Exhibit 10.T.1
AMENDED AND RESTATED
MANAGEMENT SERVICES AGREEMENT
AMENDED AND RESTATED MANAGEMENT SERVICES AGREEMENT, dated as of April 3,
2001 (the "Agreement"), by and among The FINOVA Group Inc. ("FINOVA" or the
"Company"), a Delaware corporation, and Leucadia National Corporation, a New
York corporation ("Leucadia" or "Manager") and Leucadia International
Corporation, a Utah corporation that is a wholly owned subsidiary of Leucadia
("Leucadia International").
WHEREAS, FINOVA, Leucadia and Leucadia International are parties to the
Management Services Agreement dated as of February 26, 2001 (the "Original
Agreement"), and desire to amend and restate the Management Services Agreement
in its entirety as set forth herein;
WHEREAS, FINOVA filed a petition for voluntary reorganization (the
"Voluntary Petition") under chapter 11 of title 11 of the United States Code 11
U.S.C. Sections 101 et seq. (the " Bankruptcy Code") with the United States
Bankruptcy Court for the District of Delaware (and together with any United
States District Court that exercises jurisdiction over the bankruptcy cases of
FINOVA and its affiliated debtors, the "Bankruptcy Court"); and
WHEREAS, FINOVA, its subsidiary, FINOVA Capital Corporation ("FCC"),
Berkadia LLC, a Delaware limited liability company ("Berkadia"), Berkshire
Hathaway Inc., a Delaware corporation ("Berkshire") and Leucadia have entered
into a commitment letter dated February 26, 2001, as such commitment letter may
be amended from time to time (the "Commitment Letter") pursuant to which, among
other things, Berkadia has committed, which commitment is guarantied by
Berkshire and Leucadia, to lend to FCC $6 billion on the terms and conditions
set forth in the Commitment Letter; and
WHEREAS, pursuant to the Commitment Letter, the Company and FCC have agreed
to file a chapter 11 plan containing the principal terms outlined in the
Commitment Letter or such other terms agreed to by the Company as are mutually
acceptable to both Leucadia and Berkshire in their reasonable discretion (the
"Plan"); and
WHEREAS, the Board of Directors of the Company (the "Board") has formed a
special committee consisting of two directors to serve as a special committee of
the Board until the effective date of the Company's chapter 11 plan (the
"Special Committee"), to work closely with Leucadia and the designee of Berkadia
provided by Leucadia hereunder (the "Berkadia Liaison"); and
WHEREAS, certain management functions have previously been performed for
FINOVA by its own officers; and
WHEREAS, Leucadia, directly and through its subsidiaries, has the
capability to provide advice and assistance to FINOVA with respect to such
services prior to the effective date of the Plan and to provide those services
to FINOVA after the effective date of the Plan; and
WHEREAS, the Board has determined that it is in the best interests of
FINOVA to obtain such services from Leucadia and its subsidiaries.
It is hereby mutually agreed that the Original Agreement is hereby amended
and restated in its entirety to read as follows:
1. TERM. The term of this Management Agreement shall be ten years
commencing on the date hereof.
2. COMPENSATION. For a period of ten years, commencing on the date of
the Original Agreement, FINOVA shall pay to Leucadia International annually a
management fee of $8 million, payable in immediately available funds (the
"Annual Management Fee"). The Annual Management Fee shall be payable quarterly,
in advance, at the beginning of each calendar quarter; provided, however, that
the entire first Annual Management Fee was paid to Leucadia International on
February 27, 2001.
3. SERVICES OF LEUCADIA. (a) The following applies prior to the
effective date of the Plan: Subject to the authority of the Board and the
Special Committee, Leucadia, directly and through its subsidiaries including
Leucadia International, shall provide advice and assistance to FINOVA in the
management of the asset "portfolio" of FCC, including advice and assistance
regarding the supervision of corporate wide management of portfolio sales,
dispositions, acquisitions, and administration and shall provide to the Company
the services of the Berkadia Liaison, who initially shall be ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇ (an employee of Leucadia International), who will report to and work
closely with the Special Committee in the formulation and execution of the Plan.
FINOVA shall keep the Berkadia Liaison informed and shall request his advice and
assistance, in each case on a timely basis, as to all material acts and
decisions of FINOVA with respect to the management of the asset portfolio of
FCC. Nothing contained in this Agreement shall preclude the Board and the
Special Committee from considering, acting upon or making decisions with respect
to proposals for alternatives to the Plan.
(b) Following the effective date of the Plan, Leucadia shall be
responsible for the general management of the Company, subject to the authority
of the Board, and shall provide to the Company, the Chairman of the Board and
President of the Company and such other officers, if any, as shall be mutually
determined between Leucadia and the Company.
4. PERSONNEL. Leucadia shall provide a portion of the time of such
executive officers of Leucadia and its subsidiaries as Leucadia reasonably
determines is necessary to carry out the services specified herein. The number
of persons providing services at any one time and the number of hours such
persons devote to the services specified herein shall not be fixed but shall at
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all times be adequate to properly and promptly perform and discharge the
specified services, it being understood that acting as Berkadia Liaison shall be
▇▇. ▇▇▇▇▇▇▇▇▇▇'▇ principal professional activity through the effective date of
the Plan.
The persons provided by Leucadia hereunder shall for all purposes be
employees of Leucadia. Neither Leucadia nor Leucadia International shall be
entitled to receive any additional compensation for services rendered under this
Agreement other than the payments set forth in paragraph 2 above, but shall be
reimbursed for all reasonable out of pocket expenses, including reimbursement of
travel expenses. Nothing herein shall prevent, however, any individual provided
hereunder from becoming an elected or appointed officer or director of FINOVA
and enjoying the benefits (other than compensation) afforded to any persons in
any such position.
5. OFFICE SPACE, EQUIPMENT AND SUPPLIES, ETC. FINOVA shall provide to
Leucadia and its personnel provided hereunder office space, secretarial
services, equipment and supplies, telephone, telefax and related support
facilities to the extent available at FINOVA's regular work locations.
6. MUTUAL OBLIGATIONS. In addition to their other obligations under
this Agreement, each of FINOVA and Leucadia shall cooperate with the other in
the preparation of the Plan and in matters relating to the confirmation of the
Plan. The parties hereto also shall keep each other fully and promptly informed
of developments in FINOVA's and FCC's businesses and relationships and
discussions and negotiations with or affecting their respective creditors,
including any notices from their respective lenders, suppliers or advisors or
any notices from any third party related to their respective creditors. Upon
execution of this Agreement, Leucadia shall be entitled to name three designees
(or alternate designees for any designee that can not attend a meeting of the
Board) each of whom is mutually acceptable to FINOVA and Leucadia as observers
to the Board and, in such capacity, each such designee (or his named alternate)
(i) shall receive from FINOVA all communications with the Board at the same time
sent to all members of the Board and (ii) shall be entitled to attend all
meetings of the Board (whether telephonic or in person) and to receive reports
of any meetings (whether telephonic or in person) of the Board promptly
following such meetings not attended by such designee; provided, however, that
if the Board believes that the Leucadia designees should be excluded from
deliberations on or being present during voting with respect to any proposal for
an alternative to the Plan, the Leucadia designees shall remove themselves from
any such meeting. FINOVA agrees that prior to confirmation of the Plan, FINOVA
and its subsidiaries will carry on their respective businesses in the ordinary
course of business in compliance in all material respects with all applicable
laws and in accordance with Annex A hereto.
7. COMPANY EXPENSES. FINOVA will continue to bear the cost and expense
of its own employees, including their salary, travel, entertainment, other
business and benefit expenses.
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8. BANKRUPTCY COURT APPROVAL. If the Bankruptcy Court does not approve
this Agreement on or before the day an order is issued by the Bankruptcy Court
approving a disclosure statement for the Company and FCC (which shall be no
later than July 6, 2001), this Agreement will automatically terminate unless
termination is specifically waived by Leucadia in writing. The Company agrees
that it will use its best efforts to obtain Bankruptcy Court approval of this
Agreement in a timely manner. If the Agreement is not approved by the Bankruptcy
Court, the $8 million Annual Management Fee paid to Leucadia International upon
execution of this Agreement shall be deemed to be fully earned upon its payment
and shall not be refundable to the Company upon termination of this Agreement.
9. TERMINATION. If (i) the Commitment Letter is terminated or (ii) a
plan of reorganization other than the Plan is confirmed by order of the
Bankruptcy Court, then Leucadia and the Company each shall have the right to
terminate this Agreement. Any termination shall be upon not less than 30 days
prior written notice given by the terminating party to the other party to this
Agreement. However, any termination (whether under this paragraph or otherwise)
shall not relieve FINOVA of its obligation to pay to Leucadia International the
portion of the Management Fee, if any, that has been earned through the
termination date but has not been paid to Leucadia International as of the date
of such termination and any unpaid Management Fee due to the date of termination
shall be paid to Leucadia International in one payment, in immediately available
funds, upon the effective date of such termination. Notwithstanding the
foregoing, the $8 million Annual Management Fee paid to Leucadia International
upon execution of this Agreement shall be deemed to be fully earned upon its
payment and shall not be refundable to the Company upon termination of this
Agreement.
10. GOVERNING LAW. This Agreement shall be governed in accordance with
the laws of the State of New York.
11. ASSIGNMENT. Neither party may assign this Agreement or any of its
rights or duties hereunder, except that Manager may assign this Agreement to any
entity that is controlled by, controlling or under common control with Leucadia.
12. NOTICES. Services of all notices, if any, under this Agreement
shall be sufficient if given personally or sent by certified, registered mail,
return receipt requested, or telefax to the addresses set forth below:
If to Company, at:
The FINOVA Group Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President and Chief
Executive Officer, General Counsel and Secretary
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Manager or Leucadia International, at:
Leucadia National Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback or three Business Days after the same shall have been deposited in
the United States mail.
13. ENTIRE AGREEMENT. This Agreement supercedes in its entirety the
Management Services Agreement dated as of February 26, 2001 among FINOVA,
Leucadia and Leucadia International.
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IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Management Services Agreement to be duly executed on the date first
written above.
THE FINOVA GROUP INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
LEUCADIA NATIONAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. Orlando
------------------------------------
Name: ▇▇▇▇▇▇ ▇. Orlando
Title: Vice President
LEUCADIA INTERNATIONAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
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Annex A
Except as otherwise expressly permitted or required by the terms of the
Plan or as otherwise expressly contemplated by this Management Agreement or the
Commitment Letter, during the period from the date of the Management Agreement
to entry of a final order of the Bankruptcy Court confirming the Plan, the
Company shall not, and shall cause any of its subsidiaries not to, without the
written consent of Manager, which decision regarding consents shall be made
promptly (in light of its circumstances) after receipt of notice seeking such
consent:
(i) amend its certificate of incorporation, bylaws or other
comparable organizational documents or those of any subsidiary of the
Company;
(ii) except (A) pursuant to the exercise or conversion of
outstanding securities, (B) for issuances of Common Stock upon the
exercise of outstanding options under the benefit plans of the
Company, (C) in connection with other awards outstanding on the date
of this Management Agreement under any benefit plan, or (D) upon
conversion of TOPrS, redeem or otherwise acquire any shares of its
capital stock, or issue or sell any securities (including securities
convertible into or exchangeable for any shares of its capital stock),
or grant any option, warrant or right relating to any shares of its
capital stock, or split, combine or reclassify any of its capital
stock or issue any securities in exchange or in substitution for
shares of its capital stock;
(iii) make any material amendment to any existing, or enter into
any new, employment, consulting, severance, change in control or
similar agreement, or establish any new compensation or benefit or
commission plans or arrangements for directors or employees, or amend
or agree to amend any existing benefit plan;
(iv) other than in connection with foreclosures in the ordinary
course of business and mergers or consolidations among wholly-owned
subsidiaries of the Company, merge, amalgamate or consolidate with any
other entity in any transaction, sell all or any substantial portion
of its business or assets, or acquire all or substantially all of the
business or assets of any other person;
(v) enter into any plan of reorganization or recapitalization,
dissolution or liquidation of the Company;
(vi) declare, set aside or make any dividends, payments or
distributions in cash, securities or property to the stockholders of
the Company in respect of any capital stock of the Company;
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(vii) except for borrowings under credit facilities or lines of
credit existing on the date hereof, incur or assume any indebtedness
of the Company or any of its subsidiaries, except indebtedness of the
Company or any of its subsidiaries incurred in the ordinary course of
business;
(viii) take any action that would have a material impact on the
consolidated federal income tax return filed by the Company as the
common parent, make or rescind any express or deemed material election
relating to taxes, settle or compromise any material claim, action,
suit, litigation, proceeding, arbitration, investigation, audit or
controversy relating to taxes, enter into any material tax ruling,
agreement, contract, arrangement or plan, file any amended tax return,
or, except as required by applicable law or GAAP or in accordance with
past practices, make any material change in any method of accounting
(whether for taxes or otherwise) or make any material change in any
tax or accounting practice or policy;
(ix) enter into any contract, understanding or commitment that
restrains, restricts, limits or impedes the ability of the Company or
any of its subsidiaries, or the ability of Leucadia, to compete with
or conduct any business or line of business in any geographic area;
(x) enter into, or amend the terms of, any contract relating to
interest rate swaps, caps or other hedging or derivative instruments
relating to indebtedness of the Company or any of its subsidiaries; or
agree or commit, whether in writing or otherwise, to do any of the foregoing.
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