Exhibit 10.E.5
COMPENSATION AGREEMENT AND RELEASE
This Compensation Agreement and Release (this "Agreement") is made this
20th day of March, 2001, between The FINOVA Group Inc. (the "Company") and
Xxxxxxx X. Xxxxx ("Employee").
RECITALS
A. Employee has been an executive officer of the Company and certain of its
affiliates. In connection with that engagement, Employee has become a party to
the following compensation arrangements: (a) the Executive Retention Plan, (b)
the Executive Severance Plan -- Tier 2, and (c) the Executive Officer Group
Salary Continuation Plan (collectively, the "Recital A Benefits").
B. Employee is aware that the Company and certain affiliates have filed for
protection of the bankruptcy courts to reorganize their debts. In connection
with those proceedings, the Company's obligations pursuant to executory
agreements are subject to rejection by the Company and claims in the bankruptcy
may be subject to uncertainty or delay. In addition, whether certain predicate
events will occur is uncertain at this time, which might provide Employee with a
claim for certain compensation if those events occurred.
C. In connection with Employee's continued employment, Employee and the
Company desire to set forth certain compensation arrangements governing Employee
from and after the date of this Agreement.
Now, therefore, in consideration of the sums to be paid and the other
promises of the parties provided below, the parties agree as follows:
1. TIME FOR ACCEPTANCE. Employee may accept this Agreement within seven (7)
days of the date a draft of this Agreement was delivered to Employee. If it is
not accepted within that period, the Company's offer of these terms shall be
automatically revoked, unless the Company otherwise agrees in writing.
2. EFFECTIVE DATE. The Effective Date of this Agreement will be at 8:00
a.m. on the eighth day following Employee's delivery of a properly executed
counterpart of this Agreement to Xxxxxxx X. Xxxxxxxx or Xxxxxxx Xxxxxxxxx at
0000 X. Xxxxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxx 00000-0000, provided Employee has
not revoked acceptance of this agreement prior to that time. Notwithstanding the
above, this Agreement will not become effective until the Agreement is approved
by the bankruptcy court. If the Agreement is not approved by the court, then the
Agreement will become void.
3. REVOCATION OF ACCEPTANCE. Employee may revoke acceptance of this
Agreement provided Employee does so in writing, addressed to Xxxxxxx X. Xxxxxxxx
or Xxxxxxx Xxxxxxxxx as noted above, which revocation must be delivered by hand
or facsimile within seven (7) days of the date Employee delivers a signed
counterpart of this Agreement to the Company.
4. RETENTION BONUS PAYMENTS. In lieu of the Recital A Benefits that may
become due to Employee, the Company shall pay and Employee agrees to accept the
following sums:
(a) The Company will pay Employee the sum of $100,000, less applicable
withholding taxes. This payment will be made on the latter of the Effective Date
or the date the first payment of all or a portion of the April 6, 2001 scheduled
payment is made to employees of the Company generally, pursuant to the Retention
Incentive Plan adopted in May 2000, as amended.
(b) On adoption of a plan of reorganization by the Company and
approved by the court and creditors, the Company will pay Employee the sum of
$50,000, less applicable withholding taxes, provided Employee remains an
employee in good standing.
(c) The Company will pay Employee the sum of $50,000, less applicable
withholding taxes, on the first business day of January 2002, provided Employee
remains an employee in good standing. Any unpaid amounts pursuant to Sections 4
(a), (b) and (c) shall be paid on the severance date if Employee is
involuntarily terminated other than for cause before those respective dates.
5. BASE SALARY ADJUSTMENT. Employee's base salary shall be adjusted,
commencing as of January 1, 2001, to be paid at a rate equal to not less than
$200,000 per annum, payable in accordance with Company practices.
6. SEVERANCE BENEFITS. Employee shall be entitled to receive the following
severance benefits in the event of an involuntary termination other than for
cause, provided the Employee executes a severance agreement which contains a
full release of liability of the Company and its affiliates and their related
personnel, which release and severance agreement shall be in the Company's
standard form:
(a) Severance compensation equal to one year's base salary, payable on
the effective date of the execution of a severance agreement; provided, however,
that if Employee is terminated without cause prior to the date payment of the
bonuses pursuant to Sections 4 and 7 of this Agreement would be due, Employee
shall be paid severance compensation equal to the greater of one year's base
salary, or three years' base salary less the amount of any retention and
discretionary bonuses paid to Employee hereunder. The Employee may be required
to serve as a consultant in exchange for one of those years' worth of salaries
on terms substantially similar to those offered to other similarly situated
executives of the Company.
(b) COBRA coverage for 12 months, consistent with Employee's elections
in effect on the severance date, for medical, executive medical, dental and
vision programs in which the Employee participates as of the severance date.
(c) Financial counseling for 12 months from the severance date on the
same terms as previously offered to Employee as of the severance date.
(d) Outplacement services at an executive level for 12 months
following the severance date.
(e) Life insurance benefits equal to then-current elections for 12
months.
7. DISCRETIONARY BONUS. Employee will be eligible to receive a
discretionary bonus payable in February 2002 of between 0% and 150% of the
target amount of $200,000, based on assessments of Employee's performance by
senior management and the Human Resources Committee of the Board.
8. TERMINATION OF PARTICIPATION IN CERTAIN PLANS. This agreement replaces
the Recital A Benefits to the extent governing Employee. Employee acknowledges
that upon the Effective Date of this Agreement, Employee shall no longer be a
participant or have any right to assert a claim to benefits under any of those
plans, agreements or practices, including for benefits that may have accrued,
become vested or to which Employee otherwise has become entitled prior to the
Effective Date. As a result, Employee agrees not to assert a claim against the
Company or its estate for any such amounts, provided that the Company fully
honors its obligations under this Agreement. Nothing in this Agreement impacts
Employee's eligibility or participation in other benefit or compensation plans
of the Company, such as pension, supplemental pension, stock or option plans,
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insurance, executive medical, financial counseling, indemnification, expense
reimbursement and similar programs. Employee's rights and eligibility to
participate in those plans are governed by the terms of those other programs.
9. RELEASE FROM LIABILITY
(a) RELEASE: Subject to the terms of this Agreement and in
consideration of the Benefits set forth above, Employee voluntarily and
irrevocably (except for the seven (7) day revocation period noted above)
releases and discharges the Company, its predecessors, their respective
affiliates, and their respective stockholders, directors, officers, employees,
plan fiduciaries, agents, successors and assigns (collectively, "Released
Parties") from and against any and all claims, obligations, debts, demands,
judgments, or causes of action of any kind whatsoever, known or unknown, actual
or contingent, whether brought at law, in equity or otherwise, based on tort,
contract, statute, or on any other basis, which Employee has or may have against
any of them or liabilities they may have to Employee (collectively, "Claims"),
which arise from or are related to Employee's employment or relationship with
the Company or any other Released Party, the termination of the Recital A
Benefits, or any other matter, cause or thing whatsoever which may have occurred
involving Employee and any Released Party prior to the date of Employee's
acceptance of this Agreement. This release includes all Claims for equitable
relief, actual, compensatory, consequential, punitive, special, multiple or
other damages, expenses (including without limitation attorney's fees and court
costs), and all other reimbursements or charges of any kind. Employee hereby
waives any remedy or recovery that may be sought on Employee's behalf by any
government agency or other person, to the fullest extent permitted by law.
(b) This release includes without limitation any and all Claims
Employee has or may have against the Company or any other Released Party arising
under any federal, state, local or foreign statute, common or other law,
including without limitation those relating to discrimination of any type,
unfair employment practices, sexual or other harassment, the Age Discrimination
in Employment Act of 1967, the Americans With Disabilities Act, the Civil Rights
Acts of 1866, 1871, 1964 and 1991, the Equal Pay Act of 1963, the Employee
Retirement Income Security Act of 1974, the Internal Revenue Code of 1986, the
Fair Labor Standards Act of 1938, the Family and Medical Leave Act of 1993, the
Labor Management Relations Act of 1947, the National Labor Relations Act, the
Rehabilitation Act of 1973, and any other employment-related laws and
regulations, as they may be amended from time to time, as well as all other
Claims Employee has or may have, including without limitation misrepresentation,
fraud, duress, unfair dealing, wrongful termination, infliction of emotional
distress, breach of fiduciary or other duty, invasion of privacy, failure to
supervise or train, defamation, breach of contract, interference with contract,
and all other causes of action of any kind, by whatever name known.
(c) Employee agrees to release all such Claims, whether they are known
to Employee or unknown at this time. Employee therefore waives and releases
Employee's rights under any provision of law which states that a general release
does not extend to Claims which the person does not know or suspect to exist in
his or her favor at the time of executing the release, which if known to him or
her must have materially affected the settlement.
10. CONTINUING RIGHTS TO ENFORCE THIS AGREEMENT. The above release does not
limit Employee's rights to enforce the terms of this Agreement to its fullest
extent. Employee agrees, however, not to initiate or include as a Claim in any
lawsuit, arbitration or other proceeding against the Company or any other
Released Party in any court, before any governmental body, arbitration forum or
otherwise, any Claim which Employee has released above, except for an action
alleging a breach of this, but only this Agreement. In the event that a court
finds in a final judgment that the substance of this Agreement is not
enforceable, then the Employee shall have a right to assert a claim against the
Company for amounts Employee can establish to be due to Employee pursuant to
those items noted in Recital A, as well as to other Company benefits to which
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the Employee is entitled pursuant to law or contract. Employee intends to
release all other claims Employee may have against the Company at this time.
11. ENTIRE AGREEMENT. Employee agrees that Employee is not relying on any
representations, promises, statements or agreements not contained in or
incorporated by reference into this Agreement or in the other written materials
furnished in connection with this Agreement or Employee's Severance. Employee
agrees that this Agreement is all-inclusive and that no additional oral or
written representations, promises or agreements exist with the Company, the
persons or entities referenced in the release paragraphs below or any one else
concerning the subject matter hereof. This Agreement can not be modified,
amended, terminated or otherwise changed unless it is done so pursuant to a
written document or documents signed by both the Employee and the Company's
Senior Vice President-Human Resources (currently Xxxxxxx X. Xxxxx) or other
person authorized by the Company's Chairman.
12. ADVICE OF COUNSEL. Employee acknowledges that Employee has been advised
to consult with an attorney to review the terms and legal effect of this
Agreement, including the release, at Employee's expense, and that Employee has
been given a sufficient opportunity to do so to the extent Employee believes it
appropriate.
13. SEVERABILITY. Subject to Section 10 of this Agreement, should any part
or interpretation of this Agreement be declared by any court or arbitrator of
competent jurisdiction to be illegal or invalid, the remainder of this Agreement
shall remain valid and in effect, the invalid provision shall be deemed to
conform to a valid provision most closely approximating the intent of the
invalid provision, and the invalid provision shall not be deemed to be a part of
this Agreement.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Arizona, without regard to its choice
of law principles; provided, however, to the extent that Federal laws of the
United States control interpretation or enforcement of this Agreement, such
Federal law shall control.
15. SUCCESSORS AND ASSIGNS. This Agreement is binding on and shall inure to
the benefit of the parties hereto and their respective successors, heirs,
personal representatives and assigns.
16. ARBITRATION. The parties irrevocably agree that any disputes,
controversies or claims they may have arising out of this agreement, including
one to interpret or to enforce this Agreement, shall be settled by binding
arbitration pursuant to the rules of the American Arbitration Association for
employment disputes. The matter shall be heard by a single arbitrator in
Maricopa County, Arizona. The arbitrator shall award the prevailing party its
costs, attorney's fees and disbursements (including those of in-house counsel)
and other damages. The decision of the arbitrator shall be final, except as
otherwise required by law.
17. WAIVER OF JURY TRIAL. EMPLOYEE AND COMPANY HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL IN ANY PROCEEDINGS ARISING OUT OF OR RELATED
TO THIS AGREEMENT OR THE SUBJECT MATTER HEREOF.
DATED: As of the date and year first noted above.
THE FINOVA GROUP INC.
By: /s/ Xxxxxxx Xxxxxxxxx
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Vice President - Associate General Counsel
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ACCEPTANCE OF COMPENSATION AGREEMENT AND RELEASE
BETWEEN THE FINOVA GROUP INC. AND XXXXXXX X. XXXXX, DATED MARCH 20, 2001.
I AGREE TO BE BOUND BY THE TERMS AND CONDITIONS OF THE ABOVE COMPENSATION
AGREEMENT AND RELEASE, INCLUDING THE RELEASE FROM LIABILITY INCLUDED IN THE
AGREEMENT. I HAVE CAREFULLY READ AND UNDERSTAND THE PROVISIONS OF THIS
AGREEMENT. I HAVE HAD AN OPPORTUNITY TO REVIEW THIS AGREEMENT WITH AN ATTORNEY
AND OTHER ADVISORS OF MY CHOICE, AND I HAVE BEEN ADVISED TO DO SO. I ENTER INTO
THIS AGREEMENT FREELY AND VOLUNTARILY. I INTEND TO BE LEGALLY BOUND BY THESE
TERMS. I FOREVER WAIVE MY RIGHTS TO A JURY TRIAL AND CONSENT TO BINDING
ARBITRATION. I UNDERSTAND THAT I MAY REVOKE THIS AGREEMENT AT ANY TIME WITHIN 7
DAYS OF THE DATE OF MY ACCEPTANCE OF THESE TERMS, provided I deliver by hand or
facsimile a written signed statement to Xxxxxxx X. Xxxxxxxx, President, or
Xxxxxxx Xxxxxxxxx, Vice President-Associate General Counsel, The FINOVA Group
Inc., 0000 X. Xxxxxxxxxx Xxxx, Xxxxxxxxxx, XX 00000-0000, (000) 000-0000, within
that time period. I have signed this release before a witness who is at least 21
years of age.
Date: March 20, 2001
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Signature: /s/ Xxxxxxx X. Xxxxx
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Witness Signature: /s/ Xxxxxxx Xxxxxxxxx
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Witness Name: Xxxxxxx Xxxxxxxxx
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Witness Address: c/o FINOVA
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THIS IS A RELEASE AND LEGAL AGREEMENT
READ CAREFULLY BEFORE SIGNING
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