-----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, VOP0qiwHx30kaRilzt5nsr8U8k20Q3Y0J/3AbZrySPnyb/Nz7eEwSIaqyZzj/IRs EHN28RxK6ExJIuhVA4auFA== 0000950147-99-000228.txt : 19990316 0000950147-99-000228.hdr.sgml : 19990316 ACCESSION NUMBER: 0000950147-99-000228 CONFORMED SUBMISSION TYPE: 424B2 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19990315 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FINOVA CAPITAL CORP CENTRAL INDEX KEY: 0000043960 STANDARD INDUSTRIAL CLASSIFICATION: SHORT-TERM BUSINESS CREDIT INSTITUTIONS [6153] IRS NUMBER: 941278569 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B2 SEC ACT: SEC FILE NUMBER: 333-38171 FILM NUMBER: 99564997 BUSINESS ADDRESS: STREET 1: 1850 N CENTRAL AVE STREET 2: PO BOX 2209 CITY: PHOENIX STATE: AZ ZIP: 85004-2209 BUSINESS PHONE: 6022076900 MAIL ADDRESS: STREET 1: 1850 N. CENTRAL AVENUE STREET 2: P.O. BOX 2209 CITY: PHOENIX STATE: AZ ZIP: 85002-2209 FORMER COMPANY: FORMER CONFORMED NAME: GREYHOUND FINANCIAL CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: GREYHOUND LEASING & FINANCIAL CORP DATE OF NAME CHANGE: 19870330 424B2 1 PROSPECTUS & SUPPLEMENT Filed pursuant to Rule 424(b)(2) Registration Nos. 333-38171 333-38171-01 Prospectus Supplement to Prospectus dated February 12, 1999 [FINOVA LOGO] $200,000,000 FINOVA Capital Corporation 6.125% Notes Due March 15, 2004 1850 N. Central Avenue P.O. Box 2209 Phoenix, Arizona 85002-2209 TERMS OF NOTES MATURITY RANKING * The Notes will mature on March 15, 2004. * The Notes are unsecured. The Notes rank equally with all of our INTEREST existing and future senior debt and senior to all of our existing and * Interest paid on March 15 and future subordinated debt. September 15, accruing from the date we issue the Notes. LISTING * First interest payment date on * We do not intend to list the Notes September 15, 1999. on any securities exchange. REDEMPTION FORM * No redemption before maturity. No * Global security held by The sinking fund. Depository Trust Company, generally. For more details, see "Note Terms" and "Description of Debt Securities." -------------------------------------------------- TERMS OF SALE Per Note Total -------- ----- Price to the Public ........................ 99.749% $199,498,000 Underwriting Discounts and Commissions ...... 0.500% $ 1,000,000 Proceeds to FINOVA ........................... 99.249% $198,498,000 - ------------ Accrued interest from the issuance date will be added to the price to the public. -------------------------------------------------- The Notes have not been approved or disapproved by the SEC or any state securities commission. None of those authorities has determined that the Prospectus or this Supplement is accurate or complete. Any representation to the contrary is Book entry delivery of Notes expected a criminal offense. on March 16, 1999, subject to conditions. Chase Securities Inc. First Union Capital Markets Corp. NationsBanc Montgomery Securities LLC Paribas -------------------------------------------------- The date of this Prospectus Supplement is March 11, 1999. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. WE HAVE AUTHORIZED NO ONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN ANY LOCATION WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS, INCLUDING INFORMATION INCORPORATED BY REFERENCE, IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THE PROSPECTUS. ------------------ TABLE OF CONTENTS PAGE PAGE PROSPECTUS SUPPLEMENT PROSPECTUS FINOVA Capital Corporation...... S-3 Where You Can Find More Note Terms...................... S-3 Information................... 2 Underwriting.................... S-4 The Companies................... 2 Recent Developments............. 5 Selected Financial Information................... 6 Ratio Of Income To Total Fixed Charges................... 6 Ratio Of Income To Combined Fixed Charges And Preferred Stock Dividends............... 6 Special Note Regarding Forward-Looking Statements.... 7 Use Of Proceeds................. 7 Description Of Debt Securities.. 8 Description Of Capital Stock.... 14 Description Of Depositary Shares........................ 19 Description Of Warrants......... 21 Plan Of Distribution............ 21 Legal Matters................... 22 Experts......................... 22 S-2 FINOVA CAPITAL CORPORATION FINOVA Capital Corporation Commercial Finance ("FINOVA" or "us") is a financial * Business Credit services company that provides a broad * Commercial Services range of financing and capital market * Corporate Finance products to mid-size business, * Distribution & Channel Finance principally in the U.S. We concentrate * Growth Finance on lending to midsize businesses and * Rediscount Finance have been in operation for over 43 years. Specialty Finance * Commercial Equipment Finance FINOVA extends revolving credit * Communications Finance facilities, term loans, and equipment * Franchise Finance and real estate financing primarily to * Healthcare Finance "middle-market" businesses with * Portfolio Services financing needs falling generally * Public Finance between $500,000 and $35 million. * Resort Finance * Specialty Real Estate Finance We operate in 18 specific * Transportation Finance industry or market niches under three market groups. We selected those Capital Markets groups because our expertise in * FINOVA Realty Capital evaluating the credit-worthiness of * FINOVA Investment Alliance prospective customers and our ability * FINOVA Loan Admistration to provide value-added services enable us to differentiate ourselves from our competitors. That expertise and ability enable us to command product pricing that provides a satisfactory spread over our borrowing costs. FINOVA's principal lines of business are detailed more fully in the Prospectus. Those lines include: NOTE TERMS The following description separate series of securities under supplements the "Description of Debt the Indenture dated as of March 20, Securities" section in the Prospectus. 1998, between us and The First The Notes are to be issued as a National Bank of Chicago, as Trustee. Maximum Amount: $200,000,000 principal amount Maturity: March 15, 2004 Interest Rate: 6.125% per year Interest Payment Dates: March 15 and September 15, accruing from the date we issue the Notes. First interest payment date is September 15, 1999. Interest Calculations: Based on a 360-day year of twelve 30-day months Redemption or Sinking Fund: None Form of Note: Global security, held in the name of The Depository Trust Company, generally Settlement and Payment: Same-day -- immediately available funds Secondary Trading Payments: Same-day -- immediately available funds S-3 UNDERWRITING We have entered into an ing price set forth on the cover page Underwriting Agreement dated March 11, of this Supplement. They may offer the 1999 with Chase Securities Inc., First Notes to certain dealers at that price Union Capital Markets Corp., less a concession of 0.300%. The NationsBanc Montgomery Securities LLC Underwriters or those dealers may and Paribas Corporation, as allow a discount of 0.250% on sales to Underwriters. The agreement provides certain other dealers. After the that Chase Securities Inc. will initial public offering of the Notes, purchase from us $100,000,000 the Underwriters may change the public principal amount of the Notes, First offering price, concession to dealers Union Capital Markets Corp. and and discount. NationsBanc Montgomery Securities LLC will each purchase $40,000,000 of the The Notes are a new issue of Notes and Paribas Corporation will securities with no established trading purchase $20,000,000 of the Notes. The market. The Underwriters have advised Underwriters will purchase all of the us that they intend to act as market Notes if any of the Notes are makers for the Notes. They are not purchased. They need not purchase any obligated to do so, however, and they Notes unless certain conditions are may discontinue any market making at satisfied. We have agreed to indemnify any time without notice. Neither we the Underwriters against certain nor the Underwriters can assure the liabilities, including civil liquidity of any trading market for liabilities under the Securities Act the Notes. of 1933, or to contribute to payments which the Underwriters may be required The Underwriters and their to make for those liabilities. affiliates engage in transactions with or perform services for us in the We must also pay the expenses of ordinary course of business. Those this offering, which are expected to services include investment and be $320,000. Those expenses will commercial banking transactions and reduce the proceeds of this offering services, including serving as an received by us. agent and/or lender on some of our credit agreements. The Underwriters advise us that they propose to offer the Notes to the public initially at the offer- S-4 PROSPECTUS FINOVA 1850 North Central Avenue P.O. Box 2209 Phoenix, Arizona 85002-2209 THE FINOVA GROUP INC. FINOVA CAPITAL CORPORATION By this prospectus, we may offer up to $2,000,000,000 of our: DEBT SECURITIES We will provide the specific terms of COMMON STOCK (including, for The these securities in supplements to FINOVA Group Inc., Rights to Purchase this prospectus. You should read this Junior Participating Preferred Stock) prospectus and the supplements PREFERRED STOCK carefully before you invest. DEPOSITARY SHARES WARRANTS FINOVA Capital Corporation is a wholly We may offer the securities directly owned subsidiary of The FINOVA Group or through underwriters, agents or Inc. dealers. The supplement will describe the terms of that plan of distribution. "Plan of Distribution" below also provides more information on this topic. These securities have not been approved or disapproved by the SEC or any state securities commission. None of those authorities has determined that this prospectus is accurate or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is February 12, 1999 WHERE YOU CAN FIND MORE INFORMATION The FINOVA Group Inc. ("FINOVA * Portions of the Proxy Statement Group") and FINOVA Capital Corporation on Schedule 14A for FINOVA ("FINOVA Capital") file annual, Group's Annual Meeting of quarterly and current reports, proxy Shareholders held on May 14, and information statements and other 1998 that have been incorporated information with the SEC. You may read by reference into our 10-K. and copy any document we file at the SEC's public reference rooms at 450 * Quarterly Reports on Form 10-Q Fifth Street, N.W., Washington, D.C. of FINOVA Group and FINOVA 20549. Please call the SEC at Capital for the quarters ended 1-800-SEC-0330 for more information on March 31, June 30 and September the public reference room and their 30, 1998. copy charges. Our SEC filings are also available to the public from the SEC's * Current Reports on Form 8-K of web site at http://www.sec.gov, which FINOVA Group dated January 23, may also be available on our web site April 27, July 28, and October at http://www.finova.com. You may also 13, 1998 and January 14, 1999. inspect our SEC reports and other information at the New York Stock * Current Reports on Form 8-K of Exchange, 20 Broad Street, New York, FINOVA Capital dated January 23, New York 10005. April 27, July 30, August 7 and October 14, 1998 and The SEC allows us to "incorporate January 15, 1999. by reference" the information we file with them, which means we can disclose You may request a copy of those information to you by referring you to filings or any other information those documents. Information incorporated by reference in this incorporated by reference is part of prospectus, including exhibits. You this prospectus. Later information may do so orally or in writing by filed with the SEC updates and contacting us at: supersedes this prospectus. Treasurer We incorporate by reference the The FINOVA Group Inc. documents listed below and any future 1850 North Central Avenue filings made with the SEC under P.O. Box 2209 Sections 13(a), 13(c), 14 or 15(d) of Phoenix, Arizona 85002-2209 the Securities Exchange Act of 1934 (602) 207-6900 until this offering is completed: We will provide that information at no * Annual Reports on Form 10-K of charge to you. FINOVA Group and FINOVA Capital for the year ended December 31, 1997. THE COMPANIES FINOVA Group is a financial customers and our ability to provide services holding company. Through our value-added services enable us to principal subsidiary, FINOVA Capital, differentiate ourselves from our we provide a broad range of financing competitors. That expertise and and capital market products to ability also enable us to command mid-size business. We concentrate on pricing that provides a satisfactory lending to mid-size businesses. FINOVA spread over our borrowing costs. Capital has been in operation for over 43 years. We seek to maintain a high quality portfolio and to minimize non-earning We extend revolving credit assets and write-offs. We use clearly facilities, term loans, and equipment defined underwriting criteria and and real estate financing primarily to stringent portfolio management "middle-market" businesses with techniques. We diversify our lending financing needs falling generally activities geographically and among a between $500,000 and $35 million. range of industries, customers and loan products. We operate in 18 specific industry or market niches under three market Due to the diversity of our groups. We selected those groups portfolio, we believe we are better because our expertise in evaluating able to manage competitive changes in the credit-worthiness of prospective our markets and to withstand the impact of deteriorating economic conditions on a regional or national 2 basis. There can be no assurance, transaction sizes range from however, that competitive changes, $100,000 to $1 million and are borrowers' performance, economic made to small and mid-size conditions or other factors will not businesses with annual sales result in an adverse impact on our under $10 million. results of operations or financial condition. * REDISCOUNT FINANCE offers revolving credit facilities to We generate interest, leasing, fee the independent consumer finance and other income through charges industry including sales, assessed on outstanding loans, loan automobile, mortgage and premium servicing, leasing, brokerage and finance companies. Typical other activities. Our primary expenses transaction sizes range from $1 are the costs of funding our loan and million to $35 million. lease business, including interest paid on debt, provisions for credit SPECIALTY FINANCE losses, marketing expenses, salaries and employee benefits, servicing and * COMMERCIAL EQUIPMENT FINANCE other operating expenses and income offers equipment leases, loans taxes. and "turnkey" financing to a broad range of midsize BUSINESS GROUPS companies. Specialty markets include the corporate aircraft We operate the following principal and emerging growth technology lines of business under three market industries, primarily groups: biotechnology and electronics. Typical transaction sizes range COMMERCIAL FINANCE from $500,000 to $15 million. * BUSINESS CREDIT offers * COMMUNICATIONS FINANCE collateral-oriented revolving specializes in term financing to credit facilities and term loans advertising and for manufacturers, distributors, subscriber-supported businesses wholesalers and service including radio and television companies. Typical transaction stations, cable operators, sizes range from $500,000 to $3 outdoor advertising firms and million. publishers. Typical transaction sizes range from $1 million to * COMMERCIAL SERVICES offers full $40 million. service factoring and accounts receivable management services * FRANCHISE FINANCE offers for entrepreneurial and larger equipment, real estate and firms, primarily in the textile acquisition financing for and apparel industries. The operators of established annual factored volume of these franchise concepts. Transaction companies is generally between sizes generally range from $5 million and $25 million. This $500,000 to $15 million. line provides accounts receivable and inventory * HEALTHCARE FINANCE offers a full financing and loans secured by range of working capital, equipment and real estate. equipment and real estate financing products for the U.S. * CORPORATE FINANCE provides a health care industry. full range of cash flow-oriented Transaction sizes typically and asset-based term and range from $500,000 to $25 revolving loan products for million. manufacturers, wholesalers, distributors, specialty * PORTFOLIO SERVICES provides retailers and commercial and customized receivable servicing consumer service businesses. and collections for time-share Typical transaction sizes range developers and other generators from $2 million to $35 million. of consumer receivables. * DISTRIBUTION & CHANNEL FINANCE * PUBLIC FINANCE provides provides inbound and outbound tax-exempt term financing to inventory financing, combined state and local governments, inventory/accounts receivable non-profit corporations and lines of credit and purchase entities using industrial order financing for equipment revenue or development bonds. distributors, value-added Typical transaction sizes range resellers and dealers from $100,000 to $5 million. nationwide. Transaction sizes generally range from $500,000 to * RESORT FINANCE focuses on $30 million. construction, acquisition and receivables financing of * GROWTH FINANCE provides timeshare resorts worldwide as collateral-based working capital well as term financing for financing primarily secured by established golf resort hotels accounts receivable. Typical and receivables funding for 3 developers of second home * FINOVA Loan Administration communities. Typical transaction provides In-house servicing for sizes range from $5 million to FINOVA's commercial loan $35 million. products as well as servicing and subservicing of other * SPECIALTY REAL ESTATE FINANCE mortgage and consumer loans, provides term financing for including residential real hotel, anchored retail, office estate, mobile homes, and owner-occupied properties. automobiles and other consumer Typical transaction sizes range products. from $5 million to $25 million. Both FINOVA Group and FINOVA * TRANSPORTATION FINANCE struc- Capital are Delaware corporations. tures equipment loans, leases, FINOVA Group was incorporated in 1991 acquisition financing and to serve as the successor to The Dial leveraged lease equity Corp's financial services businesses. investments for commercial and Dial transferred those businesses to cargo airlines worldwide, FINOVA Group in March 1992 in a railroads and operators of other spin-off. Since that time, FINOVA transportation related Group has increased its total assets equipment. Typical transaction from about $2.6 billion at December sizes range from $5 million to 31, 1992 to $8.7 billion at December $30 million. Through FINOVA 31, 1997. Income from continuing Aircraft Investors LLC, FINOVA operations increased from $37 million also seeks to use its market in 1992 to $139 million in 1997. We expertise and industry presence believe FINOVA Group ranks among the to purchase, upgrade and resell largest independent commercial finance used commercial aircraft. companies in the U.S., based on total assets. The common stock of FINOVA CAPITAL MARKETS Group is traded on the New York Stock Exchange. * FINOVA REALTY CAPITAL specializes in providing capital FINOVA Capital was incorporated in markets-funded commercial real 1965 and is the successor to a estate financing products and California corporation that was formed commercial mortgage banking in 1954. All of FINOVA Capital's services. Typical transaction capital stock is owned by FINOVA sizes range from $1 million to Group. $5 million. Our principal executive offices are * FINOVA INVESTMENT ALLIANCE located at 1850 North Central Avenue, provides equity and debt P.O. Box 2209, Phoenix, Arizona financing for midsize businesses 85002-2209. Our telephone number is in partnership with (602) 207-6900. institutional investors and selected fund sponsors. Typical transaction sizes range from $2 million to $15 million. 4 RECENT DEVELOPMENTS In January 1999, FINOVA Capital In January 1999, FINOVA Group Announced its earnings and related reached a definitive agreement to financial information for 1998. FINOVA acquire Sirrom Capital Corporation Capital's 1998 net income was $173.5 ("Sirrom") for approximately $343 million, a 21% increase over the million in FINOVA Group common stock $143.1 million reported in 1997. (excluding conversion of options). Additional information is contained in Sirrom is a specialty finance company its Current Report on Form 8-K filed headquartered in Nashville, Tennessee. with the SEC on January 19, 1999. Sirrom provides secured loans to small, fast growing companies in the In October 1998, FINOVA Capital U.S. and Canada with revenues between acquired United Credit Corporation, a $5 million and $50 million, for New York-based provider of commercial expansions, acquisitions, buyouts and financing to small and mid-size other strategic ventures. Sirrom businesses, and its Patriot Funding recently announced its 1998 year-end Division. The addition formed a new financial results, which included a division named FINOVA Growth Finance, net decrease in stockholder's equity which provides collateral-based of $65.1 million during the fourth working capital financing primarily quarter of 1998. The decrease was secured by accounts receivable. The anticipated by us after our new division provides financing examination of their loan portfolio. ranging from $100,000 to $1 million to The decrease is not expected to impair small and mid-size businesses with the progress of the proposed merger. annual sales under $10 million. This The transaction must be approved by new division is serving a market Sirrom's shareholders and is subject segment of smaller, growth-oriented to other conditions and regulatory customers earlier in their maturation approvals. We anticipate that the cycle. transaction will be completed in the first half of 1999. In October 1998, FINOVA Capital acquired Electronic Payment Systems, Inc., a commercial receivables servicing business headquartered in Salt Lake City, Utah, to support the activities of our Realty Capital business. 5 SELECTED FINANCIAL INFORMATION The following information was are part of our Annual Reports on Form derived from FINOVA Group's financial 10-K and Quarterly Reports on Form statements. The information is only a 10-Q. You should read our financial summary and does not provide all of statements and other information that the information contained in our we have filed with the SEC. We have financial statements, including the reclassified earlier information to related notes, and Management's conform to the 1998 presentation. Discussion and Analysis. Those items
Nine months ended September 30, (unaudited) As of and for the Year Ended December 31, ----------------------- --------------------------------------------------------------- 1998 1997 1997 1996 1995 1994 1993 ----------- ----------- ----------- ----------- ----------- ----------- ----------- (Dollars in thousands, except per share data) OPERATIONS: Interest earned from financing transactions $ 742,877 $ 657,007 $ 897,996 $ 769,346 $ 680,912 $ 463,404 $ 255,216 Interest margins earned 343,543 300,574 408,914 340,517 287,880 216,667 124,847 Volume-based fee income 57,946 25,913 46,728 28,588 21,204 10,796 0 Provision for credit losse 44,500 48,300 69,200 41,751 37,568 10,439 5,706 Gains on sale of assets 24,243 22,407 30,261 12,949 10,889 3,877 5,439 Income from continuing operations 123,244 100,330 139,098 116,493 93,798 73,770 37,846 Net income 123,244 100,330 139,098 117,000 97,629 74,313 37,347 Basic earnings per share for continuing operations $ 2.20 $ 1.86 $ 2.56 $ 2.14 $ 1.72 $ 1.48 $ 0.96 Basic earnings per share $ 2.20 $ 1.86 $ 2.56 $ 2.15 $ 1.79 $ 1.49 $ 0.95 Basic adjusted weighted average outstanding shares(1) 56,146,000 53,979,000 54,405,000 54,508,000 54,633,000 49,765,000 39,277,000 Diluted earnings per share for continuing operations $ 2.07 $ 1.76 $ 2.42 $ 2.08 $ 1.69 $ 1.46 $ 0.90 Diluted earnings per share $ 2.07 $ 1.76 $ 2.42 $ 2.09 $ 1.76 $ 1.47 $ 0.89 Diluted adjusted weighted average shares(1) 60,947,000 58,684,000 59,161,000 56,051,000 55,469,000 50,436,000 40,552,000 Dividend declared per common share $ 0.44 $ 0.38 $ 0.52 $ 0.46 $ 0.42 $ 0.37 $ 0.34 FINANCIAL POSITION: Investment in financing transactions 9,392,529 8,075,600 8,399,456 7,298,759 6,348,079 5,342,979 2,846,571 Nonaccruing assets 199,367 173,390 187,356 155,505 143,127 149,046 102,607 Reserve for credit losses 187,161 167,754 177,088 148,693 129,077 110,903 64,280 Total assets 9,835,462 8,307,720 8,719,840 7,526,734 7,036,514 5,821,343 2,834,322 Total debt 7,891,283 6,502,512 6,764,581 5,850,223 5,649,368 4,573,354 2,079,286 Company-obligated mandatory redeemable convertible preferred securities of subsidiary trust solely holding con- vertible debentures of FINOVA Group ("TOPrS") 111,550 111,550 111,550 111,550 -- -- -- Shareowners' equity 1,145,538 977,921 1,090,454 929,591 825,184 770,252 503,300
RATIO OF INCOME TO TOTAL FIXED CHARGES
Nine Months Ended September 30, Year Ended December 31, ----------------- ----------------------------------------------- 1998 1997 1997 1996 1995 1994 1993 ------- ------- ------- ------- ------- ------- ------- FINOVA Group 1.59x 1.53x 1.54x 1.50x 1.44x 1.58x 1.53x FINOVA Capital 1.59x 1.53x 1.54x 1.50x 1.44x 1.58x 1.50x
RATIO OF INCOME TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Nine Months Ended September 30, Year Ended December 31, ----------------- ----------------------------------------------- 1998 1997 1997 1996 1995 1994 1993 ------- ------- ------- ------- ------- ------- ------- FINOVA Group 1.56x 1.51x 1.52x 1.50x 1.44x 1.58x 1.50x FINOVA Capital 1.59x 1.53x 1.54x 1.50x 1.44x 1.58x 1.46x
- ------------ (1) Adjusted to reflect a 2-for-1 stock split on October 1, 1997. 6 Variations in interest rates generally before income taxes plus fixed do not have a substantial impact on charges. Fixed charges consist of the ratio because fixed-rate and interest and related debt expense, and floating-rate assets are generally a portion of rental expense determined matched with liabilities of similar to be representative of interest. rate and term. Income available for fixed charges, for purposes of computing the above ratios, consists of income from continuing operations SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements in this * Actions of our competitors and prospectus and any supplements are our ability to respond to those "forward-looking," in that they do not actions. We seek to remain discuss historical fact but instead competitive without sacrificing note future expectations, projections, prudent lending standards. Doing intentions or other items relating to business under those standards the future. These forward-looking becomes more difficult, however, statements include those made in when competitors offer financing documents incorporated in this with less stringent criteria. We prospectus by reference. seek to maintain credit quality at the risk of growth in assets, Forward-looking statements are if necessary. subject to known and unknown risks, uncertainties and other factors that * The cost of our capital. That may cause our actual results or cost depends on many factors, performance to differ materially from some of which are beyond our those contemplated by the control, such as our portfolio forward-looking statements. Many of quality, ratings, prospects and those factors are noted in conjunction outlook. with the forward-looking HERE IT ISstatements. Many of those factors * Changes in government are noted in conjunction with the regulations, tax rates and forward-looking statements in the similar matters. For example, text. Other important factors that government regulations could could cause actual results to differ significantly increase the cost include: of doing business or could eliminate certain tax advantages * The results of our efforts to of some of our financing implement our business strategy. products. Failure to fully implement our business strategy might result * Other risks detailed in our in decreased market penetration, other SEC reports or filings. adverse effects on results of operations and other adverse We do not promise to update results. forward-looking information to reflect actual results or changes in * The effect of economic assumptions or other factors that conditions and the performance could affect those statements. of our borrowers. Economic conditions in general or in particular market segments could impact the ability of our borrowers to operate or expand their businesses, which might result in decreased performance for repayment of their obligations or reduce demand for additional financing needs. USE OF PROCEEDS We intend to use the net proceeds financing transactions and capital from the sale of the securities for expenditures. We will describe in the general corporate purposes. Those supplement any proposed use of purposes include the repayment or proceeds other than for general refinancing of debt, acquisitions in corporate purposes. the ordinary course of business, working capital, investment in 7 DESCRIPTION OF DEBT SECURITIES DEBT SECURITIES * FINOVA Capital may discharge the debt issued in any series at any The following summary applies only time by depositing sufficient to the debt securities of FINOVA funds with the Trustee to pay Capital. If we issue debt securities the obligations when due. All of FINOVA Group, we will describe amounts due to you on the debt those securities and the indenture would be paid by the Trustee under which they are issued in the from the deposited funds. applicable supplement. * If FINOVA Capital fails to meet The debt securities of FINOVA its obligations on the debt, it Capital will be issued under an will be in default. Defaults for indenture (the "Indenture") between senior debt securities are FINOVA Capital and one or more U.S. described on pages 12-13 of this banking institutions (a "Trustee"). pospectus. The Indenture may but need not have separate Trustees for senior and GENERAL subordinated debt. The debt securities of FINOVA Group The following summary of certain and FINOVA Capital offered by this provisions of the Indenture is not prospectus will be limited to $2.0 complete. You should look at the billion principal amount. The Indenture that is filed as an exhibit Indenture does not limit the amount of to the Registration Statement. To debt securities FINOVA Capital could obtain a copy of the Indenture, see offer under it. FINOVA Capital can "Where You Can Find More Information" issue debt securities in one or more on page 2. series, in each case as authorized by us from time to time. Each series may All capitalized terms have the differ as to its terms. The debt meanings specified in the Indenture. securities will be FINOVA Capital's unsecured general obligations and may GENERAL INDENTURE PROVISIONS THAT or may not be subordinated to FINOVA APPLY TO SENIOR AND SUBORDINATED DEBT Capital's other general indebtedness. Those that are not subordinated are * The Indenture does not limit the called "senior debt securities." The amount of debt that FINOVA others are "subordinated debt Capital may issue nor provide securities." holders any protection should there be a highly leveraged The supplement will address the transaction involving our following terms of the debt company. We may issue additional securities: debt securities without your consent. * Their title. * If FINOVA Capital redeems debt * Any limits on the principal which is convertible into its amounts to be issued. capital stock or other securities, your right to * The dates on which the principal convert that debt into capital is payable. stock or other securities will expire on the redemption date. * The rates (which may be fixed or variable) at which they shall * The Indenture allows FINOVA bear interest, or the method for Capital to merge or to determining rates. consolidate with another company, or sell all or * The dates from which the substantially all of its assets interest will accrue and will be to another company. If these payable, or the method of events occur, the other company determining those dates, and any will be required to assume record dates for the payments FINOVA Capital's due. responsibilities on the debt, and FINOVA Capital will be * Any provisions for redemption, released from all liabilities conversion or exchange, at our and obligations. option or otherwise, including the periods, prices and terms of * The Indenture provides that redemption or conversion. holders of a majority of the total principal amount of the * Any sinking fund or similar debt outstanding in any series provisions, whether mandatory or may vote to change our at the holder's option, along obligations or your rights concerning that series of debt. But to change the payment of principal or interest, every holder in that series must consent. 8 with the periods, prices and OWNERSHIP OF THE GLOBAL SECURITIES; terms of redemption, purchase or BENEFICIAL OWNERSHIP. So long as the repayment. depositary or its nominee is the registered owner of a global security, * The amount or percentage payable that entity will be the sole holder of if we accelerate their maturity, the debt securities represented by if other than the principal that instrument. The Trustee and we amount. are only required to treat the depositary or its nominee as the legal * Any changes to the events of owner of those securities for all default or covenants set forth purposes under the Indenture. in the Indenture. Each actual purchaser of debt * The terms of subordination, if securities represented by a global any. security (a "beneficial owner") will not be entitled to receive physical * Whether the series can be delivery of certificated securities, reopened. will not be considered the holder of those securities for any purpose under * Any other terms consistent with the Indenture, and will not be able to the Indenture. transfer or exchange the global securities, unless this prospectus or We may authorize and determine the the supplement provide to the terms of a series of debt securities contrary. As a result, each beneficial by resolution of our board of owner must rely on the procedures of directors or one of its committees or the depositary to exercise any rights through a supplemental Indenture. of a holder under the Indenture. In addition, if the beneficial owner is FORM OF DEBT SECURITIES not a direct or indirect participant in the depositary (each a The debt securities will be issued "participant") the beneficial owner in registered form. Unless the must rely on the procedures of the supplement otherwise provides, debt participant through which it owns its securities will be issued as one or beneficial interest in the global more global securities. This means security. that we will not issue certificates to each holder. We generally will issue The laws of some jurisdictions global securities in the total require that certain purchasers of principal amount of the debt securities take physical delivery of securities distributed in that series. the securities in certificated form. We will issue debt securities only in Those laws and the above conditions denominations of $1,000 or integral may impair the ability to transfer multiples of that amount, unless the beneficial interests in the global supplement states otherwise. securities. GLOBAL SECURITIES THE DEPOSITORY TRUST COMPANY IN GENERAL. Debt securities in The following is based on global form will be deposited with or information furnished by DTC and on behalf of a depositary. Global applies to the extent it is the securities are represented by one or depositary, unless otherwise stated in more global certificates for the a supplement: series registered in the name of the depositary or its nominee. Debt REGISTERED OWNER. The debt securities in global form may not be securities will be issued as fully transferred except as a whole among registered securities in the name of the depositary, a nominee of or a Cede & Co. (DTC's partnership successor to the depositary and any nominee). One fully registered global nominee of that successor. Unless security generally will be issued for otherwise identified in the each $200 million principal amount of supplement, the depositary will be The debt securities. The Trustee will Depository Trust Company ("DTC"). deposit the global securities with the depositary. The deposit of the global NO DEPOSITARY OR GLOBAL SECURITIES. securities with DTC and its If a depositary for a series is registration in the name of Cede & Co. unwilling or unable to continue as will not change the beneficial depositary, and a successor is not ownership of the securities. appointed by us within 90 days, we will issue debt securities of that DTC ORGANIZATION. DTC is a series in definitive form in exchange limited-purpose trust company for the global security or securities organized under the New York Banking of that series. We also may determine Law, a "banking organization" within at any time in our discretion not to the meaning of that law, a member of use global securities for any series. the Federal Reserve System, a In that event, we will issue debt "clearing corporation" within the securities in definitive form. 9 meaning of the New York Uniform NOTICES AMONG THE DEPOSITARY, Commercial Code and a "clearing PARTICIPANTS AND BENEFICIAL OWNERS. agency" registered under the Notices and other communications by provisions of Section 17A of the the depositary, its participants and Securities Exchange Act of 1934, as the beneficial owners will be governed amended. by arrangements among them, subject to any legal requirements in effect. DTC is owned by a number of its direct participants and by the New VOTING PROCEDURES. Neither DTC nor York Stock Exchange, Inc., the Cede & Co. will give consents for or American Stock Exchange, Inc. and the vote the global securities. The National Association of Securities depositary generally mails an omnibus Dealers, Inc. Direct participants proxy to us just after the applicable include securities brokers and record date. That proxy assigns Cede & dealers, banks, trust companies, Co.'s consenting or voting rights to clearing corporations and certain the direct participants to whose other organizations who directly accounts the securities are credited participate in DTC (each a "direct at that time. participant"). Other entities ("indirect participants") may access PAYMENTS. Principal and interest DTC's system by clearing transactions payments made by us will be delivered through or maintaining a custodial to the depositary. DTC's practice is relationship with direct participants, to credit direct participants' either directly or indirectly. The accounts on the applicable payment rules applicable to DTC and its date unless it has reason to believe participants are on file with the SEC. it will not receive payment on that date. Payments by participants to DTC ACTIVITIES. DTC holds beneficial owners will be governed by securities that its participants standing instructions and customary deposit with it. DTC also facilitates practices, as is the case with the settlement among participants of securities held for customers in securities transactions, such as bearer form or registered in "street transfers and pledges, in deposited name." Those payments will be the securities through electronic responsibility of that participant, computerized book-entry changes in not the depositary, the Trustee or us, participant's accounts. Doing so subject to any legal requirements in eliminates the need for physical effect at that time. movement of securities certificates. We are responsible for payment of PARTICIPANTS' RECORDS. Except as principal, interest and premium, if otherwise provided in this prospectus any, to the Trustee, who is or a supplement, purchases of the debt responsible to pay it to the securities must be made by or through depositary. The depositary is direct participants, which will responsible for disbursing those receive a credit for the securities on payments to direct participants. The the depositary's records. The participants are responsible for beneficial owner's ownership interest disbursing payments to the beneficial is in turn to be recorded on the owners. direct and indirect participants' records. Beneficial owners will not TRANSFER OR EXCHANGE OF SECURITIES receive written confirmations from the depositary of their purchase, but they You may transfer or exchange the are expected to receive them, along debt securities (other than a global with periodic statements of their security) without service charge at holdings, from the direct or indirect our office designated for that purpose participants through whom they entered or at the office of any transfer agent into the transaction. or security registrar identified under the Indenture. You must execute a Transfers of interests in the proper form of transfer and pay any global securities will be made on the taxes and other governmental charges books of the participants on behalf of resulting from that action. You may the beneficial owners. Certificates transfer or exchange the debt representing the interest of the securities (other than a global beneficial owners in the securities security) initially at our offices at will not be issued unless the use of 1850 North Central Avenue, P.O. Box global securities is suspended, as 2209, Phoenix, Arizona 85002-2209 or provided above. at our office or agency established for that purpose in New York, New The depositary has no knowledge of York. the actual beneficial owners of the global securities. Its records only Debt securities in the several reflect the identity of the direct denominations will be interchangeable participants as owners of the without service charge, but we may securities. Those participants may or require payment to cover taxes and may not be the beneficial owners. Participants are responsible for keeping account of their holdings on behalf of their customers. 10 other governmental charges. The exclude any portion of long-term debt Trustee initially will act as maturing within one year of that date authenticating agent under the of determination, all as reflected on Indenture. the consolidated balance sheet of FINOVA Capital and its consolidated SAME-DAY SETTLEMENT AND PAYMENT subsidiaries. Unless the supplement otherwise "LIEN" means any lien, charge, provides, the debt securities will be claim, security interest, pledge, settled in immediately available hypothecation, right of another under funds. We will make payments of any conditional sale or other title principal and interest in immediately retention agreement or any other available funds. encumbrance affecting title to property. Lien includes any lease PAYMENT AND PAYING AGENT under a sale and leaseback arrangement. If the debt securities are not held in global form, we will make payment "SUBSIDIARY" means any corporation of principal and premium, if any, a majority of the Voting Stock of against surrender of the debt which is owned, directly or securities at the principal office of indirectly, by FINOVA Capital or by the Trustee in New York, New York. We one or more Subsidiaries or by FINOVA will pay any installment of interest Capital and one or more Subsidiaries. on debt securities to the record holder on the record date for that "RESTRICTED SUBSIDIARY" is any interest. We can make those payments Subsidiary a majority of the Voting through the Trustee, as noted above, Stock of which is owned directly by by check mailed by first class mail to FINOVA Capital or by one or more the registered holders at their Restricted Subsidiaries, or by FINOVA registered address or by wire transfer Capital and one or more Restricted to an eligible account of the Subsidiaries and which is designated registered holder. as a Restricted Subsidiary by resolution of FINOVA Capital's board If any payments of principal, of directors. premium or interest are not claimed within three years of the date the "UNRESTRICTED SUBSIDIARY" means any payment became due, those funds are to Subsidiary other than a Restricted be repaid to us. The beneficial owners Subsidiary. of those interests thereafter will look only to us for payment for those "VOTING STOCK" means stock of any amounts. class or classes (however designated) having ordinary voting power for the CERTAIN INDENTURE PROVISIONS election of a majority of the members of the board of directors (or any CERTAIN DEFINITIONS. The following governing body) of that corporation, is a summary of certain terms defined other than stock having that power in the Indenture and applicable only only by reason of the happening of a to senior debt securities. Those terms contingency. are determined in accordance with generally accepted accounting LIMITATION ON LIENS. The Indenture principles, unless specifically stated provides that FINOVA Capital will not otherwise. create, assume, incur or allow to be created, assumed or incurred or to "Consolidated Net Tangible Assets" exist any Lien on any of its means the total of all assets properties unless FINOVA Capital reflected on the most recent quarterly secures the senior debt securities or annual consolidated balance sheet equally and ratably with any other of FINOVA Capital and its consolidated obligation secured in that manner. The subsidiaries, at their net book values Indenture contains the following (after deducting related depreciation, exceptions to that prohibition: depletion, amortization and all other valuation reserves), less the * Leases of property in the aggregate of its current liabilities ordinary course of business or and those of its consolidated if the property is not needed in Subsidiaries reflected on that balance the operation of our business. sheet. We exclude from assets goodwill, unamortized debt discount * Purchase money security and all other like intangible assets. interests that are non-recourse For purposes of this definition, to FINOVA Capital or its "current liabilities" include all Restricted Subsidiaries except indebtedness for money borrowed, to the extent of the property so incurred, issued, assumed or acquired or any proceeds from guaranteed by FINOVA Capital and its that property, or both. consolidated subsidiaries, and other payables and accruals, in each case * Governmental deposits or payable on demand or due within one security as a condition to the year of the date of determination, but transaction of business or the 11 exercise of a privilege, or to MERGER, CONSOLIDATION AND SALE OF maintain self-insurance, or to ASSETS. FINOVA Capital cannot merge participate in any fund in with or into, consolidate with, sell connection with worker's or lease all or substantially all of compensation, unemployment its assets to or purchase all or insurance, pensions, social substantially all the assets of security or for appeal bonds. another corporation unless it will be the surviving corporation or the * Liens for taxes or assessments successor is incorporated in the U.S. not yet due or which are payable and assumes all of FINOVA Capital's without a penalty or are being obligations under the debt securities contested in good faith and with and the Indenture, provided, and if adequate reserves, so long as immediately after that transaction, no foreclosure or similar default will exist. A purchase by a proceedings are not commenced. Subsidiary of all or substantially all of the assets of another corporation * Judgment Liens that have not will not be a purchase of those assets remained undischarged or by FINOVA Capital. If, however, any of unstayed for more than six the transactions noted in this months. paragraph occurs and results in a Lien on any of FINOVA Capital's properties * Incidental or undetermined (except as permitted above), FINOVA construction, mechanics or Capital must simultaneously secure the similar Liens arising in the senior debt securities equally and ordinary course of business ratably with the debt secured by that relating to obligations not Lien. overdue or which are being contested by FINOVA Capital or a MODIFICATION OF THE INDENTURE. The Restricted Subsidiary in good Trustee and FINOVA Capital may amend faith and deposits for releases the Indenture without consent of the of such Liens. holders of debt securities to do certain things, such as establishing * Zoning restrictions, licenses, the form and terms of any series of easements and similar debt securities. FINOVA Capital must encumbrances or defects if obtain consent of holders of at least immaterial. two-thirds of the outstanding debt securities affected by a change to * Other Liens immaterial in the amend the terms of the Indenture or aggregate incidental to FINOVA any supplemental indenture or the Capital's or the Restricted rights of the holders of those debt Subsidiary's business or securities. property, other than for indebtedness. Unanimous consent is required for changes to extend the fixed maturity * Banker's liens and set off of any debt securities, reduce the rights in the ordinary course of principal, redemption premium or rate business. of interest, extend the time of payment of interest, change the form * Leasehold or purchase rights, of currency, limit the right to sue exercisable for fair for payment on or after maturity of consideration, arising in the the debt securities, adversely affect ordinary course of business. the right, if any, to convert or exchange the debt securities or * Liens on property or securities adversely affect the subordination existing when an entity becomes provisions, if any. Unanimous consent a Restricted Subsidiary or is also required to reduce the level merges with FINOVA Capital or a of consents needed to approve any such Restricted Subsidiary, provided change. The Trustee must consent to they are not incurred in changes modifying its rights, duties anticipation of those events. or immunities. * Liens on property or securities DEFAULTS. Events of default under existing at the time of the Indenture for any series are: acquisition. * Failure for 30 days to pay * Liens in a total amount less interest on any debt securities than $25 million, excluding of that series. Liens covered by the exceptions noted above. * Failure to pay principal (other than sinking fund redemptions) * Liens securing indebtedness of or premium, if any, on debt FINOVA Capital or a Restricted securities of that series. Subsidiary provided those and similar Liens on indebtedness do * Failure for 30 days to pay any not exceed 10% of Consolidated sinking fund installment on that Net Tangible Assets, excluding series. certain preexisting indebtedness and those Liens permitted above. 12 * Violation of a covenant under series before maturity. It may do so the Indenture pertaining to that by depositing with the Trustee, in series that persists for at trust for the benefit of the holders, least 90 days after FINOVA either enough funds to pay, or direct Capital is notified by the U.S. government obligations that, Trustee or the holders of 25% of together with the income of those the series. obligations (without considering any reinvestment), will be sufficient to * Default in other instruments or pay, the obligation of that series, under any other series of debt including principal, premium, if any, securities resulting in and interest. Certain other conditions acceleration of indebtedness must be met before it may do so. over $15 million, unless that FINOVA Capital must deliver an opinion default is rescinded or of counsel that the holders of that discharged within 10 days after series will have no Federal income tax written notice by the Trustee or consequences as a result of that the holders of 10% of that deposit. series. SUBORDINATION * Bankruptcy, insolvency or similar event. The terms and conditions of any subordination of subordinated debt * Any other event of default with securities to other indebtedness of respect to the debt securities FINOVA Capital will be described in of that series. the supplement relating to the subordinated debt securities. The If an event of default occurs and terms will include a description of continues, the Trustee or the holders the indebtedness ranking senior to the of at least 25% of the series may subordinated debt securities, the declare those debt securities due and restrictions on payments to the payable. FINOVA Capital is required to holders of the subordinated debt certify to the Trustee annually as to securities while a default exists with its compliance with the Indenture. A respect to senior indebtedness, any default under one series does not restrictions on payments to the necessarily mean that a default or an holders of the subordinated debt event of default will have occurred securities following an event of under another series under the default and provisions requiring Indenture. holders of the subordinated debt securities to remit certain payments Holders of a majority of the to holders of senior indebtedness. principal of a series may control certain actions of the Trustee and may Because of the subordination, if waive past defaults for that series. FINOVA Capital becomes insolvent, Except as provided in the Indenture, holders of the subordinated debt the Trustee will not be under any securities may recover less, ratably, obligation to exercise any of the than other creditors of FINOVA rights or powers vested in it by the Capital, including holders of senior Indenture at the request, order or indebtedness. direction of any holder unless one or more of them shall have offered CONVERSION reasonable indemnity to the Trustee. Debt securities may be convertible If an event of default occurs and into or exchangeable for common stock, is continuing, the Trustee may preferred stock, other debt reimburse itself for its reasonable securities, warrants or other of compensation and expenses incurred out securities of FINOVA Capital, or of any sums held or received by it securities of any other issuer or before making any payments to the obligor. The supplement will describe holders of the debt securities of the the terms of any conversion rights. defaulted series. CONCERNING THE TRUSTEE The right of any holders of debt securities of a series to commence an The Trustee may, but need not be, action for any remedy is subject to one of the banks in one of FINOVA certain conditions, including the Capital's credit agreements and from requirement that the holders of at time to time may perform other least 25% of that series request that banking, trust or related services on the Trustee take such action, and behalf of FINOVA Capital or our offer reasonable indemnity to the customers. Trustee against its liabilities incurred in doing so. DEFEASANCE FINOVA Capital may defease the debt securities of a series, meaning it would satisfy its duties under that 13 DESCRIPTION OF CAPITAL STOCK The following summary of certain action, to issue preferred stock in provisions of the common stock, the one or more series, with the preferred stock, the junior designations, powers, preferences, participating preferred stock (the rights, qualifications, limitations "Junior Preferred Stock") and the and restrictions as the board rights to purchase the Junior determines. Thus, the board, without Preferred Stock (the "Rights") of stockholder approval, could authorize FINOVA Group is not complete. You the issuance of preferred stock with should refer to the certificate of voting, conversion and other rights incorporation and bylaws of FINOVA that could adversely affect the voting Group, as amended, FINOVA Group's power and other rights of the holders certificate of designations for the of the common stock or that could make Junior Preferred Stock and the Rights it more difficult for another company Agreement dated as of February 15, to enter into certain business 1992, as amended and restated as of combinations with FINOVA Group. See September 14, 1995 (the "Rights "-- Certain Other Provisions of the Agreement"), between FINOVA Group and Certificate of Incorporation, the Harris Trust & Savings Bank, as Bylaws and Delaware Law -- Preferred successor Rights Agent. To obtain Stock" below. copies of those documents, see "Where You Can Find More Information" on page SHAREHOLDER RIGHTS PLAN 2. If we issue capital stock of FINOVA Capital, we will describe those In 1992, FINOVA Group issued one securities in the applicable Right for each outstanding share of supplement. common stock. FINOVA Group has and will continue to issue one Right with FINOVA Group is authorized by its each newly issued share of its common certificate of incorporation to issue stock (including stock issued on 105,000,000 shares of capital stock, conversion of preferred securities). consisting of 5,000,000 shares of The obligation to continue to issue preferred stock, par value $.01 per the Rights, however, will terminate on share, and 100,000,000 shares of the expiration, exchange or redemption common stock, par value $.01 per of the Rights. share. As of February 10, 1999, there were 55,919,703 shares of common stock Each Right entitles the registered outstanding (excluding 2,634,972 holder to purchase from FINOVA Group treasury shares held by FINOVA Group) 1/200th of a share of the Junior and no shares of preferred stock Preferred Stock. The purchase price is outstanding. However, FINOVA Group has $67.50 per 1/200th of a share, subject authorized 600,000 shares of Junior to adjustment under certain Preferred Stock which have been circumstances. reserved for issuance on the exercise of the Rights. The Rights will trade only with the common stock and FINOVA Group will not COMMON STOCK issue separate certificates for the Rights until the "Rights Distribution The holders of the common stock are Date." That date occurs on the first entitled to one vote per share. FINOVA to occur of the following events: Group's certificate of incorporation does not provide for cumulative voting * 10 days after a public in the election of directors. The announcement (the "Share board may declare dividends on the Acquisition Date") that a person common stock in its discretion, if or group of persons acting funds are legally available for those together has become the purposes. On liquidation, common beneficial owner of at least 20% stockholders are entitled to receive or more of FINOVA Group's common pro rata any remaining assets of stock, directly or indirectly FINOVA Group, after we satisfy or (becoming an "Acquiring provide for the satisfaction of all Person"), or liabilities as well as obligations on our preferred stock, if any. The * 10 business days after the start holders of common stock do not have or announcement of an intention preemptive rights to subscribe for or to make a tender offer or purchase any shares of capital stock exchange offer that would result or other securities of FINOVA Group. in a person or group acting together beneficially owning 20% PREFERRED STOCK or more of FINOVA Group's common stock, directly or indirectly. Under FINOVA Group's certificate of The board, however, may extend incorporation, the board is that 10 business day deadline authorized, without stockholder prior to the time the person or group becomes an Acquiring Person. 14 The Rights may not be exercised may pay the redemption price in cash, until the Rights Distribution Date. common stock or any other method The Rights will expire on February 28, selected by the board. Upon 2002 unless we extend that date or, redemption, the right to exercise the unless we redeem or exchange the Rights will terminate and the holders Rights before then. will only have the right to receive the redemption price. The value of each 1/200th interest in a share of Junior Preferred Stock NO RIGHTS AS A STOCKHOLDER. Rights is intended to approximate the value holders, as Rights holders, have no of one share of FINOVA Group common independent rights as stockholders of stock, due to the dividend, FINOVA Group, including the right to liquidation and voting rights of the vote or to receive dividends, until Junior Preferred Stock, although there the Rights are exercised. can be no assurance the value will be the same. ANTITAKEOVER EFFECTS. The Rights have certain antitakeover effects. The HOW THE RIGHTS WORK. If a person or Rights will substantially dilute the group becomes an Acquiring Person, ownership interest in our shares of their Rights become void. The other any Acquiring Person. That dilution Rights holders will have the right to would impair the ability of the exercise their Rights, at the then Acquiring Person to change the current exercise price, for FINOVA composition of our board. It also Group common stock having a market would impact its ability to acquire value of two times the exercise price FINOVA Group on terms not approved by of the Right. That right to purchase, our board, including through a tender however, will not exist if the Rights offer at a premium to the market Distribution Date is due to a tender price, other than through an offer or exchange offer for all of FINOVA conditioned on a substantial number of Group's common stock and the Rights being acquired. The Rights independent members of our board should not interfere with any merger determine that the offer is at a fair or business combination approved by price, on fair terms and is otherwise the board, since we may redeem the in the best interests of FINOVA Group Rights before they become exercisable. and its stockholders. JUNIOR PREFERRED STOCK NOT The other Rights holders also will REGISTERED. The Junior Preferred Stock have the same exercise rights is not registered with the SEC or any described above if, after a person or other securities administrator. If the group becomes an Acquiring Person, Rights become exercisable, we intend FINOVA Group is acquired in a merger to register with the SEC the Junior or business combination or at least Preferred Stock exchangeable for the half of our total assets and earning Rights. power are sold. The exception is the same as the one noted in the above CERTAIN OTHER PROVISIONS OF THE paragraph, provided that the price CERTIFICATE OF INCORPORATION, THE offered to the shareholders for each BYLAWS AND DELAWARE LAW share of common stock is not less than that paid in the tender or exchange FINOVA Group's certificate of offer, and the consideration is in the incorporation and bylaws contain same form as that paid in the tender certain provisions that could make or exchange offer. If the requirements more difficult our acquisition by of this exception are met, then the means of a tender offer, a proxy Rights will expire. contest or otherwise. This description is only a summary and does not provide EXCHANGE OF RIGHTS. After a person all the information contained in or group becomes an Acquiring Person FINOVA Group's certificate of but before the Acquiring Person incorporation and bylaws. To obtain acquires at least half of the copies of these documents, see "Where outstanding common stock, our board You Can Find More Information" on page may exchange all or some of the Rights 2. at an exchange ratio of one share of common stock for 1/200th of a share of Delaware law permits a corporation Junior Preferred Stock per Right, to eliminate or limit the personal subject to adjustment. liability of its directors to the corporation or to any of its REDEMPTION OF RIGHTS. We may redeem stockholders for monetary damages for all the Rights, but not some of them, a breach of fiduciary duty as a for $.005 per Right at any time before director, except (i) for breach of the the earlier of 15 days after the Share director's duty of loyalty, (ii) for Acquisition Date or the expiration acts or omissions not in good faith or date noted above. The board may which involve intentional misconduct determine the conditions, terms and or a knowing violation of law, (iii) effective date for the redemption. We for certain unlawful dividends and 15 stock purchases and redemptions or NUMBER OF DIRECTORS; REMOVAL; (iv) for any transaction from which FILLING VACANCIES. FINOVA Group's the director derived an improper certificate of incorporation provides personal benefit. FINOVA Group's that, subject to any rights of certificate of incorporation provides preferred stockholders to elect that no director will be personally additional directors under specified liable to FINOVA Group or its circumstances, the number of directors stockholders for monetary damages for will be fixed in the manner provided any breach of his or her fiduciary in the bylaws. FINOVA Group's bylaws duty as a director, except as provided provide that, subject to any rights of by Delaware law. holders of preferred stock to elect directors under specified BOARD OF DIRECTORS. FINOVA Group's circumstances, the number of directors certificate of incorporation and will be fixed from time to time bylaws divide the board into three exclusively by directors constituting classes of directors, with the classes a majority of the total number of to be as nearly equal in number as directors that FINOVA Group would have possible. The stockholders elect one if there were no vacancies on the class of directors each year for a board, but must consist of between 3 three-year term. and 17 directors. The classification of directors In addition, FINOVA Group's bylaws makes it more difficult for provide that, subject to any rights of stockholders to change the composition preferred stockholders, and unless the of the board. At least two annual board otherwise determines, any meetings of stockholders, instead of vacancies will be filled only by the one, generally will be required to affirmative vote of a majority of the change a majority of the board. That remaining directors, though less than delay may help ensure that FINOVA a quorum. Accordingly, absent an Group's directors, if confronted by a amendment to the bylaws, the board proxy contest, tender or exchange could prevent any stockholder from offer or extraordinary corporate enlarging the board and filling the transaction, would have sufficient new directorships with that time to review the proposal as well as stockholder's own nominees. any available alternatives to the proposal and to act in what they Under Delaware law, unless believe to be the best interest of the otherwise provided in the certificate stockholders. The classification of incorporation, directors serving on provisions apply to every election of a classified board may only be removed directors, regardless of whether a by the stockholders for cause. In change in the composition of the board addition, FINOVA Group's certificate would be beneficial to FINOVA Group of incorporation and bylaws provide and its stockholders and whether or that directors may be removed only for not a majority of the stockholders cause and only upon the affirmative believe that such a change is vote of holders of at least 80% of the desirable. voting power of all the then outstanding shares of stock entitled The classification provisions also to vote generally in the election of could discourage a third party from directors, voting together as a single initiating a proxy contest, tender class. offer or other attempt to obtain control of FINOVA Group, even though STOCKHOLDER ACTION BY WRITTEN an attempt might be beneficial to CONSENT; SPECIAL MEETINGS. FINOVA Group and its stockholders. The Stockholders of FINOVA Group must act classification of the board thus only through an annual or special increases the likelihood that meeting. Stockholders cannot act by incumbent directors will retain their written consent in lieu of a meeting. positions. In addition, because the Only the Chairman or a majority of the classification provisions may whole board of FINOVA Group may call a discourage accumulations of large special meeting. Stockholders of blocks of FINOVA Group's stock by FINOVA Group are not able to call a purchasers whose objective is to take special meeting to require that the control of FINOVA Group and remove a board do so. At a special meeting, majority of the board, the stockholders may consider only the classification of the board could business specified in the notice of reduce the likelihood of fluctuations meeting given by FINOVA Group. in the market price of the common Preferred stockholders may be given stock that might result from different rights from those noted accumulations of large blocks. above. Accordingly, stockholders could be deprived of certain opportunities to The provisions of FINOVA Group's sell their shares of common stock at a certificate of incorporation and higher market price than otherwise bylaws prohibiting stockholder action might be the case. by written consent may have the effect 16 of delaying consideration of a Secretary between the 90th day before stockholder proposal until the next the meeting and the later of the 70th annual meeting, unless a special day before the meeting or the 10th day meeting is called by the Chairman or after the first public announcement of at the request of a majority of the the meeting date. whole board. These provisions also would prevent the holders of a A stockholder's notice proposing to majority of stock from unilaterally nominate a person for election as a using the written consent procedure to director must contain certain take stockholder action. Moreover, a information, including, without stockholder could not force limitation, the identity and address stockholder consideration of a of the nominating stockholder, the proposal over the opposition of the class and number of shares of stock of Chairman and the board by calling a FINOVA Group beneficially owned by the special meeting of stockholders prior stockholder and all information to the time the Chairman or a majority regarding the proposed nominee that of the whole board believes such would be required to be included in a consideration to be appropriate. proxy statement soliciting proxies for the proposed nominee. A stockholder's ADVANCE NOTICE PROVISIONS FOR notice relating to the conduct of STOCKHOLDER NOMINATIONS AND business other than the nomination of STOCKHOLDER PROPOSALS. The bylaws directors must contain certain establish an advance notice procedure information about that business and for stockholders to nominate about the proposing stockholder, directors, or bring other business including, without limitation, a brief before an annual meeting of description of the business the stockholders of FINOVA Group. stockholder proposes to bring before the meeting, the reasons for A person may not be nominated for a conducting that business at such director position unless that person meeting, the name and address of such is nominated by or at the direction of stockholder, the class and number of the board or by a stockholder who has shares of stock of FINOVA Group given appropriate notice to FINOVA beneficially owned by that stockholder Group's Secretary during the periods and any material interest of the noted below prior to the meeting. stockholder in the business so Similarly, stockholders may not bring proposed. If the Chairman or other business before an annual meeting officer presiding at a meeting unless the stockholder has given determines that a person was not FINOVA Group's Secretary appropriate nominated, or other business was not notice of their or its intention to brought before the meeting, in bring that business before the accordance with these procedures, the meeting. FINOVA Group's Secretary must person will not be eligible for receive the nomination or proposal election as a director, or the between 70 and 90 days before the business will not be conducted at the first anniversary of the prior year's meeting, as appropriate. annual meeting. If FINOVA Group's annual meeting date is advanced by Advance notice of nominations or more than 20 days or delayed by more proposed business by stockholders than 70 days from that anniversary gives the board time to consider the date, then we must receive the notice qualifications of the proposed between 90 days before the meeting and nominees, the merits of the proposals the later of the 70th day before the and, to the extent deemed necessary or meeting or 10 days after the meeting desirable by the board, to inform date is first publicly announced. stockholders about those matters. The board also may recommend positions If the board increases the number regarding those nominees or proposals, of directors and if we have not so that stockholders can better decide publicly announced nominees for each whether to attend the meeting or to open position within 80 days before grant a proxy regarding the nominee or the first anniversary of the prior that business. year's annual meeting, stockholders may nominate directors for the new Although the bylaws do not give the position, but only those newly created board any power to approve or positions, if FINOVA Group's Secretary disapprove stockholder nominations for receives the notice no later than 10 the election of directors or proposals days following public announcement of for action, these procedures may that change. preclude a contest for the election of directors or the consideration of Stockholders may nominate directors stockholder proposals if the proper only at a special meeting by sending procedures are not followed, and of appropriate notice for receipt by our discouraging or deterring a third party from conducting a solicitation of proxies to elect its own slate of directors or to approve its own 17 proposal, without regard to whether amount of voting securities, consideration of such nominees or outstanding of at least 20%, subject proposals might be harmful or to certain exceptions. If the approval beneficial to FINOVA Group and its of FINOVA Group's stockholders is not stockholders. required for the issuance of shares of preferred stock or common stock, the PREFERRED STOCK. FINOVA Group's board may determine not to seek certificate of incorporation stockholder approval. authorizes the board to establish one or more series of preferred stock and Although the board has no intention to determine, with respect to any at the present time of doing so, it series of preferred stock, the terms could issue a series of preferred and rights of such series, including stock that could, depending on its (i) the designation of the series, terms, impede a merger, tender offer (ii) the number of shares of the or other takeover attempt. The board series, which the board may (except will make any determination to issue where otherwise provided by the terms shares with those terms based on its of such series) increase or decrease judgment as to the best interests of (but not below the number of shares FINOVA Group and its stockholders. The thereof then outstanding), (iii) board, in so acting, could issue whether dividends, if any, will be preferred stock having terms that cumulative or noncumulative and the could discourage an acquisition dividend rate of the series, if any, attempt in which an acquiror would (iv) the dates at which dividends, if change the composition of the board, any, will be payable, (v) the including a tender offer or other redemption rights and price or prices, transaction. An acquisition attempt if any, for shares of the series, (vi) could be discouraged in this manner the terms and amounts of any sinking even if some, or a majority, of FINOVA fund provided for the purchase or Group's stockholders might believe it redemption of shares of the series, to be in their best interests or in (vii) the amounts payable on shares of which stockholders might receive a the series in the event of any premium for their stock over the then voluntary or involuntary liquidation, current market price of the stock. dissolution or winding up of the FINOVA Group's affairs, (viii) whether MERGER/SALE OF ASSETS. FINOVA the shares of the series will be Group's certificate of incorporation convertible into shares of any other provides that certain "business class or series, or any other combinations" must be approved by the security, of FINOVA Group or any other holders of at least 662|M/3% of the corporation, and, if so, the voting power of the shares not owned specification of another class or by an "interested shareholder", unless series or another security, the the business combinations are approved conversion price or prices or rate or by the "Continuing Directors" or meet rates, any adjustments to the prices certain requirements regarding price or rates, the date or dates as of and procedure. The terms quoted in which the shares shall be convertible this paragraph are defined in the and all other terms and conditions certificate of incorporation. upon which the conversion may be made, (ix) restrictions on the issuance of AMENDMENT OF CERTAIN PROVISIONS OF shares of the same series or of any THE CERTIFICATE OF INCORPORATION AND other class or series and (x) the BYLAWS. Under Delaware law, voting rights, if any, of the holders stockholders may adopt, amend or of shares of the series. repeal the bylaws and, with approval of the board, the certificate of FINOVA Group believes that the incorporation of a corporation. In ability of the board to issue one or addition, a corporation's board may more series of preferred stock will adopt, amend or repeal the bylaws if provide FINOVA Group with flexibility allowed by the certificate of in structuring possible future incorporation. FINOVA Group's financings and acquisitions, and in certificate of incorporation requires meeting other corporate needs which a vote of (i) at least 80% of the might arise. The authorized shares of outstanding shares of voting stock, preferred stock, as well as shares of voting together as a single class, to common stock, will be available for amend provisions of the certificate of issuance without further action by incorporation relating to the FINOVA Group's stockholders, unless prohibition of stockholder action approval is required by applicable law without a meeting; the number, or the rules of any stock exchange or election and term of FINOVA Group's automated quotation system on which directors; and the removal of FINOVA Group's securities are listed directors; (ii) at least 662|M/3% of or traded. The NYSE currently requires the outstanding shares of voting stockholder approval in several stock, voting together as a single instances, including where the present or potential issuance of shares could result in an increase in the number of shares of common stock, or in the 18 class, to amend the provisions of the subsequent to that date, the board and certificate of incorporation relating 66 2/3% of the outstanding voting to approval of certain business stock not owned by the interested combinations; and (iii) at least a stockholder approved the business majority of the outstanding shares of combination. Except as specified by voting stock, voting together as a Delaware law, an interested single class, to amend all other stockholder includes (x) any person provisions of the certificate of that is the owner of 15% or more of incorporation. FINOVA Group's the outstanding voting stock of the certificate of incorporation further corporation, or is an affiliate or provides that the bylaws may be associate of the corporation and was amended by the board or by the the owner of 15% or more of the affirmative vote of the holders of at outstanding voting stock of the least 80% of the voting power of the corporation, at any time within three outstanding shares of voting stock, years immediately prior to the voting together as a single class. relevant date, and (y) the affiliates These supermajority voting and associates of that person. requirements make the amendment by stockholders of the bylaws or of any Under certain circumstances, of the provisions of the certificate Delaware law makes it more difficult of incorporation described above more for an "interested stockholder" to difficult, even if a majority of enter into various business FINOVA Group's stockholders believe combinations with a corporation for a that amendment would be in their best three-year period, although interests. stockholders may adopt an amendment to a corporation's certificate of ANTITAKEOVER LEGISLATION. Subject incorporation or bylaws excluding the to certain exceptions, Delaware law corporation from those restrictions. does not allow a corporation to engage However, FINOVA Group's certificate of in a business combination with any incorporation and bylaws do not "interested stockholder" for a exclude FINOVA Group from the three-year period following the date restrictions imposed under Delaware that the stockholder becomes an law. These provisions of Delaware law interested stockholder, unless (i) may encourage companies interested in prior to that date, the board approved acquiring FINOVA Group to negotiate in either the business combination or the advance with the board, since the transaction which resulted in the stockholder approval requirement would stockholder becoming an interested be avoided if a majority of the board stockholder, (ii) on that date, the approves either the business interested stockholder owned at least combination or the transaction which 85% of the voting stock of the results in the stockholder becoming an corporation outstanding at the time interested stockholder. the transaction commenced (excluding certain shares) or (iii) on or DESCRIPTION OF DEPOSITARY SHARES The following summary of certain Agreement") between us and a bank or provisions of the Deposit Agreement, trust company selected by us having the depositary shares and depositary its principal office in the U.S. and receipts is not complete. You should having a combined capital and surplus refer to the forms of Deposit of at least $50 million. Subject to Agreement and depositary receipts the terms of the Deposit Agreement, relating to each series of preferred each owner of depositary shares will stock that will be filed with the SEC. be entitled, in proportion to the To obtain copies of these documents, applicable fractional interests in see "Where You Can Find More shares of preferred stock underlying Information" on page 2. the depositary shares to all the rights and preferences of the GENERAL preferred stock underlying the depositary shares. Those rights We may offer fractional interests include dividend, voting, redemption, in shares of preferred stock, instead conversion and liquidation rights. of shares of preferred stock. If we do, we will have a depositary issue to The depositary shares will be the public receipts for depositary evidenced by depositary receipts shares, each of which will represent issued under the Deposit Agreement. fractional interests of a particular Individuals purchasing the fractional series of preferred stock. interests in shares of the related series of preferred stock will receive We will deposit shares of any depositary receipts according to the series of preferred stock underlying terms of the offering described in the the depositary shares under a separate supplement. Deposit Agreement (the "Deposit 19 DIVIDENDS AND OTHER DISTRIBUTIONS redemption date, the number of depositary shares representing the The depositary will distribute all preferred stock. The depositary shares cash dividends or other cash to be redeemed will be selected by lot distributions received for the or pro rata as determined by the preferred stock to the record holders depositary when less than all of depositary shares representing the outstanding depositary shares will be preferred stock in proportion to the redeemed. number of depositary shares owned by those holders on the relevant record After the redemption date, the date. The depositary will distribute depositary shares redeemed will no only the amount that can be longer be outstanding. When this distributed without attributing to any occurs, all rights of the holders will holder of depositary shares a fraction cease, except the right to receive of one cent. The undistributed balance money, securities or other property will be added to and treated as part payable upon such redemption and any of the next amount received by the money, securities or other property depositary for distribution to record that the holders of depositary shares holders of depositary shares. were entitled to on the redemption upon surrender to the depositary of If there is a distribution other the depositary receipts evidencing the than in cash, the depositary will depositary shares redeemed. distribute property received by it to the record holders of depositary VOTING THE PREFERRED STOCK shares, in proportion, if possible, to the number of depositary shares owned Upon receipt of notice of any by those holders, unless the meeting at which the holders of the depositary determines (after preferred stock are entitled to vote, consulting with us) that it cannot the depositary will mail all relevant make the distribution. If this occurs, information to the record holders of the depositary may, with our approval, the depositary shares representing the sell the property and distribute the preferred stock. The record holders net proceeds from the sale to the may instruct the depositary how to holders of depositary shares. vote the shares of preferred stock underlying their depositary shares. The Deposit Agreement also will The depositary will try, if practical, state how any subscription or similar to vote the number of shares of rights offered by us to holders of the preferred stock underlying the preferred stock will be made available depositary shares according to the to holders of depositary shares. instructions, and we will agree to take all reasonable action requested CONVERSION AND EXCHANGE by the depositary so the depositary may follow the instructions. If any series of preferred stock underlying the depositary shares is AMENDMENT AND TERMINATION OF subject to conversion or exchange, DEPOSITARY AGREEMENT each record holder of depositary receipts may convert or exchange the The form of depositary receipt and depositary shares represented by those any provision of the Deposit Agreement depositary receipts. may be amended by agreement between us and the depositary. However, any REDEMPTION OF DEPOSITARY SHARES amendment that materially and adversely alters the rights of the If a series of the preferred stock existing holders of depositary shares underlying the depositary shares is will not be effective unless approved subject to redemption, the depositary by the record holders of at least a will redeem the depositary shares from majority of the depositary shares then the proceeds received by the outstanding. We or the depositary may depositary in the redemption, in whole only terminate the Deposit Agreement or in part, of the series of the if (a) all related outstanding preferred stock held by the depositary shares have been redeemed depositary. The depositary will mail or (b) there has been a final notice of redemption within 30 to 60 distribution of the preferred stock of days prior to the date fixed for the relevant series in connection with redemption to the record holders of our liquidation, dissolution or the depositary shares to be redeemed winding up and that distribution has at their addresses appearing in the been distributed to the holders of the depositary's books. The redemption related depositary shares. price per depositary share will equal the applicable fraction of the redemption price per share payable on such series of the preferred stock. Whenever we redeem shares of preferred stock held by the depositary, the depositary will redeem as of the same 20 CHARGES OF DEPOSITARY MISCELLANEOUS We will pay all transfer and other The depositary will send to the taxes and governmental charges arising holders of depositary shares all solely from the existence of the reports and communications from us depositary arrangements. We will pay that we must furnish to the holders of associated charges of the depositary preferred stock. for the initial deposit of the preferred stock and any redemption of We and the depositary will not be the preferred stock. Holders of liable if we are prevented or delayed depositary shares will pay transfer by law or any circumstance beyond our and other taxes and governmental control in performing our obligations charges and any other charges stated under the Deposit Agreement. Those in the Deposit Agreement to be for obligations will be limited to their accounts. performance in good faith of duties set forth in the Deposit Agreement. We RESIGNATION AND REMOVAL OF DEPOSITARY and the depositary will not be obligated to prosecute or defend any The depositary may resign by legal proceeding connected with any delivering notice to us, and we may depositary shares or preferred stock remove the depositary. Resignations or unless satisfactory indemnity is removals will take effect upon the furnished. We and the depositary may appointment and acceptance of a rely upon written advice of counsel or successor depositary. We must appoint accountants, or information provided a successor depositary within 60 days by persons presenting preferred stock after delivery of the notice of for deposit, holders of depositary resignation or removal. The successor shares, or other persons believed to depositary must be a bank or trust be competent and on documents believed company having its principal office in to be genuine. the U.S. and having a combined capital and surplus of at least $50 million. DESCRIPTION OF WARRANTS We may issue warrants for the solely as our agent for the warrants purchase of debt securities, preferred and will not act for or on behalf of stock or common stock. We may issue the holders or beneficial owners of warrants independently or together warrants. This summary of certain with debt securities, common stock or provisions of the warrants is not preferred stock or attached to or complete. You should refer to the separate from the offered securities. provisions of the Warrant Agreement We will issue each series of warrants that will be filed with the SEC as under a separate warrant agreement (a part of the offering of any warrants. "Warrant Agreement") between us and a To obtain a copy of this document, see bank or trust company, as warrant "Where You Can Find More Information" agent. The warrant agent will act on page 2. PLAN OF DISTRIBUTION FINOVA Group and FINOVA Capital may liabilities under the Federal offer securities directly or through securities laws and other laws. The underwriters, dealers or agents. The underwriters' obligations to purchase supplement will identify those securities will be subject to certain underwriters, dealers or agents and conditions and generally will require will describe the plan of them to purchase all of the securities distribution, including commissions to if any are purchased. be paid. If we do not name a firm in the supplement, that firm may not Unless otherwise noted in the directly or indirectly participate in supplement, the securities will be any underwriting of those securities, offered by the underwriters, if any, although it may participate in the when, as and if issued by us, distribution of securities under delivered to and accepted by the circumstances entitling it to a underwriters and subject to their dealer's allowance or agent's right to reject orders in whole or in commission. part. Any underwriting agreement probably FINOVA Group and FINOVA Capital may will entitle the underwriters to sell securities to dealers, as indemnity against certain civil principals. Those dealers then may 21 resell the securities to the public at and penalty bids in accordance with varying prices set by those dealers Regulation M under the Securities from time to time. Exchange Act of 1934. Over-allotment involves sales in excess of the FINOVA Group and FINOVA Capital offering size, which creates a short also may offer securities through position. Stabilizing transactions agents. Agents generally act on a permit bids to purchase the underlying "best efforts" basis during their security so long as the stabilizing appointment, meaning they are not bids do not exceed a specified obligated to purchase securities. maximum. Short covering transactions involve purchases of the securities in Dealers and agents may be entitled the open market after the distribution to indemnification as underwriters by is completed to cover short positions. us against certain liabilities under Penalty bids permit the underwriters the Federal securities laws and other to reclaim a selling concession from a laws. dealer when the securities originally sold by the dealer are purchased in a FINOVA Group and FINOVA Capital or covering transaction to cover short the underwriters or agents may solicit positions. Those activities may cause offers by institutions approved by us the price of the securities to be to purchase securities under contracts higher than it would otherwise be. The providing for future payment. underwriters may engage in any such Permitted institutions include activities on any exchange or other commercial and savings banks, market in which the securities may be insurance companies, pension funds, traded. If commenced, the underwriters investment companies, educational and may discontinue those activities at charitable institutions and others. any time. Certain conditions apply to those purchases. The supplement or pricing supplement, as applicable, will set Any underwriter may engage in forth the anticipated delivery date of over-allotment, stabilizing trans- the securities being sold at that actions, short covering transactions time. LEGAL MATTERS Unless otherwise noted in a Counsel of FINOVA Group and FINOVA supplement, William J. Hallinan, Esq., Capital, respectively, will pass Senior Vice President-General Counsel on the legality of the securities of FINOVA Group and FINOVA Capital, or offered through this prospectus and Richard Lieberman, Esq., Vice any supplement. Brown & Wood LLP will President-Associate/Assistant General act as counsel for any underwriters or agents, unless otherwise noted in a supplement. EXPERTS Deloitte & Touche LLP, independent financial statements are incorporated auditors, have audited the financial into this prospectus by reference in statements for FINOVA Group and FINOVA reliance upon their report given upon Capital incorporated in this their authority as experts in prospectus by reference from our accounting and auditing. Annual Reports on Form 10-K. The 22 [FINOVA LOGO] -----END PRIVACY-ENHANCED MESSAGE-----