FORM 10-K405

-----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, SZUrVmq3U2wgB29wujO1TGGxYTcdc82BiAum64GJDfrj9g1aLHd3UX3rR4b0feQo nG/V1sMvRAIVyVquQKUE0g== 0000950131-01-001406.txt : 20010307 0000950131-01-001406.hdr.sgml : 20010307 ACCESSION NUMBER: 0000950131-01-001406 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010302 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HELLER FINANCIAL INC CENTRAL INDEX KEY: 0000046738 STANDARD INDUSTRIAL CLASSIFICATION: SHORT-TERM BUSINESS CREDIT INSTITUTIONS [6153] IRS NUMBER: 361208070 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 001-06157 FILM NUMBER: 1560231 BUSINESS ADDRESS: STREET 1: 500 W MONROE ST CITY: CHICAGO STATE: IL ZIP: 60661 BUSINESS PHONE: 3124417000 MAIL ADDRESS: STREET 1: 500 W MONROE ST CITY: CHICAGO STATE: IL ZIP: 60661 FORMER COMPANY: FORMER CONFORMED NAME: HELLER WALTER E & CO /NEW/ DATE OF NAME CHANGE: 19850503 10-K405 1 0001.htm FORM 10-K405 FORM 10-K405

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2000

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 1-6157

Heller Financial, Inc.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of

incorporation or organization)

36-1208070

(I.R.S. Employer

Identification No.)

500 West Monroe Street, Chicago, Illinois

(Address of principal executive offices)

60661

(Zip Code)

Registrant’s telephone number, including area code: (312) 441-7000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Name of Exchange on which Registered
Class A Common Stock		New York Stock Exchange, Inc.
		The Chicago Stock Exchange Incorporated
Cumulative Perpetual Senior Preferred Stock, Series A		New York Stock Exchange, Inc.

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ü No .

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

As of February 16, 2001, the aggregate market value of voting stock held by non-affiliates of the registrant, based upon the closing sales price for the registrant’s Class A common stock, as reported on the New York Stock Exchange was approximately $1,621,056,484.

Number of shares of Common Stock outstanding at February 16, 2001:

Class A Common Stock—45,563,704

Class B Common Stock—51,050,000

Documents incorporated by reference: Portions of the definitive Proxy Statement prepared for the 2001 Annual Meeting of Stockholders to be filed no later than April 5, 2001 are incorporated by reference into Part III of this report. Web site address is www.hellerfinancial.com

TABLE OF CONTENTS

Item No.	Name of Item	Page
Part I
Item 1.	Business	4
	General	4
	Domestic Commercial Finance Segment	8
	Corporate Finance	8
	Real Estate Finance	11
	Leasing Services	13
	Healthcare Finance	16
	Small Business Finance	17
	International Factoring and Asset Based Finance Segment	19
	Sales and Marketing	22
	Competition	23
	Regulation	24
	Employees and Employer of Choice Initiative	26
	Enterprise Risk Management	26
	Credit Risk Management	26
	Asset/Liability Management	28
	Interest Rate Risk Management	28
	Foreign Exchange Risk Management	29
	Liquidity Risk Management	30
	Operational Risk Management	31
	Portfolio Quality	32
	Executive Officers of Registrant	35
Item 2.	Properties	36
Item 3.	Legal Proceedings	36
Item 4.	Submission of Matters to a Vote of Security Holders	36

Part II
Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters	37
Item 6.	Selected Financial Data	38
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40
	General	40
	Year Ended December 31, 2000 Compared to Year Ended December 31, 1999	41
	Results of Operations	41
	Lending Assets and Investments	46
	Year Ended December 31, 1999 Compared to Year Ended December 31, 1998	49
	Results of Operations	49

Item No.
(cont.)	Name of Item	Page
	Lending Assets and Investments	53
	Liquidity and Capital Resources	55
	Accounting Developments	57
	Cautionary Note Regarding Forward-Looking Statements	59
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	60
Item 8.	Financial Statements and Supplementary Data	61
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	108

Part III
Item 10.	Directors and Executive Officers of the Registrant	109
Item 11.	Executive Compensation	109
Item 12.	Security Ownership of Certain Beneficial Owners and Management	109
Item 13.	Certain Relationships and Related Transactions	109

Part IV
Item 14.	Exhibits, Financial Statement Schedules and Reports on Form 8-K	110

PART I

ITEM 1. BUSINESS

The following discussion contains certain forward-looking statements as defined in the Securities Exchange Act of 1934 which are generally identified by the words anticipates, believes, estimates, expects, plans, intends and other similar expressions. Those statements represent the Company’s current expectations regarding its future growth, results and performance. These forward-looking statements are subject to certain risks, uncertainties and contingencies, which could cause the Company’s actual results, performance or achievements to differ materially from those expressed in, or implied by, such statements. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Special Note Regarding Forward-Looking Statements.

General

Heller Financial, Inc. (including its consolidated subsidiaries, Heller or the Company, which may be referred to as we, us or our) is a worldwide commercial finance company providing a broad range of financing solutions to middle-market and small business clients.

Primary Business Segments

We deliver our products and services principally through two business segments:

Domestic Commercial Finance; and

International Factoring and Asset Based Finance.

Domestic Business

Our Domestic Commercial Finance segment is made up of five business units:

(1)

Corporate Finance, primarily providing collateralized cash flow and asset based lending;

(2)

Real Estate Finance, primarily providing secured real estate financing;

(3)

Leasing Services, providing debt and lease financing of small, medium and large ticket equipment sourced directly or through manufacturers, distributors and dealers;

(4)

Healthcare Finance, providing asset-based, collateralized cash flow and secured real estate financing to healthcare service providers with a primary focus on long-term care, hospitals and physician practices; and

(5)

Small Business Finance, which provides financing to small businesses, primarily through two programs of the Small Business Association (SBA). We recently announced a strategic decision to discontinue originations of new business in this business unit. See Item 1. Business—Small Business Finance and Note 27—Subsequent Events—of our Consolidated Financial Statements for more information.

Although the Domestic Commercial Finance segment business units operate primarily in the United States, they have more recently begun to expand their activities into certain other countries, including Canada and the United Kingdom, in order to provide complementary financing products to clients in additional markets.

International Business

Our International Factoring and Asset Based Finance segment, known as Heller International Group (International Group), provides factoring services and financings secured primarily by receivables, inventory and equipment. It does so through wholly-owned subsidiaries and joint ventures which provide financing to small and mid-sized companies primarily in Europe, but also in Asia and Latin America. It also has provided the platforms within various foreign markets from which our Global Vendor Finance operation, which is part of our domestic Leasing Services unit, has begun to expand its reach into foreign markets.

Market Position

We concentrate primarily on senior secured lending, with 89% of consolidated lending assets and investments at December 31, 2000 being made on that basis. Also, to a more limited extent, we make subordinated loans and invest in selected debt and equity instruments.

Our primary clients and customers are entities in the manufacturing and service sectors having annual sales generally in the range of U.S. $5 million to U.S. $250 million and in the real estate sector having property values generally in the range of U.S. $1 million to U.S. $40 million.

We are among the largest lenders to private equity-sponsored companies in the U.S. middle-market and have been recognized as the #5 syndicator of middle-market sponsored leveraged loans. We believe that our subsidiary, Factofrance-Heller (Factofrance), is the largest factoring operation in France. We believe we are the leading provider of secured finance to small and mid-sized healthcare companies in the United States. Additionally, we are a recognized leader in real estate finance, vacation ownership lending, vendor finance and middle-market equipment finance and leasing in the United States.

We have built our portfolio through:

effective asset origination capabilities;

disciplined underwriting and credit approval processes;

effective portfolio management; and

acquisitions.

Our business units have the ability to manage asset, client, industry and geographic concentrations and enhance profitability by distributing assets through securitizations, syndications and loan sales.

Heller History and Recent Activities

Heller was founded in 1919. From our inception, we have primarily targeted our commercial financing activities at mid-sized and small businesses in the United States. Since 1964, we have also competed in select international markets through our consolidated subsidiaries and investments in international joint ventures. More recently, we have opportunistically expanded the international focus of some of our domestic based business units.

Heller was purchased by a subsidiary of The Fuji Bank, Limited (Fuji Bank) in 1984. Fuji Bank owned 100% of Heller’s common stock between that time and April 1998. In May 1998, we issued 38,525,000 shares of Class A Common Stock in an initial public offering (the IPO). The IPO reduced Fuji Bank’s ownership, through its direct subsidiary Fuji America Holdings, Inc. (FAHI), to 79% of the voting interest and 57% of the economic interest of our issued common stock. Fuji Bank’s ownership was further reduced to 77% of the voting interest and 52% of the economic interest when we issued approximately 7.3 million shares of our Class A Common Stock in conjunction with our acquisition of HealthCare Financial Partners, Inc. (HCFP) in July 1999. As a result of such voting interest, FAHI retains the unilateral power to elect all of the members of our Board of Directors.

In May 1998, Heller increased its ownership of International Group to 100% from 79% by purchasing the 21% interest previously held by Fuji Bank.

In September 2000, Fuji Bank, all of whose capital stock had been previously publicly held, became a wholly-owned subsidiary of Mizuho Holdings, Inc. (Mizuho), which currently is also the holding company for the Dai-Ichi Kangyo Bank Ltd. (DKB), and the Industrial Bank of Japan (IBJ). The common shareholders of Fuji Bank, DKB and IBJ became shareholders of Mizuho, which is publicly held. We believe Mizuho is the largest banking organization in the world, with over $1 trillion in total assets.

A major focus of Heller is to build a diversified portfolio. The Company has substantial franchises in Corporate Finance, Real Estate Finance and International Group and has built other significant secured lending businesses in Healthcare Finance and Leasing Services through start-ups of new business units, acquisitions and the expansion of smaller existing operations. Products include asset based working capital and term financings secured by accounts receivable and inventory and various types of equipment finance and leasing product offerings.

In the past several years, we have selectively expanded or refocused our overseas operations, most significantly by completing the acquisition, in April 1997, of the interest of our joint venture partner in Factofrance, the leading factoring company in France. Additionally, in September 1999, we purchased our joint venture partner’s interest in our Argentina joint venture and, as a result, made it a consolidated subsidiary. During 2000, we sold our investment in our joint venture in Belgium and liquidated our Australian consolidated subsidiary.

We further expanded our leasing operations in 1998 by acquiring certain U.S. assets of the Dealer Products Group of Dana Commercial Credit Corporation and the stock of the Dealer Products Group’s international subsidiaries (collectively, Dealer Products Group). This became the platform for our Global Vendor Finance unit and has given us the capability to offer vendor leasing programs on an international basis and to expand our existing domestic vendor finance business.

In April 1999, we formed our Entertainment Media and Technology group (EMX), as part of the Capital Finance unit of Leasing Services. EMX provides innovative and highly structured leasing alternatives to emerging and converging media, entertainment, technology and other selected companies.

In July 1999, we became a leading financing provider to small and middle-market healthcare companies nationally by acquiring HCFP and combining it with our existing healthcare finance activities.

Also in 1999, we opened our Canadian subsidiary, Heller Financial Canada, Ltd. (HFC), which allows us to offer Canadian borrowers many of the lending and leasing products we are able to offer our customers in the U.S. Throughout 2000, we have expanded HFC’s operations to serve Heller customers of several business units so that HFC now serves Real Estate Finance, Leasing Services and Corporate Finance.

In 1999, we launched our Franchise Finance business, a specialty group within our Commercial Equipment unit of Leasing Services, to expand and reinforce our commitment to servicing the financing needs of strong, experienced operators of proven franchise concepts. Also in 1999, we launched the Special Purpose Property product, as part of Leasing Services. This product allows us to combine our asset based lending expertise with our traditional equipment and real estate financing products to provide a single financing source for real property and equipment. Our Special Purpose Property specialists provide secured debt and synthetic lease products for end-user and owner-occupied properties to middle-market companies in a wide variety of industries.

In December 1999, we completed the sale of the assets of our Commercial Services unit, part of our Domestic Commercial Finance segment. We believe that long-term success in the domestic factoring business would have required substantial economies of scale, which Commercial Services would not have been able to achieve through internal growth. We used the capital and other resources made available from this sale to increase our investment in our other business units that, in our opinion, offer greater opportunities for long-term growth and profitability.

In February 2000, we established Heller Financial Limited (HFL), a U.K. subsidiary of International Group which operates as a division of our Corporate Finance unit and provides cash flow financing and equity investments to companies in the U.K. and Western Europe. HFL complements Heller Corporate Finance activities in the United States and Canada, and enables us to serve many common customers on both continents as they increase their cross border investment activities.

In June 2000, we formed our Venture Finance business and established it as a specialty group within our Leasing Services unit that focuses on serving the needs of early- to mid-stage emerging growth companies backed by venture capitalists and other professional investors.

In February 2001, we announced a strategic decision to discontinue the new origination of Small Business Administration (SBA) loans through our Small Business Finance unit. Increased competition from banks focused on capturing small business customers by cross-selling a range of financial products, such as cash management and depository banking services in addition to SBA loans, have made the pricing and returns on this product less attractive. Our decision to stop new business origination in this market will permit us to re-deploy capital and other resources to our other businesses where we see better growth prospects that, we believe, will enhance shareholder value. Despite ceasing origination in Small Business Finance, we will fund existing commitments and intend to continue servicing the Small Business Finance portfolio in accordance with our customary business practices. See Note 27—Subsequent Events—of our Consolidated Financial Statements for more details.

As a result of the above activities, we believe that we have strengthened our franchise positions and have enhanced our core activities resulting in a lending portfolio that is well diversified, has strong asset collateralization and provides us with a consistent and diversified income stream.

Summary 2000 Results

For the year ended December 31, 2000:

Net income totaled $290 million, representing our eighth consecutive year of record earnings.

Net income was up 23% over the prior year, after adjusting for the Company’s one-time net gain of $48 million on the sale of the assets of our Commercial Services unit in 1999.

Net income applicable to common stock was $261 million, representing an increase of 25% over the prior year adjusted amount of $208 million.

Net interest income increased 23% over the prior year.

Operating revenues totaled over $1 billion for the full year and were up 9 percent over 1999.

Operating efficiency was 44% for 2000, a significant improvement from the 1999 level of 48%, and in line with our target for this year.

New business volume totaled $7.8 billion and was strongest in Corporate Finance, Real Estate Finance, Leasing Services and Healthcare Finance.

Total lending assets and investments totaled $18.7 billion, an increase of $1.9 billion, or 11% from the prior year.

Nonearning assets were $307 million, or 1.9% of total lending assets at December 31, 2000 and below our targeted range for nonearning assets of 2% to 4% of total lending assets.

Writeoffs as a percentage of average lending assets for the year were 0.7%, consistent with 1999 and consistent with our average targeted level over a business cycle of 0.75%.

See Note 23—Operating Segments—of our Consolidated Financial Statements for disclosure regarding certain financial information with respect to each of our business segments.

Domestic Commercial Finance Segment

Corporate Finance

Corporate Finance is a leading provider of financing solutions to middle-market oriented equity sponsors, intermediaries and enterprises. Corporate Finance offers:

cash flow lending;

asset based lending; and

on a more limited basis, junior secured, mezzanine and modest-sized equity investments.

Through Corporate Finance, we provide cash flow and asset based lending for corporate acquisitions, leveraged buyouts, leveraged buildups, recapitalizations, refinancings, verifiable turnarounds, debtor-in-possession (DIP) financings, post-DIP transactions and growth financing for publicly and privately held companies. The companies we finance are in a wide variety of manufacturing, distribution and services industries. In almost all cases, we source these transactions through professional or private equity investors who acquire businesses for financial or strategic purposes, or through financial intermediaries such as accounting, law, investment banking, brokerage or turnaround consulting firms. We have developed and maintain close relationships with over 200 equity sponsors, many of whom have been our clients for ten or more years and have financed several transactions with us.

Corporate Finance also provides secured term and revolving credit facilities with durations averaging five to eight years. To a lesser extent, we provide unsecured subordinated debt financings and invest in limited partnership funds. From time to time, we make modest equity investments in conjunction with senior debt facilities, receive warrants, and make stand-alone equity co-investments with private equity sponsor clients. We also serve as a co-lender or participant in larger senior secured transactions originated by other lenders.

Corporate Finance has offices in nine cities in the U.S., plus Toronto and London. We also have specialized industry teams focused on Energy and Project Finance, Mature-Stage Technology, Mezzanine Finance and Debtor-in-Possession and Post-Bankruptcy Finance. We believe we are one of the top firms providing non-investment grade financing to middle-market companies.

Our Corporate Finance portfolio is diversified among approximately 30 industries and no industry represented more than 10% of the portfolio.

The following table gives additional information about Corporate Finance:

	As of, or For the Year Ended, December 31,
	2000		1999		1998
	(dollars in millions)
New business volume	$2,759		$3,130		$2,607
Total lending assets and investments (1)	5,225		4,937		3,722
Revenues	651		471		389
Corporate Finance revenues as a percentage of total Company revenues	32.0	%	28.8	%	27.6	%
Ratio of net writedowns to average lending assets	1.2		0.5		0.4
Ratio of nonearning assets to lending assets	2.2		0.6		0.4

(1)	Lending assets and investments at December 31, 2000 were reduced by $700 million of commercial cash flow loans sold to an asset backed commercial paper conduit facility.

Corporate Finance’s ratio of net writedowns to average lending assets was 1.2% at December 31, 2000, up from 0.5% and 0.4% for 1999 and 1998, respectively. This increase was driven by increased writedowns on cash flow financings. Net writedowns resulted from individual business issues and were not significantly concentrated by borrower, industry type or geographic region.

The December 31, 2000 level of nonearning assets of 2.2% of total Corporate Finance lending assets lies within our overall targeted range of 2%–4%. The increase from the prior years reflects downturns in many sectors of the U.S. economy during the second half of 2000.

For the year ended December 31, 2000, Corporate Finance had total revenues of $651 million, an increase of 38% over 1999. This increase was primarily driven by higher average net funds employed and a higher interest rate environment in 2000.

As of December 31, 2000, Corporate Finance had total lending assets and investments of $5.2 billion, or 28% of Heller’s total lending assets and investments. Of this amount:

about $4.3 billion, or 23% of Heller’s total lending assets and investments, represents cash flow financings; and

about $900 million, or 5% of Heller’s total lending assets and investments, represents asset based financings.

We base our commitment to finance cash flow lending transactions on our assessment of the borrower’s ability to generate cash flows to repay the loan and to maintain or increase its business value. To do this, we consider, among other factors, the borrower’s:

historical and projected profitability;

market position;

ability to withstand competitive challenges; and

relationships with clients and suppliers.

Our cash flow term loans and revolving credit facilities to the same borrower are generally cross-collateralized and are secured by liens on the borrower’s current and fixed assets and, in most cases, the borrower’s capital stock.

In our asset based lending transactions, we concentrate on balancing collateral values, cash flow and capital structure. We protect against deterioration of a borrower’s performance by using established advance rates against eligible collateral and by cross-collateralizing revolving credit facilities and term loans. In all of our transactions, we actively manage credit risk through portfolio diversification, according to industry and individual client exposure.

Corporate Finance also makes relatively modest minority direct equity investments and invests in limited partnership funds managed by equity sponsors. Our investments totaled $372 million as of December 31, 2000 and represented investments in 730 companies, either directly or indirectly held through fund investments.

Corporate Finance has an established syndication capability. This enables us to commit to larger transactions, while still managing the ultimate size of our retained position, and to generate additional income. In 2000, we acted as lead managing agent for 30 private equity-sponsored syndicated transactions. Corporate Finance believes this level of activity makes us the fifth largest syndicator, in terms of overall number of transactions in the U.S., as measured by Loan Pricing Corporation (LPC). In addition, we received an agent title on 76 sponsored transactions within the leveraged bank loan market, placing us third on league tables for equity-sponsored leveraged bank loans, as measured by LPC.

In 2000, we syndicated approximately $1.4 billion in commitments. Although we can provide commitments of up to $300 million per transaction, we generally syndicate our ultimate retained position to $25 million or less. As of December 31, 2000, our average retained transaction size was approximately $14 million in commitments and $10 million in fundings.

As of December 31, 2000, Corporate Finance had contractual commitments to finance an additional $1.9 billion to new and existing borrowers, generally contingent on their maintaining specific credit standards. Since we expect many of these commitments to remain unused, the total commitment amounts do not necessarily represent future cash requirements. Corporate Finance does not have any significant commitments to provide additional financing related to nonearning assets.

Real Estate Finance

Real Estate Finance provides secured financing to owners, investors and developers for the acquisition, refinancing and renovation of commercial income producing properties in a wide range of property types and geographic areas. Real Estate Finance serves these markets by offering tailored senior secured debt and junior participating debt structures. Real Estate Finance also opportunistically purchases interests in syndicated debt and selected commercial mortgage-backed bonds. Real Estate Finance is a leading provider of capital to the U.S. vacation ownership industry, providing timeshare resort developers with full life-cycle financing secured by time share receivables and unsold real estate inventory.

Our transactions are secured by a variety of property types including:

offices;

apartments;

retail properties;

industrial properties;

manufactured housing communities;

affordable housing properties;

self storage facilities; and

hotels and vacation ownership units.

Senior secured loan transactions range in size from $5 million to $25 million, with an average transaction size in 2000 of about $10 million. Typical junior secured loan transactions range in size from $2 million to $12 million, with an average transaction size in 2000 of about $4 million. Typical vacation ownership transactions range in size from
$5 million to $50 million, with an average transaction size in 2000 of about $18 million.

Real Estate Finance also periodically invests in affordable housing transactions. These transactions provide tax credits which benefit our consolidated results by lowering our income tax provision.

Real Estate Finance has eight offices throughout the United States as well as offices in Toronto and Mexico City. Real Estate Finance generates new business through our relationships with real estate brokers and through direct calling on prospective borrowers. Real Estate Finance markets our products through the use of trade advertising, direct marketing, newsletters and trade show attendance and sponsorship.

The following table gives additional information about Real Estate Finance:

	As of, or For the Year Ended, December 31,
	2000		1999		1998
	(dollars in millions)
New business volume	$1,242		$1,422		$1,964
Total lending assets and investments	2,766		2,626		1,889
Revenues	296		221		250

Real Estate Finance revenues as a percentage of total Company revenues	14.5	%	13.5	%	17.8	%
Ratio of net writedowns to average lending assets	0.1		0.1		2.9
Ratio of nonearning assets to lending assets	0.6		1.0		0.5

As of December 31, 2000, Real Estate Finance had total lending assets and investments of $2.8 billion, or 15% of Heller’s total lending assets and investments. Of this amount:

about $1.8 billion represents senior secured lending assets and investments; and

about $400 million represents vacation ownership lending assets and investments.

Real Estate Finance new business volume for the year totaled $1.2 billion. New business volume was down from 1999 due to a reduced emphasis on fixed rate originations for the commercial mortgage backed securities market (CMBS).

Real Estate Finance securitized over $600 million of CMBS receivables in two separate transactions, recognizing income totaling $6 million. We did not retain any residual risk in these transactions, as all of the securities and servicing were sold to third parties on a non-recourse basis.

In addition, we participate 50% of most of our junior participating debt originations through an arrangement with institutional investors. The use of syndications has enabled
us to reduce our average individual retained position in this portfolio to approximately
$2 million.

Net writedowns to average lending assets were 0.1% during 2000, unchanged from the prior year. In addition, nonearning assets have remained at or below 1.0% of lending assets for the last three years. Excluding a $40 million writedown recorded on CMBS assets in 1998, the ratio of net writedowns to average lending assets was 0.3% for Real Estate Finance during that period.

Real Estate Finance’s credit philosophy emphasizes selecting properties that generate stable or increasing income cash flow streams, have strong asset quality and proven sponsorship with defined business plans. For vacation ownership transactions, our credit philosophy considers the developer’s business objectives and capital needs, the competitive position of the resort development, mortgage servicing capabilities, receivable performance and the developer’s financial strength and timeshare experience. Our credit philosophy for junior secured financings considers the strength and track record of the property developer, the supply and demand dynamics of the particular market and the competitive strengths of the subject real estate.

Real Estate Finance’s lending assets and investments are distributed as follows:

Property Types

	2000		1999
General purpose office buildings	31	%	27	%
Apartments	17		14
Vacation ownership units	16		14
Retail properties	11		18
Industrial properties	9		7
Hotels	7		6
Manufactured housing	2		5
Senior housing	2		2
Self storage facilities	1		3
Loan Portfolios	—		1
Other	4		3

	100	%	100	%

Geographic Areas

	2000		1999
California	26	%	17	%
Southwest	18		17
Florida	9		10
Midwest	8		7
Southeast	6		8
Mid-Atlantic States	6		6
New England	4		5
West	3		5
New York	3		4
Other	17		21

	100	%	100	%

At December 31, 2000, Real Estate Finance maintained contractual commitments to finance an additional $524 million to new and existing borrowers, generally contingent upon their maintaining specific credit standards. Since we expect many of these commitments to remain unused, the total commitment amounts do not necessarily represent future cash requirements. Real Estate Finance does not have any significant commitments to provide additional financing related to nonearning assets.

Leasing Services

Leasing Services is made up of three distinct business units:

(1)

Global Vendor Finance, which provides financing programs domestically and in important overseas markets for manufacturers and their channel partners;

(2)

Commercial Equipment Finance, which provides loans and lease financing to leading middle market companies and experienced operators of proven franchise concepts; and

(3)

Capital Finance, which provides financing and leasing for industry specific assets through direct investments, joint ventures and institutional partnerships.

Global Vendor Finance. We formed Global Vendor Finance by combining our existing Vendor Finance unit with the Dealer Products Group acquired late in 1998. Primary locations for vendor leasing are the United States, the United Kingdom and Canada, with smaller operations in continental Europe, Mexico, Hong Kong and Singapore.

Global Vendor Finance provides customized sales financing programs that enable vendors and manufacturers in commercial, industrial and information and technology markets to offer financing and leasing options to their customers. The primary products we offer are direct finance leases, operating leases and loans. These financing programs may be offered on either a direct, private label or joint venture basis. The primary equipment types we finance are computer equipment, software, machine tool equipment, plastics equipment, graphic arts equipment and transportation equipment. Individual transaction sizes within these programs range from $1,000 to $10 million and terms generally range from 24 months to eight years.

Global Vendor Finance’s approach to lending balances the financial strength of the borrower, the value of the underlying collateral and the extent of recourse provided by the vendor. Middle and large ticket leasing transactions are characterized by the high credit quality performance of the portfolio as evidenced by lower levels of nonearning assets and writedowns. These transactions also have correspondingly lower yields. Small ticket leasing transactions have higher margins but also have correspondingly higher levels of writedowns and nonearning assets.

During 2000, Global Vendor Finance repositioned its business by exiting several non-strategic regional vendor programs and committing significant resources to attracting and launching new technology based programs with significant global partners. As part of this strategy shift, the unit has created a global web-enabled lease origination capability, which will be utilized beginning in 2001 and continues to make significant investments to build out its global origination platform. We believe that these strategic changes and investments will improve returns for the business unit in future periods.

Global Vendor Finance has created and is in the process of rolling out to its customers a completely electronic, internet based approach to applying for and documenting transactions. We have applied for our first patent for this business.

Commercial Equipment Finance. Commercial Equipment Finance has broad, national and international access to the equipment finance marketplace through 13 domestic offices. We provide general equipment term loan and lease financings directly to a diverse group of middle market companies. They use the financings for:

expansions;

acquisitions;

turnkey land, building and equipment financing;

remodeling;

refinancing;

replacement or modernization of equipment; and

refinancing of existing equipment obligations.

We believe that our emphasis on direct origination provides us with a competitive advantage of stronger customer relationships and enables us to generate repeat business.

In addition to direct origination, we generate business through traditional broker and other intermediary channels. Through our broad market access, we also generate new business referrals for other business units of the Company, particularly Corporate Finance. Individual transaction sizes range from $1 million to $40 million, with an average transaction size of $6 million in 2000. A typical borrower/lessee is a U.S. business with annual revenues of at least $35 million. Generally, the equipment serving as collateral for the financing is essential to the operations of the borrower and the amount financed is generally not a substantial part of the borrower’s capital structure.

Commercial Equipment Finance’s approach to lending concentrates on the cash flow of the borrower, the importance and/or value of the equipment to the borrower’s overall operations and the relative strength of the borrower’s balance sheet and capital structure.

In 1999, we launched the Franchise Finance unit, a specialty group within Commercial Equipment, to expand and focus our existing efforts to meet the financing needs of strong, experienced operators of proven franchise concepts. This unit reinforces our commitment to franchise lending.

The Special Purpose Property product was also launched in 1999 as part of Commercial Equipment Finance. This product combines our asset based lending expertise with our traditional equipment and real estate financing to provide one financing source for real property and equipment. Our Special Purpose Property specialists provide secured debt and synthetic lease products for end-user and owner-occupied properties to middle market companies in a wide variety of industries.

Expanding our reach into international markets, Commercial Equipment Finance is currently pursuing equipment-leasing opportunities in the United Kingdom through a partnership agreement with a major lending institution. Formalized in September 2000, this five-year agreement provides us with an immediate, established market presence in the United Kingdom at minimal cost.

Capital Finance. Capital Finance provides structured, secured financing and equipment leasing for transactions in the United States and overseas. Capital Finance was initially comprised of our 10 year-old Aircraft Finance group. In the past two years, Capital Finance has established the Entertainment Media and Technology group (April 1999) and the Technology/Venture Finance group (June 2000).

Our Aircraft Finance group, a niche competitor in the commercial aircraft and aircraft engine finance industries, provides financing through operating leases and senior and junior secured loans, on both new and used equipment. Our clients are typically mid-tier foreign or domestic airlines. We have developed a reputation for responsiveness on single investor transactions, which generally involve one aircraft with lease terms of three to seven years. In addition, our reliability and industry knowledge have made us a frequently desired participant in larger financings by other aircraft lessors.

Our Entertainment Media and Technology group provides innovative and highly structured leasing alternatives to emerging and converging media, entertainment, technology and other selected companies.

Our Technology/Venture Finance group offers leasing products to target emerging growth companies in the information technology, technology and biotech fields that:

are currently backed by well-regarded venture capitalists or professional investors;

have a high growth potential based on both target market and product/service offering; and

have a complete and experienced management team.

Capital Finance has credit strategies, which match attributes of specific markets. These generally include cash flow based financial analysis for EMX, asset life-cycle evaluation for Aircraft Finance and an enterprise value creation approach for Venture Finance.

Capital Finance’s individual transaction sizes range from $1 million to $50 million, with an average transaction size of $8 million in 2000.

The following table sets forth certain information regarding Leasing Services, on a combined basis:

	As of, or For the Year Ended, December 31,
	2000		1999		1998
	(dollars in millions)
New business volume	$2,716		$2,298		$1,634
Total lending assets and investments	4,434		3,428		2,840
Revenues	409		341		231
Leasing Services revenues as a percentage of total Company revenues	20.0	%	20.8	%	16.4	%
Ratio of net writedowns to average lending assets	0.7		0.5		0.1
Ratio of nonearning assets to lending assets	0.8		0.9		1.0

The ratio of net writedowns to average lending assets was 0.7% at December 31, 2000, a modest increase from 0.5% in 1999. Nonearning assets to lending assets of 0.8% as of December 31, 2000 represents a modest improvement over 1999. The low ratio of nonearning assets to lending assets of 1.0% or lower for each of the past three years demonstrates the strong credit quality of the Leasing Services portfolio.

Leasing Services’ new business volume for the year totaled $2.7 billion, an increase of over $400 million, or 18%. The increase is primarily attributable to increases in new business volume of Capital Finance and Commercial Equipment Finance.

In all of its business units, Leasing Services assesses residual value risk associated with its ownership interest in leased assets and proactively manages its exposure on assets at the end of lease terms. All residual values used in structuring equipment leases are approved by a remarketing unit, which reports to the Chief Risk and Credit Officer of the Company. Individuals within the remarketing unit continuously research secondary market values to establish current residual values, estimate future residual values and mark industry trends.

Leasing Services distributes a portion of its assets through securitizations and syndications. Through these capital markets capabilities, we are able to provide broader market coverage and better service to clients, while managing borrower and industry concentrations. During 2000, Leasing Services securitized $137 million of its assets, generating a gain of approximately $1 million.

As of December 31, 2000, Leasing Services’ lending assets and investments totaled $4.4 billion, or 24% of Heller’s total lending assets and investments, up from $3.4 billion, or 20% of Heller’s total as of December 31, 1999. Within Leasing Services, the strongest growth in lending assets and investments was within our Capital Finance portfolio.

The Leasing Services portfolio consisted of 34 industry classifications at December 31, 2000. The transportation services industry, which includes Aircraft Finance, represented 20% of Leasing Services total lending assets, while the computer industry represented 14%. No other industry represented more than 10% of total lending assets for Leasing Services at December 31, 2000.

At December 31, 2000, Leasing Services maintained contractual commitments to finance an additional $444 million to new and existing borrowers, generally contingent upon their maintaining specific credit standards. Since we expect many of these commitments to remain unused, the total commitment amounts do not necessarily represent future cash requirements. Leasing Services does not have any significant commitments to provide additional financing related to nonearning assets.

Healthcare Finance

Healthcare Finance was formed when we acquired HCFP in July 1999. We combined our existing healthcare finance activities in cash flow and real estate lending with those of HCFP, and believe we became the leading financing provider to small and middle-market healthcare companies nationally.

Healthcare Finance offers asset-based, collateralized cash flow and secured real estate financing to healthcare providers, with a primary focus on clients operating in sub-markets of the healthcare industry, including long-term care, home healthcare, physician practices, pharmacies, mental health providers and durable medical equipment suppliers. Healthcare Finance provides financing to its clients through i) revolving lines of credit secured by, and advanced against, accounts receivable, and ii) term loans secured by real estate, accounts receivable or other assets. Healthcare Finance clients use its products to address their working capital needs and to finance healthcare facility acquisitions and expansions.

Healthcare Finance targets small and middle-market healthcare providers with financing needs in the $100,000 to $30 million range in the targeted healthcare sub-markets. The average asset based lending transaction size in 2000 was approximately $3 million. The average cash flow lending transaction size was about $16 million and the average real estate lending transaction size was approximately $10 million in 2000.

Healthcare Finance has developed low cost means of marketing its services on a nationwide basis to its targeted healthcare sub-markets. Healthcare Finance primarily markets its services by telemarketing to prospective clients, advertising in industry specific periodicals and participating in industry trade shows. To a lesser extent, Healthcare Finance markets its services by developing referral relationships with accountants, lawyers, venture capital firms, billing and collecting firms and investment banks.

The following table gives additional information about Healthcare Finance:

	As of, or For the Year Ended, December 31,
	2000(1)		1999(1)		1998(1)
	(dollars in millions)
New business volume	$ 574		$362		$250
Total lending assets and investments	1,563		971		217
Revenues	174		63		14
Healthcare revenues as a percentage of total Company revenues	8.5	%	3.8	%	1.0	%
Ratio of net writedowns to average lending assets	0.3		—		—
Ratio of nonearning assets to lending assets	1.3		0.7		—

(1)	Includes existing healthcare activities of Real Estate Finance and Corporate Finance.

As of December 31, 2000, Healthcare Finance had total lending assets and investments of nearly $1.6 billion, or 8% of Heller’s total lending assets and investments. Healthcare Finance new business volume for the year totaled $574 million, representing an increase of 59% over the prior year.

Nonearning assets to lending assets remained relatively low at 1.3% as of December 31, 2000. In addition, the ratio of net writedowns to average lending assets totaled 0.3% in 2000 after recording negligible net writedowns in 1999 and 1998. This strong portfolio performance results from Healthcare Finance’s industry expertise and disciplined approach to credit and portfolio management.

Healthcare Finance provides financing based upon an analysis of the prospective client’s financial condition and strategic position, including a review of financial statements, legal documentation and operational matters. Our assessment also includes a detailed examination of a prospective client’s accounts receivable, sub-industry reimbursement issues, accounts payable, billing and collection systems and procedures, management information systems and real and personal property and other collateral.

As of December 31, 2000, Healthcare Finance had contractual commitments to finance an additional $87 million to new and existing borrowers, generally contingent on their maintaining specific credit standards. Healthcare Finance does not have any significant commitments to provide additional financing related to nonearning assets.

Small Business Finance

In February 2001, we announced a strategic decision to discontinue the origination of SBA loans through our Small Business Finance unit. Increased competition from banks focused on capturing small business customers by cross-selling a range of financial products, such as cash management and depository banking services in addition to SBA loans, have made the pricing and returns on this product less attractive. Our decision to stop the origination of new business in this market will permit us to re-deploy capital and other resources to our other businesses where we see better growth prospects that, we believe, will enhance shareholder value. Despite ceasing origination in Small Business Finance, we will fund existing commitments and intend to continue servicing the Small Business Finance portfolio in accordance with our customary business practices. We expect to record a one time non-operating pre-tax charge of less than $15 million for severance and leasehold related costs in the first quarter of 2001 as a result of this decision.

Small Business Finance has provided long-term financing to small businesses primarily in the manufacturing, retail and service sectors for:

facility purchases, construction or refinancing;

business or equipment acquisition;

working capital; and

debt refinancing.

Our major product offerings have been SBA 7(a) loans, which are guaranteed up to 80% by the SBA, and SBA 504 loans, which are senior to an accompanying SBA loan. We also have originated transactions without credit support from the SBA.

Our portfolio is 76% concentrated among five states including Arizona, California, Texas, Florida and Illinois, and is geographically diversified within these states. We have diversified our portfolio by industry type, with concentrations of 15% in transportation services and 11% in miscellaneous consumer services at December 31, 2000. No other industry represented more than 10% of our portfolio.

Small Business Finance loans are generally for amounts up to $4 million, have an average size of approximately $500,000 and have a contractual maturity ranging from five to 25 years. Small Business Finance’s $1.4 billion in lending assets and investments as of December 31, 2000, represented 8% of the Company’s portfolio. At December 31, 2000, 79% of our portfolio was originated under SBA lending programs.

The following table gives certain information regarding Small Business Finance:

	As of, or For the Year Ended, December 31,
	2000		1999		1998
	(dollars in millions)
New business volume	$ 481		$ 703		$ 547
Total lending assets and investments	1,440		1,312		1,013
Revenues	144		120		98
Small Business Finance revenues as a percentage of Company total revenues	7.1	%	7.3	%	7.0	%
Ratio of net writedowns to average lending assets	0.9		0.5		0.4
Ratio of nonearning assets to lending assets	4.5		3.3		3.3

New business volume of Small Business Finance totaled $ 481 million in 2000 and represented a 32% decrease from the prior year. The decrease in new business volume from the prior year was the result of our maintaining pricing disciplines in a highly competitive lending environment during 2000.

The ratio of net writedowns to average lending assets was 0.9% at December 31, 2000, up from 0.5% and 0.4% for 1999 and 1998, respectively. Net writedowns have remained below 1.0% of average lending assets for each of the past three years.

Our Small Business Finance portfolio at December 31, 2000 consists of approximately 3,600 individual loans, providing diversified exposure. Nonearning assets represented 4.5% of this portfolio. Of our nonearning assets, approximately 55% were the guaranteed portions of SBA 7(a) loans, which are held until a liquidation is complete and the SBA repurchases the loan.

Small Business loans have been underwritten based on the analysis of a prospective borrower’s cash flow, the use of independent valuations for collateral and a review of management. Loans are generally secured by real estate and equipment, with additional collateral in the form of other business assets, personal residences and, in many instances, personal guarantees.

We have developed and demonstrated the ability to sell both the guaranteed and unguaranteed portions of SBA 7(a) and 504 loans in the secondary market. We sold $175 million in guaranteed SBA 7(a) and 504 loans during 2000.

At December 31, 2000, Small Business Finance maintained contractual commitments to finance an additional $34 million to new and existing borrowers, generally contingent upon their maintaining specific credit standards. We do not have any significant commitments to provide additional financing related to nonearning assets.

International Factoring and Asset Based Finance Segment

International Group, the Heller subsidiary that manages the International Factoring and Asset Based Financing Segment, is active in the following product areas:

working capital finance;

factoring and receivables management services;

asset based financing;

acquisition financing;

leasing and vendor financing; and

trade financing.

International Group has a significant presence in factoring and asset based financing, primarily in Europe. We have had subsidiaries and joint ventures in many international markets for more than 30 years. International Group currently consists of five consolidated subsidiaries and eight joint ventures. These subsidiaries and joint ventures operate in 17 countries in Europe, Asia/Pacific and Latin America. International Group has also provided the platforms within various foreign markets from which our Global Vendor Finance operation has begun to expand its reach into foreign markets.

The largest of our consolidated subsidiaries is Factofrance, which is the leading factoring company in France. Factofrance’s traditional clients are small to mid-sized, high-growth companies that utilize factoring to finance their working capital needs. Factofrance offers a full range of both domestic and international factoring services, including financing, credit insurance and management and collection of accounts receivables. In 2000, Factofrance had factoring volume of over FRF 82 billion (or approximately $11.5 billion), representing an increase of 10% over 1999 volume of nearly FRF 75 billion (or approximately $12.0 billion).

Factofrance utilizes a credit scoring system and a rating system for making credit decisions. The scoring system involves many criteria including company size, industry, selected financial information and ratio analysis. In addition to the scoring system, a rating system is used for requests for credit lines above specified limits. The rating system is used to authorize credit limits for individual and global lines of credit. Credit approval decisions are made by analysts, credit managers or by committee according to delegated authorities.

Factofrance is re-insured by a third-party insurer for customer credit lines above specified limits. This credit insurance enables Factofrance to more effectively manage credit exposures. Insured risks generally require the approval of the insurance provider and are insured at either a 50% or 80% level, depending on the size of the risk.

During 1999 and 2000, Factofrance has reduced its ownership position in certain non-consolidated joint ventures with French banking institutions to provide factoring services. This shift is consistent with Factofrance’s strategy of originating a greater degree of volume on a direct origination basis.

In addition to its Paris headquarters, Factofrance has eight regional sales offices, which market its services and cover local networks of business referral sources from brokers or banks. In recent years, the direct marketing approach has gained in importance and is now the main source of business for Factofrance. The company engages in press and television advertisement to increase brand awareness and support direct marketing efforts.

Factofrance’s consolidated receivables were FRF 16.4 billion (or approximately $2.4 billion) at the end of 2000. The company’s receivables portfolio is well diversified both in terms of exposure to specific industries and individual customers. The portfolio is diversified among over 30 industries, with a 13% concentration in the general industrial machinery industry. No other industry represented more than 10% of the total. In addition, the company has very effective control procedures in place to manage its risks, whether client or customer related.

The largest of our joint ventures is NMB-Heller Holding N.V., which operates in 8 countries, primarily Holland, the United Kingdom and Germany. NMB-Heller Holding N.V. principally provides secured cash flow and asset based lending and factoring services, structured to meet local area financing needs and opportunities. NMB-Heller Holding N.V. generates business through local shareholder referral programs, financial intermediaries and through direct solicitation. NMB-Heller Holding N.V. accounted for 69% of our investment in international joint ventures at December 31, 2000. Our investment in NMB-Heller Holding N.V. totaled $148 million and $129 million at December 31, 2000 and 1999, respectively. NMB-Heller Holding N.V. had total receivables of $3.4 billion and $2.9 billion at December 31, 2000 and 1999, respectively, and revenues of $227 million and $181 million for the years then ended. The Holland based subsidiary of NMB-Heller Holding N.V. accounted for 53% of these receivables and 57% of these revenues for 2000.

The following table provides certain information regarding the International Factoring and Asset Based Financing segment:

	As of, or For the Year Ended, December 31,
	2000		1999		1998
	(dollars in millions)
Lending assets and investments of consolidated subsidiaries:
France	$ 2,377		$ 2,410		$ 2,143
Latin America (1)	143		204		74
Asia/Pacific	141		189		194
Other	25		22		19

	2,686		2,825		2,430
Investments in international joint ventures:
Europe	187		187		194
Asia/Pacific	17		17		16
Latin America (1)	11		11		21

	215		215		231

Total lending assets and investments	$ 2,901		$ 3,040		$ 2,661

Factoring volume of consolidated subsidiaries:
France (2)	$ 11,535		$12,014		$10,684
Latin America (1)	1,138		936		346
Asia/Pacific	469		623		573

	$ 13,142		$13,573		$11,603

Revenues of consolidated subsidiaries:
France	$ 220		$ 182		$ 183
Latin America (1)	28		26		8
Asia/Pacific	16		18		21
Other	5		5		2

	269		231		214
Income of international joint ventures:
Europe	37		36		30
Asia/Pacific	2		1		—
Latin America (1)	—		(3	)	—

	39		34		30

Total international revenues	$ 308		$ 265		$ 244

International Group revenues as a percentage of total Company revenues	15.1	%	16.2	%	17.3	%
Ratio of net writedowns to average Lending assets	0.4		0.1		0.2
Ratio of nonearning assets to lending assets	1.4		1.2		1.1

(1)	Reflects the consolidation of Heller Sud Servicios Financieros in 1999 due to our obtaining economic control of this Argentina subsidiary (formerly 50% owned).

(2)	Factoring volume at Factofrance in local currency totaled FRF 82 billion in 2000, FRF 75 billion in 1999, and FRF 63 billion in 1998.

We believe that our International Group subsidiaries and joint ventures provide a solid base for consistent growth in international earnings. They also provide us with the opportunity to meet the international financing needs of Heller’s domestic client base. At December 31, 2000, International Group had total lending assets and investments of $2.9 billion, or 15% of Heller’s total lending assets and investments. In 2000, International Group had total revenues (including Heller’s share of net income from international joint ventures) of $308 million, or 15% of Heller’s total revenues.

We continue to opportunistically develop our international operations through mergers, joint ventures and acquisitions. We have broad, worldwide access to mid-sized and small businesses with operations in 17 countries outside the United States. Each of our subsidiaries and joint ventures operates independently, with its own well-developed methods of originating business. The majority of our international joint ventures are self-financed. We manage our international investments through offices located in London and Chicago. Each subsidiary and joint venture has its own well-developed credit philosophy, risk management policies and procedures and portfolio management processes. We monitor our subsidiaries and joint ventures through participation on their boards of directors, credit committees and other executive and administrative bodies.

Sales and Marketing

Our marketing efforts include reinforcing our national brand building marketing campaign, Straight Talk, Smart Deals ^SM , in the marketplace.

Heller originates transactions in the United States utilizing a dedicated sales force of over 300 employees throughout our 56 domestic office locations. We originate transactions internationally through a network of wholly-owned subsidiaries and joint venture commercial finance companies in 23 countries outside the United States. Our sales people have industry-specific experience that enables them to effectively structure commercial finance transactions to companies in the industries and markets we serve.

Our sales force originates business through a combination of:

relationships with a wide variety of private equity investors, business brokers, mortgage brokers, investment bankers, and various intermediaries and referral sources;

relationships with manufacturers, dealers and distributors;

direct calling on prospective borrowers;

relationships with financial institutions; and

relationships with web-based customers.

We have invested in expanding and broadening our market coverage in several of our businesses, particularly Corporate Finance, Leasing Services and Healthcare Finance. We expect these investments to enhance our ability to generate new transactions and revenue growth.

We design the structure of our sales force compensation to encourage:

profitable new business development;

client retention;

credit quality;

solid pricing margins; and

cross-referral of business opportunities to other business units.

Our CrossLink Program, which compensates sales force members and all other employees for the generation of cross-referral business volume, has been enhanced and has built momentum for cross-referral activities. During 2000, cross-referral activities produced commitments of nearly $900 million.

We also market our products and services through the use of:

general market advertising;

trade advertising;

direct mail;

email;

web sites;

public relations;

newsletters;

trade show attendance and sponsorship;

participation in educational seminars; and

a variety of other market and industry-specific events.

We maintain several proprietary databases for the purpose of generating targeted, customized direct marketing campaigns and for tracking relationship history with certain clients and prospects. We regularly conduct client satisfaction surveys, post-closing surveys and other market research studies designed to assess our competitive position and to identify unfulfilled needs of our clients and prospects.

We are developing and expanding our eCommerce capabilities in an effort to realize new business opportunities and processing efficiencies, including:

new origination channels;

greater geographic penetration;

internet based alliances and partnerships;

enhanced ability to manage vendors and providers of professional services, such as law firms;

sales enabling tools for sales force efficiency;

increased automation of loan application and credit approval processes for small ticket financings; and

self-service enhancements for customers and employees.

We have registered a number of domestic and foreign domain names that we are using, or may use in the future, in connection with our eCommerce strategy, the two most important of which are hellerfin.com and hellerfinancial.com.

Competition

Heller’s markets are highly fragmented and extremely competitive. They are characterized by competitive factors that vary by product and geographic region. Our competitors include:

other commercial finance companies;

national and regional banks and thrift institutions;

investment banks;

leasing companies;

investment companies; and

manufacturers and vendors.

Competition from traditional competitors is increasingly being impacted by a slowdown in the U.S. economy, industry consolidation, increased emphasis on liquidity and widening credit spreads, with greater dispersion of credit spreads for lower rated credits. On a relative basis, we believe we are well positioned within the commercial finance marketplace to contend with these factors.

We compete primarily on the basis of pricing, terms, structure and service. Our competitors often seek to compete aggressively on the basis of these factors. We may lose market share to the extent we are unwilling to match our competitors’ pricing, terms or structure in order to maintain our spreads or to maintain our credit discipline. To the extent that we match competitors’ pricing, terms or structure, we may experience decreased spreads and/or increased risk of credit losses. Many of our competitors are large companies that have substantial capital, technological and marketing resources. Some of these competitors are larger than Heller and may have access to capital at a lower cost than we do. Further, the size and access to capital of certain of our competitors are being enhanced by the recent surge in consolidation activity in the commercial and investment banking industries.

Our competitors include businesses that are not affiliated with bank holding companies and, therefore, are not subject to the same federal regulation of permissible activities to which we (as an affiliate of Mizuho) are subject. In addition, some of our bank-affiliated competitors have applied (or are now able to apply) to the Board of Governors of the Federal Reserve System to become “financial holding companies.” Under the Financial Services Modernization Act of 1999 (more commonly known as the Gramm-Leach-Bliley Act), a financial holding company and its affiliates may engage in a broader range of banking and other commercial activities than a traditional bank holding company. All of these competitors, whether unaffiliated with a bank or affiliated with a financial holding company, may be able to engage in potentially profitable activities in which we are currently prohibited from engaging.

Regulation

Bank Holding Company Act

Mizuho, the indirect majority owner of Heller, is a bank holding company within the meaning of the Bank Holding Company Act of 1956 and is registered as such with the Board of Governors of the Federal Reserve System. As a result of its ownership position, we are subject to the Bank Holding Company Act and are subject to examination by the Federal Reserve .

In general, the Bank Holding Company Act limits the activities in which we may engage to those the Federal Reserve has generally determined to be “so closely related to banking . . . as to be a proper incident thereto.” The Bank Holding Company Act generally requires the approval of the Federal Reserve before we may engage in such activities. To obtain the Federal Reserve’s approval, Mizuho must submit a notice that provides information both about the proposed activity or acquisition and about the financial condition and operations of Mizuho and Heller. The Bank Holding Company Act will continue to apply to the Company for as long as Mizuho holds, through Fuji Bank, 25% or more of any class of our voting stock or otherwise is deemed by the Federal Reserve to control our management or operations. Our current business activities either constitute permitted activities or have received the Federal Reserve’s express approval.

Japanese Banking Law

Mizuho, as a Japanese bank holding company, is also required to comply with the Japanese Banking Law. During 1998, the Banking Law was amended. The Banking Law limits the type of subsidiaries and affiliates in which a Japanese bank may invest to those that conduct “eligible businesses.” Eligible businesses generally include banks, securities firms, insurance companies, administrative businesses and financial companies. Non-eligible business investments are permitted if acquired as collateral, although disposition of such businesses is required within one year as a general rule. Establishment of any subsidiary requires the prior approval of the Financial Services Agency, an agency of the Cabinet Office. A subsidiary is defined as a corporation in which there is ownership of more than 50% of the voting shares.

Heller intends to use its best efforts to cooperate with Mizuho in Mizuho’s compliance with the new statute, provided that such cooperation would not, in the judgment of Heller’s management, materially and adversely affect Heller’s business operations. We do not believe that our cooperation has had or will have a material adverse effect on our current business operations or on the achievement of our intended business and financial goals.

Small Business Act

SBA loans that we originated, and certain investments that we hold, are subject to regulation under the Small Business Act and the Small Business Investment Act of 1958, as amended, and may be subject to the same regulations by certain states as are other commercial finance operations. The federal statutes and regulations specify the types of loans and loan amounts which are eligible for the SBA’s guaranty as well as the servicing requirements imposed on the lender to maintain SBA guarantees.

Other

Our operations are subject, in certain instances, to supervision and regulation by state and federal governmental authorities. They may also be subject to various laws and judicial and administrative decisions imposing various requirements and restrictions, which, among other things:

regulate credit granting activities;

establish maximum interest rates, finance charges and other charges;

require disclosures to customers;

restrict foreign ownership or investment;

govern secured transactions; and

set collection, foreclosure, repossession and claims handling procedures and other trade practices.

Although most states do not regulate commercial finance, certain states impose limitations on interest rates and other charges and on certain collection practices and creditor remedies. They may also require licensing of lenders and financiers and adequate disclosure of certain contract terms. We are also required to comply with certain provisions of the Equal Credit Opportunity Act applicable to commercial loans. Additionally, we are subject to regulation in those countries in which we have operations and in most cases have been required to obtain central governmental approval before commencing business.

In the judgment of management, the above and other existing statutes and regulations have not had a material adverse effect on our business. However, it is not possible to forecast the nature of future domestic or foreign legislation, regulations, judicial decisions, orders or interpretations nor their impact upon our future business, financial condition, results of operations or prospects.

Employees and Employer of Choice Initiative

As of December 31, 2000, Heller had 2,514 employees globally (not including employees of its joint ventures). Factofrance has entered into collective bargaining agreements with employees who are union delegates of national unions that are customary and/or required under French law. In addition, Factofrance applies the compulsory national collective bargaining agreement for the financial services industry. With the exception of such agreements, we are not a party to any collective bargaining agreements.

During 1999, Heller implemented its Employer of Choice (EOC) initiative in an effort to gain recognition by its competitors, clients and employees as an exceptional employer—an industry and market leader in attracting, developing and retaining employees. During 2000, we established an EOC Steering Committee to oversee the implementation of the EOC plan and to monitor the success of the program. With insight from Heller employees and external research, the Steering Committee has made significant progress in accomplishing our goal of becoming and remaining an Employer of Choice, as evidenced by Chicago magazine’s recent listing of Heller in the “Top 25 Best Places to Work” among employers in the Chicagoland area.

Enterprise Risk Management

We have adopted an Enterprise Risk Management (ERM) approach to enhance and to interpret our measurement, reporting and monitoring of all risks, including operational risk. ERM involves an enterprise-wide risk management process, recognizing the inter-dependency of risk and the need to manage this at a company-wide level.

ERM is an integrated approach, its framework encompassing three components:

(1)

risk awareness;

(2)

risk management; and

(3)

risk reporting.

Under the ERM framework, Heller broadly defines the principal types of risk across our enterprise to be:

credit risk;

asset/liability risk (including market risk exposures to changes in interest rates and foreign exchange rates as well as liquidity risk); and

operational risk.

We consider the proper management of risk, across the enterprise, essential to conducting our business and to maintaining profitability. Accordingly, we have designed our risk management systems and procedures to identify and analyze our risks. We believe we have developed appropriate policies and operational systems designed to monitor each of these risks and limit their impact on our businesses.

Credit Risk Management

We manage credit risk through:

underwriting procedures;

centralized approval of individual transactions; and

active portfolio and account management.

We have developed underwriting procedures for each business line that enable us to assess a prospective borrower’s ability to perform in accordance with established loan terms. These procedures include:

analyzing business or property cash flows and collateral values;

performing financial sensitivity analyses; and

assessing potential exit strategies.

For transactions we originate with the intent of reducing our ultimate retained asset size, we assign a risk rating prior to approval of the underlying transaction that reflects our confidence level, prior to funding, in syndicating the proposed transaction. Each business unit has a Senior Credit Officer who reports directly to our Chief Risk and Credit Officer and who reviews and approves financing and restructuring transactions that exceed designated amounts. Larger transactions require approval of our Chief Risk and Credit Officer, or his deputy or a centralized credit committee comprised of our Chairman, Chief Operating Officer, Chief Risk and Credit Officer, Deputy Chief Credit Officer and Chief Financial Officer. Our Chief Risk and Credit Officer conducts a quarterly portfolio review of each business unit’s significant assets.

We manage our portfolio by monitoring transaction sizes as well as diversification according to:

industry;

geographic area;

property type; and

identity of borrower.

Through these practices, management identifies and limits exposure to unfavorable risks and seeks favorable financing opportunities. We use (1) loan grading systems to monitor the performance of loans by product category and (2) an overall risk classification system to monitor the risk characteristics of the total portfolio. These systems generally consider:

debt service coverage;

the relationship of the loan to underlying business or collateral value;

industry characteristics;

principal and interest risk; and

credit enhancements such as guarantees, irrevocable letters of credit and recourse provisions.

When an account experiences financial difficulties, professionals who specialize in managing workout situations are brought in to more closely monitor the account and formulate strategies to optimize and accelerate the resolution process. An independent loan review function also performs periodic reviews to validate the loan grading of assets and provides its findings to senior management and to our Board’s Audit Committee. Our Internal Audit Department (IAD), which is independent of operations, performs reviews of credit management and operation processes. IAD also reports its findings to senior management and to our Board’s Audit Committee.

Asset/Liability Management

We actively measure and quantify (1) interest rate risk, (2) foreign exchange risk and (3) liquidity risk resulting from normal business operations and derivatives hedging activity. We use derivatives as an integral part of our asset/liability management program. We use these derivatives to:

diversify sources of funding;

alter interest rate exposure arising from mismatches between assets and liabilities; and

manage exposure to fluctuations in foreign exchange rates.

We are not an interest rate swap dealer nor are we a trader in derivatives. We do not use derivative products for the purpose of generating earnings from changes in market conditions.

Before entering into a derivative transaction, we determine that a high correlation exists between the change in value of a hedged item and the value of the derivative. When we execute each transaction, we designate the derivative to specific assets or pools of assets or liabilities. After the inception of a hedge transaction, our asset/liability managers monitor the effectiveness of derivatives through an ongoing review of the amounts and maturities of assets, liabilities and swap positions. They report this information to our Financial Risk Management Committee (the FRMC), whose members include our Chairman, Chief Operating Officer, Chief Risk and Credit Officer, Chief Financial Officer and Treasurer. The FRMC approves the direction we will take with respect to our financial risk position and regularly reviews interest rate sensitivity, foreign exchange exposures, funding needs and liquidity. We regularly report these positions and the related FRMC activities to the Board of Directors and our Board’s Executive Committee.

Interest Rate Risk Management. We regularly measure and quantify our sensitivity to changes in interest rates in terms of our two primary risks of potential loss: (1) basis risk and (2) gap risk. Basis risk is the exposure created from the use of different interest rate indices to re-price assets versus liabilities, such as prime based assets funded with commercial paper liabilities. Gap risk is the exposure created from the re-pricing or maturity characteristics of on and off-balance sheet assets versus the re-pricing or maturity characteristics of on and off-balance sheet liabilities.

We use various sensitivity analysis models to measure our exposure to increases or decreases in interest rates on net income. We perform these analyses to ensure that our exposure to any significant adverse effect of change in interest rates is limited to that approved by the Board of Directors and the FRMC. The FRMC reviews the results of these models monthly.

Assuming our balance sheet and off-balance sheet positions were to remain constant and no actions were taken to alter the existing interest rate sensitivity at December 31, 2000 and 1999, a hypothetical immediate 100 basis point parallel shift in yield curves would affect net income by less than 0.7% and 0.4%, respectively, over a six month horizon.

Additionally, if our balance sheet and off-balance sheet positions were to remain constant and no actions were taken to alter the existing prime/commercial paper exposure existing at December 31, 2000 and 1999, a 30 basis point compression in the existing basis would alter net income by approximately 1.0% and 1.3% over a twelve month horizon.

We believe that the above interest rate sensitivity analyses comply with the SEC’s Quantitative Disclosure Rules About Market Risk. Certain limitations are inherent in the above income simulation models. The models assume that changes in interest rates are reflected uniformly across all yield curves. The models do not adjust for potential changes in credit quality, size and balance sheet composition or other business developments over the period being measured which could affect net income. Although our models provide an indication of our sensitivity to interest rate changes at a particular point in time, we can give no assurances that actual results would not differ materially from the potential outcomes simulated.

Interest rate swaps are our primary tool for financial risk management. These instruments enable us to match more closely the interest rate and maturity characteristics of our assets and liabilities. As such, we use interest rate swaps to:

change the characteristics of fixed rate debt to that of variable rate debt;

alter the characteristics of specific fixed rate asset pools to more closely match the interest rate terms of the underlying financing; and

modify the variable rate basis of a liability to more closely match the variable rate basis used for variable rate receivables.

At December 31, 2000, we had nearly $7 billion in notional amount of interest rate swap and basis swap agreements with commercial banks and investment banking firms.

We also utilize interest rate futures to hedge the interest rate risk of a portion of our receivables portfolio. At December 31, 2000 we held 2-year, 5-year and 10-year interest rate futures contracts with equivalent notional amounts of $83 million, $64 million and $187 million.

Heller’s underlying business activities remain substantially unchanged from 1999 and are not expected to substantially change in 2001. Interest rate risk remains a primary market risk exposure that we will continue to manage. Our implementation of Financial Accounting Standard No. 133, Accounting for Derivatives and Hedging Activities, will modestly affect how we manage our interest rate exposure in 2001. See also Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Accounting Developments for more information. We may utilize certain other types of instruments, in addition to interest rate swaps and futures, to hedge interest rate risk in 2001.

Foreign Exchange Risk Management. We invest in and operate commercial finance companies throughout the world. Over the course of time, reported results from our operations and investments in foreign countries may fluctuate in response to exchange rate movements in the U.S. dollar. While our Western European operations and investments represent our largest areas of activity, reported results will be influenced to a lesser extent by the exchange rate movements in the currencies of certain countries in Asia and Latin America where our subsidiaries and investments are located.

To minimize the effect of fluctuations in foreign currency exchange rates on our financial results, we periodically enter into forward currency exchange contracts, cross currency swap agreements or enter into currency options or currency option combinations. These financial instruments serve as hedges of our foreign investment in international subsidiaries and joint ventures or effectively hedge the translation of the related foreign currency income. We held $1.0 billion in notional amount of forward currency exchange contracts, $127 million in notional amount of options and $633 million in notional amount of cross currency swap agreements at December 31, 2000. Included in the cross currency interest rate swap agreements were $430 million used to hedge debt instruments issued in foreign currencies as of December 31, 2000. The remaining cross currency interest rate swap agreements were primarily used to hedge foreign currency denominated inter-company receivables. Through these contracts, we effectively sell the local currency and buy U.S. dollars. We also periodically enter into forward contracts to hedge receivables denominated in foreign currencies or purchase foreign currencies in the spot market to settle a foreign currency denominated liability.

Heller’s exposure to foreign exchange risk has increased somewhat in the recent past primarily due to the Dealer Products Group acquisition and the expansion of Global Vendor Finance and Corporate Finance, since we now have additional operations in certain foreign countries. Additionally, during 2000, several of our domestic business units increased their emphasis on international financing opportunities. Accordingly, foreign exchange risk remains a primary market risk exposure that we will continue to manage primarily through the use of forward contracts, options and swaps. Our implementation of SFAS No. 133, will have a modest impact on our foreign currency hedging activities in 2001. See also Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Accounting Developments for more information.

We use a Value-at-Risk (VAR) methodology to evaluate the impact of foreign currency exchange fluctuations on net income. VAR is a measurement of the potential company-wide loss in earnings from adverse market movements over a specified period of time with a selected likelihood of occurrence. Our model measures the aggregate sensitivity to all changes in foreign currency exchange rates to which we are exposed. The FRMC reviews the results of this model monthly.

We have employed a variance/co-variance approach to measure VAR. This approach seeks to quantify market volatility by using historical changes in foreign currency exchange rates to measure the probability of future changes in foreign exchange rates. Variance/ covariance also uses correlation statistics to measure how different currencies move in relation to one another. Our VAR analysis calculates the potential after-tax earnings at risk associated with changes in foreign currency exchange rates, within a 95% confidence level, over a twelve-month horizon. Based on our analysis using a 95% confidence level, it is expected that as of December 31, 2000 and 1999, foreign exchange rate movements would not reduce after-tax earnings by more than $4 million and $1 million, respectively, over a twelve-month horizon. The high and low VAR amounts during the year ended December 31, 2000 ranged from $3.5 million to $100,000. The high and low VAR amounts during the year ended December 31, 1999 ranged from $1.7 million to $45,000.

We believe that the above VAR analyses comply with the SEC’s Quantitative Disclosure Rules About Market Risk.

Liquidity Risk Management. We manage liquidity risk primarily by:

monitoring the relative maturities of assets and liabilities;

diversifying the sources of borrowed funds among various U.S. and international money, capital, and bank credit markets; and

ensuring the availability of substantial sources of liquidity such as unused committed bank lines.

We use cash to fund asset growth and to meet debt obligations and other commitments on a timely and cost-effective basis. Our primary sources of funds are:

cash flows from operations;

commercial paper borrowings;

issuances of medium-term notes and other term debt securities; and

the syndication, securitization or sale of certain lending assets.

To further enhance our liquidity position, we established an asset backed commercial paper conduit facility in September of 2000. This facility provides us with committed liquidity support totaling $1.4 billion, of which $700 million was utilized at December 31, 2000. The underlying liquidity support is provided by unaffiliated commercial banks. The commitment period of this liquidity support is 364 days and may be renewed annually by conduit participants, at their discretion. See Note 27—Subsequent Events—of our Consolidated Financial Statements for more information on this facility.

At December 31, 2000, commercial paper and short-term borrowings were $5.1 billion and amounts due on term debt within one year were $3.2 billion. If we were unable to access such markets at acceptable terms, we could draw on our bank credit and asset sale facilities and use cash flow from operations and portfolio liquidations to satisfy our liquidity needs. At December 31, 2000, we had committed available liquidity support through our bank credit and asset sale facilities totaling $5.9 billion representing 116% of outstanding commercial paper and short-term borrowings. We believe that such credit lines should provide us with sufficient liquidity under foreseeable conditions. See also Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources for further information concerning our liquidity.

Operational Risk Management

Operational risk is the potential risk of loss due to business risk, event risk or organizational risk.

ERM has an organizational structure wherein each business unit has an operational risk manager responsible for the identification, measurement, monitoring and reporting of credit, market and operational risk. These risks are then aggregated and monitored, on a company wide basis, by a separate unit led by our Operational Risk Officer who reports to the Audit Committee of our Board of Directors.

Technology Investment

We continue to make significant investments to enhance our technological capabilities, including:

a global web-based lease transaction system capable of supporting a high volume business. This system, established for our Global Vendor Finance unit and for which we have applied for a U.S. business methods patent, performs credit scoring, provides standardized pricing for each vendor program and automatic applications for credit;

a company-wide application which centralizes customer information from all business units into one database. This gives us the ability to manage companies, contacts, deals, marketing and other crucial business processes, while providing an easy method of sharing this information across Heller units; and

implementation of new technology to enhance transaction processing systems.

Portfolio Quality

The continued strong credit quality of our portfolio in 2000 reflected our credit strategies, underwriting, portfolio management and disciplined credit approval processes. As of December 31, 2000, nonearning assets were $307 million, or 1.9% of lending assets, versus $228 million, or 1.5% of lending assets, at the end of 1999. We remained favorable to our stated target range for nonearning assets of 2%–4% of lending assets. In addition, our allowance for losses of receivables was in excess of 100% of nonearning impaired receivables as of December 31, 2000, 1999 and 1998. The following table presents information about the credit quality of our portfolio:

	December 31,
	2000		1999		1998
	(in millions)
Lending Assets and Investments:
Receivables	$15,966		$14,795		$11,854
Repossessed assets	22		24		3

Total lending assets	15,988		14,819		11,857
Equity and real estate investments	897		726		617
Debt securities	755		549		400
Operating leases	695		428		296
Investments in international joint ventures	216		215		231
Lending partnerships	165		95		29

Total lending assets and investments	$18,716		$16,832		$13,430

Nonearning Assets:
Impaired receivables	$ 285		$ 204		$ 208
Repossessed assets	22		24		3

Total nonearning assets	$ 307		$ 228		$ 211

Ratio of nonearning impaired receivables to receivables	1.8	%	1.4	%	1.8	%
Ratio of total nonearning assets to total lending assets	1.9	%	1.5	%	1.8	%
Allowances for Losses:
Allowance for losses of receivables	$ 342		$ 316		$ 271
Ratio of allowance for losses of receivables to receivables	2.1	%	2.1	%	2.3	%
Ratio of allowances for losses of receivables to net writedowns	3.0	x	3.2	x	3.3	x
Ratio of allowance for losses of receivables to nonearning impaired receivables	120.0	%	154.9	%	130.3	%
Delinquencies:
Earning loans delinquent 60 days or more	$ 267		$ 228		$ 184
Ratio of earning loans delinquent 60 days or more to receivables	1.7	%	1.5	%	1.6	%

	For the Year Ended December 31,
	2000		1999		1998
	(dollars in millions)
Net Writedowns of Lending Assets:
Net writedowns on receivables	$115		$98		$81
Net writedowns on repossessed assets	—		—		—

Total net writedowns	$115		$98		$81

Ratio of net writedowns to average lending assets	0.7	%	0.7	%	0.7	%

Nonearning Assets. We classify receivables as nonearning when we have significant doubt about the ability of the debtor to meet contractual terms. This may be evidenced by (1) loan delinquency, (2) reduction of cash flows, (3) deterioration in the loan to value relationship and (4) other relevant considerations. The table below shows nonearning assets by business line in 2000, 1999 and 1998:

	For the Year Ended December 31,
	2000			1999			1998
	Amount	Percent		Amount	Percent		Amount	Percent
	(dollars in millions)
Domestic Commercial Finance
Corporate Finance	$ 99	32	%	$ 29	13	%	$ 13	6	%
Small Business Finance	64	21		43	19		33	16
Leasing Services	29	10		25	11		25	12
Healthcare Finance	19	6		7	3		—	—
Real Estate Finance	13	4		21	9		8	4
Commercial Services (1)	—	—		—	—		5	2
Other	46	15		71	31		101	48

Total Domestic Commercial Finance	270	88		196	86		185	88
International Factoring and Asset Based Finance	37	12		32	14		26	12

Nonearning assets	$307	100	%	$228	100	%	$211	100	%

(1)	In December 1999, we sold the assets of our Commercial Services unit

Total nonearning assets of Heller as of December 31, 2000 were 1.9% of total lending assets, favorable to our targeted range of 2% to 4%. Included in total nonearning assets were other nonearning assets which consist of transactions from business activities we are no longer pursuing. Amounts included in this category have continued to decline as we liquidate these accounts.

The level of nonearning assets of Corporate Finance of $99 million represents 2.2% of Corporate Finance lending assets at December 31, 2000. This level of nonearning assets lies within Heller’s targeted range 2%-4%. The increase from the prior years reflects downturns in many sectors of the U.S. economy during the second half of 2000.

At December 31, 2000, Small Business Finance nonearning assets of $64 million represented 4.5% of this portfolio. Of these nonearning assets, approximately 55% were the guaranteed portions of SBA 7(a) loans which are held until a liquidation is complete and the SBA repurchases the loan. See Note 27—Subsequent Events—of our Consolidated Financial Statements for more information concerning the discontinuation of new business origination in Small Business Finance.

Nonearning levels of Real Estate Finance, Healthcare Finance, Leasing Services and International Group remained relatively low as a percentage of lending assets, as we continue to experience strong credit performances within these portfolios.

Allowance for Losses. The allowance for losses of receivables is a reserve available to absorb losses in the entire portfolio. We establish this allowance through direct charges to income. Losses are charged to the allowance when we deem all or a portion of a receivable uncollectible. We review the allowance periodically and we adjust it when appropriate given:

the size and loss experience of the overall portfolio;

the effect of current economic conditions; and

the collectibility and workout potential of identified risk and nonearning accounts. For repossessed assets, if the fair value has declined at the time of repossession, we record a writedown to reflect this reduction in value.

Our allowance for losses of receivables totaled $342 million at December 31, 2000 versus $316 million at December 31, 1999. Our allowance as a percentage of receivables totaled 2.1% at December 31, 2000, unchanged from the prior year. The ratio of allowance for losses of receivables to nonearning impaired receivables exceeded 100% at December 31, 2000, 1999 and 1998. See Note 1—Summary of Significant Accounting Policies—to our Consolidated Financial Statements for more information on our process for evaluating the adequacy of our allowance for losses of receivables.

Delinquent Earning Accounts and Loan Modifications. Earning accounts 60 days or greater past due totaled $267 million, or 1.7% of receivables at December 31, 2000 compared to $228 million or 1.5% at December 31, 1999. The level of delinquent earning accounts changes between periods based on the timing of payments and the effects of changes in general economic conditions on our borrowers. We did not have any troubled debt restructurings, which represent earning loans restructured at a lower-than-market rate of interest, at December 31, 2000. This compares with $14 million of troubled debt restructurings held at December 31, 1999. At December 31, 2000, there were no loans that were restructured and returned to earning status.

Writedowns. Net writedowns, shown below for the years ended December 31, 2000, 1999 and 1998, increased slightly in 2000 from 1999 primarily due to an increase in writedowns on our cash flow financings within the Corporate Finance portfolio, offset by the reduction in net writedowns due to the sale of our Commercial Services unit in December 1999. Net writedowns as a percentage of average lending assets of 0.74% as of December 31, 2000 was unchanged from that of the prior year. Net writedowns within Corporate Finance were not concentrated by borrower, industry type or geographic region. These writedowns principally reflect downturns in many sectors of the U.S. economy during the second half of 2000.

	For the Year Ended December 31,
	2000			1999			1998
	Amount	Percent		Amount	Percent		Amount		Percent
	(dollars in millions)
Net Writedowns of Lending Assets:
Domestic Commercial Finance
Corporate Finance	$ 57	50	%	$22	22	%	$14		17	%
Leasing Services	22	19		14	15		3		4
Small Business Finance	12	10		6	6		3		4
Healthcare Finance	4	3		—	—		—		—
Real Estate Finance	2	2		2	2		45		55
Commercial Services (1)	—	—		16	17		13		16
Other	9	8		35	35		(2	)	(2	)

Total Domestic Commercial Finance	106	92		95	97		76		94
International Factoring and Asset Based Finance	9	8		3	3		5		6

Total net writedowns	$115	100	%	$98	100	%	$81		100	%

(1)	In December 1999, we sold the assets of our Commercial Services unit

Gross writedowns totaled $140 million for 2000, compared to $116 million in the prior year, while gross recoveries totaled $25 million in 2000 compared to $18 million in 1999.

The Real Estate Finance net writedowns during 1998 were primarily the result of the $40 million writedown on CMBS assets recorded in the fourth quarter of that year.

Executive Officers of Registrant

Set forth below is information with respect to those individuals who serve as executive officers of Heller.

Richard J. Almeida

Mr. Almeida, age 58, has served as Chairman of the Board and Chief Executive Officer of Heller and Heller International Group, Inc. ( International Group), a wholly-owned subsidiary through which Heller conducts its international business, since November 1995, and as a Director of Heller since November 1987. He has been Director of Fuji America Holdings, Inc. (FAHI), an indirect, wholly-owned subsidiary of Mizuho Holdings, Inc., and the majority stockholder of Heller, since January 1998. He previously held the positions of Executive Vice President and Chief Financial Officer from November 1987 to November 1995. Mr. Almeida also serves as a Director of The Fuji Bank and Trust Company, an indirect, wholly-owned subsidiary of Mizuho Holdings. Prior to joining Heller in 1987, Mr. Almeida held a number of operating positions, both in corporate banking and investment banking, for Citicorp.

Nina B. Eidell

Ms. Eidell, age 48, has served as Executive Vice President and Chief Human Resources Officer of Heller since March 1998. From February 1995 to February 1998, she served as Director, Human Resources of the American Bar Association. Ms. Eidell previously spent eight years with Citicorp, where she held a variety of human resources management roles. She has also held human resources leadership positions with Sara Lee Corporation and R.R. Donnelley & Sons Company.

Michael J. Litwin

Mr. Litwin, age 53, has served as Executive Vice President and Chief Credit and Risk Officer of Heller since January 1997, and in 1999 became Chief Credit and Risk Officer of Heller. He previously served as a Director of Heller from April 1990 to July 1998, and Senior Group President of Heller from October 1990 to January 1997. Mr. Litwin has served in various other positions since joining Heller in 1971, including Assistant General Counsel.

Lauralee E. Martin

Ms. Martin, age 50, has served as Executive Vice President and Chief Financial Officer of Heller since May 1996. She was a Director of Heller from May 1991 to July 1998, and Senior Group President of Heller from October 1990 to May 1996. Ms. Martin has been a Director of Gables Residential Trust since January 1994. Prior to joining Heller in 1986, Ms. Martin held a variety of senior management positions with General Electric Credit Corporation.

Mark J. Ohringer

Mr. Ohringer, age 42, has served as General Counsel and Secretary of Heller, and Secretary of International Group and FAHI, since September 2000. He previously served as Chief Corporate Counsel and Deputy General Counsel from March 1999 to September 2000, Associate General Counsel from March 1996 to March 1999, and Senior Counsel from December 1993 to February 1996. Prior to joining Heller, Mr. Ohringer was a Partner at the law firm of Winston & Strawn.

James L. Prouty

Mr. Prouty, age 50, has served as President and Chief Executive Officer of Heller International Group Limited since March 2001, and Director of Heller International Group Limited since October 1998. Previously, Mr. Prouty was Managing Director from November 1997 to March 2001. Prior to joining Heller, Mr. Prouty spent 21 years with Bank of America, where he was most recently Senior Vice President and Regional Manager of Continental Europe, headquartered in Paris.

Frederick E. Wolfert

Mr. Wolfert, age 46, has served as a Director of Heller since July 1998 and as President and Chief Operating Officer since January 1998. In this capacity, he has principal responsibility for all of our domestic businesses. Prior to joining Heller, Mr. Wolfert was Chairman of Key Global Finance Ltd. from April 1996 to December 1997, Chairman, President and Chief Executive Officer of KeyCorp Leasing, Ltd. from June 1993 to December 1997, Chairman, President and Chief Executive Officer of KeyBank USA N.A. from June 1993 to December 1996, President and Chief Operating Officer of KeyCorp Leasing, Ltd. from December 1991 to June 1993, and Executive Vice President of KeyBank USA N.A. from December 1991 to June 1993.

ITEM 2. PROPERTIES

We lease office space for our corporate headquarters at 500 West Monroe Street, Chicago, Illinois 60661. We lease other offices throughout the United States, Canada, Europe, Asia/Pacific and Latin America. For information concerning our lease obligations, see Note 11—Rental Commitments—to the Consolidated Financial Statements. We own an office building used by Leasing Services in the United Kingdom.

ITEM 3. LEGAL PROCEEDINGS

We are a party to a number of legal proceedings as plaintiff and defendant, all arising in the ordinary course of our business. We believe that the amounts, if any, which we may ultimately pay regarding these matters will not have a material adverse effect on our business, financial condition or results of operations. However, we have no assurance that an unfavorable decision in any such legal proceeding would not have a material adverse effect.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the security holders of Heller in the fourth quarter of 2000.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Heller’s Class A Common Stock has traded on the New York and Chicago Stock Exchanges, under the symbol HF, since our initial public offering in May 1998. The following tables summarize the high and low market prices as reported on the New York Stock Exchange Composite Tape for the periods indicated and the cash dividends declared on our common stock during 2000 and 1999:

	Sales Price Range of Common Stock
	2000		1999
	High	Low	High	Low
Quarters:
First	$23.00	$17.00	$30.31	$22.63
Second	24.06	17.19	31.19	23.31
Third	30.31	20.44	28.00	20.75
Fourth	31.88	25.63	25.63	18.63

	Dividends Declared on Common Stock
	2000	1999
	(dollars in millions)
Quarters:
First	$ 9	$ 8
Second	10	8
Third	10	8
Fourth	10	10

Total dividends paid	$39	$34

In 2000, we declared and paid cash dividends of $39 million on our Common Stock. During the fourth quarter of 1999, we increased the quarterly dividend on each share of our Class A and Class B Common Stock to $0.10 per share from $0.09 per share, an increase of 11%.

During the first quarter of 2001, we declared and paid dividends ratably on our Class A and Class B Common Stock of $0.10 per share.

We are prohibited from paying dividends on Common Stock unless:

(1)

we have paid all declared dividends on all of our outstanding shares of Preferred Stock, Series C and Series D; and

(2)

we have paid all full cumulative dividends on all outstanding shares of our Cumulative Perpetual Senior Preferred Stock, Series A.

All such preferred stock dividends have been paid to date.

As of February 16, 2001, there were approximately 762 holders of record of Heller’s Class A Common Stock, one of which represents approximately 7,183 beneficial holders. FAHI is the sole record holder of Heller’s Class B Common Stock. The closing price of the Class A Common Stock on February 16, 2001, was $35.30.

ITEM 6. SELECTED FINANCIAL DATA

The results of our operations for each of the years in the three-year period ended December 31, 2000 and the balance sheet data as of December 31, 2000 and 1999, were derived from our audited Consolidated Financial Statements, and the notes thereto, which appear elsewhere in this Form 10-K. The results of operations for each of the years in the two-year period ended December 31, 1997 and the balance sheet data as of December 31, 1998, 1997 and 1996, were derived from our audited consolidated financial statements, and the notes thereto, which are not presented herein. The data presented below should be read in conjunction with Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements, and the notes thereto, appearing elsewhere in this Form 10-K.

	Year Ended December 31,
	2000(1)(3)(4)		1999(1)(2)(3)(4)		1998(3)(4)		1997(4)		1996
	(in millions)

Results of Operations:
Interest income	$ 1,628		$ 1,197		$ 1,047		$ 924		$ 807
Interest expense	999		685		624		516		452

Net interest income	629		512		423		408		355
Fees and other income	298		286		206		206		79
Factoring commissions	73		119		124		104		55
Income of international joint ventures	38		35		30		36		44

Operating revenues	1,038		952		783		754		533
Operating expenses	459		456		399		357		247
Provision for losses	148		136		77		164		103
Gain on sale of HCS assets	—		79		—		—		—
Restructuring charge	—		—		17		—		—

Income before income taxes and minority interest	431		439		290		233		183
Income tax provision	139		154		93		66		43
Minority interest	2		1		4		9		7

Net income	$ 290		$ 284		$ 193		$ 158		$ 133

Dividends on preferred stock	$ 29		$ 28		$ 21		$ 14		$ 10

Net income applicable to common stock	$ 261		$ 256		$ 172		$ 144		$ 123


	December 31,
	2000(1)(3)(4)		1999(1)(2)(3)(4)		1998(3)(4)		1997(4)		1996
	(in millions)
Balance Sheet Data:
Receivables	$15,966		$14,795		$11,854		$10,722		$8,529
Allowance for losses of receivables	(342	)	(316	)	(271	)	(261	)	(225	)
Equity and real estate investments	897		726		617		488		419
Debt securities	755		549		400		311		251
Operating leases	695		428		296		150		135
Investment in international joint ventures	216		215		231		198		272
Lending partnerships	165		95		29		45		—
Total assets	$20,061		$17,973		$14,366		$12,861		$9,926

Commercial paper and short-term borrowings	$ 5,127		$ 5,202		$ 3,681		$ 3,432		$2,745
Long-term debt	10,525		8,630		6,768		6,004		4,761

Total debt	$15,652		$13,832		$10,449		$ 9,436		$7,506

Total liabilities	$17,474		$15,615		$12,394		$11,096		$8,402
Preferred stock	400		400		400		275		125
Common equity	2,175		1,947		1,562		1,403		1,342

Total stockholders’ equity	$ 2,575		$ 2,347		$ 1,962		$ 1,678		$1,467

	As of, or For the Year Ended, December 31,
	2000(1)(3)(4)		1999(1)(2)(3)(4)		1998(3)(4)		1997(4)		1996
	(dollars in millions)
Selected Data and Ratios:
Profitability
Net interest income as a percentage of AFE(5)	3.7	%	3.8	%	3.6	%	4.0	%	4.1	%
Non-interest income as a percentage of AFE(5)	2.4		3.2		3.0		3.5		2.0
Operating revenues as a percentage of AFE(5)	6.1		7.0		6.6		7.5		6.1
Return on average common stockholders’ equity(6)	12.7		14.9		12.4		10.5		9.4
Return on average common stockholders’ equity, net of HCS gain(6)	12.7		12.1		12.4		10.5		9.4
Return on AFE(5)	1.7		2.1		1.6		1.6		1.5
Ratio of earnings to combined fixed charges and preferred stock dividends(7)	1.37	x	1.53	x	1.39	x	1.39	x	1.36	x
Salaries and general operating expenses as a percentage of AFE(5)	2.7	%	3.3	%	3.4	%	3.5	%	2.8	%
Ratio of operating expenses to operating revenues	44.2		47.9		51.0		47.3		46.3
Common dividend payout ratio(8)	14.9		13.3		13.4		47.7		47.2
Credit Quality
Ratio of earning loans delinquent 60 days or more to receivables	1.7	%	1.5	%	1.6	%	1.4	%	1.7	%
Ratio of net writedowns to average lending assets	0.7		0.7		0.7		1.5		1.3
Ratio of total nonearning assets to total lending assets	1.9		1.5		1.8		1.4		3.3
Ratio of allowance for losses of receivables to receivables	2.1		2.1		2.3		2.4		2.6
Ratio of allowance for losses of receivables to net writedowns	3.0	x	3.2	x	3.3	x	1.8	x	2.1	x
Ratio of allowance for losses of receivables to nonearning impaired receivables	120.0	%	154.9	%	130.2	%	185.1	%	85.2	%
Leverage
Ratio of debt (net of short-term investments) to total stockholders’ equity	5.9	x	5.8	x	5.2	x	5.2	x	5.0	x
Ratio of commercial paper and short-term borrowings to total debt	32.8	%	37.6	%	35.2	%	36.4	%	36.6	%
Other
Total lending assets and investments(9)	$18,716		$16,832		$13,430		$11,928		$9,620
Average lending assets	15,456		13,235		11,506		9,702		8,293
Funds employed(5)	17,734		15,839		11,989		10,673		9,030
Average funds employed(5)	16,978		13,636		11,814		10,081		8,727
Total managed assets(10)	18,877		16,099		13,134		11,299		9,289
Average managed assets(10)	17,516		14,433		12,217		10,294		9,071
Number of employees globally(11)	2,514		2,695		2,714		2,339		1,527
Number of office locations globally(11)	81		70		76		63		52

(1)

The financial data presented for 2000 and 1999 reflects our purchase of HCFP in July 1999. As a result of this purchase, we consolidated the acquired assets as of the date of acquisition. Goodwill related to the acquisition totaled approximately $235 million. The consolidation of HCFP resulted in an increase of approximately $535 million in total lending assets and investments and 134 additional employees as of the date of acquisition. This acquisition had a favorable impact on our 1999 net income.

(2)	On December 1, 1999, we sold the net assets of our Commercial Services unit. The sale consisted of $911 million of factored accounts receivable and the assumption of $577 million of liabilities due to factoring clients. We recognized an after-tax net gain on the transaction of $48 million.

(3)

The financial data presented for 2000, 1999 and 1998 reflects our purchase of the domestic technology leasing assets of the Dealer Products Group and the stock of the Dealer Products Group’s international subsidiaries in November 1998. As a result of this purchase, we consolidated the acquired assets and international subsidiaries of the Dealer Products Group as of the date of acquisition. Goodwill related to this acquisition totaled $190 million. The consolidation of the Dealer Products Group assets and subsidiaries resulted in an increase of approximately $625 million in total assets and approximately 400 additional employees as of December 31, 1998 as compared to December 31, 1997.

(4)

The financial data presented for 2000, 1999, 1998 and 1997 reflects our purchase (through our subsidiary, International Group) of our joint venture partner’s interest in Factofrance in April 1997 for $174 million. As a result of this purchase, Factofrance was reported on a consolidated basis with Heller as of the date of acquisition. The premium related to this purchase was allocated as follows: $78 million to goodwill and $18 million to a noncompetition agreement. Our consolidation of Factofrance resulted in increases of $2 billion, $94 million, $59 million and 570 in total assets, operating revenues, operating expenses and number of employees, respectively, during 1997 as compared to 1996.

(5)

Funds employed include lending assets and investments, less credit balances of our factoring clients. We believe that funds employed are indicative of the dollar amount of loans and investments we have made. Average funds employed (AFE) reflect the average of lending assets and investments, less credit balances of our factoring clients.

(6)	Return on average common stockholders’ equity is computed as net income less preferred stock dividends paid, divided by average total stockholders’ equity net of preferred stock.

(7)	The ratio of earnings to combined fixed charges and preferred stock dividends is calculated by dividing (i) income before income taxes, minority interest and fixed charges by (ii) fixed charges plus preferred stock dividends.

(8)	Common dividend payout ratio is computed as common dividends paid, divided by net income applicable to common stock. The 1998 common dividend payout ratio excludes the $983 million dividends paid on the Common Stock owned by FAHI.

(9)	Total lending assets and investments consist of receivables, repossessed assets, equity and real estate investments, operating leases, debt securities, investments in international joint ventures and investments in lending partnerships.

(10)

Total managed assets include funds employed, plus receivables previously securitized or sold, for which we hold securities giving us an economic interest in the performance of these assets. This amount excludes assets for which we merely retain servicing responsibilities and for which we are paid a fee at a market rate for providing such servicing.

(11)	Excludes joint ventures.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the Selected Financial Data and Consolidated Financial Statements, including the notes thereto, appearing elsewhere in this Form 10-K. The following discussion and analysis contains certain forward-looking statements, as defined in the Securities Exchange Act of 1934, which are generally identified by the words anticipates, believes, estimates, expects, plans, intends and other similar expressions. These statements are subject to certain risks, uncertainties and contingencies, which could cause our actual results, performance or achievements to differ materially from those expressed in, or implied by, such statements. See Cautionary Note Regarding Forward-Looking Statements below.

General

We are in the commercial finance business, providing primarily collateralized financing and leasing products and related services to mid-sized and small businesses in the United States and selected international markets. We classify the sources of our operating revenues in two broad categories:

net interest income; and

non-interest income.

Net interest income represents the total interest income we earn, principally through our financing and leasing activities, less the total interest expense we pay on our interest bearing liabilities, which largely relate to the funding of these financing and leasing activities.

Non-interest income consists of:

factoring commissions;

income from investments in international joint ventures; and

fees and other income.

Fees include:

loan servicing income;

late fees;

structuring fees;

residual rental income;

syndication fees; and

prepayment fees.

Other income includes:

real estate participation income;

our share of income from fund investments;

gains from sales, syndications and securitizations of lending assets and investments; and

equipment residual gains.

Our primary expenses, other than interest expense, are operating expenses, including employee compensation and general and administrative expenses, and provision for credit losses.

Our results of operations may vary significantly from quarter to quarter based upon the timing of certain events, such as securitizations and net investment gains. See Note 25—Summary of Quarterly Financial Information—of our Consolidated Financial Statements.

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

Results of Operations

Overview. For the year ended December 31, 2000:

Net income totaled $290 million, marking our eighth consecutive year of record earnings.

Net income was up 23% over the prior year, after adjusting for the Company’s one-time after-tax net gain of $48 million on the sale of the assets of our Commercial Services unit in 1999.

Net income applicable to common stock was $261 million, representing an increase of 25% over the prior year adjusted amount of $208 million.

The increase in net income reflects an increase in operating revenues, due to growth in net interest income.

The increase in net interest income, as compared to the prior year, is due to growth in lending assets and investments. See— Operating Revenues—Net Interest Income.

New business volume totaled $7.8 billion and was strongest in Corporate Finance, Real Estate Finance, Leasing Services and Healthcare Finance. This level of new business resulted in growth in lending assets and investments of 11%, to $18.7 billion as of December 31, 2000.

Our factoring volume totaled $13.1 billion in 2000, a modest decrease of 3% from the prior year, after adjusting for the 1999 sale of our Commercial Services unit. The decrease was primarily due to the depreciation of the Euro. In local currency, Factofrance’s factoring volume was up 10% over 1999.

Our credit quality remained in line with targets. Nonearning assets were 1.9% of total lending assets, below the Company’s range of 2% to 4%. Net writedowns as a percentage of average lending assets were 0.7% for the year, consistent with our targeted average annual level of 0.75% over a business cycle.

Operating Revenues. The following table shows our operating revenues for the years ended December 31, 2000 and 1999:

	For the Year Ended December 31,
	2000			1999
	Amount	Percent of AFE		Amount	Percent of AFE
	(dollars in millions)
Net interest income	$ 629	3.7	%	$512	3.8	%
Non-interest income:
Fees and other income	298	1.8		286	2.1
Factoring commissions	73	0.4		119	0.9
Income of international joint ventures	38	0.2		35	0.2

Total operating revenues	$1,038	6.1	%	$952	7.0	%

Net Interest Income. The following table shows our net interest income for the years ended December 31, 2000 and 1999:

	For the Year Ended December 31,				Increase
	2000		1999		Amount	Percent
	(dollars in millions)
Interest income	$1,628		$1,197		$431	36.0	%
Interest expense	999		685		314	45.8

Net interest income	$ 629		$ 512		$117	22.9	%

Net interest income as apercentage of AFE	3.7	%	3.8	%

Net interest income totaled $629 million for the year ended December 31, 2000, an increase of $117 million, or 23%, from the comparable prior year period. This increase was driven by strong growth in lending assets and investments, partially offset by a modestly lower net interest margin for the year driven by competitive pricing pressures coupled with an increase in our operating lease portfolio.

Average funds employed totaled $17.0 billion for 2000, up 25% from $13.6 billion in 1999, due to new business lending volume of $7.8 billion.

Net interest income as a percentage of AFE decreased to 3.7% at December 31, 2000 from 3.8% at December 31, 1999. This decrease reflects the impact of an increase in our operating lease and investment portfolios and a marginally higher cost of funding.

Interest rates we charge vary depending on:

risks and maturities of loans;

competition;

our current costs of borrowing;

state usury laws; and

other governmental regulations.

Our portfolio of receivables earns interest at both variable and fixed rates. The variable rates float in accordance with various agreed upon reference rates, including LIBOR, the Prime Rate and corporate based lending rates.

We use interest rate swaps as an important tool for financial risk management. They enable us to match more closely the interest rate and maturity characteristics of our assets and liabilities. As such, we use interest rate swaps to:

change the characteristics of fixed rate debt to that of variable rate liabilities;

alter the characteristics of specific fixed rate asset pools to more closely match the interest terms of the underlying financing; an d

modify the variable rate basis of a liability to more closely match the variable rate basis used for variable rate receivables.

The following table shows a comparative analysis of the year-end principal outstanding (gross of the unamortized discount of $8 million and $6 million) and weighted average interest rates we paid on our debt as of December 31, 2000 and 1999, respectively, before and after giving effect to interest rate swaps:

	For the Year Ended December 31,
	2000					1999
	Year-end Balance	Before swaps		After swaps		Year-end balance	Before swaps		After swaps
	(dollars in millions)
Commercial paper—domestic and foreign	$ 4,138	6.28	%	6.28	%	$ 3,960	5.12	%	5.12	%
Fixed rate debt	6,255	6.93		6.97		4,817	6.20		6.60
Variable rate debt	4,278	6.89		6.88		3,819	6.29		6.36

Total	$14,671	6.73		6.75		$12,596	5.89		6.06

Non-Interest Income. Our non-interest income is composed of:

factoring commissions;

income of international joint ventures; and

fees and other income.

The following table shows our non-interest income for the years ended December 31, 2000 and 1999:

	For the Year Ended December 31,				Increase/(Decrease)
	2000		1999		Amount		Percent
	(dollars in millions)
Factoring commissions	$ 73		$119		$(46	)	(38.7	)%
Income of international joint ventures	38		35		3		8.6
Fees and other income:
Investment and asset sale income(1)	204		175		29		16.6
Fee income and other(2)	94		111		(17	)	(15.3	)

Total fees and other income	$298		$286		$12		4.2

Total non-interest income	$409		$440		$(31	)	7.0

Non-interest income as a percentage of AFE	2.4	%	3.2	%

(1)	Investment and asset sale income consists of gains on securitizations, syndications and loan sales, net investment income and gains, equipment residual gains and participation income.

(2)	Fee income and other consists primarily of loan servicing income, late fees, prepayment fees, early termination fees, residual rental income and other miscellaneous fees.

Factoring commissions decreased $46 million, or 39%, in 2000 versus 1999 primarily due to the sale of the assets of our domestic factoring business, Commercial Services, in December 1999. In addition, increased competition in the French factoring market and changes in product mix have resulted in lower factoring commission rates at Factofrance. Changes in exchange rates have also negatively affected the U.S. dollar equivalent for our consolidated subsidiaries’ factoring commissions. Consolidated factoring volume in U.S. dollars, excluding Commercial Services, decreased 3% over the prior year. During 2000, Factofrance had factoring volume of over FRF 82 billion (or approximately $11.5 billion), representing an increase in local currency of 10% over 1999 volume of nearly FRF 75 billion (or approximately $12.0 billion).

Income of international joint ventures represents our share of the annual earnings or losses of joint ventures. The $3 million increase in income from international joint ventures in 2000 versus 1999 was due primarily due to an increase in income of our largest joint venture, NMB-Heller Holding N.V. See Item 1. International Factoring and Asset Based Finance Segment.

Fees and other income totaled $298 million for 2000, an increase of 4% from the prior year due to an increase in investment and asset sale income, partially offset by a decrease in fee income and other. Investment and asset sale income increased $29 million, or 17%, due to larger net investment gains recognized on our portfolio of equity investments, partially offset by a decrease in loan sale income generated by sales of SBA guaranteed portions of 7(a) loans in Small Business Finance for the year, as compared to the prior year. Investment and asset sale income is somewhat dependent on the equity, real estate and capital markets and is therefore subject to volatility.

Fee income and other decreased $17 million, or 15%, compared to 1999. This decrease is due to:

the impact of affordable housing transactions within our Real Estate Finance unit. These transactions, while generating losses in operating income, provide tax credits which benefit our consolidated results through our income tax provision, as evidenced by our lower effective tax rate during 2000; and

a reduction in the value of investments within our executive deferred compensation plan. This results in a decrease in fee income and other, with a corresponding decrease in operating expenses. As a result, there is no overall effect on our consolidated results of operations, or earnings per share, related to the change in value of assets related to this compensation plan for 2000.

Operating Expenses. The following table shows our operating expenses for the years ended December 31, 2000 and 1999:

	For the Year Ended December 31,				Increase
	2000		1999		Amount		Percent
	(dollars in millions)
Salaries and other compensation	$236		$237		$(1	)	(0.4	)%
General and administrative expenses	199		200		(1	)	(0.5	)
Goodwill and non-compete amortization	24		19		5		26.3

Total	$459		$456		$3		0.7

Operating expenses as a percentage of average managed assets	2.6	%	3.2	%
Ratio of operating expenses to operating revenues	44	%	48	%
Ratio of operating expenses, excluding goodwill and non-compete amortization, as a percentage of operating revenues	42	%	46	%

Operating expenses increased only $3 million, or 1%, in 2000 as compared to 1999, as the increase in operating expenses from the July 1999 HCFP acquisition was more than offset by a decrease in operating expenses resulting from the December 1999 sale of our Commercial Services unit. Excluding the effect of acquisitions and divestitures, operating expenses increased $28 million, or 7%, during 2000, as compared to 1999, primarily as a result of:

increased compensation costs in Leasing Services associated with our investment in new markets; combined with

higher costs associated with our technology investment and support in our Leasing Services business unit.

Allowance for Losses. The following table shows the changes in our allowance for losses of receivables, including our provision for losses of receivables and repossessed assets, for the years ended December 31, 2000 and 1999:

	For the Year Ended December 31,				Increase/(Decrease)
	2000		1999		Amount		Percent
	(dollars in millions)
Balance at the beginning of the year	$316		$271		$45		16.6	%
Provision for losses	148		136		12		8.8
Writedowns	(140	)	(116	)	(24	)	(20.7	)
Recoveries	25		18		7		38.9
HCFP acquisition	—		7		(7	)	(100.0	)
Sale of HCS assets	—		(2	)	2		100.0
Transfers and other	(7	)	2		(9	)	(450.0	)

Balance at the end of the year	$342		$316		$26		8.2	%

We systematically evaluate the appropriateness of the allowance for losses of receivables and adjust the allowance to reflect any necessary changes in the credit quality and inherent risks and losses of our portfolio. See Note 1—Summary of Significant Accounting Policies—to our Consolidated Financial Statements for more information on our process for evaluating the adequacy of our allowance for losses of receivables.

The provision for losses was higher during 2000 than 1999 due to a higher level of net writedowns recorded in our Corporate Finance unit during 2000, as compared to 1999, coupled with growth in our portfolio of lending assets. Net writedowns totaled $115 million or 0.74% of average lending assets in 2000, compared to $98 million or 0.74% in 1999. Net writedown levels for both 2000 and 1999 are in line with our targeted average level of 0.75% of average lending assets over a business cycle.

Gross writedowns totaled $140 million for 2000 versus $116 million for 1999, while gross recoveries totaled $25 million in 2000 versus $18 million for 1999. The increase in gross writedowns during 2000 primarily relates to cash flow financings of our Corporate Finance unit.

The ratio of our allowance for losses of receivables to receivables was 2.1%, as of December 31, 2000, unchanged from that as of December 31, 1999. The Company considers this level of allowance for loan losses adequate to cover losses inherent in our loan portfolio at December 31, 2000.

Income Taxes. Our effective income tax rate was 32% for 2000, down from 34% for 1999 excluding the effect of the HCS sale. In each case, our effective tax rate was below the combined Federal and State statutory rates due to:

the effect of earnings from international joint ventures;

the use of business related, foreign, and other tax credits;

differences in tax rates on international earnings; and

certain favorable tax issue resolutions.

Lending Assets and Investments

Total lending assets and investments increased $1.9 billion, or 11%, during 2000 due to new business originations of $7.8 billion partially offset by syndications, securitizations, loan sales, utilization and payoffs of $5.6 billion. During 2000, new business volume was strongest in Corporate Finance, Real Estate Finance, Leasing Services and Healthcare Finance, as we continued to realize the benefits of the market positions held by these business units.

The following tables present our lending assets and investments by business line and asset type as of December 31, 2000 and 1999:

	December 31,
	2000			1999
	Amount	Percent		Amount	Percent
	(dollars in millions)
By Business Segment:
Domestic Commercial Finance Segment
Corporate Finance (1)	$ 5,225	28	%	$ 4,937	29	%
Leasing Services	4,434	24		3,428	20
Real Estate Finance	2,766	15		2,626	16
Healthcare Finance	1,563	8		971	6
Small Business Finance	1,440	8		1,312	8
Other	387	2		518	3

Total Domestic Commercial Finance Segment	15,815	85		13,792	82
International Factoring and Asset Based Finance Segment (2)	2,901	15		3,040	18

Total lending assets and investments	$18,716	100	%	$16,832	100	%

By Asset Type:
Receivables	$15,966	85	%	$14,795	88	%
Repossessed assets	22	—		24	—

Total lending assets	15,988	85		14,819	88
Equity and real estate investments	897	5		726	4
Debt securities	755	4		549	3
Operating leases	695	4		428	3
International joint ventures	216	1		215	1
Lending partnerships (3)	165	1		95	1

Total lending assets and investments	$18,716	100	%	$16,832	100	%

Average lending assets	$15,456			$13,235
Total managed assets	18,877			16,099
Average managed assets	17,516			14,433
Funds employed	17,734			15,839
Average funds employed	16,978			13,636

(1)	Lending assets and investments at December 31, 2000 were reduced by $700 million of commercial cash flow loans sold to an asset backed commercial paper conduit facility.

(2)	Includes $216 million in investments in international joint ventures in 2000 and $215 million in investments in international joint ventures in 1999, representing 1% of total lending assets and investments for both 2000 and 1999 year ends.

(3)	Includes interests we hold in partnerships, which have been established for the purpose of providing financing through operating leases, loans or direct financing leases. We account for these investments under the equity method of accounting.

As of December 31, 2000, our domestic commercial finance portfolio remained well diversified among our domestic product units:

Corporate Finance increased its lending assets and investments to $5.2 billion, or 28% of total lending assets and investments, as a result of $2.8 billion in new business volume, which was partially offset by loan sales, loan syndications, utilization and runoff in the portfolio of $2.4 billion. Of the total lending assets and investments of Corporate Finance at December 31, 2000, approximately $900 million, or 17%, represented asset-based financings.

Leasing Services grew to $4.4 billion, or 24% of our total lending assets and investments, at December 31, 2000, primarily due to new business volume of $2.7 billion offset by payoffs, utilization, syndications and securitizations totaling approximately $1.7 billion in receivables. The growth in lending assets and investments of Leasing Services is primarily attributable to growth in Capital Finance.

Real Estate Finance increased its lending assets and investments to $2.8 billion, or 15% of our total lending assets and investments as of December 31, 2000, as new business volume of $1.2 billion was offset by payoffs, securitizations, syndications and utilization totaling $1.0 billion.

Healthcare Finance increased its lending assets and investments to approximately $1.6 billion, or 8% of total lending assets and investments, primarily due to new business volume of nearly $600 million, partially offset by over $100 million of syndications and payoffs. Asset growth in Healthcare Finance was driven by cash flow, asset based and real estate financings.

Small Business Finance increased its lending assets and investments by nearly $130 million due to new business volume of approximately $480 million. This was partially offset by loan sales, utilization and payoffs of approximately $340 million. See Note 27—Subsequent Events—of our Consolidated Financial Statements.

Concentrations of lending assets of 5% or more at December 31, 2000 and 1999, based on the standard industrial classifications of the borrowers, were as follows:

	December 31,
	2000			1999
	Amount	Percent		Amount	Percent
	(dollars in millions)
Health Services	$1,694	11	%	$ 864	6	%
Transportation	1,145	7		844	6
Business Services	897	6		503	3
Computers	549	3		938	6
Department and general merchandise retail stores	511	3		877	6
Automotive	473	3		1,038	7

With respect to the above table:

The health services category is primarily comprised of revolving and term facilities with small- and mid-sized health care providers. The increase in this category is due to growth of Healthcare Finance’s portfolio since our acquisition of HCFP in July 1999.

A majority of the lending assets in the transportation category arise from chartered aircraft services and transportation services for freight, cargo and packages. The increase in this category is due to growth in all areas of our Leasing Services unit.

The business services category is primarily comprised of equipment rental and leasing companies, computer related service providers, building maintenance and security companies and other miscellaneous business services. The increase in this category is due to increases in our International Group and Global Vendor Finance.

The computers category consists of software/hardware distributors and manufacturers, component manufacturers and end-users of this equipment. The decrease in this category is primarily due to decreases in International Group and Global Vendor Finance.

The department and general merchandise retail stores category is primarily comprised of factored accounts receivable, which represent short-term trade receivables from numerous customers. The decrease in this category is primarily due to a decrease in International Group.

The automotive category is primarily comprised of auto parts distributors and wholesalers, resale and leasing services in the automotive industry and maintenance services for automotive parts. The decrease in this category is primarily due to decreases in International Group and Corporate Finance.

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

Results of Operations

Overview. For the year ended December 31, 1999:

Net income totaled $284 million compared with $193 million for the prior year, an increase of 47%.

Net income applicable to common stock was $256 million compared with $172 million, an increase of 49%.

Net income for 1999 includes a one-time after-tax net gain of $48 million relating to the sale of the assets of our Commercial Services business unit. Excluding this gain, net income was $236 for the year, an increase of 22% over the prior year, marking our seventh consecutive year of record net income.

This increase in net income reflects an increase of $169 million in operating revenues, due to growth in both net interest income and non-interest income.

The increase in net interest income, as compared to the prior year, is due to both strengthening margins and growth in lending assets and investments. See—Operating Revenues—Net Interest Income.

The increase in non-interest income, as compared to the prior year, is due primarily to larger net investment gains and larger fee income and other. See—Operating Revenues —Non-Interest Income.

New business lending volume totaled a record $8.1 billion, an increase of 12% over the prior year. This increase was the result of our significant investment in building leadership positions in our businesses and in expanding market coverage.

Our factoring volume totaled $20.3 billion in 1999, an increase of 5% from the prior year. Factofrance’s factoring volume was up 12% over 1998.

Operating Revenues. The following table shows our operating revenues for the years ended December 31, 1999 and 1998:

	For the Year Ended December 31,
	1999			1998
	Amount	Percent of AFE		Amount	Percent of AFE
	(dollars in millions)
Net interest income	$512	3.8	%	$423	3.6	%
Non-interest income:
Fees and other income	286	2.1		206	1.7
Factoring commissions	119	0.9		124	1.0
Income of international joint ventures	35	0.2		30	0.3

Total operating revenues	$952	7.0	%	$783	6.6	%

Net Interest Income. The following table shows our net interest income for the years ended December 31, 1999 and 1998:

	For the Year Ended December 31,				Increase
	1999		1998		Amount	Percent
	(dollars in millions)
Interest income	$1,197		$1,047		$150	14.3	%
Interest expense	685		624		61	9.8

Net interest income	$ 512		$ 423		$ 89	21.0

Net interest income as a Percentage of AFE	3.8	%	3.6	%

Net interest income totaled $512 million for the year ended December 31, 1999, an increase of $89 million, or 21%, from the comparable prior year period. This increase was driven by strong growth in lending assets and investments combined with improved net interest margins.

Average funds employed totaled $13.6 billion for 1999, up 15% from $11.8 billion in 1998, primarily due to new business lending volume of $8.1 billion during the year.

Net interest income as a percentage of AFE increased to 3.8% at December 31, 1999 from 3.6% at December 31, 1998. This increase reflects improved pricing in certain product groups, a lower cost of funding and a more favorable mix of higher yielding products during 1999 as compared to 1998 such as those from HCFP and the Dealer Products Group acquisitions.

Interest rates we charge vary depending on:

risks and maturities of loans;

competition;

our current costs of borrowing;

state usury laws; and

other governmental regulations.

We use interest rate swaps to manage financial risk. They enable us to match more closely the interest rate and maturity characteristics of our assets and liabilities. As such, we use interest rate swaps to:

change the characteristics of fixed rate debt to that of variable rate liabilities;

alter the characteristics of specific fixed rate asset pools to more closely match the interest terms of the underlying financing; an d

modify the variable rate basis of a liability to more closely match the variable rate basis used for variable rate receivables.

The following table shows a comparative analysis of the year-end principal outstanding (gross of the unamortized discount of $6 million and unamortized premium of $3 million) and average interest rates we paid on our debt as of December 31, 1999 and 1998, respectively, before and after giving effect to interest rate swaps:

	For the Year Ended December 31,
	1999					1998
	Year- end balance	Before Swaps		After Swaps		Year- end balance	Before Swaps		After Swaps
	(dollars in millions)
Commercial paper—domestic and foreign	$ 3,960	5.12	%	5.12	%	$2,692	5.52	%	5.52	%
Fixed rate debt	4,817	6.20		6.60		3,886	6.31		6.17
Variable rate debt	3,819	6.29		6.36		2,879	5.34		5.59

Total	$12,596	5.89		6.06		$9,457	5.79		5.81

Non-Interest Income. Our non-interest income is composed of:

factoring commissions;

income of international joint ventures; and

fees and other income.

The following table shows our non-interest income for the years ended December 31, 1999 and 1998:

	For the Year Ended December 31,				Increase/(Decrease)
	1999		1998		Amount		Percent
	(dollars in millions)
Factoring commissions	$119		$124		$ (5	)	(4.0	)%
Income of international joint ventures	35		30		5		16.7
Fees and other income:
Investment and asset sale income (1)	175		111		64		57.7
Fee income and other (2)	111		95		16		16.8

Total fees and other income	$286		$206		$80		38.8

Total non-interest income	$440		$360		$80		22.2

Non-interest income as a percentage of AFE	3.2	%	3.0	%

(1)	Investment and asset sale income consists of gains on securitizations, syndications and loan sales, net investment income and gains, equipment residual gains and participation income.

(2)	Fee income and other consists primarily of loan servicing income, late fees, prepayment fees, early termination fees, residual rental income and other miscellaneous fees.

Factoring commissions decreased $5 million, or 4%, in 1999 versus 1998 due to lower volume of our domestic factoring business, partially due to the December 1999 sale of the assets of our Commercial Services unit, combined with lower factoring commission rates of Factofrance. Increased competition in the French factoring market and changes in product mix have resulted in lower factoring commission rates of Factofrance. Our total 1999 factoring volume increased 5% from the prior year. Factofrance’s factoring volume increased 12% over prior year.

Income of international joint ventures represents our share of the annual earnings or losses of joint ventures. The $5 million increase in income from international joint ventures in 1999 versus 1998 was due primarily to higher income from our European joint ventures partially offset by lower income from our Latin American joint ventures.

Fees and other income totaled $286 million for 1999, an increase of 39% from the prior year due to increases in both fee income and other and investment and asset sale income. Fee income and other increased $16 million or 17% compared to 1998. This increase is due to higher fee income in Leasing Services related to the Dealer Products Group.

Investment and asset sale income increased $64 million, or 58% due to larger gains recognized on our portfolio of equity investments, higher income on limited partnership investments and higher gains on asset sales and equipment residual gains. Net investment gains are generated primarily from investment activity of Corporate Finance and junior participating lending activity of Real Estate Finance. The increase in asset sale income was primarily generated by sales of SBA guaranteed portions of 7(a) loans in Small Business Finance. See Note 27 —Subsequent Events— of our Consolidated Financial Statements.

During 1999, we generated $13 million of securitization gains, a decrease of $4 million from the prior year. Securitization gains during 1999 resulted from three securitization transactions. Leasing Services securitized approximately $800 million in two term securitizations during 1999 resulting in a net gain of $9 million. Real Estate Finance securitized approximately $400 million in CMBS receivables resulting in $4 million of securitization income.

Operating Expenses. The following table shows our operating expenses for the years ended December 31, 1999 and 1998:

	For the Year Ended December 31,				Increase
	1999		1998		Amount	Percent
	(dollars in millions)
Salaries and other compensation	$237		$227		$10	4.4	%
General and administrative expenses	200		164		36	22.0
Goodwill and non-compete amortization	19		8		11	137.5

Total	$456		$399		$57	14.3

Operating expenses as a percentage of average managed assets	3.2	%	3.3	%
Ratio of operating expenses to operating revenues	48	%	51	%
Operating expenses, excluding goodwill and non-compete amortization, as a percentage of operating revenues	46	%	50	%

Operating expenses, excluding the effect of acquisitions and divestitures, increased by $5 million, or 1%, in 1999, as compared to 1998. This modest growth is primarily related to increases in performance related compensation resulting from strong business performance in 1999, offset by decreases in salary expense resulting from our 1998 restructuring effort. Operating expenses, excluding the effect of acquisitions and divestitures also increased as a result of increases in certain professional fees. Total operating expenses as a percentage of operating revenues improved to 48% in 1999 from 51% for the prior year and were in line with our 1999 goal. This decrease reflects improved leveraging of the Company’s cost base.

	For the Year Ended December 31,				Increase/(Decrease)
	1999		1998		Amount		Percent
	(dollars in millions)
Balance at the beginning of the year	$271		$261		$10		3.8	%
Provision for losses	136		77		59		76.6
Writedowns	(116	)	(145	)	29		20.0
Recoveries	18		64		(46	)	(71.9	)
Dealer Products Group acquisition	—		18		(18	)	(100.0	)
HCFP acquisition	7		—		7		N/M
Sale of HCS assets	(2	)	—		(2	)	N/M
Transfers and other	2		(4	)	6		150.0

Balance at the end of the year	$316		$271		$45		16.6	%

The provision for losses was higher during 1999 than 1998 due to a significantly higher level of recoveries recorded in 1998 as compared to 1999. Net writedowns totaled $98 million or 0.7% of average lending assets in 1999, compared to $81 million or 0.7% in 1998. Net writedown levels for both 1999 and 1998 are in line with our targeted average level of 0.75% of average lending assets over a business cycle.

Gross writedowns totaled $116 million for 1999 versus $145 million for 1998, while recoveries totaled $18 million in 1999 versus $64 million for 1998. The higher level of recoveries in 1998 relates primarily to assets from business activities the Company is no longer pursuing.

As of December 31, 1999, the ratio of our allowance for losses of receivables to receivables was 2.1%, compared to 2.3% as of December 31, 1998. The decrease in this ratio reflects the continued improvement of the credit quality of our portfolio. We systematically evaluate the appropriateness of the allowance for losses of receivables and adjust the allowance to reflect any necessary changes in the credit quality and inherent risks and losses of our portfolio.

Income Taxes. Excluding the effect of the HCS sale, our effective income tax rate was 34% for 1999 and 32% for 1998, in each case below the combined Federal and State statutory rate due to:

the effect of earnings from international joint ventures;

the use of foreign tax credits; and

certain favorable tax issue resolutions.

Lending Assets and Investments

Total lending assets and investments increased $3.4 billion, or 25%, during 1999 due to record new business originations of $8.1 billion offset by syndications, securitizations, loan sales and payoffs of $4.7 billion. The HCFP acquisition increased lending assets and investments by $535 million during 1999. This increase was more than offset by the sale of $900 million of HCS lending assets. During 1999, new business volume represented a 12% increase from 1998. This increase was largely due to strong new business volume in all of our domestic product groups.

The following tables present our lending assets and investments by business line and asset type as of December 31, 1999 and 1998:

	December 31,
	1999			1998
	Amount	Percent		Amount	Percent
	(dollars in millions)
By Business Segment:
Domestic Commercial Finance Segment
Corporate Finance	$ 4,937	29	%	$ 3,722	28	%
Leasing Services	3,428	20		2,840	21
Real Estate Finance	2,626	16		1,889	14
Small Business Finance	1,312	8		1,013	8
Healthcare Finance	971	6		217	1
Commercial Services (1)	—	—		401	3
Other	518	3		687	5

Total Domestic Commercial Finance Segment	13,792	82		10,769	80
International Factoring and Asset Based Finance Segment (2)	3,040	18		2,661	20

Total lending assets and investments	$16,832	100	%	$13,430	100	%

By Asset Type:
Receivables	$14,795	88	%	$11,854	88	%
Repossessed assets	24	—		3	—

Total lending assets	14,819	88		11,857	88
Equity and real estate investments	726	4		617	5
Debt securities	549	3		400	3
Operating leases	428	3		296	2
International joint ventures	215	1		231	2
Lending partnerships	95	1		29	—

Total lending assets and investments	$16,832	100	%	$13,430	100	%

Average lending assets	$13,235			$11,506
Total managed assets	16,099			13,134
Average managed assets	14,433			12,217
Funds employed	15,839			11,989
Average funds employed	13,636			11,814

(1)	Lending assets and investments of Commercial Services at December 31, 1998 were reduced by $475 million of factored accounts receivable sold to bank-supported conduits.

(2)	Includes $215 million and $231 million in investments in international joint ventures, representing 1% and 2% of total lending assets and investments in 1999 and 1998, respectively.

As of December 31, 1999, our domestic commercial finance portfolio remained well diversified among our domestic product groups:

Corporate Finance increased its lending assets and investments to $4.9 billion, or 29% of total lending assets and investments, as a result of $3.1 billion in new business volume, which was partially offset by loan syndications and runoff in the portfolio of $2.3 billion. Of the total lending assets and investments, approximately $900 million represented asset-based financings.

Leasing Services grew to $3.4 billion, or 20% of our total lending assets and investments, at December 31, 1999, primarily due to new business volume of $2.3 billion offset by payoffs, utilization and securitizations totaling approximately $1.6 billion in receivables.

Real Estate Finance increased its lending assets and investments to $2.6 billion, or 16% of our total lending assets and investments as of December 31, 1999 versus 14% at December 31, 1998 as new business volume of $1.4 billion was offset by payoffs, securitizations and syndications totaling nearly $840 million.

Healthcare Finance increased its lending assets and investments to approximately $1 billion, or 6% of total lending assets and investments as of December 31, 1999. Of this amount, about $535 million was as a result of the HCFP acquisition in July 1999. In addition, we combined approximately $350 million of lending assets and investments from our existing healthcare finance activities within Real Estate Finance and Corporate Finance.

Small Business Finance increased its lending assets and investments by nearly $300 million due to record new business volume of over $700 million. This was partially offset by loan sales and payoffs of approximately $370 million. See Note 27 —Subsequent Events—of our Consolidated Financial Statements.

Concentrations of lending assets of 5% or more at December 31, 1999 and 1998, based on the standard industrial classifications of the borrowers, were as follows:

	December 31,
	1999			1998
	Amount	Percent		Amount	Percent
	(dollars in millions)
Automotive	$1,038	7	%	$667	6	%
Computers	938	6		811	7
Department and general merchandise retail stores	877	6		935	8
Health services	864	6		202	2
Transportation	844	6		666	6
Food, grocery and miscellaneous retail	642	4		650	5
General industrial machines	599	4		732	6

With respect to the above table:

The automotive category is primarily comprised of auto parts distributors and wholesalers, resale and leasing services in the automotive and aircraft industries and maintenance services for automotive and aircraft parts.

The computers category consists of software/hardware distributors and manufacturers, component manufacturers and end-users of this equipment.

The department and general merchandise retail stores category is primarily comprised of factored accounts receivable, which represent short-term trade receivables from numerous customers.

The health services category is primarily comprised of revolving and term facilities with small- and mid-sized health care providers. The increase in this category from 1998 is due to the acquisition of HCFP.

A majority of the lending assets in the transportation category arise from chartered aircraft services and transportation services for freight, cargo and other various packages.

The majority of lending assets in the food, grocery and miscellaneous retail category are revolving and term facilities with borrowers that are primarily in the business of manufacturing and retailing of food products.

The general industrial machines classification is distributed among machinery used for many different industrial applications.

Liquidity and Capital Resources

During the second half of 2000, the debt and money markets experienced increased volatility and widening of credit spreads. To maintain competitively priced funding, we have diversified our investor base through a variety of new facilities and programs, including an asset backed commercial paper conduit facility, Euro Medium-Term Note and Euro Commercial Paper Programs and a Canadian Commercial Paper Program. As a result of these measures, we believe that we have strengthened our liquidity position by broadening our sources for funding and are better able to deal with the continued growth of the Company. We will continue to explore ways to diversify our funding sources into new markets and to expand existing liquidity sources. See Cautionary Note Regarding Forward-Looking Statements below.

We manage liquidity to fund asset growth and meet debt obligations primarily by:

monitoring the relative maturities of assets and liabilities; and

borrowing funds through the U.S. and international money and capital markets and bank credit markets.

Our primary sources of funds are:

cash flows from operations;

commercial paper borrowings;

issuances of medium-term notes and other debt securities;

paydowns on lending assets; and

securitizations, syndications and sales of lending assets.

During 2000, our major funding requirements included:

$7.8 billion of longer-term loans, leases and investments funded;

the retirement of $2.8 billion of senior notes;

a net decrease in commercial paper and short-term debt of $75 million; and

common and preferred dividends of approximately $68 million.

Our major sources of funding these requirements included:

cash flows from operations of $567 million;

loan repayments and proceeds from the sale of investment and equipment on lease of $2.1 billion;

a net decrease in short-term loans and advances to factoring clients of $613 million;

the syndication, securitization and sale of over $3.0 billion of loans; and

the issuance of $4.7 billion of senior notes.

We continued to maintain a conservative funding posture, with commercial paper and short-term borrowings amounting to 33% of total debt at December 31, 2000, compared to 38% at the end of 1999.

As of December 31, 2000, availability under our committed bank credit and asset sale facilities totaled $5.7 billion and represented 116% of our outstanding commercial paper and short-term borrowings.

We have approximately $4.2 billion in available liquidity support, split equally between two bank credit facilities. One of these is a five-year facility expiring in April 2005 and the other is a 364-day facility expiring in April 2001 (which we intend to renew). The 364-day facility includes a term loan option that expires one year after the option exercise date. The terms of the bank credit facilities require us to maintain stockholders’ equity of $1.5 billion. Under the terms of the debt covenants of the agreements, we could have borrowed an additional $9.1 billion of debt at December 31, 2000.

During 2000, we established an asset backed commercial paper conduit facility. This facility allows us to sell participations in a designated pool of Corporate Finance cash-flow loans to bank-sponsored conduits, on a limited recourse basis. Committed liquidity support under this facility totals $1.4 billion, of which $700 million was utilized at December 31, 2000. We used this facility during the second half of 2000 as it provided a more cost-effective funding source. The underlying liquidity support for the conduits is provided by unaffiliated commercial banks. The commitment period of this liquidity support is 364 days and may be renewed annually by the banks, at their discretion. See Note 27—Subsequent Events—of our Consolidated Financial Statements for more information regarding this facility.

We have approximately $300 million of additional alternative liquidity, which is available by discounting eligible French receivables with the French Central Bank, since Factofrance is a registered financial institution in France. At December 31, 2000, $183 million was available for use under this facility.

The consolidated international subsidiaries are funded primarily through short-term money market and bank borrowings, which are supported by approximately $750 million (U.S. dollar equivalent) of committed foreign bank credit facilities. At December 31, 2000, there was approximately $563 million available for use under these facilities.

Through our wholly-owned subsidiary, Factofrance, we have two factored accounts receivable sale facilities. These facilities allow us to sell an undivided interest of up to
FRF 1.7 billion (approximately $250 million) in a designated pool of our factored accounts receivable to two bank-sponsored conduits on a limited recourse basis. As of December 31, 2000, these facilities were fully utilized.

We have a shelf registration statement, filed with the SEC, covering the sale of up to $10 billion in debt securities (including medium term notes), senior preferred stock and Class A Common Stock. As of December 31, 2000, we had approximately $5.9 billion available under this shelf registration.

We also have a Euro Medium-Term Note Program for the issuance of up to $2 billion in notes to be issued to investors outside of the U.S. from time to time. As of December 31, 2000, approximately $1.5 billion was available under this program.

We have a Euro commercial paper program and a Canadian commercial paper program for the issuance of notes up to $1 billion and $250 million, respectively. As of December 31, 2000, there was $385 million and $42 million, respectively, available under these programs.

In addition to these various sources of liquidity, we have access to $500 million of additional liquidity support under the Keep Well Agreement between Heller and Fuji Bank. This agreement, which cannot be terminated by either party prior to December 31, 2002, also provides that Fuji Bank will maintain our net worth at an amount equal to $500 million. This agreement has been in place since 1983 and Fuji Bank has never been required to make any capital contribution or advance any funds to us under the Keep Well Agreement.

Our ratio of debt (net of short-term investments) to total stockholders’ equity remained conservative relative to finance industry peers at 5.9 times and 5.8 times at December 31, 2000 and 1999, respectively. Leverage and the level of commercial paper and short-term borrowings continued to remain within targeted ranges, which will allow us to maintain a strong financial position. Under the terms of the debt covenants in our two bank credit facilities, we are permitted to have a ratio of debt to equity of up to 10 times.

Accounting Developments

Statement of Financial Accounting Standards No. 133

In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133 (SFAS No. 133), Accounting for Derivative Instruments and Hedging Activities, as amended by Statement of Financial Accounting Standards No. 137, Deferral of the Effective Date of FASB Statement No. 133 and Statement of Financial Accounting Standards No. 138 Accounting for Derivative Instruments and Hedging Activities —an Amendment to FASB Statement No. 133 (collectively referred to as SFAS No. 133). This Statement establishes accounting and reporting standards requiring all derivative instruments (including certain derivative instruments embedded in other contracts) to be recorded in the balance sheet as either an asset or liability measured at its fair value. Changes in the fair value of the derivative are to be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows gains and losses on derivatives to offset related results on the hedged items in the income statement and requires that a company must document, designate, and assess the effectiveness of transactions that receive hedge accounting. SFAS No. 133, as amended, is effective for fiscal years beginning after June 15, 2000.

SFAS No. 133 allows special hedge accounting for fair value and cash flow hedges. The gain or loss on a derivative instrument qualifying as a fair value hedge as well as the offsetting gain or loss on the hedged item are recognized currently in earnings. The effective portion of the gain or loss on a derivative instrument qualifying as a cash flow hedge is initially reported as a component of other comprehensive income. It is reclassified into earnings in the period in which the cash flows affect earnings. The statement could increase volatility in earnings and other comprehensive income or involve certain changes in our business practices.

We hedge certain of our fixed rate receivables and investments using interest rate swap agreements or futures contracts to mitigate the effects of changes in interest rates. Under current generally accepted accounting principles any gain or loss on the derivatives is deferred and recognized into income when the asset is disposed of. In contrast, SFAS No. 133 will require that changes in the fair value of the derivative instrument are recognized currently in earnings. To the extent that we are able to satisfy certain fair value hedge criteria, the change in value of the assets due to changes in interest rates is also recognized currently in earnings. We currently hedge interest exposure related to debt issuances and, to a lesser extent, foreign exchange exposure related to our international operations.

SFAS No. 133 also requires that most warrants to acquire stock of publicly traded companies and certain privately held companies are classified as derivatives. Consequently, changes in fair value of the warrant will be recognized in earnings each reporting period.

We adopted SFAS No. 133 on January 1, 2001. Adoption of this new accounting standard will result in:

cumulative before-tax reductions in net income of approximately $6 million to be recorded in the first quarter of 2001; and

after-tax reductions through other comprehensive income, a component of stockholders’ equity, of approximately $1 million in the first quarter of 2001.

The adjustment to net income relates primarily to certain economic hedging relationships that do not qualify for special accounting treatment under the new standard as well as ineffectiveness arising from other hedging relationships. The one-time impact of implementing SFAS No. 133 is the effect of an accounting change and should not, therefore, be considered as part of our results of operations for 2001.

Statement of Financial Accounting Standards No. 140

In September 2000, the FASB issued SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities—a replacement of FASB Statement No. 125. This statement requires new disclosures covering securitization transactions entered into during the period and retained interests in securitized financial assets existing at the balance sheet date. These changes must be applied for fiscal years ending after December 15, 2000 and accordingly, we have included additional disclosures in this Form 10-K. Other provisions of SFAS No. 140, including a revision to the criteria for qualifying special purpose entities (QSPEs), must be applied prospectively to transfers of financial assets and extinguishments of liabilities occurring after March 31, 2001. We are currently assessing the impact of this statement on our sale and securitization activities.

Proposed Statement on Business Combinations and Intangible Assets

The FASB has reached a tentative agreement to modify the accounting for business combinations. Under the proposed modification, pooling-of-interests accounting would be eliminated. Additionally, the goodwill generated in a purchase acquisition transaction would no longer be amortized against earnings over an estimated life. Instead, goodwill would be recorded as a permanent asset and would be reviewed for impairment and expensed against earnings only in periods in which its recorded value exceeded its fair market value.

There is no specific deadline for the completion of the FASB’s review of this project. The earliest expected completion date is the end of the second quarter of 2001. The FASB has indicated that all issues raised under this exposure draft remain open to continuing deliberation.

Cautionary Note Regarding Forward-Looking Statements

This Form 10-K Annual Report and the information incorporated by reference in it includes or will include forward-looking statements, as defined in Section 27A of the Securities Act and Section 21E of the Exchange Act, that reflect our current expectations regarding our future results of operations, performance and achievements. We intend for these forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. We have tried to identify these forward-looking statements by using words such as anticipates, believes, estimates, expects, plans, intends and other similar expressions. These forward-looking statements are based on information currently available to us and are subject to risks, uncertainties and contingencies, which could cause our actual results, performance or achievements for 2001 and beyond to differ materially from those expressed in, or implied by these statements.

These risks, uncertainties and contingencies include, but are not limited to, the following:

the success or failure of our efforts to implement our business strategy;

changes in overall economic conditions and the impact of those conditions on the performance of our borrowers and lessees, on the markets in which they conduct business and access capital, and on the capital markets in which we syndicate and securitize our assets;

changes in the volume and mix of interest earning assets, the level of interest rates earned on those assets, the volume of interest-bearing liabilities and the level of interest rates paid on those interest-bearing liabilities;

currency exchange rate fluctuations, economic conditions and competition in international markets;

actions of our competitors and our ability to respond to those actions;

the cost of our capital, which depends in part on our portfolio quality, our debt ratings, our financial performance, prospects and outlook and general market conditions;

the adequacy of our allowance for losses of receivables;

risk associated with the value and recoverability of leased assets;

uncertainties associated with enterprise risk assessment and management, and the impact of credit, market and operational risk;

actual results in connection with exited businesses and disposition of assets;

our ability to attract and retain qualified and experienced management, sales and credit personnel; and

changes in governmental regulations, tax rates and similar matters.

You should not place undue reliance on any forward-looking statements. Except as otherwise required by federal securities laws, we assume no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or otherwise.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.

See Item 1.—Enterprise Risk Management.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

HELLER FINANCIAL, INC. AND SUBSIDIARIES

MANAGEMENT REPORT ON RESPONSIBILITY FOR FINANCIAL REPORTING

The management of Heller Financial, Inc. and its subsidiaries (the Company) is responsible for the preparation, integrity and objectivity of the accompanying consolidated financial statements. The statements were prepared in accordance with accounting principles generally accepted in the United States, reflecting, where applicable, management’ s best estimates and judgments. The other financial information in the December 31, 2000 annual report filed on Form 10-K is consistent with that contained in the consolidated financial statements.

The Company’s consolidated financial statements have been audited by Arthur Andersen LLP, independent public accountants. Arthur Andersen LLP is engaged to audit the consolidated financial statements and conducts such tests and related procedures as it deems necessary in conformity with auditing standards generally accepted in the United States. The opinion of the independent auditors, based upon their audits of the consolidated financial statements, is contained in this Form 10-K. Management has made available to Arthur Andersen LLP all the Company’s financial records and related data, as well as the minutes of the stockholders’ and directors’ meetings.

Management is responsible for establishing and maintaining a system of internal accounting controls and procedures to provide reasonable assurance that assets are safeguarded and that transactions are authorized, recorded and reported properly. The internal accounting control system is augmented by a program of internal audits and appropriate reviews by management, written policies and guidelines and careful selection and training of qualified personnel. Management considers the internal auditors’ and Arthur Andersen LLP’s recommendations concerning the Company’s system of internal accounting controls and takes action in a cost-effective manner to appropriately respond to these recommendations. Management believes that the Company’s internal accounting controls provide reasonable assurance that assets are safeguarded against material loss from unauthorized use or disposition and that the financial records are reliable for preparing financial statements and other data and for maintaining accountability of assets.

Management also recognizes its responsibility for fostering a strong ethical climate so that the Company’s affairs are conducted according to high standards of personal and corporate conduct. This responsibility is characterized and reflected in the Company’s code of ethical business practices, which is publicized throughout the Company. The code of ethical business practices addresses, among other things, the need for open communication within the Company, avoidance of potential conflicts of interest, compliance with all domestic and foreign laws, including those relating to financial disclosure, and the confidentiality of proprietary information.

Richard J. Almeida

Chairman and Chief Executive Officer

Lauralee E. Martin

Executive Vice President and Chief Financial Officer

Lawrence G. Hund

Executive Vice President, Controller and Chief Accounting Officer

HELLER FINANCIAL, INC. AND SUBSIDIARIES

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Heller Financial, Inc.:

We have audited the accompanying consolidated balance sheets of HELLER FINANCIAL, INC. (a Delaware corporation) AND SUBSIDIARIES as of December 31, 2000 and 1999, and the related consolidated statements of income, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Heller Financial, Inc. and Subsidiaries as of December 31, 2000 and 1999, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

Chicago, Illinois

January 16, 2001

(except with respect to Note 27, as to

which the date is February 16, 2001)

HELLER FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31,
	2000		1999
	(in millions)
ASSETS
Cash and cash equivalents	$ 732		$ 516
Receivables (Notes 6 and 24)
Commercial loans
Term loans	4,973		4,652
Revolving loans	2,052		2,055
Real estate loans	2,686		2,405
Factored accounts receivable	2,615		2,708
Equipment loans and leases	3,640		2,975

Total receivables	15,966		14,795
Less: Allowance for losses of receivables (Note 6)	342		316

Net receivables	15,624		14,479
Equity and real estate investments (Note 7)	897		726
Debt securities (Note 7)	755		549
Operating leases (Note 7)	695		428
Investments in international joint ventures (Note 7)	216		215
Lending partnerships (Note 7)	165		95
Goodwill (Note 7)	458		481
Other assets (Note 7)	519		484

Total assets	$20,061		$17,973

LIABILITIES AND STOCKHOLDERS’ EQUITY
Senior debt (Note 8)
Commercial paper and short-term borrowings	$ 5,127		$ 5,202
Notes and debentures	10,525		8,630

Total debt	15,652		13,832
Credit balances of factoring clients	982		993
Other payables and accruals	840		790

Total liabilities	17,474		15,615
Minority interest	12		11
Stockholders’ equity
Non-redeemable preferred stock (Notes 12 and 13)	400		400
Class A Common Stock ($.25 par; 500,000,000 shares authorized; 46,347,832 shares issued and 45,450,329 shares outstanding) (Notes 2 and 14)	12		12
Class B Common Stock ($.25 par; 300,000,000 shares authorized; 51,050,000 shares issued and outstanding) (Note 2)	13		13
Additional paid in capital	1,631		1,626
Retained earnings (Note 13)	554		332
Treasury stock (897,503 shares) (Note 14)	(19	)	(9	)
Accumulated other comprehensive income	(16	)	(27	)

Total stockholders’ equity	2,575		2,347

Total liabilities and stockholders’ equity	$20,061		$17,973

The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.

HELLER FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

	For the Year Ended December 31,
	2000	1999	1998
	(in millions)
Interest income	$1,628	$1,197	$1,047
Interest expense	999	685	624

Net interest income	629	512	423
Fees and other income (Note 15)	298	286	206
Factoring commissions	73	119	124
Income of international joint ventures	38	35	30

Operating revenues	1,038	952	783
Operating expenses (Note 16)	459	456	399
Provision for losses (Note 6)	148	136	77
Gain on sale of Commercial Services assets (Note 5)	—	79	—
Restructuring charge (Note 17)	—	—	17

Income before taxes and minority interest	431	439	290
Income tax provision (Note 19)	139	154	93
Minority interest	2	1	4

Net income	$ 290	$ 284	$ 193

Dividends on preferred stock	$ 29	$ 28	$ 21

Net income applicable to common stock	$ 261	$ 256	$ 172

Basic net income applicable to common stock per share (Note 20)	$ 2.70	$ 2.75	$ 2.23

Diluted net income applicable to common stock per share (Note 20)	$ 2.69	$ 2.74	$ 2.23

Pro forma basic net income applicable to common stock per share (Note 20)	$ 2.70	$ 2.75	$ 1.92

Pro forma diluted net income applicable to common stock per share (Note 20)	$ 2.69	$ 2.74	$ 1.91

The accompanying Notes to Consolidated Financial Statements

are an integral part of these statements.

HELLER FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Year Ended December 31,
	2000		1999		1998
	(in millions)
OPERATING ACTIVITIES
Net income	$ 290		$ 284		$ 193
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for losses	148		136		77
Losses from equity investments	17		21		33
Amortization and depreciation	54		46		25
Provision for deferred tax asset	67		40		33
(Decrease) increase in accounts payable and accrued liabilities	(6	)	206		2
Undistributed income of international joint ventures	(33	)	(21	)	(20	)
Increase in interest payable	56		20		21
Net increase in other assets	(33	)	(23	)	(72	)
Other	7		33		68

Net cash provided by operating activities	567		742		360
INVESTING ACTIVITIES
Increase in longer-term loans
Due to HCFP acquisition	—		(535	)	—
Due to Dealer Products Group acquisition	—		—		(579	)
Due to fundings	(6,887	)	(7,334	)	(6,486	)
Collections of principal	1,579		2,476		2,810
Loan sales, securitizations and syndications	3,014		2,425		4,068
Net decrease (increase) in short-term loans and advances to factoring clients
Due to sale of HCS assets	—		334		—
Other	613		(1,066	)	(874	)
Investment in operating leases
Due to Dealer Products Group acquisition	—		—		(35	)
Other	(600	)	(278	)	(170	)
Investment in equity interests and other investments	(332	)	(447	)	(536	)
Goodwill and non-competition agreement from acquisitions	—		(238	)	(187	)
Sales of investments and equipment on lease	515		337		362
Other	—		48		(54	)

Net cash used for investing activities	(2,098	)	(4,278	)	(1,681	)
FINANCING ACTIVITIES
Senior note issues	4,695		4,805		2,780
Retirement of notes and debentures	(2,797	)	(2,932	)	(2,020	)
(Decrease) increase in commercial paper and other short-term borrowings	(75	)	1,521		249
Net proceeds from preferred stock issuance	—		—		122
Net proceeds from common stock issuance/re-issuance	1		192		991
Repurchase of Class A Common Stock (Note 14)	(10	)	(2	)	(8	)
Net increase (decrease) in advances to affiliates	—		6		(32	)
Dividends paid on preferred and common stock	(68	)	(62	)	(1,027	)
Other	1		(5	)	(26	)

Net cash provided by financing activities	1,747		3,523		1,029
Increase (decrease) in cash and cash equivalents	216		(13	)	(292	)
Cash and cash equivalents at the beginning of the year	516		529		821

Cash and cash equivalents at the end of the year	$ 732		$ 516		$ 529

The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.

HELLER FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

	Non-re- deemable Preferred Stock (Note 12)	Class A Common Stock (Note 2)	Class B Common Stock (Note 2)	Treasury Stock (Note 14)		Add’l Paid In Capital		Accum. Other Compre- hensive Income		Retained Earnings		Total		Compre- hensive Income
	(in millions)
BALANCE AT DECEMBER 31, 1997	$275	—	$13	—		$ 672		$(12	)	$730		$1,678
Comprehensive Income:
Net income	—	—	—	—		—		—		193		193		$193
Other comprehensive income, net of tax:
Unrealized gain on securities, net of tax of $7	—	—	—	—		—		—		—		14		14
Foreign currency translation adjustments, net of tax benefit of $17	—	—	—	—		—		—		—		(1	)	(1	)

Other comprehensive income	—	—	—	—		—		13		—		—		13

Comprehensive income	—	—	—	—		—		—		—		—		$206

Issuance of Noncumulative Perpetual Senior Preferred Stock, Series D	125	—	—	—		(3	)	—		—		122
Issuance of Class A Common Stock (Note 2)	—	10	—	—		981		—		—		991
Repurchase of Class A Common Stock (Note 14)	—	—	—	(8	)	—		—		—		(8	)
Preferred stock dividends (Notes 12 and 13)	—	—	—	—		—		—		(21	)	(21	)
Common stock dividends (Notes 2 and 13)	—	—	—	—		(215	)	—		(791	)	(1,006	)

BALANCE AT DECEMBER 31, 1998	$400	$10	$13	$ (8	)	$1,435		$ 1		$111		$1,962
Comprehensive Income:
Net income	—	—	—	—		—		—		284		284		$284
Other comprehensive income, net of tax:
Unrealized loss on securities, net of tax benefit of $8	—	—	—	—		—		—		—		(15	)	(15	)
Foreign currency translation adjustments, net of tax of $(56)	—	—	—	—		—		—		—		(13	)	(13	)

Other comprehensive income	—	—	—	—		—		(28	)	—		—		(28	)

Comprehensive income	—	—	—	—		—		—		—		—		$256

Issuance of Class A Common Stock (Note 2)	—	2	—	—		190		—		—		192
Repurchase of Class A Common Stock (Note 14)	—	—	—	(1	)	—		—		(1	)	(2	)
Vesting of Restricted Shares	—	—	—	—		1		—		—		1
Preferred stock dividends (Notes 12 and 13)	—	—	—	—		—		—		(28	)	(28	)
Common stock dividends (Notes 2 and 13)	—	—	—	—		—		—		(34	)	(34	)

BALANCE AT DECEMBER 31, 1999	$400	$12	$13	$ (9	)	$1,626		$(27	)	$332		$2,347
Comprehensive Income:
Net income	—	—	—	—		—		—		290		290		$290
Other comprehensive income, net of tax:
Unrealized gain on securities, net of tax of $2	—	—	—	—		—		—		—		3		3
Foreign currency translation adjustments, net of tax of $(34)	—	—	—	—		—		—		—		8		8

Other comprehensive income	—	—	—	—		—		11		—		—		11

Comprehensive income	—	—	—	—		—		—		—		—		$301

Re-issuance of Class A Common Stock	—	—	—	—		1		—		—		1
Repurchase of Class A Common Stock (Note 14)	—	—	—	(10	)	—		—		—		(10	)
Vesting of Restricted Shares	—	—	—	—		4		—		—		4
Preferred stock dividends (Notes 12 and 13)	—	—	—	—		—		—		(29	)	(29	)
Common stock dividends (Note 2 and 13)	—	—	—	—		—		—		(39	)	(39	)

BALANCE AT DECEMBER 31, 2000	$400	$12	$13	$(19	)	$1,631		$(16	)	$554		$2,575

The accumulated other comprehensive income balance included $10 million, $7 million and $22 million of net unrealized gains on securities available for sale at December 31, 2000, 1999 and 1998, respectively. Accumulated other comprehensive income also included deferred foreign currency translation adjustments, net of tax, of $(26) million, $(34) million and $(21) million at December 31, 2000, 1999 and 1998, respectively.

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

HELLER FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Description of the Reporting Entity—

Heller Financial, Inc. (including its consolidated subsidiaries, Heller or the Company, which may be referred to as we, us or our) furnishes commercial finance services to businesses in the United States and invests in and operates commercial finance companies throughout the world. We provide our products and services to mid-sized and small businesses principally through two business segments, (1) Domestic Commercial Finance and (2) International Factoring and Asset Based Finance. The Domestic Commercial Finance segment is comprised of five business units: (i) Corporate Finance (Corporate Finance), (ii) Real Estate Financial Services (Real Estate Finance), (iii) Leasing Services (Leasing Services), (iv) Healthcare Finance (Healthcare Finance) and (v) Small Business Finance (Small Business Finance )—See Note 27—Subsequent Events. Our International Factoring and Asset Based segment, managed by our wholly-owned subsidiary, Heller International Group, Inc. (International Group), provides international factoring and asset based financing to medium size and small companies.

Prior to 1998, all of our common stock was owned by Heller International Corporation (HIC), a wholly-owned subsidiary of The Fuji Bank, Limited (Fuji Bank), of Tokyo, Japan. In addition, Fuji Bank directly owned 21% of the outstanding shares of International Group. We owned the remaining 79% of the outstanding shares of International Group.

Effective January 1998, in order to combine its United States non-bank operations under one holding company, Fuji Bank formed Fuji America Holdings, Inc. (FAHI), and transferred ownership of the Company from HIC to FAHI.

In May 1998, we issued 38,525,000 shares of Class A Common Stock in an initial public offering (the Offering). During 1998, we also issued 505,912 shares of restricted Class A Common Stock to management. After the Offering and the issuance of shares to management, there were 90,080,912 shares of common stock issued, resulting in FAHI owning 79% of the voting interest and 57% of the economic interest of Heller’s issued common stock. See Note 2—Initial Public Offering—for more details. In May 1998, we also purchased the 21% interest held by Fuji Bank in International Group and we now own 100% of International Group.

In July 1999, we issued 7.3 million shares of Class A Common Stock in conjunction with the HealthCare Financial Partners acquisition. See Note 4—HealthCare Financial Acquisition—for more details. Our issuance of common stock related to this transaction reduced FAHI’s economic interest in Heller from 57% to 52%.

In September 2000, Fuji Bank, all of whose capital stock had been previously publicly held, became a wholly-owned subsidiary of Mizuho Holdings, Inc. (Mizuho), which currently is also the holding company for the Dai-Ichi Kangyo Bank Ltd. (DKB), and the Industrial Bank of Japan (IBJ). The common shareholders of Fuji Bank, DKB and IBJ became shareholders of Mizuho, which is publicly held. We believe Mizuho is the largest banking organization in the world, with over $1 trillion in total assets.

Basis of Presentation—

The accompanying consolidated financial statements include the accounts of the Company and our majority-owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. We account for investments in affiliated companies owned 50% or less using the equity method. We have included certain temporary interests in investments and carry those temporary investments at cost.

Use of Estimates—

Preparing financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions. These estimates and assumptions may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the financial statement date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents—

Cash and cash equivalents consist of cash deposits maintained in banks and short-term debt securities with original maturities of less than 60 days.

Receivables—

We present receivables net of unearned income, which generally includes deferred loan origination and commitment fees and direct loan origination costs. We also include in unearned income other amounts attributed to the fair value of equity interests and other investments received in connection with certain financings. We amortize the unearned income to interest income using the effective interest method over the life of the related loan, lease or commitment period.

We originate loans, portions of which may be sold to participants to manage borrower, industry or product concentrations. We present these receivables net of unearned income. In the event we sell a portion of a loan we had originated, any deferred fees or discounts relating to the portion sold are recognized immediately in income. For loan sales that qualify as participations, we recognize income when the participation is complete.

We review income recognition on an account by account basis. We evaluate collateral regularly, primarily by assessing the related current and future cash flow streams to estimate the value of the equipment, or by assessing the value of the property underlying the receivable. We classify loans as nonearning and we suspend all interest and unearned income amortization when there is significant doubt as to the ability of the debtor to meet current contractual terms. Numerous factors including loan covenant defaults, deteriorating loan-to-value relationships, delinquencies greater than 90 days, the sale of major income generating assets or other major operational or organizational changes may lead to income suspension. We may restore a nonearning account to earning status, triggering recognition of deferred income, if all delinquent principal and interest have been paid under the original contractual terms or the account has been restructured and has demonstrated both the capacity to service the amended terms of the debt and has adequate loan to value coverage.

Direct financing leases are recorded at the aggregate future minimum lease payments plus estimated residual values and deferred initial direct costs, less unearned income. We recognize income on direct financing leases by a method which produces a constant periodic rate of return on the outstanding investment in the lease.

Allowance for Losses—

We have an established process to evaluate, on a quarterly basis, the adequacy of the allowance for loan losses, which assesses the risk of losses inherent in our portfolio. This process provides an allowance consisting of two components, allocated and unallocated. To derive the allocated component of the allowance, the Company combines estimates of the allowances needed for loans analyzed individually (including impaired loans subject to Statement of Financial Accounting Standards (SFAS) No. 114, Accounting by Creditors for Impairment of a Loan), and loans analyzed on a pooled basis.

The determination of allocated reserves involves a review of certain higher-risk transactions, focusing on the accuracy of loan grading, assessments of specific loss content and, in some cases, strategies for resolving problem credits. The loan loss reserve allocations arrived at through this methodology are adjusted based on management’s judgement concerning the effect of recent economic events on portfolio performance. In the case of more homogeneous portfolios, such as small business lending and small ticket leasing, the determination of allocated reserves is conducted at a more aggregate, or pooled level. For portfolios of this nature, the risk assessment process focuses on recent delinquency and loss trends in different portfolios to project future losses.

To mitigate the imprecision inherent in most estimates of expected credit losses, the allocated component of the allowance is supplemented by an unallocated component. The unallocated component includes management’s judgmental determination of the amounts necessary for economic uncertainties, related industry performance, historical losses and other subjective factors; correspondingly, the relationship of the unallocated component to the total allowance for loan losses may fluctuate from period to period. Although management has allocated a portion of the allowance to specific loan categories, the adequacy of the allowance must be considered in its entirety.

The allowance for losses of receivables is established through direct charges to income. We charge losses to the allowance when we deem all or a portion of a receivable to be impaired and uncollectible as determined by account management procedures. These procedures include assessing how the borrower is affected by economic and market conditions, evaluating operating performance and reviewing loan-to-value relationships. We measure impaired receivables based on the present value of expected future cash flows discounted at the receivable’s effective interest rate, at the observable market price of the receivable or at the fair value of the collateral if the receivable is collateral dependent. When the recorded balance of an impaired receivable exceeds the relevant measure of value, we record a writedown against our allowance for losses of receivables.

Securitized Receivables—

We have securitized and sold to investors certain real estate loans, commercial cash flow loans, small business loans, factored accounts receivable and equipment loans and leases. In the securitization process, originated loans are sold to trusts. The trusts then issue asset-backed securities to investors. In accordance with SFAS No. 125, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities, as amended by SFAS No. 127, Deferral of the Effective Date of Certain Provisions of FASB Statement No. 125, collectively referred to as SFAS No. 125, after a transfer of financial assets, an entity:

recognizes the financial and servicing assets it controls and the liabilities it has incurred;

derecognizes financial assets when control has been surrendered; and

derecognizes liabilities when extinguished.

SFAS No. 125 provides standards for distinguishing transfers of financial assets that are sales, from transfers that are secured borrowings. Securitizations of finance receivables are accounted for as sales when legal and effective control over the related receivables is surrendered. Servicing assets or liabilities are recognized when the servicing rights are retained by the seller and when servicing fees vary from market rates.

In accordance with SFAS No. 125, when we sell loans in a sale or securitization transaction, the carrying value of loans is allocated to the portion retained by Heller and the portion sold, based on relative fair values. We recognize a gain or loss for the difference between the net proceeds received and the allocated carrying value of the receivables sold. Net proceeds include cash received plus the fair value of securities or other interests retained less liabilities incurred or estimated expenses. Any gain or loss from a sale or securitization transaction is recognized currently in fees and other income.

Securities retained in a transaction are recorded at their estimated fair market value based on estimated future cash flows, factoring in expected loan loss and prepayment speeds, discounted at a market rate of interest and adjusted for any recourse obligations. Assumptions used in estimating future cash flows are based on a combination of our historical experience, current and forecasted trends and external data. We classify retained securities as debt securities available for sale and periodically review these securities for impairment. If we do not retain any interest in the transaction and sell all of the securities to third party investors on a non-recourse basis, our gain equals the net proceeds on the transaction less the carrying value of the securities sold.

In general, we do not establish servicing assets or liabilities because, in securitization transactions to date, we have earned servicing fees that are considered consistent with market rates.

See Note 26—Accounting Developments—for more information on SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities—a replacement of FASB Statement No. 125.

Investments in International Joint Ventures—

Our investments in unconsolidated joint ventures represent investments in companies with operations in 14 foreign countries. We use the equity method of accounting for these investments. Under this method, we recognize our share of the earnings or losses of the joint venture in the period in which it is earned. We record these amounts as income of international joint ventures in our consolidated statements of income. Dividends received from joint ventures reduce the carrying amount of our investment.

Lending Partnerships—

Our investments in lending partnerships represent interests we hold in partnerships, which have been established for the purpose of providing financing through operating leases, loans or direct financing leases. We account for these investments under the equity method of accounting.

Investments—

Equity interests and investments—We carry at cost investments in warrants, certain common and preferred stocks and certain equity investments, which are not subject to the provisions of SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities (SFAS No. 115). We periodically review the valuation of all of these investments, and we write down the investment balance to reflect declines in value determined to be other than temporary. We record any gains or losses recognized upon sale or writedown of these investments as a component of fees and other income. We account for equity investments in limited partnerships under the equity method of accounting in accordance with Accounting Principles Board Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock, and record income on these investments based on financial information received from fund managers.

Equipment on Operating Leases—We record, at cost, aircraft and equipment on operating leases and depreciate it over its estimated useful lives using the straight line method for financial reporting purposes and accelerated methods for tax purposes. The equipment and aircraft on operating leases is shown net of accumulated depreciation in the balance sheet. We recognize rental revenue from our operating leases ratably over the lease term. Rental revenue, net of depreciation, is recorded as a component of interest income.

Residual Values—We have investments in the residual values of our leasing portfolios. The residual values represent the estimate of the values of the assets at the end of the lease contracts. We initially record these based on appraisals and estimates. Realization of the residual values is dependent on our future ability to market the aircraft or equipment under then prevailing market conditions. Management reviews residuals periodically to determine that recorded amounts are appropriate.

Available for Sale and Held to Maturity Securities—In accordance with SFAS No. 115, we carry, at fair value, our available for sale securities. We record any unrealized gains or losses in stockholders’ equity, net of related taxes. We record our held to maturity securities at amortized cost. We write down to fair value available for sale and held to maturity securities to reflect declines in value determined to be other than temporary. We include the amount of any writedown in fees and other income.

Real Estate Investments—We provide financing through certain real estate loan arrangements that are recorded as acquisition, development and construction investment transactions. We recognize income to the extent we have received cash in excess of the investment’s carrying amount.

Repossessed Assets—Assets that we have legally acquired in satisfaction of receivables are carried at fair value, less estimated selling costs and are included in other assets. After repossession, we expense operating costs and apply cash receipts to reduce the asset balance.

Goodwill—We record as goodwill the excess of our acquisition cost over the fair value of the acquired entity’s net assets and any identifiable intangibles. We amortize goodwill on a straight-line basis over the acquisition’s expected beneficial period not to exceed 25 years. We periodically evaluate the carrying value of our goodwill for impairment.

Income Taxes—

Federal income taxes are accounted for utilizing the liability method. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

Derivative Financial Instruments—

We use derivatives as an integral part of asset/liability management to reduce the overall level of financial risk arising from normal business operations. These derivatives are used to:

diversify sources of funding;

alter interest rate exposure arising from mismatches between assets and liabilities; and

manage exposure to fluctuations in foreign exchange rates.

We do not trade in derivative securities, nor do we use speculative derivative products to generate earnings from changes in market conditions.

Before entering into a derivative transaction, we determine that a high correlation exists between the change in value of the hedged item and the value of the derivative. At the inception of each transaction, derivatives are designated or matched to specific assets or pools of assets or liabilities. After inception of a hedge, asset/liability managers monitor its effectiveness through an ongoing review of the amounts and maturities of assets, liabilities and derivative positions. This information is reported to our Financial Risk Management Committee (FRMC) whose members include our Chairman, Chief Financial Officer and Treasurer. The FRMC approves the direction we will take with respect to our financial risk position and regularly reviews interest rate sensitivity, foreign exchange exposure, funding needs and liquidity. Our financial risk position and the related activities of the FRMC are reported regularly to the Executive Committee of the Board of Directors and to the Board of Directors.

We enter into interest rate swap agreements to modify the interest characteristics of our outstanding assets and liabilities to limit exposure to changes in interest rates. Our interest rate swap agreements are designated as hedges of their underlying assets and liabilities. We may also utilize cross currency interest rate swaps when the issuance of debt denominated in a foreign currency is deemed more cost effective. This type of swap converts foreign currency denominated debt to U.S. dollar denominated debt with U.S. based indices. We generally hold our interest rate swap agreements to maturity. Any differential due to changes in interest rates is accrued and recognized as an adjustment to interest expense or interest income over the agreement’s life. Any amount payable to or receivable from counter-parties is recorded in other liabilities or other assets. Gains or losses on terminated interest rate swaps that hedged underlying assets or obligations are amortized to interest income or interest expense over the remaining life of the underlying asset or obligation. If the underlying asset or obligation is sold, we recognize the gain or loss related to closing the swap currently in income.

We also periodically enter into forward currency exchange contracts. These financial instruments serve as hedges of our foreign investment in international subsidiaries and joint ventures. Through these contracts, we primarily sell the local currency and buy U.S. dollars. Gains or losses on terminated forward currency exchange contracts, which were hedges of net investments in a foreign subsidiary or joint venture, continue to be deferred and are recognized when the international investment is sold or substantially liquidated. Gains or losses resulting from translation of foreign currency financial statements and the related effects of the hedges of net investments in joint ventures and subsidiaries outside the United States, are accumulated in stockholders’ equity, net of related taxes, until the international investment is sold or substantially liquidated. The change in fair value of contracts, which serve to effectively hedge our foreign investment in international subsidiaries and joint ventures, is included in the determination of net income.

We utilize interest rate futures contracts to hedge the interest rate risk of a portion of our receivables portfolio and to fix the interest rates of various floating rate liabilities. Futures contracts are agreements to buy or sell a specific amount of a financial instrument at a particular price on a stipulated future date. Futures contracts are carried at fair value.

Stock Based Compensation—

We account for stock option and stock awards in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB No. 25). In accordance with APB No. 25, no compensation expense is recognized for stock options or awards issued under our stock incentive plan, as the exercise price of the stock options equaled the market value on the grant dates. In 1996, SFAS No. 123, Accounting for Stock-Based Compensation (SFAS No. 123), became effective. SFAS No. 123, which prescribes the recognition of compensation expense based on the fair value of options on the grant date, allows companies to continue applying APB No. 25 if certain pro forma disclosures are made assuming hypothetical fair value method application. See Note 18—Employee Benefits —for pro forma disclosures required by SFAS No. 123 plus additional information on the Company’s stock options.

Restricted stock issued is recorded as deferred compensation at the issue price (fair market value) on grant date and is amortized to compensation expense on a straight-line basis over the applicable vesting periods.

Reclassifications—

We have reclassified certain prior year amounts to conform to the current year’s presentation.

2. Initial Public Offering

In May 1998, we issued 38,525,000 shares of Class A Common Stock in an initial public offering. We received net proceeds of $986 million. Of that amount, we repaid our indebtedness under a $450 million subordinated note to FAHI. The note was issued February 24, 1998 for a previously declared dividend to FAHI. We also used $533 million to pay a cash dividend to FAHI. Our 51,050,000 outstanding Class B Common Shares are held by FAHI. In addition, we issued 505,912 shares of restricted Class A Common Stock to management during 1998.

The holders of our Class A Common Stock are entitled to one vote per share. The holders of our Class B Common Stock are entitled to three votes per share (except that the outstanding shares of Class B Common Stock may never represent more than 79% of the combined voting power of all outstanding shares of the Company’s voting stock).

After the Offering and the issuance of shares to management, we had 90,080,912 shares of common stock issued resulting in FAHI owning 79% of the voting interest and 57% of the economic interest of our issued common stock. Prior to May 1998, FAHI owned 100% of our issued and outstanding common stock. At December 31, 2000 FAHI’s ownership is 53%.

In anticipation of an initial public offering, we amended our Restated Certificate of Incorporation increasing the number of authorized shares of Common Stock. We have the authority to issue up to 852 million shares of stock including:

2 million shares designated as Preferred Stock with no par value;

50 million shares designated as Senior Preferred Stock with a par value of $0.01 per share; and

800 million shares designated Common Stock with a par value of $0.25 per share.

Our Certificate of Incorporation, as amended, now authorizes two classes of Common Stock, Class A Common Stock and Class B Common Stock. We have retroactively reflected the authorization of the two classes of Common Stock in our consolidated financial statements.

3. Dealer Products Group Acquisition

On November 30, 1998, we acquired, through our subsidiaries, the U.S. assets of the Dealer Products Group of Dana Commercial Credit Corporation and the stock of the Dealer Products Group’s international subsidiaries (collectively, Dealer Products Group) for $775 million. The purchase price includes the assumption and repayment of approximately $260 million of the international subsidiaries’ debt. The U.S. and international subsidiaries of the Dealer Products Group provide customized leasing and financing to commercial enterprises primarily for the acquisition of computer and telecommunications equipment.

We accounted for the acquisition using the purchase method of accounting in accordance with Accounting Principles Board Opinion No. 16, Business Combinations. Goodwill from the acquisition totaled $190 million and is being amortized over 25 years.

We combined the operations of the Dealer Products Group with our existing business and now have operations in the United States, Canada, United Kingdom and Continental Europe.

4. HealthCare Financial Partners, Inc. Acquisition

On July 28, 1999 we acquired HealthCare Financial Partners, Inc. (HCFP) for approximately $475 million. We paid 41% of the purchase price in the form of our Class A Common Stock and 59% in cash. We issued approximately 7.3 million Class A Common Shares for the transaction, which reduced FAHI’s ownership interest in Heller from 57% to 52%. In addition, we issued options to purchase 1.1 million shares of our Class A Common Stock at prices ranging from $2 to $37 per share to replace stock options previously held by HCFP employees for HCFP common stock. HCFP was a rapidly growing commercial finance company exclusively focused on providing secured financing to small- and mid-sized health care providers throughout the United States.

We accounted for the acquisition using the purchase method of accounting in accordance with Accounting Principles Board Opinion No. 16, Business Combinations. Goodwill from the transaction totaled approximately $235 million and is being amortized over 25 years. Our 1999 consolidated statement of income includes HCFP’s operating results since the acquisition date.

The following table presents the unaudited pro forma combined income statements of the Company and HCFP for the years ended December 31, 2000 and 1999. The pro forma combined income statements are presented as if the acquisition had been effective January 1, 1999. The combined historical operating results of the Company and HCFP for 2000 and 1999 have been adjusted to reflect goodwill amortization and financing costs for the transaction. We have presented the following table for informational purposes only. It does not necessarily indicate our future operating results or the operating results that would have occurred had the acquisition been effective in the periods presented.

	For the Year Ended December 31,
	2000	1999
	(in millions) (unaudited)
Interest income	$1,628	$1,239
Interest expense	999	694

Net interest income	629	545
Fees and other income	298	289
Factoring commissions	73	119
Income of international joint ventures	38	35

Operating revenues	1,038	988
Operating expenses	459	477
Provision for losses	148	142
Gain on sale of Commercial Services assets	—	79

Income before income taxes and minority interest	431	448
Income tax provision	139	157
Minority interest	2	1

Net income	$ 290	$ 290

5. Commercial Services Sale

On December 1, 1999, we sold the assets of our Commercial Services unit, part of our Domestic Commercial Finance segment, for approximately $454 million in cash. The sale consisted of $911 million of factored accounts receivable and the assumption of $577 million of liabilities due to factoring clients.

The premium on the transaction to Heller was reduced by $41 million of costs incurred to exit the domestic factoring business. Of this amount, $21 million was related to severance benefits and other related compensation costs incurred for termination of 19% of our domestic employees. In addition, we incurred expenses for transaction costs, termination of third party contracts such as facility leases and vendor contracts, asset impairment charges, recourse provisions and certain other costs directly attributable to the sale. The transaction resulted in a pre-tax gain of $79 million and an after tax gain of $48 million.

Upon completion of the sale, we terminated our domestic factored accounts receivable sale facility.

Of the total costs incurred in this transaction, $3 million is recorded as a liability of Heller as of December 31, 2000.

6. Lending Assets

Lending assets includes receivables and repossessed assets.

At December 31, 2000 we had domestic commercial finance receivables of $13.3 billion and international factoring and asset based finance receivables of $2.7 billion. The international receivables included factored accounts receivable of $2.4 billion relating to Factofrance and $300 million from our other foreign consolidated subsidiaries. Total receivables at December 31, 1999 consist of $12.0 billion of domestic receivables and $2.8 billion of foreign receivables.

Diversification of Credit Risk—

Concentrations of lending assets of 5% or more at December 31, 2000 and 1999, based on the standard industrial classification of the borrower, are as follows:

	December 31,
	2000			1999
	Amount	Percent		Amount	Percent
	(dollars in millions)
Health Services	$1,694	11	%	$864	6	%
Transportation	1,145	7		844	6
Business Services	897	6		503	3
Computers	549	3		938	6
Department and general merchandise retail stores	511	3		877	6
Automotive	473	3		1,038	7

The lending assets in the transportation category primarily arise from chartered aircraft services and transportation services of freight, cargo, and various packages. The increase in this category is due to growth in all areas of our Leasing Services unit.

The business services category consists of equipment rental and leasing companies, computer related service providers, building and security maintenance, and other miscellaneous business services. The increase in this category is due to increases in our International Group and Global Vendor Finance.

The computers category consists of software/hardware distributors and manufacturers, component manufacturers, and end-users of this equipment. The decrease in this category is primarily due to decreases in International Group and Global Vendor Finance.

The department and general merchandise retail stores category is primarily comprised of factored accounts receivable which represent short-term trade receivables from numerous customers. The decrease in this category is primarily due to a decrease in International Group.

The automotive category is primarily comprised of auto parts distributors and wholesalers, resale and leasing services in the automotive and aircraft industries, and maintenance services for automotive and aircraft parts. The decrease in this category is primarily due to decreases in International Group and Corporate Finance.

Contractual Maturity of Loan Receivables—

The following table presents the contractual maturities of our receivables at December 31, 2000. This information should not be regarded as a forecast of cash flows (in millions):

	2001	2002	2003	2004	2005	After 2005	Total
Commercial loans	$ 870	$1,352	$ 872	$ 641	$ 657	$2,633	$ 7,025
Real estate loans	456	645	700	273	203	409	2,686
Factored accounts receivable	2,615	—	—	—	—	—	2,615
Equipment loans and leases	893	771	653	380	390	553	3,640

Total	$4,834	$2,768	$2,225	$1,294	$1,250	$3,595	$15,966

Commercial loans consist principally of senior loans secured by receivables, inventory or property, plant and equipment. Real estate loans are principally collateralized by first mortgages on commercial and residential real estate. Factored accounts receivable are purchased from clients, and we provide credit and collection services in return for a commission. Equipment loans and leases are secured by the underlying equipment, and we may have at least partial recourse to the equipment vendor in certain programs. Of the loans maturing after 2001, $3.4 billion have fixed interest rates and $7.7 billion have floating interest rates.

Direct Financing Leases—

The components of the net investment in direct financing leases, included as part of Equipment Loans and Leases on our consolidated balance sheet, are as follows:

	December 31,
	2000		1999
	(dollars in millions)
Total minimum lease payments	$1,556		$1,507
Estimated residual values	310		179
Deferred initial direct costs	18		16
Unearned income	(288	)	(254	)

Net investment in direct financing leases	$1,596		$1,448

At December 31, 2000, the future minimum lease payments to be received on direct financing leases for the five succeeding fiscal years and thereafter are (in millions):

Year Ending December 31:
2001		$ 529
2002		403
2003		250
2004		170
2005		70
Thereafter		134

Total minimum lease payments		$1,556

Impaired Receivables, Repossessed Assets, and Troubled Debt Restructurings—

We do not recognize interest and fee income on impaired receivables or repossessed assets, both of which are classified as nonearning, as set forth in the following table:

	December 31,
	2000		1999
	(dollars in millions)
Impaired receivables	$285		$204
Repossessed assets	22		24

Total nonearning assets	$307		$228

Ratio of total nonearning assets to total lending assets	1.9	%	1.5	%

Nonearning assets included $37 million and $32 million in 2000 and 1999, respectively, for our International Factoring and Asset Based Finance Segment.

The average investment in nonearning impaired receivables was $246 million, $214 million and $160 million for the years ended December 31, 2000, 1999 and 1998, respectively.

We did not have any loans that are considered troubled debt restructurings at December 31, 2000. This compares with $14 million of troubled debt restructurings held as of December 31, 1999. Troubled debt restructurings are earning loans restructured at below market terms.

The following table indicates the effect on income if interest on nonearning impaired receivables and troubled debt restructurings, outstanding at year-end, had been recognized at original contractual rates during the year:

	For the Year Ended December 31,			For the Year Ended December 31,
	2000	1999	1998	2000	1999	1998
	Domestic			Foreign
	(in millions)
Interest income which would have been recorded	$25	$12	$15	$19	$20	$15
Interest income recorded	1	2	4	—	—	—

Effect on interest income	$24	$10	$11	$19	$20	$15

Loan Modifications—

At December 31, 2000 and 1999, there were no impaired loans that were restructured and returned to earning status.

Allowance for Losses of Receivables—

The changes in the allowance for losses of receivables and repossessed assets were as follows:

	For the Year Ended December 31,
	2000		1999		1998
	(in millions)
Balance at the beginning of the year	$316		$271		$261
Provision for losses	148		136		77
Writedowns	(140	)	(116	)	(145	)
Recoveries	25		18		64
Dealer Products Group acquisition	—		—		18
HCFP acquisition	—		7		—
Sale of HCS assets	—		(2	)	—
Other	(7	)	2		(4	)

Balance at the end of the year	$342		$316		$271

There were no material changes in estimation methods and assumptions for the allowances that took place during 2000. The Company considers the allowance for loan losses of $342 million adequate to cover losses inherent in our loan portfolio as of December 31, 2000. Because the allowance is based on judgements and estimates, it is reasonably possible that those judgements and estimates could change in the future causing a corresponding change in the recorded allowance.

Impaired receivables with identified reserve requirements were $260 million and $177 million at December 31, 2000 and 1999, respectively.

	December 31,
	2000		1999
	(dollars in millions)
Identified reserve requirements for impaired receivables	$ 78		$ 44
Additional allowance for losses of receivables	264		272

Total allowance for losses of receivables	$342		$316

Ratio of total allowance for losses of receivables to nonearning impaired receivables	120	%	155	%

7. Investments and Other Assets

Equity and Real Estate Investments—

The following table sets forth a summary of the major components of our equity and real estate investments (in millions):

	December 31,
	2000	1999
Equity interests and investments	$404	$342
Real estate investments	321	235
Affordable housing projects	100	65
Available for sale equity securities	72	84

Total equity and real estate investments	$897	$726

Equity interests and investments principally include common stock, preferred stock, warrants and limited partnership investments.

Real estate investments are acquisition, development and construction investment transactions. At December 31, 2000, we held investments in 163 projects with balances ranging up to approximately $12 million.

Affordable housing projects are investments of our Real Estate Finance unit that provide tax credits which benefit our consolidated results through our income tax provision.

The available for sale equity securities are principally comprised of shares of publicly traded common stock. Net unrealized holding gains on these securities were $49 million and $50 million at December 31, 2000 and 1999, respectively, and are recorded in stockholders’ equity on a net of tax basis.

Debt Securities—

The Company’s debt securities are comprised of available for sale debt securities and include purchased investments in debt securities and $335 million of securities retained in connection with our loan sales or securitizations. Net unrealized holding losses on total available for sale debt securities were $34 million and $36 million at December 31, 2000 and 1999, respectively. These amounts are recorded in stockholders’ equity, on a net of tax basis.

Operating Leases—

Equipment on lease includes the following (in millions):

	December 31,
	2000		1999
Aircraft and related equipment	$350		$259
Other	461		213
Less: accumulated depreciation	(116	)	(44	)

Equipment on lease	$695		$428

As of December 31, 2000, computer related equipment on lease totaled approximately $160 million and was included in Other.

Non-cancelable future minimum rental receipts under the leases are $109 million, $67 million, $39 million, $27 million and $18 million for 2001 through 2005. Substantially all aircraft and related equipment was under lease as of December 31, 2000.

Investments in International Joint Ventures—

The following table sets forth a summary of the financial results of our international joint ventures on a combined basis. This information does not reflect Heller’s pro-rata share of these investments:

	December 31,
	2000	1999
	(dollars in millions)
Factoring volume	$21,187	$25,243
Total receivables	4,312	4,609
Net income	65	50

The following table shows our investment in international joint ventures by geographic region:

	December 31,
	2000	1999
	(dollars in millions)
Europe	$188	$187
Latin America	11	11
Asia/Pacific	17	17

Total	$216	$215

We own interests of 40% to 50% in these joint ventures. Our largest investment in international joint ventures is NMB-Heller Holding N.V. which accounts for 69% of our total investments in international joint ventures at December 31, 2000. NMB-Heller Holding N.V. operates finance companies primarily located in the Netherlands, Germany and the United Kingdom. Our investment in NMB-Heller Holding N.V. totaled $148 million and $129 million at December 31, 2000 and 1999, respectively. NMB-Heller Holding N.V. had total receivables of $3.4 billion and $2.9 billion as of December 31, 2000 and 1999 and revenues of $227 million and $181 million for the years then ended.

During 2000, we sold our investment in our joint venture in Belgium. Our investment in this entity totaled nearly $12 million. The gain from the sale was recorded as part of fees and other income.

Lending partnerships—

Our investments in lending partnerships are primarily comprised of investments of our Leasing Services unit and primarily include partnership interests within the aircraft industry. As of December 31, 2000, we held interests in 10 lending partnerships versus seven at December 31, 1999.

Goodwill—

The following table presents goodwill balances, net of amortization, relating to our acquisitions:

	December 31,
	2000	1999
	(dollars in millions)
HCFP	$222	$231
Dealer Products Group	174	181
Factofrance	56	62
Other	6	7

Total goodwill	$458	$481

Amortization for the years ended December 31, 2000 and 1999 totaled $20 million and $15 million, respectively.

Other Assets—

The following table sets forth a summary of the major components of other assets:

	December 31,
	2000	1999
	(in millions)
Other Assets:
Prepaid expenses and other assets	$225	$203
Deferred income tax benefits, net of allowance of $5 at December 31, 2000 and 1999, respectively	211	194
Furniture, fixtures and equipment	57	55
Repossessed assets	22	24
Non-compete agreement	4	8

Total other assets	$519	$484

Our noncash investing activities include $11 million and $21 million of receivables which were classified as repossessed assets during the periods ended December 31, 2000 and 1999, respectively. See Note 19—Income Taxes—for additional information on deferred income tax benefits.

8. Senior Debt

Commercial paper and short-term borrowings—We use commercial paper to finance a portion of our domestic operations. Our consolidated international subsidiaries use short-term borrowings and commercial paper to finance international operations. Total commercial paper borrowings represent 26% of total debt at December 31, 2000. Combined commercial paper and short-term borrowings represent 33% of total debt at December 31, 2000.

The following table summarizes our commercial paper and short-term borrowings as of December 31, 2000 and 1999:

	December 31,
	2000	1999
	(in millions)
Domestic commercial paper	$3,486	$3,539
International commercial paper	652	421
Factofrance short-term borrowings	833	989
Other consolidated subsidiaries short-term borrowings	156	253

Commercial paper and short-term borrowings	$5,127	$5,202

The table below sets forth information concerning our domestic commercial paper borrowings. The average interest rates and average borrowings are computed based on the average daily balances during the year. We issue commercial paper with maturities ranging up to 270 days.

	2000		1999		1998
	(dollars in millions)
Commercial Paper—domestic:
Average interest rate
During the year	6.45	%	5.32	%	5.71	%
During the year, including the effect of commitment fees	6.63		5.47		5.83
At year-end	7.09		6.13		5.59
Average borrowings	$3,699		$3,346		$2,619
Maximum month-end borrowings	3,959		4,194		2,974
End of period borrowings	3,486		3,539		2,450

Our International commercial paper includes Factofrance commercial paper and issuances under our Canadian commercial paper program. Factofrance commercial paper issued at December 31, 2000 had an average interest rate of 5.08% and its short-term borrowings at December 31, 2000 had an average interest rate of 5.06%. Factofrance uses primarily short-term debt and commercial paper to fund its assets, which are short-term in nature. Canadian commercial paper issued at December 31, 2000 had an average interest rate of 6.02%. We use Canadian commercial paper to fund our Canadian assets.

Available credit and asset sale facilities—At December 31, 2000, we have total committed credit and asset sale facilities of $5.9 billion, of which $5.7 billion was available for use at December 31, 2000.

The amount of committed facilities includes approximately $4.2 billion in available liquidity support, split equally between two bank credit facilities. One of these is a five-year facility expiring in April 2005 and the other is a 364-day facility expiring in April 2001 (which we intend to renew). The 364-day facility includes a term loan option that expires one year after the option exercise date. The terms of the bank credit facilities require us to maintain stockholders’ equity of $1.5 billion and to maintain a debt to equity ratio of less than ten times. Under the terms of the debt covenants of the agreements, we could have borrowed an additional $9.1 billion of debt at December 31, 2000.

During 2000, we increased our committed liquidity support by establishing an asset backed commercial paper conduit facility. This facility allows us to sell participations in a designated pool of Corporate Finance cash-flow loans to bank-sponsored conduits, on a limited recourse basis. Committed liquidity support under this facility totals $1.4 billion, of which $700 million was utilized at December 31, 2000. The underlying liquidity support for the conduits is provided by unaffiliated commercial banks. The commitment period of this liquidity support is 364 days and may be renewed annually by the banks, at their discretion. See Note 27—Subsequent Events—for more information on this facility.

Also included in committed facilities is approximately $300 million of additional alternative liquidity, which is available by discounting eligible French receivables with the French Central Bank since Factofrance is a registered financial institution in France. At December 31, 2000, $183 million was available for use under this facility.

In addition to the above facilities, we have committed foreign bank credit facilities of nearly $750 million (U.S. dollar equivalent) for our consolidated international subsidiaries. As of December 31, 2000, there was $563 million available under these facilities.

Our wholly-owned subsidiary, Factofrance, has two factored accounts receivable sale facilities. These facilities allow Factofrance to sell an undivided interest of up to FRF 1.7 billion (approximately $250 million) in a designated pool of our factored accounts receivable to two bank-sponsored conduits on a limited recourse basis. As of December 31, 2000, these facilities were fully utilized.

We have a shelf registration statement, filed with the SEC, covering the sale of up to $10 billion in debt securities (including medium term notes), senior preferred stock and Class A Common Stock. As of December 31, 2000, there was $5.9 billion available under this shelf registration.

We have a Euro Medium-Term Note Program for the issuance of up to $2 billion in notes to be issued from time to time. As of December 31, 2000, there was $1.5 billion available under this Program.

Notes and debentures—The scheduled maturities of debt outstanding at December 31, 2000, other than commercial paper and short-term borrowings, and gross of the unamortized discount of $8 million, are as follows:

	Scheduled Maturities at December 31,
	2001		2002		2003		2004		2005		After 2005		Total
	(dollars in millions)
Various fixed rate notes and debentures	$ 941		$1,849		$ 956		$ 876		$1,033		$600		$ 6,255
Fixed weighted average rate	6.07	%	6.83	%	7.77	%	6.28	%	7.38	%	7.38	%	6.93	%
Various floating rate notes and debentures	$2,279		$1,210		$ 719		$ 45		$ —		$ 25		$ 4,278
Floating weighted average rate	6.89	%	6.89	%	6.88	%	7.16	%	—	%	7.11	%	6.89	%
Total notes and debentures	$3,220		$3,059		$1,675		$ 921		$1,033		$625		$10,533

Our various fixed and floating rate notes and debentures are denominated in U.S. dollars, Euros, French francs, Singapore dollars, Czech korunas, British pounds and Japanese yen. In order to fix the exchange rate of foreign currency to U.S. dollars on the foreign currency denominated debt, we have entered into cross currency interest rate swap agreements. In order to convert certain fixed rate debt to floating rate debt and vice-versa, we have entered into interest rate swap agreements.

The following table provides the year-end weighted average interest rate of the U.S. dollar and foreign denominated debt, gross of the unamortized discount of $8 million and
$6 million, before and after the effect of the swap agreements at December 31, 2000 and 1999, respectively.

	Weighted Average Interest Rate
	Fixed Debt Outstanding	Before Effect of Swap		After Effect of Swap		Variable Debt Outstanding	Before Effect of Swap		After Effect of Swap		Total Debt Outstanding
	(dollars in millions)
2000:
United States dollar	$5,884	7.02	%	6.97	%	$4,040	6.97	%	6.94	%	$ 9,924
Euros	283	5.75		7.08		118	5.26		5.35		401
French franc	9	5.25		5.25		58	5.60		5.60		67
Singapore dollar	58	3.40		7.04		—	—		—		58
Czech koruna	21	6.00		7.01		33	5.53		6.99		54
British pound	—	—		—		29	6.39		6.39		29
Total	$6,255	6.93	%	6.97	%	$4,278	6.89	%	6.88	%	$10,533
1999:
United States dollar	$4,494	6.40	%	6.63	%	$3,732	6.35	%	6.42	%	$ 8,226
French franc	17	5.25		5.25		87	3.82		3.82		104
Japanese yen	306	3.26		6.24		—	—		—		306
Total	$4,817	6.20	%	6.60	%	$3,819	6.29	%	6.36	%	$ 8,636

The contractual interest rates for the U.S. dollar denominated fixed rate debt range between 5.48% and 8.00% at December 31, 2000. The contractual rates on the U.S. dollar denominated floating rate debt are based primarily on indices such as the Federal Funds rate plus 0.31% to 0.60% and the three-month London Inter-Bank Offered Rate (LIBOR) plus 0.07% to 0.90%.

9. Financial Instruments with Off-Balance Sheet Risk

We are party to several types of agreements involving financial instruments with off-balance sheet risk. These instruments are used to meet the financing needs of borrowers and to manage our own exposure to interest rate and currency exchange rate fluctuations. These instruments principally include interest rate swap agreements, forward currency exchange contracts, options, futures contracts, interest rate cap agreements, loan commitments, letters of credit and guarantees.

Derivative financial instruments used for risk management purposes—

We use derivatives as an integral part of asset/liability management to reduce our overall level of financial risk. These derivatives, particularly interest rate swap agreements, are used to:

diversify sources of funding;

alter interest rate exposure arising from mismatches between assets and liabilities; and

manage exposure to fluctuations in foreign exchange rates.

Our derivative instruments are entirely related to accomplishing these risk management objectives, which arise from normal business operations. We are not an interest rate swap dealer nor are we a trader in derivative securities. We have not used speculative derivative products to generate earnings from changes in market conditions.

The credit risk associated with these instruments is limited to:

amounts earned but not collected; and

any additional amounts we may incur to replace the instrument under current market conditions.

These amounts will increase or decrease during the life of the instruments as interest rates and foreign exchange rates fluctuate. The amounts of credit risk are substantially less than the notional amounts of these agreements. We manage this risk by establishing minimum credit ratings for each counter-party. We also limit the exposure to individual counter-parties based upon the total notional amount and the current replacement cost of existing agreements. We have not experienced nonperformance by any counter-party related to our derivative financial instruments.

The following table summarizes the contractual notional amounts of our derivative financial instruments as of December 31, 2000 and 1999.

	Contractual or Notional Amount
	2000	1999
	(in millions)
Interest rate swap agreements	$4,699	$7,662
Basis swap agreements	2,161	2,376
Forward currency exchange contracts	1,007	1,421
Cross currency interest rate swap agreements	633	470
Interest rate futures contracts	334	220
Purchased options	127	29
Interest rate cap agreements	30	24

Interest rate swaps are agreements whereby two parties enter into an agreement to exchange periodic interest payments. We utilize interest rate swaps primarily to convert fixed rate financings to variable rate debt. We may also utilize cross currency interest rate swaps when the issuance of debt denominated in a foreign currency is deemed more cost effective. This type of swap converts foreign currency denominated debt to U.S. dollar denominated debt with U.S. based indices. We also use swap agreements to alter the characteristics of specific asset pools to more closely match the interest terms of the underlying financings. These agreements enhance the correlation of the interest rate and currency characteristics of our assets and liabilities and mitigate our exposure to interest rate volatility. Basis swap agreements involve the exchange of two different floating rate interest payment obligations. We use these types of agreements to manage the risk between different floating rate indices.

Forward contracts are agreements to purchase or sell a specific quantity of an instrument or currency at the current or spot price, with delivery and settlement at a specified future date. We will periodically enter into forward currency exchange contracts or purchase options. These instruments serve as hedges of our investment in international subsidiaries and joint ventures. We also periodically enter into forward contracts to hedge receivables denominated in foreign currencies or may purchase foreign currencies in the spot market to settle a foreign currency denominated liability.

Futures contracts are agreements to buy or sell a specific amount of a financial instrument at a particular price on a stipulated future date. We utilize futures contracts to hedge the interest rate risk of a portion of our receivables portfolio and to fix the interest rates of various floating rate liabilities.

Commitments, letters of credit and guarantees—We generally enter into various commitments, letters of credit and guarantees in response to our customers’ financing needs. Since we expect many of these agreements to expire unused, the total commitment amount does not necessarily represent future cash requirements. The credit risk involved in issuing these instruments is similar to extending loans to borrowers. Our credit quality and collateral policies for controlling this risk are similar to those involved in our normal lending transactions. Our contractual amount of commitments, letters of credit and guarantees are shown below:

	Contract Amount
	2000	1999
	(in millions)
Loan commitments	$2,997	$2,587
Letters of credit and financial guarantees	512	582
Investment commitments	150	147

Commitments to fund new and existing borrowers generally have fixed expiration dates and termination clauses and typically require payment of a fee. We issue letters of credit and financial guarantees as conditional commitments to guarantee the performance of a borrower or an affiliate to a third party. Losses related to these services historically have not been significant. Investment commitments are comprised of Real Estate Finance and Corporate Finance commitments to fund a variety of investment types.

10. Legal Proceedings

We are party to a number of legal proceedings as plaintiff and defendant, all arising in the ordinary course of our business. Although the ultimate outcome of these proceedings is not ascertainable, we believe that the amounts, if any, which may ultimately be funded or paid will not have a material adverse effect on our financial condition or results of operations.

11. Rental Commitments

Our minimum rental commitments under non-cancelable operating leases and other service agreements at December 31, 2000 are as follows (in millions):

2001		$ 24
2002		23
2003		20
2004		20
2005		18
Thereafter		34

Total		$139

Total rent expense, net of rental income from subleases, was $30 million, $37 million and $34 million for the years ended December 31, 2000, 1999 and 1998, respectively.

12. Preferred Stock

The following table summarizes our non-redeemable preferred stock:

	As of December 31,
	2000	1999
	(in millions)
Cumulative Perpetual Senior Preferred Stock, Series A	$125	$125
Noncumulative Perpetual Senior Preferred Stock, Series C	150	150
Noncumulative Perpetual Senior Preferred Stock, Series D	125	125

Total Preferred Stock	$400	$400

Cumulative Perpetual Senior Preferred Stock, Series A ($.01 Par Value; stated value, $25; 8.125%; 5,000,000 shares authorized and outstanding)—Our Cumulative Perpetual Senior Preferred Stock, Series A (Series A Preferred Stock) can be redeemed in whole or in part, at a redemption price of $25 per share, plus accrued and unpaid dividends. Dividends are cumulative and payable quarterly. The Series A Preferred Stock ranks senior with respect to the payment of dividends and liquidation to our other preferred stock.

Noncumulative Perpetual Senior Preferred Stock, Series C ($.01 Par Value; stated value, $100; 6.687%; 1,500,000 shares authorized and outstanding)— Our Series C Preferred Stock is not redeemable prior to August 15, 2007. On or after this date, we can redeem, in whole or in part, the Series C Preferred Stock at a redemption price of $100 per share, plus any accrued and unpaid dividends.

Noncumulative Perpetual Senior Preferred Stock, Series D ($.01 Par Value; stated value, $100; 6.95%; 1,250,000 shares authorized and outstanding)—Our Series D Preferred Stock is not redeemable prior to February 15, 2009. On or after this date, we can redeem, in whole or in part, the Series D Preferred Stock at a redemption price of $100 per share, plus any accrued and unpaid dividends.

Redeemable Preferred Stock—We have authorized the issuance of 100,000 shares of a series of preferred stock designated NW Preferred Stock, Class B (No Par Value) (NW Preferred Stock). This stock was authorized pursuant to the Keep Well Agreement between us and Fuji Bank. The agreement is dated April 23, 1983 and was subsequently amended (the Keep Well Agreement). The amendments include, among other things, Fuji Bank’s agreement to purchase NW Preferred Stock in an amount required to maintain our stockholders’ equity at $500 million. As of December 31, 2000, our stockholders’ equity was $2.6 billion. If and when issued, we will pay quarterly dividends on the NW Preferred Stock at a rate per annum equal to 1% over the three-month LIBOR rate. Subject to certain conditions, the holder can redeem the NW Preferred Stock within a specified time period after a calendar quarter end. The redemption amount must not exceed the amount of our stockholders’ equity over $500 million. The redemption price will equal the price paid for the stock plus accumulated dividends. No purchases of NW Preferred Stock have been made by Fuji Bank under the Keep Well Agreement.

13. Dividend Restrictions and Payments

Under the provisions of the Delaware General Corporation Law, we may legally pay dividends only out of our surplus or out of our net profits for either the current or preceding fiscal year, or both. In addition, we are prohibited from paying dividends on Common Stock unless all current and full cumulative dividends on the Series A Preferred Stock and the current dividends on the Series C and Series D Preferred Stock have been paid. Also, we are prohibited from paying dividends on any other preferred stock that ranks, with respect to the payment of dividends, equal or junior to the Series A, Series C and Series D Preferred Stock, unless all current and full cumulative dividends on these preferred stocks have been paid.

The following table summarizes the dividends declared and paid dividends on our shares of Preferred Stock during 2000 and 1999:

	As of December 31,
	2000	1999
	(in millions)
Cumulative Perpetual Senior Preferred Stock, Series A	$10	$10
Noncumulative Perpetual Senior Preferred Stock, Series C	10	10
Noncumulative Perpetual Senior Preferred Stock, Series D	9	8

Total Preferred Stock	$29	$28

We paid Common Stock dividends of $39 million and $34 million in 2000 and 1999, ratably to our Class A and Class B shareholders.

14. Treasury Stock

We have an executive deferred compensation plan (the Plan) into which certain employees can elect to defer a portion of their annual compensation on a pre-tax basis. The amount deferred remains an asset of Heller and is invested in several mutual funds and in our Class A Common Stock. Investments in our Class A Common Stock under this Plan are reported as treasury stock and are included in the calculation of basic and diluted earnings per share. At December 31, 2000, we held 235,562 shares of treasury stock through the Plan. See Note 18—Employee Benefits—for additional information relating to the Plan.

In addition, we held 661,941 shares of our Class A Common Stock for use in meeting the requirements of our current stock incentive compensation plans. A significant portion of these shares were purchased during the first quarter of 2000 under a 1999 authorization to repurchase up to 2 million shares of our Class A Common Stock.

15. Fees and Other Income

The following table summarizes our fees and other income for the years ended December 31, 2000, 1999 and 1998:

	Year Ended December 31,
	2000	1999	1998
	(in millions)
Investment and asset sale income	$204	$175	$111
Fee income and other	94	111	95

Total	$298	$286	$206

Investment and asset sale income consists of gains on securitizations, syndications and loan sales, net investment income and gains, equipment residual gains and participation income. Investment and asset sale income in 2000 also includes a net gain from the sale of one international investment and the liquidation of another. Investment and asset sale income is somewhat dependent on the equity, real estate and capital markets and is therefore subject to volatility.

Fee income and other includes servicing income, late fees, prepayment fees, early termination fees, residual rental income and other miscellaneous fees.

16. Operating Expenses

The following table sets forth a summary of the major components of operating expenses:

	Year Ended December 31,
	2000	1999	1998
	(in millions)
Salaries and other compensation	$236	$237	$227
Legal and professional fees	41	45	31
Equipment costs	33	25	24
Space costs	30	37	30
Business acquisition costs	26	23	20
Goodwill and noncompete agreement amortization	24	19	8
Travel and entertainment costs	21	19	16
Other	48	51	43

Total	$459	$456	$399

increased compensation costs in Leasing Services associated with our investment into new markets; combined with

higher costs associated with our technology investment and support in our Leasing Services unit.

17. Restructuring Charge

In 1998, we incurred a one-time restructuring charge of $17 million. This amount included $8 million in severance benefits for termination of approximately 15% of the Company’s domestic employees. Also included was $6 million related to office lease terminations and related leasehold improvement writedowns. Restructuring charge liabilities were fully paid out during 1999.

18. Employee Benefits

We have various incentive compensation plans and a savings and profit-sharing plan which provide for annual contributions for eligible employees based on our achievement of certain financial objectives and employee achievement of certain objectives.

Pension and Post Retirement Plans—We have a noncontributory defined benefit pension plan (Retirement Plan) covering substantially all of our domestic employees and a supplemental executive retirement plan (SERP) in which certain employees participate. Our policy is to fund, at a minimum, pension contributions as required by the Employee Retirement Income Security Act of 1974. Benefits under the Retirement Plan and SERP are based on an employee’s years of service and average earnings for the five highest consecutive years of compensation occurring during the last ten years before retirement.

We also provide health care benefits for eligible retired employees and their eligible dependents through the Post-retirement Health Care Plan (Health Care Plan).

The following table summarizes the change in the benefit obligations for the Retirement Plan and Health Care Plan at the end of the respective year and identifies the assumptions used to determine the benefit obligation:

	Retirement Plan Year Ended December 31,						Post-Retirement Health Care Plan Year Ended December 31,
	2000		1999		1998		2000		1999		1998
	(dollars in millions)
Change in benefit obligation
Benefit obligation at January 1	$50		$52		$47		$ 10		$ 10		$ 10
Service Cost	3		4		4		—		—		—
Interest Cost	3		4		3		1		1		1
Acquisitions/Divestitures	—		(1	)	—		—		—		—
Actuarial gain	(5	)	(7	)	(1	)	—		—		(1	)
Benefits paid	(1	)	(2	)	(1	)	(1	)	(1	)	—

Benefit obligation at December 31	$50		$50		$52		$ 10		$ 10		$ 10

Change in plan assets
Fair value of plan assets at January 1	$56		$50		$42		$—		$—		$—
Actual return on plan assets	(2	)	8		9		1		—		—
Benefits paid	(1	)	(2	)	(1	)	(1	)	—		—

Fair value of plan assets at December 31	$53		$56		$50		$—		$—		$—

Reconciliation of funded status
Funded status	$ 3		$ 6		$ (2	)	$ (10	)	$ (10	)	$ (10	)
Unrecognized prior service cost	(1	)	(1	)	(1	)	(1	)	—		—
Unrecognized actuarial (gain) loss	(11	)	(14	)	(3	)	1		1		—
Unrecognized transition obligation	—		—		—		4		4		5

Net amount recognized in the statement of financial position at December 31	$ (9	)	$ (9	)	$ (6	)	$ (6	)	$ (5	)	$ (5	)

Weighted-average assumptions as of December 31:
Discount rate	7.75	%	7.50	%	7.00	%	7.75	%	7.50	%	7.00	%
Expected return on assets	9.00		9.00		9.00		N/A		N/A		N/A
Rate of salary increases	5.00		5.00		5.00		N/A		N/A		N/A

Components of net pension cost for the Retirement Plan and the Health Care Plan for the following periods are:

	Retirement Plan Year Ended December 31,						Post-Retirement Health Care Plan Year Ended December 31,
	2000		1999		1998		2000	1999	1998
	(in millions)
Service cost	$ 3		$ 4		$ 4		$—	$—	$—
Interest cost	3		4		4		1	1	1
Expected return on plan assets	(5	)	(5	)	(4	)	—	—	—
Prior service cost and transition amount	—		—		(1	)	—	—	—
Recognized actuarial (gain) or loss	(1	)	—		—		—	—	—

Net periodic benefit cost	$—		$ 3		$ 3		$ 1	$ 1	$ 1

The following table summarizes the change in the benefit obligations for SERP Plan at the end of the respective year and identifies the assumptions used to determine the benefit obligation:

	Supplemental Executive Retirement Plan Year Ended December 31,
	2000		1999		1998
	(in millions)
Benefit obligation
Benefit obligation at January 1	$ 3		$ 3		$ 4

Benefit obligation at December 31	$ 3		$ 3		$ 3

Plan assets
Fair value of plan assets at January 1	$—		$—		$—

Fair value of plan assets at December 31	$—		$—		$—

Reconciliation of funded status
Funded status	$ (3	)	$ (3	)	$ (3	)
Unrecognized prior service cost	2		2		2
Unrecognized actuarial gain	(4	)	(4	)	(4	)

Net amount recognized in the statement of financial position at December 31	$ (5	)	$ (5	)	$ (5	)

The weighted average assumptions as of December 31, 2000, 1999 and 1998 for the SERP were consistent with the discount rate and rate of salary increases applied to the Retirement Plan.

The net pension cost for the Supplemental Executive Retirement Plan was less than
$1 million for the years ended December 31, 2000, 1999 and 1998.

The additional employees resulting from the Dealer Products Group and HCFP acquisitions in December 1998 and July 1999, respectively, have not had a significant impact on our pension expense since the dates of acquisition. The reduction of plan participants resulting from the sale of assets of our HCS unit in December 1999, had no impact on 1999 pension expense and decreased 2000 pension expense by approximately $1 million.

We adjust the discount and salary rates, as well as the expected rates of return on assets, for the Retirement Plan and the SERP to reflect market conditions at the measurement date. Changes in these assumptions will impact the amount of pension expense in future years. The modest increase in the discount rate at December 31, 2000 will not have a material impact on the pension expense for 2001. The increase in the discount rate at December 31, 1999, combined with amortization of our actuarial gain, reduced pension expense by approximately $3 million in 2000 as compared to 1999. We have maintained our salary rate assumption at 5% for both the Retirement Plan and the SERP.

We also adjust the discount, salary, and health care cost trend rates for the Health Care Plan to reflect market conditions at the measurement date. Changes in these assumptions will impact the amount of the benefit expense in future years. The modest increase in the discount rate at December 31, 2000 will not have a material impact on the benefit expense for 2001. The increase in the discount rate at December 31, 1999 had an insignificant impact on the benefit expense for 2000.

The accumulated post retirement benefit obligation, under the terms of the Health Care Plan, as amended, was calculated using relevant actuarial assumptions and health care cost trend rates projected at annual rates ranging from 6.5% in 2000 trending down to 5.0% in 2004 and thereafter. The effect of a 1.0% annual increase in those assumed cost trend rates would increase the accumulated post retirement benefit obligation by approximately
$1 million, while annual service and interest cost components in the aggregate would not be materially affected. The effect of a 1.0% annual decrease in these assumed cost trend rates would decrease the accumulated post retirement benefit obligation by approximately
$1 million, while annual service and interest cost components in the aggregate would not be materially affected.

Executive Deferred Compensation Plan—Our Executive Deferred Compensation Plan (the Plan ) is a nonqualified deferred compensation plan in which certain employees may elect to defer a portion of their annual compensation on a pre-tax basis. The amount deferred remains an asset of Heller and may be invested, at the participant’s discretion, into certain mutual funds and our Class A Common Stock. Payment of amounts deferred is made in a lump sum or in annual installments over a five, ten or fifteen year period as determined by the participant.

Investments in our Class A Common Stock under this plan are reported as treasury stock on our balance sheet. At December 31, 2000, we held 235,562 shares of treasury stock through the Plan. Plan assets, other than treasury stock, totaled $45 million and $39 million at December 31, 2000 and 1999, respectively.

Earnings or losses on plan assets, other than treasury stock, are included as part of fees and other income. We recorded a loss on plan assets, other than treasury stock, of $3 million during 2000, and income of $8 million and $4 million during 1999 and 1998, respectively. Compensation expense of these same amounts was also recorded in each of these years.

Long Term Incentive Plans—We have long-term incentive plans in which participants receive performance units that are granted at the beginning of either a two or three-year performance period. The value of a performance unit is based on our three-year average earnings per share and return on common equity. The total expense related to the long-term incentive plans was approximately $1 million in 2000 and 1999, and $4 million in 1998.

1998 Stock Incentive Plan—We adopted a stock-based incentive plan, The Heller Financial, Inc. 1998 Stock Incentive Plan (Stock Incentive Plan), covering non-employee directors and employees (collectively, Participants).

The Stock Incentive Plan provides for the grant of incentive and non-qualified stock options, restricted stock, stock appreciation rights, performance shares and performance units (Awards). The terms of the Awards are set forth in award agreements (Award Agreements). The Compensation Committee of the Heller Board of Directors, in its sole discretion, determines which employees receive Awards as well as the type, size and terms and conditions applicable to any Award. The Compensation Committee also has the authority to interpret, construe and implement the provisions of the Stock Incentive Plan. Awards to non-employee directors will be made by members of our Board of Directors, who are not otherwise entitled to participate in the Stock Incentive Plan, or will be based on a formula developed by the Board of Directors or the Compensation Committee.

In January 2001, the Heller Board of Directors amended the Stock Incentive Plan to increase, to 10,000,000, the total number of shares (including both newly issued dilutive shares as well as previously issued non-dilutive shares which we acquire through open-market purchases) that may be used for awards under the Stock Incentive Plan. Of this amount, the maximum number of newly issued dilutive shares that may be used for awards under the Stock Incentive Plan remains unchanged at 6,718,125 shares.

Under the Stock Incentive Plan, 6,182,162 shares of Class A Common Stock are available for Awards as of December 31, 2000. During 2000, we awarded shares of restricted stock and non-qualified options to purchase shares of Class A Common Stock as discussed below:

Restricted Stock—As of December 31, 2000, there were 639,355 restricted shares outstanding. During 2000 and 1999, 128,947 shares and 197,604 shares, respectively of restricted stock were granted as part of compensation awards. In conjunction with our Offering, we issued 505,912 shares of restricted Class A Common Stock during 1998.

All restricted shares were issued at the fair market value on the date of grant. Shares awarded during 2000 and 1999 have various vesting periods, none of which exceed a three-year period. Shares issued in conjunction with our Offering vested on January 1, 2001, since we achieved certain net income growth targets as specified in the Restricted Stock Award Agreements.

The holder of restricted stock generally has the rights of a Heller stockholder, including the right to vote and to receive cash dividends prior to the end of the vesting period. Compensation expense related to these shares totaled $6 million, $5 million and $5 million during 2000, 1999 and 1998, respectively.

Stock Options—Each option represents the right to purchase one share of our Class A Common Stock. No compensation expense was recorded, as the exercise price of each option granted equals the market price of our Class A Common Stock on the grant date. The options expire ten years from the grant date.

Over 1.2 million options were granted during 2000 as part of compensation awards. These options vest ratably over a four-year period from the date of grant. Of the 2.3 million options granted in 1999, as presented in the table below, approximately 1.1 million related to the HCFP acquisition and were 100% vested on the grant date. The options were issued at prices ranging from $2 to $37 per share to replace stock options previously held by HCFP employees for HCFP common stock. The remaining options granted in 1999 will vest ratably over a four-year period from the date of grant. The options granted in 1998 vested on January 1, 2001.

A summary of the status and activity of stock options under the Stock Incentive Plan as of December 31, 2000, 1999 and 1998, and changes during the years ending on those dates is presented below:

	2000			1999			1998
	Shares		Weighted- Average Exercise Price	Shares		Weighted- Average Exercise Price	Shares		Weighted- Average Exercise Price
Outstanding at beginning of year	3,150,795		$26.27	1,291,952		$26.85	—		—
Granted	1,248,243		19.78	2,293,824		25.29	1,322,202		26.85
Exercised	(189,508	)	17.89	(136,863	)	11.81	—		—
Forfeited	(313,907	)	23.52	(298,118	)	27.84	(30,250	)	27.00

Outstanding at end of year	3,895,623		24.82	3,150,795		26.27	1,291,952		26.85

Weighted-average fair value of options granted during the year	$11.00			$13.45			$9.29

The following table summarizes information about stock options outstanding at December 31, 2000:

	Options Outstanding		Options Exercisable
	Number Outstanding at 12/31/00	Weighted- Average Remaining Contractual Life	Weighted- Average Exercise Price	Number Exercisable at 12/31/00	Weighted- Average Exercise Price
Range of Exercise Prices
$ 2 to $11	60,287	8.5 years	$ 5.30	60,287	$ 5.30
12 to 20	1,031,179	9.0 years	19.39	—	—
21 to 27	1,737,359	7.8 years	25.89	1,258,943	25.84
28 to 37	1,066,798	8.0 years	29.42	346,661	30.83

$ 2 to $37	3,895,623			1,665,891

Accounting for Stock-Based Compensation Plans—We account for the stock options in accordance with Accounting Principles Board Opinion No. 25 (APB No. 25), Accounting for Stock Issued to Employees. Under APB No. 25, we do not recognize compensation expense on the issuance of our stock options, as the option terms are fixed and the exercise price equals the market price of the underlying stock on the grant date. If we were to implement Statement of Financial Accounting Standard No. 123, Accounting for Stock Based Compensation, our net income applicable to common stock for 2000 and 1999 would have been $255 million and $243 million, respectively. Our diluted earnings per share would have been $2.63 and $2.61 for 2000 and 1999, respectively. The weighted average fair value of each option granted during 2000 and 1999 was $11.00 and $13.45, respectively. The annual cost of the stock options was determined using a Black-Scholes option-pricing model that assumed the following:

a ten-year option life for 2000, 1999 and 1998;

a risk-free interest rate of 6.53% for 2000, 4.76% for 1999 and 5.67% for 1998;

a dividend yield of 2.04% for 2000, 1.26% for 1999 and 1.60% for 1998; and

volatility of 53.13% for 2000 based on the volatility of Heller’s stock price and 36.51% and 19.44% for 1999 and 1998, respectively, based on industry peers’ volatility.

Employee Stock Purchase Plan—We adopted an Employee Stock Purchase Plan (the ESPP) which offers employees the opportunity to purchase Class A Common Stock at a discount through payroll deductions. The ESPP meets the requirements of Section 423 of the Internal Revenue Code. All regular full-time and part-time employees are eligible to participate in the ESPP. Employees desiring to purchase stock through ESPP may elect to reduce their pay by up to 10% in any payroll period. These payroll deductions accumulate during a three-month purchase period. At the end of each purchase period, the payroll deductions are used to purchase Class A Common Stock at a price equal to 85% of the fair market value of the Class A Common Stock on the last day of the respective purchase period. We purchase shares of Class A Common Stock in the open market to satisfy purchases under the ESPP. During 2000 and 1999, we incurred expenses related to the ESPP of approximately $271,000 and $408,000.

19. Income Taxes

The provision for income taxes is summarized in the following table:

	2000		1999	1998
	(in millions)
Current:
Federal	$ 25		$ 81	$31
State	5		11	5
Foreign	32		22	24

Total current	62		114	60

Deferred:
Federal	82		37	32
State	5		3	1
Foreign	(10	)	—	—

Total deferred	77		40	33

	$139		$154	$93

Of the total current income tax provision recorded in 1999, $31 million relates to the gain on sale of the Commercial Services assets.

We filed a consolidated United States federal income tax return with FAHI through the date of the Offering in May 1998. Since then, we file our own United States federal income tax return. International Group filed a separate United States federal income tax return through the date of the Offering. Subsequent to that date, International Group is included in our consolidated United States federal income tax return.

We record future tax benefits for deductible temporary differences if we believe that we will realize these benefits. In the period we filed a consolidated income tax return with FAHI, we recorded income tax expense as if we were a separate taxpayer. Included in income tax expense are amounts relating to International Group.

We made United States federal income tax payments of $68 million in 2000, $67 million in 1999 and $20 million since the Offering through December 1998.

Under the terms of the tax allocation agreements between Heller and FAHI through April 1998, we calculated our current and deferred income taxes based on our taxable income or loss, utilizing separate company net operating losses, tax credits, capital losses and deferred tax assets or liabilities. In accordance with the provisions of the tax allocation agreements, net payments of $6 million were made to FAHI through April 1998.

The reconciliation between the statutory federal income tax provision and the actual effective tax provision for each of the three years ended December 31 is as follows:

	2000		1999		1998
	(in millions)
Tax provision at statutory rate	$151		$154		$101
State and foreign income taxes, net of federal income tax effects	31		32		31
Income of foreign subsidiaries and joint ventures and foreign tax credit utilization	(28	)	(29	)	(37	)
Resolution of tax issues	—		—		(3	)
Business related and other tax credits	(15	)	(8	)	(4	)
Other, net	—		5		5

	$139		$154		$ 93

The effective income tax rate was 32%, 34% (excluding the effect of the sale of our Commercial Services unit) and 32% for 2000, 1999 and 1998, respectively.

The significant components of the deferred tax assets and deferred tax liabilities at December 31, 2000 and 1999 are shown below:

	December 31,
	2000		1999
	(in millions)
Deferred Tax Assets:
Allowance for losses of receivables	$144		$128
Lease portfolio acquisitions	89		36
Net operating losses	57		54
Accrued expenses	42		36
Foreign tax credits	5		5
Equity interests and other investments	3		20

Gross deferred tax assets	340		279
Valuation allowance	(5	)	(5	)

Gross deferred tax assets, net of valuation allowance	335		274
Deferred Tax Liabilities:
Fixed assets and deferred income from lease financing	(103	)	(67	)
Repossessed properties	(14	)	(8	)
Unrealized appreciation of securities available for sale	(7	)	(5	)

Gross deferred tax liabilities	(124	)	(80	)

Net deferred tax asset	$211		$194

We have not made a provision for United States or additional foreign taxes on $283 million of undistributed earnings of subsidiaries outside the United States since we intend to reinvest those earnings. These earnings would become taxable upon the sale or liquidation of these international operations or upon the remittance of dividends. Given the availability of foreign tax credits and various tax planning strategies, we believe any tax liability which may ultimately be paid on these earnings would be substantially less than that computed at the statutory federal income tax rate. Upon remittance, certain foreign countries impose withholding taxes that are then available, subject to certain limitations, for use as credits against our United States tax liability. The amount of withholding tax that would be payable upon remittance of the entire amount of undistributed earnings is approximately $19 million.

We had unused foreign tax credit carryforwards of $5 million at December 31, 2000 and 1999, respectively. Due to substantial restrictions on the utilization of foreign tax credits imposed by the Tax Reform Act of 1986, we may not be able to utilize a significant portion of foreign tax credit carryforwards prior to expiration. Accordingly, we have recognized a valuation allowance for the amount of foreign tax credits recorded at December 31, 2000 and 1999.

We have recorded a net deferred tax asset of $211 million as of December 31, 2000. Although realization is not assured, we believe it is more likely than not that the deferred tax assets will be realized. The amount of the deferred tax assets considered realizable, however, could be reduced if estimates of future taxable income are reduced.

20. Basic and Diluted Net Income Per Share and Pro Forma Net Income Per Share

The following table shows the calculation of net income applicable to common stock per share on a basic and diluted basis for the periods indicated:

	Quarter Ended December 31, (unaudited)				Twelve Months Ended December 31,
	Basic		Diluted		Basic		Diluted
	2000	1999	2000	1999	2000	1999	2000	1999
Net income applicable to common stock (in millions)	$ 64	$ 103	$ 64	$ 103	$ 261	$ 256	$ 261	$ 256

Average equivalent shares of common stock outstanding (in thousands)	96,690	97,325	96,690	97,325	96,641	93,158	96,641	93,158
Stock options	—	—	491	121	—	—	260	75

Total average equivalent shares	96,690	97,325	97,181	97,446	96,641	93,158	96,901	93,233

Net income per share	$ 0.66	$ 1.06	$ 0.66	$ 1.06	$ 2.70	$ 2.75	$ 2.69	$ 2.74

The table below presents the pro-forma net income applicable to common stock per share on a basic and diluted basis excluding the after-tax gain from the 1999 sale of the Commercial Services assets:

	Quarter Ended December 31, (unaudited)				Twelve Months Ended December 31,
	Basic		Diluted		Basic		Diluted
	2000	1999	2000	1999	2000	1999	2000	1999
Net income applicable to common stock, net of HCS gain	$ 64	$ 55	$ 64	$ 55	$ 261	$ 208	$ 261	$ 208

Pro forma shares of common stock outstanding (in thousands)	96,690	97,325	96,690	97,325	96,641	93,158	96,641	93,158
Stock options	—	—	491	121	—	—	260	75

Total pro forma shares	96,690	97,325	97,181	97,446	96,641	93,158	96,901	93,233

Pro forma net income per share, net of HCS gain	$ 0.66	$ 0.56	$ 0.66	$ 0.56	$ 2.70	$ 2.23	$ 2.69	$ 2.23

Pro forma net income applicable to common stock per share on a basic and diluted basis for the year ended December 31, 1998, as shown on the Consolidated Statements of Income, adjusts for the impact of our Offering of Class A Common Stock that occurred in May 1998. The information assumes that shares issued in conjunction with the Offering have been outstanding since the beginning of 1998. Total pro forma shares used to compute pro forma basic and diluted net income applicable to common stock per share totaled 89,797,000 and 90,078,000, respectively.

21. Related Parties

We have several financial, administrative or other service arrangements with Fuji Bank, FAHI or related affiliates. We believe that the terms of these arrangements were similar to those we would have obtained in like agreements with unaffiliated entities in arms-length transactions.

Keep Well Agreement with Fuji Bank. The Keep Well Agreement provides that if Heller should lack sufficient cash or credit facilities to meet our commercial paper obligations, Fuji Bank will lend us up to $500 million. That loan would be payable on demand. We could only use the proceeds from the loan to meet our commercial paper obligations.

The Keep Well Agreement further provides that Fuji Bank will maintain our stockholders’ equity at $500 million. Accordingly, if at the close of any month our stockholders’ equity is less than $500 million, Fuji Bank will purchase, or cause one of its subsidiaries to purchase, shares of our NW Preferred Stock in an amount necessary to increase our stockholders’ equity to $500 million.

We paid commitment fees to Fuji Bank under the Keep Well Agreement of less than $1 million in 2000, 1999 and 1998. Interest on any loans will be charged at the prime rate of Morgan Guaranty Trust Company of New York plus 0.25% per annum. No loans or purchases of NW Preferred Stock have been made by Fuji Bank under this agreement.

Neither Fuji Bank nor us can terminate the Keep Well Agreement prior to December 31, 2002. After December 31, 2002, the Keep Well Agreement can only be terminated if we have received written certifications from Moody’s Investor Service, Inc. and Standard and Poor’s Corporation that, upon termination, our Series A Preferred Stock will be rated no lower than “a3” and “A-”, respectively and our Series C Preferred Stock will be rated no lower than “baa1” and “BBB” respectively. Similarly, after December 31, 2002, the agreement may only be terminated if our senior debt ratings were unchanged as a result of the termination of the Agreement. After December 31, 2007, the agreement may be terminated by either party with 30 business days written notice.

We amended the Keep Well Agreement in connection with the Offering to allow us or Fuji Bank or any of its affiliates to sell or dispose of Common Stock to any person or entity on the condition that Fuji Bank (directly or indirectly through one or more subsidiaries) continues to hold greater than 50% of the combined voting power of the outstanding Common Stock.

Purchase of Interest in International Group from Fuji Bank. In connection with the Offering, we purchased Fuji Bank’s interest in International Group for total cash consideration of approximately $83 million. The cost included $54 million for the International Group common stock owned by Fuji Bank, valued at book value, and $29 million for the International Group preferred stock owned by Fuji Bank, valued at a modest premium over book value.

Services Provided by Fuji Bank for Heller. Certain employees of Fuji Bank performed managerial, administrative and other related functions for Heller during 2000, 1999 and 1998. We compensated Fuji Bank for the use of such individuals’ services at a rate that reflects current costs. The amount paid to Fuji Bank for these services was approximately $1 million in 2000, 1999 and 1998. Additionally, certain subsidiaries of Fuji Bank act as registrar and paying agent for certain debt issuances by Heller. These services are provided at market rates.

Fuji Bank and one of its subsidiaries may also serve as co-managers for various offerings of Heller debt securities. These services are provided at market rates and paid directly to the lead underwriter on the offering.

Services Provided by Heller for Fuji Bank and Affiliates. We perform services for our affiliates, including FAHI, and charge them for the cost of the work performed. The amount received from FAHI was less than $1 million in 2000, 1999 and 1998. Additionally, we guaranteed payment under a deferred compensation arrangement between FAHI and certain of its employees who were providing services to Heller. We may also guarantee the obligations of our clients or the clients of certain joint ventures, under letters of credit issued by financial institutions, some of which are Heller’s affiliates.

Intercompany Receivables, Payables, Transactions and Financial Instruments. At December 31, 2000 and 1999, other payables and other receivables, respectively, included net amounts due to and due from affiliates of $3 million. These amounts mainly include interest bearing demand notes representing amounts due to, or from Heller, arising from advances, administrative fees and costs charged to other subsidiaries of FAHI and amounts payable to FAHI for services provided. The notes bear interest at rates that approximate the average rates our commercial paper obligations or short-term bank borrowing rates outstanding during the period. During 2000 and 1999, we paid interest of $210,000 and $160,000, respectively, to FAHI related to these notes.

Fuji Bank’s trust department may purchase our commercial paper for its clients. We paid interest expense related to these borrowings of $272,000 in 1998. There were no such purchases for Fuji Bank in 1999 or 2000.

Fuji Bank and one of its subsidiaries provided committed lines of credit to our consolidated international subsidiaries totaling $43 million and $55 million at December 31, 2000 and 1999, respectively. Fuji Bank also provided uncommitted lines of credit of less than $15 million at December 31, 2000 and 1999. Borrowings under these facilities totaled $2 million at December 31, 1998. There were no such borrowings at December 31, 1999 or 2000. In addition, Fuji Bank provides committed and uncommitted lines of credit to certain international joint ventures.

During 1999, we had an accounts receivable sale facility which allowed us to sell an undivided interest of up to $503 million in a designated pool of our factored accounts receivable to five bank-sponsored conduits. The underlying liquidity support for the conduits was provided by unaffiliated entities. One of the conduits had an operating agreement with Fuji Bank. We paid fees of $247,000 and interest expense of $2 million to Fuji Bank during 1999 for services provided under this agreement. This agreement was terminated when we sold the assets of our Commercial Services business unit in December of 1999.

During 1999, Global Vendor Finance purchased, in an arms-length transaction, a leasing portfolio from FUJI Leasing (Deutschland) GMBH for approximately $4 million.

During 2000, we originated a mezzanine loan of approximately Yen 1.5 billion (or $15 million) and made a participation, in an arms-length transaction, to Fuji Bank for 75% of the loan balance. As of December 31, 2000, the outstanding balance of this loan is approximately $4.6 million, of which $2.4 million relates to the Fuji participated portion.

22. Fair Value Disclosures

Statement of Financial Accounting Standards No. 107, Disclosures about Fair Value of Financial Instruments, requires disclosure of fair value information for certain financial instruments, for which it is practicable to estimate that value. Since there is no well-established market for many of our assets and financial instruments, fair values are estimated using present value, property yield, historical rate of return and other valuation techniques. These techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. These assumptions are inherently judgmental and changes in such assumptions could significantly affect fair value calculations. The derived fair value estimates may not be substantiated by comparison to independent markets and may not be realized in immediate liquidation of the instrument.

Our carrying values and estimated fair values of our financial instruments at December 31, 2000 and 1999, are as follows:

	December 31,
	2000				1999
	Carrying Value		Estimated Fair Value		Carrying Value	Estimated Fair Value
	(in millions)
Total receivables	$15,966		$15,832		$14,795	$14,945
Total investments	2,512		2,588		1,798	1,905
Debt	15,652		15,820		13,832	14,094
Swap agreements:
Asset	—		71		—	79
Liability	—		(26	)	—	(49	)
Forward currency exchange contracts	(4	)	(4	)	6	6
Interest rate futures contracts	(11	)	(11	)	32	32
Options	(2	)	(2	)	—	—

We used the following methods and assumptions to estimate the fair value disclosures for financial instruments. Carrying values approximate fair values for all financial instruments, which are not specifically addressed.

For variable rate receivables that re-price frequently and are performing at acceptable levels, fair values were assumed to equal carrying values. All other receivables were pooled by loan type and risk rating. We estimated the fair value for these receivables by employing discounted cash flow analyses using interest rates equal to the London Inter-Bank Offered Rate or the Prime rate offered as of December 31, 2000 and 1999 plus an adjustment for normal spread, credit quality and the remaining terms of the loans.

Carrying and fair values of the securities available for sale are based predominantly on quoted market prices. We use our business valuation model to determine the estimated value of our equity and other investments as of their anticipated exercise date. The business valuation model analyzes the cash flows of the related company and considers values for similar equity investments. The determined value is then discounted back to December 31, 2000 and 1999 using an appropriate rate of return for equity investments.

We estimated the fair value of our notes and debentures using discounted cash flow analyses. These analyses are based on current incremental borrowing rates for arrangements with similar terms and remaining maturities, as quoted by independent financial institutions as of December 31, 2000 and 1999. Fair values were assumed to equal carrying values for commercial paper and other short-term borrowings.

The estimated fair value of interest rate swap agreements represents the mark to market loss and mark to market gain outstanding as of December 31, 2000 and 1999, respectively. We estimated these fair values using discounted cash flow analyses in addition to using quoted market prices obtained from independent financial institutions. Forwards, futures contracts, and options are carried at fair value. The fair values of loan commitments, letters of credit and guarantees are negligible.

23. Operating Segments

SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, requires us to report segment information based upon the way we organize segments within the Company for making operating decisions and assessing performance.

Our two reportable segments, Domestic Commercial Finance and International Factoring and Asset Based Finance, are identified based upon our strategic business units whose long-term financial performance is affected by similar economic conditions. Each segment is managed separately by its own President.

Domestic Commercial Finance—This segment consists of five business units:

(i)

Heller Corporate Finance (Corporate Finance): providing collateralized cash flow and asset based lending;

(ii)

Heller Real Estate Financial Services (Real Estate Finance): providing secured real estate financing;

(iii)

Heller Leasing Services (Leasing Services): providing debt and lease financing of small and large ticket equipment and commercial aircraft;

(iv)

Heller Healthcare Finance (Healthcare Finance): providing asset based, collateralized cash flow and secured real estate financing to the healthcare industry; and

(v)

Heller Small Business Finance (Small Business Finance): providing financing to small businesses, primarily under U.S. Small Business Administration (SBA) loan programs. See Note 27—Subsequent Events.

The Domestic Commercial Finance segment also includes receivables for domestic business activities that we are no longer pursuing.

Prior to December 31, 1999, we also had included in our Domestic Commercial Finance segment Heller Commercial Services (Commercial Services), which provided factoring and receivables management services. This business unit was sold during the fourth quarter of 1999. See Note 5—Commercial Services Sale—for more details.

International Factoring and Asset Based Finance—This segment, managed by International Group, provides various types of financing through five majority owned subsidiaries and 8 joint ventures. These subsidiaries and joint ventures operate in 17 countries in Europe, Asia/Pacific and Latin America. The types of financing provided include:

factoring and receivables management services;

asset based financing;

acquisition financing; and

leasing and vendor finance and/or trade finance programs.

We evaluate the performance of our operating segments based on net income. Inter-segment sales and transfers are not significant. The reportable segments’ accounting policies are consistent with ours, as described in Note 1—Summary of Significant Accounting Policies.

Summarized financial information concerning our reportable segments is shown in the following table.

	Domestic Commercial Finance		International Factoring and Asset Based Finance	Consolidated Company
	(in millions)
Total assets:
2000	$16,792		$3,269	$20,061
1999	14,510		3,463	17,973
1998	11,278		3,088	14,366
Revenues:
2000	1,729		308	2,037
1999	1,372		265	1,637
1998	1,163		244	1,407
Income of international joint ventures:
2000	(1	)	39	38
1999	1		34	35
1998	—		30	30
Net interest income:
2000	575		54	629
1999	474		38	512
1998	381		42	423
Net Income:
2000	224		66	290
1999	236		48	284
1998	163		30	193

Total assets of International Factoring and Asset Based Finance as of December 31, 2000 decreased from the prior year due primarily to the effect of foreign currency exchange rate movements.

Net income of International Factoring and Asset Based Finance for 2000 includes a net after-tax gain of $7 million relating to the sale of one international investment and the liquidation of another.

Net income of Domestic Commercial Finance for 1999 includes a one-time after-tax gain of $48 million relating to the sale of assets of our Commercial Services unit. See Note 5—Commercial Services Sale—for more details.

Net income of Domestic Commercial Finance for 1998 was reduced by a one-time charge of $17 million ($12 million net of tax) relating to our restructuring initiative.

International Factoring and Asset Based Finance net income was reduced by minority interest of $2 million, $1 million and $4 million in 2000, 1999 and 1998, respectively.

We have allocated expenses of our corporate support functions to our Domestic Commercial Finance segment and our International Factoring and Asset Based Finance segment based on estimates of services provided to these segments. Unallocated expenses have been included with our Domestic Commercial Finance segment.

The following table presents certain financial information by geographic region for the years ended December 31, 2000, 1999 and 1998. We have attributed revenues to the specific region of transaction origination.

	For the Year Ended December 31,
	United States	Canada	France	Other Europe	Asia/ Pacific	Latin America	Consolidated
	(in millions)
Long-lived assets
2000	$1,204	$ 3	$ 73	$231	$18	$22	$1,551
1999	908	3	87	228	18	27	1,271
1998	502	—	102	237	17	39	897
Total revenues
2000	$1,674	$14	$223	$ 75	$18	$33	$2,037
1999	1,332	6	187	70	19	23	1,637
1998	1,159	—	188	31	21	8	1,407

Long-lived assets, according to SFAS No. 131, include investments in international joint ventures, gross operating leases, goodwill, non-compete agreements and fixed assets.

24. Sale of Receivables

During 2000, we sold equipment loans and leases, commercial cash flow loans, real estate loans and factored accounts receivable through securitization transactions. We retained servicing responsibilities and subordinated interests, including contractual rights to excess cash flows, in the securitizations of both equipment loans and leases and commercial cash flow loans. We retained servicing responsibilities for the factored accounts receivable. We have no continuing involvement with the real estate transferred assets sold in 2000.

Our retained interests are subordinate to the investor’s interests. Their value is subject to credit, prepayment, and interest rate risks on the transferred financial assets. The investors and securitization trusts have no recourse to our other assets for failure of debtors to pay when due.

Included in receivables on our balance sheet as of December 31, 2000 is approximately $680 million which represents a contractual right in commercial cash flow receivables sold to a special purpose entity. Our rights to the cash flows of these receivables are pari passu to those of the senior note holders in the special purpose entity.

In 2000, we recognized pretax gains of a total of approximately $12 million on both the securitizations of real estate loans and commercial cash flow loans, and recognized a gain of less than $1 million on the securitization of equipment loans and leases. We did not recognize any gain or loss on the sale of the factored accounts receivable.

The following table presents certain economic assumptions used in measuring the retained interests related to securitization transactions completed during 2000, as of the date of the transaction:

	Equipment Loans and Leases		Commercial Cash Flow Loans (1)(2)
Prepayment Speed	15.00	%	15.00	%
Weighted average life (in years)	1.66		8.47
Annual expected credit losses	0.58	%	1.00	%
Residual cash flows discounted at	10.21	%	13.00	%

(1)	Prepayment speed assumption utilized in year 5, after the end of the revolving period of transaction.

(2)	No credit losses expected in the first year of the transaction.

As of December 31, 2000, we held retained interests from previous years’ securitizations, in addition to those occurring in 2000. The following table presents the fair values of our retained interests as of December 31, 2000, along with key economic assumptions used to derive the values as of year-end. The table also presents the sensitivity of the current fair value to immediate 10 percent and 20 percent adverse changes in the listed economic assumptions.

	Equipment Loans and Leases		Commercial Cash Flow Loans (1)(2)		Real Estate Loans
	(dollars in millions)
Fair value of retained interests as of December 31, 2000	$ 6		$300		$ 27
Weighted-average life (in years)	1.66		9.26		2.48

Prepayment speed Assumption (annual rate)	15.0	%	15.0	%	13.0	%
Impact on fair value of 10% adverse change	N/M		N/M		N/M
Impact on fair value of 20% adverse change	N/M		N/M		N/M

Expected credit losses (annual rate)	0.58	%	1.00	%	1.56	%
Impact on fair value of 10% adverse change	N/M		$ (4	)	N/M
Impact on fair value of 20% adverse change	N/M		$ (8	)	N/M

Residual cash flows Discount rate (annual)	10.21	%	12.78	%	13.36	%
Impact on fair value of 10% adverse change	N/M		$ (16	)	$ (1	)
Impact on fair value of 20% adverse change	N/M		$ (32	)	$ (1	)

(1)	Prepayment speed assumption utilized in year 5, after the end of the revolving period of transaction.

(2)	No credit losses expected in the first year of the transaction.

These sensitivities are hypothetical and should be used with caution. As the amounts indicate, changes in fair value based on a 10 percent variation in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in the above table, the effect of a variation in a particular assumption on the fair value of the retained interest is calculated without changing any other assumption; in reality, changes in one factor may result in changes in another, which might magnify or counteract the sensitivities.

Certain retained interests from our equipment loans and lease securitizations have been excluded from the above sensitivity analysis, as these interests have no ascribed value as of December 31, 2000. We have also excluded, from the sensitivity analysis, a retained interest from a securitization of our SBA 7(a) and 504 loans (unguaranteed portion) due to an assessment of immateriality, in light of both quantitative and qualitative factors.

The following table illustrates expected static pool credit losses. Static pool credit losses are calculated by summing the actual and projected future credit losses and dividing these losses by the original balance of each pool of assets. The amounts shown below are a weighted average for all securitizations in which Heller has retained a material interest, based on qualitative and quantitative factors, as of December 31, 2000.

		Equipment Loans and Leases			Commercial Cash Flow Loans			Real Estate Loans
Actual and Projected Credit Losses (%) as of:
December 31, 2000		1.0	%		5.68	%(1)		0.55	%

(1)	No losses have been recorded to date on transaction. Ratio calculates estimate of projected future credit losses over twelve-year life of transaction.

The table below summarizes certain cash flows received from/(paid to) securitization trusts for all securitization activity occurring in 2000:

	Year Ended December 31,
	2000
	(in millions)
Proceeds from new securitizations	$1,504
Proceeds from collections reinvested during revolving period of previous securitizations	966
Servicing fees received	3
Other cash flows received on retained interests	4
Purchase of delinquent or foreclosed assets	—

Servicing advances	(140	)
Repayment of servicing advances	136
Other	(25	)

The following illustration presents quantitative information about delinquencies, net credit losses, and components of securitized financial assets and other assets managed together with them:

	Total Principal Amount of Loans	Principal Amount of Loans 60 Days or more past due	Net Credit Losses
	At December 31, 2000		During the Year
	(in millions)
Type of Asset
Equipment loans and leases	$ 3,765	$72	$22
Commercial cash flow loans	4,557	—	47
Real estate loans	2,686	16	3

Total assets managed or securitized	$11,008	$88	$72

Less: assets securitized	825

Assets held in portfolio (1)	$10,183

(1)	For securitized asset types where Heller retains an interest as of December 31, 2000.

25. Summary of Quarterly Financial Information (Unaudited)

The following financial information for the calendar quarters of 2000, 1999 and 1998, is unaudited. In the opinion of management, all adjustments necessary to present fairly the results of operations for such periods have been included.

	Quarter Ended
	March 31	June 30	September 30	December 31
	(in millions)
Net interest income
2000	$146	$157	$163	$162
1999	113	118	133	148
1998	99	105	109	110
Operating revenues
2000	$261	$262	$261	$252
1999	223	225	239	265
1998	186	194	196	207
Provision for losses
2000	$ 30	$ 41	$ 36	$ 40
1999	29	30	37	41
1998	15	17	27	18
Net income
2000	$ 75	$ 70	$ 72	$ 71
1999	57	58	59	110
1998	48	51	47	47

Net income for the fourth quarter of 1999 includes a one-time after-tax gain of $48 million relating to the sale of assets of our Commercial Services unit. See Note 5—Commercial Services Sale—for more details.

26. Accounting Developments

Statement of Financial Accounting Standards No. 133

In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133 (SFAS No. 133), Accounting for Derivative Instruments and Hedging Activities, as amended by Statement of Financial Accounting Standards No. 137, Deferral of the Effective Date of FASB Statement No. 133 and Statement of Financial Accounting Standards No. 138 Accounting for Derivative Instruments and Hedging Activities —an Amendment to FASB Statement No. 133 (collectively referred to as SFAS No. 133). This Statement establishes accounting and reporting standards requiring all derivative instruments (including certain derivative instruments embedded in other contracts) to be recorded in the balance sheet as either an asset or liability measured at its fair value. Changes in the fair value of the derivative are to be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows gains and losses on derivatives to offset related results on the hedged items in the income statement and requires that a company must document, designate, and assess the effectiveness of transactions that receive hedge accounting. SFAS No. 133, as amended, is effective for fiscal years beginning after June 15, 2000.

We hedge certain of our fixed rate receivables and investments using interest rate swap agreements or futures contracts to mitigate the effects of changes in interest rates. Under current generally accepted accounting principles any gain or loss on the derivatives is deferred and recognized into income when the asset is disposed of. In contrast, SFAS No. 133 will require that changes in the fair value of the derivative instrument are recognized currently in earnings. To the extent that we are able to satisfy certain fair value hedge criteria, the change in value of the assets due to changes in interest rates is also recognized currently in earnings. We currently hedge interest rate exposure related to debt issuances and, to a lesser extent, foreign exchange exposure related to our international operations.

SFAS No. 133 also requires that most warrants to acquire stock of publicly traded companies and certain privately held companies are classified as derivatives. Consequently, the changes in fair value of the warrant will be recognized in earnings each reporting period.

We adopted SFAS No. 133 on January 1, 2001. Adoption of this new accounting standard will result in:

cumulative before-tax reductions in net income of approximately $6 million to be recorded in the first quarter of 2001; and

after-tax reductions through other comprehensive income, a component of stockholders’ equity, of approximately $1 million in the first quarter of 2001.

The adjustment to net income relates primarily to certain economic hedging relationships that do not qualify for special accounting treatment under the new standard as well as ineffectiveness arising from other hedging relationships. The one-time impact of implementing SFAS No. 133 is the effect of an accounting change and should, therefore, not be considered as part of our results of operations for 2001.

Statement of Financial Accounting Standards No. 140

In September 2000, the FASB issued SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities—a replacement of FASB Statement No. 125. This statement requires new disclosures about securitization transactions entered into during the period, and retained interests in securitized financial assets existing at the balance sheet date. These changes must be applied for fiscal years ending after December 15, 2000 and accordingly, we have included additional disclosures in this Form 10-K in order to comply with the expanded disclosure requirements. Other provisions of SFAS No. 140, including a revision to the criteria for qualifying special purpose entities (QSPEs), must be applied prospectively to transfers of financial assets and extinguishments of liabilities occurring after March 31, 2001. We are currently assessing the impact of this statement on our sale and securitization activities.

Proposed Statement on Business Combinations and Intangible Assets

There is no specific deadline for the completion of the FASB’s review of this project. The earliest expected completion date is the end of the second quarter of 2001. FASB has indicated that all issues raised under this exposure draft remain open to continuing deliberation.

27. Subsequent Events

In January 2001, we amended our asset backed commercial paper conduit facility to include additional conduit participants. Under the amended facility, committed liquidity support now totals approximately $1.5 billion. Also in January 2001, we utilized an additional $300 million of liquidity under this facility. Available liquidity support, subsequent to this drawdown, totals $450 million.

In February 2001, we granted to various employees approximately 1.6 million options to purchase shares of Heller’s Class A Common Stock. No compensation expense was recorded in conjunction with the awards, as the exercise price equaled the market value of the stock on the date of grant. The options vest equally over each of the next four years.

In February 2001, we granted approximately 108,000 shares of restricted Class A Common Stock to employees of Heller. Compensation expense will be recorded ratably over the vesting periods, which range from two to five years.

On February 15, 2001, we paid dividends of $0.10 per share on our Class A and Class B Common Stock.

On February 16, 2001, we announced a strategic decision to discontinue the origination of SBA loans through Small Business Finance, effective immediately. Increased competition from banks focused on capturing small business customers by cross-selling a range of financial products, such as cash management and depository banking services in addition to SBA loans, have made the pricing and returns on this product less attractive. Our decision to stop the origination of new business in this market will permit us to re-deploy capital and other resources to our other businesses where we see better growth prospects that, we believe, will enhance shareholder value. Despite ceasing origination in Small Business Finance, we will fund existing commitments and intend to continue servicing the Small Business Finance portfolio in accordance with our customary business practices. We expect to record a one time non-operating pre-tax charge of less than $15 million for severance and leasehold related costs in the first quarter of 2001, as a result of this decision.

All of the above items were completed by February 16, 2001.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this item pertaining to executive officers of the Company is set forth in Item I of Part I. The information required by this item pertaining to the directors of the Company and with respect to compliance with Section 16(a) of the Securities Exchange Act of 1934 is incorporated by reference to the Company’s Proxy Statement for the 2001 Annual Meeting of Stockholders. Directors of Heller may also be directors of wholly-owned subsidiaries.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item is incorporated by reference to the Company’s Proxy Statement for the 2001 Annual Meeting of Stockholders.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this Item is incorporated by reference to the Company’s Proxy Statement for the 2001 Annual Meeting of Stockholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is incorporated by reference to the Company’s Proxy Statement for the 2001 Annual Meeting of Stockholders.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) Documents Filed as Part of This Report:

Financial Statements (All Financial Statements listed below are those of the Company and its consolidated subsidiaries):

Report of Independent Public Accountants—Arthur Andersen LLP

Consolidated Balance Sheets—December 31, 2000 and 1999

Consolidated Statements of Income for the Years Ended December 31, 2000, 1999 and 1998

Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998

Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2000, 1999 and 1998

Notes to Consolidated Financial Statements

Financial Statement Schedules:

Schedules are omitted because they are not applicable or because the required information appears in the financial statements or the notes thereto.

Exhibits:

Any shareholder who would like a copy of the following Exhibits may obtain one upon request from the Company at a charge that reflects the reproduction cost of such Exhibits. Requests should be made to the Corporate Secretary, Heller Financial, Inc., 500 W. Monroe St., Chicago, IL 60661.

(3)(a)		Amended and Restated Certificate of Incorporation of the Company, as amended and restated on April 30, 1998, is incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 1998 (File No. 1-6157).

(3)(b)		Amended and Restated By-laws of the Company, adopted on April 27, 1998, are incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 1998 (File No. 1-6157).

(4)(a)		Certificate of Designation, Preferences and Rights of Cumulative Perpetual Senior Preferred Stock, Series A, as filed with the Delaware Secretary of State on September 16, 1992, is incorporated by reference to Exhibit 4(a) to the Company’s Annual Report on Form 10-K for the Fiscal Year ended December 31, 1992 (File No. 1-6157).

(4)(b)		Certificate of Designation, Preferences and Rights of the Company’s Fixed Rate Noncumulative Perpetual Senior Preferred Stock, Series C (Liquidation Preference $100.00 Per Share) filed with the Secretary of State of Delaware on November 5, 1997, is incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form S-4 dated October 24, 1997 (File No. 333-38627).

(4)(c)		Certificate of Designation, Preferences and Rights of the Company’s Fixed Rate Noncumulative Perpetual Senior Preferred Stock, Series D (Liquidation Preference $100.00 Per Share), filed with the Secretary of State of Delaware on December 3, 1998 is incorporated by reference to Exhibit (4)(c) to the Company’s Annual Report on Form 10-K for the Fiscal Year ended December 31, 1998, as amended on Form 10-K/A (File No. 1-6157).

(4)(d)		Heller Financial, Inc. Standard Multiple-Series Indenture Provisions dated February 5, 1987 are incorporated by reference to Exhibit (4)(a) to the Company’s Registration Statement on Form S-3 dated February 5, 1987 (File No. 33-11757).

(4)(e)		Indenture dated as of September 1, 1995 between the Company and State Street Bank and Trust Company, as successor to Shawmut Bank Connecticut, National Association, as Trustee, with respect to Senior Securities is incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-3 dated October 23, 1997 (File No. 333-38545).

(4)(f)		First Supplemental Indenture dated as of October 13, 1995, to the Indenture dated as of September 1, 1995, between the Company and State Street Bank and Trust Company, as successor to Shawmut Bank Connecticut, National Association, as Trustee, with respect to Senior Securities is incorporated by reference to an exhibit to the Company’s Current Report on Form 8-K, filed October 18, 1995 (File No. 1-6157).

(4)(g)		Second Supplemental Indenture dated November 17, 1997 to the Indenture dated September 1, 1995 between the Company and State Street Bank and Trust Company, as Trustee, with respect to Senior Securities is incorporated by reference to Exhibit 4(a) to the Company’s Current Report on Form 8-K filed December 4, 1997 (File No. 1-6157).

(4)(h)		Third Supplemental Indenture dated as of August 16, 1999 to the Indenture dated September 1, 1995 between the Company and State Street Bank and Trust Company, as Trustee, with respect to Senior Securities is incorporated by reference to Exhibit 4 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 1-6157).

(4)(i)		Indenture dated as of September 1, 1995 between the Company and State Street Bank and Trust Company, as successor to Shawmut Bank Connecticut, National Association, as Trustee, with respect to Subordinated Securities is incorporated by reference to Exhibit 4.5 to the Company’s Registration Statement on Form S-3 dated October 23, 1997 (File No. 333-38545).

(4)(j)		First Supplemental Indenture dated as of October 13, 1995, to the Indenture dated as of September 1, 1995, between the Company and State Street Bank and Trust Company, as successor to Shawmut Bank Connecticut, National Association, as Trustee, with respect to Subordinated Securities is incorporated by reference to an exhibit to the Company’s Current Report on Form 8-K, filed October 18, 1995 (File No. 1-6157).

(4)(k)		Indenture dated as of September 1, 1995 between the Company and State Street Bank and Trust Company, as successor to Shawmut Bank Connecticut, National Association, as Trustee, with respect to Junior Subordinated Securities is incorporated by reference to Exhibit 4.7 to the Company’s Registration Statement on Form S-3 dated October 23, 1997 (File No. 333-38545).

(4)(l)		First Supplemental Indenture dated October 13, 1995 to the Indenture dated as of September 1, 1995 between the Company and State Street Bank and Trust Company, as successor to Shawmut Bank Connecticut, National Association, as Trustee, with respect to Junior Subordinated Securities is incorporated by reference to Exhibit 4(d)(i) to the Company’s Current Report on Form 8-K filed October 18, 1995 (File No. 1-6157).

(4)(m)		Form of Medium-Term Note, Series J (Fixed Rate) due from 9 months to 30 years from date of issue is incorporated by reference to Exhibit 4(a) to the Company’s Current Report on Form 8-K filed October 6, 1999 (File No. 1-6157).

(4)(n)		Form of Medium-Term Note, Series J (Fixed Rate/Currency Indexed) due from 9 months to 30 years from date of issue is incorporated by reference to Exhibit 4(b) to the Company’s Current Report on Form 8-K filed October 6, 1999 (File No. 1-6157).

(4)(o)		Form of Medium-Term Note, Series J (Floating Rate) due from 9 months to 30 years from date of issue filed as Exhibit 4(c) to the Company’s Current Report on Form 8-K filed October 6, 1999 (File No. 1-6157).

(4)(p)		Form of Medium-Term Note, Series J (Floating Rate/Currency Indexed) due from 9 months to 30 years from date of issue is incorporated by reference to Exhibit 4(d) to the Company’s Current Report on Form 8-K filed October 6, 1999 (File No. 1-6157).

(4)(q)*		Programme Manual dated October 16, 2000 for $2,000,000,000 Euro Medium-Term Programme for which Heller Financial, Inc. is an issuer and guarantor and Heller Financial Canada, Ltd. is an issuer.

(10)(a)		Amended and Restated Keep Well Agreement between The Fuji Bank, Limited (Fuji Bank) and the Company, as amended, is incorporated by reference to Exhibit 4.13 to the Company’s Registration Statement on Form S-3 dated July 8, 1998 (File No. 333-58723).

(10)(b)		Registration Rights Agreement dated May 6, 1998 between the Company and Fuji Bank is incorporated by reference to Exhibit (10)(b) to the Company’s Annual Report on Form 10-K for the Year Ended December 31, 1998, as amended on Form 10-K/A (File No. 1-6157).

(10)(c)		Services Agreement dated January 1, 1985 between the Company and Fuji Bank is incorporated by reference to Exhibit (10)(e) to the Company’s Annual Report on Form 10-K for the Fiscal Year ended December 31, 1992 (File No. 1-6157).

(10)(d)		Management Services Agreement dated as of January 2, 1998 between Fuji America Holdings, Inc. (FAHI) and the Company is incorporated by reference to Exhibit 10(d) to the Company’s Annual Report on Form 10-K for the Fiscal Year ended December 31, 1997, as amended on Form 10-K/A (File No. 1-6157).

(10)(e)		Agreement for the Allocation of Federal Income Tax Liability and Benefits among FAHI and the Company, effective as of January 2, 1998, incorporated by reference to the Company’s Annual Report on Form 10-K for the Fiscal Year ended December 31, 1998, as amended on Form 10-K/A (File No. 1-6157).

(10)(f)†		Supplemental Executive Retirement Benefit Plan, amended and restated effective January 1, 1996, is incorporated by reference to Exhibit (10)(e) to the Company’s Annual Report on Form 10-K for the Fiscal Year ended December 31, 1996 (File No. 1-6157).

(10)(g)†		First Amendment to the Company’s Supplemental Executive Retirement Plan. effective as of January 1, 1999, is incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 1-6157).

(10)(h)†		1998 Heller Financial, Inc. Stock Incentive Plan is incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-2 initially filed on February 26, 1998, as amended (File No. 333-46915).

(10)(i)†*		Amendment dated January 17, 2001 to 1998 Stock Incentive Plan.

(10)(j) †*		Heller Financial, Inc. Executive Deferred Compensation Plan (as amended and restated effective as of January 1, 2001).

(10)(k) †*		First Amendment of Heller Financial, Inc. Executive Deferred Compensation Plan (as amended and restated effective as of January 1, 2001).

(10)(l) †*		Heller Financial, Inc. 2000-2001 Long-Term Incentive Plan.

(10)(m) †*		Heller Financial, Inc. 2000-2002 Long-Term Incentive Plan.

(10)(n) †*		Heller Financial, Inc. Deferral Restoration Plan (Effective January 1, 2001).

(10)(o)		Employment Letter Agreement, dated as of December 31, 1999, between the Company and Richard J. Almeida.

(10)(p)		Employment Letter Agreement, dated as of December 31, 1999, between the Company and Frederick E. Wolfert.

(10)(q)†		Form of Change in Control Agreement is incorporated by reference to Exhibit 10.32 to the Company’s Registration Statement on Form S-2 initially filed on February 26, 1998, as amended (File No. 333-46915).

(12)*		Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.

(21)*		Subsidiaries of the Registrant.

(23)*		Consent of Independent Public Accountants.

*Filed herewith.

†Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K.

Instruments defining the rights of holders of certain issues of long-term debt of the Company have not been filed as exhibits to this Report because the authorized principal amount of any one of such issues does not exceed 10% of the total assets of the Company. The Company hereby agrees to furnish to the Securities and Exchange Commission, upon request, a copy of each instrument that defines the rights of holders of the Company’s long-term debt.

(b) Current Reports on Form 8-K:

Date of Report	Item	Description
October 19, 2000	5,7	A report filing a press release announcing the declaration of dividends on the Company’s common and preferred stocks.

October 20, 2000	5,7	A report filing a press release announcing earnings for the quarter ending September 30, 2000.

January 17, 2001	5,7	A report filing a press release announcing the declaration of dividends on the Company’s common and preferred stocks.

January 18, 2001	5,7	A report filing a press release announcing (i) earnings for the year ending December 31, 2000, (ii) selection by the Board of Directors of May 3, 2001 as the date for the Annual Meeting of Stockholders, and (iii) selection by the Board of Directors of March 9, 2001 as the record date for voting at the Annual Meeting of Stockholders.

February 20, 2001	5,7	A report filing a press release announcing the cessation of new business origination in the Company’s Small Business Finance unit.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized on this 21st day of February, 2001.

HELLER FINANCIAL , INC .

/S / RICHARD J. ALMEIDA

By:

Richard J. Almeida

Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Form 10-K has been signed by the following persons on behalf of the registrant in their capacities and on the date indicated.

Signature	Title	Date

/S / RICHARD J. ALMEIDA ^{Richard J. Almeida}	Chairman and Chief Executive Officer	February 21, 2001


/S / LAWRENCE G. HUND ^{Lawrence G. Hund}	Executive Vice President, Controller, and Chief Accounting Officer	February 16, 2001


/S / LAURALEE E. MARTIN ^{Lauralee E. Martin}	Executive Vice President and Chief Financial Officer	February 22, 2001


/S / FREDERICK E. WOLFERT ^{Frederick E. Wolfert}	Director, President and Chief Operating Officer	February 21, 2001


/S / MICHAEL A. CONWAY ^{Michael A. Conway}	Director	February 19, 2001


/S / TAKAAKI KATO ^{Takaaki Kato}	Director	February 21, 2001


/S / MARK KESSEL ^{Mark Kessel}	Director	February 20, 2001


/S / TETSUO KUMON ^{Tetsuo Kumon}	Director	February 20, 2001


/S / TAKASHI MAKIMOTO ^{Takashi Makimoto}	Director	February 20, 2001

Signature	Title	Date

/S / FRANK S. PTAK ^{Frank S. Ptak}	Director	February 26, 2001


/S / MASAHIRO SAWADA ^{Masahiro Sawada}	Director	February 21, 2001


/S / KENICHIRO TANAKA ^{Kenichiro Tanaka}	Director	February 26, 2001


/S / MICHIO UENO ^{Michio Ueno}	Director	February 20, 2001

EX-4.Q 2 0002.htm PROGRAMME MANUAL DATED OCTOBER 16, 2000 PROGRAMME MANUAL DATED OCTOBER 16, 2000

Exhibit 4 (Q)

CONFORMED COPY

HELLER FINANCIAL, INC.
(as issuer and guarantor)

HELLER FINANCIAL CANADA, LTD.
(as issuer)

U.S.$2,000,000,000

EURO MEDIUM-TERM NOTE PROGRAMME




	PROGRAMME MANUAL

CONTENTS



		PAGE

1. Signed For Identification		3

2. The Programme		3

3. Interpretation		4

4. Settlement Procedures		4

5. Forms Of The Notes		5

Schedule 1	SETTLEMENT PROCEDURES FOR NON - -SYNDICATED ISSUES OF NOTES	6

Schedule 2	SETTLEMENT PROCEDURES FOR SYNDICATED ISSUES OF NOTES	11

Schedule 3	FORM OF PRICING SUPPLEMENT	16

Schedule 4	FORM OF DEALER ACCESSION LETTER	27

Schedule 5	FORM OF NOTICE OF INCREASE OF AUTHORISED AMOUNT	29

Schedule 6	NOTICE AND CONTACT DETAILS	30

Schedule 7	FORM OF TEMPORARY GLOBAL NOTE	33

Schedule 8	FORM OF PERMANENT GLOBAL NOTE	86

Schedule 9	FORM OF DEFINITIVE NOTE	134

1.	SIGNED FOR IDENTIFICATION

SIGNED for the purposes of identifying this Programme Manual as the Programme Manual referred to in the Programme Documents defined below:

HELLER FINANCIAL, INC.

By:	LAURALEE E. MARTIN

Title:	*EVP AND CHIEF FINANCIAL OFFICER*

HELLER FINANCIAL CANADA, LTD.

By:	PAUL HAGY

Title:	*ASSISTANT TREASURER*

DEUTSCHE BANK AG LONDON

By:	DAVID BLOFELD	ALAN COSTER

Title:	*ASSISTANT VICE PRESIDENT*	*VICE PRESIDENT*

DATED: 26 OCTOBER 2000

2.	THE PROGRAMME

2.1	The Programme Documents

	Heller Financial, Inc. ("Heller") and Heller Financial Canada, Ltd. ("Heller Canada" and together with Heller, the "Issuers") have established a Euro Medium-Term Note Programme (the "Programme") for the issuance of notes (the "Notes"), in connection with which they have entered into an amended and restated dealer agreement dated 26 October 2000 (the "Dealer Agreement") and an amended and restated issue and paying agency agreement dated 26 October 2000 (the "Agency Agreement").

2.2	Luxembourg Stock Exchange

	Notes may be issued on a listed or unlisted basis. The Issuers have made an application to the Luxembourg Stock Exchange for Notes issued under the Programme to be listed on the Luxembourg Stock Exchange.

2.3	Offering Circular

	In connection with such application, the Issuers have prepared an offering circular dated 26 October 2000 (the "Offering Circular"), which expression includes any further offering circular prepared in connection with the listing of the Notes on any other stock exchange on which any Notes may from time to time be listed together with any information incorporated therein by reference).

3.		INTERPRETATION

3.1		Definitions

		In this Programme Manual, the Dealer Agreement, the Agency Agreement and the Offering Circular are together referred to as the "Programme Documents". All terms and expressions which have defined meanings in the Programme Documents shall have the same meanings in this Programme Manual except where the context requires otherwise or unless otherwise stated.

3.2		Construction

		All references in this Programme Manual to an agreement, instrument or other document (including the Offering Circular, the Dealer Agreement and the Agency Agreement shall be construed as a reference to that agreement, instrument or other document as the same may be amended, supplemented, replaced or novated from time to time.

3.3		Legal Effect

		This Programme Manual is not intended to create legal relations between any of the parties referred to in it or signing it for the purposes of identification. It is intended to illustrate certain ways in which the provisions of the Programme Documents can operate, and to contain suggested forms of certain documents which may be created during the existence of the Programme, but is not intended to affect the construction of any of the Programme Documents. In the case of any conflict between any of the provisions of this Programme Manual and any of the provisions of the Programme Documents, the provisions of the Programme Documents shall prevail.

4.		SETTLEMENT PROCEDURES

4.1		Non-syndicated issues of Notes

		The settlement procedures set out in Schedule 1 (Settlement Procedures for Non-Syndicated Issues of Notes) shall apply to each non-syndicated issue of Notes unless otherwise agreed between the relevant Issuer and (where the relevant Issuer is Heller Canada) Heller and the Relevant Dealer.

4.2		Syndicated issues of Notes

		The settlement procedures set out in Schedule 2 (Settlement Procedures for Syndicated Issues of Notes) shall apply to each syndicated issue of Notes unless otherwise agreed between the relevant Issuer and (where the relevant Issuer is Heller Canada) Heller and the Relevant Dealers.

4.3		Euroclear and/or Clearstream, Luxembourg

		The settlement procedures set out in Schedules 1 (Settlement Procedures for Non-Syndicated Issues of Notes) and 2 (Settlement Procedures for Syndicated Issues of Notes) assume settlement through Euroclear System ("Euroclear") and/or Clearstream

		Banking, société anonyme ("Clearstream, Luxembourg"). Settlement through alternative or additional clearing systems is permitted by the Programme but not illustrated in this Programme Manual.

5.		FORMS OF THE NOTES

		Schedules 7 (Form of Temporary Global Note), 8 (Form of Permanent Global Note) and 9 (Form of Definitive Note) contain the forms of the Notes. Each Issuer has delivered to the Fiscal Agent a stock of Master Temporary Global Notes and Master Permanent Global Notes (in unauthenticated form but executed on behalf of the relevant Issuer and (where the relevant Issuer is Heller Canada) Heller) based on the forms appearing in Schedules 7 (Form of Temporary Global Note) and 8 (Form of Permanent Global Note), respectively. The forms of Notes appearing in Schedules 7 (Form of Temporary Global Note), 8 (Form of Permanent Global Note) and 9 (Form of Definitive Note ) may be amended or supplemented for use in respect of a particular Tranche of Notes by agreement between the relevant Issuer, Heller (where the relevant Issuer is Heller Canada), the Fiscal Agent and the Relevant Dealer(s).

SCHEDULE 1

SETTLEMENT PROCEDURES FOR NON-SYNDICATED ISSUES OF NOTES

By no later than 2.00 p.m. (Local Time) three Local Banking Days before the Issue Date

		The relevant Issuer and (where the relevant Issuer is Heller Canada) Heller agree terms with a Dealer (which in this Schedule includes any institution to be appointed as a Dealer under the Dealer Accession Letter referred to below) for the issue and purchase of Notes (whether pursuant to an unsolicited bid from such Dealer or pursuant to an enquiry by the relevant Issuer).

		The Relevant Dealer promptly confirms (by fax) the terms of such agreement to the relevant Issuer and (where the relevant Issuer is Heller Canada) Heller copied to the Fiscal Agent.

		The Relevant Dealer instructs the Fiscal Agent to obtain a common code and ISIN code from Euroclear or Clearstream, Luxembourg.

		In the case of the first Tranche of Notes of a Series, the Fiscal Agent telephones Euroclear or Clearstream, Luxembourg with a request for a common code and ISIN code for such Series and in the case of a subsequent Tranche of Notes of that Series the Fiscal Agent telephones Euroclear or Clearstream, Luxembourg with a request for a temporary common code and ISIN code for such Tranche.

		Each common code and ISIN code is notified by the Fiscal Agent to the relevant Issuer and the Relevant Dealer.

		Where the purchasing institution is not a Dealer, arrangements are made for the execution of a Dealer Accession Letter (in or substantially in the form set out in Schedule 4 ( Form of Dealer Accession Letter) to the Programme Manual) and for the collection and review of the required condition precedent documents.

By no later than 3.00 p.m. (Local Time) three Local Banking Days before the Issue Date

The Relevant Dealer (or, if such Dealer so agrees with the relevant Issuer, the relevant Issuer) prepares (or procures the preparation of) the Pricing Supplement based on or substantially on the form set out in Schedule 3 (Form of Pricing Supplement) to the Programme Manual, and sends (by fax) a copy to the relevant Issuer (or, as the case may be, the Relevant Dealer), with a copy to the Fiscal Agent.

By no later than 5.00 p.m. (Local Time) three Local Banking Days before the Issue Date

		The Pricing Supplement is agreed between the relevant Issuer and the Relevant Dealer.

		The relevant Issuer confirms its instructions to the Fiscal Agent to carry out the duties to be carried out by the Fiscal Agent under the Agency Agreement and:

			if a Master Global Note(s) is/are to be used, ensures that the Fiscal Agent receives such details as are necessary to enable it to complete a duplicate or duplicates of the appropriate Master Global Note(s); and

			if a Master Global Note(s) is/are not to be used, ensures that there is delivered to the Fiscal Agent an appropriate Temporary Global Note and (if applicable) a Permanent Global Note, in unauthenticated form but executed on behalf of the relevant Issuer and (where the relevant Issuer is Heller Canada) Heller.

		The Pricing Supplement is executed and delivered (by fax) to the Relevant Dealer, with a copy to the Fiscal Agent.

		If required by the Conditions, a Calculation Agent is appointed.

No later than two Local Banking Days before the Issue Date

		The Relevant Dealer instructs Euroclear and/or Clearstream, Luxembourg to debit its account and pay the net subscription moneys to the Fiscal Agent's distribution account with Euroclear and/or Clearstream, Luxembourg for value on the Issue Date, against delivery of the Notes for value the Issue Date to the specified account of the Relevant Dealer with Euroclear or Clearstream, Luxembourg.

		The Fiscal Agent receives details of such instructions through the records of Euroclear and/or Clearstream, Luxembourg.

No later than two Luxembourg business days before the Issue Date

In the case of Notes which are to be listed on the Luxembourg Stock Exchange, the Fiscal Agent notifies the Luxembourg Stock Exchange by fax of the details of the Notes to be issued by sending the Pricing Supplement to the Luxembourg Listing Agent for submission to the Luxembourg Stock Exchange.

In respect of the first issue of Notes under the Programme to be listed on the Luxembourg Stock Exchange, the Pricing Supplement needs to be submitted to the Luxembourg Stock Exchange at least four Luxembourg business days prior to the date when listing is intended to be effective.

By no later than the Local Banking Day before the Issue Date

		If a Master Global Note(s) is/are to be used, the Fiscal Agent completes a duplicate or duplicates of the appropriate Master Global Note(s), attaches a copy of the relevant Pricing Supplement and authenticates the completed Global Note(s).

		If a Master Global Note(s) is/are not to be used, the Fiscal Agent checks and authenticates the completed Global Note(s) supplied to it by the relevant Issuer.

		The conditions precedent in the Dealer Agreement are satisfied and/or waived.

		The Global Note(s) is/are then delivered by the Fiscal Agent to a common depositary for Euroclear and Clearstream, Luxembourg, to be held in the Fiscal Agent's distribution account to the order of the relevant Issuer, pending payment of the net subscription moneys.

		Instructions are given by the Fiscal Agent to Euroclear or, as the case may be, Clearstream, Luxembourg to credit the Notes represented by such Global Note to the Fiscal Agent's distribution account.

		If delivery "against payment" is specified in the relevant Pricing Supplement, the Fiscal Agent further instructs Euroclear or, as the case may be, Clearstream, Luxembourg to debit from the Fiscal Agent's distribution account the nominal amount of such Notes which the Relevant Dealer has agreed to purchase and to credit such nominal amount to the account of such Dealer with Euroclear or Clearstream, Luxembourg against payment to the account of the Fiscal Agent of the net subscription moneys for the relevant Tranche of Notes for value the Issue Date.

		The Relevant Dealer gives corresponding instructions to Euroclear or Clearstream, Luxembourg.

		If delivery "free of payment" is agreed between the parties and specified in the Pricing Supplement, the relevant Issuer, the Relevant Dealer and the Fiscal Agent may agree alternative payment, settlement and delivery arrangements.

By no later than 3.00 p.m. (Local Time) one Local Banking Day before the Issue Date

		In the case of Floating Rate Notes, the Fiscal Agent notifies Euroclear, Clearstream, Luxembourg, the relevant Issuer, the relevant stock exchange (if applicable) and the Relevant Dealer by fax of the Rate of Interest for the first Interest Period (if already determined).

		Where the Rate of Interest has not yet been determined, this will be notified in accordance with this paragraph as soon as it has been determined.

On the Issue Date

		Euroclear and/or Clearstream, Luxembourg debit and credit accounts in accordance with instructions received by them.

		Upon receipt of the net subscription moneys, the Fiscal Agent transfers such moneys for value to such account as has been designated by the relevant Issuer.

On or subsequent to the Issue Date

		The Fiscal Agent notifies the relevant Issuer forthwith in the event that the Relevant Dealer does not pay the net subscription moneys due from it in respect of a Note.

		If the applicable US selling restrictions are "Regulation S - Category 2", the Relevant Dealer promptly notifies the Fiscal Agent that the distribution of the Notes purchased by it has been completed. The Fiscal Agent promptly notifies the relevant Issuer, the Relevant Dealer, Euroclear and Clearstream, Luxembourg of the date of the end of the distribution compliance period with respect to the relevant Tranche of Notes.

On the Exchange Date (if necessary)

In the case of the first Tranche of a Series, where the Pricing Supplement for such Tranche specifies that a Temporary Global Note shall be exchangeable for a Permanent Global Note:

		if a Master Permanent Global Note is to be used, the Fiscal Agent completes a duplicate of the Master Permanent Global Note, attaches a copy of the relevant Pricing Supplement, authenticates the completed Permanent Global Note (to the extent not already done) and delivers it to the common depositary for Euroclear and Clearstream, Luxembourg; and

		If a Master Permanent Global Note is not to be used, the Fiscal Agent checks and authenticates the completed Permanent Global Note supplied to it by the relevant Issuer (to the extent not already done) and delivers it to the common depositary for Euroclear and Clearstream, Luxembourg.

	A Temporary Global Note may only be exchanged for a Permanent Global Note upon certification as to non-U.S. beneficial ownership and, in the case of an issue by Heller Canada, as to non-Canadian residence.

SCHEDULE 2

SETTLEMENT PROCEDURES FOR SYNDICATED ISSUES OF NOTES

No later than 10 Local Banking Days before the Issue Date (or such other number of days agreed between the
relevant Issuer, the Mandated Dealer and the Fiscal Agent)

		The relevant Issuer and (where the relevant Issuer is Heller Canada) Heller agree terms with a Dealer (which expression in this Schedule includes any institution to be appointed as a Dealer under the Subscription Agreement referred to below) for the issue and purchase of Notes (whether pursuant to an unsolicited bid from such Dealer or pursuant to an enquiry by the relevant Issuer), subject to the execution of the Subscription Agreement referred to below.

		The Mandated Dealer promptly confirms (by fax) the terms of such agreement to the relevant Issuer and (where the relevant Issuer is Heller Canada) Heller, copied to the Fiscal Agent.

		The Mandated Dealer may invite other Dealers approved by the relevant Issuer to join the syndicate either on the basis of an invitation telex agreed between the relevant Issuer and the Mandated Dealer or on the terms of the Pricing Supplement referred to below and the Subscription Agreement.

		The Mandated Dealer instructs the Fiscal Agent to obtain a common code and ISIN code from Euroclear or Clearstream, Luxembourg.

		In the case of the first Tranche of Notes of a Series, the Fiscal Agent telephones Euroclear or Clearstream, Luxembourg with a request for a common code and ISIN code for such Series and in the case of a subsequent Tranche of Notes of that Series the Fiscal Agent telephones Euroclear or Clearstream, Luxembourg with a request for a temporary common code and ISIN code for such Tranche.

		Each common code and ISIN code is notified by the Fiscal Agent to the relevant Issuer and the Mandated Dealer.

		The Mandated Dealer (or, if such Dealer so agrees with the relevant Issuer, the relevant Issuer) prepares (or procures the preparation of) the Pricing Supplement based on or substantially on the form set out in Schedule 3 (Form of Pricing Supplement) to the Programme Manual. A draft Subscription Agreement (in or substantially in substantially the form of Schedule 3 (Pro Forma Subscription Agreement) to the Dealer Agreement or such other form as may be agreed between the relevant Issuer and the Relevant Dealers) is also prepared.

		Copies of the draft Pricing Supplement and draft Subscription Agreement are submitted for approval to each lawyer required to give a legal opinion in connection with the issue.

At least two full business days before the Subscription Agreement is intended to be signed

		The Mandated Dealer sends a copy of the draft Subscription Agreement and the draft Pricing Supplement to the other Relevant Dealers.

		At the same time the Mandated Dealer sends a copy of the Offering Circular and Dealer Agreement (together with such other conditions precedent documents) to any other Relevant Dealer which has not previously received such documents.

By 5.00 p.m. (Local Time) no later than three Local Banking Days before the Issue Date

		The Subscription Agreement and Pricing Supplement are agreed and executed and a copy of the Pricing Supplement is sent by fax to the Fiscal Agent.

		The relevant Issuer confirms its instructions to the Fiscal Agent to carry out the duties to be carried out by the Fiscal Agent under the Agency Agreement and:

			if a Master Global Note(s) is/are to be used, ensures that the Fiscal Agent receives such details as are necessary to enable it to complete a duplicate or duplicates of the appropriate Master Global Note(s); and

			if a Master Global Note(s) is/are not to be used, ensures that there is delivered to the Fiscal Agent an appropriate Temporary Global Note and/or a Permanent Global Note (as the case may be), in unauthenticated form but executed on behalf of the relevant Issuer.

		If required by the Conditions, a Calculation Agent is appointed.

No later than two Local Banking Days before the Issue Date

The Relevant Dealers instruct Euroclear and/or Clearstream, Luxembourg to debit their accounts and pay the net subscription moneys, for value the Issue Date, to the "New Issues Securities Clearance Account" of the Mandated Dealer with Euroclear and Clearstream, Luxembourg against delivery of the Notes for value the Issue Date, to the specified accounts of the Relevant Dealers with Euroclear or Clearstream, Luxembourg.

No later than two Luxembourg business days before the Issue Date

		In the case of Notes which are to be listed on the Luxembourg Stock Exchange, the Fiscal Agent notifies the Luxembourg Stock Exchange by fax of the details of the Notes to be issued by sending the Pricing Supplement to the Luxembourg Listing Agent for submission to the Luxembourg Stock Exchange.

		In respect of the first issue of Notes under the Programme to be listed on the Luxembourg Stock Exchange, the Pricing Supplement needs to be submitted to the Luxembourg Stock Exchange at least four Luxembourg business days prior to the date when listing is intended to be effective.

By 3.00 p.m. (Local Time) no later than one Local Banking Day before the Issue Date

		In the case of Floating Rate Notes, the Fiscal Agent notifies Euroclear, Clearstream, Luxembourg, the relevant Issuer, the relevant stock exchange (if applicable) and the Mandated Dealer by fax of the Rate of Interest for the first Interest Period (if already determined).

		Where the Rate of Interest has not yet been determined, this will be notified in accordance with this paragraph as soon as it has been determined.

On the "Payment Instruction Date", being either the Issue Date or, in the case of a pre-closed issue, the day which is one Local Banking Day before the Issue Date

		If a Master Global Note(s) is/are to be used, the Fiscal Agent completes a duplicate or duplicates of the appropriate Master Global Note(s), attaches a copy of the relevant Pricing Supplement and authenticates the completed Global Note(s).

		If a Master Global Note(s) is/are not to be used, the Fiscal Agent checks and authenticates the completed Global Note(s) supplied to it by the relevant Issuer.

		The conditions precedent in the Subscription Agreement and the Dealer Agreement are satisfied and/or waived.

		The Global Note(s) is/are then delivered by the Fiscal Agent to a common depositary for Euroclear and Clearstream, Luxembourg and instructions are given by the Fiscal Agent (on behalf of the relevant Issuer) to the common depositary to hold the Notes represented by the relevant Global Note to the relevant Issuer's order, pending payment of the net subscription moneys.

		If delivery "against payment" is specified in the Pricing Supplement, the Mandated Dealer instructs Euroclear and Clearstream, Luxembourg to pay the net subscription moneys to the common depositary for value the Issue Date, and instructs the common depositary to pay the net subscription moneys to the relevant Issuer, for value the Issue Date against delivery of the Notes represented by the relevant Global Note to the common depositary.

		If delivery "free of payment" is agreed between the parties and specified in the Pricing Supplement, the relevant Issuer the Mandated Dealer and the Fiscal Agent may agree alternative payment, settlement and delivery arrangements.

Issue Date

		Euroclear and/or Clearstream, Luxembourg debit and credit accounts in accordance with instructions received by them.

		The common depositary pays the net subscription moneys to such account as has been designated by the relevant Issuer.

On or subsequent to the Issue Date

If the applicable US selling restrictions are "Regulation S - Category 2", each Relevant Dealer promptly notifies the Fiscal Agent that the distribution of the Notes purchased by it has been completed. When all Relevant Dealers have certified, the Fiscal Agent promptly notifies the relevant Issuer, the Relevant Dealers, Euroclear and Clearstream, Luxembourg of the date of the end of the distribution compliance period with respect to the relevant Tranche of Notes.

On the Exchange Date (if necessary)

		In the case of the first Tranche of a Series, where the Pricing Supplement for such Tranche specifies that a Temporary Global Note shall be exchangeable for a Permanent Global Note:

			if a Master Permanent Global Note is to be used, the Fiscal Agent completes a duplicate of the Master Permanent Global Note, attaches a copy of the relevant Pricing Supplement, authenticates the completed Permanent Global Note (to the extent not already done) and delivers it to the common depositary for Euroclear and Clearstream, Luxembourg; and

			If a Master Permanent Global Note is not to be used, the Fiscal Agent checks and authenticates the completed Permanent Global Note supplied to it by the relevant Issuer (to the extent not already done) and delivers it to the common depositary for Euroclear and Clearstream, Luxembourg.

		A Temporary Global Note may only be exchanged for a Permanent Global Note upon certification as to non-U.S. beneficial ownership and, in the case of an issue by Heller Canada, as to non-Canadian residence.

SCHEDULE 3

FORM OF PRICING SUPPLEMENT

The Pricing Supplement in respect of each Tranche of Notes will be substantially in the following form, duly supplemented (if necessary), amended (if necessary) and completed to reflect the particular terms of the relevant Notes and their issue. Text in this section appearing in italics does not form part of the form of the Pricing Supplement but denotes directions for completing the Pricing Supplement.

Pricing Supplement dated Ÿ

[HELLER FINANCIAL, INC./HELLER FINANCIAL CANADA, LTD.]
(incorporated in [the State of Delaware, United States of America/Canada])
Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes]
under the U.S. $2,000,000,000
Euro Medium-Term Note Programme
[unconditionally and irrevocably guaranteed by
HELLER FINANCIAL, INC.
(incorporated in the State of Delaware, United States of America)]

This document constitutes the Pricing Supplement relating to the issue of Notes described herein. Terms used herein shall be deemed to be defined as such for the purposes of the Conditions set forth in the Offering Circular dated 26 October 2000. This Pricing Supplement must be read in conjunction with such Offering Circular.

[The Notes constitute [commercial paper][shorter/longer term debt securities]¹ issued in accordance with regulations made under section 4 of the Banking Act 1987. The Issuer of the Notes is [Heller Financial, Inc./Heller Financial Canada, Ltd.] which is not an authorised institution or a European authorised institution (as such terms are defined in the Banking Act 1987 (Exempt Transactions) Regulations 1997). Repayment of the principal and payment of any interest or premium in connection with the Notes has [not] been guaranteed [by Heller Financial, Inc.] which is not an authorised institution or a European authorised institution (as such terms are defined in the Banking Act 1987 (Exempt Transactions) Regulations 1997).²

[Include whichever of the following apply or specify as "Not Applicable" (N/A). Note that the numbering should remain as set out below, even if "Not Applicable" is indicated for individual paragraphs or sub-paragraphs. Italics denote directions for completing the Pricing Supplement.]

Include "commercial paper" if Notes must be redeemed before their first anniversary. Include "shorter term debt securities" if Notes may not be redeemed before their first anniversary but must be redeemed before their third anniversary. Include "longer term debt securities" if Notes may not be redeemed before their third anniversary.

Unless otherwise permitted, text to be included for all Notes (including Notes denominated in Sterling) in respect of which the issue proceeds are accepted by the Issuer in the United Kingdom.

1.	(i) Issuer:	[Heller Financial, Inc./Heller Financial Canada, Ltd.]

	[(ii) Guarantor	[Heller Financial, Inc.]]

2.	[(i)] Series Number:	[ ]

	[(ii) Tranche Number: (If fungible with an existing Series, details of that Series, including the date on which the Notes become fungible).]	[ ]

3.	Specified Currency or Currencies:	[ ]

4.	Aggregate Nominal Amount:

	[(i)] Series:	[ ]

	[(ii) Tranche:	[ ]]

5.	[(i)] Issue Price:	[ ] per cent. of the Aggregate Nominal Amount [plus accrued interest from [insert date] ( in the case of fungible issues only, if applicable)]

	[(ii) Net proceeds:	[ ] (Required only for listed issues)]

6.	Specified Denominations of the Definitive Notes:	[ ]

7.	[(i)] Issue Date:	[ ]

	[(ii) Interest Commencement Date (if different from the Issue Date):	[ ]]

8.	Maturity Date:	[specify date or (for Floating Rate Notes) Interest Payment Date falling in the relevant month and year]

9.	Interest Basis:	[• % Fixed Rate] [[specify reference rate] +/- • % Floating Rate] [Zero Coupon] [Index-Linked Interest] [Other (specify)] (further particulars specified below)


10.	Redemption/Payment Basis:	[Redemption at par] [Index-Linked Redemption] [Dual Currency] [Partly Paid] [Instalment] [Other (specify)]


11.	Change of Interest or Redemption/ Payment Basis:	[Specify details of any provision for convertibility of Notes into another interest or redemption/ payment basis]


12.	Put/Call Options:	[Investor Put] [Issuer Call] [(further particulars specified below)]


13.	Status of the Notes:	[Senior/Dated/Perpetual]


14.	Listing:	[Luxembourg/other (specify)/None]


15.	Method of distribution:	[Syndicated/Non-syndicated]

PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE

16.	Fixed Rate Note Provisions	[Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph)


	(i) Rate[(s)] of Interest:	[ ] per cent. per annum [payable [annually/semi- annually/quarterly/monthly] in arrear]


	(ii) Interest Payment Date(s):	[ ] in each year

	(iii) Fixed Coupon Amount[(s)]:	[ ] [per Note of [ ] Specified Denomination and per Note of [ ] Specified Denomination]
	(iv) Day Count Fraction:	[30/360]/[Actual/Actual (ISMA)]/[If neither of these options applies, give details]
		[Note that if interest is not payable on a regular basis Actual/Actual will not be a Suitable Day Count Fraction]

	(v) Broken Amount(s):

	(vi) Other terms relating to the method of calculating interest for Fixed Rate Notes:	[Not Applicable/give details] (Consider if day count fraction, particularly for euro denominated issues, should be on an Actual/Actual basis. Also consider what should happen to unmatured Coupons in the event of early redemption of the Notes.)

17.	Floating Rate Note Provisions	[Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph. Also consider whether EURO BBA LIBOR or EURIBOR is the appropriate reference rate)
	(i) Specified Period(s)/Specified Interest Payment Dates:	[ ]

	(ii) Business Day Convention:	[Floating Rate Convention/ Following Business Day Convention/ Modified Following Business Day Convention/ Preceding Business Day Convention/ other (give details)]

	(iii) Additional Business Centre(s):	[Not Applicable/give details]

(iv)	Manner in which the Rate(s) of Interest is/are to be determined:	[Screen Rate Determination/ISDA Determination/other (give details)]

(v)	Party responsible for calculating the Rate(s) of Interest and Interest Amount(s) (if not the [Fiscal Agent]):	[[Name] shall be the Calculation Agent (no need to specify if the Fiscal Agent is to perform this function)]

(vi)	Screen Rate Determination:

	- Reference Rate:	[For example, LIBOR or EURIBOR]
	- Relevant Screen Page:	[For example, Telerate page 3750/248 (if not 248 for EURIBOR ensure page shows a composite rate)

	- Interest Determination Date(s):	[ ]

	- Relevant Time:	[For example, 11.00 a.m. London time/Brussels time]
	- Relevant Financial Centre:	[For example, London/Euro-zone (where Euro-zone means the region comprised of the countries whose lawful currency is the euro)]

(vii)	ISDA Determination:

	- Floating Rate Option:	[ ]

	- Designated Maturity:	[ ]

	- Reset Date:	[ ]

(viii)	Margin(s):	[+/-][ ] per cent. per annum

(ix)	Minimum Rate of Interest:	[ ] per cent. per annum

(x)	Maximum Rate of Interest:	[ ] per cent. per annum

(xi)	Day Count Fraction:	[ ]


	(xii)	Fall back provisions, rounding provisions, denominator and any other terms relating to the method of calculating interest on Floating Rate Notes, if different from those set out in the Conditions:	[ ]

18.	Zero Coupon Note Provisions		[Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph)

	(i)	[Amortisation/Accrual] Yield:	[ ] per cent. per annum

	(ii)	Reference Price:	[ ]

	(iii)	Any other formula/basis of determining amount payable:	[Consider whether it is necessary to specify a Day Count Fraction if the Notes are denominated in euro]
19.	Index-Linked Interest Note Provisions		[Applicable/Not Applicable] (If not applicable, delete the remaining subparagraphs of this paragraph)
	(i)	Index/Formula:	[Give or annex details]

	(ii)	Calculation Agent responsible for calculating the interest due:	[ ]

	(iii)	Provisions for determining Coupon where calculation by reference to Index and/or Formula is impossible or impracticable:	[ ]

	(iv)	Specified Period(s)/Specified Interest Payment Dates:	[ ]

	(v)	Business Day Convention:	[Floating Rate Convention/ Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention/other (give details)]


		(vi)	Additional Business Centre(s):		[ ]

		(vii)	Minimum Rate of Interest:		[ ] per cent. per annum

		(viii)	Maximum Rate of Interest:		[ ] per cent. per annum

		(ix)	Day Count Fraction:		[ ]

20.	Dual Currency Note Provisions				[Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph)

		(i)	Rate of Exchange/method of calculating Rate of Exchange:		[Give details]

		(ii)	Calculation Agent, if any, responsible for calculating the principal and/or interest due:		[ ]

		(iii)	Provisions applicable where calculation by reference to Rate of Exchange impossible or impracticable:		[ ]

		(iv)	Person at whose option Specified Currency(ies) is/are payable:		[ ]


PROVISIONS RELATING TO REDEMPTION

21.	Call Option				[Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph)

		(i)	Optional Redemption Date(s) (Call):		[ ]

		(ii)	Optional Redemption Amount(s) (Call) and method, if any, of calculation of such amount(s):		[ ]

		(iii)	If redeemable in part:

			(a)	Minimum Redemption Amount:	[ ]

			(b)	Maximum Redemption Amount:	[ ]


	(iv)	Notice period (if other than as set out in the Conditions):	[ ]

22.	Put Option		[Applicable/Not Applicable] (If not applicable, delete the remaining sub-paragraphs of this paragraph)
	(i)	Optional Redemption Date(s):	[ ]

	(ii)	Optional Redemption Amount(s) and method, if any, of calculation of such amount(s):

	(iii)	Notice period (if other than as set out in the Conditions):	[ ]

23.	Final Redemption Amount		[Par/other/see Appendix]

24.	Early Redemption Amount

	Early Redemption Amount(s) payable on redemption for taxation reasons or on event of default and/or the method of calculating the same (if required or if different from that set out in the Conditions):		[Not Applicable (if both the Early Redemption Amount (Tax) and the Early Termination Amount (Default) are the principal amount of the Notes/specify the Early Redemption Amount (Tax) and/or the Early Termination Amount (Default) if different from the principal amount of the Notes)]


GENERAL PROVISIONS APPLICABLE TO THE NOTES

25.	Form of Notes:		Bearer Notes:

			[Temporary Global Note exchangeable for a Permanent Global Note which is exchangeable for Definitive Notes on [ ] days' notice/at any time/in the limited circumstances specified in the Permanent Global Note.]

			[Temporary Global Note exchangeable for Definitive Notes on [ ] days' notice.]

26.	Additional Financial Centre(s) or other special provisions relating to Payment Dates:		[Not Applicable/give details. Note that this item relates to the place of payment, and not interest period end dates, to which item 17(iii) relates]

27.	Talons for future Coupons or Receipts to be attached to Definitive Notes (and dates on which such Talons mature):		[Yes/No. If yes, give details]

28.	Details relating to Partly Paid Notes: amount of each payment comprising the Issue Price and date on which each payment is to be made and consequences (if any) of failure to pay, including any right of the Issuer to forfeit the Notes and interest due on late payment:		[Not Applicable/give details]

29.	Details relating to Instalment Notes: amount of each instalment, date on which each payment is to be made:		[Not Applicable/give details]

30.	Redenomination, renominalisation and reconventioning provisions:		[Not Applicable/The provisions [in Condition 22 (Redenomination)] [annexed to this Pricing Supplement] apply]

31.	Consolidation provisions:		[Not Applicable/The provisions [in Condition 18 (Further Issues)] [annexed to this Pricing Supplement] apply]

32.	Other terms or special conditions:		[Not Applicable/give details]


DISTRIBUTION

33.	(i)	If syndicated, names of Managers:	[Not Applicable/give names]

	(ii)	Stabilising Manager (if any):	[Not Applicable/give name]

34.	If non-syndicated, name of Dealer:		[Not Applicable/give name]

35.	TEFRA:		The D Rules are applicable

36.		Additional selling restrictions:	[Not Applicable/give details]

			[If Heller Canada is the Issuer, Canadian selling restrictions will apply]

OPERATIONAL INFORMATION

37.		ISIN Code:	[ ]


38.		Common Code:	[ ]

39.		Any clearing system(s) other than Euroclear and Clearstream, Luxembourg and the relevant identification number(s):	[Not Applicable/give name(s) and number(s)]


40.		Delivery:	Delivery [against/free of] payment

41.		Additional Paying Agent(s) (if any):	[ ]

[The Issuer confirms that it:

(a)	has complied with its obligations under the relevant rules (as defined in the Banking Act 1987 (Exempt Transactions) Regulations 1997 (the "Regulations")) in relation to the admission to and continuing listing of Notes issued under the U.S.$2,000,000,000 Euro Medium-Term Note Programme (the "Programme") and of any previous issues made under it and listed on the same exchange as the Programme;

(b)	will have complied with its obligations under the relevant rules in relation to the admission to listing of such Notes by the time such Notes are so admitted; [and]

(c)	has not, since the last publication, if any, in compliance with the relevant rules of information about the Programme, any previous issues made under it and listed on the same exchange as the Programme, or the Notes, having made all reasonable enquiries, become aware of any change in circumstances which could reasonably be regarded as significantly and adversely affecting its ability to meet its obligations as Issuer in respect of the Notes as they fall due[; and

(d)	has complied and will continue to comply with its obligations under the Regulations to lodge all relevant information (as defined in the Regulations) in relation to any such Notes with the Financial Services Authority in its capacity as competent authority for the purposes of Part IV of the Financial Services Act 1986 and if necessary, the London Stock Exchange.]¹


¹ Insert for all Notes where the Issuer is accepting the issue proceeds in the United Kingdom.

[LISTING APPLICATION

This Pricing Supplement comprises the details required to list the issue of Notes described herein pursuant to the listing of the U.S.$2,000,000,000 Euro Medium-Term Note Programme of Heller Financial, Inc. and Heller Financial Canada, Ltd.]

RESPONSIBILITY

The Issuer accepts responsibility for the information contained in this Pricing Supplement.

Signed on behalf of the Issuer:

By: ............................................

Duly authorised

[Signed on behalf of the Guarantor:

By: ............................................

Duly authorised]²

² Insert if the Issuer is Heller Financial Canada, Ltd.

SCHEDULE 4

FORM OF DEALER ACCESSION LETTER

Form of Dealer Accession Letter

[New Dealer]
[Address]

Dear Sirs

Heller Financial, Inc.
Heller Financial Canada, Ltd.
U.S.$2,000,000,000
Euro Medium-Term Note Programme

We refer to our Euro Medium-Term Note Programme (the "Programme") for the issuance of notes, in connection with which we have entered into an amended and restated dealer agreement dated 26 October 2000 (the "Dealer Agreement"). All terms and expressions which have defined meanings in the Dealer Agreement shall have the same meanings in this letter except where the context requires otherwise or unless otherwise stated.

We have pleasure in inviting you to become a Dealer upon the terms of the Dealer Agreement [but only in respect of [specify Tranche of Notes (the "Notes")]], a copy of which has been supplied to you by us.

We are enclosing such copies of the conditions precedent as set out in Schedule 2 (Initial Conditions Precedent) to the Dealer Agreement as you have requested together with copies of any updates or supplements thereto as have been delivered to the existing Dealers. In addition, we enclose letters from Clifford Chance, the Deputy General Counsel and Chief Corporate Counsel of Heller Financial, Inc. and Blake, Cassels & Graydon, Canadian counsel of Heller Financial Canada, Ltd. entitling you to rely on the original letters referred to therein.

Please return a copy of this letter to us signed by an authorised signatory whereupon you will become a Dealer for the purposes of the Dealer Agreement with [,subject as hereinafter provided,] all the authority, rights, powers, duties and obligations of a Dealer under the Dealer Agreement [except that, following the issue of the Notes, you shall have no further authority, rights, powers, duties or obligations except such as may have accrued or been incurred prior to, or in connection with, the issue of the Notes].

This letter is governed by, and shall be construed in accordance with, New York law. The provisions of Clause 17 (Law and Jurisdiction) of the Dealer Agreement shall apply to this letter as if set out herein in full.

Yours faithfully

Heller Financial, Inc.	[Heller Financial Canada, Ltd.]

By:	By:

CONFIRMATION

We hereby accept our appointment as a Dealer under the Amended and Restated Dealer Agreement (the "Dealer Agreement") upon the terms of this letter [but only in respect of [specify Tranche of Notes].

We confirm that we are in receipt of all the documents which we have requested and have found them to be satisfactory.

For the purposes of the Dealer Agreement our communication details are as set out below.

[NEW DEALER]

By:

Date:

Address:              [                      ]
[Telex:                 [number and answerback]]
Fax :                    + [number]
Attention:            [name or department]

[For the purposes of article 1 of the Protocol annexed to the Convention on jurisdiction and the enforcement of judgments in civil and commercial Matters signed at Brussels on 27 September 1968, the undersigned expressly and specifically agree[s] in the terms of Clause 17.2 (Jurisdiction of New York Courts) of the Dealer Agreement as it is incorporated into this letter agreement.]

[NEW DEALER]

By:

[copies to:

(i) all existing Dealers who have been appointed in respect of the Programme generally;

(ii) the existing Fiscal Agent.]

SCHEDULE 5

FORM OF NOTICE OF INCREASE OF AUTHORISED AMOUNT

To:             [list all current Dealers appointed in
                   respect of the Programme generally, and each of the
                   Paying Agents]

Dear Sirs

Heller Financial, Inc.
Heller Financial Canada, Ltd.
U.S.$2,000,000,000
Euro Medium-Term Note Programme

Pursuant to Clause 14 (Increase in Authorised Amount) of the Dealer Agreement, we hereby request that the Authorised Amount of the Programme be increased from U.S.$2,000,000,000 to [currency ] [amount] with effect from [date] or such later date upon which the requirements of Clause 14.2 (Effectiveness) of the Dealer Agreement shall be fulfilled, subject always to the provisions of Clause 14.2 (Effectiveness) of the Dealer Agreement.

Unless we receive notice to the contrary from you no later than ten days after your receipt of this letter, you will (subject to our compliance with all matters contemplated in Clause 14.2 ( Effectiveness) of the Dealer Agreement) be deemed to have consented to the increase in the Authorised Amount.

From the date upon which the increase in the Authorised Amount becomes effective, all references in the Dealer Agreement to the Programme and the Authorised Amount being in a certain principal amount shall be to the increased principal amount as specified herein.

Yours faithfully,

Heller Financial, Inc.		[Heller Financial Canada, Ltd.]

By:		By:

SCHEDULE 6

Notice and Contact Details

As Issuer and Guarantor

HELLER FINANCIAL, INC.

Address:		500 West Monroe Street
		Chicago, Illinois 60661
		United States of America

Fax:		+ 312 441 7586
Attention:		Treasurer


*As Issuer*

HELLER FINANCIAL CANADA, LTD.

Address:		11 King Street West
		15^th Floor
		Toronto
		Ontario, Canada M5H 4C7

Fax:		+ 416 202 6226
Attention:		Chief Executive Officer


*The Dealers*

DEUTSCHE BANK AG LONDON

Address:		Winchester House
		1 Great Winchester Street
		London EC2N 2DB

Fax :		+ 44 (0)20 7545 4289
Attention:		MTN Desk

ABN AMRO BANK N.V.

Address:		250 Bishopsgate
		London EC2M 4AA

Fax :		+ 44 (0)20 7678 6484
Attention:		MTN Desk

CHASE MANHATTAN INTERNATIONAL LIMITED

Address:		125 London Wall
		London EC2Y 5AJ

Fax :		+ 44 (0)20 7777 3144
Attention:		New Issues Desk

CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED

Address:		One Cabot Square
		London E14 4QJ

Fax :		+ 44 (0)20 7888 3719
Attention:		MTN Desk

LEHMAN BROTHERS INTERNATIONAL (EUROPE)

Address:		One Broadgate
		London EC2M 7HA

Fax :		+ 44 (0)20 7260 2778
Attention:		MTN Trading Desk

MERRILL LYNCH INTERNATIONAL

Address:		Ropemaker Place
		25 Ropemaker Street
		London EC2Y 9LY

Fax :		44 (0)20 7867 4327
Attention:		EMTN Trading and Distribution Desk

J.P. MORGAN SECURITIES LTD.

Address:		Transactions Execution Group
		4^th Floor
		60 Victoria Embankment
		London EC4Y 0JP

Fax :		+ 44 (0)20 7325 8225
Attention:		EMTN Desk

UBS AG, acting through its business group UBS Warburg

Address:		1 Finsbury Avenue
		London EC2M 2PP

Fax :		+ 44 (0)20 7568 3349
Attention:		MTN and Private Placements

*The Fiscal Agent*

DEUTSCHE BANK AG LONDON

Address:		Winchester House
		1 Great Winchester Street
		London EC2N 2DB

Fax :		+ 44 (0)20 7547 6732
Attention:		Alan Coster, Transaction Management, London

SCHEDULE 7

FORM OF TEMPORARY GLOBAL NOTE

[THIS NOTE CONSTITUTES
[COMMERCIAL PAPER]/[A SHORTER/LONGER]
TERM DEBT SECURITY] ISSUED IN ACCORDANCE WITH THE REGULATIONS
MADE UNDER SECTION 4 OF THE BANKING ACT 1987]¹

[HELLER FINANCIAL, INC./HELLER FINANCIAL CANADA, LTD.]
(incorporated in [the State of Delaware, United States of America/Canada])

[currency][amount] Notes due [maturity]

issued under

U.S.$2,000,000,000
Euro Medium-Term Note Programme

[unconditionally and irrevocably guaranteed by
HELLER FINANCIAL, INC.
(incorporated in the State of Delaware, United States of America)]

TEMPORARY GLOBAL NOTE

1.		INTRODUCTION

1.1		The Notes

		This Temporary Global Note is issued in respect of the notes (the "Notes") of [ ] (the "Issuer") described in the pricing supplement (the "Pricing Supplement") a copy of which is annexed hereto. The Notes are the subject of an amended and restated issue and paying agency agreement dated 26 October 2000 (the " Agency Agreement") made between the Issuer, [Heller Financial, Inc. (the "Guarantor"),] Deutsche Bank AG London as fiscal agent (the "Fiscal Agent", which expression includes any successor fiscal agent appointed from time to time in connection with the Notes) and the other paying agent named therein (together with the Fiscal Agent, the "Paying Agents", which expression includes any additional or successor paying agents appointed from time to time in connection with the Notes). [The Notes are guaranteed by the Guarantor in the Agency Agreement.]

¹ Insert if the issue proceeds are accepted in the UK.

1.2	Construction

	All references in this Temporary Global Note to an agreement, instrument or other document (including the Agency Agreement) shall be construed as a reference to that agreement, instrument or other document as the same may be amended, supplemented, replaced or novated from time to time provided that, in the case of any amendment, supplement, replacement or novation made after the date hereof, it is made in accordance with the Conditions. Headings and sub-headings are for ease of reference only and shall not affect the construction of this Temporary Global Note.

1.3	References to Conditions

	Any reference herein to the "Conditions" is to the Terms and Conditions of the Notes set out in Schedule 4 (Terms and Conditions of the Notes) hereto as supplemented, amended and/or replaced by the Pricing Supplement, and any reference to a numbered "Condition" is to the correspondingly numbered provision thereof. Words and expressions defined in the Conditions shall have the same meanings when used in this Temporary Global Note.

2.	PROMISE TO PAY

	The Issuer, for value received, promises to pay to the bearer of this Temporary Global Note, in respect of each Note represented by this Temporary Global Note, the Redemption Amount on the Maturity Date or on such earlier date or dates as the same may become payable in accordance with the Conditions (or to pay such other amounts of principal on such dates as may be specified in the Pricing Supplement), and to pay interest on each such Note on the dates and in the manner specified in the Conditions, together with any additional amounts payable in accordance with the Conditions, all subject to and in accordance with the Conditions; provided, however, that such interest shall be payable only:

	2.1	Before the Exchange Date: in the case of interest falling due before the Exchange Date (as defined below), to the extent that a certificate or certificates issued by Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System ("Euroclear") and/or Clearstream Banking, société anonyme ("Clearstream, Luxembourg") and/or any other relevant clearing system dated not earlier than the date on which such interest falls due and in substantially the form set out in Schedule 3 (Form of Euroclear/Clearstream, Luxembourg Certification) hereto is/are delivered to the Specified Office of the Fiscal Agent; or

	2.2	Failure to exchange: in the case of interest falling due at any time, to the extent that the Issuer has failed to procure the exchange for a permanent global note of that portion of this Temporary Global Note in respect of which such interest has accrued.

3.	NEGOTIABILITY

	This Temporary Global Note is negotiable and, accordingly, title to this Temporary Global Note shall pass by delivery.

4.	EXCHANGE

4.1	Permanent Global Note

	If the relevant Pricing Supplement specifies the form of Notes as being "Temporary Global Note exchangeable for a Permanent Global Note", then on or after the Exchange Date, the Issuer shall procure (in the case of first exchange) the delivery of a Permanent Global Note (which expression has the meaning given in the Agency Agreement) in accordance with the Agency Agreement to the bearer of this Temporary Global Note or (in the case of any subsequent exchange) an increase in the principal amount of the Permanent Global Note in accordance with its terms against:


	4.1.1	Presentation and surrender: presentation and (in the case of final exchange) surrender of this Temporary Global Note at the Specified Office of the Fiscal Agent; and


	4.1.2	Certification: receipt by the Fiscal Agent of a certificate or certificates issued by Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system dated not earlier than the Exchange Date and in substantially the form set out in Schedule 3 (Form of Euroclear/Clearstream, Luxembourg Certification) hereto.

	The principal amount of the Permanent Global Note shall be equal to the aggregate of the principal amounts specified in the certificates issued by Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system and received by the Fiscal Agent; provided, however, that in no circumstances shall the principal amount of the Permanent Global Note exceed the initial principal amount of this Temporary Global Note.


	For purposes hereof, "Exchange Date" shall mean the first day following the expiry of the later of (i) 40 days after the later of the commencement of the offering of the Notes represented by this temporary Global Note and the date of issue hereof (the "Initial Restricted Period") and (ii) if either the commencement of the offering of Notes of any other Tranche of the same Series as the Notes represented by this temporary Global Note or the date of issue thereof falls within the Initial Restricted Period, 40 days after the later of the commencement of the offering of Notes of such Tranche and the date of issue thereof.


4.2	Definitive Notes; D Rules


	If the Pricing Supplement specifies the form of Notes as being "Temporary Global Note exchangeable for Definitive Notes" [and also specifies that the D Rules are

	applicable,]² then on or after the Exchange Date (as defined in paragraph 4.1 above), the Issuer shall procure the delivery of Definitive Notes (which expression has the meaning given in the Agency Agreement) in accordance with the Agency Agreement with Coupons and Talons (if so specified in the Pricing Supplement) attached against:

	4.2.1	Presentation and surrender: presentation and (in the case of final exchange) surrender of this Temporary Global Note at the Specified Office of the Fiscal Agent; and

	4.2.2	Certification: receipt by the Fiscal Agent of a certificate or certificates issued by Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system dated not earlier than the Exchange Date and in substantially the form set out in Schedule 3 (Form of Euroclear/Clearstream, Luxembourg Certification) hereto.

	The Definitive Notes so delivered from time to time shall be in an aggregate principal amount equal to the aggregate of the principal amounts specified in the certificates issued by Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system and received by the Fiscal Agent; provided, however, that in no circumstances shall the aggregate principal amount of Definitive Notes so delivered exceed the initial principal amount of this Temporary Global Note.


5.	DELIVERY OF PERMANENT GLOBAL OR DEFINITIVE NOTES

5.1	Permanent Global Note

	Whenever any interest in this Temporary Global Note is to be exchanged for an interest in a Permanent Global Note, the Issuer shall procure (in the case of first exchange) the prompt delivery (free of charge to the bearer) of such Permanent Global Note, duly authenticated, to the bearer of this Temporary Global Note or (in the case of any subsequent exchange) an increase in the principal amount of such Permanent Global Note in accordance with its terms, in each case in an aggregate principal amount equal to the aggregate of the principal amounts specified in the certificates issued by Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system and received by the Fiscal Agent against presentation and (in the case of final exchange) surrender of this Temporary Global Note at the Specified Office of the Fiscal Agent within 7 days of the bearer requesting such exchange.

5.2	Definitive Notes

	Whenever this Temporary Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons attached (if so specified in the Pricing Supplement), in an aggregate principal amount equal to the principal amount of this Temporary Global Note to the bearer of this Temporary

² Delete where the Issuer of the Notes is Heller Financial Cananda, Ltd.

	Global Note against the surrender of this Temporary Global Note at the Specified Office of the Fiscal Agent within 30 days of the bearer requesting such exchange.

6.	FAILURE TO DELIVER PERMANENT GLOBAL OR DEFINITIVE NOTES OR TO REPAY

	If:

	6.1	Permanent Global Note: the Permanent Global Note has not been delivered or the principal amount thereof increased in accordance with paragraph 6 (Delivery of Permanent Global Note or Definitive Notes) above by 5.00 p.m. (London time) on the seventh day after the bearer has requested exchange of an interest in this Temporary Global Note for an interest in a Permanent Global Note; or

	6.2	Definitive Notes: Definitive Notes have not been delivered in accordance with paragraph 6 (Delivery of Permanent Global Note or Definitive Notes) above by 5.00 p.m. (London time) on the thirtieth day after the bearer has requested exchange of this Temporary Global Note for Definitive Notes; or


	6.3	Payment default: this Temporary Global Note (or any part hereof) has become due and payable in accordance with the Conditions or the date for final redemption of this Temporary Global Note has occurred and, in either case, payment in full of the amount of principal falling due with all accrued interest thereon has not been made to the bearer in accordance with the terms of this Temporary Global Note on the due date for payment,

	then the Issuer hereby irrevocably agrees that each Holder or its successors or assigns may, without the consent and to the exclusion of the bearer hereof, file any claim, take any action or institute any proceeding to enforce, directly against the Issuer, the obligation of the Issuer hereunder to pay amount due in respect of each Notes represented by this Temporary Global Note which is credited to such Holder's securities account with a clearing agent as fully as though such Note were evidenced by a Definitive Note without the production of this Temporary Global Note, provided that the bearer hereof shall not theretofore have filed a claim, taken action or instituted proceedings to enforce the same in respect of such Note. The face amount of this Temporary Global Note shall be reduced by the face amount, if any, of each Note represented hereby in respect of which full settlement has occurred as a result of any such claim, action or proceeding by such relevant accountholders or their successors or assigns.


7.	WRITING DOWN


	On each occasion on which:


	7.1	Permanent Global Note: the Permanent Global Note is delivered or the principal amount thereof is increased in accordance with its terms in exchange for a further portion of this Temporary Global Note; or


	7.2	Definitive Notes: Definitive Notes are delivered in exchange for this Temporary Global Note; or


	7.3	Cancellation: Notes represented by this Temporary Global Note are to be cancelled in accordance with Condition 10(i) (Redemption and Purchase - Cancellation),


	the Issuer shall procure that (a) the principal amount of the Permanent Global Note, the principal amount of such increase or (as the case may be) the aggregate principal amount of such Notes and (b) the remaining principal amount of this Temporary Global Note (which shall be the previous principal amount hereof less the aggregate of the amounts referred to in (a)) are noted in Schedule 1 (Payments, Exchange and Cancellation of Notes) hereto, whereupon the principal amount of this Temporary Global Note shall for all purposes be as most recently so noted.

8	PAYMENTS

	All payments in respect of this Temporary Global Note shall be made against presentation and (in the case of payment of principal of the Notes in full with all interest accrued on the Notes) surrender of this Temporary Global Note at the Specified Office of any Paying Agent and shall be effective to satisfy and discharge the corresponding liabilities of the Issuer in respect of the Notes. On each occasion on which a payment of interest is made in respect of this Temporary Global Note, the Issuer shall procure that the same is noted in Schedule 1 (Payments, Exchange and Cancellation of Notes) hereto.


9.	CONDITIONS APPLY

	Until this Temporary Global Note has been exchanged as provided herein or cancelled in accordance with the Agency Agreement, the bearer of this Temporary Global Note shall be subject to the Conditions and, subject as otherwise provided herein, shall be entitled to the same rights and benefits under the Conditions as if the bearer were the holder of Definitive Notes and any related Coupons and Talons in the smallest Specified Denomination and in an aggregate principal amount equal to the principal amount of this Temporary Global Note.

10.	NOTICES

	Notwithstanding Condition 19 (Notices), while all the Notes are represented by this Temporary Global Note (or by this Temporary Global Note and the Permanent Global Note) and this Temporary Global Note is (or this Temporary Global Note and the Permanent Global Note are) deposited with a depositary or a common depositary for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system, notices to Noteholders may be given by delivery of the relevant notice to Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system and, in any case, such notices shall be deemed to have been given to the Noteholders in accordance with the Condition 19 (Notices) on the date of delivery to Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system; provided,

	however, that, so long as the Notes are listed on the Luxembourg Stock Exchange and its rules so require, notices will also be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxemburger Wort).

11.	REDENOMINATION

	If the Notes are redenominated pursuant to Condition 22 (Redenomination), then following redenomination:

	11.1	Denominations: if Definitive Notes are required to be issued, they shall be issued at the expense of the Issuer in the denominations of euro 0.01, euro 1,000, euro 10,000, euro 100,000 and such other denominations as the Fiscal Agent shall determine and notify to the Noteholders; and

	11.2	Calculation of interest: the amount of interest due in respect of Notes represented by this Temporary Global Note will be calculated by reference to the aggregate principal amount of such Notes and the amount of such payment shall be rounded down to the nearest euro 0.01.

12.	AUTHENTICATION

	This Temporary Global Note shall not be valid for any purpose until it has been authenticated for and on behalf of Deutsche Bank AG London as fiscal agent.

13.	GOVERNING LAW

	THIS TEMPORARY GLOBAL NOTE IS GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

14	The Issuer of this Global Note is [Heller Financial, Inc./Heller Financial Canada, Ltd.], which is not an authorised institution or a European authorised institution (as such terms are defined in the Banking Act 1987 (Exempt Transactions) Regulations 1997). Repayment of the principal and payment of any interest or premium in connection with this Note has [not] been guaranteed [by Heller Financial, Inc.] which is not an authorised institution or a European authorised institution (as such terms are defined in the Banking Act 1987 (Exempt Transactions) Regulations 1997).³

	AS WITNESS the [manual/facsimile] signature of a duly authorised person on behalf of the Issuer.

³ Insert if the issue proceeds are accepted in the UK.

[HELLER FINANCIAL, INC./HELLER FINANCIAL CANADA, INC.]


	By¹ :	........................................................	or	By² :	.........................................................

		[manual or facsimile signature]			[manual or facsimile signature]
		(duly authorised)			(duly authorised)



		ISSUED on the Issue Date

		AUTHENTICATED for and on behalf of Deutsche Bank AG London as fiscal agent without recourse, warranty or liability


	By :	.........................................................

		[manual signature]
		(duly authorised)

¹ In the case where Heller Fnancial, Inc. is the Issuer.

² In the case where Heller Financial Canada, Inc. is the issuer.

[FORM OF NOTATION RELATING TO GUARANTEE]

[GUARANTEE]

Heller Financial, Inc. (which term includes any successor) has unconditionally and absolutely guaranteed, to the extent set forth in, and subject to the provisions in the Amended and Restated Agency Agreement (the "Agency Agreement"), the due and punctual payment of principal and interest on this Note and any other amounts due and payable under the Agency Agreement and hereunder of Heller Financial Canada, Ltd., and further agrees to pay any and all expenses (including, without limitation, all fees and disbursements of counsel) which may be paid or incurred by a Noteholder in enforcing its rights under the Guarantee. In case of the failure of Heller Financial Canada, Ltd. punctually to perform or make any such payment, the Guarantor hereby agrees to cause such payment and performance to be made punctually.

The obligations of the Guarantor to the Noteholders pursuant to the Guarantee and the Agency Agreement are expressly set forth in Clause 17 of the Agency Agreement and reference is hereby made to the Agency Agreement for the precise terms of the Guarantee. The Guarantor has the right under Condition 25, at any time, to substitute itself for Heller Canada as issuer and principal obligor under this Note. Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Agency Agreement.

HELLER FINANCIAL, INC.

By:    .................................................
          [manual/facsimile signature]
          (duly authorized)

Schedule 1

Payments, Exchange and Cancellation of Notes

Date of payment, delivery or cancellation

Amount of interest then paid

Principal amount of Permanent Global Note then delivered or by which Permanent Global Note then increased or aggregate principal amount of Definitive Notes then delivered

Aggregate principal amount of Notes then cancelled

Remaining principal amount of this Temporary Global Note

Authorised Signature

Schedule 2

Form of Accountholder's Certification

[HELLER FINANCIAL, INC./HELLER FINANCIAL CANADA, LTD.]
[currency][amount]
[title of Notes]

This is to certify that as of the date hereof, and except as set forth below, the above-captioned Securities held by you for our account (a) are owned by persons that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any estate or trust the income of which is subject to United States Federal income taxation regardless of its source ("United States persons"), (b) are owned by United States person(s) that (i) are foreign branches of a United States financial institution (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)) ("financial institutions ") purchasing for their own account or for resale, or (ii) acquired the Securities through foreign branches of United States financial institutions and who hold the Securities through such United States financial institutions on the date hereof (and in either case (i) or (ii), each such United States financial institution hereby agrees, on its own behalf or through its agent, that you may advise the Issuer or the Issuer's agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), (c) are owned by United States or foreign financial institution(s) for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and in addition if the owner of the Securities is a United States or foreign financial institution described in clause (c) (whether or not also described in clause (a) or (b)) this is to further certify that such financial institution has not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions, or (d) if the Issuer is Heller Financial Canada, Ltd., are owned by a person who is not a resident of Canada.

[If the Securities are of the category contemplated in Section 230.903(c)(3) of Regulation S under the Securities Act of 1933 (the "Act"), then this is also to certify that, except as set forth below, the Securities are beneficially owned by (1) non-U.S. person(s) or (2) U.S. person(s) who purchased the Securities in transactions which did not require registration under the Act. As used in this paragraph the term "U.S. person" has the meaning given to it by Regulation S under the Act].

As used herein, "United States" means the United States of America (including the States and the District of Columbia); and its "possessions" include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands.

We undertake to advise you promptly by tested telex on or prior to the date on which you intend to submit your certification relating to the Securities held by you for our account in accordance with your operating procedures if any applicable statement herein is not correct on such date, and in the absence of any such notification it may be assumed that this certification applies as of such date.

This certification excepts and does not relate to [currency] [amount] of such interest in the above Securities in respect of which we are not able to certify and as to which we understand exchange and delivery of definitive Securities (or, if relevant, exercise of any rights or collection of any interest) cannot be made until we do so certify.

We understand that this certification is required in connection with certain tax laws and, if applicable, certain securities laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorise you to produce this certification to any interested party in such proceedings.

Dated: [ ]

[name of account holder]
as, or as agent for,
the beneficial owner(s) of the Securities
to which this certificate relates.

By: ............................................

Authorised signatory

Schedule 3

Form of Euroclear/Clearstream, Luxembourg Certification

[HELLER FINANCIAL, INC./HELLER FINANCIAL CANADA, LTD.]
[currency][amount]
[title of Notes]

This is to certify that, based solely on certifications we have received in writing, by tested telex or by electronic transmission from member organisations appearing in our records as persons being entitled to a portion of the principal amount set forth below (our "Member Organisations") substantially to the effect set forth in the temporary global note issued in respect of the securities, as of the date hereof, [currency] [amount] principal amount of the above-captioned Securities (a) is owned by persons that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any estate or trust the income of which is subject to United States Federal income taxation regardless of its source ("United States persons"), (b) is owned by United States persons that (i) are foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)) ("financial institutions" ) purchasing for their own account or for resale, or (ii) acquired the Securities through foreign branches of United States financial institutions and who hold the Securities through such United States financial institutions on the date hereof (and in either case (i) or (ii), each such United States financial institution has agreed, on its own behalf or through its agent, that we may advise the Issuer or the Issuer's agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), (c) is owned by United States or foreign financial institutions for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and to the further effect that United States or foreign financial institutions described in clause (c) (whether or not also described in clause (a) or (b)) have certified that they have not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions, or (d) if the Issuer is Heller Financial Canada, Ltd., is owned by a person who is not a resident of Canada.

[If the Securities are of the category contemplated in Section 230.903(c)(3) of Regulation S under the Securities Act of 1933 (the "Act"), then this is also to certify with respect to the principal amount of Securities set forth above that, except as set forth below, we have received in writing, by tested telex or by electronic transmission, from our Member Organisations entitled to a portion of such principal amount, certifications with respect to such portion substantially to the effect set forth in the temporary global note issued in respect of the Securities.]

We further certify (1) that we are not making available herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) any portion of the temporary global security excepted in such certifications and (2) that as of the date hereof we have not received any notification from any of our Member Organisations to the effect that the statements made by such Member Organisations with respect to any portion of the part submitted herewith for

exchange (or, if relevant, exercise of any rights or collection of any interest) are no longer true and cannot be relied upon as of the date hereof.

Dated: [ ]

Morgan Guaranty Trust Company of New York,
Brussels Office,
as operator of the Euroclear System

Clearstream Banking, société anonyme

By: ........................................

Authorised signatory

Schedule 4

Terms and Conditions of the Notes

1.		Introduction

(a)		Programme: Heller Financial, Inc. ("Heller'') and Heller Financial Canada, Ltd. ("Heller Canada'') have established a Euro Medium-Term Note Programme (the "Programme'') for the issuance of up to U.S.$2,000,000,000 aggregate principal amount of notes (the 'Notes''). Notes issued by Heller Canada will be guaranteed by Heller in its capacity as guarantor (the "Guarantor'').

(b)		Issuer: In these Conditions,"Issuer'' means, in relation to any Notes or Tranche (as defined below) or Series (as defined below) of any Notes, the issuer of such Notes or of such Tranche or such Series as identified in the Pricing Supplement (as defined below) relating thereto being either (i) Heller or (ii) Heller Canada.

(c)		Pricing Supplement: Notes issued under the Programme are issued in series (each a "Series'') and each Series may comprise one or more tranches (each a " Tranche'') of Notes. Each Tranche is the subject of a pricing supplement (the "Pricing Supplement'') which supplements these terms and conditions (the "Conditions''). The terms and conditions applicable to any particular Tranche of Notes are these Conditions as supplemented, amended and/or replaced by the relevant Pricing Supplement. In the event of any inconsistency between these Conditions and the relevant Pricing Supplement, the relevant Pricing Supplement shall prevail.

(d)		Agency Agreement: The Notes are the subject of an amended and restated issue and paying agency agreement dated 26 October 2000 (as amended or supplemented from time to time, the "Agency Agreement'') between Heller, Heller Canada, Deutsche Bank AG London as fiscal agent (the "Fiscal Agent'', which expression includes any successor fiscal agent appointed from time to time in connection with the Notes) and the paying agent named therein (together with the Fiscal Agent, the "Paying Agents'', which expression includes any successor or additional paying agents appointed from time to time in connection with the Notes).

(e)		The Notes: All subsequent references in these Conditions to "Notes'' are to the Notes which are the subject of the relevant Pricing Supplement. Copies of the relevant Pricing Supplement are available free of charge by holders of the Notes ("Noteholders'') during normal business hours at the Specified Office of the Fiscal Agent and the Paying Agent in Luxembourg, the initial Specified Offices of which are set out below.

(f)		The Guarantee: Notes issued by Heller Canada will have the benefit of a guarantee (the "Guarantee'') given by Heller which is contained in the Agency Agreement. The Guarantee contains provisions which enable Noteholders to take action directly against the Guarantor.

(g)		Summaries: Certain provisions of these Conditions are summaries of the Agency Agreement and are subject to its detailed provisions. Noteholders and the holders of the "Additional Financial Centre(s)'' means the city or cities specified as such in the relevant Pricing Supplement;

		"Business Day'' means

		(i)	in relation to any sum payable in euro, a TARGET Settlement Day and a day on which commercial banks and foreign exchange markets settle payments generally in each (if any) Additional Business Centre; and

		(ii)	in relation to any sum payable in a currency other than euro, a day on which commercial banks and foreign exchange markets settle payments generally in the Principal Financial Centre of the relevant currency and in each (if any) Additional Business Centre;

		"Business Day Convention'', in relation to any particular date, has the meaning given in the relevant Pricing Supplement and, if so specified in the relevant Pricing Supplement, may have different meanings in relation to different dates and, in this context, the following expressions shall have the following meanings:

		(i)	"Following Business Day Convention'' means that the relevant date shall be postponed to the first following day that is a Business Day;

		(ii)	"Modified Following Business Day Convention'' or ``Modified Business Day Convention'' means that the relevant date shall be postponed to the first following day that is a Business Day unless that day falls in the next calendar month in which case that date will be the first preceding day that is a Business Day;

		(iii)	"Preceding Business Day Convention'' means that the relevant date shall be brought forward to the first preceding day that is a Business Day;

		(iv)	"FRN Convention'', ``Floating Rate Convention'' or ``Eurodollar Convention'' means that each relevant date shall be the date which numerically corresponds to the preceding such date in the calendar month which is the number of months "Calculation Agent'' means the Fiscal Agent or such other Person specified in the relevant Pricing Supplement as the party responsible for calculating the Rate(s) of Interest and Interest Amount(s) and/or such other amount(s) as may be specified in the relevant Pricing Supplement;

	"Consolidated Net Tangible Assets" means the total of all assets reflected on a consolidated balance sheet of Heller and its consolidated Subsidiaries, prepared in accordance with generally accepted accounting principles, at their net book values (after deducting related depreciation, depletion, amortisation and all other valuation reserves which, in accordance with such principles, should be set aside in connection with the business conducted), but excluding goodwill, unamortised debt discount and all other like segregated intangible assets, and amounts on the asset side of such balance sheet for capital stock of Heller, all as determined in accordance with such principles, less the aggregate of the current liabilities of Heller and its consolidated Subsidiaries reflected on such balance sheet, all as determined in accordance with such principles. For purposes of this definition, "current liabilities" includes all indebtedness for money borrowed, incurred, issued, assumed or guaranteed by Heller and its consolidated Subsidiaries, credit balances of factoring clients and other payables and accruals, in each case payable on demand or due within one year of the date of determination of Consolidated Net Tangible Assets, all as reflected on such consolidated balance sheet of Heller and its consolidated Subsidiaries, prepared in accordance with generally accepted accounting principles;

	"Coupon Sheet" means, in respect of a Note, a coupon sheet relating to the Note;

		"Day Count Fraction" means (subject as provided in Condition 6 (Fixed Rate Note Provisions) and Condition 7 (Floating Rate Note and Index-Linked Interest Note Provision s)), in respect of the calculation of an amount for any period of time (the "Calculation Period"), such day count fraction as may be specified in these Conditions or the relevant Pricing Supplement and:

		(i)	if "Actual/365" or "Actual/Actual-ISDA" is so specified, means the actual number of days in the Calculation Period divided by 365 (or, if any portion of the Calculation Period falls in a leap year, the sum of (A) the actual number of days in that portion of the Calculation Period falling in a leap year divided by 366 and (B) the actual number of days in that portion of the Calculation Period falling in a non-leap year divided by 365);

		(ii)	if "Actual/365 (Fixed)'' is so specified, means the actual number of days in the Calculation Period divided by 365;

		(iii)	if "Actual/360'' is so specified, means the actual number of days in the Calculation Period divided by 360;

		(iv)	if "30/360'' is so specified, means the number of days in the Calculation Period divided by 360 (the number of days to be calculated on the basis of a year of 360 days with 12 30-day months (unless (i) the last day of the Calculation Period is the 31st day of a month but the first day of the Calculation Period is a day other than the 30th or 31st day of a month, in which case the month that includes that last day shall not be considered to be shortened to a 30-day month, or (ii) the last day of the Calculation Period is the last day of the month of February, in which case the month of February shall not be considered to be lengthened to a 30-day month)); and

		(v)	if "30E/360'' or "Eurobond Basis'' is so specified means, the number of days in the Calculation Period divided by 360 (the number of days to be calculated on the basis of a year of 360 days with 12 30-day months, without regard to the date of the first day or last day of the Calculation Period unless, in the case of the final Calculation Period, the date of final maturity is the last day of the month of February, in which case the month of February shall not be considered to be lengthened to a 30-day month);

		"Early Redemption Amount (Tax)'' means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Pricing Supplement;

		"Early Termination Amount'' means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, these Conditions or the relevant Pricing Supplement;

		"Extraordinary Resolution" has the meaning given in the Agency Agreement;

		"Final Redemption Amount'' means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Pricing Supplement;

		"Finance Business'' means the business of making loans, extending credit or providing financial accommodations to any person and such activities as may be incidental thereto, including, but not limited to, the purchase of obligations growing out of the sale or lease of all types of consumer, commercial and industrial property; the making of loans to individuals and business enterprises including the extension of wholesale or floor plan accommodations to permit distributors and dealers to carry inventories for resale; factoring; leasing of tangible personal property to others; mortgage brokerage and servicing; and other business of a similar character to the extent that other companies similarly situated, within the limits of sound trade practice, may have heretofore engaged or may hereafter engage in such other business;

		"Fixed Coupon Amount" has the meaning given in the relevant Pricing Supplement;

		"Indebtedness'' means any money borrowed and all liabilities, whether issued or assumed, in respect of money borrowed, whether or not evidenced by notes, debentures or other like written obligations to pay money, and all guarantees in respect of money borrowed by third persons, whether or not evidenced by notes, debentures or other like written obligations of such third persons to pay money;

		"Interest Amount'' means, in relation to a Note and an Interest Period, the amount of interest payable in respect of that Note for that Interest Period;

		"Interest Commencement Date'' means the Issue Date of the Notes or such other date as may be specified as the Interest Commencement Date in the relevant Pricing Supplement;

		"Interest Determination Date'' has the meaning given in the relevant Pricing Supplement;

		"Interest Payment Date'' means the date or dates specified as such in, or determined in accordance with the provisions of, the relevant Pricing Supplement and, if a Business Day Convention is specified in the relevant Pricing Supplement:

		(i)	as the same may be adjusted in accordance with the relevant Business Day Convention; or

		(ii)	if the Business Day Convention is the FRN Convention, Floating Rate Convention or Eurodollar Convention and an interval of a number of calendar months is specified in the relevant Pricing Supplement as being the Specified Period, each of such dates as may occur in accordance with the FRN Convention, Floating Rate Convention or Eurodollar Convention at such Specified Period of calendar months following the Interest Commencement Date (in the case of the first Interest Payment Date) or the previous Interest Payment Date (in any other case);

		"Interest Period" means each period beginning on (and including) the Interest Commencement Date or any Interest Payment Date and ending on (but excluding) the next Interest Payment Date;

		"ISDA Definitions" means the 2000 ISDA Definitions (as supplemented, amended or updated as at the date of issue of the first Tranche of the Notes of the relevant Series (as specified in the relevant Pricing Supplement) as published by the International Swaps and Derivatives Association, Inc. (formerly the International Swap Dealers Association, Inc.));

		"Issue Date'' has the meaning given in the relevant Pricing Supplement;

		"Lien'' means any mortgage, charge, pledge or other security interest including without limitation, anything analogous to any of the foregoing under the laws of any jurisdiction;

		"Margin'' has the meaning given in the relevant Pricing Supplement;

		"Maturity Date'' has the meaning given in the relevant Pricing Supplement;

		"Maximum Redemption Amount'' has the meaning given in the relevant Pricing Supplement;

		"Minimum Redemption Amount'' has the meaning given in the relevant Pricing Supplement;

		"Non-United States Person'' means a person who is not a United States Person;

		"Optional Redemption Amount (Call)'' means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Pricing Supplement;

		"Optional Redemption Amount (Put)'' means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Pricing Supplement;

		"Optional Redemption Date (Call)'' has the meaning given in the relevant Pricing Supplement;

		"Optional Redemption Date (Put)'' has the meaning given in the relevant Pricing Supplement;

		"Participating Member State'' means a Member State of the European Communities which adopts the euro as its lawful currency in accordance with the Treaty;

		"Payment Business Day'' means:

		(i)	if the currency of payment is euro, any day which is:

		(A)	a day on which banks in the relevant place of presentation are open for presentation or payment of bearer debt securities and for dealings in foreign currencies; and

		(B)	in the case of payment by transfer to an account, a TARGET Settlement Day and a day on which dealings in foreign currencies may be carried on in each (if any) Additional Financial Centre; or

	(ii)	if the currency of payment is not euro, any day which is:

		(A)	a day on which banks in the relevant place of presentation are open for presentation or payment of bearer debt securities and for dealings in foreign currencies; and

		(B)	in the case of payment by transfer to an account, a day on which dealings in foreign currencies may be carried on in the Principal Financial Centre of the currency of payment and in each (if any) Additional Financial Centre;

"Person'' means any individual, company, corporation, firm, partnership, limited liability company, joint venture, association, trust, organisation, state or agency of a state or other entity, whether or not having separate legal personality;

"Principal Financial Centre'' means, in relation to any currency, the principal financial centre for that currency provided, however, that:

	(i)	in relation to euro, it means the principal financial centre of such Member State of the European Communities as is selected (in the case of a payment) by the payee or (in the case of a calculation) by the Calculation Agent; and

	(ii)	in relation to Australian dollars, it means either Sydney or Melbourne and, in relation to New Zealand dollars, it means either Wellington or Auckland; in each case as is selected (in the case of a payment) by the payee or (in the case of a calculation) by the Calculation Agent;

"Put Option Notice'' means a notice which must be delivered to a Paying Agent by any Noteholder wanting to exercise a right to redeem a Note at the option of the Noteholder;

"Put Option Receipt'' means a receipt issued by a Paying Agent to a depositing Noteholder upon deposit of a Note with such Paying Agent by any Noteholder wanting to exercise a right to redeem a Note at the option of the Noteholder;

"Rate of Interest'' means the rate or rates (expressed as a percentage per annum) of interest payable in respect of the Notes specified in the relevant Pricing Supplement, or calculated or determined in accordance with the provisions of, these Conditions and/or the relevant Pricing Supplement;

"Redemption Amount'' means, as appropriate, the Final Redemption Amount, the Early Redemption Amount (Tax), the Optional Redemption Amount (Call), the Optional

		Redemption Amount (Put), the Early Termination Amount or such other amount in the nature of a redemption amount as may be specified in, or determined in accordance with the provisions of, the relevant Pricing Supplement;

		"Reference Banks'' has the meaning given in the relevant Pricing Supplement or, if none, four (or if the Principal Financial Centre is Helsinki, five) major banks selected by the Calculation Agent in the market that is most closely connected with the Reference Rate;

		"Reference Price'' has the meaning given in the relevant Pricing Supplement;

		"Reference Rate'' has the meaning given in the relevant Pricing Supplement;

		"Relevant Date" means, in relation to any payment, whichever is the later of (a) the date on which the payment in question first becomes due and (b) if the full amount payable has not been received in the Principal Financial Centre of the currency of payment by the Fiscal Agent on or prior to such due date, the date on which (the full amount having been so received) notice to that effect has been given to the Noteholders;

		"Relevant Financial Centre'' has the meaning given in the relevant Pricing Supplement;

		"Relevant Indebtedness'' means any Indebtedness which is in the form of or represented by any bond, note, debenture, debenture stock, loan stock, certificate or other instrument which is, or is capable of being, listed, quoted or traded on any stock exchange or in any securities market (including, without limitation, any over-the-counter market);

		"Relevant Jurisdiction'' means, where the Issuer is Heller, the United States and, where the Issuer is Heller Canada, each of the United States and Canada;

		"Relevant Screen Page'' means the page, section or other part of a particular information service (including, without limitation, the Reuters Markets 3000 and Bridge/Telerate) specified as the Relevant Screen Page in the relevant Pricing Supplement, or such other page, section or other part as may replace it on that information service or such other information service, in each case, as may be nominated by the Person providing or sponsoring the information appearing there for the purpose of displaying rates or prices comparable to the Reference Rate;

		"Relevant Time'' has the meaning given in the relevant Pricing Supplement;

		"Reserved Matter'' means any proposal to change any date fixed for payment of principal or interest in respect of the Notes, to reduce the amount of principal or interest payable on any date in respect of the Notes, to alter the method of calculating the amount of any payment in respect of the Notes or the date for any such payment, to change the currency of any payment under the Notes or to change the quorum requirements relating to meetings or the majority required to pass an Extraordinary Resolution;

"Restricted Subsidiary'' means a Subsidiary of Heller or of a Restricted Subsidiary, including any of their respective Subsidiaries:


	(i)	which is primarily engaged in the Finance Business;

(ii)

which conducts such Finance Business primarily in the United States; and

(iii)

of which Heller and/or a Restricted Subsidiary owns 51 per cent. or more of each class of its Voting Stock;


	"SBA'' means the United States Small Business Administration or any successor thereto;


	"Senior Debt'' means all indebtedness of Heller or (where the Issuer of the Notes is Heller Canada) Heller Canada, present and future, which is not by its terms made subordinate or junior in right of payment with respect to the general assets of Heller or (where the Issuer of the Notes is Heller Canada) Heller Canada to any other Indebtedness of Heller or (where the Issuer of the Notes is Heller Canada) Heller Canada;

	"Specified Currency'' has the meaning given in the relevant Pricing Supplement;

	"Specified Denomination(s)'' has the meaning given in the relevant Pricing Supplement;

	"Specified Office'' of any Agent means the office specified against its name in Schedule 2 of the Agency Agreement or, in the case of any Agent not originally party thereto, specified by notice to the Issuer in accordance with the Agency Agreement;

	"Specified Period'' has the meaning given in the relevant Pricing Supplement;

	"Subsidiary'' means any corporation of which more than 50 per cent. of the Voting Stock, other than directors' qualifying shares (if any) shall at the time be owned by Heller and/or one or more Subsidiaries and (where the Issuer of the Notes is Heller Canada), Heller Canada and/or one or more Subsidiaries;


	"Talon'' means a talon for further Coupons;

	"TARGET Settlement Day'' means any day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET) System is open;

	"TEFRA D Rules'' means the United States Treasury Regulation §1.163-5(c)(2)(i)(D);

"Treaty'' means the Treaty establishing the European Community, as amended by the Treaty on European Union;


	"Voting Stock'' means capital stock the holders of which have general voting power under ordinary circumstances to elect at least a majority of the directors of a corporation, provided that capital stock which carries only a right to vote conditional on any corporation, partnership or other entity created or organised in or under the laws of the United States;

	(iii)	any estate if the income of such estate falls within the federal income tax jurisdiction of the United States regardless of the source of such income; and

	(iv)	any trust if a United States court is able to exercise primary supervision over its administration and one or more United States persons have the authority to control all of its substantial decisions; and

"Zero Coupon Note'' means a Note specified as such in the relevant Pricing Supplement.

(b)	Interpretation: In these Conditions:

	(i)	if the Notes are Zero Coupon Notes, references to Coupons and Couponholders are not applicable;

	(ii)	if Talons are specified in the relevant Pricing Supplement as being attached to the Notes at the time of issue, references to Coupons shall be deemed to include references to Talons;

	(iii)	if Talons are not specified in the relevant Pricing Supplement as being attached to the Notes at the time of issue, references to Talons are not applicable;

	(iv)	any reference to principal shall be deemed to include the Redemption Amount, any additional amounts in respect of principal which may be payable under Condition 12 (Taxation), any premium payable in respect of a Note and any other amount in the nature of principal payable pursuant to these Conditions;

	(v)	any reference to interest shall be deemed to include any additional amounts in respect of interest which may be payable under Condition 12 (Taxation) and any other amount in the nature of interest payable pursuant to these Conditions;

	(vi)	references to Notes being "outstanding'' shall be construed in accordance with the Agency Agreement; and

	(vii)	if an expression is stated in Condition 2(a) (Definitions) to have the meaning given in the relevant Pricing Supplement, but the relevant Pricing Supplement gives no such meaning or specifies that such expression is "not applicable'', then such expression is not applicable to the Notes.

Denomination and Title

The Notes are in bearer form in the Specified Denomination(s) with Coupons and, if specified in the relevant Pricing Supplement, Talons attached at the time of issue. In the case of a Series of Notes with more than one Specified Denomination, Notes of one Specified Denomination will not be exchangeable for Notes of another Specified Denomination. Title to the Notes and the Coupons will pass by delivery. The holder of any Note or Coupon shall (except as otherwise required by law) be treated as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any other interest therein, any writing thereon or any notice of any previous loss or theft thereof) and no Person shall be liable for so treating such holder.


4.	Status

(a)	The Notes: The Notes and Coupons constitute direct, unconditional, unsubordinated and unsecured obligations of the Issuer and will at all times rank pari passu among themselves and at least pari passu with all other, present and future, unsecured and

unsubordinated indebtedness and monetary obligations of the Issuer, including (without limitation) all other Senior Debt, save for such obligations as may be preferred by provisions of law that are both mandatory and of general application.


(b)	The Guarantee: Where the Issuer of the Notes is Heller Canada, Heller will unconditionally and irrevocably guarantee the due and punctual payment of the principal of, premium, if any, and interest on the Notes issued by Heller Canada, when and as the same shall become due and payable, whether at maturity, upon redemption or otherwise. The Guarantee constitutes a direct, unconditional and unsecured obligation of Heller, and will rank pari passu with all other, present and future, unsecured and unsubordinated indebtedness and monetary obligations of Heller including (without limitation) all other Senior Debt, save for such obligations as may be preferred by provisions of law that are both mandatory and of general application. The Guarantee provides that in the event of a default in payment of principal, premium, if any, or interest on a Note issued by Heller Canada, Noteholders may institute legal proceedings directly against Heller, to enforce the Guarantee without first proceeding directly against Heller Canada.

5.	Negative Pledge

(a)	Heller: So long as any of the Notes remain outstanding, Heller will not, and will not permit any Restricted Subsidiary to create, incur or assume any Lien on property of any character of Heller or any Restricted Subsidiary to secure any Indebtedness unless:

	(i)	the Lien equally and rateably secures the Notes and the Indebtedness; or

	(ii)	the Lien is on property or shares of stock of a corporation at the time the corporation becomes a Restricted Subsidiary or merges into or consolidates with Heller or a Restricted Subsidiary; or

	(iii)	the Lien is on property at the time Heller or a Restricted Subsidiary acquires the property; or

	(iv)	the Lien secures Indebtedness incurred to finance all or part of the purchase price or cost of construction of property of Heller or a Restricted Subsidiary; or

	(v)	the Lien secures Indebtedness of a Restricted Subsidiary owing to Heller or another Restricted Subsidiary; or

	(vi)	the Lien is on property of a person at the time the person transfers or leases all or substantially all of its assets to Heller or a Restricted Subsidiary; or

	(vii)	the Lien is in favour of a government or governmental entity and is for taxes or assessments or secures payments pursuant to a contract or statute; or

	(viii)	the Lien arises out of a judgment, decree or court order or the Lien arises in connection with other proceedings or actions at law or in equity; or

	(ix)	the Lien is on receivables, or cash, deposited or otherwise subjected to a Lien as a basis for the issuance of bankers' acceptances or letters of credit in connection with any financing of customers' operations by Heller or any Restricted Subsidiary; or

	(x)	the Lien is on property (or any receivables arising in connection with the lease thereof) acquired by Heller or a Restricted Subsidiary through repossession, foreclosure or like proceeding and secures Indebtedness incurred at the time of such acquisition or at any time thereafter to finance all or part of the cost of maintenance, improvement or construction relating thereto; or

	(xi)	the Lien is created in favour of the SBA on property owned by a Restricted Subsidiary which is organised as a small business investment company under Title 15, Section 681, of the United States Code; or

	(xii)	the Lien extends, renews or replaces in whole or in part a Lien set forth in sub-paragraphs (i) through (xi) above; or

	(xiii)	the Lien secures Indebtedness of Heller or a Restricted Subsidiary and the sum of the following does not exceed 10 per cent. of Consolidated Net Tangible Assets:

	(A)		such Indebtedness; plus

	(B)		other Indebtedness of Heller and its Restricted Subsidiaries secured by Liens on property of Heller and its Restricted Subsidiaries, excluding Indebtedness secured by a Lien existing as of the Issue Date of the Notes and excluding Indebtedness secured by a Lien permitted by one of sub-paragraphs (i) through (xii) above.

(b)	Heller Canada: So long as any Note issued by Heller Canada remains outstanding, Heller Canada shall not and shall not permit any of its Subsidiaries to, create or permit to subsist any Lien upon the whole or any part of its present or future undertaking, assets or revenues (including uncalled capital) to secure any Relevant Indebtedness or guarantee of Relevant Indebtedness without (a) at the same time or prior thereto securing the Notes equally and rateably therewith or (b) providing such other security for the Notes as may be approved by an Extraordinary Resolution of Noteholders.

	For the purposes of the Conditions, "guarantee'' means, in relation to any Indebtedness of any Person, any obligation of another Person to pay such Indebtedness including (without limitation):

	(i)	any obligation to purchase such Indebtedness;

	(ii)	any obligation to lend money, to purchase or subscribe shares or other securities or to purchase assets or services in order to provide funds for the payment of such Indebtedness;

(iii)

any indemnity against the consequences of a default in the payment of such Indebtedness; and


	(iv)	any other agreement to be responsible for such Indebtedness.

6.	Fixed Rate Note Provisions

(a)	Application: This Condition 6 (Fixed Rate Note Provisions) is applicable to the Notes only if the Fixed Rate Note Provisions are specified in the relevant Pricing Supplement as being applicable.

(b)	Accrual of interest: The Notes bear interest from the Interest Commencement Date at the Rate of Interest payable in arrear on each Interest Payment Date, subject as provided in Condition 11 (Payments). Each Note will cease to bear interest from the due date for final redemption unless, upon due presentation, payment of the Redemption Amount is improperly withheld or refused, in which case it will continue to bear interest in accordance with this Condition 6 (Fixed Rate Note Provisions) (as well after as before judgment) until whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Fiscal Agent has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).

(c)	Fixed Coupon Amount: The amount of interest payable in respect of each Note for any Interest Period shall be the relevant Fixed Coupon Amount and, if the Notes are in more than one Specified Denomination, shall be the relevant Fixed Coupon Amount in respect of the relevant Specified Denomination.

(d)	Regular Interest Periods: If all of the Interest Payment Dates fall at regular intervals between the Issue Date and the Maturity Date, then:

	(i)	the Notes shall for the purposes of this Condition 6 be "Regular Interest Period Notes'';

	(ii)	the day and month (but not the year) on which any Interest Payment Date falls shall for the purposes of this Condition 6 (Fixed Rate Note Provisions) be a "Regular Date''; and

	(iii)	each period from and including a Regular Date falling in any year to but excluding the next succeeding Regular Date shall for the purposes of this Condition 6 (Fixed Rate Note Provision s) be a "Regular Period''.

(e)	Irregular first or last Interest Periods: If the Notes would be Regular Interest Period Notes but for the fact that either or both of:

	(i)	the interval between the Issue Date and the first Interest Payment Date; and

	(ii)	the interval between the Maturity Date and the immediately preceding Interest Payment Date is longer or shorter than a Regular Period, then the Notes shall

nevertheless be deemed to be Regular Interest Period Notes provided, however, that if the interval between the Maturity Date and the immediately preceding Interest Payment Date is longer or shorter than a Regular Period, the day and month on which the Maturity Date falls shall not be a "Regular Date''.


(f)	Irregular interest amount: If the Notes are Regular Interest Period Notes, the amount of interest payable in respect of each Note for any period which is not a Regular Period shall be calculated by applying the Rate of Interest to the principal amount of such Note, multiplying the product by the relevant Day Count Fraction and rounding the resulting figure to the nearest sub-unit of the Specified Currency (half a sub-unit being rounded upwards). For this purpose a "sub-unit'' means, in the case of any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, in the case of euro, means one cent.

(g)	Day Count Fraction: In respect of any period which is not a Regular Period the relevant day count fraction (the "Day Count Fraction'') shall be determined in accordance with the following provisions:

	(i)	if the Day Count Fraction is specified in the relevant Pricing Supplement as being 30/360, the relevant Day Count Fraction will be the number of days in the relevant period (calculated on the basis of a year of 360 days consisting of 12 months of 30 days each and, in the case of an incomplete month, the actual number of days elapsed) divided by 360;

	(ii)	if the Day Count Fraction is specified in the relevant Pricing Supplement as being Actual/Actual (ISMA) and the relevant period falls during a Regular Period, the relevant Day Count Fraction will be the number of days in the relevant period divided by the product of (A) the number of days in the Regular Period in which the relevant period falls and (B) the number of Regular Periods in any period of one year; and

	(iii)	the Day Count Fraction is specified in the relevant Pricing Supplement as being Actual/Actual (Bond) and the relevant period begins in one Regular Period and ends in the next succeeding Regular Period, interest will be calculated on the basis of the sum of:

	(A)		the number of days in the relevant period falling within the first such Regular Period divided by the product of (1) the number of days in the first such Regular Period and (2) the number of Regular Periods in any period of one year; and

	(B)		the number of days in the relevant period falling within the second such Regular Period divided by the product of (1) the number of days in the second such Regular Period and

	(C)		the number of Regular Periods in any period of one year.

(h)	Number of days: For the purposes of this Condition 6 (Fixed Rate Note Provisions), unless the Day Count Fraction is specified in the relevant Pricing Supplement as being 30/360 (in which case the provisions of paragraph (g)(i) above shall apply), the number of days in any period shall be calculated on the basis of actual calendar days from and including the first day of the relevant period to but excluding the last day of the relevant period.

(i)	Irregular Interest Periods: If the Notes are not Regular Interest Period Notes and interest is required to be calculated for any period other than an Interest Period, interest shall be calculated on such basis as is described in the relevant Pricing Supplement.

7.	Floating Rate Note and Index-Linked Interest Note Provisions

(a)	Application: This Condition 7 (Floating Rate Note and Index-Linked Interest Note Provisions) is applicable to the Notes only if the Floating Rate Note Provisions or the Index-Linked Interest Note Provisions are specified in the relevant Pricing Supplement as being applicable.

(b)	Accrual of interest: The Notes bear interest from the Interest Commencement Date at the Rate of Interest payable in arrear on each Interest Payment Date, subject as provided in Condition 11 (Payments). Each Note will cease to bear interest from the due date for final redemption unless, upon due presentation, payment of the Redemption Amount is improperly withheld or refused, in which case it will continue to bear interest in accordance with this Condition (as well after as before judgment) until whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Fiscal Agent has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).

(c)	Screen Rate Determination: If Screen Rate Determination is specified in the relevant Pricing Supplement as the manner in which the Rate(s) of Interest is/are to be determined, the Rate of Interest applicable to the Notes for each Interest Period will be determined by the Calculation Agent on the following basis:

	(i)	if the Reference Rate is a composite quotation or customarily supplied by one entity, the Calculation Agent will determine the Reference Rate which appears on the Relevant Screen Page as of the Relevant Time on the relevant Interest Determination Date;

	(ii)	in any other case, the Calculation Agent will determine the arithmetic mean of the Reference Rates which appear on the Relevant Screen Page as of the Relevant Time on the relevant Interest Determination Date;

	(iii)	if, in the case of (i) above, such rate does not appear on that page or, in the case of (ii) above, fewer than two such rates appear on that page or if, in either case, the Relevant Screen Page is unavailable, the Calculation Agent will:

		(A)	request the principal Relevant Financial Centre office of each of the Reference Banks to provide a quotation of the Reference Rate at approximately the Relevant Time on the Interest Determination Date to prime banks in the Relevant Financial Centre interbank market in an amount that is representative for a single transaction in that market at that time; and

		(B)	determine the arithmetic mean of such quotations; and

	(iv)	if fewer than two such quotations are provided as requested, the Calculation Agent will determine the arithmetic mean of the rates (being the nearest to the Reference Rate, as determined by the Calculation Agent) quoted by major banks in the Principal Financial Centre of the Specified Currency, selected by the Calculation Agent, at approximately 11.00 a.m. (local time in the Principal Financial Centre of the Specified Currency) on the first day of the relevant Interest Period for loans in the Specified Currency to leading European banks for a period equal to the relevant Interest Period and in an amount that is representative for a single transaction in that market at that time, and the Rate of Interest for such Interest Period shall be the sum of the Margin and the rate or (as the case may be) the arithmetic mean so determined; provided, however, that if the Calculation Agent is unable to determine a rate or (as the case may be) an arithmetic mean in accordance with the above provisions in relation to any Interest Period, the Rate of Interest applicable to the Notes during such Interest Period will be the sum of the Margin and the rate or (as the case may be) the arithmetic mean last determined in relation to the Notes in respect of the preceding Interest Period.

(d)	ISDA Determination: If ISDA Determination is specified in the relevant Pricing Supplement as the manner in which the Rate(s) of Interest is/are to be determined, the Rate of Interest applicable to the Notes for each Interest Period will be the sum of the Margin and the relevant ISDA Rate where "ISDA Rate'' in relation to any Interest Period means a rate equal to the Floating Rate (as defined in the ISDA Definitions) that would be determined by the Calculation Agent under an interest rate swap transaction if the Calculation Agent were acting as Calculation Agent for that interest rate swap transaction under the terms of an agreement incorporating the ISDA Definitions and under which:

	(i)	the Floating Rate Option (as defined in the ISDA Definitions) is as specified in the relevant Pricing Supplement;

	(ii)	the Designated Maturity (as defined in the ISDA Definitions) is a period specified in the relevant Pricing Supplement; and

	(iii)	the relevant Reset Date (as defined in the ISDA Definitions) is either (A) if the relevant Floating Rate Option is based on the London inter-bank offered rate (LIBOR) for a currency, the first day of that Interest Period or (B) in any other case, as specified in the relevant Pricing Supplement.

(e)		Index-Linked Interest: If the Index-Linked Interest Note Provisions are specified in the relevant Pricing Supplement as being applicable, the Rate(s) of Interest applicable to the Notes for each Interest Period will be determined in the manner specified in the relevant Pricing Supplement.

(f)		Maximum or Minimum Rate of Interest: If any Maximum Rate of Interest or Minimum Rate of Interest is specified in the relevant Pricing Supplement, then the Rate of Interest shall in no event be greater than the maximum or be less than the minimum so specified.

(g)		Calculation of Interest Amount: The Calculation Agent will, as soon as practicable after the time at which the Rate of Interest is to be determined in relation to each Interest Period, calculate the Interest Amount payable in respect of each Note for such Interest Period. The Interest Amount will be calculated by applying the Rate of Interest for such Interest Period to the principal amount of such Note during such Interest Period and multiplying the product by the relevant Day Count Fraction.

(h)		Calculation of other amounts: If the relevant Pricing Supplement specifies that any other amount is to be calculated by the Calculation Agent, the Calculation Agent will, as soon as practicable after the time or times at which any such amount is to be determined, calculate the relevant amount. The relevant amount will be calculated by the Calculation Agent in the manner specified in the relevant Pricing Supplement.

(i)		Publication: The Calculation Agent will cause each Rate of Interest and Interest Amount determined by it, together with the relevant Interest Payment Date, and any other amount(s) required to be determined by it together with any relevant payment date(s) to be notified to the Paying Agents and each stock exchange (if any) on which the Notes are then listed as soon as practicable after such determination but (in the case of each Rate of Interest, Interest Amount and Interest Payment Date) in any event not later than the first day of the relevant Interest Period. Notice thereof shall also promptly be given to the Noteholders. The Calculation Agent will be entitled to amend any Interest Amount (on the basis of the foregoing provisions) without notice in the event of an extension or shortening of the relevant Interest Period.

(j)		Notifications etc: All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of this Condition by the Calculation Agent will (in the absence of manifest error) be binding on the Issuer and (where the Issuer of the Notes is Heller Canada) the Guarantor, the Paying Agents, the Noteholders and the Couponholders and (subject as aforesaid) no liability to any such Person will attach to the Calculation Agent in connection with the exercise or non-exercise by it of its powers, duties and discretions for such purposes.

8.		Zero Coupon Note Provisions

(a)		Application: This Condition 8 (Zero Coupon Note Provisions) is applicable to the Notes only if the Zero Coupon Note Provisions are specified in the relevant Pricing Supplement as being applicable.


(b)	Late payment on Zero Coupon Notes: If the Redemption Amount payable in respect of any Zero Coupon Note is improperly withheld or refused, the Redemption Amount shall thereafter be an amount equal to the sum of:

	(i)	the Reference Price; and

	(ii)	the product of the Accrual Yield (compounded annually) being applied to the Reference Price from (and including) the Issue Date to (but excluding) whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Fiscal Agent has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).

9.	Dual Currency Note Provisions

	Application: This Condition 9 (Dual Currency Note Provisions) is applicable to the Notes only if the Dual Currency Note Provisions are specified in the relevant Pricing Supplement as being applicable.

(b)	Rate of Interest: If the rate or amount of interest falls to be determined by reference to an exchange rate, the rate or amount of interest payable shall be determined in the manner specified in the relevant Pricing Supplement.

10.	Redemption and Purchase

(a)	Scheduled redemption: Unless previously redeemed, or purchased and cancelled, the Notes will be redeemed at their Final Redemption Amount on the Maturity Date, subject as provided in Condition 11 (Payments).

(b)	Redemption for tax reasons:

	(i)	The Notes may be redeemed at the option of the Issuer in whole, but not in part, at any time, on giving not less than 30 or more than 60 days' notice in accordance with Condition 19 (Notices) (which notice shall be irrevocable), at their Early Redemption Amount (Tax), together with accrued interest, if any, if the Issuer has or will become obligated to pay additional interest on such Notes pursuant to Condition 12 (Taxatio n) or (where the Issuer of the Notes is Heller Canada) the Guarantor would be unable for reasons outside its control to procure payment by the Issuer and in making payment itself would be required to pay such additional amounts as a result of any change in, or amendment to, the laws (or any regulations or rulings promulgated thereunder) of any Relevant Jurisdiction or any change in the application or official interpretation of such laws, regulations or rulings, which change or amendment becomes effective on or after the date on which any person (including any person acting as underwriter, broker or dealer) agrees to purchase any of such Notes pursuant to their original issuance, and such obligation cannot be avoided by the Issuer or, if applicable, the Guarantor taking reasonable measures available to it; provided that no such


			notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer or, as the case may be, the Guarantor would be obligated to pay such additional interest were a payment in respect of the Notes then due. Prior to the publication of any notice of redemption pursuant to this Condition 10 (Redemption and Purchase), the Issuer or, if applicable, the Guarantor shall deliver to the Fiscal Agent (A) a certificate signed by an officer of the Issuer or, if applicable, the Guarantor stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred and (B) a legal opinion, from lawyers of recognised standing to the Issuer or, if applicable, the Guarantor to the effect that the Issuer or, if applicable, the Guarantor has or will become obligated to pay such additional interest as a result of such change or amendment.

		(ii)	Unless otherwise specified in the Pricing Supplement, if Heller shall determine that any payment made outside the United States by Heller (in its capacity as either Issuer or Guarantor) or any of its Paying Agents in respect of any Note, Coupon or Talon, if any, that is not a Note to which the Floating Rate Note Provisions, as specified in the relevant Pricing Supplement apply (an "Affected Note'') would, under any present or future laws or regulations of the United States, be subject to any certification, documentation, information or other reporting requirement of any kind, the effect of which requirement is the disclosure to Heller (in its relevant capacity as aforesaid), any Paying Agent or any governmental authority of the nationality, residence or identity of a beneficial owner of such Affected Note that is a Non-United States Person (other than such a requirement (A) that would not be applicable to a payment made by Heller (in its relevant capacity as aforesaid) or any one of its Paying Agents (1) directly to the beneficial owner or (2) to a custodian, nominee or other agent of the beneficial owner, or (B) that can be satisfied by such custodian, nominee or agent certifying to the effect that the beneficial owner is a Non-United States Person, provided that, in any case referred to in clause (A)(1) or (B), payment by the custodian, nominee or agent to the beneficial owner is not otherwise subject to any such requirement), then either the Issuer (if, but only if the Issuer is Heller) shall elect to redeem such Affected Notes in whole, but not in part, at their Early Redemption Amount (Tax), together with accrued interest, if any, or if the conditions of the next succeeding paragraph are satisfied, to pay the additional interest specified in such paragraph or if the Issuer is Heller Canada, and the conditions of the next succeeding paragraph are satisfied, Heller (in its capacity as Guarantor) shall pay the additional interest specified in such paragraph. Heller (in its relevant capacity as aforesaid) shall make such determination as soon as practicable and the Issuer shall publish prompt notice thereof (the "Determination Notice''), stating the effective date of such certification, documentation, information or other reporting requirement, whether the Affected Notes shall be redeemed or that the additional interest specified in the next succeeding paragraph shall be paid and (if applicable) the last date by which the redemption of the


			Affected Notes must take place (the "Redemption Date''), as provided in the next succeeding sentence. If any Affected Notes are to be redeemed pursuant to this paragraph, the redemption shall take place on such date, not later than one year after the publication of the Determination Notice, as the Issuer shall specify by notice given to the Fiscal Agent at least 60 days before the Redemption Date. Notice of such redemption shall be given to the holders of the Affected Notes not more than 60 days or less than 30 days prior to the Redemption Date. Notwithstanding the foregoing, the Affected Notes shall not be so redeemed if Heller (in its relevant capacity as aforesaid) shall subsequently determine, not less than 30 days prior to the Redemption Date, that subsequent payments on the Affected Notes would not be subject to any such certification, documentation, information or other reporting requirement, in which case the Issuer shall publish prompt notice of such subsequent determination, and any earlier redemption notice given pursuant to this paragraph shall be revoked and of no further effect. Prior to the publication of any Determination Notice pursuant to this paragraph, Heller shall deliver to the Fiscal Agent (I) a certificate signed by an officer of Heller (in its relevant capacity as aforesaid) stating that Heller (in its relevant capacity as aforesaid) is entitled to make such determination and setting forth a statement of facts showing that the conditions precedent to the obligation of the Issuer to redeem the Affected Notes or to pay the additional interest specified in the next succeeding paragraph have occurred and (II) a legal opinion, from lawyers of recognised standing in the United States, to the effect that such conditions have occurred.

			If and so long as the certification, documentation, information or other reporting requirement referred to in the preceding paragraph would be fully satisfied by payment of a back-up withholding tax or similar charge, Heller (in its capacity as either Issuer or Guarantor) may elect to pay as additional interest such amounts as may be necessary so that every net payment made outside the United States following the effective date of such requirement by Heller (in its relevant capacity as aforesaid) or any of its Paying Agents in respect of any Affected Note of which the beneficial owner is a Non-United States Person (but without any requirement that the nationality, residence or identity of such beneficial owner be disclosed to Heller (in its relevant capacity as aforesaid), any Paying Agent or any governmental authority), after deduction or withholding for or on account of such back-up withholding tax or similar charge (other than a backup withholding tax or similar charge that (i) would not be applicable in the circumstances referred to in the parenthetical clause of the first sentence of the preceding paragraph or (ii) is imposed as a result of presentation of any such Affected Note for payment more than 15 days after the Relevant Date), will not be less than the amount provided in any such Affected Note to be then due and payable. If Heller (in its relevant capacity as aforesaid) elects to pay additional interest pursuant to this paragraph, then the Issuer shall have the right to redeem the Affected Notes at any time in whole, but not in part, at their Early Redemption Amount (Tax) together with accrued interest, if any, subject to the provisions of the last three


		sentences of the immediately preceding paragraph. If Heller (in its relevant capacity as aforesaid) elects to pay additional interest pursuant to this paragraph and the condition specified in the first sentence of this paragraph should no longer be satisfied, then the Issuer shall redeem the Affected Notes in whole, but not in part, at their Early Redemption Amount (Tax), together with accrued interest, if any, subject to the provisions of the last three sentences of the immediately preceding paragraph. The foregoing sentence shall not apply to any Notes issued by Heller Canada. Any redemption payments made by Heller (in its relevant capacity as aforesaid) pursuant to the two immediately preceding sentences shall be subject to the continuing obligation of Heller (in its relevant capacity as aforesaid) to pay additional interest pursuant to this paragraph. If the Affected Notes are to be redeemed pursuant to this paragraph, the redemption shall take place on such date, not later than one year after publication of the notice of redemption, as the Issuer shall specify by notice to the Fiscal Agent at least 60 days prior to the Redemption Date.

(c)	Redemption at the option of the Issuer: If the Call Option is specified in the relevant Pricing Supplement as being applicable, the Notes may be redeemed at the option of the Issuer in whole or, if so specified in the relevant Pricing Supplement, in part on any Optional Redemption Date (Call) at the relevant Optional Redemption Amount (Call) on the Issuer's giving not less than 30 nor more than 60 days' notice to the Noteholders (which notice shall be irrevocable and shall oblige the Issuer to redeem the Notes or, as the case may be, the Notes specified in such notice on the relevant Optional Redemption Date (Call) at the Optional Redemption Amount (Call) plus accrued interest (if any) to such date).

(d)	Partial redemption: If the Notes are to be redeemed in part only on any date in accordance with Condition 10(c) (Redemption at the option of the Issuer), the Notes to be redeemed shall be selected by the drawing of lots in such place as the Fiscal Agent approves and in such manner as the Fiscal Agent considers appropriate, subject to compliance with applicable law and the rules of each stock exchange on which the Notes are then listed, and the notice to Noteholders referred to in Condition 10(c) (Redemption at the option of the Issuer) shall specify the serial numbers of the Notes so to be redeemed. If any Maximum Redemption Amount or Minimum Redemption Amount is specified in the relevant Pricing Supplement, then the Optional Redemption Amount (Call) shall in no event be greater than the maximum or be less than the minimum so specified.

(e)	Redemption at the option of Noteholders: If the Put Option is specified in the relevant Pricing Supplement as being applicable, the Issuer shall, at the option of the holder of any Note, redeem such Note on the Optional Redemption Date (Put) specified in the relevant Put Option Notice at the relevant Optional Redemption Amount (Put) together with interest (if any) accrued to such date. In order to exercise the option contained in this Condition 10(e), the holder of a Note must, not less than 30 nor more than 60 days before the relevant Optional Redemption Date (Put), deposit with any Paying Agent such Note together with all unmatured Coupons relating thereto and a duly completed


	Put Option Notice in the form obtainable from any Paying Agent. The Paying Agent with which a Note is so deposited shall deliver a duly completed Put Option Receipt to the depositing Noteholder. No Note, once deposited with a duly completed Put Option Notice in accordance with this Condition 10(e) (Redemption at the option of Noteholders), may be withdrawn; provided, however, that if, prior to the relevant Optional Redemption Date (Put), any such Note becomes immediately due and payable or, upon due presentation of any such Note on the relevant Optional Redemption Date (Put), payment of the redemption moneys is improperly withheld or refused, the relevant Paying Agent shall mail notification thereof to the depositing Noteholder at such address as may have been given by such Noteholder in the relevant Put Option Notice and shall hold such Note at its Specified Office for collection by the depositing Noteholder against surrender of the relevant Put Option Receipt. For so long as any outstanding Note is held by a Paying Agent in accordance with this Condition 10(e) (Redemption at the option of Noteholders), the depositor of such Note and not such Paying Agent shall be deemed to be the holder of such Note for all purposes.

(f)	No other redemption: The Issuer shall not be entitled to redeem the Notes otherwise than as provided in paragraphs (a) to (e) above.

(g)	Early redemption of Zero Coupon Notes: Unless otherwise specified in the relevant Pricing Supplement, the Redemption Amount payable on redemption of a Zero Coupon Note at any time before the Maturity Date shall be an amount equal to the sum of:

	(i)	the Reference Price; and

	(ii)	the product of the Accrual Yield (compounded annually) being applied to the Reference Price from (and including) the Issue Date to (but excluding) the date fixed for redemption or (as the case may be) the date upon which the Note becomes due and payable.

	Where such calculation is to be made for a period which is not a whole number of years, the calculation in respect of the period of less than a full year shall be made on the basis of such Day Count Fraction as may be specified in the Pricing Supplement for the purposes of this Condition 10(g) (Early Redemption of Zero Coupon Notes) or, if none is so specified, a Day Count Fraction of 30E/360.

(h)	Purchase: The Issuer or (where the Issuer of the Notes is Heller Canada) the Guarantor or any of their respective Subsidiaries may at any time purchase Notes in the open market or otherwise and at any price, provided that all unmatured Coupons are purchased therewith.

(i)	Cancellation: All Notes so redeemed or purchased by the Issuer or (where the Issuer of the Notes is Heller Canada) the Guarantor or any of their respective Subsidiaries and any unmatured Coupons attached to or surrendered with them shall be cancelled and may not be reissued or resold.

11.	Payments

(a)	Principal: Payments of principal shall be made only against presentation and (provided that payment is made in full) surrender of Notes at the Specified Office of any Paying Agent outside the United States by cheque drawn in the currency in which the payment is due on, or by transfer to an account denominated in that currency (or, if that currency is euro, any other account to which euro may be credited or transferred) and maintained by the payee with, a bank in the Principal Financial Centre of that currency.

(b)	Interest: Payments of interest shall, subject to paragraph (h) below, be made only against presentation and (provided that payment is made in full) surrender of the appropriate Coupons (if any) at the Specified Office of any Paying Agent outside the United States in the manner described in paragraph (a) above.

(c)	Payments in New York City: In respect of Notes denominated in U.S. dollars only, payments of principal or interest may be made at the Specified Office of a Paying Agent in New York City if (i) the Issuer has appointed Paying Agents outside the United States with the expectation that such Paying Agents will be able to make payment of the full amount of principal and interest on the Notes in the currency in which the payment is due when due, (ii) payment of the full amount of such principal or interest at the offices of all such Paying Agents is illegal or effectively precluded by exchange controls or other similar restrictions and (iii) payment is permitted by applicable United States law (including the TEFRA D Rules, if applicable). Notwithstanding the foregoing, payments in US dollars may be made by transfer to an account maintained by the payee outside the United States, and payments will be made by transfer to an account maintained by the payee in the United States only if the payee is an exempt recipient described in US Treasury regulation section 1.6049-4(c)(1)(ii) and is also a financial institution described in US Treasury regulation section 1.163-5(c)(2)(v)(B)(2) that is receiving such payment as a step in the clearance of funds and such interest is promptly credited to an account maintained outside the United States for such financial institution or for persons for which the financial institution has collected such interest. Payments by cheque will in no event be mailed to a United States address.

(d)	Payments subject to fiscal laws: All payments in respect of the Notes are subject in all cases to any applicable fiscal or other laws and regulations, but without prejudice to the provisions of Condition 12 (Taxation). No commissions or expenses shall be charged to the Noteholders or Couponholders in respect of such payments.

(e)	Deductions for unmatured Coupons: If the relevant Pricing Supplement specifies that the Fixed Rate Note Provisions are applicable and a Note is presented without all unmatured Coupons relating thereto:

	(i)	if the aggregate amount of the missing Coupons is less than or equal to the amount of principal due for payment, a sum equal to the aggregate amount of the missing Coupons will be deducted from the amount of principal due for payment; provided, however, that if the gross amount available for payment is less than the amount of principal due for payment, the sum deducted will be that proportion of

		the aggregate amount of such missing Coupons which the gross amount actually available for payment bears to the amount of principal due for payment;

	(ii)	if the aggregate amount of the missing Coupons is greater than the amount of principal due for payment:

		(A)	so many of such missing Coupons shall become void (in inverse order of maturity) as will result in the aggregate amount of the remainder of such missing Coupons (the " Relevant Coupons'') being equal to the amount of principal due for payment; provided, however, that where this sub-paragraph would otherwise require a fraction of a missing Coupon to become void, such missing Coupon shall become void in its entirety; and


		(B)	a sum equal to the aggregate amount of the Relevant Coupons (or, if less, the amount of principal due for payment) will be deducted from the amount of principal due for payment; provided, however, that, if the gross amount available for payment is less than the amount of principal due for payment, the sum deducted will be that proportion of the aggregate amount of the Relevant Coupons (or, as the case may be, the amount of principal due for payment) which the gross amount actually available for payment bears to the amount of principal due for payment.

	Each sum of principal so deducted shall be paid in the manner provided in paragraph (a) above against presentation and (provided that payment is made in full) surrender of the relevant missing Coupons.

(f)	Unmatured Coupons void: If the relevant Pricing Supplement specifies that this Condition 11(f) is applicable or that the Floating Rate Note Provisions or the Index-Linked Interest Note Provisions are applicable, on the due date for final redemption of any Note or early redemption of such Note pursuant to Condition 10(b) (Redemption for tax reasons), Condition 10(c) (Redemption at the option of the Issuer), Condition 10(d) (Partial Redemption), Condition 10(e) (Redemption at the option of Noteholders), or Condition 13 (Events of Defaul t), all unmatured Coupons relating thereto (whether or not still attached) shall become void and no payment will be made in respect thereof.

(g)	Payments on business days: If the due date for payment of any amount in respect of any Note or Coupon is not a Payment Business Day in the place of presentation, the holder shall not be entitled to payment in such place of the amount due until the next succeeding Payment Business Day in such place and shall not be entitled to any further interest or other payment in respect of any such delay.

(h)	Payments other than in respect of matured Coupons: Payments of interest other than in respect of matured Coupons shall be made only against presentation of the relevant Notes at the Specified Office of any Paying Agent outside the United States (or in New York City if permitted by paragraph (c) above).

(i)	Partial payments: If a Paying Agent makes a partial payment in respect of any Note or Coupon presented to it for payment, such Paying Agent will endorse thereon a statement indicating the amount and date of such payment.

(j)	Exchange of Talons: On or after the maturity date of the final Coupon which is (or was at the time of issue) part of a Coupon Sheet relating to the Notes, the Talon forming part of such Coupon Sheet may be exchanged at the Specified Office of the Fiscal Agent or the Paying Agent with its Specified Office in Luxembourg for a further Coupon Sheet (including, if appropriate, a further Talon but excluding any Coupons in respect of which claims have already become void pursuant to Condition 14 (Prescription)). Upon the due date for redemption of any Note, any unexchanged Talon relating to such Note shall become void and no Coupon will be delivered in respect of such Talon.

12.	Taxation

(a)	The Issuer or (where the Issuer of the Notes is Heller Canada) the Guarantor will, subject to the exceptions and limitations set forth below, pay as additional interest to the holder of any Note, Coupon or Talon such amounts as may be necessary so that every net payment on such Note, Coupon or Talon, after deduction or withholding for or on account of any present or future tax, assessment or other governmental charge imposed upon or as a result of such payment to the Relevant Jurisdiction, will not be less than the amount provided in such Note, Coupon or Talon to be then due and payable.

(b)	Exceptions Relating to United States Taxes: However, Heller (in its capacity either as Issuer or Guarantor) will not be required to make any such payment of additional interest for or on account of:

	(i)	any tax, assessment or other government charge that would not have been imposed but for (A) the existence of any present or former connection between a Noteholder or Couponholder (or between a fiduciary, settlor or beneficiary of, or a person holding a power over, such holders, if such holder is an estate or a trust, or a member or shareholder of such holder, if such holder is a partnership or corporation) and the United States, including, without limitation, such holder (or such fiduciary, settlor, beneficiary, person holding a power, member or shareholder) being or having been a citizen or resident thereof or being or having been engaged in trade of business or present therein or having or having had a permanent establishment therein or (B) such Noteholder or Couponholder's past or present status as a personal holding company, foreign personal holding company, foreign private foundation or other foreign tax-exempt organisation with respect to the United States, passive foreign investment company, controlled foreign corporation or as a corporation that accumulates earnings to avoid United States federal income tax; or

	(ii)	any estate, inheritance, gift, sales, transfer, excise, wealth or personal property tax or any similar tax, assessment or other governmental charge; or

	(iii)	any tax, assessment or other governmental charge that would not have been imposed but for:

		(A)	the presentation by the holder of a Note, Coupon or Talon for payment more than 10 days after the Relevant Date; or

		(B)	a change in law, regulation or administrative or judicial interpretation that becomes effective more than 10 days after the payment becomes due or is duly provided for, whichever occurs later; or

	(iv)	any tax, assessment or other governmental charge that is payable otherwise than by deduction or withholding from a payment on a Note, Coupon or Talon; or

	(v)	any tax, assessment or other governmental charge required to be deducted or withheld by any Paying Agent from a payment on a Note, Coupon or Talon, if such payment can be made without such deduction or withholding by any other Paying Agent; or

	(vi)	any tax, assessment or other governmental charge that would not have been imposed but for a failure to comply with (A) certification, documentation, information or other reporting requirement concerning the nationality, residence, identity or connection with the United States of the holder or the beneficial owner of a Note, Coupon or Talon if, without regard to any tax treaty, such compliance is required by statute or regulation of the United States as a precondition to relief or exemption from such tax, assessment or other governmental charge (including backup withholding) or (B) any other certification, documentation, reporting or other similar requirements under United States income tax laws or regulations that would establish entitlement to otherwise applicable relief or exemption from such tax, assessment or other governmental charge; or

	(vii)	any tax, assessment or other governmental charge imposed on a holder that actually owns or is deemed to own 10 per cent. or more of the combined voting power of all classes of stock of Heller or that is a controlled foreign corporation relating to Heller through stock ownership; or

	(viii)	a payment on a Note, Coupon or Talon to a holder that is a fiduciary or partnership or other than the sole beneficial owner of such payment to the extent a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner would not have been entitled to the additional interest had such beneficiary, settlor, member or beneficial owner been the holder of such Note, Coupon or Talon; or

	(ix)	any combination of sub-paragraphs (i) to (viii) above.

(c)	Exceptions Relating to Canadian Taxes: However (where the Issuer of the Notes is Heller Canada) Heller Canada will not be required to make any such payment of additional interest for or on account of:


	(i)	any tax, assessment or other government charge that is payable by reason of the Noteholder or the Couponholder having any present or former connection with Canada otherwise than merely by the holding or use or ownership or deemed holding or use outside Canada or ownership as a non-resident of Canada of such Note or Coupon or otherwise than merely by reason of the fact that payments in respect of the Guarantee are, or for purposes of taxation are deemed to be, derived from sources in, or are secured in, the United States; or

	(ii)	any tax, assessment or other government charge that is payable by reason of the Noteholder or the Couponholder being a person with whom Heller Canada is not dealing at arm's length (within the meaning of the Income Tax Act (Canada)).

13.	Events of Default

(a)	If any of the following events occurs:

	(i)	Non-payment of principal: the Issuer defaults in the payment of principal or premium, if any, on any Note at its maturity, upon redemption (if applicable) or otherwise; or

	(ii)	Non-payment of interest: the Issuer defaults in the payment of any interest upon any Note or any payment with respect to the Coupons, if any, when and as it becomes payable, and continuance of such default for a period of 30 days; or

	(iii)	Breach of other obligations: the Issuer or the Guarantor (if applicable) defaults in the performance or observance of any covenant or agreement in these Conditions, the Guarantee (if applicable) or in the Agency Agreement and such default continues for a period of 60 days; or

	(iv)	Cross-default:

		(A)	an event of default with respect to any other Series of Notes; or

		(B)	a default under any bond, debenture, note or other evidence of Indebtedness issued, assumed or guaranteed by Heller or (where the Issuer of the Notes is Heller Canada) Heller Canada having unpaid principal in excess of U.S.$2,000,000 (or its equivalent in other currencies) or under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any such Indebtedness, whether such Indebtedness now exists or shall hereafter be created, which Event of Default or default, as the case may be, in either such case, shall have resulted in such other Series of Notes or such Indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without such other Series of Notes or such Indebtedness having been discharged or such declaration of acceleration having been rescinded or annulled within a period of 60 days after there shall have been given, by registered or certified mail, to Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada by the


		holders of at least 25 per cent. in aggregate principal amount of the outstanding Notes of such Series, a written notice specifying such Event of Default or default, as the case may be, and requiring Heller or (where the Issuer of the Notes is Heller Canada) Heller Canada to cause such Indebtedness to be discharged or cause such acceleration to be rescinded or annulled and stating that such notice is a "Notice of Default'' hereunder, unless at the end of such 60-day period and thereafter the Event of Default or default is being contested in good faith by Heller or (where the Issuer of the Notes is Heller Canada) Heller Canada; or

(v)	Insolvency of Heller: the entry of a decree or order for relief in respect of Heller by a court having jurisdiction in the premises in an involuntary case under the U.S. Federal bankruptcy laws, as now or hereafter constituted, or any other applicable U.S. Federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee or sequestrator (or other similar official) of Heller or substantially all of its property, or ordering the winding up or liquidation of its affairs; or

(vi)	Voluntary insolvency of Heller: the commencement by Heller of a voluntary case under the U.S. Federal bankruptcy laws, as now or hereafter constituted, or any other applicable U.S. Federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by it to the entry of an order for relief in an involuntary case under any such law or to the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of Heller or for substantially all of its property, or the making by it of an assignment for the benefit of its creditors; or

(vii)	Guarantee not in force: where the Issuer of the Notes is Heller Canada, the Guarantee is not (or is claimed not to be by Heller) in full force and effect; or

(viii)	Insolvency of Heller Canada: where the Issuer of the Notes is Heller Canada, (i) Heller Canada or any of its Subsidiaries becomes insolvent or is unable to pay its debts as they fall due, (ii) an administrator or liquidator of Heller Canada or any of its Subsidiaries or the whole or a substantial part of the undertaking, assets and revenues of Heller Canada or any of its Subsidiaries is appointed (or application for any such appointment is made), (iii) Heller Canada or any of its Subsidiaries takes any action for a readjustment or deferment of any of its obligations or makes a general assignment or an arrangement or composition with or for the benefit of its creditors or declares a moratorium in respect of any of its Indebtedness or any guarantee of any Indebtedness given by it or (iv) Heller Canada or any of its Subsidiaries ceases or threatens to cease to carry on all or any substantial part of its business (otherwise than, in the case of a Subsidiary of Heller or a Subsidiary of Heller Canada, for the purposes of or pursuant to an amalgamation, reorganisation or restructuring whilst solvent); or

(ix)	Winding up of Heller Canada: where the Issuer of the Notes is Heller Canada, an order is made or an effective resolution is passed for the winding up, liquidation

		or dissolution of Heller Canada or any of its Subsidiaries (otherwise than, in the case of a Subsidiary of Heller Canada or a Subsidiary of Heller, for the purposes of or pursuant to an amalgamation, reorganisation or restructuring whilst solvent); or

	(x)	Other specified events: the occurrence of any other event of default with respect to the Notes of such Series as provided in the relevant Pricing Supplement.

	No event of default with respect to Notes of a particular Series shall constitute an event of default with respect to Notes of any other Series, except with respect to an event of default under sub-paragraph (iii), (iv), (v), (vi), (viii) and (ix) of this Condition 13(a) (Events of Default).

(b)	If an event of default with respect to the Notes of a particular Series at the time outstanding occurs and is continuing, then in every such case the holders of not less than 25 per cent, in principal amount of the outstanding Notes of such Series may declare the Early Redemption Amount (Default) (being the amount so specified in the applicable Pricing Supplement and if no such amount is specified, the principal amount thereof) and all accrued but unpaid interest on the Notes to be due and payable immediately, by a notice in writing to Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada and to the Fiscal Agent, and upon any such declaration such Early Redemption Amount (Default) (or other specified amount) and interest shall become immediately due and payable. Upon payment of such amounts in the currency in which such Notes are denominated, all obligations of Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada in respect of payment of principal and interest on such Notes shall terminate.

	At any time after such a declaration of acceleration of the Notes of a Series has been made and before a judgment or decree for payment has been obtained, the holders of a majority in principal amount of the outstanding Notes of such Series, by written notice to Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada may, on behalf of all Noteholders of such Series, waive such event of default and rescind and annul such declaration and its consequences if:

	(i)	Heller or Heller Canada has paid or deposited with the Fiscal Agent a sum in the currency in which such Notes are denominated sufficient to pay:

		(A)	all overdue instalments of interest on such Notes or all overdue payments with respect to any related Coupons;

		(B)	the amounts of principal (and premium, if any, on) such Notes that have become due otherwise than by such declaration of acceleration and interest thereon at the rate prescribed therefor in these Conditions;

		(C)	to the extent that payment of such interest is lawful, interest upon overdue instalments of interests on each such Note or upon overdue payments on any Coupons at the rate or rates prescribed therefor in such Notes or Coupons; and

		(D)	all sums paid or advanced by the Paying Agents and the reasonable compensation, expenses, disbursements and advances of the Paying Agents; provided, however, that all sums payable under this sub-paragraph (D) shall be paid in US dollars; and

	(ii)	all events of default with respect to such Notes, other than the non-payment of principal of and interest on the Notes that have become due solely by such declaration of acceleration, have been cured or waived as provided in Condition 17 (Meeting of Noteholders and Waiver). No such recission and waiver shall affect any subsequent default or impair any right consequent thereon.

	For all purposes under these Conditions, if a portion of the principal of any Zero Coupon Note shall have been accelerated and declared due and payable pursuant to the provisions hereof, then, from and after such declaration, unless such declaration has been rescinded and annulled, the principal amount of such Zero Coupon Note shall be deemed, for all purposes hereunder, to be such portion of the principal thereof as shall be due and payable as a result of such acceleration, and payment of such portion of the principal thereof as shall be due and payable as a result of such acceleration, together with interest, if any, thereon and all other amounts owing thereunder, shall constitute payment in full of such Zero Coupon Note.

14.	Prescription

	Claims for principal shall become void unless the relevant Notes are presented for payment within ten years of the appropriate Relevant Date. Claims for interest shall become void unless the relevant Coupons are presented for payment within five years of the appropriate Relevant Date.

15.	Replacement of Notes and Coupons

	If any Note or Coupon is lost, stolen, mutilated, defaced or destroyed, it may be replaced at the Specified Office of the Fiscal Agent (and, if the Notes are then listed on any stock exchange whose rules requires the appointment of a Paying Agent in any particular place, the Paying Agent having its Specified Office in the place required by the rules of such stock exchange), subject to all applicable laws and stock exchange requirements, upon payment by the claimant of the expenses incurred in connection with such replacement and on such terms as to evidence, security, indemnity and otherwise as the Issuer may reasonably require. Mutilated or defaced Notes or Coupons must be surrendered before replacements will be issued.

16.	Agents

	In acting under the Agency Agreement and in connection with the Notes and the Coupons, the Paying Agents act solely as agents of Heller and Heller Canada and do not assume any obligations towards or relationship of agency or trust for or with any of the Noteholders or Couponholders.

	The initial Paying Agents and their initial Specified Offices are listed below. The initial Calculation Agent (if any) is specified in the relevant Pricing Supplement. Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada reserve the right at any time to vary or terminate the appointment of any Paying Agent and to appoint a successor fiscal agent or Calculation Agent and additional or successor paying agents; provided, however, that Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada shall at all times maintain:

	(i)	a Fiscal Agent; and

	(ii)	if a Calculation Agent is specified in the relevant Pricing Supplement, a Calculation Agent;

	(iii)	if and for so long as the Notes are listed on any stock exchange whose rules requires the appointment of a Paying Agent in any particular place, a Paying Agent having its Specified Office in the place required by the rules of such stock exchange; and

	(iv)	a Paying Agent in a place of payment located outside the United States.

	Notice of any change in any of the Paying Agents, the Calculation Agent or in their respective Specified Offices shall promptly be given to the Noteholders in accordance with Condition 19 (Notices).

17.	Meetings of Noteholders and Waiver

(a)	Meetings of Noteholders: The Agency Agreement contains provisions for convening meetings of Noteholders to consider matters relating to the Notes, including the modification of any provision of these Conditions. Any such modification may be made if sanctioned by an Extraordinary Resolution. Such a meeting may be convened by the Issuer and, if applicable, the Guarantor (in such case acting together) and shall be convened by it upon the request in writing of Noteholders holding not less than one-tenth of the aggregate principal amount of the outstanding Notes. The quorum at any meeting convened to vote on an Extraordinary Resolution will be two or more Persons holding or representing one more than half of the aggregate principal amount of the outstanding Notes or, at any adjourned meeting, two or more Persons being or representing Noteholders whatever the principal amount of the Notes held or represented; provided, however, that Reserved Matters may only be sanctioned by an Extraordinary Resolution passed at a meeting of Noteholders at which two or more Persons holding or representing not less than three-quarters or, at any adjourned meeting, one quarter of the aggregate principal amount of the outstanding Notes form a quorum. Any Extraordinary Resolution duly passed at any such meeting shall be binding on all the Noteholders and Couponholders, whether present or not.

(b)	Modification: The Notes and these Conditions may be amended without the consent of the Noteholders or the Couponholders to correct a manifest error. In addition, the parties to the Agency Agreement may agree to modify any provision thereof (including, without limitation, the Guarantee), but the Issuer and, if applicable, the Guarantor (in

		such case acting together) shall not agree, without the consent of the Noteholders, to any such modification unless it is of a formal, minor or technical nature, it is made to correct a manifest error or it is, in the opinion of such parties, not materially prejudicial to the interests of the Noteholders.

18.		Further Issues

		The Issuer may from time to time, without the consent of the Noteholders or the Couponholders, create and issue further notes having the same terms and conditions as the Notes in all respects (or in all respects except for the first payment of interest) so as to form a single series with the Notes.

19.		Notices

		Notices to the Noteholders shall be valid if published in a leading English language daily newspaper published in London (which is expected to be the Financial Times) and, if the Notes are listed on the Luxembourg Stock Exchange and the rules of that exchange so require, a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxemburger Wort) or in either case, if such publication is not practicable, in a leading English language daily newspaper having general circulation in Europe. Any such notice shall be deemed to have been given on the date of first publication (or if required to be published in more than one newspaper, on the first date on which publication shall have been made in all the required newspapers). Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the Noteholders.

20.		Currency Indemnity

		If any sum due from the Issuer in respect of the Notes or the Coupons or any order or judgment given or made in relation thereto has to be converted from the currency the ("first currency'') in which the same is payable under these Conditions or such order or judgment into another currency (the "second currency'') for the purpose of (a) making or filing a claim or proof against the Issuer, (b) obtaining an order or judgment in any court or other tribunal or (c) enforcing any order or judgment given or made in relation to the Notes, the Issuer shall indemnify each Noteholder, on the written demand of such Noteholder addressed to the Issuer and delivered to the Issuer or to the Specified Office of the Fiscal Agent, against any loss suffered as a result of any discrepancy between (i) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (ii) the rate or rates of exchange at which such Noteholder may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof.

		This indemnity constitutes a separate and independent obligation of the Issuer and shall give rise to a separate and independent cause of action.

21.	Rounding

	For the purposes of any calculations referred to in these Conditions (unless otherwise specified in these Conditions or the relevant Pricing Supplement), (a) all percentages resulting from such calculations will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point (with 0.000005 per cent. being rounded up to 0.00001 per cent.), (b) all United States dollar amounts used in or resulting from such calculations will be rounded to the nearest cent (with one half cent being rounded up), (c) all Japanese Yen amounts used in or resulting from such calculations will be rounded downwards to the next lower whole Japanese Yen amount, and (d) all amounts denominated in any other currency used in or resulting from such calculations will be rounded to the nearest two decimal places in such currency, with 0.005 being rounded upwards.

22.	Redenomination

(a)	Application: This Condition 22 (Redenomination) is applicable to the Notes only if it is specified in the relevant Pricing Supplement as being applicable.

(b)	Notice of redenomination: If the country of the Specified Currency is, becomes, or announces its intention to become, a Participating Member State, the Issuer may, without the consent of the Noteholders and Couponholders, on giving at least 30 days' prior notice to the Noteholders and the Paying Agents, designate a date (the "Redenomination Date''), being an Interest Payment Date under the Notes falling on or after the date on which such country becomes a Participating Member State.

(c)	Redenomination: Notwithstanding the other provisions of these Conditions, with effect from the Redenomination Date:

	(i)	the Notes shall be deemed to be redenominated into euro in the denomination of euro 0.01 with a principal amount for each Note equal to the principal amount of that Note in the Specified Currency, converted into euro at the rate for conversion of such currency into euro established by the Council of the European Union pursuant to the Treaty (including compliance with rules relating to rounding in accordance with European Community regulations); provided, however, that, if the Issuer determines, with the agreement of the Fiscal Agent that then market practice in respect of the redenomination into euro 0.01 of internationally offered securities is different from that specified above, such provisions shall be deemed to be amended so as to comply with such market practice and the Issuer shall promptly notify the Noteholders and Couponholders, each stock exchange (if any) on which the Notes are then listed and the Paying Agents of such deemed amendments;

	(ii)	if Notes have been issued in definitive form:

		(A)	all unmatured Coupons denominated in the Specified Currency (whether or not attached to the Notes) will become void with effect from the date (the "Euro Exchange Date") on which the Issuer gives notice (the "Euro

			Exchange Notice'') to the Noteholders that replacement Notes and Coupons denominated in euro are available for exchange (provided that such Notes and Coupons are available) and no payments will be made in respect thereof;

		(B)	the payment obligations contained in all Notes denominated in the Specified Currency will become void on the Euro Exchange Date but all other obligations of the Issuer thereunder (including the obligation to exchange such Notes in accordance with this Condition 22 (Redenomination)) shall remain in full force and effect; and

		(C)	new Notes and Coupons denominated in euro will be issued in exchange for Notes and Coupons denominated in the Specified Currency in such manner as the Fiscal Agent may specify and as shall be notified to the Noteholders in the Euro Exchange Notice; and

	(iii)	all payments in respect of the Notes (other than, unless the Redenomination Date is on or after such date as the Specified Currency ceases to be a sub-division of the euro, payments of interest in respect of periods commencing before the Redenomination Date) will be made solely in euro by cheque drawn on, or by credit or transfer to a euro account (or any other account to which euro may be credited or transferred) maintained by the payee with, a bank in the principal financial centre of any Member State of the European Communities.

(d)	Interest: Following redenomination of the Notes pursuant to this Condition 22 (Redenomination), where Notes have been issued in definitive form, the amount of interest due in respect of the Notes will be calculated by reference to the aggregate principal amount of the Notes presented (or, as the case may be, in respect of which Coupons are presented) for payment by the relevant holder.

(e)	Interest Determination Date: If the Floating Rate Note Provisions are specified in the relevant Pricing Supplement as being applicable and Screen Rate Determination is specified in the relevant Pricing Supplement as the manner in which the Rate(s) of Interest is/are to be determined, with effect from the Redenomination Date the Interest Determination Date shall be deemed to be the second TARGET Settlement Day before the first day of the relevant Interest Period.

23.	Consolidation or Merger

	So long as any of the Notes remain outstanding, Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada shall not consolidate with or merge into any other corporation or convey, transfer or lease its properties and assets substantially as an entirety to any person, unless:

	(i)	the corporation formed by such consolidation or into which Heller and/or (where the Issuer of the Notes is Heller Canada) Heller Canada is merged or the person which shall have acquired by conveyance or transfer, or which leases, such properties and assets is a corporation, partnership, limited liability company or

		trust organised and existing under the laws of any Relevant Jurisdiction, and shall assume payment of the principal of, and premium, if any, and interest, if any, under the Notes and, if applicable, the Guarantee and the performance or observance of every covenant to be performed or observed by the Issuer under the Notes;

	(ii)	mmediately thereafter, neither an event of default (or event which, with notice or lapse of time, or both, would be such) nor a breach of the Agency Agreement (including, without limitation, where applicable, the Guarantee) shall have occurred and be continuing; and

	(iii)	Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada shall have delivered to the Fiscal Agent (I) a certificate signed by an officer of Heller (in its capacity as either Guarantor or Issuer) and (II) a legal opinion from lawyers of recognised standing in the Relevant Jurisdiction, each stating that such consolidation, merger, conveyance, transfer and/or such lease comply with this Condition 23 (Consolidation or Merger) and that all conditions precedent are satisfied.

	If any such transaction were to occur, then, provided that Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada has complied with the foregoing conditions, Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada would (except in the case of a lease) be discharged from all of its respective obligations and covenants under the Notes, any Coupons and the Agency Agreement (including, without limitation, where applicable, the Guarantee).

24.	Interest Act of Canada Disclosure

	For the purposes of disclosure pursuant to the Interest Act of Canada and not for any other purpose, where in any Note issued by Heller Canada (i) a rate of interest is to be calculated on the basis of a year of 360 days, the yearly rate of interest to which the 360 day rate is equivalent is such rate multiplied by the number of days in the year for which such calculation is made and divided by 360, or (ii) a rate of interest is to be calculated during a leap year, the yearly rate of interest to which such rate is equivalent is such rate multiplied by 366 and divided by 365.

25.	Substitution

(a)	This Condition 25 (Substitution) is applicable solely to Notes issued by Heller Canada.

(b)	By purchasing or otherwise acquiring the Notes or Coupons (or a beneficial interest therein), each Noteholder and Couponholder (including any holder of a beneficial interest therein) shall thereby consent and agree that the Guarantor may, without any further consent or agreement of such Noteholder or Couponholder (including any holder of a beneficial interest therein) be entitled at any time to substitute for Heller Canada itself as principal obligor (the "Substituted Obligor'') in respect of all obligations arising from or in connection with the Notes and Coupons provided that:

	(i)	the Fiscal Agent and other Agents under the Agency Agreement:

		(A)	are satisfied that Heller is not in default in the performance or observance of any covenant or agreement in these Conditions, the Guarantee or the Agency Agreement; and

		(B)	agree to the terms of substitution;

	(ii)	the Substituted Obligor shall deliver a notice of substitution (the "Notice of Substitution''), the form of which is set forth in Schedule 6 of the Agency Agreement, and such other agreements or documents, if any, as may then be necessary to give effect to the substitution (the "Documents'') and (without limiting the generality of the foregoing) pursuant to which the Substituted Debtor shall undertake in favour of each Noteholder (of Notes issued by Heller Canada) to be bound by the Conditions of such Notes and the Agency Agreement as the issuer and principal obligor in respect of such Notes;

	(iii)	a legal opinion shall have been delivered to the Fiscal Agent (from whom copies will be available to Noteholders) from lawyers of recognised standing confirming that upon the substitution taking place (A) the requirements of this Condition 25 (Substitution), save as to the giving of notice to the Noteholders, have been met, (B) such Notes and the Agency Agreement are legal, valid, binding and enforceable obligations of the Substituted Debtor (subject to all applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and general equitable principles), (C) the Substituted Obligor is validly incorporated under the law of the State of Delaware, United States of America and (D) that the Substituted Obligor has (if necessary) obtained all necessary governmental and regulatory approvals and consents for the substitution and for the entry into and performance of the Documents; and

	(iv)	if the Notes are listed on the Luxembourg Stock Exchange or any other stock exchange, such stock exchange shall have confirmed to Heller and the Fiscal Agent that, after giving effect to such substitution, the Notes shall continue to be listed on such stock exchange.

	The Guarantor hereby represents, warrants, undertakes and agrees that upon such substitution of itself as the Substituted Obligor as described in this Condition 25(b) (Substitution), it shall, immediately thereupon (x) be bound by, and shall comply with and fully perform, the Conditions of such Notes as the issuer thereof and principal obligor thereunder, and (y) be bound by, and shall comply with and fully perform, the provisions of the Agency Agreement relating to such Notes as the issuer and principal obligor in respect thereof.

(c)	Upon the execution of the Documents (if any) and the delivery of the legal opinion referred to in paragraph (b) of this Condition 25 (Substitution), the Substituted Obligor shall be deemed to be named in the Notes issued by Heller Canada as the issuer and principal obligor in place of Heller Canada and it shall thereupon assume all of the

			rights and obligations of Heller Canada under the Agency Agreement and (ii) Heller Canada shall be released from all of its obligations under such Notes and the Agency Agreement. References in these Conditions to the Issuer shall from then on be deemed to refer to the Substituted Obligor.

(d)			Notification of any such substitution shall be provided in accordance with Condition 19 (Notices) within 5 days of the execution of such Documents and/or the delivery of the legal opinion referred to in paragraph (b) of this Condition 25 (Substitution).

(e)			Counterparts of the Documents, if any, shall be deposited with and held by the Fiscal Agent for so long as any of such Notes originally issued by Heller Canada remain outstanding and for so long as any claim made against the Substituted Obligor or the Guarantor by any Noteholder or Couponholder (or any holder of a beneficial interest therein) in relation to such Notes or the Documents, if any, shall not have been finally adjudicated, settled or discharged.

26.			Governing Law and Jurisdiction

(a)			Governing law: The Notes and the guarantee are governed by, and shall be construed in accordance with, the laws of the State of New York.

(b)			Jurisdiction: Each of Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada agrees for the benefit of the Noteholders that the courts of the State of New York and the federal courts of the United States in the State of New York, in each case sitting in the Borough of Manhattan in the City of New York, shall have jurisdiction to hear and determine any suit, action or proceedings, and to settle any disputes, which may arise out of or in connection with the Notes (respectively, "Proceedings" and "Disputes") and, for such purposes, irrevocably submits to the jurisdiction of such courts.

(c)			Process agent: Each of Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada agrees that the process by which any Proceedings in New York are begun may be served on it by being delivered to CT Corporation System, 111 Eighth Avenue, New York New York 10011 (in the case of Heller) or to Corporation Service Company at 80 State Street, Albany, New York, 12207 (in the case of Heller Canada) or, if different, its registered office for the time being or at any address of the Issuer in New York. If such Person is not or ceases to be effectively appointed to accept service of process on behalf of Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada, each of Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada shall, on the written demand of any Noteholder addressed to Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada and delivered to Heller or to the Specified Office of the Fiscal Agent, appoint a further Person in New York to accept service of process on its behalf and, failing such appointment within 15 days, any Noteholder shall be entitled to appoint such a Person by written notice addressed to Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada and delivered to Heller or to the Specified Office of the Fiscal Agent. Nothing in this

			paragraph shall affect the right of any Noteholder to serve process in any other manner permitted by law.

(d)			Non-exclusivity: The submission to the jurisdiction of the courts referred to above shall not (and shall not be construed so as to) limit the right of any Noteholder to take Proceedings in any other court of competent jurisdiction, nor shall the taking of Proceedings in any one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction (whether concurrently or not) if and to the extent permitted by law.

SCHEDULE 8

FORM OF PERMANENT GLOBAL NOTE

[THIS NOTE CONSTITUTES [COMMERCIAL PAPER]/[A SHORTER/ LONGER]
TERM DEBT SECURITY] ISSUED IN ACCORDANCE WITH THE REGULATIONS
MADE UNDER SECTION 4 OF THE BANKING 1987]¹

ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE OF 1986.

[HELLER FINANCIAL, INC./HELLER FINANCIAL CANADA, LTD.]
([incorporated in [the State of Delaware, United States of America/Canada)]

[currency][amount] Notes due [maturity]

issued under

U.S.$2,000,000,000
Euro Medium-Term Note Programme

[unconditionally and irrevocably guaranteed by
HELLER FINANCIAL, INC.
(incorporated in the State of Delaware, United States of America)]

PERMANENT GLOBAL NOTE

1.		INTRODUCTION

1.1		The Notes

		This Global Note is issued in respect of the notes (the "Notes") of [ ] (the "Issuer") described in the pricing supplement (the "Pricing Supplement") a copy of which is annexed hereto. The Notes are the subject of an amended and restated issue and paying agency agreement dated 26 October 2000 (the " Agency Agreement") made between the Issuer, [Heller Financial, Inc. (the "the Guarantor"),] Deutsche Bank AG London fiscal agent (the "Fiscal Agent", which expression includes any successor fiscal agent appointed from time to time in connection with the Notes) and the other paying agent named therein (together with the Fiscal Agent, the "Paying Agents", which expression includes any additional or successor paying agents

¹ Insert if the issue proceeds are accepted in the U.K.

	appointed from time to time in connection with the Notes). [The Notes are guaranteed by the Guarantor in the Agency Agreement.]

1.2	Construction

	All references in this Global Note to an agreement, instrument or other document (including the Agency Agreement) shall be construed as a reference to that agreement, instrument or other document as the same may be amended, supplemented, replaced or novated from time to time; provided, that, in the case of any amendment, supplement, replacement or novation made after the date hereof, it is made in accordance with the Conditions. Headings and sub-headings are for ease of reference only and shall not affect the construction of this Global Note.

2.	REFERENCES TO CONDITIONS

	Any reference herein to the "Conditions" is to the Terms and Conditions of the Notes set out in Schedule 2 (Terms and Conditions of the Notes) hereto, as supplemented, amended and/or replaced by the Pricing Supplement, and any reference to a numbered "Condition" is to the correspondingly numbered provision thereof. Words and expressions defined in the Conditions shall have the same meanings when used in this Global Note.

3.	PROMISE TO PAY

3.1	The Issuer, for value received, promises to pay to the bearer of this Global Note, in respect of each Note represented by this Global Note, the Redemption Amount on the Maturity Date or on such earlier date or dates as the same may become payable in accordance with the Conditions (or to pay such other amounts of principal on such dates as may be specified in the Pricing Supplement), and to pay interest on each such Note on the dates and in the manner specified in the Conditions, together with any additional amounts payable in accordance with the Conditions, all subject to and in accordance with the Conditions.

4.	NEGOTIABILITY

	This Global Note is negotiable and, accordingly, title to this Global Note shall pass by delivery.

5.	EXCHANGE

	This Global Note will become exchangeable, in whole but not in part only and at the request of the bearer of this Global Note, for Definitive Notes (which expression has the meaning given in the Agency Agreement) in accordance with the Agency Agreement:

	5.1	on the expiry of such period of notice as may be specified in the Pricing Supplement; or

	5.2	if any of the following events occurs:

		5.2.1	Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System ("Euroclear") or Clearstream Banking, société anonyme (" Clearstream, Luxembourg") or any other relevant clearing system is closed for business for a continuous period of 14 days (other than by reason of legal holidays) or announces an intention permanently to cease business; or

		5.2.2	any of the circumstances described in Condition 13 (Events of Default) occurs; or

		5.2.3	the holder requests exchange of the Global Note for Definitive Notes.

6.	DELIVERY OF DEFINITIVE NOTES

	Whenever this Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons attached (if so specified in the Pricing Supplement), in an aggregate principal amount equal to the principal amount of this Global Note to the bearer of this Global Note against the surrender of this Global Note at the Specified Office of the Fiscal Agent within 30 days of the bearer requesting such exchange.

7.	FAILURE TO DELIVER DEFINITIVE NOTES OR TO REPAY

	If:

	7.1	Failure to deliver Definitive Notes: Definitive Notes have not been delivered in accordance with paragraph 6 (Delivery of Definitive Notes) above by 5.00 p.m. (London time) on the thirtieth day after the bearer has requested exchange of this Global Note for Definitive Notes; or

	7.2	Temporary global note becomes void: this Global Note was originally issued in exchange for part only of a temporary global note representing the Notes and such temporary global note becomes void in accordance with its terms; or

	7.3	Payment default: this Global Note (or any part hereof) has become due and payable in accordance with the Conditions or the date for final redemption of this Global Note has occurred and, in either case, payment in full of the amount of principal falling due with all accrued interest thereon has not been made to the bearer in accordance with the terms of this Global Note on the due date for payment,

	then the Issuer hereby irrevocably agrees that if it does not make the required delivery of such Definitive Notes by 6.00 p.m. (London time) on the day on which the relevant notice period expires or, as the case may be, the thirtieth day after the day on which such Permanent Global Note becomes due to be exchanged, and, in the case of (a) above, such note is not duly redeemed (or the funds required for such redemption are not available to the Fiscal Agent for the purposes of effecting such redemption and remain available for such purpose) by 6.00 p.m. (London time) on the thirtieth day

	after the day on which such Note became so exchangeable then each Holder or its successors or assigns may, without the consent and to the exclusion of the bearer hereof, file any claim, take any action or institute any proceedings to enforce, directly against the Issuer, the obligation of the Issuer hereunder to pay any amount due in respect of each Note represented by this Permanent Global Note which is credited to such Holder's securities account with a clearing agent as fully as though such Note were evidenced by a Definitive Note without the production of this Permanent Global Note, provided that the bearer hereof shall not theretofore have filed a claim, taken action or instituted proceedings to enforce the same in respect of such Note. The face amount of this Permanent Global Note shall be reduced by the face amount, if any, of each Note represented hereby in respect of which full settlement has occurred as a result of any such claim, action or proceeding by such relevant account holders or their successors or assigns.

8.	WRITING DOWN

	On each occasion on which:

	8.1	Payment of principal: a payment of principal is made in respect of this Global Note;

	8.2	Definitive Notes: Definitive Notes are delivered; or

	8.3	Cancellation: Notes represented by this Global Note are to be cancelled in accordance with Condition 10(i) (Redemption and Purchase - Cancellation),

	the Issuer shall procure that (a) the amount of such payment and the aggregate principal amount of such Notes and (b) the remaining principal amount of this Global Note (which shall be the previous principal amount hereof less the aggregate of the amounts referred to in (a) above) are noted in Schedule 1 (Payments, Exchanges against Temporary Global Note, Delivery of Definitive Notes and Cancellation of Notes) hereto, whereupon the principal amount of this Global Note shall for all purposes be as most recently so noted.

9.	WRITING UP

	If this Global Note was originally issued in exchange for part only of a temporary global note representing the Notes, then, if at any time any further portion of such temporary global note is exchanged for an interest in this Global Note, the principal amount of this Global Note shall be increased by the amount of such further portion, and the Issuer shall procure that the principal amount of this Global Note (which shall be the previous principal amount hereof plus the amount of such further portion) is noted in Schedule 1 (Payments, Exchanges against Temporary Global Note, Delivery of Definitive Notes and Cancellation of Notes) hereto, whereupon the principal amount of this Global Note shall for all purposes be as most recently so noted.

10.		PAYMENTS

		All payments in respect of this Global Note shall be made against presentation and (in the case of payment of principal of the Notes in full with all interest accrued on the Notes) surrender of this Global Note at the Specified Office of any Paying Agent and shall be effective to satisfy and discharge the corresponding liabilities of the Issuer in respect of the Notes. On each occasion on which a payment of interest is made in respect of this Global Note, the Issuer shall procure that the same is noted in Schedule 1 (Payments, Exchanges against Temporary Global Note, Delivery of Definitive Notes and Cancellation of Notes) hereto.

11.		CONDITIONS APPLY

		Until this Global Note has been exchanged as provided herein or cancelled in accordance with the Agency Agreement, the bearer of this Global Note shall be subject to the Conditions and, subject as otherwise provided herein, shall be entitled to the same rights and benefits under the Conditions as if the bearer were the holder of Definitive Notes and any related Coupons and Talons in the smallest Specified Denomination and in an aggregate principal amount equal to the principal amount of this Global Note.

12.		EXERCISE OF PUT OPTION

		In order to exercise the option contained in Condition 10(e) (Redemption at the option of Noteholders) (the "Put Option"), the bearer of this Global Note must, within the period specified in the Conditions for the deposit of the relevant Note and Put Option Notice, give written notice of such exercise to the Fiscal Agent specifying the principal amount of Notes in respect of which the Put Option is being exercised. Any such notice shall be irrevocable and may not be withdrawn.

13.		EXERCISE OF CALL OPTION

		In connection with an exercise of the option contained in Condition 10(e) (Redemption at the option of the Issuer) in relation to some only of the Notes, this Global Note may be redeemed in part in the principal amount specified by the Issuer in accordance with the Conditions and the Notes to be redeemed will not be selected as provided in the Conditions.

14.		NOTICES

		Notwithstanding Condition 19 (Notices), while all the Notes are represented by this Global Note (or by this Global Note and a temporary global note) and this Global Note is (or this Global Note and a temporary global note are) deposited with a depositary or a common depositary for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system, notices to Noteholders may be given by delivery of the relevant notice to Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system and, in any case, such notices shall be deemed to have been given to the Noteholders in accordance with the Condition 19 (Notices) on the date of delivery to Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system; provided, however, that, so long as the Notes are listed on the

	Luxembourg Stock Exchange and its rules so require, notices will also be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxemburger Wort).

15.	REDENOMINATION

	If the Notes are redenominated pursuant to Condition 22 (Redenomination), then following redenomination:

	15.1	Denominations: if Definitive Notes are required to be issued, they shall be issued at the expense of the Issuer in the denominations of euro 0.01, euro 1,000, euro 10,000, euro 100,000 and such other denominations as the Fiscal Agent shall determine and notify to the Noteholders; and

	15.2	Calculation of Interest: the amount of interest due in respect of Notes represented by this Global Note will be calculated by reference to the aggregate principal amount of such Notes and the amount of such payment shall be rounded down to the nearest euro 0.01.

16.	AUTHENTICATION

	This Global Note shall not be valid for any purpose until it has been authenticated for and on behalf of Deutsche Bank AG London as fiscal agent.

17.	GOVERNING LAW

	THIS GLOBAL NOTE IS GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE, LAWS OF THE STATE OF NEW YORK.

18.	The Issuer of this Global Note is [Heller Financial, Inc./Heller Financial Canada, Ltd.], which is not an authorised institution or a European authorised institution (as such terms are defined in the Banking Act 1987 (Exempt Transactions) Regulations 1997). Repayment of the principal and payment of any interest or premium in connection with this Note has [not] been guaranteed [by Heller Financial, Inc.] which is not an authorised institution or a European Authorised institution (as such terms are defined in the Banking Act 1987 (Exempt Transactions) Regulations 1997).²

² Insert if the issue proceeds are accepted in the UK.

	AS WITNESS the [manual/facsimile] signature of a duly authorised person on behalf of the Issuer.

	[HELLER FINANCIAL, INC./HELLER FINANCIAL CANADA, LTD.]



	By¹ : ......................................................... [manual or facsimile signature] (duly authorised)	By² : ......................................................... [manual or facsimile signature] (duly authorised)



	ISSUED on the Issue Date

	AUTHENTICATED for and on behalf of Deutsche Bank AG London as fiscal agent without recourse, warranty or liability


	By: ......................................................... [manual signature] (duly authorised)





¹ In the case where Heller Financial, Inc. is the Issuer. ² In the case where Heller Financial Canada, Ltd. is the Issuer.

[FORM OF NOTATION RELATING TO GUARANTEE]

[GUARANTEE]

Heller Financial, Inc. (and any successor of Heller Financial, Inc.) has unconditionally and absolutely guaranteed, to the extent set forth in, and subject to the provisions in the Amended and Restated Agency Agreement (the "Agency Agreement"), the due and punctual payment of principal and interest on this Note and any other amounts due and payable under the Agency Agreement and hereunder of Heller Financial Canada, Ltd. and further agrees to pay any and all expenses (including, without limitation, all fees and disbursements of counsel) which may be paid or incurred by a Noteholder in enforcing its rights under the Guarantee. In case of the failure of Heller Financial Canada, Ltd. punctually to perform or make any such payment, the Guarantor hereby agrees to cause such payment and performance to be made punctually.

The obligations of the Guarantor to the Noteholders pursuant to the Guarantee and the Agency Agreement are expressly set forth in Clause 17 of the Agency Agreement and reference is hereby made to the Agency Agreement for the precise terms of the Guarantee. The Guarantor has the right under Condition 25, at any time, to substitute itself for Heller Canada as issuer and principal obligor under this Note. Capitalised terms used herein and not defined herein have the meanings ascribed thereto in the Agency Agreement.


HELLER FINANCIAL, INC.


By: [manual/facsimile signature] (duly authorised)

SCHEDULE 1

PAYMENTS , EXCHANGES AGAINST TEMPORARY GLOBAL NOTE , DELIVERY OF DEFINITIVE
NOTES AND
CANCELLATION OF NOTES

Date of payment,
exchange, delivery or
cancellation

Amount of
interest then paid

Amount of
principal then
paid

Principal amount
of Temporary
Global Note then
exchanged

Aggregate principal
amount of Definitive
Notes then delivered

Aggregate principal
amount of Notes then
cancelled

New principal amount
of this Global Note

Authorised
signature

SCHEDULE 2

TERMS AND CONDITIONS OF THE NOTES

1. Introduction

(a) Programme: Heller Financial, Inc. ("Heller'') and Heller Financial Canada, Ltd. ("Heller Canada'') have established a Euro Medium-Term Note Programme (the " Programme'') for the issuance of up to U.S.$2,000,000,000 aggregate principal amount of notes (the "Notes''). Notes issued by Heller Canada will be guaranteed by Heller in its capacity as guarantor (the "Guarantor'').

(b) Issuer: In these Conditions, "Issuer'' means, in relation to any Notes or Tranche (as defined below) or Series (as defined below) of any Notes, the issuer of such Notes or of such Tranche or such Series as identified in the Pricing Supplement (as defined below) relating thereto being either (i) Heller or (ii) Heller Canada.

(c) Pricing Supplement: Notes issued under the Programme are issued in series (each a "Series'') and each Series may comprise one or more tranches (each a "Tranche'') of Notes. Each Tranche is the subject of a pricing supplement (the " Pricing Supplement'') which supplements these terms and conditions (the "Conditions''). The terms and conditions applicable to any particular Tranche of Notes are these Conditions as supplemented, amended and/or replaced by the relevant Pricing Supplement. In the event of any inconsistency between these Conditions and the relevant Pricing Supplement, the relevant Pricing Supplement shall prevail.

(d) Agency Agreement: The Notes are the subject of an amended and restated issue and paying agency agreement dated 26 October 2000 (as amended or supplemented from time to time, the "Agency Agreement'') between Heller, Heller Canada, Deutsche Bank AG London as fiscal agent (the "Fiscal Agent'', which expression includes any successor fiscal agent appointed from time to time in connection with the Notes) and the paying agent named therein (together with the Fiscal Agent, the "Paying Agents'', which expression includes any successor or additional paying agents appointed from time to time in connection with the Notes).

(e) The Notes: All subsequent references in these Conditions to "Notes'' are to the Notes which are the subject of the relevant Pricing Supplement. Copies of the relevant Pricing Supplement are available free of charge by holders of the Notes ("Noteholders'') during normal business hours at the Specified Office of the Fiscal Agent and the Paying Agent in Luxembourg, the initial Specified Offices of which are set out below.

(f) The Guarantee: Notes issued by Heller Canada will have the benefit of a guarantee (the "Guarantee'') given by Heller which is contained in the Agency Agreement. The Guarantee contains provisions which enable Noteholders to take action directly against the Guarantor.

(g) Summaries: Certain provisions of these Conditions are summaries of the Agency Agreement and are subject to its detailed provisions. Noteholders and the holders of the

	related interest coupons, if any, (the "Couponholders'' and the "Coupons'', respectively) are bound by, and are deemed to have notice of, all the provisions of the Agency Agreement applicable to them. Copies of the Agency Agreement are available for Noteholders during normal business hours at the Specified Offices (as defined in the Agency Agreement) of each of the Paying Agents, the initial Specified Offices of which are set out below.

2.	Interpretation

(a)	Definitions: In these Conditions the following expressions have the following meanings:

	"Accrual Yield'' has the meaning given in the relevant Pricing Supplement;

	"Additional Business Centre(s)'' means the city or cities specified as such in the relevant Pricing Supplement;

	"Additional Financial Centre(s)'' means the city or cities specified as such in the relevant Pricing Supplement;

	"Business Day'' means:

	(i)	in relation to any sum payable in euro, a TARGET Settlement Day and a day on which commercial banks and foreign exchange markets settle payments generally in each (if any) Additional Business Centre; and

	(ii)	in relation to any sum payable in a currency other than euro, a day on which commercial banks and foreign exchange markets settle payments generally in the Principal Financial Centre of the relevant currency and in each (if any) Additional Business Centre;

	"Business Day Convention'', in relation to any particular date, has the meaning given in the relevant Pricing Supplement and, if so specified in the relevant Pricing Supplement, may have different meanings in relation to different dates and, in this context, the following expressions shall have the following meanings:

	(i)	"Following Business Day Convention'' means that the relevant date shall be postponed to the first following day that is a Business Day;

	(ii)	"Modified Following Business Day Convention'' or "Modified Business Day Convention'' means that the relevant date shall be postponed to the first following day that is a Business Day unless that day falls in the next calendar month in which case that date will be the first preceding day that is a Business Day;

	(iii)	"Preceding Business Day Convention'' means that the relevant date shall be brought forward to the first preceding day that is a Business Day;

	(iv)	"FRN Convention'', "Floating Rate Convention'' or "Eurodollar Convention'' means that each relevant date shall be the date which numerically corresponds to the preceding such date in the calendar month which is the number of months

	specified in the relevant Pricing Supplement as the Specified Period after the calendar month in which the preceding such date occurred provided, however, that:

	(A)	if there is no such numerically corresponding day in the calendar month in which any such date should occur, then such date will be the last day which is a Business Day in that calendar month;


	(B)	if any such date would otherwise fall on a day which is not a Business Day, then such date will be the first following day which is a Business Day unless that day falls in the next calendar month, in which case it will be the first preceding day which is a Business Day; and


	(C)	if the preceding such date occurred on the last day in a calendar month which was a Business Day, then all subsequent such dates will be the last day which is a Business Day in the calendar month which is the specified number of months after the calendar month in which the preceding such date occurred; and


(v)	"No Adjustment'' means that the relevant date shall not be adjusted in accordance with any Business Day Convention;


"Calculation Agent'' means the Fiscal Agent or such other Person specified in the relevant Pricing Supplement as the party responsible for calculating the Rate(s) of Interest and Interest Amount(s) and/or such other amount(s) as may be specified in the relevant Pricing Supplement;


"Consolidated Net Tangible Assets'' means the total of all assets reflected on a consolidated balance sheet of Heller and its consolidated Subsidiaries, prepared in accordance with generally accepted accounting principles, at their net book values (after deducting related depreciation, depletion, amortisation and all other valuation reserves which, in accordance with such principles, should be set aside in connection with the business conducted), but excluding goodwill, unamortised debt discount and all other like segregated intangible assets, and amounts on the asset side of such balance sheet for capital stock of Heller, all as determined in accordance with such principles, less the aggregate of the current liabilities of Heller and its consolidated Subsidiaries reflected on such balance sheet, all as determined in accordance with such principles. For purposes of this definition, "current liabilities'' includes all indebtedness for money borrowed, incurred, issued, assumed or guaranteed by Heller and its consolidated Subsidiaries, credit balances of factoring clients and other payables and accruals, in each case payable on demand or due within one year of the date of determination of Consolidated Net Tangible Assets, all as reflected on such consolidated balance sheet of Heller and its consolidated Subsidiaries, prepared in accordance with generally accepted accounting principles;


"Coupon Sheet'' means, in respect of a Note, a coupon sheet relating to the Note;

		"Day Count Fraction'' means (subject as provided in Condition 6 (Fixed Rate Note Provisions) and Condition 7 (Floating Rate Note and Index-Linked Interest Note Provision s)), in respect of the calculation of an amount for any period of time (the "Calculation Period''), such day count fraction as may be specified in these Conditions or the relevant Pricing Supplement and:


		(i)	if "Actual/365'' or "Actual/Actual-ISDA'' is so specified, means the actual number of days in the Calculation Period divided by 365 (or, if any portion of the Calculation Period falls in a leap year, the sum of (A) the actual number of days in that portion of the Calculation Period falling in a leap year divided by 366 and (B) the actual number of days in that portion of the Calculation Period falling in a non-leap year divided by 365);


		(ii)	if "Actual/365 (Fixed)'' is so specified, means the actual number of days in the Calculation Period divided by 365;


		(iii)	if "Actual/360'' is so specified, means the actual number of days in the Calculation Period divided by 360;


		(iv)	if "30/360'' is so specified, means the number of days in the Calculation Period divided by 360 (the number of days to be calculated on the basis of a year of 360 days with 12 30-day months (unless (i) the last day of the Calculation Period is the 31st day of a month but the first day of the Calculation Period is a day other than the 30th or 31st day of a month, in which case the month that includes that last day shall not be considered to be shortened to a 30-day month, or (ii) the last day of the Calculation Period is the last day of the month of February, in which case the month of February shall not be considered to be lengthened to a 30-day month)); and


		(v)	if "30E/360'' or "Eurobond Basis'' is so specified means, the number of days in the Calculation Period divided by 360 (the number of days to be calculated on the basis of a year of 360 days with 12 30-day months, without regard to the date of the first day or last day of the Calculation Period unless, in the case of the final Calculation Period, the date of final maturity is the last day of the month of February, in which case the month of February shall not be considered to be lengthened to a 30-day month);


		"Early Redemption Amount (Tax)'' means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Pricing Supplement;


		"Early Termination Amount'' means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, these Conditions or the relevant Pricing Supplement;


		"Extraordinary Resolution'' has the meaning given in the Agency Agreement;

		"Final Redemption Amount'' means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Pricing Supplement;


		"Finance Business'' means the business of making loans, extending credit or providing financial accommodations to any person and such activities as may be incidental thereto, including, but not limited to, the purchase of obligations growing out of the sale or lease of all types of consumer, commercial and industrial property; the making of loans to individuals and business enterprises including the extension of wholesale or floor plan accommodations to permit distributors and dealers to carry inventories for resale; factoring; leasing of tangible personal property to others; mortgage brokerage and servicing; and other business of a similar character to the extent that other companies similarly situated, within the limits of sound trade practice, may have heretofore engaged or may hereafter engage in such other business;


		"Fixed Coupon Amount'' has the meaning given in the relevant Pricing Supplement;


		"Indebtedness'' means any money borrowed and all liabilities, whether issued or assumed, in respect of money borrowed, whether or not evidenced by notes, debentures or other like written obligations to pay money, and all guarantees in respect of money borrowed by third persons, whether or not evidenced by notes, debentures or other like written obligations of such third persons to pay money;


		"Interest Amount'' means, in relation to a Note and an Interest Period, the amount of interest payable in respect of that Note for that Interest Period;


		"Interest Commencement Date'' means the Issue Date of the Notes or such other date as may be specified as the Interest Commencement Date in the relevant Pricing Supplement;


		"Interest Determination Date'' has the meaning given in the relevant Pricing Supplement;


		"Interest Payment Date'' means the date or dates specified as such in, or determined in accordance with the provisions of, the relevant Pricing Supplement and, if a Business Day Convention is specified in the relevant Pricing Supplement:


		(i)	as the same may be adjusted in accordance with the relevant Business Day Convention; or


		(ii)	if the Business Day Convention is the FRN Convention, Floating Rate Convention or Eurodollar Convention and an interval of a number of calendar months is specified in the relevant Pricing Supplement as being the Specified Period, each of such dates as may occur in accordance with the FRN Convention, Floating Rate Convention or Eurodollar Convention at such Specified Period of calendar months following the Interest Commencement Date (in the case of the first Interest Payment Date) or the previous Interest Payment Date (in any other case);

		"Interest Period'' means each period beginning on (and including) the Interest Commencement Date or any Interest Payment Date and ending on (but excluding) the next Interest Payment Date;


		"ISDA Definitions'' means the 2000 ISDA Definitions (as supplemented, amended or updated as at the date of issue of the first Tranche of the Notes of the relevant Series (as specified in the relevant Pricing Supplement) as published by the International Swaps and Derivatives Association, Inc. (formerly the International Swap Dealers Association, Inc.));


		"Issue Date'' has the meaning given in the relevant Pricing Supplement;


		"Lien'' means any mortgage, charge, pledge or other security interest including without limitation, anything analogous to any of the foregoing under the laws of any jurisdiction;


		"Margin'' has the meaning given in the relevant Pricing Supplement;


		"Maturity Date'' has the meaning given in the relevant Pricing Supplement;


		"Maximum Redemption Amount'' has the meaning given in the relevant Pricing Supplement;


		"Minimum Redemption Amount'' has the meaning given in the relevant Pricing Supplement;


		"Non-United States Person'' means a person who is not a United States Person;


		"Optional Redemption Amount (Call)'' means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Pricing Supplement;


		"Optional Redemption Amount (Put)'' means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Pricing Supplement;


		"Optional Redemption Date (Call)'' has the meaning given in the relevant Pricing Supplement;


		"Optional Redemption Date (Put)'' has the meaning given in the relevant Pricing Supplement;


		"Participating Member State'' means a Member State of the European Communities which adopts the euro as its lawful currency in accordance with the Treaty;


		"Payment Business Day'' means:


		(i)	if the currency of payment is euro, any day which is:

	(A)	a day on which banks in the relevant place of presentation are open for presentation or payment of bearer debt securities and for dealings in foreign currencies; and


	(B)	in the case of payment by transfer to an account, a TARGET Settlement Day and a day on which dealings in foreign currencies may be carried on in each (if any) Additional Financial Centre; o r


(ii)	if the currency of payment is not euro, any day which is:


	(A)	a day on which banks in the relevant place of presentation are open for presentation or payment of bearer debt securities and for dealings in foreign currencies; and


	(B)	in the case of payment by transfer to an account, a day on which dealings in foreign currencies may be carried on in the Principal Financial Centre of the currency of payment and in each (if any) Additional Financial Centre;


"Person'' means any individual, company, corporation, firm, partnership, limited liability company, joint venture, association, trust, organisation, state or agency of a state or other entity, whether or not having separate legal personality;


"Principal Financial Centre'' means, in relation to any currency, the principal financial centre for that currency provided, however, that:


(i)	in relation to euro, it means the principal financial centre of such Member State of the European Communities as is selected (in the case of a payment) by the payee or (in the case of a calculation) by the Calculation Agent; and


(ii)	in relation to Australian dollars, it means either Sydney or Melbourne and, in relation to New Zealand dollars, it means either Wellington or Auckland; in each case as is selected (in the case of a payment) by the payee or (in the case of a calculation) by the Calculation Agent;


"Put Option Notice'' means a notice which must be delivered to a Paying Agent by any Noteholder wanting to exercise a right to redeem a Note at the option of the Noteholder;


"Put Option Receipt'' means a receipt issued by a Paying Agent to a depositing Noteholder upon deposit of a Note with such Paying Agent by any Noteholder wanting to exercise a right to redeem a Note at the option of the Noteholder;


"Rate of Interest'' means the rate or rates (expressed as a percentage per annum) of interest payable in respect of the Notes specified in the relevant Pricing Supplement, or calculated or determined in accordance with the provisions of, these Conditions and/or the relevant Pricing Supplement;


"Redemption Amount'' means, as appropriate, the Final Redemption Amount, the Early Redemption Amount (Tax), the Optional Redemption Amount (Call), the Optional

		Redemption Amount (Put), the Early Termination Amount or such other amount in the nature of a redemption amount as may be specified in, or determined in accordance with the provisions of, the relevant Pricing Supplement;


		"Reference Banks'' has the meaning given in the relevant Pricing Supplement or, if none, four (or if the Principal Financial Centre is Helsinki, five) major banks selected by the Calculation Agent in the market that is most closely connected with the Reference Rate;


		"Reference Price'' has the meaning given in the relevant Pricing Supplement;


		"Reference Rate'' has the meaning given in the relevant Pricing Supplement;


		"Relevant Date'' means, in relation to any payment, whichever is the later of (a) the date on which the payment in question first becomes due and (b) if the full amount payable has not been received in the Principal Financial Centre of the currency of payment by the Fiscal Agent on or prior to such due date, the date on which (the full amount having been so received) notice to that effect has been given to the Noteholders;


		"Relevant Financial Centre'' has the meaning given in the relevant Pricing Supplement;


		"Relevant Indebtedness'' means any Indebtedness which is in the form of or represented by any bond, note, debenture, debenture stock, loan stock, certificate or other instrument which is, or is capable of being, listed, quoted or traded on any stock exchange or in any securities market (including, without limitation, any over-the-counter market);


		"Relevant Jurisdiction'' means, where the Issuer is Heller, the United States and, where the Issuer is Heller Canada, each of the United States and Canada;


		"Relevant Screen Page'' means the page, section or other part of a particular information service (including, without limitation, the Reuters Markets 3000 and Bridge/Telerate) specified as the Relevant Screen Page in the relevant Pricing Supplement, or such other page, section or other part as may replace it on that information service or such other information service, in each case, as may be nominated by the Person providing or sponsoring the information appearing there for the purpose of displaying rates or prices comparable to the Reference Rate;


		"Relevant Time'' has the meaning given in the relevant Pricing Supplement;


		"Reserved Matter'' means any proposal to change any date fixed for payment of principal or interest in respect of the Notes, to reduce the amount of principal or interest payable on any date in respect of the Notes, to alter the method of calculating the amount of any payment in respect of the Notes or the date for any such payment, to change the currency of any payment under the Notes or to change the quorum requirements relating to meetings or the majority required to pass an Extraordinary Resolution;

		"Restricted Subsidiary'' means a Subsidiary of Heller or of a Restricted Subsidiary, including any of their respective Subsidiaries:

		(i)	which is primarily engaged in the Finance Business;

		(ii)	which conducts such Finance Business primarily in the United States; and

		(iii)	of which Heller and/or a Restricted Subsidiary owns 51 per cent, or more of each class of its Voting Stock;

		"SBA'' means the United States Small Business Administration or any successor thereto;

		"Senior Debt'' means all indebtedness of Heller or (where the Issuer of the Notes is Heller Canada) Heller Canada, present and future, which is not by its terms made subordinate or junior in right of payment with respect to the general assets of Heller or (where the Issuer of the Notes is Heller Canada) Heller Canada to any other Indebtedness of Heller or (where the Issuer of the Notes is Heller Canada) Heller Canada;

		"Specified Currency'' has the meaning given in the relevant Pricing Supplement;

		"Specified Denomination(s)'' has the meaning given in the relevant Pricing Supplement;

		"Specified Office'' of any Agent means the office specified against its name in Schedule 2 of the Agency Agreement or, in the case of any Agent not originally party thereto, specified by notice to the Issuer in accordance with the Agency Agreement;

		"Specified Period'' has the meaning given in the relevant Pricing Supplement;

		"Subsidiary'' means any corporation of which more than 50 per cent, of the Voting Stock, other than directors' qualifying shares (if any) shall at the time be owned by Heller and/or one or more Subsidiaries and (where the Issuer of the Notes is Heller Canada), Heller Canada and/or one or more Subsidiaries;

		"Talon'' means a talon for further Coupons;

		"TARGET Settlement Day'' means any day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET) System is open;

		"TEFRA D Rules'' means the United States Treasury Regulation §1.163-5(c)(2)(i)(D);

		"Treaty'' means the Treaty establishing the European Community, as amended by the Treaty on European Union;

		"Voting Stock'' means capital stock the holders of which have general voting power under ordinary circumstances to elect at least a majority of the directors of a corporation, provided that capital stock which carries only a right to vote conditional on

	the happening of an event shall not be considered voting stock, whether or not such event has happened;

	"United States'' means the United States of America, including the States and the District of

	Columbia, its territories, its possessions and other areas within its jurisdiction;

	"United States Person'' means:

(a)	for purposes of Regulation S under the Securities Act:

	(i)	any natural person resident in the United States;

	(ii)	any partnership or corporation organized or incorporated under the laws of the United States;

	(iii)	any estate of which any executor or administrator is a United States Person;

	(iv)	any trust of which any trustee is a United States Person;

	(v)	any agency or branch of a foreign entity located in the United States;

	(vi)	any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a United States Person;

	(vii)	any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated or (if an individual) resident in the United States; and

	(viii)	Any partnership or corporation if (A) organized or incorporated under the laws of any foreign jurisdiction; and (B) formed by a United States Person principally for the purpose of investing in securities not registered under the Securities Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a) under the Securities Act) who are not natural persons, estates or trusts;

(b)	for purposes of U.S. federal tax laws:

	(i)	any individual who is a citizen or resident of the United States;

	(ii)	any corporation, partnership or other entity created or organised in or under the laws of the United States;

	(iii)	any estate if the income of such estate falls within the federal income tax jurisdiction of the United States regardless of the source of such income; and

	(iv)	any trust if a United States court is able to exercise primary supervision over its administration and one or more United States persons have the authority to control all of its substantial decisions; and

"Zero Coupon Note'' means a Note specified as such in the relevant Pricing Supplement.

(b)	Interpretation: In these Conditions:

	(i)	if the Notes are Zero Coupon Notes, references to Coupons and Couponholders are not applicable;

	(ii)	if Talons are specified in the relevant Pricing Supplement as being attached to the Notes at the time of issue, references to Coupons shall be deemed to include references to Talons;

	(iii)	if Talons are not specified in the relevant Pricing Supplement as being attached to the Notes at the time of issue, references to Talons are not applicable;

	(iv)	any reference to principal shall be deemed to include the Redemption Amount, any additional amounts in respect of principal which may be payable under Condition 12 (Taxatio n), any premium payable in respect of a Note and any other amount in the nature of principal payable pursuant to these Conditions;

	(v)	any reference to interest shall be deemed to include any additional amounts in respect of interest which may be payable under Condition 12 (Taxation) and any other amount in the nature of interest payable pursuant to these Conditions;

	(vi)	references to Notes being "outstanding'' shall be construed in accordance with the Agency Agreement; and

	(vii)	if an expression is stated in Condition 2(a) (Definitions) to have the meaning given in the relevant Pricing Supplement, but the relevant Pricing Supplement gives no such meaning or specifies that such expression is "not applicable'', then such expression is not applicable to the Notes.

3.	Denomination and Title

	The Notes are in bearer form in the Specified Denomination(s) with Coupons and, if specified in the relevant Pricing Supplement, Talons attached at the time of issue. In the case of a Series of Notes with more than one Specified Denomination, Notes of one Specified Denomination will not be exchangeable for Notes of another Specified Denomination. Title to the Notes and the Coupons will pass by delivery. The holder of any Note or Coupon shall (except as otherwise required by law) be treated as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any other interest therein, any writing thereon or any notice of any previous loss or theft thereof) and no Person shall be liable for so treating such holder.

4.	Status

(a)	The Notes: The Notes and Coupons constitute direct, unconditional, unsubordinated and unsecured obligations of the Issuer and will at all times rank pari passu among themselves and at least pari passu with all other, present and future, unsecured and

	unsubordinated indebtedness and monetary obligations of the Issuer, including (without limitation) all other Senior Debt, save for such obligations as may be preferred by provisions of law that are both mandatory and of general application.

(b)	The Guarantee: Where the Issuer of the Notes is Heller Canada, Heller will unconditionally and irrevocably guarantee the due and punctual payment of the principal of, premium, if any, and interest on the Notes issued by Heller Canada, when and as the same shall become due and payable, whether at maturity, upon redemption or otherwise. The Guarantee constitutes a direct, unconditional and unsecured obligation of Heller, and will rank pari passu with all other, present and future, unsecured and unsubordinated indebtedness and monetary obligations of Heller including (without limitation) all other Senior Debt, save for such obligations as may be preferred by provisions of law that are both mandatory and of general application. The Guarantee provides that in the event of a default in payment of principal, premium, if any, or interest on a Note issued by Heller Canada, Noteholders may institute legal proceedings directly against Heller, to enforce the Guarantee without first proceeding directly against Heller Canada.

5.	Negative Pledge

(a)	Heller: So long as any of the Notes remain outstanding, Heller will not, and will not permit any Restricted Subsidiary to create, incur or assume any Lien on property of any character of Heller or any Restricted Subsidiary to secure any Indebtedness unless:

	(i)	the Lien equally and rateably secures the Notes and the Indebtedness; or

	(ii)	the Lien is on property or shares of stock of a corporation at the time the corporation becomes a Restricted Subsidiary or merges into or consolidates with Heller or a Restricted Subsidiary; or

	(iii)	the Lien is on property at the time Heller or a Restricted Subsidiary acquires the property; or

	(iv)	the Lien secures Indebtedness incurred to finance all or part of the purchase price or cost of construction of property of Heller or a Restricted Subsidiary; or

	(v)	the Lien secures Indebtedness of a Restricted Subsidiary owing to Heller or another Restricted Subsidiary; or

	(vi)	the Lien is on property of a person at the time the person transfers or leases all or substantially all of its assets to Heller or a Restricted Subsidiary; or

	(vii)	the Lien is in favour of a government or governmental entity and is for taxes or assessments or secures payments pursuant to a contract or statute; or

	(viii)	the Lien arises out of a judgment, decree or court order or the Lien arises in connection with other proceedings or actions at law or in equity; or

	(ix)	the Lien is on receivables, or cash, deposited or otherwise subjected to a Lien as a basis for the issuance of bankers' acceptances or letters of credit in connection with any financing of customers' operations by Heller or any Restricted Subsidiary; or

	(x)	the Lien is on property (or any receivables arising in connection with the lease thereof) acquired by Heller or a Restricted Subsidiary through repossession, foreclosure or like proceeding and secures Indebtedness incurred at the time of such acquisition or at any time thereafter to finance all or part of the cost of maintenance, improvement or construction relating thereto; or

	(xi)	the Lien is created in favour of the SBA on property owned by a Restricted Subsidiary which is organised as a small business investment company under Title 15, Section 681, of the United States Code; or

	(xii)	the Lien extends, renews or replaces in whole or in part a Lien set forth in sub-paragraphs (i) through (xi) above; or

	(xiii)	the Lien secures Indebtedness of Heller or a Restricted Subsidiary and the sum of the following does not exceed 10 per cent, of Consolidated Net Tangible Assets:

		(A)	such Indebtedness; plus

		(B)	other Indebtedness of Heller and its Restricted Subsidiaries secured by Liens on property of Heller and its Restricted Subsidiaries, excluding Indebtedness secured by a Lien existing as of the Issue Date of the Notes and excluding Indebtedness secured by a Lien permitted by one of subparagraphs (i) through (xii) above.

(b)	Heller Canada: So long as any Note issued by Heller Canada remains outstanding, Heller Canada shall not and shall not permit any of its Subsidiaries to, create or permit to subsist any Lien upon the whole or any part of its present or future undertaking, assets or revenues (including uncalled capital) to secure any Relevant Indebtedness or guarantee of Relevant Indebtedness without (a) at the same time or prior thereto securing the Notes equally and rateably therewith or (b) providing such other security for the Notes as may be approved by an Extraordinary Resolution of Noteholders.

	For the purposes of the Conditions, "guarantee'' means, in relation to any Indebtedness of any Person, any obligation of another Person to pay such Indebtedness including (without limitation):

	(i)	any obligation to purchase such Indebtedness;

	(ii)	any obligation to lend money, to purchase or subscribe shares or other securities or to purchase assets or services in order to provide funds for the payment of such Indebtedness;

	(iii)	any indemnity against the consequences of a default in the payment of such Indebtedness; and

	(iv)	any other agreement to be responsible for such Indebtedness.

6.	Fixed Rate Note Provisions

(a)	Application: This Condition 6 (Fixed Rate Note Provisions) is applicable to the Notes only if the Fixed Rate Note Provisions are specified in the relevant Pricing Supplement as being applicable.

(b)	Accrual of interest: The Notes bear interest from the Interest Commencement Date at the Rate of Interest payable in arrear on each Interest Payment Date, subject as provided in Condition 11 (Payments). Each Note will cease to bear interest from the due date for final redemption unless, upon due presentation, payment of the Redemption Amount is improperly withheld or refused, in which case it will continue to bear interest in accordance with this Condition 6 (Fixed Rate Note Provisions) (as well after as before judgment) until whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Fiscal Agent has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).

(c)	Fixed Coupon Amount: The amount of interest payable in respect of each Note for any Interest Period shall be the relevant Fixed Coupon Amount and, if the Notes are in more than one Specified Denomination, shall be the relevant Fixed Coupon Amount in respect of the relevant Specified Denomination.

(d)	Regular Interest Periods: If all of the Interest Payment Dates fall at regular intervals between the Issue Date and the Maturity Date, then:

	(i)	the Notes shall for the purposes of this Condition 6 be "Regular Interest Period Notes'';

	(ii)	the day and month (but not the year) on which any Interest Payment Date falls shall for the purposes of this Condition 6 (Fixed Rate Note Provisions) bea "Regular Date''; and

	(iii)	each period from and including a Regular Date falling in any year to but excluding the next succeeding Regular Date shall for the purposes of this Condition 6 (Fixed Rate Note Provision s) bea "Regular Period''.

(e)	Irregular first or last Interest Periods: If the Notes would be Regular Interest Period Notes but for the fact that either or both of:

	(i)	the interval between the Issue Date and the first Interest Payment Date; and

	(ii)	the interval between the Maturity Date and the immediately preceding Interest Payment Date is longer or shorter than a Regular Period, then the Notes shall

(h)	Number of days: For the purposes of this Condition 6 (Fixed Rate Note Provisions), unless the Day Count Fraction is specified in the relevant Pricing Supplement as being 30/360 (in which case the provisions of paragraph (g)(i) above shall apply), the number of days in any period shall be calculated on the basis of actual calendar days from and including the first day of the relevant period to but excluding the last day of the relevant period.

	Irregular Interest Periods: If the Notes are not Regular Interest Period Notes and interest is required to be calculated for any period other than an Interest Period, interest shall be calculated on such basis as is described in the relevant Pricing Supplement.

7.	Floating Rate Note and Index-Linked Interest Note Provisions

(a)	Application: This Condition 7 (Floating Rate Note and Index-Linked Interest Note Provisions)is applicable to the Notes only if the Floating Rate Note Provisions or the Index-Linked Interest Note Provisions are specified in the relevant Pricing Supplement as being applicable.

(b)	Accrual of interest: The Notes bear interest from the Interest Commencement Date at the Rate of Interest payable in arrear on each Interest Payment Date, subject as provided in Condition 11 (Payments). Each Note will cease to bear interest from the due date for final redemption unless, upon due presentation, payment of the Redemption Amount is improperly withheld or refused, in which case it will continue to bear interest in accordance with this Condition (as well after as before judgment) until whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Fiscal Agent has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).

(c)	Screen Rate Determination: If Screen Rate Determination is specified in the relevant Pricing Supplement as the manner in which the Rate(s) of Interest is/are to be determined, the Rate of Interest applicable to the Notes for each Interest Period will be determined by the Calculation Agent on the following basis:

	(i)	if the Reference Rate is a composite quotation or customarily supplied by one entity, the Calculation Agent will determine the Reference Rate which appears on the Relevant Screen Page as of the Relevant Time on the relevant Interest Determination Date;

	(ii)	in any other case, the Calculation Agent will determine the arithmetic mean of the Reference Rates which appear on the Relevant Screen Page as of the Relevant Time on the relevant Interest Determination Date;

	(iii)	if, in the case of (i) above, such rate does not appear on that page or, in the case of (ii) above, fewer than two such rates appear on that page or if, in either case, the Relevant Screen Page is unavailable, the Calculation Agent will:

		(A)	request the principal Relevant Financial Centre office of each of the Reference Banks to provide a quotation of the Reference Rate at approximately the Relevant Time on the Interest Determination Date to prime banks in the Relevant Financial Centre interbank market in an amount that is representative for a single transaction in that market at that time; and

		(B)	determine the arithmetic mean of such quotations; and

	(viii)	if fewer than two such quotations are provided as requested, the Calculation Agent will determine the arithmetic mean of the rates (being the nearest to the Reference Rate, as determined by the Calculation Agent) quoted by major banks in the Principal Financial Centre of the Specified Currency, selected by the Calculation Agent, at approximately 11.00 a.m. (local time in the Principal Financial Centre of the Specified Currency) on the first day of the relevant Interest Period for loans in the Specified Currency to leading European banks for a period equal to the relevant Interest Period and in an amount that is representative for a single transaction in that market at that time, and the Rate of Interest for such Interest Period shall be the sum of the Margin and the rate or (as the case may be) the arithmetic mean so determined; provided, however, that if the Calculation Agent is unable to determine a rate or (as the case may be) an arithmetic mean in accordance with the above provisions in relation to any Interest Period, the Rate of Interest applicable to the Notes during such Interest Period will be the sum of the Margin and the rate or (as the case may be) the arithmetic mean last determined in relation to the Notes in respect of the preceding Interest Period.

(d)	ISDA Determination: If ISDA Determination is specified in the relevant Pricing Supplement as the manner in which the Rate(s) of Interest is/are to be determined, the Rate of Interest applicable to the Notes for each Interest Period will be the sum of the Margin and the relevant ISDA Rate where "ISDA Rate'' in relation to any Interest Period means a rate equal to the Floating Rate (as defined in the ISDA Definitions) that would be determined by the Calculation Agent under an interest rate swap transaction if the Calculation Agent were acting as Calculation Agent for that interest rate swap transaction under the terms of an agreement incorporating the ISDA Definitions and under which:

	(i)	the Floating Rate Option (as defined in the ISDA Definitions) is as specified in the relevant Pricing Supplement;

	(ii)	the Designated Maturity (as defined in the ISDA Definitions) is a period specified in the relevant Pricing Supplement; and

	(iii)	the relevant Reset Date (as defined in the ISDA Definitions) is either (A) if the relevant Floating Rate Option is based on the London inter-bank offered rate (LIBOR) for a currency, the first day of that Interest Period or (B) in any other case, as specified in the relevant Pricing Supplement.

(e)		Index-Linked Interest: If the Index-Linked Interest Note Provisions are specified in the relevant Pricing Supplement as being applicable, the Rate(s) of Interest applicable to the Notes for each Interest Period will be determined in the manner specified in the relevant Pricing Supplement.

(f)		Maximum or Minimum Rate of Interest: If any Maximum Rate of Interest or Minimum Rate of Interest is specified in the relevant Pricing Supplement, then the Rate of Interest shall in no event be greater than the maximum or be less than the minimum so specified.

(g)		Calculation of Interest Amount: The Calculation Agent will, as soon as practicable after the time at which the Rate of Interest is to be determined in relation to each Interest Period, calculate the Interest Amount payable in respect of each Note for such Interest Period. The Interest Amount will be calculated by applying the Rate of Interest for such Interest Period to the principal amount of such Note during such Interest Period and multiplying the product by the relevant Day Count Fraction.

(h)		Calculation of other amounts: If the relevant Pricing Supplement specifies that any other amount is to be calculated by the Calculation Agent, the Calculation Agent will, as soon as practicable after the time or times at which any such amount is to be determined, calculate the relevant amount. The relevant amount will be calculated by the Calculation Agent in the manner specified in the relevant Pricing Supplement.

(i)		Publication: The Calculation Agent will cause each Rate of Interest and Interest Amount determined by it, together with the relevant Interest Payment Date, and any other amount(s) required to be determined by it together with any relevant payment date(s) to be notified to the Paying Agents and each stock exchange (if any) on which the Notes are then listed as soon as practicable after such determination but (in the case of each Rate of Interest, Interest Amount and Interest Payment Date) in any event not later than the first day of the relevant Interest Period. Notice thereof shall also promptly be given to the Noteholders. The Calculation Agent will be entitled to amend any Interest Amount (on the basis of the foregoing provisions) without notice in the event of an extension or shortening of the relevant Interest Period.

(j)		Notifications etc: All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of this Condition by the Calculation Agent will (in the absence of manifest error) be binding on the Issuer and (where the Issuer of the Notes is Heller Canada) the Guarantor, the Paying Agents, the Noteholders and the Couponholders and (subject as aforesaid) no liability to any such Person will attach to the Calculation Agent in connection with the exercise or non-exercise by it of its powers, duties and discretions for such purposes.

8.		Zero Coupon Note Provisions

(a)		Application: This Condition 8 (Zero Coupon Note Provisions) is applicable to the Notes only if the Zero Coupon Note Provisions are specified in the relevant Pricing Supplement as being applicable.

(b)	Late payment on Zero Coupon Notes: If the Redemption Amount payable in respect of any Zero Coupon Note is improperly withheld or refused, the Redemption Amount shall thereafter be an amount equal to the sum of:

	(i)	the Reference Price; and

	(ii)	the product of the Accrual Yield (compounded annually) being applied to the Reference Price from (and including) the Issue Date to (but excluding) whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Fiscal Agent has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).

9.	Dual Currency Note Provisions

(a)	Application: This Condition 9 (Dual Currency Note Provisions) is applicable to the Notes only if the Dual Currency Note Provisions are specified in the relevant Pricing Supplement as being applicable.

(b)	Rate of Interest: If the rate or amount of interest falls to be determined by reference to an exchange rate, the rate or amount of interest payable shall be determined in the manner specified in the relevant Pricing Supplement.

10.	Redemption and Purchase

(a)	Scheduled redemption: Unless previously redeemed, or purchased and cancelled, the Notes will be redeemed at their Final Redemption Amount on the Maturity Date, subject as provided in Condition 11 (Payments).

(b)	Redemption for tax reasons:

	(i)	The Notes may be redeemed at the option of the Issuer in whole, but not in part, at any time, on giving not less than 30 or more than 60 days' notice in accordance with Condition 19 (Notic es) (which notice shall be irrevocable), at their Early Redemption Amount (Tax), together with accrued interest, if any, if the Issuer has or will become obligated to pay additional interest on such Notes pursuant to Condition 12 (Taxation) or (where the Issuer of the Notes is Heller Canada) the Guarantor would be unable for reasons outside its control to procure payment by the Issuer and in making payment itself would be required to pay such additional amounts as a result of any change in, or amendment to, the laws (or any regulations or rulings promulgated thereunder) of any Relevant Jurisdiction or any change in the application or official interpretation of such laws, regulations or rulings, which change or amendment becomes effective on or after the date on which any person (including any person acting as underwriter, broker or dealer) agrees to purchase any of such Notes pursuant to their original issuance, and such obligation cannot be avoided by the Issuer or, if applicable, the Guarantor taking reasonable measures available to it; provided that no such

			notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer or, as the case may be, the Guarantor would be obligated to pay such additional interest were a payment in respect of the Notes then due. Prior to the publication of any notice of redemption pursuant to this Condition 10 (Redemption and Purchase), the Issuer or, if applicable, the Guarantor shall deliver to the Fiscal Agent (A) a certificate signed by an officer of the Issuer or, if applicable, the Guarantor stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred and (B) a legal opinion, from lawyers of recognised standing to the Issuer or, if applicable, the Guarantor to the effect that the Issuer or, if applicable, the Guarantor has or will become obligated to pay such additional interest as a result of such change or amendment.

		(ii)	Unless otherwise specified in the Pricing Supplement, if Heller shall determine that any payment made outside the United States by Heller (in its capacity as either Issuer or Guarantor) or any of its Paying Agents in respect of any Note, Coupon or Talon, if any, that is not a Note to which the Floating Rate Note Provisions, as specified in the relevant Pricing Supplement apply (an "Affected Note") would, under any present or future laws or regulations of the United States, be subject to any certification, documentation, information or other reporting requirement of any kind, the effect of which requirement is the disclosure to Heller (in its relevant capacity as aforesaid), any Paying Agent or any governmental authority of the nationality, residence or identity of a beneficial owner of such Affected Note that is a Non-United States Person (other than such a requirement (A) that would not be applicable to a payment made by Heller (in its relevant capacity as aforesaid) or any one of its Paying Agents (1) directly to the beneficial owner or (2) to a custodian, nominee or other agent of the beneficial owner, or (B) that can be satisfied by such custodian, nominee or agent certifying to the effect that the beneficial owner is a Non-United States Person, provided that, in any case referred to in clause (A)(1) or (B), payment by the custodian, nominee or agent to the beneficial owner is not otherwise subject to any such requirement), then either the Issuer (if, but only if the Issuer is Heller) shall elect to redeem such Affected Notes in whole, but not in part, at their Early Redemption Amount (Tax), together with accrued interest, if any, or if the conditions of the next succeeding paragraph are satisfied, to pay the additional interest specified in such paragraph or if the Issuer is Heller Canada, and the conditions of the next succeeding paragraph are satisfied, Heller (in its capacity as Guarantor) shall pay the additional interest specified in such paragraph. Heller (in its relevant capacity as aforesaid) shall make such determination as soon as practicable and the Issuer shall publish prompt notice thereof (the "Determination Notice"), stating the effective date of such certification, documentation, information or other reporting requirement, whether the Affected Notes shall be redeemed or that the additional interest specified in the next succeeding paragraph shall be paid and (if applicable) the last date by which the redemption of the

			Affected Notes must take place (the "Redemption Date"), as provided in the next succeeding sentence. If any Affected Notes are to be redeemed pursuant to this paragraph, the redemption shall take place on such date, not later than one year after the publication of the Determination Notice, as the Issuer shall specify by notice given to the Fiscal Agent at least 60 days before the Redemption Date. Notice of such redemption shall be given to the holders of the Affected Notes not more than 60 days or less than 30 days prior to the Redemption Date. Notwithstanding the foregoing, the Affected Notes shall not be so redeemed if Heller (in its relevant capacity as aforesaid) shall subsequently determine, not less than 30 days prior to the Redemption Date, that subsequent payments on the Affected Notes would not be subject to any such certification, documentation, information or other reporting requirement, in which case the Issuer shall publish prompt notice of such subsequent determination, and any earlier redemption notice given pursuant to this paragraph shall be revoked and of no further effect. Prior to the publication of any Determination Notice pursuant to this paragraph, Heller shall deliver to the Fiscal Agent (I) a certificate signed by an officer of Heller (in its relevant capacity as aforesaid) stating that Heller (in its relevant capacity as aforesaid) is entitled to make such determination and setting forth a statement of facts showing that the conditions precedent to the obligation of the Issuer to redeem the Affected Notes or to pay the additional interest specified in the next succeeding paragraph have occurred and (II) a legal opinion, from lawyers of recognised standing in the United States, to the effect that such conditions have occurred.

			If and so long as the certification, documentation, information or other reporting requirement referred to in the preceding paragraph would be fully satisfied by payment of a back-up withholding tax or similar charge, Heller (in its capacity as either Issuer or Guarantor) may elect to pay as additional interest such amounts as may be necessary so that every net payment made outside the United States following the effective date of such requirement by Heller (in its relevant capacity as aforesaid) or any of its Paying Agents in respect of any Affected Note of which the beneficial owner is a Non-United States Person (but without any requirement that the nationality, residence or identity of such beneficial owner be disclosed to Heller (in its relevant capacity as aforesaid), any Paying Agent or any governmental authority), after deduction or withholding for or on account of such back-up withholding tax or similar charge (other than a backup withholding tax or similar charge that (i) would not be applicable in the circumstances referred to in the parenthetical clause of the first sentence of the preceding paragraph or (ii) is imposed as a result of presentation of any such Affected Note for payment more than 15 days after the Relevant Date), will not be less than the amount provided in any such Affected Note to be then due and payable. If Heller (in its relevant capacity as aforesaid) elects to pay additional interest pursuant to this paragraph, then the Issuer shall have the right to redeem the Affected Notes at any time in whole, but not in part, at their Early Redemption Amount (Tax) together with accrued interest, if any, subject to the provisions of the last three

		sentences of the immediately preceding paragraph. If Heller (in its relevant capacity as aforesaid) elects to pay additional interest pursuant to this paragraph and the condition specified in the first sentence of this paragraph should no longer be satisfied, then the Issuer shall redeem the Affected Notes in whole, but not in part, at their Early Redemption Amount (Tax), together with accrued interest, if any, subject to the provisions of the last three sentences of the immediately preceding paragraph. The foregoing sentence shall not apply to any Notes issued by Heller Canada. Any redemption payments made by Heller (in its relevant capacity as aforesaid) pursuant to the two immediately preceding sentences shall be subject to the continuing obligation of Heller (in its relevant capacity as aforesaid) to pay additional interest pursuant to this paragraph. If the Affected Notes are to be redeemed pursuant to this paragraph, the redemption shall take place on such date, not later than one year after publication of the notice of redemption, as the Issuer shall specify by notice to the Fiscal Agent at least 60 days prior to the Redemption Date.

(c)	Redemption at the option of the Issuer: If the Call Option is specified in the relevant Pricing Supplement as being applicable, the Notes may be redeemed at the option of the Issuer in whole or, if so specified in the relevant Pricing Supplement, in part on any Optional Redemption Date (Call) at the relevant Optional Redemption Amount (Call) on the Issuer's giving not less than 30 nor more than 60 days' notice to the Noteholders (which notice shall be irrevocable and shall oblige the Issuer to redeem the Notes or, as the case may be, the Notes specified in such notice on the relevant Optional Redemption Date (Call) at the Optional Redemption Amount (Call) plus accrued interest (if any) to such date).

(d)	Partial redemption: If the Notes are to be redeemed in part only on any date in accordance with Condition 10(c) (Redemption at the option of the Issuer), the Notes to be redeemed shall be selected by the drawing of lots in such place as the Fiscal Agent approves and in such manner as the Fiscal Agent considers appropriate, subject to compliance with applicable law and the rules of each stock exchange on which the Notes are then listed, and the notice to Noteholders referred to in Condition 10(c) (Redemption at the option of the Issuer) shall specify the serial numbers of the Notes so to be redeemed. If any Maximum Redemption Amount or Minimum Redemption Amount is specified in the relevant Pricing Supplement, then the Optional Redemption Amount (Call) shall in no event be greater than the maximum or be less than the minimum so specified.

(e)	Redemption at the option of Noteholders: If the Put Option is specified in the relevant Pricing Supplement as being applicable, the Issuer shall, at the option of the holder of any Note, redeem such Note on the Optional Redemption Date (Put) specified in the relevant Put Option Notice at the relevant Optional Redemption Amount (Put) together with interest (if any) accrued to such date. In order to exercise the option contained in this Condition 10(e), the holder of a Note must, not less than 30 nor more than 60 days before the relevant Optional Redemption Date (Put), deposit with any Paying Agent such Note together with all unmatured Coupons relating thereto and a duly completed

	Put Option Notice in the form obtainable from any Paying Agent. The Paying Agent with which a Note is so deposited shall deliver a duly completed Put Option Receipt to the depositing Noteholder. No Note, once deposited with a duly completed Put Option Notice in accordance with this Condition 10(e) (Redemption at the option of Noteholders), may be withdrawn; provided, however, that if, prior to the relevant Optional Redemption Date (Put), any such Note becomes immediately due and payable or, upon due presentation of any such Note on the relevant Optional Redemption Date (Put), payment of the redemption moneys is improperly withheld or refused, the relevant Paying Agent shall mail notification thereof to the depositing Noteholder at such address as may have been given by such Noteholder in the relevant Put Option Notice and shall hold such Note at its Specified Office for collection by the depositing Noteholder against surrender of the relevant Put Option Receipt. For so long as any outstanding Note is held by a Paying Agent in accordance with this Condition 10(e) (Redemption at the option of Noteholders), the depositor of such Note and not such Paying Agent shall be deemed to be the holder of such Note for all purposes.

(f)	No other redemption: The Issuer shall not be entitled to redeem the Notes otherwise than as provided in paragraphs (a) to (e) above.

(g)	Early redemption of Zero Coupon Notes: Unless otherwise specified in the relevant Pricing Supplement, the Redemption Amount payable on redemption of a Zero Coupon Note at any time before the Maturity Date shall be an amount equal to the sum of:

	(i)	the Reference Price; and

	(ii)	the product of the Accrual Yield (compounded annually) being applied to the Reference Price from (and including) the Issue Date to (but excluding) the date fixed for redemption or (as the case may be) the date upon which the Note becomes due and payable.

	Where such calculation is to be made for a period which is not a whole number of years, the calculation in respect of the period of less than a full year shall be made on the basis of such Day Count Fraction as may be specified in the Pricing Supplement for the purposes of this Condition 10(g) (Early Redemption of Zero Coupon Notes) or, if none is so specified, a Day Count Fraction of 30E/360.

(h)	Purchase: The Issuer or (where the Issuer of the Notes is Heller Canada) the Guarantor or any of their respective Subsidiaries may at any time purchase Notes in the open market or otherwise and at any price, provided that all unmatured Coupons are purchased therewith.

(i)	Cancellation: All Notes so redeemed or purchased by the Issuer or (where the Issuer of the Notes is Heller Canada) the Guarantor or any of their respective Subsidiaries and any unmatured Coupons attached to or surrendered with them shall be cancelled and may not be reissued or resold.

11.	Payments

(a)	Principal: Payments of principal shall be made only against presentation and (provided that payment is made in full) surrender of Notes at the Specified Office of any Paying Agent outside the United States by cheque drawn in the currency in which the payment is due on, or by transfer to an account denominated in that currency (or, if that currency is euro, any other account to which euro may be credited or transferred) and maintained by the payee with, a bank in the Principal Financial Centre of that currency.

(b)	Interest: Payments of interest shall, subject to paragraph (h) below, be made only against presentation and (provided that payment is made in full) surrender of the appropriate Coupons (if any) at the Specified Office of any Paying Agent outside the United States in the manner described in paragraph (a) above.

(c)	Payments in New York City: In respect of Notes denominated in U.S. dollars only, payments of principal or interest may be made at the Specified Office of a Paying Agent in New York City if (i) the Issuer has appointed Paying Agents outside the United States with the expectation that such Paying Agents will be able to make payment of the full amount of principal and interest on the Notes in the currency in which the payment is due when due, (ii) payment of the full amount of such principal or interest at the offices of all such Paying Agents is illegal or effectively precluded by exchange controls or other similar restrictions and (iii) payment is permitted by applicable United States law (including the TEFRA D Rules, if applicable). Notwithstanding the foregoing, payments in U.S. dollars may be made by transfer to an account maintained by the payee outside the United States, and payments will be made by transfer to an account maintained by the payee in the United States only if the payee is an exempt recipient described in U.S. Treasury regulation section 1.6049-4(c)(1)(ii) and is also a financial institution described in U.S. Treasury regulation section 1.163-5(c)(2)(v)(B)(2) that is receiving such payment as a step in the clearance of funds and such interest is promptly credited to an account maintained outside the United States for such financial institution or for persons for which the financial institution has collected such interest. Payments by cheque will in no event be mailed to a United States address.

(d)	Payments subject to fiscal laws: All payments in respect of the Notes are subject in all cases to any applicable fiscal or other laws and regulations, but without prejudice to the provisions of Condition 12 (Taxation). No commissions or expenses shall be charged to the Noteholders or Couponholders in respect of such payments.

(e)	Deductions for unmatured Coupons: If the relevant Pricing Supplement specifies that the Fixed Rate Note Provisions are applicable and a Note is presented without all unmatured Coupons relating thereto:

	(i)	if the aggregate amount of the missing Coupons is less than or equal to the amount of principal due for payment, a sum equal to the aggregate amount of the missing Coupons will be deducted from the amount of principal due for payment; provided, however, that if the gross amount available for payment is less than the amount of principal due for payment, the sum deducted will be that proportion of

		the aggregate amount of such missing Coupons which the gross amount actually available for payment bears to the amount of principal due for payment;

	(ii)	if the aggregate amount of the missing Coupons is greater than the amount of principal due for payment:

		(A)	so many of such missing Coupons shall become void (in inverse order of maturity) as will result in the aggregate amount of the remainder of such missing Coupons (the "Relevant Coupons") being equal to the amount of principal due for payment; provided, however, that where this sub-paragraph would otherwise require a fraction of a missing Coupon to become void, such missing Coupon shall become void in its entirety; and

		(B)	a sum equal to the aggregate amount of the Relevant Coupons (or, if less, the amount of principal due for payment) will be deducted from the amount of principal due for payment; provided, however, that, if the gross amount available for payment is less than the amount of principal due for payment, the sum deducted will be that proportion of the aggregate amount of the Relevant Coupons (or, as the case may be, the amount of principal due for payment) which the gross amount actually available for payment bears to the amount of principal due for payment.

	Each sum of principal so deducted shall be paid in the manner provided in paragraph (a) above against presentation and (provided that payment is made in full) surrender of the relevant missing Coupons.

(f)	Unmatured Coupons void: If the relevant Pricing Supplement specifies that this Condition 11(f) is applicable or that the Floating Rate Note Provisions or the Index-Linked Interest Note Provisions are applicable, on the due date for final redemption of any Note or early redemption of such Note pursuant to Condition 10(b) (Redemption for tax reasons), Condition 10(c) (Redemption at the option of the Issuer), Condition 10(d) (Partial Redemption), Condition 10(e) (Redemption at the option of Noteholders), or Condition 13 (Events of Defaul t), all unmatured Coupons relating thereto (whether or not still attached) shall become void and no payment will be made in respect thereof.

(g)	Payments on business days: If the due date for payment of any amount in respect of any Note or Coupon is not a Payment Business Day in the place of presentation, the holder shall not be entitled to payment in such place of the amount due until the next succeeding Payment Business Day in such place and shall not be entitled to any further interest or other payment in respect of any such delay.

(h)	Payments other than in respect of matured Coupons: Payments of interest other than in respect of matured Coupons shall be made only against presentation of the relevant Notes at the Specified Office of any Paying Agent outside the United States (or in New York City if permitted by paragraph (c) above).

(i)	Partial payments: If a Paying Agent makes a partial payment in respect of any Note or Coupon presented to it for payment, such Paying Agent will endorse thereon a statement indicating the amount and date of such payment.

(j)	Exchange of Talons: On or after the maturity date of the final Coupon which is (or was at the time of issue) part of a Coupon Sheet relating to the Notes, the Talon forming part of such Coupon Sheet may be exchanged at the Specified Office of the Fiscal Agent or the Paying Agent with its Specified Office in Luxembourg for a further Coupon Sheet (including, if appropriate, a further Talon but excluding any Coupons in respect of which claims have already become void pursuant to Condition 14 (Prescription)). Upon the due date for redemption of any Note, any unexchanged Talon relating to such Note shall become void and no Coupon will be delivered in respect of such Talon.

12.	Taxation

(a)	The Issuer or (where the Issuer of the Notes is Heller Canada) the Guarantor will, subject to the exceptions and limitations set forth below, pay as additional interest to the holder of any Note, Coupon or Talon such amounts as may be necessary so that every net payment on such Note, Coupon or Talon, after deduction or withholding for or on account of any present or future tax, assessment or other governmental charge imposed upon or as a result of such payment to the Relevant Jurisdiction, will not be less than the amount provided in such Note, Coupon or Talon to be then due and payable.

(b)	Exceptions Relating to United States Taxes: However, Heller (in its capacity either as Issuer or Guarantor) will not be required to make any such payment of additional interest for or on account of:

	(i)	any tax, assessment or other government charge that would not have been imposed but for (A) the existence of any present or former connection between a Noteholder or Couponholder (or between a fiduciary, settlor or beneficiary of, or a person holding a power over, such holders, if such holder is an estate or a trust, or a member or shareholder of such holder, if such holder is a partnership or corporation) and the United States, including, without limitation, such holder (or such fiduciary, settlor, beneficiary, person holding a power, member or shareholder) being or having been a citizen or resident thereof or being or having been engaged in trade of business or present therein or having or having had a permanent establishment therein or (B) such Noteholder or Couponholder's past or present status as a personal holding company, foreign personal holding company, foreign private foundation or other foreign tax-exempt organisation with respect to the United States, passive foreign investment company, controlled foreign corporation or as a corporation that accumulates earnings to avoid United States federal income tax; or

	(ii)	any estate, inheritance, gift, sales, transfer, excise, wealth or personal property tax or any similar tax, assessment or other governmental charge; or

	(iii)	any tax, assessment or other governmental charge that would not have been imposed but for:

		(A)	the presentation by the holder of a Note, Coupon or Talon for payment more than 10 days after the Relevant Date; or

		(B)	a change in law, regulation or administrative or judicial interpretation that becomes effective more than 10 days after the payment becomes due or is duly provided for, whichever occurs later; or

	(iv)	any tax, assessment or other governmental charge that is payable otherwise than by deduction or withholding from a payment on a Note, Coupon or Talon; or

	(v)	any tax, assessment or other governmental charge required to be deducted or withheld by any Paying Agent from a payment on a Note, Coupon or Talon, if such payment can be made without such deduction or withholding by any other Paying Agent; or

	(vi)	any tax, assessment or other governmental charge that would not have been imposed but for a failure to comply with (A) certification, documentation, information or other reporting requirement concerning the nationality, residence, identity or connection with the United States of the holder or the beneficial owner of a Note, Coupon or Talon if, without regard to any tax treaty, such compliance is required by statute or regulation of the United States as a precondition to relief or exemption from such tax, assessment or other governmental charge (including backup withholding) or (B) any other certification, documentation, reporting or other similar requirements under United States income tax laws or regulations that would establish entitlement to otherwise applicable relief or exemption from such tax, assessment or other governmental charge; or

	(vii)	any tax, assessment or other governmental charge imposed on a holder that actually owns or is deemed to own 10 per cent, or more of the combined voting power of all classes of stock of Heller or that is a controlled foreign corporation relating to Heller through stock ownership; or

	(viii)	a payment on a Note, Coupon or Talon to a holder that is a fiduciary or partnership or other than the sole beneficial owner of such payment to the extent a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner would not have been entitled to the additional interest had such beneficiary, settlor, member or beneficial owner been the holder of such Note, Coupon or Talon; or

	(ix)	any combination of sub-paragraphs (i) to (viii) above.

(c)	Exceptions Relating to Canadian Taxes: However (where the Issuer of the Notes is Heller Canada) Heller Canada will not be required to make any such payment of additional interest for or on account of:

	(x)	any tax, assessment or other government charge that is payable by reason of the Noteholder or the Couponholder having any present or former connection with Canada otherwise than merely by the holding or use or ownership or deemed holding or use outside Canada or ownership as a non-resident of Canada of such Note or Coupon or otherwise than merely by reason of the fact that payments in respect of the Guarantee are, or for purposes of taxation are deemed to be, derived from sources in, or are secured in, the United States; or

	(xi)	any tax, assessment or other government charge that is payable by reason of the Noteholder or the Couponholder being a person with whom Heller Canada is not dealing at arm's length (within the meaning of the Income Tax Act (Canada)).

13.	Events of Default

(a)	If any of the following events occurs:

	(i)	Non-payment of principal: the Issuer defaults in the payment of principal or premium, if any, on any Note at its maturity, upon redemption (if applicable) or otherwise; or

	(ii)	Nonpayment of interest: the Issuer defaults in the payment of any interest upon any Note or any payment with respect to the Coupons, if any, when and as it becomes payable, and continuance of such default for a period of 30 days; or

	(iii)	Breach of other obligations: the Issuer or the Guarantor (if applicable) defaults in the performance or observance of any covenant or agreement in these Conditions, the Guarantee (if applicable) or in the Agency Agreement and such default continues for a period of 60 days; or

	(iv)	Cross-default:

		(A)	an event of default with respect to any other Series of Notes; or

		(B)	a default under any bond, debenture, note or other evidence of Indebtedness issued, assumed or guaranteed by Heller or (where the Issuer of the Notes is Heller Canada) Heller Canada having unpaid principal in excess of U.S.$2,000,000 (or its equivalent in other currencies) or under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any such Indebtedness, whether such Indebtedness now exists or shall hereafter be created, which Event of Default or default, as the case may be, in either such case, shall have resulted in such other Series of Notes or such Indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without such other Series of Notes or such Indebtedness having been discharged or such declaration of acceleration having been rescinded or annulled within a period of 60 days after there shall have been given, by registered or certified mail, to Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada by the

		holders of at least 25 per cent. in aggregate principal amount of the outstanding Notes of such Series, a written notice specifying such Event of Default or default, as the case may be, and requiring Heller or (where the Issuer of the Notes is Heller Canada) Heller Canada to cause such Indebtedness to be discharged or cause such acceleration to be rescinded or annulled and stating that such notice is a "Notice of Default" hereunder, unless at the end of such 60-day period and thereafter the Event of Default or default is being contested in good faith by Heller or (where the Issuer of the Notes is Heller Canada) Heller Canada; or

(v)	Insolvency of Heller: the entry of a decree or order for relief in respect of Heller by a court having jurisdiction in the premises in an involuntary case under the U.S. Federal bankruptcy laws, as now or hereafter constituted, or any other applicable U.S. Federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee or sequestrator (or other similar official) of Heller or substantially all of its property, or ordering the winding up or liquidation of its affairs; or

(vi)	Voluntary insolvency of Heller: the commencement by Heller of a voluntary case under the U.S. Federal bankruptcy laws, as now or hereafter constituted, or any other applicable U.S. Federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by it to the entry of an order for relief in an involuntary case under any such law or to the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of Heller or for substantially all of its property, or the making by it of an assignment for the benefit of its creditors; or

(vii)	Guarantee not in force: where the Issuer of the Notes is Heller Canada, the Guarantee is not (or is claimed not to be by Heller) in full force and effect; or

(viii)	Insolvency of Heller Canada: where the Issuer of the Notes is Heller Canada, (i) Heller Canada or any of its Subsidiaries becomes insolvent or is unable to pay its debts as they fall due, (ii) an administrator or liquidator of Heller Canada or any of its Subsidiaries or the whole or a substantial part of the undertaking, assets and revenues of Heller Canada or any of its Subsidiaries is appointed (or application for any such appointment is made), (iii) Heller Canada or any of its Subsidiaries takes any action for a readjustment or deferment of any of its obligations or makes a general assignment or an arrangement or composition with or for the benefit of its creditors or declares a moratorium in respect of any of its Indebtedness or any guarantee of any Indebtedness given by it or (iv) Heller Canada or any of its Subsidiaries ceases or threatens to cease to carry on all or any substantial part of its business (otherwise than, in the case of a Subsidiary of Heller or a Subsidiary of Heller Canada, for the purposes of or pursuant to an amalgamation, reorganisation or restructuring whilst solvent); or

(ixi)	Winding up of Heller Canada: where the Issuer of the Notes is Heller Canada, an order is made or an effective resolution is passed for the winding up, liquidation

		or dissolution of Heller Canada or any of its Subsidiaries (otherwise than, in the case of a Subsidiary of Heller Canada or a Subsidiary of Heller, for the purposes of or pursuant to an amalgamation, reorganisation or restructuring whilst solvent); or

	(x)	Other specified events: the occurrence of any other event of default with respect to the Notes of such Series as provided in the relevant Pricing Supplement.

	No event of default with respect to Notes of a particular Series shall constitute an event of default with respect to Notes of any other Series, except with respect to an event of default under subparagraphs (iii), (iv), (v), (vi), (viii) and (ix) of this Condition 13(a) (Events of Default).

(b)	If an event of default with respect to the Notes of a particular Series at the time outstanding occurs and is continuing, then in every such case the holders of not less than 25 per cent. in principal amount of the outstanding Notes of such Series may declare the Early Redemption Amount (Default) (being the amount so specified in the applicable Pricing Supplement and if no such amount is specified, the principal amount thereof) and all accrued but unpaid interest on the Notes to be due and payable immediately, by a notice in writing to Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada and to the Fiscal Agent, and upon any such declaration such Early Redemption Amount (Default) (or other specified amount) and interest shall become immediately due and payable. Upon payment of such amounts in the currency in which such Notes are denominated, all obligations of Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada in respect of payment of principal and interest on such Notes shall terminate.

	At any time after such a declaration of acceleration of the Notes of a Series has been made and before a judgment or decree for payment has been obtained, the holders of a majority in principal amount of the outstanding Notes of such Series, by written notice to Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada may, on behalf of all Noteholders of such Series, waive such event of default and rescind and annul such declaration and its consequences if:

	(i)	Heller or Heller Canada has paid or deposited with the Fiscal Agent a sum in the currency in which such Notes are denominated sufficient to pay:

		(A)	all overdue installments of interest on such Notes or all overdue payments with respect to any related Coupons;

		(B)	the amounts of principal (and premium, if any, on) such Notes that have become due otherwise than by such declaration of acceleration and interest thereon at the rate prescribed therefor in these Conditions;

		(C)	to the extent that payment of such interest is lawful, interest upon overdue installments of interests on each such Note or upon overdue payments on any Coupons at the rate or rates prescribed therefor in such Notes or Coupons; and

		(D)	all sums paid or advanced by the Paying Agents and the reasonable compensation, expenses, disbursements and advances of the Paying Agents; provided, however, that all sums payable under this sub-paragraph (D) shall be paid in U.S. dollars; and

	(ii)	all events of default with respect to such Notes, other than the non-payment of principal of and interest on the Notes that have become due solely by such declaration of acceleration, have been cured or waived as provided in Condition 17 (Meeting of Noteholders and Waiver). No such recission and waiver shall affect any subsequent default or impair any right consequent thereon.

	For all purposes under these Conditions, if a portion of the principal of any Zero Coupon Note shall have been accelerated and declared due and payable pursuant to the provisions hereof, then, from and after such declaration, unless such declaration has been rescinded and annulled, the principal amount of such Zero Coupon Note shall be deemed, for all purposes hereunder, to be such portion of the principal thereof as shall be due and payable as a result of such acceleration, and payment of such portion of the principal thereof as shall be due and payable as a result of such acceleration, together with interest, if any, thereon and all other amounts owing thereunder, shall constitute payment in full of such Zero Coupon Note.

14.	Prescription

	Claims for principal shall become void unless the relevant Notes are presented for payment within ten years of the appropriate Relevant Date. Claims for interest shall become void unless the relevant Coupons are presented for payment within five years of the appropriate Relevant Date.

15.	Replacement of Notes and Coupons

	If any Note or Coupon is lost, stolen, mutilated, defaced or destroyed, it may be replaced at the Specified Office of the Fiscal Agent (and, if the Notes are then listed on any stock exchange whose rules requires the appointment of a Paying Agent in any particular place, the Paying Agent having its Specified Office in the place required by the rules of such stock exchange), subject to all applicable laws and stock exchange requirements, upon payment by the claimant of the expenses incurred in connection with such replacement and on such terms as to evidence, security, indemnity and otherwise as the Issuer may reasonably require. Mutilated or defaced Notes or Coupons must be surrendered before replacements will be issued.

16.	Agents

	In acting under the Agency Agreement and in connection with the Notes and the Coupons, the Paying Agents act solely as agents of Heller and Heller Canada and do not assume any obligations towards or relationship of agency or trust for or with any of the Noteholders or Couponholders.

	The initial Paying Agents and their initial Specified Offices are listed below. The initial Calculation Agent (if any) is specified in the relevant Pricing Supplement. Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada reserve the right at any time to vary or terminate the appointment of any Paying Agent and to appoint a successor fiscal agent or Calculation Agent and additional or successor paying agents; provided, however, that Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada shall at all times maintain:

	(i)	a Fiscal Agent; and

	(ii)	if a Calculation Agent is specified in the relevant Pricing Supplement, a Calculation Agent;

	(iii)	if and for so long as the Notes are listed on any stock exchange whose rules requires the appointment of a Paying Agent in any particular place, a Paying Agent having its Specified Office in the place required by the rules of such stock exchange; and

	(iv)	a Paying Agent in a place of payment located outside the United States.

	Notice of any change in any of the Paying Agents, the Calculation Agent or in their respective Specified Offices shall promptly be given to the Noteholders in accordance with Condition 19 (Notice s).

17.	Meetings of Noteholders and Waiver

(a)	Meetings of Noteholders: The Agency Agreement contains provisions for convening meetings of Noteholders to consider matters relating to the Notes, including the modification of any provision of these Conditions. Any such modification may be made if sanctioned by an Extraordinary Resolution. Such a meeting may be convened by the Issuer and, if applicable, the Guarantor (in such case acting together) and shall be convened by it upon the request in writing of Noteholders holding not less than one-tenth of the aggregate principal amount of the outstanding Notes. The quorum at any meeting convened to vote on an Extraordinary Resolution will be two or more Persons holding or representing one more than half of the aggregate principal amount of the outstanding Notes or, at any adjourned meeting, two or more Persons being or representing Noteholders whatever the principal amount of the Notes held or represented; provided, however, that Reserved Matters may only be sanctioned by an Extraordinary Resolution passed at a meeting of Noteholders at which two or more Persons holding or representing not less than three-quarters or, at any adjourned meeting, one quarter of the aggregate principal amount of the outstanding Notes form a quorum. Any Extraordinary Resolution duly passed at any such meeting shall be binding on all the Noteholders and Couponholders, whether present or not.

(b)	Modification: The Notes and these Conditions may be amended without the consent of the Noteholders or the Couponholders to correct a manifest error. In addition, the parties to the Agency Agreement may agree to modify any provision thereof (including, without limitation, the Guarantee), but the Issuer and, if applicable, the Guarantor (in

		such case acting together) shall not agree, without the consent of the Noteholders, to any such modification unless it is of a formal, minor or technical nature, it is made to correct a manifest error or it is, in the opinion of such parties, not materially prejudicial to the interests of the Noteholders.

18.		Further Issues

		The Issuer may from time to time, without the consent of the Noteholders or the Couponholders, create and issue further notes having the same terms and conditions as the Notes in all respects (or in all respects except for the first payment of interest) so as to form a single series with the Notes.

19.		Notices

		Notices to the Noteholders shall be valid if published in a leading English language daily newspaper published in London (which is expected to be the Financial Times) and, if the Notes are listed on the Luxembourg Stock Exchange and the rules of that exchange so require, a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxemburger Wort) or in either case, if such publication is not practicable, in a leading English language daily newspaper having general circulation in Europe. Any such notice shall be deemed to have been given on the date of first publication (or if required to be published in more than one newspaper, on the first date on which publication shall have been made in all the required newspapers). Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the Noteholders.

20.		Currency Indemnity

		If any sum due from the Issuer in respect of the Notes or the Coupons or any order or judgment given or made in relation thereto has to be converted from the currency (the "first currency") in which the same is payable under these Conditions or such order or judgment into another currency (the "second currency") for the purpose of (a) making or filing a claim or proof against the Issuer, (b) obtaining an order or judgment in any court or other tribunal or (c) enforcing any order or judgment given or made in relation to the Notes, the Issuer shall indemnify each Noteholder, on the written demand of such Noteholder addressed to the Issuer and delivered to the Issuer or to the Specified Office of the Fiscal Agent, against any loss suffered as a result of any discrepancy between (i) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (ii) the rate or rates of exchange at which such Noteholder may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof.

		This indemnity constitutes a separate and independent obligation of the Issuer and shall give rise to a separate and independent cause of action.

21.	Rounding

	For the purposes of any calculations referred to in these Conditions (unless otherwise specified in these Conditions or the relevant Pricing Supplement), (a) all percentages resulting from such calculations will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point (with 0.000005 per cent. being rounded up to 0.00001 per cent.), (b) all United States dollar amounts used in or resulting from such calculations will be rounded to the nearest cent (with one half cent being rounded up), (c) all Japanese Yen amounts used in or resulting from such calculations will be rounded downwards to the next lower whole Japanese Yen amount, and (d) all amounts denominated in any other currency used in or resulting from such calculations will be rounded to the nearest two decimal places in such currency, with 0.005 being rounded upwards.

22.	Redenomination

(a)	Application: This Condition 22 (Redenomination) is applicable to the Notes only if it is specified in the relevant Pricing Supplement as being applicable.

(b)	Notice of redenomination: If the country of the Specified Currency is, becomes, or announces its intention to become, a Participating Member State, the Issuer may, without the consent of the Noteholders and Couponholders, on giving at least 30 days' prior notice to the Noteholders and the Paying Agents, designate a date (the "Redenomination Date"), being an Interest Payment Date under the Notes falling on or after the date on which such country becomes a Participating Member State.

(c)	Redenomination: Notwithstanding the other provisions of these Conditions, with effect from the Redenomination Date:

	(i)	the Notes shall be deemed to be redenominated into euro in the denomination of euro 0.01 with a principal amount for each Note equal to the principal amount of that Note in the Specified Currency, converted into euro at the rate for conversion of such currency into euro established by the Council of the European Union pursuant to the Treaty (including compliance with rules relating to rounding in accordance with European Community regulations); provided, however, that, if the Issuer determines, with the agreement of the Fiscal Agent that then market practice in respect of the redenomination into euro 0.01 of internationally offered securities is different from that specified above, such provisions shall be deemed to be amended so as to comply with such market practice and the Issuer shall promptly notify the Noteholders and Couponholders, each stock exchange (if any) on which the Notes are then listed and the Paying Agents of such deemed amendments;

	(ii)	if Notes have been issued in definitive form:

		(A)	all unmatured Coupons denominated in the Specified Currency (whether or not attached to the Notes) will become void with effect from the date (the "Euro Exchange Date") on which the Issuer gives notice (the "Euro

			Exchange Notice") to the Noteholders that replacement Notes and Coupons denominated in euro are available for exchange (provided that such Notes and Coupons are available) and no payments will be made in respect thereof;

		(B)	the payment obligations contained in all Notes denominated in the Specified Currency will become void on the Euro Exchange Date but all other obligations of the Issuer thereunder (including the obligation to exchange such Notes in accordance with this Condition 22 (Redenomination)) shall remain in full force and effect; and

		(C)	new Notes and Coupons denominated in euro will be issued in exchange for Notes and Coupons denominated in the Specified Currency in such manner as the Fiscal Agent may specify and as shall be notified to the Noteholders in the Euro Exchange Notice; and

	(iii)	all payments in respect of the Notes (other than, unless the Redenomination Date is on or after such date as the Specified Currency ceases to be a sub-division of the euro, payments of interest in respect of periods commencing before the Redenomination Date) will be made solely in euro by cheque drawn on, or by credit or transfer to a euro account (or any other account to which euro may be credited or transferred) maintained by the payee with, a bank in the principal financial centre of any Member State of the European Communities.

(d)	Interest: Following redenomination of the Notes pursuant to this Condition 22 (Redenomination), where Notes have been issued in definitive form, the amount of interest due in respect of the Notes will be calculated by reference to the aggregate principal amount of the Notes presented (or, as the case may be, in respect of which Coupons are presented) for payment by the relevant holder.

(e)	Interest Determination Date: If the Floating Rate Note Provisions are specified in the relevant Pricing Supplement as being applicable and Screen Rate Determination is specified in the relevant Pricing Supplement as the manner in which the Rate(s) of Interest is/are to be determined, with effect from the Redenomination Date the Interest Determination Date shall be deemed to be the second TARGET Settlement Day before the first day of the relevant Interest Period.

23.	Consolidation or Merger

	So long as any of the Notes remain outstanding, Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada shall not consolidate with or merge into any other corporation or convey, transfer or lease its properties and assets substantially as an entirety to any person, unless:

	(i)	the corporation formed by such consolidation or into which Heller and/or (where the Issuer of the Notes is Heller Canada) Heller Canada is merged or the person which shall have acquired by conveyance or transfer, or which leases, such properties and assets is a corporation, partnership, limited liability company or

		trust organised and existing under the laws of any Relevant Jurisdiction, and shall assume payment of the principal of, and premium, if any, and interest, if any, under the Notes and, if applicable, the Guarantee and the performance or observance of every covenant to be performed or observed by the Issuer under the Notes;

	(ii)	immediately thereafter, neither an event of default (or event which, with notice or lapse of time, or both, would be such) nor a breach of the Agency Agreement (including, without limitation, where applicable, the Guarantee) shall have occurred and be continuing; and

	(iii)	Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada shall have delivered to the Fiscal Agent (I) a certificate signed by an officer of Heller (in its capacity as either Guarantor or Issuer) and (II) a legal opinion from lawyers of recognised standing in the Relevant Jurisdiction, each stating that such consolidation, merger, conveyance, transfer and/or such lease comply with this Condition 23 (Consolidation or Merger) and that all conditions precedent are satisfied.

	If any such transaction were to occur, then, provided that Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada has complied with the foregoing conditions, Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada would (except in the case of a lease) be discharged from all of its respective obligations and covenants under the Notes, any Coupons and the Agency Agreement (including, without limitation, where applicable, the Guarantee).

24.	Interest Act of Canada Disclosure

	For the purposes of disclosure pursuant to the Interest Act of Canada and not for any other purpose, where in any Note issued by Heller Canada (i) a rate of interest is to be calculated on the basis of a year of 360 days, the yearly rate of interest to which the 360 day rate is equivalent is such rate multiplied by the number of days in the year for which such calculation is made and divided by 360, or (ii) a rate of interest is to be calculated during a leap year, the yearly rate of interest to which such rate is equivalent is such rate multiplied by 366 and divided by 365.

25.	Substitution

(a)	This Condition 25 (Substitution) is applicable solely to Notes issued by Heller Canada.

(b)	By purchasing or otherwise acquiring the Notes or Coupons (or a beneficial interest therein), each Noteholder and Couponholder (including any holder of a beneficial interest therein) shall thereby consent and agree that the Guarantor may, without any further consent or agreement of such Noteholder or Couponholder (including any holder of a beneficial interest therein) be entitled at any time to substitute for Heller Canada itself as principal obligor (the "Substituted Obligor") in respect of all obligations arising from or in connection with the Notes and Coupons provided that:


	(i)	the Fiscal Agent and other Agents under the Agency Agreement:

		(A)	are satisfied that Heller is not in default in the performance or observance of any covenant or agreement in these Conditions, the Guarantee or the Agency Agreement; and

		(B)	agree to the terms of substitution;

	(ii)	the Substituted Obligor shall deliver a notice of substitution (the "Notice of Substitution"), the form of which is set forth in Schedule 6 of the Agency Agreement, and such other agreements or documents, if any, as may then be necessary to give effect to the substitution (the "Documents") and (without limiting the generality of the foregoing) pursuant to which the Substituted Debtor shall undertake in favour of each Noteholder (of Notes issued by Heller Canada) to be bound by the Conditions of such Notes and the Agency Agreement as the issuer and principal obligor in respect of such Notes;

	(iii)	a legal opinion shall have been delivered to the Fiscal Agent (from whom copies will be available to Noteholders) from lawyers of recognised standing confirming that upon the substitution taking place (A) the requirements of this Condition 25 (Substitution), save as to the giving of notice to the Noteholders, have been met, (B) such Notes and the Agency Agreement are legal, valid, binding and enforceable obligations of the Substituted Debtor (subject to all applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and general equitable principles), (C) the Substituted Obligor is validly incorporated under the law of the State of Delaware, United States of America and (D) that the Substituted Obligor has (if necessary) obtained all necessary governmental and regulatory approvals and consents for the substitution and for the entry into and performance of the Documents; and

	(iv)	if the Notes are listed on the Luxembourg Stock Exchange or any other stock exchange, such stock exchange shall have confirmed to Heller and the Fiscal Agent that, after giving effect to such substitution, the Notes shall continue to be listed on such stock exchange.

	The Guarantor hereby represents, warrants, undertakes and agrees that upon such substitution of itself as the Substituted Obligor as described in this Condition 25(b) (Substitutio n), it shall, immediately thereupon (x) be bound by, and shall comply with and fully perform, the Conditions of such Notes as the issuer thereof and principal obligor thereunder, and (y) be bound by, and shall comply with and fully perform, the provisions of the Agency Agreement relating to such Notes as the issuer and principal obligor in respect thereof.

(c)	Upon the execution of the Documents (if any) and the delivery of the legal opinion referred to in paragraph (b) of this Condition 25 (Substitution), the Substituted Obligor shall be deemed to be named in the Notes issued by Heller Canada as the issuer and principal obligor in place of Heller Canada and it shall thereupon assume all of the

	rights and obligations of Heller Canada under the Agency Agreement and (ii) Heller Canada shall be released from all of its obligations under such Notes and the Agency Agreement. References in these Conditions to the Issuer shall from then on be deemed to refer to the Substituted Obligor.

(d)	Notification of any such substitution shall be provided in accordance with Condition 19 (Notices) within 5 days of the execution of such Documents and/or the delivery of the legal opinion referred to in paragraph (b) of this Condition 25 (Substitution).

(e)	Counterparts of the Documents, if any, shall be deposited with and held by the Fiscal Agent for so long as any of such Notes originally issued by Heller Canada remain outstanding and for so long as any claim made against the Substituted Obligor or the Guarantor by any Noteholder or Couponholder (or any holder of a beneficial interest therein) in relation to such Notes or the Documents, if any, shall not have been finally adjudicated, settled or discharged.

26.	Governing Law and Jurisdiction

(a)	Governing law: The Notes and the guarantee are governed by, and shall be construed in accordance with, the laws of the State of New York.

(b)	Jurisdiction: Each of Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada agrees for the benefit of the Noteholders that the courts of the State of New York and the federal courts of the United States in the State of New York, in each case sitting in the Borough of Manhattan in the City of New York, shall have jurisdiction to hear and determine any suit, action or proceedings, and to settle any disputes, which may arise out of or in connection with the Notes (respectively, "Proceedings" and "Disputes") and, for such purposes, irrevocably submits to the jurisdiction of such courts.

(c)	Process agent: Each of Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada agrees that the process by which any Proceedings in New York are begun may be served on it by being delivered to CT Corporation System, 111 Eighth Avenue, New York New York 10011 (in the case of Heller) or to Corporation Service Company at 80 State Street, Albany, New York, 12207 (in the case of Heller Canada) or, if different, its registered office for the time being or at any address of the Issuer in New York. If such Person is not or ceases to be effectively appointed to accept service of process on behalf of Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada, each of Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada shall, on the written demand of any Noteholder addressed to Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada and delivered to Heller or to the Specified Office of the Fiscal Agent, appoint a further Person in New York to accept service of process on its behalf and, failing such appointment within 15 days, any Noteholder shall be entitled to appoint such a Person by written notice addressed to Heller and (where the Issuer of the Notes is Heller Canada) Heller Canada and delivered to Heller or to the Specified Office of the Fiscal Agent. Nothing in this

	paragraph shall affect the right of any Noteholder to serve process in any other manner permitted by law.

(d)	Non-exclusivity: The submission to the jurisdiction of the courts referred to above shall not (and shall not be construed so as to) limit the right of any Noteholder to take Proceedings in any other court of competent jurisdiction, nor shall the taking of Proceedings in any one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction (whether concurrently or not) if and to the extent permitted by law.

SCHEDULE 9

FORM OF DEFINITIVE NOTE

[THIS NOTE CONSTITUTES [COMMERCIAL PAPER]/[A SHORTER/LONGER] TERM DEBT SECURITY] ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER SECTION 4 OF THE BANKING ACT 1987]¹

[currency] [On the face of the Note:] [denomination]

[HELLER FINANCIAL, INC./HELLER FINANCIAL CANADA, LTD.]
(incorporated in [the State of Delaware, United States of America/Canada)]

[currency][amount] Notes due [maturity]

issued under

U.S.$2,000,000,000
Euro Medium-Term Note Programme

[unconditionally and irrevocably guaranteed by
HELLER FINANCIAL, INC.
(incorporated in the State of Delaware, United States of America)]

This Note is one of a series of notes (the "Notes") of [ ] (the "Issuer") described in the pricing supplement (the "Pricing Supplement") a copy of [the relevant particulars of] which is endorsed on this Note. Any reference herein to the "Conditions" is to the Terms and Conditions of the Notes endorsed on this Note, as supplemented, amended and/or replaced by the Pricing Supplement, and any reference to a numbered "Condition" is to the correspondingly numbered provision thereof. Words and expressions defined in the Conditions shall have the same meanings when used in this Note. [The Notes are guaranteed by the Guarantor in the Agency Agreement.]

The Issuer, for value received, promises to pay to the bearer of this Note the Redemption Amount on the Maturity Date or on such earlier date or dates as the same may become payable in accordance with the Conditions (or to pay such other amounts of principal on such dates as may be specified in the Pricing Supplement), and to pay interest on this Note on the dates and in the manner specified in the Conditions, together with any additional amounts

¹	Insert if the issue proceeds are accepted in the U.K.

payable in accordance with the Conditions, all subject to and in accordance with the Conditions.

This Note shall not be valid for any purpose until it has been authenticated for and on behalf of Deutsche Bank AG London as fiscal agent.

THIS NOTE IS GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

[The Issuer of this Note is [Heller Financial, Inc/Heller Financial Canada, Inc.], which is not an authorised institution or a European authorised institution (as such terms are defined in the Banking Act 1987 (Exempt Transactions) Regulations 1997). Repayment of the principal and payment of any interest or premium in connection with this Note has [not] been guaranteed [by Heller Financial, Inc.] which is not an authorised institution or a European authorised institution (as such terms are defined in the Banking Act 1987 (Exempt Transaction) Regulation of 1997).²

AS WITNESS the facsimile signature of a duly authorised person on behalf of the Issuer.

[HELLER FINANCIAL, INC./HELLER FINANCIAL CANADA, LTD.]

By: ..............................

[manual or facsimile signature]
(duly authorised)]

ISSUED on the Issue Date

AUTHENTICATED for and on behalf of
Deutsche Bank AG London as fiscal agent without
recourse, warranty or liability

By: ..............................

[manual signature]
(duly authorised)

²	Insert if the issue proceeds are accepted in the U.K.

[On the reverse of the Note:]

PRICING SUPPLEMENT

The following is a copy of [the relevant particulars of] the Pricing Supplement.

TERMS AND CONDITIONS

[As set out in the Offering Circular]

[At the foot of the Terms and Conditions:]

FISCAL AGENT

Deutsche Bank AG London
Winchester House
1 Great Winchester Street
London EC2N 2DB

PAYING AGENT
Deutsche Bank Luxembourg S.A.
2 Boulevard Konrad Adenauer
L-115 Luxembourg

[FORM OF NOTATION RELATING TO GUARANTEE]

[GUARANTEE]

Heller Financial, Inc. (and any successor of Heller Financial, Inc.) has unconditionally and absolutely guaranteed, to the extent set forth in, and subject to the provisions in the Amended and Restated Agency Agreement (the "Agency Agreement") the due and punctual payment of principal and interest on this Note and any other amounts due and payable under the Agency Agreement and hereunder of Heller Financial Canada, Ltd. and further agrees to pay any and all expenses (including, without limitation, all fees and disbursements of counsel) which may be paid or incurred by a Noteholder in enforcing its rights under the Guarantee. In case of the failure of Heller Financial Canada, Ltd. punctually to perform or make any such payment, the Guarantor hereby agrees to cause such payment and performance to be made punctually.

The obligations of the Guarantor to the Noteholders pursuant to the Guarantee and the Agency Agreement are expressly set forth in Clause 17 of the Agency Agreement and reference is hereby made to the Agency Agreement for the precise terms of the Guarantee. The Guarantor has the right under Condition 25, at any time, to substitute itself for Heller Canada as issuer and principal obligor under this Note. Capitalised terms used herein and not defined herein have the meanings ascribed thereto in the Agency Agreement.

HELLER FINANCIAL, INC.

By: [manual/facsimile signature]
(duly authorized)

Form of Coupon

[On the face of the Coupon:]¹

[For Fixed Rate Notes]

[HELLER FINANCIAL, INC./HELLER FINANCIAL CANADA, LTD.]
[currency][amount] [fixed rate] Notes due [maturity]
[guaranteed by HELLER FINANCIAL, INC.]

Coupon for [currency][amount of interest payment] due on [interest payment date].

Such amount is payable, subject to the terms and conditions (the "Conditions") endorsed on the Note to which this Coupon relates (which are binding on the holder of this Coupon whether or not it is for the time being attached to such Note), against presentation and surrender of this Coupon at the specified office for the time being of any of the agents shown on the reverse of this Coupon (or any successor or additional agents appointed from time to time in accordance with the Conditions).

[For Floating Rate Notes]

[HELLER FINANCIAL, INC./HELLER FINANCIAL CANADA, LTD.]
[currency][amount] Floating Rate Notes due [maturity]
[guaranteed by HELLER FINANCIAL, INC.]

This Coupon relates to a Note in the denomination of [currency] [amount].

Coupon for the amount of interest due on the Interest Payment Date falling in [month and year].

The Note to which this Coupon relates may, in certain circumstances specified in the Conditions, fall due for redemption before the maturity date of this Coupon. In such event, this Coupon shall become void and no payment will be made in respect hereof.

¹	As a prefix to the Coupon number the letters "AX" must appear if interest is subject to Canadian withholding tax and "F" must appear if not subject to Canadian withholding tax. The letters will be printed indelibly in gothic or similar style capital letters of seven point or larger size.

[On the reverse of the Coupon:]

Fiscal Agent:		Deutsche Bank AG London, Winchester House, 1 Great Winchester Street, London, EC2N 2DB

Paying Agent:		Deutsche Bank Luxembourg S.A., 2 Boulevard Konrad Adenauer, L-115 Luxembourg

Form of Talon

[On the face of the Talon:]¹

[HELLER FINANCIAL, INC./HELLER FINANCIAL CANADA, LTD.]
[currency][amount] [fixed rate floating Rate] Notes due [maturity]
[guaranteed by HELLER FINANCIAL INC.]
Talon for further Coupons.

On or after the maturity date of the final Coupon which is (or was at the time of issue) part of the Coupon Sheet to which this Talon is (or was at the time of issue) attached, this Talon may be exchanged at the specified office for the time being of the fiscal agent shown on the reverse of this Talon (or any successor fiscal agent appointed from time to time in accordance with the terms and conditions (the "Conditions") of the Notes to which this Talon relates) for a further Coupon Sheet (including a further Talon but excluding any Coupons in respect of which claims have already become void pursuant to the Conditions).

The Note to which this Talon relates may, in certain circumstances specified in the Conditions, fall due for redemption before the maturity date of such final Coupon. In such event, this Talon shall become void and no Coupon will be delivered in respect hereof.

[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE OF 1986.]

[On the reverse of the Talon:]

Fiscal Agent:

Deutsche Bank AG London, Winchester House, 1 Great Winchester Street, London, EC2N 2DB

Paying Agent:

Deutsche Bank Luxembourg S.A., 2 Boulevard Konrad Adenauer, L-115 Luxembourg

¹	As a prefix to the Coupon number the letters "AX" must appear if interest is subject to Canadian withholding tax and "F" must appear if not subject to Canadian withholding tax. The letters will be printed indelibly in gothic or similar style capital letters of seven point or larger size.

EX-10.I 3 0003.htm AMENDMENT TO 1998 STOCK INCENTIVE PLAN AMENDMENT TO 1998 STOCK INCENTIVE PLAN

Exhibit 10(I)

HELLER FINANCIAL, INC.
Board of Directors Meeting
January 17, 2001

WHEREAS, there has previously been established the 1998 Stock Incentive Plan (the "Plan") of Heller Financial, Inc. (the " Company"); and

WHEREAS, pursuant to Section 15.1 of the Plan, the Board of Directors of the Company has the authority to amend the Plan at any time;

NOW, THEREFORE, BE IT RESOLVED, that Section 4.1 of the Heller Financial, Inc. 1998 Stock Incentive Plan is hereby amended by deleting therefrom the first sentence in its entirety and inserting in its place the following sentences:

Subject to adjustment as provided in Section 4.3, the number of Shares transferrable to Participants under the Plan which are dilutive Shares that have been newly issued by the Company ("Newly Issued Shares") shall be limited to 7.5% of the Shares outstanding upon consummation of the Company's initial public offering (6,718,125 Shares). The total of (1) the number of Newly Issued Shares plus (2) the number of Shares transferrable to Participants under the Plan which are non-dilutive Shares that have been previously issued and repurchased by the Company shall be limited to 10,000,000.

RESOLVED FURTHER, that as amended above, the Plan is hereby ratified and confirmed in all respects.

RESOLVED FURTHER, that the appropriate officers of the Company, and any of them separately, are hereby authorized to execute such papers and documents, take such actions and do such things as are in the opinion of any of them necessary or advisable in order to effectuate the purpose and intent of this resolution.

EX-10.J 4 0004.htm HELLER FINANCIAL, INC. EXECUTIVE DEFERRED COMP. PL HELLER FINANCIAL, INC. EXECUTIVE DEFERRED COMP. PL

HELLER FINANCIAL, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
(As Amended and Restated Effective as of January 1, 2001)

Section 1
Introduction

1.1 The Plan and Its Effective Date. The Heller International Corporation Executive Deferred Compensation Plan (the "Original Plan") was established by Heller International Corporation effective as of January 1, 1994 (the "Effective Date"). Heller International Corporation transferred sponsorship of the Original Plan to Heller Financial, Inc. (the "Company"), effective as of January 1, 1998. Effective as of the same date, the Original Plan was renamed the Heller Financial, Inc. Executive Deferred Compensation Plan (the "Plan").

1.2 Purpose. The Original Plan was adopted, and this Plan continues to be maintained, for a select group of management and highly compensated employees. The purpose of the Plan is to retain and attract highly qualified personnel by offering the benefits of a non-qualified, unfunded plan of deferred compensation. This Plan allows Eligible Employees to make deferrals and receive benefits regardless of the benefit and contribution limits applicable to qualified retirement plans under the Internal Revenue Code of 1986, as amended. The Plan is intended to be a top-hat plan described in Section 201(2) of the Employee Retirement Income Security Act of 1974 ("ERISA").

1.3 Administration. The Plan will be administered by a committee (the "Committee" ) appointed by the Compensation Committee of the Board of Directors of the Company (the "Compensation Committee"), or, if the Compensation Committee fails to appoint such a committee, the Compensation Committee. The Committee has the powers set forth in the Plan, as well as the power to interpret the Plan's provisions. Any decision of the Committee regarding the Plan will be final and binding on all persons. Benefits under this plan will be paid only if the Committee or its representative decides in its discretion that the applicant is entitled to them. The Committee may delegate its authority hereunder to one or more officers or directors of the Company, and may delegate administrative responsibilities to one or more employees of the Company, or to one or more outside vendors. The members of the Committee will serve at the pleasure of the Compensation Committee and may be removed, with or without cause, by the Compensation Committee.

Section 2
Participation and Deferral Elections

2.1 Eligibility and Participation. Subject to the conditions and limitations of the Plan, all leadership executives (salary grade 18 and above) of the Company or an Employer (as defined in Section 6.1), such other executives of the Company or an

Employer identified as eligible by the Committee, and those non-employee members of the Board of Directors of the Company identified as eligible by the Committee will be eligible to participate in the Plan (" Eligible Employees"). Any Eligible Employee who makes a Deferral Election as described in Section 2.2 below will become a participant in the Plan ("Participant") and will remain a Participant until the entire balance of his Deferral Account (defined in Section 3.1 below) has been distributed to him.

2.2 Rules for Deferral Elections. Any Eligible Employee may make an irrevocable election ("Deferral Election") to defer receipt of any compensation payable to him for a calendar year in accordance with the rules set forth below, and in Section 2.3.

(a)	An individual will be eligible to make a Deferral Election only if he is an Eligible Employee on the date he makes the election. Effective July 17, 1998, an individual who first becomes an Eligible Employee during a given calendar year may make an election to participate in the Plan during that calendar year, so long as the election:

	(i)	is submitted to the Committee or its delegate within thirty days after the individual becomes an Eligible Employee; and

	(ii)	relates only to compensation earned for services performed during that calendar year after the election is properly submitted to the Committee or its delegate.

	July 17, 1998 will be a special date upon which individuals first hired by the Company or an Employer earlier in 1998 become Eligible Employees (assuming the Committee has named them as eligible, if applicable).

(b)	All Deferral Elections must be made in writing on such forms or by such means as the Committee prescribes, and must be received by the Committee or its designee no later than the date specified by the Committee. In no event will the date specified by the Committee be on or later than the earliest date that the amount being deferred is made available to the Eligible Employee.

(c)	Payment of amounts deferred will be postponed to the date specified by the Eligible Employee in his initial Deferral Election (the "Distribution Date"). Except as provided in subsections 2.2(f), 2.2(k) or 2.2(l) below, the Distribution Date the Eligible Employee specifies in his initial Deferral Election is irrevocable and will apply to all amounts the Eligible Employee defers under the Plan.

(d)	The Distribution Date the Participant specifies in his initial Deferral Election must be either (i) a particular date no earlier than the January 1 immediately following the third anniversary of the date the Eligible Employee files his initial Deferral Election, (ii) the Eligible Employee's

		Termination of Employment (as defined in subsection (e), below) or a particular date coinciding with or next following the Eligible Employee's Termination of Employment (e.g., "January 1 coinciding with or next following my Termination of Employment"), or (iii) the earlier of (i) or (ii) above.

	(e)	For purposes of this Plan, a "Termination of Employment" occurs when a person ceases active employment with the Company (including all subsidiaries and affiliates), or, as applicable, ceases to be a member of the Board of Directors of the Company, by reason of a resignation, discharge, retirement, or death. For a Participant who is a non-employee member of the Board of Directors of the Company, a "Termination of Employment" occurs when the Participant ceases to be a non-employee director. The period of time during which a person is receiving severance pay is not considered active employment.

	(f)	A Participant may make a one-time election after his initial Deferral Election to change the Distribution Date, but the election will be effective only if the Committee receives the election at least one year and one day before the Distribution Date originally elected by the Participant.

	(g)	At the time of the Participant's initial Deferral Election, the Participant must elect a form of payment for his Deferral Account. The Participant may choose among a single lump sum payment, or substantially equal annual installments over a five, ten or fifteen year period. The Participant's election of form of payment must be made on the form, or by the other means, prescribed by the Committee. Except as provided in Section 4.1, the Participant's initial election as to the form of payment of his Deferral Account will apply to all amounts deferred by the Eligible Employee under the Plan.

	(h)	At the time of the Participant's initial Deferral Election, the Participant must specify, on the form or by the other means prescribed by the Committee, his initial investment elections under Section 3.2.

	(i)	No Deferral Election will apply to any amounts which, in the absence of a Deferral Election, would be payable to the Eligible Employee on or after January 1, 2004. The Board of Directors of the Company may prescribe a later date after which compensation may not be deferred under the Plan.

	(j)	A Deferral Election will be irrevocable. Notwithstanding the foregoing, if the Committee determines that a Participant has an Unforeseeable Financial Emergency (as defined in Section 4.6), the Participant's then-effective Deferral Election will be revoked prospectively. In addition, if a Participant receives a distribution on account of hardship under any qualified plan that is described in Section 401(k) of the Internal Revenue

		Code (the "Code") and which is maintained by the Company, an Employer or a commonly controlled entity (as defined in Code Sections 414(b), (c) and (m)) of the Company or an Employer, he may not defer amounts under this Plan for a period of 12 months following the date he receives the hardship distribution.

	(k)	If a Participant makes a Deferral Election that will first become effective after the Distribution Date initially elected by the Participant, he must select a new Distribution Date and form of payment in the manner described in subsections 2.2(d) and (g), and the new Distribution Date and form of payment selected by the Participant will apply only to amounts deferred by the Participant for calendar years following the year in which he selects the new Distribution Date.

2.3 Amounts Deferred. Except as provided below, an Eligible Employee may make a Deferral Election as to any compensation payable to him by the Company, an Employer or a commonly controlled entity (as defined in Code Sections 414(b), (c) and (m)) of the Company or an Employer, in the form of cash or the Company's Class A common stock, par value $0.25 ("Company Stock"). Compensation that may be subject to a Participant's Deferral Election includes, but is not limited to:

	(a)	his incentive payments under the Long-term Incentive Plan of Heller Financial, Inc. with respect to performance in the calendar year in which the Deferral Election is made;

	(b)	a bonus payable to him under a Company incentive plan;

	(c)	any sign-on bonus payable to him;

	(d)	payments due to him under any carried interest plan; and

	(f)	his retainer received for services as a non-employee member of the Board of Directors of the Company ("Retainer").

Notwithstanding the foregoing, a Participant may not defer more than 50% of his or her base salary, nor may he or she defer compensation that is payable to him in the nature of severance pay. Similarly, a Participant may not defer into this Plan any amount payable under it. The Committee may specify other forms of compensation that may not be subject to Deferral Elections. The Committee will specify the percentage or dollar increments in which Participants may defer elements of compensation.

Section 3
Deferral Accounts

3.1 Deferral Accounts. All amounts deferred pursuant to one or more Deferral Elections under the Plan will be allocated to a bookkeeping account in the name of the Participant ("Deferral Account"). Amounts deferred will be credited to the Deferral Account as of the Deferral Crediting Date (as defined below) coinciding with or next following the date on which the Participant would have received the deferred amounts, if he had not elected to defer them. The "Deferral Crediting Date" will be the business day coinciding with or next preceding the 15th day of each calendar month (the "Mid-Month Deferral Crediting Date") and the business day coinciding with or next preceding the last day of each calendar month (the "End-of-Month Deferral Crediting Date").

3.2 Investment Elections and Income Crediting. As of the close of business on each day the New York Stock Exchange is open for business ("Valuation Date"), each Participant's Deferral Account will be credited with income and gains and charged with losses, expenses and distributions equal to the amount by which the Deferral Account would have been credited or charged since the prior Valuation Date (in the manner described below) had the Participant's Deferral Account been invested in the Investment Funds (as defined below) selected by the Participant in accordance with the Participant's investment elections.

The "Investment Funds" will consist of two or more mutual funds or other group investment funds designated by the Committee, in its sole discretion, for Participants' investment elections. In addition, the Committee may establish an Investment Fund consisting of Company Stock (the "Company Stock Fund"). Income, gains, losses, expenses and distributions will be credited and charged in the manner dictated by each Investment Fund. The Company Stock Fund may use a unit valuation method of accounting. The Committee may, in its sole discretion, from time to time designate additional Investment Funds or terminate existing Investment Funds.

A Participant must make an investment election at the time of his or her initial Deferral Election. The investment election must designate the portion of the amounts deferred to be treated as invested in each available Investment Fund. As to elections effective on or after March 1, 1999, any investment election made by a Participant that directed or directs investment into the Company Stock Fund will be irrevocable. A Participant may elect no later than 1 p.m. Central Standard Time on February 26, 1999 to move amounts already in the Company Stock Fund out of that Fund; any amounts not moved by that time will remain in the Company Stock Fund.

A Participant's investment election will remain in effect for each deferral made after the election is effective, until after the Participant properly submits a request to make a change in his investment election. Except as described above with regard to amounts invested in the Company Stock Fund, a Participant may change his investment election as to amounts deferred following the change in investment election, as to the investment allocation of the Participant's existing Deferral Account, or as to both matters. Any request to make a change in investment election must be filed or otherwise

submitted to the party and in the form prescribed by the Committee and in the time and manner specified by the Committee. A Participant's initial investment election, or any request to make a change in investment election, will become effective in accordance with rules established by the Committee and applied uniformly to similarly situated Participants. The Company reserves the right to impose blackout periods during which no contributions or transfers may be made to, or, for transfers to be effective before March 1, 1999, from the Company Stock Fund.

Notwithstanding any other provision of this Section 3, a Participant will be deemed to have elected to invest in the Company Stock Fund any compensation that would have been payable to him in the form of Company Stock, but that he elected to defer under Section 2.3.

3.3. Vesting. A Participant will at all times be fully vested in the balance of his Deferral Account.

Section 4
Payment of Benefits

4.1 Time and Method of Payment. A Participant's Deferral Account will be paid in a single lump sum or installments, as elected by the Participant at the time of his initial Deferral Election. A Participant may make a one-time election after his initial Deferral Election to change the form of payment, so long as the Committee receives the election change at least one year and one day before the Participant's Distribution Date.

If a Participant's Deferral Account is payable in a single lump sum, the payment will be made as of a Valuation Date occurring as soon as possible following the Participant's Distribution Date, in an amount equal to the value of the Participant's Deferral Account.

If a Participant's elected installment payments, his Deferral Account will be paid in substantially equal installments over the five-, ten- or fifteen-year period he elected, with installments beginning as soon as practicable after the Participant's Distribution Date. Each installment payment will be computed by dividing the amount credited to the Participant's Deferral Account as of the Valuation Date immediately before the installment payment is due by the number of payments then remaining in the installment period.

4.2 Payment Upon Disability. If a Participant becomes Disabled (as defined below) before his Distribution Date, payment of his Deferral Account will be made or begin (in the form of payment elected by him under Sections 2.2(g) and 4.1) as of a Valuation Date occurring as soon as practicable after the date the Committee determines the Participant is Disabled.

For purposes of this Section 4.2, a Participant will be deemed to be "Disabled" if he has a physical or mental condition that results from a bodily injury, disease, or mental

disorder, and that renders him incapable, presumably permanently, of performing his normal employment duties. The Committee will determine, on the basis of the medical and other competent evidence it deems relevant, whether a Participant is Disabled.

4.3 Payment Upon Death of a Participant. If a Participant dies before receiving payment of all or part of his Deferral Account, the amount remaining to be paid in his behalf from the Plan will be paid to his Beneficiary. Notwithstanding any election by a Participant regarding the timing and manner of payment of his Deferral Account, the Committee will determine in its sole discretion how and when the Participant's Deferral Account will be paid to his Beneficiary.

4.4 Beneficiary. If a Participant is married on the date of his death, then his Beneficiary will be his spouse. Notwithstanding the foregoing, the Participant may, with his spouse's written consent, name someone other than spouse as a Beneficiary or Beneficiaries. A Beneficiary designation will be effective only if it is filed with the Committee or other party designated by the Committee, in the form specified by the Committee. A Participant may revoke an existing Beneficiary designation by filing another Beneficiary designation with the Committee. The latest proper Beneficiary designation received by the Committee will control.

If a Participant fails to name a Beneficiary or survives all of his named Beneficiaries, his Deferral Account will be paid in the following order of precedence:

		(1)	to the Participant's spouse;

		(2)	to the Participant's children (including adopted children), per stirpes; or

		(3)	to the Participant's estate.

A married Participant's designation of someone other than his spouse as a Beneficiary will be effective only if the spouse validly consents to it. To be valid, a spousal consent:

		(1)	must be in writing acknowledging the effect of the consent;

		(2)	must be witnessed by a notary public;

		(3)	must be effective only for the spouse who executes the consent; and

		(4)	must designate a Beneficiary or Beneficiaries who may not be changed by the Participant without the spouse's consent, unless the Participant names his spouse as his sole Beneficiary or the spouse's consent in the first instance expressly permits

designations by the Participant without any requirement of further consent by the spouse.

4.5 Medium of Payment. Effective March 1, 1999, any portion of a Participant's Deferral Account that is invested in the Company Stock Fund will be paid in whole shares Company Stock, with cash paid for fractional shares. All other amounts owing under the Plan will be paid in cash.

4.6 Unforeseeable Financial Emergency. If the Committee determines that a Participant has incurred an Unforeseeable Financial Emergency (as defined below), and to the extent that the Unforeseeable Financial Emergency cannot be relieved:

		(1)	through reimbursement or compensation by insurance or otherwise; or

		(2)	by liquidation of the Participant's assets, to the extent liquidation of those assets would not itself cause severe financial hardship;

it will permit the Participant to withdraw the portion of the balance of his or her Deferral Account that is needed to satisfy the Unforeseeable Financial Emergency.

An "Unforeseeable Financial Emergency" is a severe financial hardship to the Participant resulting from:

		(1)	a sudden and unexpected illness or accident of the Participant or of a dependent of the Participant;

		(2)	loss of the Participant's property due to casualty; or

		(3)	other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant and determined by the Committee to constitute an Unforeseeable Financial Emergency.

Notwithstanding the foregoing, effective for withdrawals made on or after March 1, 1999, no portion of a Participant's Deferral Account that is "invested" in the Company Stock Fund may be withdrawn under this Section 4.6 under any circumstances. A withdrawal on account of an Unforeseeable Financial Emergency will be paid in cash, as of a Valuation Date occurring as soon as possible after the date on which the Committee approves the withdrawal.

If a Participant is entitled to a withdrawal from the Plan on account of an Unforeseeable Financial Emergency and at the same time is entitled to a distribution on account of hardship from a 401(k) Plan (as defined in Section 2.2(j)), the Participant must withdraw his or her entire Deferral Account under the Plan on account of the Unforeseeable Financial Emergency before he or she may receive any distribution on account of hardship under the 401(k) Plan.

4.7 Withholding of Taxes. The Company will withhold any applicable Federal, state or local income tax from payments due under the Plan. The Company will also withhold Social Security taxes, including the Medicare portion of those taxes, and any other employment taxes necessary to comply with applicable laws. To the extent that a Participant's Deferral Account does not contain sufficient cash to satisfy the applicable taxes, the Company will liquidate shares of Company Stock held for a Participant who directed the investment of all or a portion of his or her Deferral Account into the Company Stock Fund and use the funds obtained to satisfy the taxes.

4.8 Cashout of Account Balances. Notwithstanding a Participant's election regarding the timing and manner of payment of his Deferral Account, if a Participant has a Termination of Employment, and if the entire value of his Deferral Account is less than $100,000, the Participant's Employer may direct that he be paid a lump sum distribution of the entire value of his Deferral Account. Also notwithstanding a Participant's election regarding the timing and manner of payment of his Deferral Account, if a Participant has a Termination of Employment, the Committee may in its sole discretion direct that he be paid the entire value of his Deferral Account in one lump sum, regardless of its size. For purposes of this Section 4.8, the value of a Participant's Deferral Account will be determined as of the Valuation Date coinciding with or immediately following the Participant's termination of employment.

Section 5
Miscellaneous

5.1 Funding. Benefits payable under the Plan to any Participant will be paid directly by the Participant's Employer (including the Company if the Participant is employed by the Company). The Company and the Employers will not be required to fund, or otherwise segregate assets to be used for payment of benefits under the Plan. While the Company and Employers may, in the discretion of the Committee, make investments in the mutual funds designated by the Committee as Investment Funds in amounts equal or unequal to Participants' investment elections under this Plan, the Company and the Employers will not be under any obligation to make such investments and any such investment will remain an asset of the Company or the Employer subject to the claims of its general creditors. Notwithstanding the foregoing, the Company and the Employers, in the discretion of the Committee, may maintain one or more grantor trusts ("Trust") to hold assets to be used for payment of benefits under the Plan. The assets of the Trust with respect to benefits payable to the employees of each Employer will remain the assets of that Employer, subject to the claims of its general creditors. Any payments by a Trust of benefits provided to a Participant under the Plan will be considered payment by the Company or the Employer and will discharge the Company or the Employer of any further liability under the Plan for those payments.

5.2 Benefit Statements. As soon as practical after the end of each calendar year (or after such additional date or dates as the Committee, in its discretion, may designate), the Committee will provide each Participant with a statement of the balance

of his Deferral Account as of the last day of that calendar year (or as of another date designated by the Committee in its discretion).

5.3 Employment Rights. Establishment of the Plan must not be construed to give any Eligible Employee the right to be retained in the Company's or any Employer's service, or to any benefits not specifically provided by the Plan.

5.4 Interests Not Transferable. Except as to withholding of any taxes under the laws of the United States or any state or locality and the provisions of Section 4.4, no benefit payable at any time under the Plan will be subject in any manner to alienation, sale, transfer, assignment, pledge, attachment, or other legal process, or encumbrance of any kind. Any attempt to alienate, sell, transfer, assign, pledge or otherwise encumber any such benefits, whether currently or thereafter payable, will be void. No person will, in any manner, be liable for or subject to the debts or liabilities of any person entitled to those benefits. If any person attempts to, or does, alienate, sell, transfer, assign, pledge or otherwise encumber his benefits under the Plan, or if by any reason of his bankruptcy or other event happening at any time, his benefits would devolve upon any other person or would not be enjoyed by the person entitled to them under the Plan, then the Committee, in its discretion, may terminate the interest in those benefits of the person entitled to them under the Plan and hold or apply them for or to the benefit of the person entitled to them under the Plan or his spouse, children or other dependents, or any of them, in whatever manner the Committee may deem proper.

5.5 Forfeitures and Unclaimed Amounts. If the Committee or its designee is unable to distribute any part of a Participant's Deferral Account because it cannot, despite conducting a reasonable search, locate the Participant or his Beneficiary within two years after the date a Plan payment becomes due, the Deferral Account will be deemed an "unclaimed amount." Unclaimed amounts will be forfeited, and the forfeitures will reduce the Company's obligations under the Plan. After an unclaimed amount has been forfeited, the Participant or Beneficiary, as applicable, will have no further right to his Deferral Account.

5.6 Controlling Law. To the extent it is not preempted by ERISA, the law of Illinois (other than its choice of law provisions) will control in all matters relating to the Plan.

5.7 Gender and Number. Words in the masculine gender include the feminine, words in the plural include the singular and words in the singular include the plural.

5.8 Action by the Company. Except as otherwise specifically provided in this document, any action required of or permitted to be taken by the Company under the Plan must be taken by resolution of the Board of Directors of the Company, by action of a member of the Committee, or by person(s) authorized by resolution of the Board of Directors of the Company or the Committee.

5.9 Voting Company Stock. Effective March 1, 1999, any Participant that has directed or directs the investment of any part of his or her Deferral Account into the Company Stock Fund will have the right to direct the voting of shares of Company Stock allocated to his or her Deferral Account. The Participant will direct the voting of shares allocated to his or her Deferral Account according to the procedures and deadlines established by the Committee.

Section 6
Employer Participation

6.1 Adoption of Plan. Any subsidiary or affiliate of the Company (including any domestic or foreign entity which is related to the Company by less than a 50% direct or indirect ownership interest by or in the Company) (an "Employer") may, with the approval of the Committee and under such terms and conditions as the Committee prescribes, adopt the Plan by resolution of its board of directors. The Committee will amend the Plan as necessary or desirable to reflect the adoption of the Plan by an Employer, and the appearance of an Employer's name in Appendix A will be conclusive proof that the Committee has approved the Employer's adoption of the Plan. An adopting Employer has no authority to amend or terminate the Plan under Section 7.

6.2 Withdrawal from the Plan by Employer. Any Employer has the right, at any time, upon the approval of and under such conditions as may be provided by the Committee, to withdraw from the Plan by delivering to the Committee written notice of its election to withdraw. Upon receipt of such a notice, the Committee will direct that the portion of the Deferral Account of a Participant or Beneficiary attributable to amounts deferred while the Participant was an employee of the withdrawing Employer, plus any net earnings, gains and losses on those amounts, be distributed from the Trust in cash, and, effective for distributions made on or after March 1, 1999, to the extent invested in the Company Stock Fund, in shares of Company Stock. Distribution under the preceding sentence will be made at such time or times as the Committee, in its sole discretion, deems to be in the best interest of the withdrawing Employer's employees and their Beneficiaries. To the extent the amounts held in the Trust for the benefit of its Participants and Beneficiaries are not sufficient to satisfy the withdrawing Employer's obligation to its Participants and their Beneficiaries accrued on account of their employment with the withdrawing Employer, the amount remaining necessary to satisfy the obligation will be an obligation of the withdrawing Employer, and the Company will have no further obligation to the withdrawing Employer's Participants and Beneficiaries with respect to those amounts.

Section 7
Amendment and Termination

The Company intends the Plan to be permanent, but reserves the right at any time by action of its Board of Directors (or of any person or persons duly authorized by the Board of Directors) to modify, amend or terminate the Plan, provided, however, that no

amendment or termination of the Plan may reduce or eliminate any Deferral Account accrued through the date of the amendment or termination, increased by any income and gain credited to the Participant's Deferral Account and reduced by any losses, expenses and distributions charged to the Participant's Deferral Account in accordance with Section 3.2.

The Committee will have the same authority to adopt amendments to the Plan as the Board of Directors of the Company in the following circumstances:

		(a)	to adopt amendments to the Plan which the Committee determines are necessary or desirable for the Plan to comply with or to obtain benefits or advantages under the provisions of applicable law, regulations or rulings or requirements of the Internal Revenue Service or other governmental or administrative agency or changes in such law, regulations, rulings or requirements; and

(b)

to adopt any other procedural or cosmetic amendment that the Committee determines to be necessary or desirable that does not materially change benefits to Participants or their Beneficiaries or materially increase the Company's or adopting Employers' obligations under the Plan.

Executed in multiple originals this _______ day of August, 2000.

		HELLER FINANCIAL, INC.


		By: ________________________
		Title: _______________________

Appendix A

Adopting Employers

The affiliates and subsidiaries of the Company listed below have adopted the Plan for their employees effective as of the dates indicated.

Adopting Employer		Effective Date

Heller Financial Leasing, Inc.		January 1, 1999

EX-10.K 5 0005.htm FIRST AMENDMENT TO EXECUTIVE DEFERRED COMP PLAN FIRST AMENDMENT TO EXECUTIVE DEFERRED COMP PLAN

FIRST AMENDMENT
OF
HELLER FINANCIAL, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
As Amended and Restated Effective as of January 1, 2001)

WHEREAS, Heller Financial, Inc. (the "Company") maintains the Heller Financial, Inc. Executive Deferred Compensation Plan, as Amended and Restated Effective as of January 1, 2001 (the "Plan") for a select group of its management and highly compensated employees; and


	WHEREAS, it is now deemed necessary and desirable to amend the Plan;


NOW, THEREFORE, in exercise of the power delegated to the Committee (as defined by the Plan) by Section 7 of the Plan and delegated to the undersigned officer by resolution of the Committee, the Plan is amended in the following particulars, effective January 1, 2001:


1. By redesignating subsections 2.2(c) through (k) as subsections (d) through (l), respectively, and inserting a new subsection 2.2(c) immediately after subsection 2.2(b), as follows:

	"(c)	From time to time, the Committee may declare that Participants' Deferral Accounts, as defined in Section 3.1 below, will be split into subaccounts ('Subaccounts'). As to each Subaccount, the Committee will permit Participants to make different Deferral Elections, with different Distribution Dates (as described in subsection 2.2(d) below) and different forms of distribution. A Participant's investment elections will apply to all of his Subaccounts."


2. By substituting the following for subsections 2.2(d) and (e), as renumbered by particular1 above:


	"(d)	Payment of amounts deferred into a given Subaccount will be postponed to the date specified by the Eligible Employee in his initial Deferral

		Election (the 'Distribution Date') for that Subaccount. Except as provided in subsections 2.2(g), 2.2(k) and 2.2(l) below, the Distribution Date the Eligible Employee specifies in his initial Deferral Election as to a given Subaccount is irrevocable and will apply to all amounts the Eligible Employee defers into that Subaccount.


	"(e)	The Distribution Date the Participant specifies in his initial Deferral Election for a Subaccount must be either (i) a particular date no earlier than one year and one day after the date the Eligible Employee files that Deferral Election, (ii) the Eligible Employee's Termination of Employment (as defined in subsection (f) below) or a particular date coinciding with or next following the Eligible Employee's Termination of Employment (e.g. 'January 1 coinciding with or next following my Termination of Employment') or (iii) the earlier of (i) and (ii) above."


3.	By substituting the following for subsections 2.2(g) and(h), as renumbered by particular 1 above:


	"(g)	A Participant may make a one-time election after his initial Deferral Election as to a given Subaccount to change the Distribution Date for that Subaccount, but the election will be effective only if the Committee receives the election at least one year and one day before the Distribution Date originally elected by the Participant.

	"(h)	At the time of the Participant's initial Deferral Election as to a Subaccount, the Participant must elect a form of payment for that Subaccount. The Participant may choose among a single lump sum payment, or annual installments over a five-, ten- or fifteen-year period. The Participant's election of form of payment must be made on the form, or by the other means, prescribed by the Committee. Except as provided in Section 4.1, the Participant's initial election as to the form of payment of a given Subaccount will apply to all amounts deferred by the Eligible Employee into that Subaccount."


4.	By substituting the following for subsection 2.2(l), as renumbered by particular 1 above:


	"(l)	If a Participant makes a Deferral Election that will first become effective after the first Distribution Date initially elected by the Participant, then amounts deferred by the Participant for periods after that Distribution Date will automatically be credited to the existing Subaccount with the soonest Distribution Date, or, if the Participant has only one Subaccount or affirmatively elects to create a new one, to a new Subaccount. If amounts are to be credited to a new Subaccount, the Participant must select a new

		Distribution Date and form of payment in the manner described in subsections 2.2(e) and (h) above for the new Subaccount."

5.	By substituting the following for Section 3.1 of the Plan:

		"3.1 Deferral Accounts; Subaccounts. All amounts deferred pursuant to one or more Deferral Elections under the Plan will be allocated to a bookkeeping account in the name of the Participant (`Deferral Account'). The Participant's Deferral Account will be made up of all of his Subaccounts, as described in subsection 2.2(c) above. Amounts deferred will be credited to the relevant Subaccounts of the Participant's Deferral Account as soon as practicable, and in no event later than the fifteenth business day of the month following the month in which the Participant would have received the deferred amounts, if he had not elected to defer them."

6.	By substituting the following for the first sentence of the fourth paragraphs of Section 3.2 of the Plan:

	"A Participant's investment election will apply to all Subaccounts in his Deferral Account, and will remain in effect for each deferral made after the election is effective, until after the Participant properly submits a request to make a change in his investment election."

7.	By substituting the following for Section 4.1 of the Plan:

	"4.1 Time and Method of Payment. Each Subaccount of a Participant's Deferral Account will be paid in a single lump sum or installments, as elected by the Participant at the time of his initial Deferral Election with respect to that Subaccount. A Participant may make a one-time election after his initial Deferral Election as to a given Subaccount to change the form of payment, so long as the Committee receives the election change at least one year and one day before the Participant's Distribution Date for that Subaccount.

	"If a Subaccount is payable in a single lump sum, the payment will be made as of a Valuation Date occurring as soon as possible following the Participant's Distribution Date for that Subaccount, in an amount equal to the value of the Subaccount.

	"If a Participant elected installment payments as to a Subaccount, the Subaccount will be paid in installments over the five-, ten- or fifteen-year period he elected, with installments beginning as soon as practicable after the Participant's Distribution Date for that Subaccount. Each installment payment

will be computed by dividing the amount credited to the Subaccount as of the Valuation Date immediately before the installment payment is due by the number of payments then remaining in the installment period."

IN WITNESS WHEREOF, on behalf of the Company and Committee, the undersigned officer has executed this amendment this 3rd day of January, 2001.


			HELLER FINANCIAL, INC.


			By:______________________________
			Nina B. Eidell Executive Vice President Chief Human Resources Officer

EX-10.L 6 0006.htm 2000-2001 LONG TERM INCENTIVE PLAN 2000-2001 LONG TERM INCENTIVE PLAN

Heller Financial, Inc.
2000-2001
Long-Term Incentive Plan

I.	Purpose of the Plan

The 2000-2001 Long-Term Incentive Plan (the "Plan") is an integral part of the total compensation strategy of Heller Financial, Inc. ("Heller"). The Plan has been designed to:

		Enhance Heller's ability to attract and retain valued executives.

		Focus Heller's executives on Heller's long-term goals and objectives.

		Motivate executives by enhancing Heller's pay-for-performance environment.

		Promote teamwork.

		Align executives with shareholder interests.

		Diversify the sources of long-term compensation beyond stock options and restricted stock.

II. Plan Participants

The participants in the Plan will be those members of senior management who are (1) designated as participants by the Compensation Committee of Heller's Board of Directors (the " Committee") at the beginning of the Plan or (2) are newly hired or promoted after the beginning of the Plan and are designated as participants either by the Committee or the Chief Executive Officer of Heller. No person who otherwise participates in another business unit long-term incentive plan shall be eligible to participate in the Plan. Grants to the Chief Executive Officer and Chief Operating Officer of Heller shall in all events be subject to the approval of the Committee.

III.

Grants and Valuation of Performance Units

Performance units will be granted at the beginning of the Plan (or to newly hired or promoted individuals after the beginning of the Plan) and will be valued after the designated performance period for the Plan. Performance units represent only economic interests in the Plan and do not represent actual equity in Heller common stock or otherwise.

IV.

Performance Period

The performance period for the Plan will be from January 1, 2000 through December 31, 2001.

V.	Goal Setting/Value Determination

The value of a performance unit for the Plan will be based on the arithmetic average (giving a 50% weighting to each) of: (i) a two year average return on equity (ROE) goal and (ii) a two year average earnings per unit (EPS) goal, in each case for the two year period from January 1, 2000 through December 31, 2001.

The performance grid shown below will be used in determining actual unit value:

ROE (50%)		EPS (50%)
2 Year Average	Unit Value	2 Year Average	Unit Value
15.00%	$200	$3.30	$200
14.25%	$160	$3.14	$160
13.75%	$135	$3.04	$135
13.25%	$115	$2.94	$115

12.75%	$100	$2.84	$100

12.25%	$ 85	$2.74	$ 85
11.75%	$ 60	$2.64	$ 60
Less than 11.0%	0	Less than $2.64	0

By way of example, if the 2 Year Average ROE is 13.25% (with a corresponding Unit Value of $115) and the 2 Year Average EPS is $3.04 (with a corresponding Unit Value of $135), then the value of a unit granted under the Plan will be (115 + 135)/2 = $125.

Extraordinary gains and losses shall, in the discretion of the Committee, be excluded from the calculation of ROE and EPS.

VI.

Performance Units Available under the Plan

The number of performance units granted under the Plan will be established by the Committee from time to time and shall include grants made by the Chief Executive Officer after the beginning of the Plan as contemplated above.

VII.

Distributions of Awards

Performance units will be distributed as soon as practical after the end of the performance period. Payments will be made in shares of Class A Common Stock of Heller ("Common Stock"), based upon the New York Stock Exchange closing price thereof on December 31, 2001, and in cash in lieu of fractional shares of Common

Stock. Participants may elect to defer shares of Common Stock to be awarded under the Plan, and/or any cash to be paid in lieu of fractional shares of Common Stock, into the Heller Executive Deferred Compensation Plan.

VIII. Administration

General

The Plan shall be administered by or under the authority of the Committee. Subject to the provisions of the Plan, the Committee shall have the authority to approve eligibility to participate in the Plan, to establish the terms and conditions under which the awards become payable, and to adopt such rules and regulations and make all other determinations deemed necessary or desirable for the implementation and administration of the Plan.

Termination of Employment

A Plan participant must be an active employee of Heller at the time payment of incentive compensation is paid after the end of the performance period (December 31, 2001) to be eligible for any incentive compensation under the Plan. Except as set forth below, in the event that for any reason a Plan participant ceases to be an active employee of Heller before the time of the payment of the incentive compensation under the Plan, no incentive compensation will be deemed to have been earned by the Plan participant during the performance period.

Notwithstanding the above, any Plan participant who becomes permanently disabled (as defined by, or otherwise for purposes of, Heller's long-term disability plan) or retires during a performance period will be fully vested in his or her grant of performance units. Awards will be paid at the time that awards are distributed to all other Plan participants, with performance units being valued after the end of the performance period as determined for all other Plan participants under Section V above, but pro-rated according to the number of whole months actually worked by the participant prior to his or her disability or retirement.

Notwithstanding the above, any Plan participant who dies during a performance period will be fully vested in his or her grant of performance units, which will be valued at $100 per unit and otherwise pro-rated according to the number of whole months actually worked by the participant before his or her death. Awards will be paid as soon as practicable after death to a beneficiary previously designated by the participant in writing specifically for purposes of the Plan. If no beneficiary has been so designated, then the award will be paid to a beneficiary designated for purposes of Heller's Basic Life Insurance plan and, if no This Plan is effective for the calendar years 2000 through 2001 and is subject to amendment by the Committee in its sole discretion, provided that no such amendment may reduce the value of the benefits payable under the Plan.

Plan Participants will be notified of an amendment to the Plan within a reasonable time after the amendment has been effected.

Withholding and Benefits

Heller will withhold from any amounts payable under this Plan all federal, state, city and local taxes as shall be legally required as well as any other amounts authorized or required by employer policy including, but not limited to, withholding for garnishments and judgments or other court orders.

Amounts accrued or paid under this Plan shall not be included or considered in determining any benefits under any pension, retirement, profit sharing, group insurance or other benefit plan of Heller or any of its affiliates.

Employment Rights

The Plan does not constitute a contract of employment and participation in the Plan will not give a Plan participant the right to be rehired or retained in the employ of Heller on a full-time, part-time, or any other basis, nor will participation in the Plan give any Plan participant any right or claim to any benefit under the Plan unless such right or claim has specifically accrued under the terms of the Plan.

Company's Decision Final

Any interpretation of the Plan and any decisions, calculations and determinations made by the Committee on all matters relating to the Plan or the administration thereof shall be final and binding.

Incentive Awards not Distributed to Participants

Any portion of incentive compensation not earned and disbursed at the end of the performance period will be retained by the Company.

EX-10.M 7 0007.htm 2000-2001 LONG-TERM INCENTIVE PLAN 2000-2001 LONG-TERM INCENTIVE PLAN

Heller Financial, Inc.
2000-2002
Long-Term Incentive Plan

I.	Purpose of the Plan

The 2000-2002 Long-Term Incentive Plan (the "Plan") is an integral part of the total compensation strategy of Heller Financial, Inc. ("Heller"). The Plan has been designed to:

		Enhance Heller's ability to attract and retain valued executives.

		Focus Heller's executives on Heller's long-term goals and objectives.

		Motivate executives by enhancing Heller's pay-for-performance environment.

		Promote teamwork.

		Align executives with shareholder interests.

		Diversify the sources of long-term compensation beyond stock options and restricted stock.

II.	Plan Participants

The participants in the Plan will be those members of senior management who are (1) designated as participants by the Compensation Committee of Heller's Board of Directors (the " Committee") at the beginning of the Plan or (2) are newly hired or promoted after the beginning of the Plan and are designated as participants either by the Committee or the Chief Executive Officer of Heller. No person who otherwise participates in another business unit long-term incentive plan shall be eligible to participate in the Plan. Grants to the Chief Executive Officer and Chief Operating Officer of Heller shall in all events be subject to the approval of the Committee.

III.	Grants and Valuation of Performance Units

Performance units will be granted at the beginning of the Plan (or to newly hired or promoted individuals after the beginning of the Plan) and will be valued after the designated performance period for the Plan. Performance units represent only economic interests in the Plan and do not represent actual equity in Heller common stock or otherwise.

IV. Performance Period

The performance period for the Plan will be from January 1, 2000 through December 31, 2002.

V. Goal Setting/Value Determination

The value of a performance unit for the Plan will be based on the arithmetic average (giving a 50% weighting to each) of: (i) a three year average return on equity (ROE) goal and (ii) a three year average earnings per unit (EPS) goal, in each case for the two year period from January 1, 2000 through December 31, 2002.

The performance grid shown below will be used in determining actual unit value.

ROE (50%) EPS (50%)

3 Year Average Unit Value 3 Year Average Unit Value

15.00%

$200

$3.55

$200

14.50%

$160

$3.40

$160

14.00%

$135

$3.30

$135

13.50%

$115

$3.20

$115

13.00%

$100

$3.10

$100

12.50%

$ 85

$3.00

$ 85

12.00%

$ 60

$2.90

$ 60

Less than 12.0%

0

Less than $2.90

0

By way of example, if the 3 Year Average ROE is 13.50% (with a corresponding Unit Value of $115) and the 3 Year Average EPS is $3.30 (with a corresponding Unit Value of $135), then the value of a unit granted under the Plan will be (115 + 135)/2 = $125.

Extraordinary gains and losses shall, in the discretion of the Committee, be excluded from the calculation of ROE and EPS.

VI. Performance Units Available under the Plan

The number of performance units granted under the Plan will be established by the Committee from time to time and shall include grants made by the Chief Executive Officer after the beginning of the Plan as contemplated above.

VII. Distributions of Awards

Performance units will be distributed as soon as practical after the end of the performance period. Payments will be made in shares of Class A Common Stock of Heller (" Common Stock"), based upon the New York Stock Exchange closing price thereof on December 31, 2002, and in cash in lieu of fractional shares of Common

Stock. Participants may elect to defer shares of Common Stock to be awarded under the Plan, and/or any cash to be paid in lieu of fractional shares of Common Stock, into the Heller Executive Deferred Compensation Plan.

VIII.	Administration

	General

	The Plan shall be administered by or under the authority of the Committee. Subject to the provisions of the Plan, the Committee shall have the authority to approve eligibility to participate in the Plan, to establish the terms and conditions under which the awards become payable, and to adopt such rules and regulations and make all other determinations deemed necessary or desirable for the implementation and administration of the Plan.

	Termination of Employment

	A Plan participant must be an active employee of Heller at the time payment of incentive compensation is paid after the end of the performance period (December 31, 2002) to be eligible for any incentive compensation under the Plan. Except as set forth below, in the event that for any reason a Plan participant ceases to be an active employee of Heller before the time of the payment of the incentive compensation under the Plan, no incentive compensation will be deemed to have been earned by the Plan participant during the performance period.

	Notwithstanding the above, any Plan participant who becomes permanently disabled (as defined by, or otherwise for purposes of, Heller's long-term disability plan) or retires during a performance period will be fully vested in his or her grant of performance units. Awards will be paid at the time that awards are distributed to all other Plan participants, with performance units being valued after the end of the performance period as determined for all other Plan participants under Section V above, but pro-rated according to the number of whole months actually worked by the participant prior to his or her disability or retirement.

	Notwithstanding the above, any Plan participant who dies during a performance period will be fully vested in his or her grant of performance units, which will be valued at $100 per unit and otherwise pro-rated according to the number of whole months actually worked by the participant before his or her death. Awards will be paid as soon as practicable after death to a beneficiary previously designated by the participant in writing specifically for purposes of the Plan. If no beneficiary has been so designated, then the award will be paid to a beneficiary designated for purposes of Heller's Basic Life Insurance plan and, if no

beneficiary has been so designated, then to the participant's estate or as otherwise required by law.

Plan Termination

This Plan is effective for the calendar years 2000 through 2002 and is subject to amendment by the Committee in its sole discretion, provided that no such amendment may reduce the value of the benefits payable under the Plan.

Plan Participants will be notified of an amendment to the Plan within a reasonable time after the amendment has been effected

Withholding and Benefits

Heller will withhold from any amounts payable under this Plan all federal, state, city and local taxes as shall be legally required as well as any other amounts authorized or required by employer policy including, but not limited to, withholding for garnishments and judgments or other court orders.

Amounts accrued or paid under this Plan shall not be included or considered in determining any benefits under any pension, retirement, profit sharing, group insurance or other benefit plan of Heller or any of its affiliates.

Employment Rights

The Plan does not constitute a contract of employment and participation in the Plan will not give a Plan participant the right to be rehired or retained in the employ of Heller on a full-time, part-time, or any other basis, nor will participation in the Plan give any Plan participant any right or claim to any benefit under the Plan unless such right or claim has specifically accrued under the terms of the Plan.

Company's Decision Final

Any interpretation of the Plan and any decisions, calculations and determinations made by the Committee on all matters relating to the Plan or the administration thereof shall be final and binding.

Incentive Awards not Distributed to Participants

Any portion of incentive compensation not earned and disbursed at the end of the performance period will be retained by the Company.

EX-10.N 8 0008.htm DEFERRAL RESTORATION PLAN DEFERRAL RESTORATION PLAN

Heller Financial, Inc. Deferral Restoration Plan

(Effective January 1, 2001)

Winston & Strawn

Chicago

Heller Financial, Inc. Deferral Restoration Plan
(Effective January 1, 2001)

ARTICLE I
Introduction

1.1. Plan. Heller Financial, Inc. (the "Company") hereby establishes the Heller Financial, Inc. Deferral Restoration Plan (the "Plan"), for the benefit of eligible employees of the Company and those subsidiaries and affiliates of the Company which are participating employers.

1.2. Effective Date. The Plan is effective January 1, 2001 (the "Effective Date"). The Plan's records will be maintained on the basis of a "Plan Year" that is the same as the calendar year.

1.3. Employers. The Company is one "Employer" under the Plan. In addition, each subsidiary or affiliate of the Company that participates in the Heller Financial, Inc. Savings and Profit Sharing Plan (the "401(k) Plan") will be an "Employer" under this Plan, from the date that the subsidiary or affiliate first becomes an employer under the 401(k) Plan until the date the subsidiary or affiliate ceases to be an employer under the 401(k) Plan. The Company and those subsidiaries and affiliates that participate in the Plan are sometimes referred to collectively as the " Employers."

1.4. Purpose. The Plan is intended to supplement the retirement benefits provided by the 401(k) Plan, by permitting a select group of management or highly compensated employees to defer amounts they cannot defer under the 401(k) Plan because of the limitations of Sections 401(a)(17), 401(k)(3), 401(m)(2), 402(g) and 415 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated under it (the "Code"). By supplementing the retirement benefits of certain executives in this way, the Employers hope to be more competitive in attracting and retaining top-quality personnel. The Plan is also an integral part of the Company's "total compensation" philosophy.

ARTICLE II
Eligibility

2.1. Eligibility. Subject to the conditions and limitations of the Plan, all leadership executives (defined for purposes of the Plan as executives in salary grades 18 and above) of an Employer will be permitted to participate. In addition, other executives of an Employer that the Committee (as hereinafter defined) identifies as eligible will be permitted to participate. Executives who are permitted to participate are referred to as "Eligible Employees."

2.2. Effective Date of Participation; Deferral Agreements. An Eligible Employee becomes a " Participant" in the Plan on the date his or her first election to participate under this Section 2.2 becomes effective. An Eligible Employee must elect before the beginning of each Plan Year whether to participate for that Plan Year. If an Eligible Employee elects to participate for a given year, the amount credited to him or her under Section 3.1 will be determined

according to his or her deferral elections under the 401(k) Plan, and will begin, end and vary with his or her deferral election under the 401(k) Plan. Notwithstanding the foregoing, if an individual becomes an Eligible Employee part-way through a Plan Year, he or she must elect whether or not to participate for the remainder of the Plan Year within thirty days after he or she becomes an Eligible Employee, and his or her election to participate in this Plan will become effective as soon as practicable after it has been properly made.

2.3. Inactive Participation. A Participant becomes an "Inactive Participant" when he or she ceases to be an Eligible Employee, and continues as an Inactive Participant until he or she has been paid all amounts allocated to his or her account under the Plan. An Inactive Participant has all the Plan rights of other Participants, except the right to receive allocations of contributions for periods of time after he or she ceased to be an Eligible Employee. The beneficiary of a deceased Participant will be considered an Inactive Participant as to any unpaid accounts of the deceased Participant.

ARTICLE III
CONTRIBUTIONS

3.1. Supplemental Pre-tax Salary Deferral Contributions. Each pay period, each Participant will be credited with a "Supplemental Pre-tax Salary Deferral Contribution" equal to the difference, if any, between: (a) the amount that would have been allocated to him or her for that pay period as a pre-tax salary deferral under the 401(k) Plan if the limitations of Code Sections 401(a)(17), 401(k)(3), 402(g) and 415 did not exist; and (b) the amount that actually was allocated to him or her for that pay period as a pretax salary deferral under the 401(k) Plan. In addition, each Participant in this Plan will be deemed to have made an irrevocable election to credit to his or her account for any Plan Year an amount equal to the amount, if any, by which the pretax salary deferrals allocated to him or her under the 401(k) Plan for that Plan Year are actually reduced in order to ensure that the 401(k) Plan complies with Code Section 401(k)(3).

3.2. Supplemental Matching Contributions. As of each January 1 and July 1, each Participant will be credited with a "Supplemental Matching Contribution" equal to the difference, if any, between: (a) the matching contribution that would have allocated to the Participant under the 401(k) Plan for the six-month period just ended if Code Sections 401(a)(17), 401(m)(2), and 415 did not exist; and (b) the matching contribution actually allocated to the Participant under the 401(k) Plan for the six-month period just ended. In addition, as of the end of each Plan Year, each Participant will be credited an amount equal to the amount, if any, by which the matching contributions allocated to him or her under the 401(k) Plan for that Plan Year are actually reduced in order to ensure that the 401(k) Plan complies with Code Section 401(m)(2). No Participant will be entitled to any earnings on any amount allocated under the preceding sentence for any period of time before the amount is actually allocated.

ARTICLE IV
Bookkeeping Accounts

4.1. Participant Accounts. All amounts allocated to a Participant per Article III will be credited to bookkeeping accounts. The Committee, or its delegate, will maintain a "Supplemental Pretax Salary Deferral Account" and a "Supplemental Matching Contributions Account" (together, the "Accounts") for each Participant. Each such account will reflect the allocations credited to the Participant, together with any deemed interest or income and any deemed expenses, losses or distributions credited to or charged against the allocations, in accordance with the deemed investment elections the Participant makes and any expenses the Committee or its delegate charges to Participants, per this Article IV. The rules regarding when and how contribution allocations are credited to Accounts will be the same as the rules regarding allocations of contributions under the 401(k) Plan.

4.2. Accounts Fully Vested. Each Participant will at all times be fully vested in his or her Accounts, as subject to adjustment per Section 4.1.

4.3. Investment Elections. The Committee will establish "Investment Funds," which will be two or more mutual funds or other group investment funds. In addition, the Committee may establish and Investment Fund consisting of the Company's Class A common stock, par value $0.25 (the "Company Stock Fund"). Income, gains, losses, expenses and distributions will be credited and charged in the manner dictated by each Investment Fund. Any or all of the Investment Funds may use a unit valuation method of accounting. The Committee may, in its sole discretion, from time to designate additional Investment Funds, or terminate existing Investment Funds.

At the time he or she begins to participate in the Plan, each Participant must make an investment election. The investment election must designate the portion of the amounts deferred that will be treated as invested in each available Investment Fund. All Supplemental Matching Contributions credited under the Plan will be deemed to be invested in the Company Stock Fund at all times.

A Participant's investment election will remain in effect for each allocation credited after the election is effective, until after the Participant properly submits a request to make a change in his investment election. Except as described below with regard to amounts invested in the Company Stock Fund, a Participant may change his or her investment election as to amounts allocated following the change in investment election, as to the investment allocation of the Participant's existing Accounts, or as to both matters. Any request to make a change in investment election must be filed or otherwise submitted to the party and in the form prescribed by the Committee and in the time and manner specified by the Committee. A Participant's initial investment election, or any request to make a change in investment election, will become effective in accordance with rules established by the Committee and applied uniformly to similarly situated Participants.

Notwithstanding any other provision of the Plan, any investment election made by a Participant that directs investment into the Company Stock Fund will be irrevocable. The

Company reserves the right to impose blackout periods during which no contributions or transfers may be made to the Company Stock Fund.

4.4. Company Responsibility for Plan Benefits; Funding. Benefits payable under the Plan to any Participant will be paid directly by the Company. The Company may, but is not required to, charge each Participant's Plan benefits back to the Participant's Employer, or, if the Participant was employed by more than one Employer during the time he or she was an active Participant, the Employers who employed the Participant while he or she participated actively in the Plan.. The Company will not be required to fund or otherwise segregate assets to be used to pay Plan benefits. While the Company may, in the discretion of the Committee, make investments in the mutual funds designated by the Committee as Investment Funds, in amounts that may or may not equal Participants' investment elections under this Plan, it will not be under any obligation to make those types of investments, and any such investment will remain an asset of the Company, subject to the claims of the Company's general creditors. Notwithstanding the foregoing, the Company may, in the discretion of the Committee, maintain one or more grantor trusts (each a "Trust") to hold assets to be used to pay Plan benefits. The assets of such a Trust will remain assets of the Company, subject to the claims of its general creditors. Any payments from a Trust of Plan benefits will discharge the Company of any further liability for those benefits.

ARTICLE V
Payment of Benefits

5.1. Election of Distribution Date and Form of Payment. At the time a Participant first elects to participate actively in the Plan, he or she must select the date as of which payment of his or her Accounts will begin. This date is the Participant's "Distribution Date." At the same time, the Participant must elect whether to receive his or her Accounts in one lump sum or in installments over five, ten or fifteen years.

The Distribution Date the Participant specifies in his or her initial election to participate must be:

(a) a particular date no earlier than the day after the first anniversary of the date the Participant files his or her first election to participate in the Plan;

(b) the date the Participant terminates employment for any reason with his or her Employer and all of its affiliates or a particular date coinciding with or next following that date (e.g., "January 1 coinciding with or next following my termination of employment with my employer and all of its affiliates"); or

The period during which an individual is receiving severance pay will not be considered active employment, and will be considered to be after the individual's termination of employment.

A Participant may make a one-time election after his or her initial election to change the Distribution Date, or the form in which his or her Accounts will be paid, or both, but the election

will be effective only if the Committee or its delegate receives it at least one year and one day before the Distribution Date originally elected by the Participant.

Except as provided in the following sentence, the Distribution Date election and the election the Participant makes as to the form in which his or her Accounts are to be paid will apply to all amounts credited to him or her under the Plan. If a Participant continues to participate actively in the Plan after the Distribution Date he or she initially elected, the Participant must select a new Distribution Date and new form of payment. The new election will apply only to amounts deferred by the Participant for calendar years following the year in which the Participant selects the new Distribution Date, and will be treated as the Participant's initial election as to those amounts.

5.2. Time and Method of Payment. A Participant's Accounts will be paid in a single lump sum or installments, as he or she elects per Section 5.1. If a Participant's Accounts are payable in a single lump sum, the payment will be made as soon as possible following the Participant's Distribution Date, in an amount equal to the value of the Participant's Accounts determined as short a time as practicable before the Distribution Date. If the Participant's Accounts are to be paid in installments, the Accounts will be paid in installments over the five-, ten- or fifteen-year period he or she elected, with payments beginning as soon as practicable after the Participant's Distribution Date. Each installment payment will be computed by dividing the amount determined to be credited to the Participant's Accounts as short a time as practicable before the installment payment is due, by the number of payments then remaining in the installment period.

5.3. Payment upon Disability. If a Participant becomes Disabled (as defined in the next sentence) before his or her Distribution Date, payment of his or her Accounts will be made or begin, in the form of payment elected under Section 5.1, as soon as practicable after the date the Committee determines the Participant is Disabled. A Participant will be deemed to be "Disabled" if he or she has a physical or mental condition that results from a bodily injury, disease, or mental disorder, and that renders him or her incapable, presumably permanently, of performing his or her normal employment duties. The Committee will determine, on the basis of the medical and other competent evidence it deems relevant, whether a Participant is Disabled.

5.4. Payment upon Death of A Participant. If a Participant dies before he or she has received all or part of his or her Accounts, the amount remaining to be paid will be paid to the Participant's Beneficiary. Notwithstanding any election by a Participant regarding the timing and manner of payment of his or her Accounts, the Committee will determine in its sole discretion how and when the Participant's Accounts will be paid to his or her Beneficiary.

5.5. Beneficiary. If a Participant is married on the date of his or her death, then his or her Beneficiary will be his or her spouse. Notwithstanding the foregoing, the Participant may, with the written consent of his or her spouse, name someone other than his or her spouse as a Beneficiary or Beneficiaries. A Beneficiary designation will be effective only if it is filed with the Committee or other party designated by the Committee, in the form specified by the Committee. A Participant may revoke an existing Beneficiary designation by filing another Beneficiary designation with the Committee. The latest proper Beneficiary designation received by the Committee will control.

If a Participant fails to name a Beneficiary or survives all of his or her named Beneficiaries, his or her Accounts will be paid to the individual or individuals named as his or her beneficiary under the 401(k) Plan, or, if the Participant has not named a beneficiary under the 401(k) Plan, in the following order of precedence:

(a) to the Participant's spouse;

(b) to the Participant's children (including adopted children), per stirpes; or

A married Participant may designate someone other than his or her spouse as Beneficiary of all or part of his or her Accounts only if the spouse validly consents to the designation. To be valid, a spousal consent:

(a) must be in writing acknowledging the effect of the consent;

(b) must be witnessed by a notary public;

(d) must designate a Beneficiary or Beneficiaries who may not be changed by the Participant without the spouse's consent, unless the Participant names his or her spouse as sole Beneficiary or the spouse's consent expressly permits the Participant to make further Beneficiary designations without the further consent of the Participant's spouse.

5.6. Medium of Payment. Any portion of a Participant's Account that is deemed to be invested in the Company Stock Fund will be paid in the form of whole shares of Company Stock, with cash paid for fractional shares of Company Stock. All other amounts owing under the Plan will be paid in cash.

5.7. Unforeseeable Financial Emergency. If the Committee determines that a Participant has incurred an Unforeseeable Financial Emergency (as defined below) it will permit the Participant to receive a portion of the amount credited to his or her Supplemental Pretax Salary Deferral Account equal to the amount needed to satisfy the Unforeseeable Financial Emergency. A Participant may take a "withdrawal" under the preceding sentence only to the extent that the Unforeseeable Financial Emergency cannot be relieved: (a) through reimbursement or compensation by insurance or otherwise; or (b) by liquidation of the Participant's assets, to the extent liquidation of those assets would not itself cause the Participant severe financial hardship.

An "Unforeseeable Financial Emergency" is a severe financial hardship to the Participant resulting from:

(a) a sudden and unexpected illness or accident of the Participant or of a dependent of the Participant;

(b) loss of the Participant's property due to casualty; or

(c) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant and determined by the Committee to constitute an Unforeseeable Financial Emergency.

Notwithstanding the foregoing, no portion of a Participant's Supplemental Pretax Salary Deferral Account that is "invested" in the Company Stock Fund may be withdrawn under this Section 5.7 under any circumstances. A withdrawal on account of an Unforeseeable Financial Emergency will be paid in cash as soon as possible after the date on which the Committee approves the withdrawal.

If a Participant meets the conditions necessary to take a withdrawal from the Plan on account of an Unforeseeable Financial Emergency and at the same time meets the conditions necessary to take a withdrawal on account of unforeseeable Financial Emergency under the Heller Financial, Inc. Executive Deferred Compensation Plan or to take a hardship withdrawal from a 401(k) plan (including the 401(k) Plan), the Participant must take the maximum amount available on account of an Unforeseeable Financial Emergency under the Heller Financial, Inc. Executive Deferred Compensation Plan before his or her application for a distribution under this Section 5.7 will be considered. If the Participant then still meets the conditions necessary to take both a withdrawal from the Plan on account of an Unforeseeable Financial Emergency and a hardship withdrawal from a 401(k) plan, he or she must take the maximum amount available from this Plan on account of Unforeseeable Financial Emergency before his or her application for a hardship distribution from 401(k) plan (including the 401(k) Plan) will be considered.

5.8 Withholding of Taxes The Company will withhold any applicable Federal, state or local income tax from payments due under the Plan. The Company will also withhold Social Security taxes, including the Medicare portion of those taxes, and any other employment taxes necessary to comply with applicable laws. To the extent that a Participant's Accounts do not contain sufficient cash to satisfy the applicable taxes, the Company will liquidate shares of Company Stock that may be held for a Participant who directed the investment of all or a portion of his or her Accounts into the Company Stock Fund, and use the funds obtained to satisfy the taxes.

5.9 Cashout of Account Balances. Notwithstanding a Participant's election regarding the timing and manner of payment of his or her Accounts, if a Participant terminates employment with his or her Employer and all of its affiliates, and if the entire value of his or her Accounts is then or later less than $100,000, the Participant's Employer or the Company may direct that he or she be paid a lump sum distribution of the entire value of his or her Accounts. Also notwithstanding a Participant's election regarding the timing and manner of payment of his or her Accounts, if a Participant terminates employment with his or her employer and all of its affiliates the Committee may in its sole discretion direct that the Participant be paid the entire value of his or her Accounts in one lump sum, regardless of their size. For purposes of this Section 5.9, the value of a Participant's Accounts will be determined as of the date of his or her termination of employment, or as of a date as soon thereafter as practicable.

ARTICLE VI
Plan Administration

6.1. Administration by the Committee. The Plan will be administered by a committee appointed by the Compensation Committee of the Board of Directors of the Company (the "Compensation Committee") or, if the Compensation Committee fails to appoint such a committee, by the Compensation Committee. If the Compensation Committee does appoint a committee to administer the Plan, that committee's members will serve at the pleasure of the Compensation Committee and may be removed, with or without cause, by the Compensation Committee. The committee that administers the Plan is known as the " Committee." As of the date of adoption of this Plan, the Compensation Committee had appointed the Company's Benefits Committee as the Committee.

6.2. Powers and Duties of Committee. The Committee will administer the Plan in accordance with its terms and has all powers necessary to carry out its provisions. The Committee has the power to interpret the Plan, and will determine all questions arising in the administration, interpretation, and application of the Plan, including but not limited to, questions of eligibility and the status and rights of employees, Participants and other persons. Any decision of the Committee regarding the Plan will be final and binding on all persons. Benefits under this Plan will be paid only if the Committee or its representative decides in its discretion that the applicant is entitled to them. All rules and determinations of the Committee will be uniformly and consistently applied to all persons in similar circumstances. To the extent not inconsistent with this Plan, all provisions set forth in (and promulgated under) the 401(k) Plan regarding the administrative powers and duties of the Committee, expenses of administration, and procedures for filing claims, will also apply to this Plan.

The Committee may delegate some or all of its authority under the Plan to one or more officers or directors of the Company, and may delegate administrative responsibilities to one or more employees of the Company, or to one or more outside vendors.

ARTICLE VII
Amendment or Termination

7.1. Amendment or Termination. The Company intends the Plan to be permanent but reserves the right to modify, amend or terminate it at any time, by action of the Board of Directors of the Company or of a person or persons duly authorized by the Board of Directors.

7.2. Effect of Amendment or Termination. No amendment or termination of the Plan will reduce or eliminate any Account accrued through the date of amendment or termination, as adjusted pursuant to Section 4.1. If and when the Plan is terminated, the amounts in each Participant's Accounts will be distributed to him or her or his or her beneficiary, in the manner and at the time described in Article V. No allocations will be made to any Participant's Account for any period of time after the Plan is terminated, but the Committee will continue to credit gains and losses to Participants' Accounts pursuant to Article IV, until the Accounts have been fully distributed.

ARTICLE VIII
Miscellaneous

8.1. Participant's Rights Unsecured. The Plan will at all times be unfunded. The right of a Participant or Beneficiary to receive benefits under this Plan will be an unsecured claim against the general assets of his or her Employer, and neither the Participant nor any Beneficiary has any rights in or against any specific assets of the Employers.

8.2. Benefit Statements. The Committee or its delegate will provide each Participant and Beneficiary with a statement of the amounts credited to him or her under the Plan at the same time and in the same manner as the Participant or Beneficiary is provided with a statement of his or her Accounts under the 401(k) Plan.

8.3. Employment Rights. The establishment and maintenance of the Plan must not be construed to give any Eligible Employee the right to be retained in any Employer's service, or to any benefits not specifically provided by the Plan.

8.4. Interests Not Transferable. Except as to withholding of any taxes under the laws of the United States or any state or locality and as to a Participant's ability to name a Beneficiary, no benefit payable at any time under the Plan will be subject in any manner to alienation, sale, transfer, assignment, pledge, attachment or other legal process or encumbrance of any kind. Any attempt to alienate, sell, transfer, assign, pledge or otherwise encumber any Plan benefits, whether then or later payable, will be void. No person will in any manner be liable for or subject to the debts or liabilities of any person entitled to those benefits. If any person attempts to, or does, alienate, sell, transfer, assign, pledge or otherwise encumber his or her benefits under the Plan, or if by any reason of his or her bankruptcy or other event's happening at any time, his or her benefits would devolve upon any other person or would not be enjoyed by the person entitled to them under the Plan, then the Committee, in its discretion, may terminate the interest in those benefits of the person entitled to them under the Plan and hold or apply them for or to the benefit of the person entitled to them under the Plan or to his or her spouse, children or other dependents, or any of them, in whatever manner the Committee deems proper.

8.5. Controlling Law. To the extent it is not preempted by the Employee Retirement Income Security Act of 1974, as amended, the law of Illinois (other than its choice of law provisions) will control in all matters relating to the Plan.

8.6. Incapacity. If any person entitled to benefits under the Plan is deemed to be incapable of personally receiving and giving a valid receipt for payment of the benefits, then, unless and until a duly appointed guardian or other legal representative of the person makes a claim for the benefits, the Committee or its delegate may pay all or part of the amount due to any other person or institution then contributing toward or providing for the care and maintenance of the person. A payment made under the previous sentence will completely discharge any liability of the Committee or the Employers relating to make the payment under the Plan.

8.7. Successors. The Plan will be binding upon the successors to the Company and the Employers.

8.8. Unclaimed Benefit. If the Committee or its designee is unable to distribute any part of a Participant's Accounts because it cannot, despite conducting a reasonable search, locate the Participant or his Beneficiary within two years after the date a Plan payment becomes due, the Accounts will be deemed an "unclaimed amount." Unclaimed amounts will be forfeited, and any forfeiture will reduce the obligations of the Employers under the Plan. After an unclaimed amount has been forfeited, the Participant or Beneficiary, as applicable, will have no further right to his or her Accounts.

8.9. Limitations on Liability. Notwithstanding any other provision of the Plan, neither the Committee, the Employers, nor any individual acting as an employee or agent of the Committee or an Employer, will be liable to any Participant, former Participant, Beneficiary or other person for any claim, loss, liability or expense incurred in connection with the Plan.

8.10. Claims Procedure. A claim for a Plan benefit shall be deemed filed when a written communication is made by a Participant or Beneficiary, or the authorized representative of either, which is reasonably calculated to bring the claim to the attention of the Committee. If a claim is wholly or partly denied, notice of the denial will be furnished to the claimant in writing within 90 days after the Committee receives the claim. The notice will set forth, in a manner calculated to be understood by the claimant: (a) the specific reason or reasons for the denial; (b) specific reference to pertinent Plan provisions on which the denial is based; (c) a description of any additional material or information necessary to perfect the claim and an explanation of why that material or information is necessary; and (d) an explanation of the Plan's claims review procedure. If no such notice is furnished to the claimant within 90 days after the Committee receives the claim, the claim will be deemed to have been wholly denied.

Within 90 days after receiving the notice of denial, a claimant may appeal the denial to the Committee for a full and fair review. A request for review will be deemed filed as of the date the Committee receives it. The claimant or his or her authorized representative will have the right to review all pertinent documents, may submit issues and comments in writing and may do any other appropriate things the Committee allows. The Committee will make its decision on review no later than 60 days after it receives the request for review, unless special circumstances require an extension of time, in which case the Committee will render its decision no later than 120 days after it receives the request for review. The decision on review will be final and binding on the claimant.

8.11. Gender and Number. Words in the masculine gender include the feminine, words in the plural include the singular, and words in the singular include the plural, unless the context requires otherwise. Headings are included for reference only, and are not to be construed so as to alter the terms of this Plan.

8.12. Indemnification. The Company and each Employer indemnify and hold harmless each member of the Committee, or any employee of the Company or an Employer, or any individual acting as an employee or agent of either of them (to the extent not indemnified or saved harmless under any liability insurance or any other indemnification arrangement) from any and all claims, losses, liabilities, costs and expenses (including attorneys' fees) arising out of any actual or alleged act or failure to act made in good faith pursuant to the provisions of the Plan or the Trust, including expenses reasonably incurred in the defense of any claim relating thereto

with respect to administration of the Plan or the Trust, except that no indemnification or defense will be provided to any person as to any conduct that has been judicially determined, or agreed by the parties, to have constituted willful misconduct on the part of that person, or to have resulted in his or her receipt of personal profit or advantage to which he or she is not entitled.

8.13. Action by the Company. Except as otherwise specifically provided in this document, any action required of or permitted to be taken by the Company under the Plan must be taken by resolution of the Board of Directors of the Company, by action of the Committee or of a member of the Committee, or by a person or persons or committee authorized by resolution of the Board of Directors of the Company or the Committee.

8.14. Voting Company Stock. Any Participant that has directed or directs the deemed investment of any part of his or her Accounts into the Company Stock Fund will have the right to direct the voting of shares of Company Stock allocated to his or her Accounts, according to the procedures and deadlines established by the Committee or its delegate.

Executed in multiple originals this _____ day of __________________, 2000.

	Heller Financial, Inc.

	By:	____________________________
	Title:	____________________________

EX-12 9 0009.htm COMPUTATION OF RATIO OF EARNINGS COMPUTATION OF RATIO OF EARNINGS

EXHIBIT (12)

HELLER FINANCIAL, INC.

COMPUTATION OF RATIO OF EARNINGS

TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS

	2000		1999		1998		1997		1996
	(dollar amounts in millions)

Net income before income taxes and minority interest	$ 431		$ 439		$290		$233		$183
Add-Fixed charges
Interest and debt expense	999		685		624		516		452
One-third of rentals	10		10		11		8		7

Total fixed charges	1,009		695		635		524		459

Net income as adjusted	1,440		1,134		925		757		642

Ratio of earnings to fixed charges	1.43	x	1.63	x	1.46	x	1.44	x	1.40	x

Preferred stock dividends on a pre-tax basis	$ 43		$ 44		$ 31		$ 21		$ 13
Total combined fixed charges and preferred stock dividends	1,052		739		666		545		472
Ratio of earnings to combined fixed charges and preferred stock dividends	1.37	x	1.53	x	1.39	x	1.39	x	1.36	x

For purposes of computing the ratio of earnings to combined fixed charges and preferred stock dividends, earnings includes income before income taxes, minority interest and fixed charges. Combined fixed charges and preferred stock dividends includes interest on all indebtedness, one third of annual rentals (approximate portion representing interest) and preferred stock dividends on a pre-tax basis.

EX-21 10 0010.htm SUBSIDIARIES OF THE REGISTRANT SUBSIDIARIES OF THE REGISTRANT

EXHIBIT (21)

SUBSIDIARIES OF THE REGISTRANT

As of February 1, 2001

Subsidiaries		Jurisdiction in Which Incorporated
Heller Capital Management, Inc.		Delaware
Heller Financial Leasing, Inc.		Delaware
Heller International Group, Inc.		Delaware
Heller Holding France, S.A.		France
Factofrance Heller, S.A.		France

The names of all other subsidiaries of the Company are omitted because such unnamed subsidiaries, considered in the aggregate as a single subsidiary, would not constitute a Significant Subsidiary as defined by the SEC.

EX-23 11 0011.htm CONSENT OF INDEPENDEN PUBLIC ACCOUNTATNS CONSENT OF INDEPENDEN PUBLIC ACCOUNTATNS

EXHIBIT 23

HELLER FINANCIAL, INC. AND SUBSIDIARIES

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Heller Financial, Inc.

As independent public accountants, we hereby consent to the incorporation of our report dated January 16, 2001 (except with respect to the matters discussed in Note 27, as to which the date is February 16, 2001) included in this Form 10-K, into the Company’s previously filed Registration Statement on Form S-3 No. 333-58725.

/S / ARTHUR ANDERSEN LLP

Chicago, Illinois

March 1, 2001

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Date of payment, delivery or cancellation	Amount of interest then paid	Principal amount of Permanent Global Note then delivered or by which Permanent Global Note then increased or aggregate principal amount of Definitive Notes then delivered	Aggregate principal amount of Notes then cancelled	Remaining principal amount of this Temporary Global Note	Authorised Signature

ROE (50%)		EPS (50%)
3 Year Average	Unit Value	3 Year Average	Unit Value
15.00%	$200	$3.55	$200
14.50%	$160	$3.40	$160
14.00%	$135	$3.30	$135
13.50%	$115	$3.20	$115

13.00%	$100	$3.10	$100

12.50%	$ 85	$3.00	$ 85
12.00%	$ 60	$2.90	$ 60
Less than 12.0%	0	Less than $2.90	0



By way of example, if the 3 Year Average ROE is 13.50% (with a corresponding Unit Value of $115) and the 3 Year Average EPS is $3.30 (with a corresponding Unit Value of $135), then the value of a unit granted under the Plan will be (115 + 135)/2 = $125.

Extraordinary gains and losses shall, in the discretion of the Committee, be excluded from the calculation of ROE and EPS.

VI.	Performance Units Available under the Plan

The number of performance units granted under the Plan will be established by the Committee from time to time and shall include grants made by the Chief Executive Officer after the beginning of the Plan as contemplated above.

VII.	Distributions of Awards

Performance units will be distributed as soon as practical after the end of the performance period. Payments will be made in shares of Class A Common Stock of Heller (" Common Stock"), based upon the New York Stock Exchange closing price thereof on December 31, 2002, and in cash in lieu of fractional shares of Common

	beneficiary has been so designated, then to the participant's estate or as otherwise required by law.

	Plan Termination

	This Plan is effective for the calendar years 2000 through 2002 and is subject to amendment by the Committee in its sole discretion, provided that no such amendment may reduce the value of the benefits payable under the Plan.

	Plan Participants will be notified of an amendment to the Plan within a reasonable time after the amendment has been effected

	Withholding and Benefits

	Heller will withhold from any amounts payable under this Plan all federal, state, city and local taxes as shall be legally required as well as any other amounts authorized or required by employer policy including, but not limited to, withholding for garnishments and judgments or other court orders.

	Amounts accrued or paid under this Plan shall not be included or considered in determining any benefits under any pension, retirement, profit sharing, group insurance or other benefit plan of Heller or any of its affiliates.

	Employment Rights

	The Plan does not constitute a contract of employment and participation in the Plan will not give a Plan participant the right to be rehired or retained in the employ of Heller on a full-time, part-time, or any other basis, nor will participation in the Plan give any Plan participant any right or claim to any benefit under the Plan unless such right or claim has specifically accrued under the terms of the Plan.

	Company's Decision Final

	Any interpretation of the Plan and any decisions, calculations and determinations made by the Committee on all matters relating to the Plan or the administration thereof shall be final and binding.

	Incentive Awards not Distributed to Participants

	Any portion of incentive compensation not earned and disbursed at the end of the performance period will be retained by the Company.