-----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, C0W1yiedEQ+raymcoAZTdiVJb3miv2lszU6O0z3OSjZlkQwkGcChZxERnTYtQ+pG 3TgZsLz9n3fr0gMLJv7E6g== /in/edgar/work/0000909518-00-000753/0000909518-00-000753.txt : 20001120 0000909518-00-000753.hdr.sgml : 20001120 ACCESSION NUMBER: 0000909518-00-000753 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20001117 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: FINOVA GROUP INC CENTRAL INDEX KEY: 0000883701 STANDARD INDUSTRIAL CLASSIFICATION: [6153 ] IRS NUMBER: 860695381 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-42383 FILM NUMBER: 772163 BUSINESS ADDRESS: STREET 1: 4800 N. SCOTTSDALE RD. STREET 2: P O BOX 2209 CITY: SCOTTSDALE STATE: AZ ZIP: 85251-7623 BUSINESS PHONE: 4486364800 MAIL ADDRESS: STREET 1: 4800 N. SCOTTSDALE RD. STREET 2: P O BOX 2209 CITY: SCOTTSDALE STATE: AZ ZIP: 85251-7623 FORMER COMPANY: FORMER CONFORMED NAME: GFC FINANCIAL CORP DATE OF NAME CHANGE: 19930328 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: LEUCADIA NATIONAL CORP CENTRAL INDEX KEY: 0000096223 STANDARD INDUSTRIAL CLASSIFICATION: [6331 ] IRS NUMBER: 132615557 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 315 PARK AVE S CITY: NEW YORK STATE: NY ZIP: 10010 BUSINESS PHONE: 2124601900 MAIL ADDRESS: STREET 1: 315 PARK AVENUE SOUTH CITY: NEW YORK STATE: NY ZIP: 10010 FORMER COMPANY: FORMER CONFORMED NAME: TALCOTT NATIONAL CORP DATE OF NAME CHANGE: 19800603 SC 13D 1 0001.txt ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D (Rule 13d-101) Under the Securities Exchange Act of 1934 THE FINOVA GROUP INC. (Name of Issuer) COMMON STOCK, $0.01 PAR VALUE 3179281 (Title of class of securities) (CUSIP number) JOSEPH A. ORLANDO LEUCADIA NATIONAL CORPORATION 315 PARK AVENUE SOUTH NEW YORK, NEW YORK 10010 (212) 460-1932 (Name, address and telephone number of person authorized to receive notices and communications) NOVEMBER 10, 2000 (Date of event which requires filing of this statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [_]. Note: Schedules filed in paper format shall include a signed original and five copies of the Schedule, including all exhibits. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section of the Exchange Act but shall be subject to all other provisions of the Exchange Act. (Continued on following pages) (Page 1 of 6 pages) ================================================================================ NY2:\982498\03\76830.0246
- ---------------------------------------------------------------------- --------------------------------------------- CUSIP No. 3179281 13D - ---------------------------------------------------------------------- --------------------------------------------- - ------------------- ------------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Leucadia National Corporation S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: - ------------------- ------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [_] (b) [_] - ------------------- ------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------- ------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS: WC - ------------------- ------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e): [_] - ------------------- ------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION: New York - ------------------------------ ------- ------------------------------------------------------------------------------------------ NUMBER OF 7 SOLE VOTING POWER: 140,325,750 shares(1)(2) SHARES ------- ------------------------------------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER: N/A OWNED BY ------- ------------------------------------------------------------------------------------------ EACH 9 SOLE DISPOSITIVE POWER: 140,325,750 shares(1)(2) REPORTING ------- ------------------------------------------------------------------------------------------ PERSON WITH 10 SHARED DISPOSITIVE POWER: N/A - ------------------- ------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON: 140,325,750 shares(1)(2) - ------------------- ------------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [_] - ------------------- ------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 69.6%(2)(3) - ------------------- ------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON: CO - ------------------- -------------------------------------------------------------------------------------------------------------
(1) Assuming conversion of 10,000,000 shares of Pay In Kind Convertible Preferred Stock of The FINOVA Group Inc ("Finova") ("PIK Convertible Preferred") and the exercise of the warrant to purchase Finova common stock that the Reporting Person has the right to acquire, as described in Item 4 hereof. (2) Does not include aggregate of up to an additional 40,000,000 shares of Finova common stock that the Reporting Person may acquire pursuant to a rights offering of PIK Convertible Preferred Stock, as described in Item 4 hereof. (3) Based on 61,303,000 shares of Finova common stock outstanding on November 13, 2000 and the issuance of an aggregate of 140,325,750 shares of Finova common stock, assuming conversion of the 10,000,000 shares of PIK Convertible Preferred Stock and exercise of the warrant, as described in Item 4 hereof. 2 Item 1. Security and Issuer. ------------------- This Statement relates to the common stock, $0.01 par value per share (the "Company Common Stock"), of The FINOVA Group Inc., a Delaware corporation (the "Company"). The address of the principal executive office of the Company is 4800 North Scottsdale Road, Scottsdale AZ 85251. Item 2. Identity and Background. ----------------------- (a)-(c) This Schedule 13D is being filed by Leucadia National Corporation ("Leucadia"). Leucadia is a New York corporation with its principal office at 315 Park Avenue South, New York, New York 10010. Leucadia is a financial services holding company principally engaged in commercial and personal lines of property and casualty insurance, banking and lending, mining, real estate activities and manufacturing. Approximately 34.3% of the outstanding common shares of Leucadia is beneficially owned (directly and through family members) by Ian M. Cumming, Chairman of the Board of Directors of Leucadia, and Joseph S. Steinberg, a director and President of Leucadia (excluding an additional 2.0% of the common shares of Leucadia beneficially owned by two trusts for the benefit of Mr. Steinberg's children, as to which Mr. Steinberg disclaims beneficial ownership). Private charitable foundations independently established by each of Messrs. Cumming and Steinberg each beneficially own less than one percent of the outstanding common shares of Leucadia. Mr. Cumming and Mr. Steinberg each disclaim beneficial ownership of the common shares of Leucadia held by their respective private charitable foundation. The following information with respect to each executive officer and director of Leucadia is set forth in Schedule A hereto: (i) name, (ii) business address, (iii) citizenship, (iv) present principal occupation or employment and (v) name of any corporation or other organization in which such employment is conducted, together with the principal business and address of any such corporation or organization other than Leucadia for which such information is set forth above. (d)-(f) During the last five years, neither Leucadia nor, to its knowledge, any of the other persons identified pursuant to Paragraphs (a) through (c) of this Item 2, has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. To the knowledge of Leucadia, each of the individuals identified pursuant to Paragraphs (a) through (c) of this Item 2 is a United States citizen. 3 Item 3. Source and Amount of Funds or Other Consideration. ------------------------------------------------- The information set forth in response to Item 4 hereof is specifically incorporated in response to Item 3 hereof. Item 4. Purpose of the Transaction. -------------------------- On November 10, 2000 Leucadia and the Company entered into a Letter Agreement dated November 10, 2000 (the "Agreement") pursuant to which, and subject to the conditions set forth therein, Leucadia will invest up to $350 million in the Company. Under the terms of the Agreement, Leucadia has agreed to purchase for $250 million (i)10 million shares (the "Shares") of new Payment in Kind Convertible Preferred Stock ("PIK Convertible Preferred") and (ii) a 10-year warrant to purchase up to 20% of the Company's outstanding shares (subject to anti-dilution provisions) for an aggregate warrant exercise price of $125 million (the "Warrant"). The PIK Convertible Preferred will have a liquidation preference of $25 per share and a 14% coupon payable in kind for a period of five years, after which time the coupon will, at the Company's option, be payable either in cash or in kind. Each share of PIK Preferred Stock will be convertible into 10 shares of the Company Common Stock from June 30, 2006 until the tenth anniversary of issuance. From issuance, the PIK Convertible Preferred will vote with the common stock and receive 20 votes per share. As soon as practical following the purchase of the Shares by Leucadia, the Company will issue up to an additional $150 million of PIK Convertible Preferred at a purchase price of $25 per share through a rights offering to its existing common stockholders (the "Rights Offering"). Leucadia has agreed to act as a standby purchaser of $100 million of that offering. As compensation for agreeing to act as standby purchaser, the Company will pay Leucadia $5 million upon distribution of the rights. The Agreement includes a provision that could result in a distribution to common stockholders or holders of the PIK Convertible Preferred and the Warrant in 2006, based upon the performance of the Company's loan and lease portfolio. In conjunction with the investment, Leucadia will have the right to appoint six members to a newly constituted ten member Board of Directors. The Agreement is subject to the Company completing a refinancing or restructuring with the Company's bank group of its outstanding $4.7 billion bank debt on terms acceptable to both Leucadia and the Company. The Agreement is also subject to the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the receipt of any other required regulatory approvals, and other customary conditions. Additionally, the issuance of the PIK Convertible Preferred may require approval by the stockholders of the Company, under the rules of the New York Stock Exchange ("NYSE"). If stockholder approval is 4 required, the Company's Board of Directors has agreed to recommend stockholder approval of the transaction. However, the Company will not be required to submit the transaction for stockholder approval (if otherwise required under the NYSE rules) if the Company enters into an agreement for a "Superior Proposal" (as defined in the Agreement) in accordance with the terms of the Agreement. References to, and descriptions of, the Agreement as set forth herein are qualified in their entirely by reference to the copy of the Letter Agreement included as Exhibit 99.1 to this Schedule 13D, which is incorporated by reference herein in its entirety and which contains provisions not described herein. Except as set forth above, Leucadia has no present plans or intentions which would result in or relate to any other transactions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D. Item 5. Interest in Securities of the Issuer. ------------------------------------ (a)-(b) The information set forth or incorporated by reference in Items 2, 3, and 4 is incorporated herein by reference. Assuming conversion of the 10 million shares of PIK Convertible Stock and assuming exercise of the Warrant, but excluding any shares of Company Common Stock that may be issuable as a result of the Rights Offering, Leucadia may be deemed to be the beneficial owner of 140,325,750 shares of the Common Stock of the Company. This would represent approximately 69.6% of the Company's Common Stock outstanding (based on the 61,303,000 shares of the Company Common Stock outstanding as of November 13, 2000 as reported in the Company's third quarter Form 10-Q for the quarter ended September 30, 2000, and assuming the issuance of (x) 100 million shares of Company Common Stock issuable upon conversion of the 10 million shares of PIK Preferred Stock (excluding any PIK Preferred Stock that may be issued to Leucadia pursuant to the rights offering) and (y) 40,325,750 shares of Common Stock upon exercise of the Warrant). (c) Except as disclosed in this Schedule 13D neither Leucadia, nor, to the best of its knowledge, any of its executive officers or directors has effected any transaction in any securities of the Company during the past 60 days. (d) Not applicable. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or ------------------------------------------ Relationships with Respect to Securities of the Issuer. ------------------------------------------------------- The information set forth or incorporated by reference in Items 3, 4 and 5 is hereby incorporated herein by reference. A Copy of the Agreement is included as Exhibit 99.1 to this Schedule 13D. Other than the Agreement, there are no contracts, arrangements, understandings or relationships with respect to any securities of the Company (i) among (a) Leucadia and, to the best of its knowledge, any of the persons identified pursuant to Item 2 above and (b) any other person. Item 7. Material to be Filed as Exhibits. -------------------------------- 99.1. Letter Agreement, dated November 10, 2000, among the Company and Leucadia. 5 SIGNATURE - --------- After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: November 17, 2000 LEUCADIA NATIONAL CORPORATION BY: /S/ JOSEPH A. ORLANDO ---------------------- Name: JOSEPH A. ORLANDO Title: Vice President 7 SCHEDULE A ADDITIONAL INFORMATION CONCERNING THE REPORTING PERSON Directors and Executive Officers of the Reporting Person - -------------------------------------------------------- Set forth below are the name, business address, present principal occupation or employment of each director and executive officer of Leucadia. To the knowledge of such entity, each person listed below is a United States citizen. Unless otherwise indicated, the business address of each person named below is c/o Leucadia National Corporation, 315 Park Avenue South, New York, New York 10010.
Director- Principal Occupation or Name and Business Address ships Offices Employment - ------------------------- ----- ------- ---------- Ian M. Cumming Director Chairman of the Board Chairman of the Board Leucadia National Corporation 529 E. South Temple Salt Lake City, Utah Joseph S. Steinberg Director President President Paul M. Dougan Director -- President and Chief Executive c/o Equity Oil Company Officer of Equity Oil Company 10 West 300 South (a company engaged in oil and Salt Lake City, Utah gas exploration and production having an office in Salt Lake City, Utah) Lawrence D. Glaubinger Director -- Chairman of the Board of c/o Stern & Stern Stern & Stern Industries (a Industries, Inc. company engaged in the 708 Third Avenue manufacture and sale of New York, N.Y. textiles); President of Lawrence Economic Consulting Inc., a management consulting firm James E. Jordan Director -- Private investor c/o The Jordan Company 767 Fifth Avenue New York, N.Y. 10153 Jesse Clyde Nichols, III Director -- President of Crimsco, Inc. (a c/o Crimsco, Inc. holding company for 5001 E. 59th St. manufacturing subsidiaries) Kansas City, Mo. 64130 Thomas E. Mara -- Executive Vice President Executive Vice President and and Treasurer Treasurer Director- Principal Occupation or Name and Business Address ships Offices Employment - ------------------------- ----- ------- ---------- Joseph A. Orlando -- Vice President and Chief Vice President and Chief Financial Officer Financial Officer Mark Hornstein -- Vice President Vice President Barbara L. Lowenthal -- Vice President and Vice President and Comptroller Comptroller H. E. Scruggs -- Vice-President Vice-President
2 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 99.1 Letter Agreement, dated November 10, 2000, among the Company and Leucadia. EX-99 2 0002.txt EXHIBIT NO. 99.1 November 10, 2000 The FINOVA Group Inc. 4800 North Scottsdale Road Scottsdale, Arizona 85251 Gentlemen: This letter agreement sets forth the principal terms and conditions on which Leucadia National Corporation or a subsidiary ("Leucadia") would be willing to invest up to $350 million in The FINOVA Group Inc. ("Finova"). 1. Preferred Stock Investment. Leucadia will purchase 10 million shares of a new series of convertible preferred stock of Finova at a purchase price of $25.00 per share (the "PIK Preferred Stock"). The principal terms of the PIK Preferred Stock will be as follows: (a) Five Year Pay-in-Kind: Cumulative dividends will be payable quarterly in additional shares of PIK Preferred Stock at the rate of 14% per annum during the first five years after issuance. (b) Coupon: Beginning in the sixth year, at Finova's option, cumulative dividends will be payable quarterly either: (i) in cash, in an amount equal to the greater of: (x) a rate of 14% per annum or (y) ten times the amount of any cash dividend paid or payable per share of Common Stock; or (ii) in additional shares of PIK Preferred Stock at the rate of 14% per annum. (c) Conversion: For a period from June 30, 2006 until the tenth anniversary of the date of issuance of the PIK Preferred Stock, each share of PIK Preferred Stock will be convertible, at the option of the holder, into ten shares of Common Stock at a conversion price of $2.50 per share of Common Stock (which number and price will be subject to normal anti-dilution adjustments). (d) Voting: The PIK Preferred Stock will vote as one class with the common stock and will have twenty (20) votes per PIK Preferred Stock share, subject to New York Stock Exchange approval, or such lesser number of votes (but not less than ten votes) per PIK Preferred Share, as the New York Stock Exchange requires. (e) Preference Rights: The PIK Preferred Stock will have a liquidation preference of $25.00 per share, plus accrued but unpaid dividends thereon. (f) Registration Rights: The PIK Preferred Stock will be entitled to demand and incidental registration rights. 2. Rights Offering. As soon as practicable after the closing, Finova will conduct a rights offering whereby existing shareholders will be permitted to purchase up to 6 million shares of PIK Preferred Stock at a price of $25.00 per share ($150 million aggregate). The rights shall be transferable, and Leucadia shall act as standby underwriter of the offering with respect to $100 million of the offering. As compensation for agreeing to act as standby underwriter, Finova will pay Leucadia $ 5 million upon distribution of the rights. 3. Leucadia Warrant. Leucadia will receive a ten-year warrant to purchase for an aggregate exercise price of $125 million such number of shares of Common Stock that will represent 20% of the outstanding shares of Common Stock immediately after exercise, assuming for the purposes of such calculation the conversion and exercise of all outstanding securities which are or will be convertible or exercisable into shares of Common Stock (other than any securities issued or issuable in a merger, acquisition or public offering for cash at fair value, in respect of "out of the money" employee and director stock options, in respect of trust originated preferred securities issued by FINOVA Finance Trust ("TOPrS"), or as may otherwise be agreed to by Leucadia and Finova), and taking into account the exercise of the Leucadia Warrant itself. 4. Sharing of "Upside" and "Downside" of Certain Collections. The Common Stockholders, on the one hand, and holders of PIK Preferred Stock and of the Leucadia Warrant (collectively, the "Other Equity") on the other hand, will share in the collection, based on a December 31, 2005 measurement date, of the (i) gross Investment in Financing Transactions as reflected on Finova's June 30, 2000 consolidated balance sheet (the "June 30 Balance Sheet"), (ii) Investments as reflected on the June 30 Balance Sheet, (iii) Offlease Aircraft as reflected in the June 30, 2000 Balance Sheet and (iv) the amount of any unfunded commitments existing as of June 30, 2000 to the extent such commitments are ultimately funded (collectively, the "Portfolio") in such amount that will yield 50% of the Sharing Amount (as defined below) being attributed to the Common Stockholders and 50% of the Sharing Amount being attributed to the Other Equity. The amount to be shared (the "Sharing Amount") will be $780 million plus the after tax gain, if any, or minus the after tax loss, if any, (in each case using a 40% tax rate) actually realized in the collection of the Portfolio. If the Sharing Amount is negative, it will be grossed-up by dividing the Sharing Amount by 60%. For purposes of determining the Sharing Amount, unrealized gains and unrealized losses on the balance of the Portfolio remaining outstanding at December 31, 2005 will be estimated by the Board of Directors of Finova and approved by a majority of the directors unaffiliated with Leucadia. The Board of Directors will determine the form of the distribution to securityholders, which will be payable by May 31, 2006 to Common Stockholders, if the Sharing Amount is a positive number, or to the Other Equity holders, if the Sharing Amount is a negative number. Once the Sharing Amount has been determined, if it is a positive number, the Sharing Amount to be distributed (the "Distribution") to the Common Stockholders shall be in an amount, which, together with the Common Stockholders' equity interest in the Company multiplied by the undistributed portion of the Sharing Amount remaining in the Company, will equal 50% of the Sharing Amount. A recipient's equity interest in the Company shall be determined on a common stock equivalent basis. If the Sharing Amount is a negative number, the Distribution to the Other Equity holders shall be in an amount which, when the Distribution is subtracted from the product of (x) the Other Equity holders' equity interest in the Company multiplied by (y) the sum of (i) the Sharing Amount (expressed as a positive number) plus (ii) the Distribution, will equal 50% of the Sharing Amount (expressed as a positive number). Any Distribution Amount to be paid to the Other Equity holders will be allocated pro rata to the relative equity interests in the Company of the PIK Preferred Stockholders and the Leucadia Warrant holder. 2 5. Refinancing of Existing Bank Debt. Leucadia's offer and Finova's acceptance is contingent upon Leucadia and the Company completing a refinancing or restructuring with the Company's lenders of the existing $4.7 billion in outstanding bank debt (the "Refinancing") upon terms acceptable to Leucadia and the Company. Promptly following execution of this agreement, Finova will notify the Banks of this agreement and request the Banks to commence such negotiation. Simultaneously with the Bank negotiations, Leucadia and Finova will commence negotiations of a mutually acceptable definitive agreement with respect to the Preferred Stock Investment and the other matters outlined in this agreement, which shall contain normal and customary representations, covenants, conditions and indemnities. 6. Additional Conditions to Consummation of the Preferred Stock Investment. The obligation of Leucadia and Finova to consummate the Preferred Stock Investment, in addition to customary closing conditions, will be subject to receipt of required regulatory approvals (including the expiration or termination of any waiting periods under the Hart-Scott-Rodino Anti-trust Improvements Act of 1976, as amended), exemption of Leucadia from Finova's existing rights plan, approval by the Board of Directors of Finova of each element of the transaction with Leucadia for purposes of Article IX of Finova's Certificate of Incorporation, and the absence of any applicable law or regulation and no judgment, injunction, order or decree prohibiting consummation of the Preferred Stock Investment and the other transactions contemplated hereby. The parties hereto agree to fully cooperate to promptly make all requisite regulatory filings and to work together to obtain required regulatory approvals. 7. Exclusivity. To allow time for negotiation of the Refinancing, from and after the date hereof until the termination of exclusivity pursuant to the terms of this agreement and except as expressly permitted by the following provisions of this paragraph, Finova shall not, directly or indirectly, through any representative or otherwise, solicit or entertain offers from, negotiate with or in any manner encourage, discuss, accept or consider (including furnishing any information to any other party) any proposal of any other person or entity relating to (i) any merger, consolidation, share exchange, recapitalization, business combination or other similar transaction, (ii) any sale, lease or exchange, mortgage, pledge, transfer or other disposition of 20% or more of the assets of Finova, in a single transaction or in a series of transactions or (iii) any tender offer, exchange offer for securities of Finova or any purchase or other acquisition of beneficial ownership of 20% or more of the equity of Finova (or securities convertible into 20% or more of the equity of Finova) (an "Acquisition Proposal"); provided, however, that nothing contained in this paragraph shall prohibit Finova's Board of Directors from furnishing information to, or entering into discussions or negotiations with, any person that makes an unsolicited bona fide, fully financed, written Acquisition Proposal which relates to the acquisition by another entity of all of the equity of Finova, whether by merger, tender offer or otherwise, if and only to the extent that (A) Finova's Board of Directors, after consultation with independent legal counsel, determines in good faith that such action is necessary for Finova's Board of Directors to comply with its fiduciary duties to Finova's stockholders under applicable law, (B) Finova's Board of Directors determines in good faith after consultation with a nationally recognized expert with experience in appraising the terms and conditions of such unsolicited Acquisition Proposal, that such unsolicited Acquisition Proposal after taking into account the strategic benefits to be derived from the transaction with 3 Leucadia and the long-term prospects of Finova, would, if consummated, result in a transaction more favorable to Finova's stockholders from a financial point of view (any such more favorable bona fide unsolicited Acquisition Proposal being referred to as a "Superior Proposal"), (C) the meeting of Finova's stockholders, if required to consummate the transaction with Leucadia, shall not have occurred and (D) prior to taking such action, Finova (i) notifies Leucadia of any Acquisition Proposal (including, without limitation, the material terms and conditions thereof and the identity of the person making the Acquisition Proposal) as promptly as practicable (but in no case later than 24 hours) after receipt thereof, (ii) provides Leucadia with a copy of any written Acquisition Proposal, (iii) thereafter informs Leucadia on a prompt basis of the status of any discussion or negotiations with such a third party and any material changes to the terms and conditions of such Acquisition Proposal, (iv) promptly gives Leucadia a copy of any information delivered to such person which has not been previously been reviewed by Leucadia and (v) receives from such person an executed confidentiality agreement in reasonably customary form and in any event containing terms at least as stringent as those contained in the confidentiality agreement to which Leucadia is a party. Finova agrees to notify any investment banker or other representative of the substance of this agreement for the purpose of terminating any solicitation efforts that previously took place. The exclusivity provision of this agreement (but not the break up fee provision of this agreement) shall expire (i) if a definitive agreement with respect to the Preferred Stock Investment is not executed by Finova and Leucadia by December 8, 2000; (ii) if a term sheet for the Refinancing (which shall have been agreed to by Finova and Leucadia) (the "Term Sheet") is not presented to the agent banks for Finova's outstanding bank debt (the "Agent Banks") by December 20, 2000; and (iii) if the Agent Banks do not recommend approval of the Term Sheet (as such Term Sheet may be amended from time to time with the approval of Finova and Leucadia) to the lenders by February 27, 2001. 8. Break Up Fee. If Finova accepts an offer from any party other than Leucadia relating to an Acquisition Proposal whether through direct purchase of stock or assets, merger, consolidation or otherwise, within one year from the date of this agreement, then Finova shall pay to Leucadia in immediately available funds, at Leucadia's option, either (i) $15 million or (ii) an amount equal to the product of 3 million multiplied by the excess of (x) the fair market value of the consideration to be paid for each share of Common Stock of Finova pursuant to such Acquisition Proposal over (y) $2.50. 9. Stockholder Approval. If Finova stockholder approval is required in order to implement the actions contemplated by this agreement, the Board of Directors of Finova shall recommend that stockholders approve the Preferred Stock Investment; provided, however, that the Board of Directors of Finova may withdraw such recommendation if Finova enters into an agreement for an Acquisition Proposal which complies with the provisions of paragraph 7 of this Agreement. If such stockholder approval is not received, Leucadia shall receive the break-up fee. 4 10. Access to Information. From and after the date of this agreement, Finova will provide Leucadia with complete access to Finova's facilities, books and records, and personnel. The parties shall make their respective personnel available to each other in Phoenix, Arizona or New York, New York and shall cause their personnel to cooperate with the other in establishing a mutually acceptable plan for the Refinancing. 11. No Extraordinary Transactions. During the term of the exclusivity period of this agreement, Finova agrees that, without the consent of Leucadia, except in the ordinary course of business, Finova will not enter into any agreement for or take any action related to (i) the sale of assets,(ii) the sale of securities, (iii) any financings or refinancings, (iv) any reorganization, recapitalization, dissolution or liquidation of Finova, (v) the material amendment to any existing, or entering into any new, employment, severance or other employee benefit arrangements or (vi) other material matters; provided, however, that Finova may enter into an agreement for an Acquisition Proposal which complies with the provisions of paragraph 7 of this agreement. 12. Board Representation. Upon consummation of the Preferred Stock Investment, designees of Leucadia shall have six seats out of the ten-member Board of Directors, which designees shall be distributed evenly among the three classes of members of the Board of Directors. Finova will take all necessary corporate action to increase the size of its Board of Directors to ten (10) members and obtain all necessary resignations for existing directors to enable the Leucadia designees to be appointed to the Board of Directors. 13. Management Fee. Upon consummation of the Preferred Stock Investment, Leucadia will receive a management fee of $5 million per year, payable quarterly, for a period of five years from consummation of the Preferred Stock Investment. 14. No Public Disclosure. Except as may be required by law, without the prior consent of the other party, neither Leucadia nor Finova shall make any public announcement with respect to, or otherwise disclose, the existence of this letter or the terms of the possible transaction. 15. Costs and Expenses. All costs and expenses (including legal, accounting and other advisory fees and disbursements) incurred in connection with this Agreement, the conduct of any due diligence review and the preparation and delivery of the definitive agreements and related documentation shall be borne by Leucadia to the extent incurred by it and by Finova to the extent incurred by it. 16. Governing Law; Miscellaneous. This Agreement shall be governed by, and construed in accordance with the laws of the State of New York. This Agreement supercedes all prior discussions and correspondence between the parties and their affiliates in respect of the transactions described herein. This Agreement may only be amended by a written instrument signed by the parties. This Agreement may not be assigned by the parties without the prior consent of the other parties. 5 17. Specific Performance; Equitable Relief. The parties agree that their remedies for any breach of this Agreement include, without limitation, specific performance and injunctive relief. Please acknowledge by your signature below that you wish to proceed in accordance with the terms of this proposal and that you agree to be bound by the terms of this agreement. Very truly yours, LEUCADIA NATIONAL CORPORATION By: ------------------------------------- Name: Title: Accepted and Agreed To: THE FINOVA GROUP INC. By: -------------------------------- Name: Title: Date: ---------------------------------------------- 6 -----END PRIVACY-ENHANCED MESSAGE-----