock or cash payable. Within five business days after the exercise date, the
Grantee shall deliver to the Company either cash or Common Stock certificates,
in negotiable form, at least equal in value to the purchase price, or that
portion thereof to be paid for with Common Stock, together with cash sufficient
to pay the full purchase price. Only full shares of Common Stock shall be
utilized for payment purposes.
To the extent permissible under applicable tax, securities, and other
laws, the Company may, in its sole discretion, permit Grantee to satisfy a tax
withholding requirement by surrendering Shares, including Shares to which
Grantee is entitled as a result of the exercise of this Option, in such manner
as the Company shall choose in its discretion to satisfy such requirement.
3. NON-TRANSFERABILITY OF THIS OPTION. This Option may not be
assigned, encumbered or transferred, in whole or in part, except by the
Grantee's will or in
<PAGE> 3
accordance with the applicable laws of descent and distribution.
4. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION OF COMPANY. The Common
Stock covered by this Option is, at the option of the Company, either
authorized but unissued or reacquired Common Stock. In the event of any
merger, reorganization, consolidation, recapitalization, stock dividend, stock
split, extraordinary distribution with respect to the Common Stock or other
change in corporate structure affecting the Common Stock during the Option
Period, the number of shares of Common Stock which may thereafter be purchased
pursuant to this Option and the purchase price per share, shall be
appropriately adjusted, or other appropriate substitutions shall be made, and
the determination of the Board of Directors of the Company, or the Executive
Compensation Committee of the Board of Directors, as the case may be, as to any
such adjustments shall be final, conclusive and binding upon the Grantee.
5. EFFECT OF CHANGE IN CONTROL.
(a) In the event of a Change in Control (as defined in the
Plan), this Option (to the extent outstanding as of the date such Change in
Control is determined to have occurred) if not then exercisable and vested
shall become fully exercisable and vested to the full extent of the original
grant.
(b) Notwithstanding any other provision of the Plan, during
the 60-day period from and after a Change in Control (the "Exercise Period"),
the Grantee shall have the right, whether or not this Option is fully
exercisable and in lieu of the payment of the exercise price for the shares of
Common Stock being purchased under the Option and by giving notice to the
Company, to elect (within the Exercise Period) to surrender all or part of the
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 (as defined in
the Plan) per share of Common Stock on the date of such election shall exceed
the exercise price per share of Common Stock under the Option (the "Spread")
multiplied by the number of shares of Common Stock granted under the Option as
to which the right granted hereunder shall have been exercised; provided,
however, that if the Change in Control is within six months of the date of
grant of a particular Option held by a Grantee who is an officer or director of
the Company and is subject to Section 16(b) of the Securities Exchange Act of
1934 no such election shall be made by such Grantee with respect to such 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 an Option held by a
Grantee who is an officer or director of the Company and is subject to Section
16(b), such Option shall be canceled in exchange for a cash payment to the
Grantee, 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
Common Stock granted under the Option.
<PAGE> 4
6. PLAN AND PLAN INTERPRETATIONS AS CONTROLLING. This Option and
the terms and conditions herein set forth are subject in all respects to the
terms and conditions of the Plan, which are controlling. The Plan provides
that the Executive Compensation Committee of the Board of Directors may from
time to time make changes therein, interpret it and establish regulations for
the administration thereof; provided that no such amendment shall impair the
rights of any Grantee under an Option without the Grantee's consent, except an
amendment for purposes of compliance with the federal securities laws. The
Grantee, by acceptance of this Option, agrees to be bound by said Plan and such
Board actions.
This Option may not be exercised whenever such exercise or the
issuance of any of the optioned shares would be contrary to law or the
regulations of any governmental authority having jurisdiction.
IN WITNESS WHEREOF, THE FINOVA GROUP INC. has caused this Option to be
duly executed in its name and dated as of the date of grant hereof.
Dated:
THE FINOVA GROUP INC.
________________________________________
By: SAMUEL L. EICHENFIELD
Chairman
ATTEST:
________________________________
Secretary or Assistant Secretary
<PAGE> 1
EXHIBIT 10.GG
GFC FINANCIAL CORPORATION
1992 STOCK INCENTIVE PLAN
PERFORMANCE-BASED RESTRICTED STOCK AGREEMENT
DATE
Shares of Restricted Stock are hereby awarded by The FINOVA
Group Inc. (Company), a Delaware corporation, to 1~ (Employee) in accordance
with the following terms and conditions:
1. SHARE AWARD. The Company hereby awards the Employee ______
shares (Shares) (subject to adjustment of between 0 and _______ shares, as
provided below) of Common Stock, par value $.01 per share (Common Stock) of the
Company pursuant to the GFC Financial Corporation 1992 Stock Incentive Plan
(Plan), and upon the terms and conditions, and subject to the restrictions
therein and hereinafter set forth.
2. RESTRICTIONS ON TRANSFER AND RESTRICTION PERIOD. During the
period (Restriction Period) commencing on the date hereof (Commencement Date)
and terminating January 1, 2000, the Shares may not be sold, assigned,
transferred, pledged, or otherwise encumbered by the Employee, except as
hereinafter provided. The Restriction Period shall lapse as to successive
installments as follows:
On January 1 of each of the five years beginning January 1, 1996, 0 to
.34 of the Shares awarded in this Agreement will vest and be issued based upon
the annual performance of the Common Stock relative to the lesser of the annual
performance of the Standard & Poor's 500 Index (S&P 500), or annual performance
of the Standard & Poor's Financial Index (S&P FI), calculated as follows:
1) The Share Price is the average of the high and low trading
price on the New York Stock Exchange for the month of December of that year.
The Total Annual Return (TAR) is the Share Price percentage change for the
calendar year plus the dividend yield. The TAR is calculated each year for the
Company, the S&P 500 and the S&P FI.
2) The lesser of the TAR for the S&P 500 or the S&P FI is
subtracted from the TAR for the Company (Relative Performance).
3) Shares will vest on each vesting date in accordance with the
table below:
<TABLE>
<CAPTION>
Relative
Performance (RP) No. of Shares to Vest
--------------- ---------------------
<S> <C>
Less than 0 0
0 .20(Shares)
.0001 - .0150 .20(Shares) + [RP/.015 x (.14 x Shares)]
Greater than .0150 .34(Shares)
</TABLE>
If no shares vest on a vesting date, .20(Shares) shall be
forfeited and returned to the company.
<PAGE> 2
The Executive Compensation Committee of the Board of Directors (Committee)
shall have the authority, in its discretion, to accelerate the time at which
any or all of the restrictions shall lapse with respect to any Shares, prior to
the expiration of the Restriction Period with respect thereto, or to remove any
or all of such restrictions, whenever the Committee may determine that such
action is appropriate by reason of change in applicable tax or other law, or
other change in circumstances.
3. TERMINATION OF EMPLOYMENT. Except as provided in paragraph 8
below, if the Employee ceases to be an employee of the Company or any
subsidiary or affiliate of the Company for any reason (including, but not
limited to, death, disability, or retirement), all Shares which at the time of
such termination of employment are subject to the restrictions imposed by
paragraph 2 above shall upon such termination of employment be forfeited and
returned to the Company.
4. CERTIFICATES FOR THE SHARES. The Company shall issue one or more
certificates in respect of the Shares in the name of the Employee which shall
equal the amount of the award specified herein, and shall hold each such
certificate on deposit for the account of the Employee until the expiration of
the restrictions set forth in paragraph 2 above with respect to the Shares
represented thereby. Each such certificate shall bear the following legend:
The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) contained in the GFC Financial Corporation 1992 Stock
Incentive Plan and a Restricted Stock Agreement dated August 11, 1994.
Copies of such Plan and Agreement are on file at the offices of The
FINOVA Group Inc., Dial Tower, Phoenix, Arizona 85077.
The Employee further agrees that simultaneously with his/her
acceptance of this Agreement, he/she shall execute one stock power covering
such award endorsed in blank for each such certificate and that he/she shall
promptly deliver such stock power to the Company.
5. EMPLOYEE'S RIGHTS. Except as otherwise provided herein, the
Employee, as owner of the Shares, shall have all rights of a stockholder,
including, but not limited to, the right to vote the Shares and receive any cash
or other dividends.
6. EXPIRATION OF RESTRICTION PERIOD. Upon the lapse or expiration of
the Restriction Period with respect to any Shares, the Company shall remove the
restrictions provided for herein and shall issue and deliver a certificate to
the Employee in the amount of the vested Shares. The Shares as to which the
Restriction Period shall have lapsed or expired and which are represented by
such certificate shall be free of the restrictions referred to in paragraph 2
above and such certificate shall not bear thereafter the legend provided for in
paragraph 4 above. The remaining certificates shall be held on deposit by the
Company for the account of the Employee pursuant to paragraph 4 above, provided
however, that sale of vested Shares prior to cessation of employment may result
in ineligibility to receive any further awards.
7. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION OF COMPANY. In the
event of
<PAGE> 3
any merger, reorganization, consolidation, recapitalization, stock dividend,
stock split, extraordinary distribution with respect to Common Stock or other
change in corporate structure affecting the Common Stock, during the Restriction
Period, the number of shares of Common Stock subject to restrictions as set
forth herein shall be appropriately adjusted and the determination of the Board
of Directors of the Company, or the Committee, as the case may be, as to any
such adjustments shall be final, conclusive and binding upon the Employee. Any
shares of Common Stock or other securities received, as a result of the
foregoing, by the Employee with respect to Shares subject to the restrictions
contained in paragraph 2 above also shall be subject to such restrictions and
the certificate(s) or other instruments representing or evidencing such shares
or securities shall be legended and deposited with the Company, along with an
executed stock power, in the manner provided in paragraph 4 above.
8. EFFECT OF CHANGE IN CONTROL. In the event of a Change in Control
(as defined in the Plan), the restrictions applicable to any Shares awarded
hereby shall lapse, and such Shares shall be free of all restrictions and
become fully vested and transferable to the full extent of the original grant.
9. PLAN AND PLAN INTERPRETATIONS AS CONTROLLING. The Shares hereby
awarded and the terms and conditions herein set forth are subject in all
respects to the terms and conditions of the Plan, which are controlling. The
Plan provides that the Committee may from time to time make changes therein,
interpret it and establish regulations for the administration thereof; provided
that no such amendment shall impair the rights of any Employee under this award
without the Employee's consent, except an amendment for purposes of compliance
with the federal securities laws. The Employee, by acceptance of this
Agreement, agrees to be bound by said Plan and such Board actions.
Shares may not be issued hereunder, delivered or redelivered, whenever
such issuance, delivery or redelivery would be contrary to law or the
regulations of any governmental authority having jurisdiction.
IN WITNESS WHEREOF, the parties have caused this Restricted Stock
Agreement to be duly executed.
Dated: DATE THE FINOVA GROUP INC.
________________________________
ATTEST: By: SAMUEL L.EICHENFIELD
Chairman
________________________________
Secretary or Assistant Secretary
ACCEPTED:
_________________________________
<PAGE> 1
EXHIBIT 11
THE FINOVA GROUP INC.
COMPUTATION OF EARNINGS PER SHARE
(Dollars in Thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------
1994 1993 1992
------------------------------------------
<S> <C> <C> <C>
Primary and Fully Diluted:
Net income $ 74,313 $ 37,347 $ 48,957
Preferred dividends 1,306 1,772
------------ ------------ ------------
Net income available to common shareholders $ 74,313 $ 36,041 $ 47,185
============ ============ ============
Average common shares outstanding before common equivalents 24,998,000 20,090,000 20,300,000
Common equivalent stock options 309,000 242,000 164,000
------------ ------------ ------------
Average outstanding common and equivalent share 25,307,000 20,332,000 20,464,000
============ ============ ============
Net income per common and equivalent share $ 2.94 $ 1.77 $ 2.31
============ ============ ============
</TABLE>
<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>
Year Ended December 31,
-------------------------------------------------------------------
1994 1993 1992 1991 1990
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income (loss) before income taxes $ 123,771 $ 66,422 $ 50,593 $ (37,014) $ 40,216
Add fixed charges:
Interest expense 222,200 123,853 136,107 157,560 171,652
One-third of rent expense 2,041 1,387 1,498 1,148 581
----------- ----------- ----------- ----------- -----------
Total fixed charges 224,241 125,240 137,605 158,708 172,233
----------- ----------- ----------- ----------- -----------
Net income as adjusted $ 348,012 $ 191,662 $ 188,198 $ 121,694 $ 212,449
----------- ----------- ----------- ----------- -----------
Ratio of income to fixed charges 1.55 1.53 1.37 ---- 1.23
=========== =========== =========== =========== ===========
Preferred stock dividends on a pre-tax basis $ 0 $ 2,139 $ 2,826
Total combined fixed charges and
preferred stock dividends $ 224,241 $ 127,379 $ 140,431 $ 158,708 $ 172,233
----------- ----------- ----------- ----------- -----------
Ratio of income to combined fixed charges and
preferred stock dividends 1.55 1.50 1.34 ---- 1.23
=========== =========== =========== =========== ===========
</TABLE>
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE FINOVA GROUP INC.
(February 1, 1995)
FINOVA CAPITAL CORPORATION (Delaware)
Ambre Realty, Inc. (New York)
BATCL - 1991 - III, Inc. (Delaware)
Cactus Resort Properties, Inc. (Delaware)
Commonwealth Avenue Warehouse, Inc. (Florida)
Desert Communications I, Inc. (Delaware)
Desert Communications II, Inc. (Delaware)
Desert Communications III, Inc. (Delaware)
Desert Communications V, Inc. (Delaware)
Desert Communications VI, Inc. (Delaware)
Desert Hospitality II, Inc. (Florida)
FINOVA Government Finance, Inc. (Delaware)
FINOVA Portfolio Services, Inc. (Arizona)
Greycas, Inc. (Arizona)
New Jersey Realty Corporation II (California)
New York Realty Corporation II (California)
Greyfin (Nassau) Limited (Bahamas)
Greyfin Corporation (Liberia)
Greyhound Shipping Corporation (Liberia)
Greyhound Financial Services Limited (United Kingdom)
Greyfin Services Limited (United Kingdom)
Hookgold Limited (United Kingdom)
Greyhound Guaranty PLC (United Kingdom)
Greyhound Credit Limited (United Kingdom)
Greyhound Finance International Limited (United Kingdom)
Greyhound Nominees Limited (United Kingdom)
Secured Advances Limited (United Kingdom) (Inactive)
Townmead Garages Limited (United Kingdom)
Greyhound Real Estate Finance Company (Arizona) (Inactive)
Greyhound Real Estate Investment BRB Inc. (Arizona)
Greyhound Real Estate Investment Eight Inc. (Delaware)
Greyhound Real Estate Investment Eleven Inc. (Delaware)
Greyhound Real Estate Investment Nine Inc. (Delaware)
Greyhound Real Estate Investment One Inc. (Arizona)
Greyhound Real Estate Investment S Inc. (Arizona)
Greyhound Real Estate Investment Seven Inc. (Delaware)
Greyhound Real Estate Investment Two Inc. (Arizona)
Interim Funding Corporation (Arizona)
Medbarge, Inc. (Delaware)
Pine Top Insurance Company Limited (United Kingdom)
TriContinental Leasing Corporation (Delaware)
TriContinental Leasing of Puerto Rico, Inc. (Delaware)
Wisconsin Hotel Operating Corporation (Wisconsin)
OTHERS:
BATCL - 1992 - II, Inc. (Delaware)
GFC Business Credit Corp. (Delaware)
<PAGE> 1
EXHIBIT 25
POWER OF ATTORNEY
Each person whose signature appears below hereby authorizes and
appoints Samuel L. Eichenfield and Bruno A. Marszowski, and each of them
severally, as his attorneys-in-fact, with full power of substitution and
resubstitution, to sign and file on his behalf individually and in each such
capacity stated below, The FINOVA Group Inc.'s Annual Report on Form 10-K, and
any amendments thereto, to be filed with the Securities and Exchange
Commission, the New York Stock Exchange, and otherwise, as fully as such person
could do in person, hereby verifying and confirming all that said
attorneys-in-fact, or their or his substitutes or substitute, may lawfully do
or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICER
/s/ SAMUEL L. EICHENFIELD
____________________________ DIRECTOR, CHAIRMAN, PRESIDENT AND February 9, 1995
Samuel L. Eichenfield CHIEF EXECUTIVE OFFICER
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER
/s/ BRUNO A. MARSZOWSKI SENIOR VICE PRESIDENT-CONTROLLER February 9, 1995
____________________________ AND CHIEF FINANCIAL OFFICER
Bruno A. Marszowski
DIRECTORS
/s/ G. ROBERT DURHAM
____________________________ February 10, 1995
G. Robert Durham
/s/ JAMES L. JOHNSON
____________________________ February 9, 1995
James L. Johnson
/s/ L. GENE LEMON
____________________________ February 14, 1995
L. Gene Lemon
/s/ KENNETH R. SMITH
____________________________ February 9, 1995
Kenneth R. Smith
/s/ ROBERT P. STRAETZ
____________________________ February 9, 1995
Robert P. Straetz
/s/ SHOSHANA B. TANCER
____________________________ February 9, 1995
Shoshana B. Tancer
/s/ JOHN W. TEETS
____________________________ February 10, 1995
John W. Teets
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 49,875
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 5,667,644
<ALLOWANCE> (109,245)
<TOTAL-ASSETS> 5,834,331
<DEPOSITS> 0
<SHORT-TERM> 0
<LIABILITIES-OTHER> 490,725
<LONG-TERM> 4,573,354
<COMMON> 284
0
0
<OTHER-SE> 769,968
<TOTAL-LIABILITIES-AND-EQUITY> 5,834,331
<INTEREST-LOAN> 503,351
<INTEREST-INVEST> 0
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 222,200
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 244,414
<LOAN-LOSSES> 16,670
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 113,018
<INCOME-PRETAX> 123,771
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 74,313
<EPS-PRIMARY> 2.94
<EPS-DILUTED> 0
<YIELD-ACTUAL> 6.0
<LOANS-NON> 168,761
<LOANS-PAST> 0
<LOANS-TROUBLED> 64,001
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 64,280
<CHARGE-OFFS> (35,127)
<RECOVERIES> 1,898
<ALLOWANCE-CLOSE> 109,245
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
