-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Lv47Ey7h8RDyPDXLAWQtrymx7dXMY4mnxM1AZ73fuQfCu8eOYY9YXb84VfTz2ORL 0dMs4siFYoKIiiqGzyszDQ== 0000854711-01-500009.txt : 20010628 0000854711-01-500009.hdr.sgml : 20010628 ACCESSION NUMBER: 0000854711-01-500009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20010430 FILED AS OF DATE: 20010614 DATE AS OF CHANGE: 20010626 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FINANCIAL FEDERAL CORP CENTRAL INDEX KEY: 0000854711 STANDARD INDUSTRIAL CLASSIFICATION: 6159 IRS NUMBER: 880244792 STATE OF INCORPORATION: NV FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-14237 FILM NUMBER: 1661371 BUSINESS ADDRESS: STREET 1: 733 THIRD AVENUE STREET 2: 7TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2125998000 MAIL ADDRESS: STREET 1: 733 THIRD AVENUE STREET 2: 7TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 10-Q 1 q04302001.txt ============================================================================= UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended April 30, 2001 Commission file number 1-12006 FINANCIAL FEDERAL CORPORATION (Exact name of registrant as specified in its charter) Nevada 88-0244792 (State of incorporation) (I.R.S. Employer Identification Number) 733 Third Avenue, New York, NY 10017 (Address of principal executive offices) (Zip code) (212) 599-8000 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- At June 1, 2001, 16,517,259 shares of Registrant's common stock, $.50 par value, were outstanding. ============================================================================= FINANCIAL FEDERAL CORPORATION AND SUBSIDIARIES Quarterly Report on Form 10-Q for the quarter ended April 30, 2001 TABLE OF CONTENTS Part I - Financial Information Page No. - - -------------------------------------------------------------------- -------- Item 1 Financial Statements Consolidated Balance Sheet at April 30, 2001 (unaudited) and July 31, 2000 (audited) 3 Consolidated Statement of Operations and Retained Earnings for the three and nine months ended April 30, 2001 and 2000 (unaudited) 4 Consolidated Statement of Cash Flows for the nine months ended April 30, 2001 and 2000 (unaudited) 5 Notes to Consolidated Financial Statements 6-7 Item 2 Management's Discussion and Analysis of Operations and Financial Condition 7-10 Part II - Other Information - - -------------------------------------------------------------------- Item 6 Exhibits and Reports on Form 8-K 10 Signatures 11 2 FINANCIAL FEDERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Dollars in Thousands)

3 FINANCIAL FEDERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS * (Dollars in Thousands, Except Per Share Amounts)

FINANCIAL FEDERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS * (Dollars in Thousands)

FINANCIAL FEDERAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - BASIS OF PRESENTATION In the opinion of the management of Financial Federal Corporation and Subsidiaries (the "Company"), the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring items) necessary to present fairly the financial position at April 30, 2001 and the results of operations and cash flows of the Company for the three and nine month periods ended April 30, 2001 and 2000. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and note disclosures included in the Company's Annual Report on Form 10-K for the year ended July 31, 2000. The consolidated results of operations for the three and nine month periods ended April 30, 2001 and 2000 are not necessarily indicative of the results for the respective full years. NOTE 2 - DESCRIPTION OF BUSINESS The Company is an independent financial services company providing collateralized lending, financing and leasing services nationwide to primarily middle-market commercial enterprises representing diverse industries such as general construction, road and infrastructure construction and repair, manufacturing, transportation and waste disposal. The Company lends against, finances and leases a wide range of revenue-producing equipment such as cranes, earthmovers, machine tools, personnel lifts, trailers and trucks. NOTE 3 - EARNINGS PER COMMON SHARE Earnings per common share was calculated as follows (in thousands, except per share amounts):

NOTE 4 - SENIOR DEBT At April 30, 2001, the Company had $450.0 million of committed unsecured revolving credit facilities with various banks including $205.0 million that expire after April 30, 2002 and $245.0 million that expire before April 30, 2002. Long-term senior debt of $588.6 million at April 30, 2001 comprised $137.3 million of borrowings under credit facilities that expire after April 30, 2002, $67.7 million of borrowings under credit facilities that expire before April 30, 2002 that were supported by credit facilities that expire after April 30, 2002 and $383.6 million of term notes payable. In September 6 2000, the Company established a $200.0 million Medium Term Note Program and issued the following notes thereunder in October 2000 and March 2001, respectively; $38.0 million of 8.50% fixed rate term notes that mature in May 2003 and $65.0 million of 7.05% fixed rate term notes that mature in April 2004. NOTE 5 - STOCKHOLDERS' EQUITY In December 2000, the Company and the majority of the warrant holders amended the warrant agreements to purchase the Company's common stock. The amendment permitted the warrant holders to pay for the exercise of their warrants with previously owned common stock of the Company in lieu of cash at the holders' option. During the quarter ended January 31, 2001, subsequent to the amendment, all of the Company's 1,606,500 outstanding warrants were exercised. The total proceeds to the Company were $4.5 million (1,125,000 warrants at an exercise price of $2.83 per warrant and 481,500 warrants at an exercise price of $2.72 per warrant). The Company received $1.1 million and 136,961 shares of its common stock at an average market value of $24.70 per share. As a result of receiving 136,961 shares, the amount available under the Company's Stock and Convertible Debenture Repurchase Program decreased to $6.6 million. At April 30, 2001, the Company held the 136,961 shares in treasury. In February 2001, the Company adopted a Management Incentive Plan for its Chief Executive Officer. The plan provides for awards of restricted stock and payments of performance bonuses that are both contingent upon the Company attaining certain operating results. The plan is subject to shareholder approval in December 2001. In February 2001, the Company awarded 55,500 shares of restricted stock to certain of its senior officers. The shares vest ratably over four years from the date granted. NOTE 6 - RELATED PARTY DEBT Related party debt decreased during the first nine months of fiscal 2001 primarily because certain holders of the Company's senior and subordinated debt ceased to be classified as related parties due to changes in stock ownership and the passing of the Company's then Chairman of the Board in November 2000. NOTE 7 - RECENT ACCOUNTING PRONOUNCEMENTS In August 2000, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities" and SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities." These Statements require the fair value of derivatives to be recorded as assets or liabilities. Gains or losses resulting from changes in the fair values of derivatives are accounted for depending on the purpose of the derivatives and whether they qualify for hedge accounting treatment. The adoption of SFAS 133 and SFAS 138 did not have a material effect on the Company's earnings or financial position. PART I Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS Comparison of three months ended April 30, 2001 to three months ended April 30, 2000 - - --------------------------------------------------------------------------- Finance income increased by 24% to $34.8 million in the third quarter of fiscal 2001 from $28.2 million in the third quarter of fiscal 2000. The increase was primarily due to the 21%, or $219 million, increase in average finance receivables outstanding to $1.263 billion in the third quarter of fiscal 2001 from $1.044 billion in the third quarter of fiscal 2000 and higher yields obtained on new receivables as a result of increases in market interest rates during May 2000 through December 2000. Finance receivables booked in the third quarter of fiscal 2001 and fiscal 2000 were $190 million and $186 million, respectively. 7 Interest expense, incurred on borrowings used to fund finance receivables, increased by 22% to $15.9 million in the third quarter of fiscal 2001 from $13.0 million in the third quarter of fiscal 2000. The increase was primarily due to the 22% increase in average debt outstanding in the third quarter of fiscal 2001 from the third quarter of fiscal 2000 and the $135.0 million increase in fixed rate term debt since April 30, 2000, partially offset by decreases in the cost of the Company's short term and variable rate debt as a result of lower average market interest rates in the third quarter of fiscal 2001 from the third quarter of fiscal 2000. Finance income before provision for possible losses on finance receivables increased by 25% to $18.9 million in the third quarter of fiscal 2001 from $15.2 million in the third quarter of fiscal 2000. Finance income before provision for possible losses expressed as an annualized percentage of average finance receivables outstanding ("net interest margin") increased to 6.2% in the third quarter of fiscal 2001 from 5.9% in the third quarter of fiscal 2000. The increase was primarily due to the increase in the yield on the Company's finance receivables and the decrease in the cost of the Company's short term and variable rate debt, partially offset by higher rates incurred on the additional $135.0 million of fixed rate term debt. The provision for possible losses on finance receivables increased by 33% to $1.3 million in the third quarter of fiscal 2001 from $975,000 in the third quarter of fiscal 2000. The provision for possible losses is determined by the amount required to increase the allowance for possible losses to a level that management considers appropriate. The allowance for possible losses was $21.2 million, or 1.66% of finance receivables at April 30, 2001, compared to $19.0 million, or 1.68% of finance receivables, at July 31, 2000 and $18.1 million, or 1.68% of finance receivables, at April 30, 2000. The allowance is periodically reviewed by the Company's management and is estimated based on total finance receivables, net credit losses incurred and management's current assessment of the risks inherent in the Company's finance receivables from national and regional economic conditions, industry conditions, concentrations, the financial condition of counterparties and other factors. Future additions to the allowance may be necessary based on changes in these factors. Net credit losses (write-downs of finance receivables less subsequent recoveries) were $586,000 and $164,000 in the third quarter of fiscal 2001 and 2000, respectively. Net credit losses expressed as an annualized percentage of average finance receivables outstanding ("loss ratio") was 0.19% and 0.06% in the third quarter of 2001 and 2000, respectively. Finance receivables on non-accrual (income recognition has been suspended) were $28.8 million, or 2.2% of total finance receivables, at April 30, 2001, compared to $16.2 million, or 1.4% of total finance receivables, at July 31, 2000 and $14.2 million, or 1.3% of total finance receivables, at April 30, 2000. Delinquent finance receivables (receivables with a contractual payment more than 60 days past due) were $29.4 million, or 2.3% of total finance receivables, at April 30, 2001, compared to $17.3 million, or 1.5% of total finance receivables, at July 31, 2000 and $15.4 million, or 1.4% of total finance receivables, at April 30, 2000. The Company's non-accruing and delinquent finance receivables and net credit losses have been increasing, and could continue to do so, although their current and expected levels are within industry standards. Salaries and other expenses increased by 33% to $4.5 million in the third quarter of fiscal 2001 from $3.4 million in the third quarter of fiscal 2000. The increase was primarily due to the increase in the number of marketing and administrative employees, salary increases and, to a lesser extent, additional costs incurred relating to the increased number of delinquent accounts. In addition, the Company relocated its Phoenix, Arizona operations center to Irvine, California. Net earnings increased by 17% to $8.0 million in the third quarter of fiscal 2001 from $6.8 million in the third quarter of fiscal 2000. Diluted earnings per share increased by 13% to $0.44 per share in the third quarter of fiscal 2001 from $0.39 per share in the third quarter of fiscal 2000 and basic earnings per share increased by 7% to $0.49 per share in the third quarter of fiscal 2001 from $0.46 per share in the third quarter of fiscal 2000. The increase in diluted earnings per share was lower than the increase in net earnings primarily due to the effect that the convertible subordinated notes have on the diluted earnings per share calculation and the 40% increase in the average price of the Company's common stock in the third quarter of fiscal 2001 from the third quarter of fiscal 2000. The increase in basic earnings per share was lower than the increase in net earnings primarily due to the increase in the number of outstanding shares of the Company's common stock resulting from the exercise of the Company's 1,606,500 warrants in the second quarter of fiscal 2001. In the third quarter of fiscal 2000, the Company repurchased $2.0 million principal amount of its convertible subordinated notes for $1.6 million. Excluding the net after tax gain on this retirement of debt, net earnings 8 increased by 22%, diluted earnings per share increased by 16% and basic earnings per share increased by 11% in the third quarter of fiscal 2001 from the third quarter of fiscal 2000. Comparison of nine months ended April 30, 2001 to nine months ended April 30, 2000 - - ----------------------------------------------------------------------------- Finance income increased by 28% to $102.7 million in the first nine months of fiscal 2001 from $80.3 million in the first nine months of fiscal 2000. The increase was primarily due to the 21%, or $213 million, increase in average finance receivables outstanding to $1.214 billion in the first nine months of fiscal 2001 from $1.001 billion in the first nine months of fiscal 2000 and higher yields obtained on new receivables and on variable rate receivables as a result of increases in market interest rates during May 2000 through December 2000. Finance receivables booked in the first nine months of fiscal 2001 and fiscal 2000 were $533 million and $522 million, respectively. Interest expense, incurred on borrowings used to fund finance receivables, increased by 32% to $49.0 million in the first nine months of fiscal 2001 from $37.2 million in the first nine months of fiscal 2000. The increase was primarily due to the 22% increase in average debt outstanding in the first nine months of fiscal 2001 from the first nine months of fiscal 2000, the $135.0 million increase in fixed rate term debt since April 30, 2000 and increases in the cost of the Company's short term and variable rate debt as a result of higher average market interest rates in the first nine months of fiscal 2001 from the first nine months of fiscal 2000 (market interest rates started to decline in January 2001). Finance income before provision for possible losses on finance receivables increased by 25% to $53.7 million in the first nine months of fiscal 2001 from $43.1 million in the first nine months of fiscal 2000. The net interest margin increased to 5.9% in the first nine months of fiscal 2001 from 5.7% in the first nine months of fiscal 2000. The increase was primarily due to the increase in the yield on the Company's finance receivables, partially offset by the increase in the cost of the Company's short term and variable rate debt and higher rates incurred on the additional $135.0 million of fixed rate term debt. The provision for possible losses on finance receivables increased by 61% to $3.6 million in the first nine months of fiscal 2001 from $2.2 million in the first nine months of fiscal 2000. Net credit losses were $1.4 million and $317,000 in the first nine months of fiscal 2001 and 2000, respectively. The loss ratio was 0.16% and 0.04% in the first nine months of 2001 and 2000, respectively. Salaries and other expenses increased by 35% to $12.5 million in the first nine months of fiscal 2001 from $9.3 million in the first nine months of fiscal 2000. The increase was primarily due to the increase in the number of marketing and administrative employees, salary increases and, to a lesser extent, additional costs incurred relating to the increased number of delinquent accounts. In addition, the Company relocated its Phoenix, Arizona operations center to Irvine, California. Net earnings increased by 16% to $23.0 million in the first nine months of fiscal 2001 from $19.8 million in the first nine months of fiscal 2000. Diluted earnings per share increased by 13% to $1.28 per share in the first nine months of fiscal 2001 from $1.13 per share in the first nine months of fiscal 2000 and basic earnings per share increased by 11% to $1.47 per share in the first nine months of fiscal 2001 from $1.33 per share in the first nine months of fiscal 2000. The increase in diluted earnings per share was lower than the increase in net earnings primarily due to the effect that the convertible subordinated notes have on the diluted earnings per share calculation and the 20% increase in the average price of the Company's common stock in the first nine months of fiscal 2001 from the first nine months of fiscal 2000. The increase in basic earnings per share was lower than the increase in net earnings primarily due to the increase in the number of outstanding shares of the Company's common stock resulting from the exercise of the Company's 1,606,500 warrants in the second quarter of fiscal 2001. In the first nine months of fiscal 2000, the Company repurchased $4.3 million principal amount of its convertible subordinated notes for $3.5 million. Excluding the net after tax gain on this retirement of debt, net earnings increased by 19%, diluted earnings per share increased by 16% and basic earnings per share increased by 13% in the first nine months of fiscal 2001 from the first nine months of fiscal 2000. 9 LIQUIDITY AND CAPITAL RESOURCES The Company is dependent upon the continued availability of funds to originate or acquire finance receivables and to purchase portfolios of finance receivables. The Company may obtain required funds from a variety of sources, including operating cash flow, dealer placed and directly issued commercial paper, borrowings under committed unsecured revolving credit facilities, private and public issuances of term debt and securitizations, and sales of common and preferred equity. Management believes, but cannot assure, that the Company has available sufficient liquidity to support its future operations. The Company issues investment grade commercial paper directly and through a $350.0 million program with recognized dealers. Commercial paper outstanding at April 30, 2001 was $144.5 million; a decrease of $191.3 million from the amount outstanding at July 31, 2000. Commencing December 2000, the Company has increased its borrowings under committed unsecured revolving bank credit facilities and reduced its outstanding commercial paper in order to vary the maturities and lower the cost of its short term debt. The Company's commercial paper is unsecured and matures within 270 days. Increases in commercial paper are generally offset by decreases in bank and other borrowings, and vice versa. The Company's current policy is to maintain committed revolving credit facilities from banks so that the aggregate amount available thereunder exceeds commercial paper outstanding. At April 30, 2001, the Company had $450.0 million of committed unsecured revolving credit facilities with various banks including $205.0 million that expire after one year and $245.0 million that expire within one year. At April 30, 2001, the Company had $137.3 million of borrowings outstanding under credit facilities expiring after one year and $129.0 million of borrowings outstanding under credit facilities expiring within one year. In September 2000, the Company established a $200.0 million Medium Term Note Program and issued the following notes thereunder in October 2000 and March 2001, respectively; $38.0 million of 8.50% fixed rate term notes that mature in May 2003 and $65.0 million of 7.05% fixed rate term notes that mature in April 2004. At April 30, 2001, $97.0 million was available under the program for future issuances. FORWARD-LOOKING STATEMENTS Certain statements in this document including the words or phrases "can be," "expects," "may affect," "may depend," "believes," "estimate," "project," "could," and similar words and phrases constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are subject to various known and unknown risks and uncertainties and the Company cautions you that any forward-looking information provided by or on its behalf is not a guarantee of future performance. The Company's actual results could differ materially from those anticipated by such forward-looking statements due to a number of factors, some of which are beyond the Company's control, including, without limitation, (i) the ability to obtain funding on acceptable terms, (ii) changes in the risks inherent in the Company's receivables portfolio and the adequacy of the Company's reserves, (iii) changes in market interest rates, (iv) changes in economic, financial, and market conditions, (v) changes in competitive conditions and (vi) the loss of key executives or personnel. Forward-looking statements apply only as of the date made and the Company is not required to update forward-looking statements for subsequent or unanticipated events or circumstances. PART II Item 6 EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 10.27 2001 Management Incentive Plan for the Chief Executive Officer of the Registrant 10.28 Form of Restricted Stock Agreement between the Registrant and its Chief Executive Officer 10.29 Form of Restricted Stock Agreement between the Registrant and certain senior officers (b) Reports on Form 8-K None. 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FINANCIAL FEDERAL CORPORATION ----------------------------- (Registrant) By: /s/ Steven F. Groth ---------------------------- Senior Vice President and Chief Financial Officer (Principal Financial Officer) By: /s/ David H. Hamm ---------------------------- Controller and Assistant Treasurer (Principal Accounting Officer) June 8, 2001 - - -------------- (Date) 11 INDEX TO EXHIBITS Exhibit No. Exhibits - - ----------- --------------------------------------------------------------- 10.27 2001 Management Incentive Plan for the Chief Executive Officer of the Registrant 10.28 Form of Restricted Stock Agreement between the Registrant and its Chief Executive Officer 10.29 Form of Restricted Stock Agreement between the Registrant and certain senior officers 12 EX-10 2 x04302001_10-27.txt FINANCIAL FEDERAL CORPORATION 2001 MANAGEMENT INCENTIVE PLAN (AS ADOPTED ON FEBRUARY 27, 2001) 1. PURPOSE The purpose of this Plan is to motivate and reward the Company's Chief Executive Officer for good performance by making a portion of his compensation dependent on the achievement of certain Performance Goals related to the performance of Financial Federal Corporation (the "Company") and also to further align the Chief Executive Officer's interests with the interests of stockholders through the issuance of Company stock. This Plan is designed to ensure that the incentives awarded hereunder are deductible under Section 162(m) of the Internal Revenue Code of 1986, as amended, and the regulations and interpretations promulgated thereunder (the "Code"). Accordingly, the adoption of this Plan is subject to the approval of the Company's stockholders pursuant to Code Section 162(m). 2. PARTICIPANT The participant in this Plan shall be the Chief Executive Officer of the Company (the "Participant"). 3. THE COMMITTEE The Committee shall consist of at least two outside directors of the Company that satisfy the requirements of Code Section 162(m). The Committee shall have the sole discretion and authority to administer and interpret this Plan in accordance with Code Section 162(m). Unless the Board provides otherwise, the Executive Compensation Committee of the Company's Board of Directors shall be the Committee. Any directors on the Executive Compensation Committee that do not satisfy the outside director requirements of Code Section 162(m) shall not serve on the Committee with respect to any bonuses or stock granted to a "covered employee." 4. AMOUNT OF BONUS The Participant's bonus payment, if any, is based on: (i) an individual target set by the Committee in writing with respect to the Performance Period and (ii) the Performance Goal or Goals for the Performance Period. However, no bonus in excess of 300% of the annualized highest rate of base salary paid to any executive of the Company with respect to fiscal year 2001 as reported in the Company's proxy statement for the 2001 Annual Meeting will be paid with respect to a Performance Period. The Committee may also reduce the Participant's maximum bonus calculated under the preceding formula in its sole discretion. This Plan's "Performance Goals" may include one or more of the following: (i) return on equity, (ii) earnings per share, (iii) pre-tax earnings or after-tax earnings, or (iv) percentage of writeoffs on accounts receivable, each with respect to the Company, as determined by the Committee in its sole discretion. A "Performance Period" shall be, with respect to the Participant, any period of time not exceeding 12 months, as determined by the Committee in its sole discretion. The Committee, in its sole discretion, may permit the Participant to defer receipt of cash that would otherwise be delivered to the Participant under this Plan. Any such deferral elections shall be subject to such rules and procedures as determined by the Committee in its sole discretion. The selection and adjustment of applicable Performance Goals, and the establishment of targets, shall occur in compliance with the rules of Code Section 162(m). 5. PAYMENT OF BONUS Subject to the Committee's discretion, the payment of a bonus generally requires that the Participant be on the Company's payroll as of the date the bonus is to be paid. The Committee may make exceptions to this requirement in the case of retirement, death or disability or under other circumstances, as determined by the Committee in its sole discretion. Bonus payments may be made (i) in cash, (ii) in shares of Company common stock ("Shares") granted under Section 6 of this Plan or in any combination thereof, all as determined by the Committee in its sole discretion. The number of Shares granted shall be determined by dividing the cash amount foregone by the Fair Market Value (as defined in Section 6) of a Share on the date in question. No bonus shall be paid unless and until the Committee certifies in writing the extent to which the Performance Goal(s) applicable to the Participant have been achieved or exceeded. The Committee may establish concurrent or overlapping Performance Periods. 6. SHARES SUBJECT TO PLAN The Committee may issue Shares to the Participant to satisfy the payment of bonuses under Section 5. The stock issuable under this Plan shall be authorized but unissued Shares or treasury Shares. The aggregate number of Shares reserved for issuance under the Plan shall not exceed 500,000 Shares, with such limit subject to adjustment in the event of a subdivision of the outstanding Shares, a declaration of a dividend payable in Shares, a declaration of a dividend payable in a form other than Shares in an amount that has a material effect on the price of Shares, a combination or consolidation of the outstanding Shares (by reclassification or otherwise) into a lesser number of Shares, a recapitalization, a spin-off or a similar occurrence. For purposes of this Plan, the Fair Market Value of a Share shall mean the market price of Shares, determined by the Committee as follows: (i) If the Shares were traded over-the-counter on the date in question but were not classified as a national market issue, then the Fair Market Value shall be equal to the mean between the last reported representative bid and asked prices quoted by the NASDAQ system for such date; (ii) If the Shares were traded over-the-counter on the date in question and were classified as a national market issue, then the Fair Market Value shall be equal to the last-transaction price quoted by the NASDAQ system for such date; (iii) If the Shares were traded on a stock exchange on the date in question, then the Fair Market Value shall be equal to the closing price reported by the applicable composite transactions report for such date; and (iv) If none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate. Whenever possible, the determination of Fair Market Value by the Committee shall be based on the prices reported in the Wall Street Journal. Such determination shall be conclusive and binding on all persons. 7. RESTRICTED STOCK AWARDS In addition to the awarding of bonuses under this Plan, the Committee may from time to time, in its sole discretion, award Shares ("Restricted Stock") to the Participant using the Shares available under Section 6. The Participant may not receive more than 100,000 shares of Restricted Stock (subject to adjustment as described in Section 6) in the aggregate in any calendar year. Any Restricted Stock awarded may or may not be subject to vesting conditions as determined by the Committee in its sole discretion, however each award of Restricted Stock will be subject to the Plan's Performance Goals. The terms and conditions of each award of Restricted Stock shall be set forth in a Restricted Stock Agreement. The Participant may or may not have to pay for all or a portion of the Fair Market Value of the Shares of a Restricted Stock award. A Restricted Stock Agreement may provide for accelerated vesting in the event of the Participant's death, disability or retirement or other events. A holder of Restricted Stock awarded under the Plan shall have the same voting, dividend and other rights as the Company's other stockholders. A Restricted Stock Agreement, however, may require that the holder of Restricted Stock invest any cash dividends received in additional Restricted Stock. Such additional Restricted Stock shall be subject to the same conditions and restrictions as the original award of Restricted Stock with respect to which the dividends were paid. Except as permitted by the Committee for the satisfaction of any tax withholding requirements, or as provided in a Restricted Stock Agreement, or as required by applicable law, any Restricted Stock granted under the Plan shall not be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor's process, whether voluntarily, involuntarily or by operation of law. Any act in violation of this Section 7 shall be void. However, this Section 7 shall not preclude a holder of Restricted Stock from designating a beneficiary who will receive any outstanding Restricted Stock in the event of the holder's death, nor shall it preclude a transfer of Restricted Stock by will or by the laws of descent and distribution. 8. AMENDMENT AND TERMINATION The Board of Directors reserves the right to amend or terminate this Plan at any time with respect to future services of participants. Plan amendments will require stockholder approval only to the extent required by applicable law. 9. LEGAL CONSTRUCTION Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural. In the event any provision of this Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included. The granting of awards under this Plan shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. This Plan and all awards shall be construed in accordance with and governed by the laws of the State of New York, but without regard to its conflict of law provisions. Captions are provided herein for convenience only, and shall not serve as a basis for interpretation or construction of this Plan. EX-10 3 x04302001_10-28.txt FINANCIAL FEDERAL CORPORATION RESTRICTED STOCK AGREEMENT Financial Federal Corporation, a Nevada corporation (the "Company"), hereby awards shares of Restricted Stock ("Shares") to the Participant named below pursuant to the Company's 2001 Management Incentive Plan (the "Plan"). The terms and conditions of the Award are set forth in this cover sheet, the attached Restricted Stock Agreement and in the Plan. Date of Award: Name of Participant: Participant's Social Security Number: Number of Shares of Restricted Stock Awarded: Amount Paid by Participant for the Shares of Restricted Stock Awarded: Aggregate fair market value of Restricted Stock on Date of Award: By signing this cover sheet, you agree to all of the terms and conditions described in the Plan and the attached Restricted Stock Agreement. You are also acknowledging receipt of this Agreement. Company: Participant: By: --------------------------- -------------------------- Michael C. Palitz Executive Vice President By: --------------------------- Troy H. Geisser Senior Vice President Attachment FINANCIAL FEDERAL CORPORATION RESTRICTED STOCK AGREEMENT Other Agreements You and the Company agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Agreement. This Agreement, the Plan and the attached Exhibits constitute the entire understanding between you and the Company regarding this Award of Restricted Stock. Any prior agreements, commitments or negotiations are superseded. Award of Restricted Stock The Company awards you the number of shares of Restricted Stock shown on the cover sheet of this Agreement. The Award is subject to the terms and conditions of this Agreement. Vesting As long as you render continuous service to the Company (or its parent, subsidiary or affiliate), you will become vested as to 25% of the total number of shares of Restricted Stock awarded, as shown above on the cover sheet, on the first anniversary of the Date of Award. Thereafter, the Restricted Stock vests at the rate of 25% on each anniversary of the Date of Award. In the event that your service ceases prior to the fourth anniversary of the Date of Award, you will forfeit to the Company all of the unvested Restricted Stock subject to this Award. In the event that you die while employed on a full time basis by the Company or any Subsidiary or Affiliate thereof and you were continuously employed by the Company or any Subsidiary or Affiliate, the vesting provision above shall be accelerated so that you shall be fully one hundred percent (100%) vested in all of the Restricted Stock granted to you herein. Forfeiture Notwithstanding anything to the contrary in the Plan or this Agreement, if (a) you violate any of the provisions in the representations section below or (b) you, at any time during your employment or within twelve months after termination of your employment, engage in any activity in competition with any business activity of the Company, or inimical, contrary or harmful to the interests of the Company, including, but not limited to: (i) conduct related to your employment for which either criminal or civil penalties against you may be sought, (ii) accepting employment with or serving as a consultant, advisor or in any other capacity to an employer that is in competition with or acting against the interests of the Company, or (iii) participating in a hostile takeover attempt, tender offer or proxy contest, then you agree to all of the following: Your stock award shall terminate and be forfeited effective the date on which you entered into such activity, unless terminated or forfeited sooner by operation of another term or condition of this Agreement or Plan; and Any stock under this Agreement that vested during the Forfeiture Period shall be immediately forfeited and any gain realized by you from the sale of stock acquired under this Agreement that you sold during the Forfeiture Period shall be promptly paid by you to the Company. The "Forfeiture Period" shall mean the period commencing twelve months prior to your termination of employment and ending twelve months after your termination of employment. Escrow The certificates for the Restricted Stock shall be deposited in escrow with the Secretary of the Company (or his designee) to be held in accordance with the provisions of this paragraph. Each deposited certificate shall be accompanied by a duly executed Assignment Separate from Certificate in the form attached hereto as Exhibit A. The deposited certificates, shall remain in escrow until such time as the certificates are to be released or otherwise surrendered for cancellation as discussed below. Upon delivery of the certificates to the Company, you shall be issued an instrument of deposit acknowledging the number of Shares of Restricted Stock delivered in escrow to the Secretary of the Company. All regular cash dividends, if any, on the Restricted Stock shall be paid directly to you and shall not be held in escrow. The Restricted Stock held in escrow hereunder shall be subject to the following terms and conditions relating to their release from escrow or their surrender to the Company: When your interest in the Restricted Stock vests as described above, the certificates for such vested Restricted Stock shall be released from escrow and delivered to you, at your request, in accordance with the following schedule. The initial release of any vested Restricted Stock from escrow shall be effected within thirty (30) days following the expiration of the one (1) year period measured from the Date of Award. Subsequent releases of vested Restricted Stock from escrow shall occur on a yearly basis. Upon termination of your service, any unvested Restricted Stock shall be surrendered to the Company. Sale of the Company The Restricted Stock shall automatically vest (subject to divestment) in the event there is a sale of all or substantially all of the assets or stock of the Company (the "Sale of Company") and you have continuously provided service from the Date of Award shown on the cover sheet to the effective date of the Sale of Company. If your employment with the Company (or its successor) is terminated for any reason, other than by the Company without Cause, before the first anniversary of the Sale of Company, you will forfeit and issue to the Company the number of shares (or the equivalent value in cash using the fair market value of the shares on the date of the Sale of Company) whose vesting accelerated because of the Sale of Company and to which would not have otherwise been vested under the vesting schedule above. In the event that there is a Sale of the Company and you are terminated by the Company or its successor without cause prior to the first anniversary of the date of the Sale of the Company, then all of your shares of Restricted Stock shall not be subject to the forfeiture provisions herein. Code Section 83(b) Election You represent and warrant that you understand the Federal, state and local income tax consequences of the granting of this Restricted Stock. Under Section 83 of the Internal Revenue Code of 1986, as amended (the "Code"), the fair market value (as determined by the Company in its sole discretion) of the Restricted Stock on the date any forfeiture restrictions applicable to such Restricted Stock lapse will be reportable as ordinary income at that time. For this purpose, "forfeiture restrictions" include surrender to the Company of unvested Restricted Stock as described above. You may elect to be taxed at the time the Restricted Stock is acquired to the extent that the fair market value of the Restricted Stock exceeds the amount of consideration paid by you (if any) for such Restricted Stock at that time rather than when such Restricted Stock ceases to be subject to such forfeiture restrictions, by filing an election under Section 83(b) of the Code with the Internal Revenue Service within thirty (30) days after the Date of Award. The form for making this election is attached as Exhibit B hereto. Failure to make this filing within the thirty (30) day period will result in the recognition of ordinary income by you (in the event the fair market value of the Restricted Stock increases after the date of purchase) as the forfeiture restrictions lapse. YOU ACKNOWLEDGE THAT IT IS YOUR SOLE RESPONSIBILITY, AND NOT THE COMPANY'S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF YOU REQUEST THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON YOUR BEHALF. YOU ARE RELYING SOLELY ON YOUR OWN ADVISORS WITH RESPECT TO THE DECISION AS TO WHETHER OR NOT TO FILE A CODE SECTION 83(b) ELECTION. Leaves of Absence For purposes of this Agreement, while you are a common- law employee, your service does not terminate when you go on a bona fide leave of absence that was approved by the Company (or its parent, subsidiary or affiliate) in writing, if the terms of the leave provide for continued service crediting, or when continued service crediting is required by applicable law. Your service terminates in any event when the approved leave ends, unless you immediately return to active work. The Company determines which leaves count for this purpose, and when your service terminates for all purposes under this Agreement. Voting and Other Rights Subject to the terms of this Agreement, you shall have all the rights and privileges of a stockholder of the Company while the Restricted Stock is held in escrow, including the right to vote and to receive dividends (if any). Restrictions on Issuance The Company will not issue any Restricted Stock or Shares if the issuance of such Restricted Stock or Shares at that time would violate any law or regulation. Withholding Taxes The release of the Restricted Stock from escrow will not be allowed unless you make acceptable arrangements to pay any withholding or other taxes that may be due. Restrictions on Resale By signing this Agreement, you agree not to sell any Restricted Stock prior to its vesting or sell any Shares acquired under this Award at a time when applicable laws, regulations or Company or underwriter trading policies prohibit sale. No Retention Rights This Agreement is not an employment agreement and does not give you the right to be retained by the Company (or its parent, subsidiaries or affiliates) and you agree that you are an employee-at-will. The Company (or its parent, subsidiaries or affiliates) reserves the right to terminate your service at any time and for any reason. Representations You acknowledge that, while employed by the Company or any subsidiary or affiliate thereof, you will have access to confidential and proprietary information regarding the internal affairs, operations and customers (customer is defined herein as including, but not limited to, borrowers, makers, lessees, guarantors, vendors and manufacturers of the following: equipment, construction equipment, transportation equipment, buses, trailers, trucks, tractors, vehicles, manufacturing equipment, machine tools, waste equipment, recycling equipment and production equipment) of the Company and any subsidiary or affiliate thereof, including but not limited to, information contained in any internal memorandum, standard operating procedure manual, employee manual, customer or vendor lists, accounting records, computer-generated information, computer lists, computer reports, computer records, computer printouts or any software data or other information in any computer system of the Company or any subsidiary or affiliate thereof and other information which pertains to the business of the Company or any subsidiary or affiliate thereof, which is not disclosed by the Company or any subsidiary or affiliate thereof to the general public. By acceptance of this Agreement, you agree to keep secret and retain in strictest confidence and not to disclose, at any time, all confidential matters, proprietary information which relate to the Company or any subsidiary or affiliate thereof including, without limitation, customer lists, trade secrets, internal memoranda, policies of the Company and other confidential business affairs of the Company and its subsidiaries or affiliates thereof and agrees not to disclose any of the foregoing information, at any time, without the prior written consent of a duly authorized officer of the Company. You further agree that, for 120 days from the date that your employment by the Company or any subsidiary or affiliate thereof ends; (1) You shall not, either directly or indirectly, solicit business from any existing or prospective customer(s) of the Company or any subsidiary or affiliate thereof and (2) You shall not, either directly or indirectly, agree to hire, solicit or recruit on behalf of your new employer, or through your new employer, any employee of the Company or any subsidiary or affiliate thereof for any job, employment or consulting, in the Company's or any subsidiary's or affiliate's industry or with any company which competes with the Company or any subsidiary or affiliate thereof. For purposes of this paragraph, a "prospective customer" includes but is not limited to, a person, corporation, partnership or other business entity with whom one or more financing and/or leasing transactions has been discussed within the twelve months prior to termination of your employment with the Company, or any subsidiary or affiliate thereof. The provisions of this representations section shall survive any expiration or termination of this Agreement. Applicable Law This Agreement will be interpreted and enforced under the laws of the State of New York and construed accordingly, including any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction. This Agreement may not be amended, altered, waived or modified unless it is in writing and signed by you and an officer of the Company who has the title of Executive Vice President or higher. This Agreement and the Plan represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements between the parties. The rights and remedies of the Company, its subsidiaries and affiliates hereunder shall be cumulative and not alternative. No delay or failure on the part of the Company, its subsidiaries or its affiliates in exercising any rights hereunder shall operate as a waiver of such or of any other rights. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. YOU HEREBY WAIVE THE RIGHT TO HAVE A TRIAL BY JURY IN ANY LITIGATION, ACTION, CAUSE OF ACTION, COUNTERCLAIM, CASE, ARBITRATION OR PROCEEDING BETWEEN YOU AND THE COMPANY, ITS SUBSIDIARIES OR AFFILIATES. __________________ In consideration of the Company granting you this Restricted Stock, please acknowledge your agreement to fully comply with all of the terms and provisions contained herein by signing this Agreement in the space provided above and returning it promptly to: Financial Federal Corporation Attention: Troy H. Geisser, Secretary EXHIBIT A ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED and pursuant to that certain Restricted Stock Agreement dated as of , the undersigned hereby sells, assigns and transfers unto the Company shares of the Common Stock of Financial Federal Corporation, a Nevada corporation, standing in the undersigned's name on the books of said corporation represented as follows: Certificate No. ____________ in the amount of shares; Certificate No. ____________ in the amount of shares; Certificate No. ____________ in the amount of shares; and Certificate No. ____________ in the amount of shares; herewith, and does hereby irrevocably constitute and appoint the Secretary or his designee attorney-in-fact to transfer the said stock on the books of the said corporation with full power of substitution in the premises. Dated: EX-10 4 x04302001_10-29.txt FINANCIAL FEDERAL CORPORATION RESTRICTED STOCK AGREEMENT Financial Federal Corporation, a Nevada corporation (the "Company"), hereby awards shares of Restricted Stock ("Shares") to the Participant named below. The terms and conditions of the Award are set forth in this cover sheet and the attached Restricted Stock Agreement. Date of Award: Name of Participant: Participant's Social Security Number: Number of Shares of Restricted Stock Awarded: Amount Paid by Participant for the Shares of Restricted Stock Awarded: Aggregate fair market value of Restricted Stock on Date of Award: By signing this cover sheet, you agree to all of the terms and conditions described in the attached Restricted Stock Agreement. You are also acknowledging receipt of this Agreement. Company: Participant: By: ------------------------ --------------------- Paul R. Sinsheimer Chief Executive Officer & President By: ------------------------ Michael C. Palitz Executive Vice President Attachment FINANCIAL FEDERAL CORPORATION RESTRICTED STOCK AGREEMENT Other Agreements You and the Company agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Agreement. This Agreement and the attached Exhibits constitute the entire understanding between you and the Company regarding this Award of Restricted Stock. Any prior agreements, commitments or negotiations are superseded. Award of Restricted Stock The Company awards you the number of shares of Restricted Stock shown on the cover sheet of this Agreement. The Award is subject to the terms and conditions of this Agreement. Vesting As long as you render continuous service to the Company (or its parent, subsidiary or affiliate), you will become vested as to 25% of the total number of shares of Restricted Stock awarded, as shown above on the cover sheet, on the first anniversary of the Date of Award. Thereafter, the Restricted Stock vests at the rate of 25% on each anniversary of the Date of Award. In the event that your service ceases prior to the fourth anniversary of the Date of Award, you will forfeit to the Company all of the unvested Restricted Stock subject to this Award. In the event that you die while employed on a full time basis by the Company or any Subsidiary or Affiliate thereof and you were continuously employed by the Company or any Subsidiary or Affiliate, the vesting provision above shall be accelerated so that you shall be fully one hundred percent (100%) vested in all of the Restricted Stock granted to you herein. Forfeiture Notwithstanding anything to the contrary in this Agreement, if (a) you violate any of the provisions in the representations section below or (b) you, at any time during your employment or within twelve months after termination of your employment, engage in any activity in competition with any business activity of the Company, or inimical, contrary or harmful to the interests of the Company, including, but not limited to: (i) conduct related to your employment for which either criminal or civil penalties against you may be sought, (ii) accepting employment with or serving as a consultant, advisor or in any other capacity to an employer that is in competition with or acting against the interests of the Company, or (iii) participating in a hostile takeover attempt, tender offer or proxy contest, then you agree to all of the following: Your stock award shall terminate and be forfeited effective the date on which you entered into such activity, unless terminated or forfeited sooner by operation of another term or condition of this Agreement; and Any stock under this Agreement that vested during the Forfeiture Period shall be immediately forfeited and any gain realized by you from the sale of stock acquired under this Agreement that you sold during the Forfeiture Period shall be promptly paid by you to the Company. The "Forfeiture Period" shall mean the period commencing twelve months prior to your termination of employment and ending twelve months after your termination of employment. Escrow The certificates for the Restricted Stock shall be deposited in escrow with the Secretary of the Company (or his designee) to be held in accordance with the provisions of this paragraph. Each deposited certificate shall be accompanied by a duly executed Assignment Separate from Certificate in the form attached hereto as Exhibit A. The deposited certificates, shall remain in escrow until such time as the certificates are to be released or otherwise surrendered for cancellation as discussed below. Upon delivery of the certificates to the Company, you shall be issued an instrument of deposit acknowledging the number of Shares of Restricted Stock delivered in escrow to the Secretary of the Company. All regular cash dividends, if any, on the Restricted Stock shall be paid directly to you and shall not be held in escrow. The Restricted Stock held in escrow hereunder shall be subject to the following terms and conditions relating to their release from escrow or their surrender to the Company: When your interest in the Restricted Stock vests as described above, the certificates for such vested Restricted Stock shall be released from escrow and delivered to you, at your request, in accordance with the following schedule. The initial release of any vested Restricted Stock from escrow shall be effected within thirty (30) days following the expiration of the one (1) year period measured from the Date of Award. Subsequent releases of vested Restricted Stock from escrow shall occur on a yearly basis. Upon termination of your service, any unvested Restricted Stock shall be surrendered to the Company. Sale of the Company The Restricted Stock shall automatically vest (subject to divestment) in the event there is a sale of all or substantially all of the assets or stock of the Company (the "Sale of Company") and you have continuously provided service from the Date of Award shown on the cover sheet to the effective date of the Sale of Company. If your employment with the Company (or its successor) is terminated for any reason, other than by the Company without Cause, before the first anniversary of the Sale of Company, you will forfeit and issue to the Company the number of shares (or the equivalent value in cash using the fair market value of the shares on the date of the Sale of Company) whose vesting accelerated because of the Sale of Company and to which would not have otherwise been vested under the vesting schedule above. In the event that there is a Sale of the Company and you are terminated by the Company or its successor without cause prior to the first anniversary of the date of the Sale of the Company, then all of your shares of Restricted Stock shall not be subject to the forfeiture provisions herein. Code Section 83(b) Election You represent and warrant that you understand the Federal, state and local income tax consequences of the granting of this Restricted Stock. Under Section 83 of the Internal Revenue Code of 1986, as amended (the "Code"), the fair market value (as determined by the Company in its sole discretion) of the Restricted Stock on the date any forfeiture restrictions applicable to such Restricted Stock lapse will be reportable as ordinary income at that time. For this purpose, "forfeiture restrictions" include surrender to the Company of unvested Restricted Stock as described above. You may elect to be taxed at the time the Restricted Stock is acquired to the extent that the fair market value of the Restricted Stock exceeds the amount of consideration paid by you (if any) for such Restricted Stock at that time rather than when such Restricted Stock ceases to be subject to such forfeiture restrictions, by filing an election under Section 83(b) of the Code with the Internal Revenue Service within thirty (30) days after the Date of Award. The form for making this election is attached as Exhibit B hereto. Failure to make this filing within the thirty (30) day period will result in the recognition of ordinary income by you (in the event the fair market value of the Restricted Stock increases after the date of purchase) as the forfeiture restrictions lapse. YOU ACKNOWLEDGE THAT IT IS YOUR SOLE RESPONSIBILITY, AND NOT THE COMPANY'S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF YOU REQUEST THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON YOUR BEHALF. YOU ARE RELYING SOLELY ON YOUR OWN ADVISORS WITH RESPECT TO THE DECISION AS TO WHETHER OR NOT TO FILE A CODE SECTION 83(b) ELECTION. Leaves of Absence For purposes of this Agreement, while you are a common- law employee, your service does not terminate when you go on a bona fide leave of absence that was approved by the Company (or its parent, subsidiary or affiliate) in writing, if the terms of the leave provide for continued service crediting, or when continued service crediting is required by applicable law. Your service terminates in any event when the approved leave ends, unless you immediately return to active work. The Company determines which leaves count for this purpose, and when your service terminates for all purposes under this Agreement. Voting and Other Rights Subject to the terms of this Agreement, you shall have all the rights and privileges of a stockholder of the Company while the Restricted Stock is held in escrow, including the right to vote and to receive dividends (if any). Restrictions on Issuance The Company will not issue any Restricted Stock or Shares if the issuance of such Restricted Stock or Shares at that time would violate any law or regulation. Withholding Taxes The release of the Restricted Stock from escrow will not be allowed unless you make acceptable arrangements to pay any withholding or other taxes that may be due. Restrictions on Resale By signing this Agreement, you agree not to sell any Restricted Stock prior to its vesting or sell any Shares acquired under this Award at a time when applicable laws, regulations or Company or underwriter trading policies prohibit sale. No Retention Rights This Agreement is not an employment agreement and does not give you the right to be retained by the Company (or its parent, subsidiaries or affiliates) and you agree that you are an employee-at-will. The Company (or its parent, subsidiaries or affiliates) reserves the right to terminate your service at any time and for any reason. Representations You acknowledge that, while employed by the Company or any subsidiary or affiliate thereof, you will have access to confidential and proprietary information regarding the internal affairs, operations and customers (customer is defined herein as including, but not limited to, borrowers, makers, lessees, guarantors, vendors and manufacturers of the following: equipment, construction equipment, transportation equipment, buses, trailers, trucks, tractors, vehicles, manufacturing equipment, machine tools, waste equipment, recycling equipment and production equipment) of the Company and any subsidiary or affiliate thereof, including but not limited to, information contained in any internal memorandum, standard operating procedure manual, employee manual, customer or vendor lists, accounting records, computer-generated information, computer lists, computer reports, computer records, computer printouts or any software data or other information in any computer system of the Company or any subsidiary or affiliate thereof and other information which pertains to the business of the Company or any subsidiary or affiliate thereof, which is not disclosed by the Company or any subsidiary or affiliate thereof to the general public. By acceptance of this Agreement, you agree to keep secret and retain in strictest confidence and not to disclose, at any time, all confidential matters, proprietary information which relate to the Company or any subsidiary or affiliate thereof including, without limitation, customer lists, trade secrets, internal memoranda, policies of the Company and other confidential business affairs of the Company and its subsidiaries or affiliates thereof and agrees not to disclose any of the foregoing information, at any time, without the prior written consent of a duly authorized officer of the Company. You further agree that, for 120 days from the date that your employment by the Company or any subsidiary or affiliate thereof ends; (1) You shall not, either directly or indirectly, solicit business from any existing or prospective customer(s) of the Company or any subsidiary or affiliate thereof and (2) You shall not, either directly or indirectly, agree to hire, solicit or recruit on behalf of your new employer, or through your new employer, any employee of the Company or any subsidiary or affiliate thereof for any job, employment or consulting, in the Company's or any subsidiary's or affiliate's industry or with any company which competes with the Company or any subsidiary or affiliate thereof. For purposes of this paragraph, a "prospective customer" includes but is not limited to, a person, corporation, partnership or other business entity with whom one or more financing and/or leasing transactions has been discussed within the twelve months prior to termination of your employment with the Company, or any subsidiary or affiliate thereof. The provisions of this representations section shall survive any expiration or termination of this Agreement. Applicable Law This Agreement will be interpreted and enforced under the laws of the State of New York and construed accordingly, including any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction. This Agreement may not be amended, altered, waived or modified unless it is in writing and signed by you and an officer of the Company who has the title of Executive Vice President or higher. This Agreement represents the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements between the parties. The rights and remedies of the Company, its subsidiaries and affiliates hereunder shall be cumulative and not alternative. No delay or failure on the part of the Company, its subsidiaries or its affiliates in exercising any rights hereunder shall operate as a waiver of such or of any other rights. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. YOU HEREBY WAIVE THE RIGHT TO HAVE A TRIAL BY JURY IN ANY LITIGATION, ACTION, CAUSE OF ACTION, COUNTERCLAIM, CASE, ARBITRATION OR PROCEEDING BETWEEN YOU AND THE COMPANY, ITS SUBSIDIARIES OR AFFILIATES. __________________ In consideration of the Company granting you this Restricted Stock, please acknowledge your agreement to fully comply with all of the terms and provisions contained herein by signing this Agreement in the space provided above and returning it promptly to: Financial Federal Corporation Attention: Troy H. Geisser, Secretary EXHIBIT A ASSIGNMENT SEPARATE FROM CERTIFICATE FOR VALUE RECEIVED and pursuant to that certain Restricted Stock Agreement dated as of , the undersigned hereby sells, assigns and transfers unto the Company shares of the Common Stock of Financial Federal Corporation, a Nevada corporation, standing in the undersigned's name on the books of said corporation represented as follows: Certificate No. ____________ in the amount of shares; Certificate No. ____________ in the amount of shares; Certificate No. ____________ in the amount of shares; and Certificate No. ____________ in the amount of shares; herewith, and does hereby irrevocably constitute and appoint the Secretary or his designee attorney-in-fact to transfer the said stock on the books of the said corporation with full power of substitution in the premises. 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