-----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, HZolPm5oFxI9FMTwfvJlwzZwI2GileT/c4dfTgrUnHLoCKjvpw673I5bD4ipsaNJ yAgLq535k2mQaDN5SguCFw== 0000950147-98-000840.txt : 19981028 0000950147-98-000840.hdr.sgml : 19981028 ACCESSION NUMBER: 0000950147-98-000840 CONFORMED SUBMISSION TYPE: 424B2 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19981027 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FINOVA CAPITAL CORP CENTRAL INDEX KEY: 0000043960 STANDARD INDUSTRIAL CLASSIFICATION: SHORT-TERM BUSINESS CREDIT INSTITUTIONS [6153] IRS NUMBER: 941278569 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B2 SEC ACT: SEC FILE NUMBER: 333-38171 FILM NUMBER: 98730986 BUSINESS ADDRESS: STREET 1: 1850 N CENTRAL AVE STREET 2: PO BOX 2209 CITY: PHOENIX STATE: AZ ZIP: 85004-2209 BUSINESS PHONE: 6022076900 MAIL ADDRESS: STREET 1: 1850 N. CENTRAL AVENUE STREET 2: P.O. BOX 2209 CITY: PHOENIX STATE: AZ ZIP: 85002-2209 FORMER COMPANY: FORMER CONFORMED NAME: GREYHOUND FINANCIAL CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: GREYHOUND LEASING & FINANCIAL CORP DATE OF NAME CHANGE: 19870330 424B2 1 PROS. SUPPLEMENT & PROSPECTUS OF FINOVA Filed Pursuant to Rule 424(b)(2) Registration Nos. 333-38171 and 333-38171-01 PROSPECTUS SUPPLEMENT FINOVA (To Prospectus dated August 7, 1998) FINOVA Capital Corporation $300,000,000 1850 N. Central Avenue 6 1/4% NOTES DUE P.O. Box 2209 NOVEMBER 1, 2002 Phoenix, Arizona 85002-2209 TERMS OF NOTES * Interest paid on May 1 and November * Global securities held by The 1, accruing from the date we issue Depository Trust Company, the Notes. generally. * First interest payment date on May * No redemption before maturity. No 1, 1999. sinking fund. For more details, see "Note Terms" and "Description of the Securities." TERMS OF SALE Underwriting Price to Discounts and Proceeds to Public Commissions FINOVA ------------ ------------- ------------ Per Note................... 99.617% .450% 99.167% Total...................... $298,851,000 $1,350,000 $297,501,000 - --------- Accrued interest from the issuance date will be added to the price to the public. The Notes have not been approved or disapproved by the SEC or any state securities commission. None of those authorities has determined that the Prospectus or this Supplement is accurate or complete. Any representation to the contrary is Book entry delivery of Notes expected a criminal offense. on October 28, 1998, subject to conditions. MORGAN STANLEY DEAN WITTER DONALDSON, LUFKIN & JENRETTE GOLDMAN, SACHS & CO. The date of this Prospectus Supplement is October 23, 1998 YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. WE HAVE AUTHORIZED NO ONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN ANY LOCATION WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS, INCLUDING INFORMATION INCORPORATED BY REFERENCE, IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THE PROSPECTUS OR THE DATE OF THE INFORMATION IN THOSE INCORPORATED REPORTS, AS APPLICABLE. ------------------ TABLE OF CONTENTS Page ---- PROSPECTUS SUPPLEMENT FINOVA Capital Corporation ............................................. S-3 Note Terms.............................................................. S-3 Underwriting............................................................ S-4 Recent Developments..................................................... S-4 PROSPECTUS Where You Can Find More Information..................................... 2 The Companies........................................................... 2 Selected Financial Information.......................................... 5 Ratio Of Income To Total Fixed Charges.................................. 5 Ratio Of Income To Combined Fixed Charges And Preferred Stock Dividends........................................................ 5 Special Note Regarding Forward-Looking Statements....................... 6 Use of Proceeds......................................................... 6 Description Of Debt Securities.......................................... 7 Description Of Capital Stock............................................ 13 Description Of Depositary Shares........................................ 18 Description of Warrants................................................. 20 Plan of Distribution.................................................... 20 Legal Matters........................................................... 21 Experts................................................................. 21 S-2 FINOVA CAPITAL CORPORATION FINOVA Capital Corporation Commercial Finance ("FINOVA" or "us") is a financial services company that provides a * Business Credit broad range of financing and capital * Commercial Services market products to mid-size business, * Corporate Finance principally in the U.S. We * Growth Finance concentrate on lending to midsize * Inventory Finance businesses and have been in operation * Rediscount Finance for over 43 years. Specialty Finance FINOVA extends revolving credit facilities, term loans, and equipment * Commercial Equipment Finance and real estate financing primarily * Communications Finance to "middle-market" businesses with * Franchise Finance financing needs falling generally * Healthcare Finance between $500,000 and $35 million. * Public Finance * Portfolio Services We operate in 16 specific * Resort Finance industry or market niches under three * Specialty Real Estate Finance market groups. We selected those * Transportation Finance groups because our expertise in evaluating the credit-worthiness of Capital Markets prospective customers and our ability to provide value-added services * FINOVA Realty Capital enable us to differentiate ourselves * FINOVA Investment Alliance from our competitors. That expertise and ability also enable us to command product pricing that provides a satisfactory spread over our borrowing costs. FINOVA's principal lines of business are detailed more fully in the Prospectus. Those lines include: NOTE TERMS The following description supplements the "Description of the Securities" section in the Prospectus. The Notes are to be issued as a separate series of securities under the Indenture dated as of March 20, 1998, between us and The First National Bank of Chicago, as Trustee. MAXIMUM AMOUNT: $300,000,000 principal amount MATURITY: November 1, 2002 INTEREST RATE: 6 1/4% per year INTEREST PAYMENT DATES: May 1 and November 1, accruing from the date we issue the Notes. First interest payment date is May 1, 1999. INTEREST CALCULATIONS: Based on a 360-day year of twelve 30-day months REDEMPTION OR SINKING FUND: None FORM OF NOTE: Two global securities, held in the name of The Depository Trust Company, generally SETTLEMENT AND PAYMENT: Same-day -- immediately available funds SECONDARY TRADING PAYMENTS: Same-day -- immediately available funds S-3 UNDERWRITING We have entered into an price set forth on the cover page of Underwriting Agreement dated October this Supplement. They may offer the 23, 1998 with Morgan Stanley & Co. Notes to certain dealers at that Incorporated, Donaldson, Lufkin & price less a concession of .25%. The Jenrette Securities Corporation and Underwriters or those dealers may Goldman, Sachs & Co., as allow a discount of .125% on sales to Underwriters. The agreement provides certain other dealers. After the that Morgan Stanley & Co. initial public offering of the Notes, Incorporated will purchase from us the Underwriters may change the $150,000,000 principal amount of the public offering price, concession to Notes, Donaldson, Lufkin & Jenrette dealers and discount. Securities Corporation will purchase $90,000,000 of the Notes and Goldman, The Notes are a new issue of Sachs & Co. will purchase $60,000,000 securities with no established of the Notes. The Underwriters will trading market. The Underwriters have purchase all of the Notes if any of advised us that they intend to act as the Notes are purchased. They need market makers for the Notes. They are not purchase any Notes unless certain not obligated to do so, however, and conditions are satisfied. We have they may discontinue any market agreed to indemnify the Underwriters making at any time without notice. against certain liabilities, Neither we nor the Underwriters can including civil liabilities under the assure the liquidity of any trading Securities Act of 1933, or to market for the Notes. contribute to payments which the Underwriters may be required to make The Underwriters and their for those liabilities. affiliates engage in transactions with or perform services for us in We must also pay the expenses of the ordinary course of business. this offering, which are expected to Those services include investment and be $425,000. Those expenses will commercial banking transactions and reduce the proceeds of this offering services, including serving as an received by us. agent and/or lender on some of our credit agreements. The Underwriters advise us that they propose to offer the Notes to the public initially at the offering RECENT DEVELOPMENTS On October 13, 1998, FINOVA primarily secured by accounts consummated the acquisition of United receivable. We seek to provide Credit Corporation, a New York-based financing ranging from $100,000 to $1 provider of commercial financing to million to small and midsize small and midsize businesses, and its businesses with annual sales under Patriot Funding Division. The $10 million. FINOVA anticipates that addition will form a new division this new division will enable us to named FINOVA Growth Finance, which serve a market segment of smaller, provides collateral-based working growth-oriented customers earlier in capital financing, their maturation cycle. S-4 Prospectus FINOVA 1850 North Central Avenue P.O. Box 2209 Phoenix, Arizona 85002-2209 THE FINOVA GROUP INC. FINOVA CAPITAL CORPORATION By this prospectus, we may offer up to $2,000,000,000 of our: DEBT SECURITIES We will provide the specific terms of COMMON STOCK (including, for The these securities in supplements to FINOVA Group Inc., Rights to Purchase this prospectus. You should read this Junior Participating Preferred Stock) prospectus and the supplements PREFERRED STOCK carefully before you invest. DEPOSITARY SHARES WARRANTS FINOVA Capital Corporation is a wholly We may offer the securities directly owned subsidiary of The FINOVA Group, or through underwriters, agents or Inc. dealers. The supplement will describe the terms of that plan of distribution. "Plan of Distribution" below also provides more information on this topic. These securities have not been approved or disapproved by the SEC or any state securities commission. None of those authorities has determined that this prospectus is accurate or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is August 7, 1998 WHERE YOU CAN FIND MORE INFORMATION The FINOVA Group Inc. ("FINOVA * Annual Reports on Form 10-K of Group") and FINOVA Capital Corporation FINOVA Group and FINOVA Capital ("FINOVA Capital") file annual, for the year ended December 31, quarterly and current reports, proxy 1997. and information statements and other information with the SEC. You may read * Portions of the Proxy Statement and copy any document we file at the on Schedule 14A for FINOVA SEC's public reference rooms at 450 Group's Annual Meeting of Fifth Street, N.W., Washington, D.C. Shareholders held on May 14, 20549. Please call the SEC at 1998 that have been incorporated 1-800-SEC-0330 for more information on by reference into our 10-K. the public reference room and their copy charges. Our SEC filings are also * Quarterly Reports on Form 10-Q available to the public from the SEC's of FINOVA Group and FINOVA web site at http://www.sec.gov, which Capital for the quarters ended may also be available on our web site March 31 and June 30 1998. at http://www.finova.com. You may also inspect our SEC reports and other * Current Reports on Form 8-K of information at the New York Stock FINOVA Group dated January 23, Exchange, 20 Broad Street, New York, April 27, and July 28, 1998. New York 10005. * Current Reports on Form 8-K of The SEC allows us to "incorporate FINOVA Capital dated January 23, by reference" the information we file April 27, and July 30, 1998. with them, which means we can disclose information to you by referring you to You may request a copy of those those documents. Information filings or any other information incorporated by reference is part of incorporated by reference in this this prospectus. Later information prospectus, including exhibits. You filed with the SEC updates and may do so orally or in writing by supersedes this prospectus. contacting us at: We incorporate by reference the Treasurer documents listed below and any future The FINOVA Group Inc. filings made with the SEC under 1850 North Central Avenue Sections 13(a), 13(c), 14 or 15(d) of P.O. Box 2209 the Securities Exchange Act of 1934 Phoenix, Arizona 85002-2209 until this offering is completed: (602) 207-6900 We will provide that information at no charge to you. THE COMPANIES FINOVA Group is a financial and our ability to provide value-added services holding company. Through our services enable us to differentiate principal subsidiary, FINOVA Capital, ourselves from our competitors. That we provide a broad range of financing expertise and ability also enable us and capital market products to to command pricing that provides a mid-size business. We concentrate on satisfactory spread over our borrowing lending to mid-size businesses. FINOVA costs. Capital has been in operation for over 43 years. We seek to maintain a high quality portfolio and to minimize non-earning We extend revolving credit assets and write-offs. We use clearly facilities, term loans, and equipment defined underwriting criteria and and real estate financing primarily to stringent portfolio management "middle-market" businesses with techniques. We diversify our lending financing needs falling generally activities geographically and among a between $500,000 and $35 million. range of industries, customers and loan products. We operate in 16 specific industry or market niches under three market Due to the diversity of our groups. We selected those groups portfolio, we believe we are better because our expertise in evaluating able to manage competitive changes in the credit-worthiness of prospective our markets and to withstand the customers impact of deteriorating economic conditions on a regional or 2 national basis. There can be no * REDISCOUNT FINANCE offers assurance, however, that competitive revolving credit facilities to changes, borrowers' performance, the independent consumer finance economic conditions or other factors industry including sales, will not result in an adverse impact automobile, mortgage and premium on our results of operations or finance companies. Typical financial condition. transaction sizes range from $1 million to $35 million. We generate interest, leasing, fee and other income through charges SPECIALTY FINANCE assessed on outstanding loans, loan * COMMERCIAL EQUIPMENT Finance servicing, leasing, brokerage and offers equipment leases, loans other activities. Our primary expenses and "turnkey" financing to a are the costs of funding our loan and broad range of midsize lease business, including interest companies. Specialty markets paid on debt, provisions for credit include the corporate aircraft losses, marketing expenses, salaries and emerging growth technology and employee benefits, servicing and industries, primarily other operating expenses and income biotechnology and electronics. taxes. Typical transaction sizes range from $500,000 to $15 million. BUSINESS GROUPS We operate the following principal * COMMUNICATIONS FINANCE lines of business under three market specializes in term financing to groups: advertising and subscriber-supported businesses COMMERCIAL FINANCE including radio and television * BUSINESS CREDIT offers stations, cable operators, collateral-oriented revolving outdoor advertising firms and credit facilities and term loans publishers. Typical transaction for manufacturers, distributors, sizes range from $1 million to wholesalers and service $40 million. companies. Typical transaction sizes range from $500,000 to $3 * FRANCHISE FINANCE offers million. equipment, real estate and acquisition financing for * COMMERCIAL SERVICES offers full operators of established service factoring and accounts franchise concepts. Transaction receivable management services sizes generally range from for entrepreneurial and larger $500,000 to $15 million. firms, primarily in the textile and apparel industries. The * HEALTHCARE FINANCE offers a full annual factored volume of these range of working capital, companies is generally between equipment and real estate $5 million and $25 million. This financing products for the U.S. line provides accounts health care industry. receivable and inventory Transaction sizes typically financing and loans secured by range from $500,000 to $25 equipment and real estate. million. * CORPORATE FINANCE provides a * PUBLIC FINANCE provides full range of cash flow-oriented tax-exempt term financing to and asset-based term and state and local governments, revolving loan products for non-profit corporations and manufacturers, wholesalers, entities using industrial distributors, specialty revenue or development bonds. retailers and commercial and Typical transaction sizes range consumer service businesses. from $100,000 to $5 million. Typical transaction sizes range from $2 million to $35 million. * PORTFOLIO SERVICES provides customized receivable servicing * INVENTORY FINANCE provides and collections for time-share inbound and outbound inventory developers and other generators financing, combined of consumer receivables. inventory/accounts receivable lines of credit and purchase * RESORT FINANCE focuses on order financing for equipment construction, acquisition and distributors, value-added receivables financing of resellers and dealers timeshare resorts worldwide as nationwide. Transaction sizes well as term financing for generally range from $500,000 to established golf resort hotels $30 million. and receivables funding for developers of second home communities. Typical transaction sizes range from $5 million to $35 million. 3 * SPECIALTY REAL ESTATE FINANCE Both FINOVA Group and FINOVA provides term financing for Capital are Delaware corporations. hotel, anchored retail, office FINOVA Group was incorporated in 1991 and owner-occupied properties. to serve as the successor to The Dial Typical transaction sizes range Corp's financial services businesses. from $5 million to $25 million. Dial transferred those businesses to FINOVA Group in March 1992 in a * TRANSPORTATION FINANCE spin-off. Since that time, FINOVA structures equipment loans, Group has increased its total assets leases, acquisition financing from about $2.6 billion at December and leveraged lease equity 31, 1992 to $8.7 billion at December investments for commercial and 31, 1997. Income from continuing cargo airlines worldwide, operations increased from $37 million railroads and operators of other in 1992 to $139 million in 1997. We transportation related believe FINOVA Group ranks among the equipment. Typical transaction largest independent commercial finance sizes range from $5 million to companies in the U.S., based on total $30 million. Through FINOVA assets. The common stock of FINOVA Aircraft Investors LLC, FINOVA Group is traded on the New York Stock also seeks to use its market Exchange. expertise and industry presence to purchase, upgrade and resell FINOVA Capital was incorporated in used commercial aircraft. 1965 and is the successor to a California corporation that was formed CAPITAL MARKETS in 1954. All of FINOVA Capital's * FINOVA REALTY CAPITAL capital stock is owned by FINOVA specializes in providing capital Group. markets-funded commercial real estate financing products and Our principal executive offices are commercial mortgage banking located at 1850 North Central Avenue, services. Typical transaction P.O. Box 2209, Phoenix, Arizona sizes range from $1 million to 85002-2209. Our telephone number is $5 million. (602) 207-6900. * FINOVA INVESTMENT ALLIANCE provides equity and debt financing for midsize businesses in partnership with institutional investors and selected fund sponsors. Typical transaction sizes range from $2 million to $15 million. 4 SELECTED FINANCIAL INFORMATION The following information was Management's Discussion and derived from FINOVA Group's financial Analysis. Those items are part of our statements. The information is only a Annual Reports on Form 10-K. You summary and does not provide all of should read our financial statements the information contained in our and other information that we have financial statements, including the filed with the SEC. related notes, and
SIX MONTHS ENDED JUNE 30, AS OF AND FOR THE YEAR ENDED DECEMBER 31, --------------------------- --------------------------------------------------------------------- 1998 1997 1997 1996 1995 1994 1993 ---- ---- ---- ---- ---- ---- ---- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) OPERATIONS: Interest earned from financing transactions $ 486,023 $ 429,197 $ 897,991 $ 769,346 $ 680,912 $ 463,404 $ 255,216 Interest margins earned 222,799 196,083 408,909 340,517 287,880 216,667 124,847 Volume-based fee income 41,259 16,367 46,733 28,588 21,204 10,796 0 Provision for credit losses 25,500 26,300 69,200 41,751 37,568 10,439 5,706 Gains on sale of assets 10,805 13,701 30,261 12,949 10,889 3,877 5,439 Income from continuing operations 80,112 65,409 139,098 116,493 93,798 73,770 37,846 Net income 80,112 65,409 139,098 117,000 97,629 74,313 37,347 Basic earnings per share for continuing operations $ 1.43 $ 1.21 $ 2.56 $ 2.14 $ 1.72 $ 1.48 $ 0.96 Basic earnings per share $ 1.43 $ 1.21 $ 2.56 $ 2.15 $ 1.79 $ 1.49 $ 0.95 Basic adjusted weighted average outstanding shares 56,189,000 53,965,000 54,405,000 54,508,000 54,633,000 49,765,000 39,277,000 Diluted earnings per share for continuing operations $ 1.34 $ 1.15 $ 2.42 $ 2.08 $ 1.69 $ 1.46 $ 0.90 Diluted earnings per share $ 1.34 $ 1.15 $ 2.42 $ 2.09 $ 1.76 $ 1.47 $ 0.89 Diluted adjusted weighted average shares 61,092,000 58,598,000 59,161,000 56,051,000 55,469,000 50,436,000 40,552,000 Dividend declared per common share $ 0.28 $ 0.24 $ 0.52 $ 0.46 $ 0.42 $ 0.37 $ 0.34 FINANCIAL POSITION: Investment in financing transactions 8,928,644 7,826,196 8,399,456 7,298,759 6,348,079 5,342,979 2,846,571 Nonaccruing assets 196,824 165,885 187,356 155,505 143,127 149,046 102,607 Reserve for credit losses 178,070 159,747 177,088 148,693 129,077 110,903 64,280 Total assets 9,288,864 8,060,403 8,719,840 7,526,734 7,036,514 5,821,343 2,834,322 Total debt 7,345,194 6,338,122 6,764,581 5,850,223 5,649,368 4,573,354 2,079,286 Company-obligated mandatory redeemable convertible preferred securities of subsidiary trust solely holding con- vertible debentures of FINOVA Group ("TOPrS") 111,550 111,550 111,550 111,550 -- -- -- Shareowners' equity 1,152,097 948,595 1,090,454 929,591 825,184 770,252 503,300
RATIO OF INCOME TO TOTAL FIXED CHARGES SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, ----------------- --------------------------------------------- 1998 1997 1997 1996 1995 1994 1993 ---- ---- ---- ---- ---- ---- ---- FINOVA Group 1.59x 1.54x 1.54x 1.50x 1.44x 1.58x 1.53x FINOVA Capital 1.59x 1.54x 1.54x 1.50x 1.44x 1.58x 1.50x RATIO OF INCOME TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, ----------------- --------------------------------------------- 1998 1997 1997 1996 1995 1994 1993 ---- ---- ---- ---- ---- ---- ---- FINOVA Group 1.57x 1.51x 1.52x 1.50x 1.44x 1.58x 1.50x FINOVA Capital 1.59x 1.54x 1.54x 1.50x 1.44x 1.58x 1.46x 5 Variations in interest rates generally continuing operations before income do not have a substantial impact on taxes plus fixed charges. Fixed the ratio because fixed-rate and charges consist of interest and floating-rate assets are generally related debt expense, and a portion of matched with liabilities of similar rental expense determined to be rate and term. Income available for representative of interest. fixed charges, for purposes of computing the above ratios, consists of income from SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements in this * Actions of our competitors and prospectus and any supplements are our ability to respond to those "forward-looking," in that they do not actions. We seek to remain discuss historical fact but instead competitive without sacrificing note future expectations, projections, prudent lending standards. Doing intentions or other items relating to business under those standards the future. These forward-looking becomes more difficult, however, statements include those made in when competitors offer financing documents incorporated in this with less stringent criteria. We prospectus by reference. seek to maintain credit quality at the risk of growth in assets, Forward-looking statements are if necessary. subject to known and unknown risks, uncertainties and other factors that * The cost of our capital. That may cause our actual results or cost depends on many factors, performance to differ materially from some of which are beyond our those contemplated by the control, such as our portfolio forward-looking statements. Many of quality, ratings, prospects and those factors are noted in conjunction outlook. with the forward-looking HERE IT ISstatements. Many of those factors * Changes in government are noted in conjunction with the regulations, tax rates and forward-looking statements in the similar matters. For example, text. Other important factors that government regulations could could cause actual results to differ significantly increase the cost include: of doing business or could eliminate certain tax advantages * The results of our efforts to of some of our financing implement our business strategy. products. Failure to fully implement our business strategy might result * Other risks detailed in our in decreased market penetration, other SEC reports or filings. adverse effects on results of operations and other adverse We do not promise to update results. forward-looking information to reflect actual results or changes in * The effect of economic assumptions or other factors that conditions and the performance could affect those statements. of our borrowers. Economic conditions in general or in particular market segments could impact the ability of our borrowers to operate or expand their businesses, which might result in decreased performance for repayment of their obligations or reduce demand for additional financing needs. USE OF PROCEEDS We intend to use the net proceeds financing transactions and capital from the sale of the securities for expenditures. We will describe in the general corporate purposes. Those supplement any proposed use of purposes include the repayment or proceeds other than for general refinancing of debt, acquisitions in corporate purposes. the ordinary course of business, working capital, investment in 6 DESCRIPTION OF DEBT SECURITIES DEBT SECURITIES * FINOVA Capital may discharge the The following summary applies only debt issued in any series at any to the debt securities of FINOVA time by depositing sufficient Capital. If we issue debt securities funds with the Trustee to pay of FINOVA Group, we will describe the obligations when due. All those securities and the indenture amounts due to you on the debt under which they are issued in the would be paid by the Trustee applicable supplement. from the deposited funds. The debt securities of FINOVA * If FINOVA Capital fails to meet Capital will be issued under an its obligations on the debt, it indenture (the "Indenture") between will be in default. Defaults for FINOVA Capital and one or more U.S. senior debt securities are banking institutions (a "Trustee"). described on pages 11-12 of this The Indenture may but need not have pospectus. separate Trustees for senior and subordinated debt. GENERAL The debt securities of FINOVA Group The following summary of certain and FINOVA Capital offered by this provisions of the Indenture is not prospectus will be limited to $2.0 complete. You should look at the billion principal amount. The Indenture that is filed as an exhibit Indenture does not limit the amount of to the Registration Statement. To debt securities FINOVA Capital could obtain a copy of the Indenture, see offer under it. FINOVA Capital can "Where You Can Find More Information" issue debt securities in one or more on page 2. series, in each case as authorized by us from time to time. Each series may All capitalized terms have the differ as to its terms. The debt meanings specified in the Indenture. securities will be FINOVA Capital's unsecured general obligations and may GENERAL INDENTURE PROVISIONS THAT or may not be subordinated to FINOVA APPLY TO SENIOR AND SUBORDINATED DEBT Capital's other general indebtedness. * The Indenture does not limit the Those that are not subordinated are amount of debt that FINOVA called "senior debt securities." The Capital may issue nor provide others are "subordinated debt holders any protection should securities." there be a highly leveraged transaction involving our The supplement will address the company. We may issue additional following terms of the debt debt securities without your securities: consent. * Their title. * If FINOVA Capital redeems debt which is convertible into its * Any limits on the principal capital stock or other amounts to be issued. securities, your right to convert that debt into capital * The dates on which the principal stock or other securities will is payable. expire on the redemption date. * The rates (which may be fixed or * The Indenture allows FINOVA variable) at which they shall Capital to merge or to bear interest, or the method for consolidate with another determining rates. company, or sell all or substantially all of its assets * The dates from which the to another company. If these interest will accrue and will be events occur, the other company payable, or the method of will be required to assume determining those dates, and any FINOVA Capital's record dates for the payments responsibilities on the debt, due. and FINOVA Capital will be released from all liabilities * Any provisions for redemption, and obligations. conversion or exchange, at our option or otherwise, including * The Indenture provides that the periods, prices and terms of holders of a majority of the redemption or conversion. total principal amount of the debt outstanding in any series * Any sinking fund or similar may vote to change our provisions, whether mandatory or obligations or your rights at the holder's option, concerning that series of debt. But to change the payment of principal or interest, every holder in that series must consent. 7 along with the periods, prices Ownership of the Global Securities; and terms of redemption, Beneficial Ownership. So long as the purchase or repayment. depositary or its nominee is the registered owner of a global security, * The amount or percentage payable that entity will be the sole holder of if we accelerate their maturity, the debt securities represented by if other than the principal that instrument. The Trustee and we amount. are only required to treat the depositary or its nominee as the legal * Any changes to the events of owner of those securities for all default or covenants set forth purposes under the Indenture. in the Indenture. Each actual purchaser of debt * The terms of subordination, if securities represented by a global any. security (a "beneficial owner") will not be entitled to receive physical * Whether the series can be delivery of certificated securities, reopened. will not be considered the holder of those securities for any purpose under * Any other terms consistent with the Indenture, and will not be able to the Indenture. transfer or exchange the global securities, unless this prospectus or We may authorize and determine the the supplement provide to the terms of a series of debt securities contrary. As a result, each beneficial by resolution of our board of owner must rely on the procedures of directors or one of its committees or the depositary to exercise any rights through a supplemental Indenture. of a holder under the Indenture. In addition, if the beneficial owner is FORM OF DEBT SECURITIES not a direct or indirect participant The debt securities will be issued in the depositary (each a in registered form. Unless the "participant") the beneficial owner supplement otherwise provides, debt must rely on the procedures of the securities will be issued as one or participant through which it owns its more global securities. This means beneficial interest in the global that we will not issue certificates to security. each holder. We generally will issue global securities in the total The laws of some jurisdictions principal amount of the debt require that certain purchasers of securities distributed in that series. securities take physical delivery of We will issue debt securities only in the securities in certificated form. denominations of $1,000 or integral Those laws and the above conditions multiples of that amount, unless the may impair the ability to transfer supplement states otherwise. beneficial interests in the global securities. GLOBAL SECURITIES In General. Debt securities in THE DEPOSITORY TRUST COMPANY global form will be deposited with or The following is based on on behalf of a depositary. Global information furnished by DTC and securities are represented by one or applies to the extent it is the more global certificates for the depositary, unless otherwise stated in series registered in the name of the a supplement: depositary or its nominee. Debt securities in global form may not be REGISTERED OWNER. The debt transferred except as a whole among securities will be issued as fully the depositary, a nominee of or a registered securities in the name of successor to the depositary and any Cede & Co. (DTC's partnership nominee of that successor. Unless nominee). One fully registered global otherwise identified in the security generally will be issued for supplement, the depositary will be The each $200 million principal amount of Depository Trust Company ("DTC"). debt securities. The Trustee will deposit the global securities with the NO DEPOSITARY OR GLOBAL SECURITIES. depositary. The deposit of the global If a depositary for a series is securities with DTC and its unwilling or unable to continue as registration in the name of Cede & Co. depositary, and a successor is not will not change the beneficial appointed by us within 90 days, we ownership of the securities. will issue debt securities of that series in definitive form in exchange DTC ORGANIZATION. DTC is a for the global security or securities limited-purpose trust company of that series. We also may determine organized under the New York Banking at any time in our discretion not to Law, a "banking organization" within use global securities for any series. the meaning of that law, a member of In that event, we will issue debt the Federal Reserve System, a securities in definitive form. "clearing corporation" within 8 the meaning of the New York Uniform NOTICES AMONG THE DEPOSITARY, Commercial Code and a "clearing PARTICIPANTS AND BENEFICIAL OWNERS. agency" registered under the Notices and other communications by provisions of Section 17A of the the depositary, its participants and Securities Exchange Act of 1934, as the beneficial owners will be governed amended. by arrangements among them, subject to any legal requirements in effect. DTC is owned by a number of its direct participants and by the New VOTING PROCEDURES. Neither DTC nor York Stock Exchange, Inc., the Cede & Co. will give consents for or American Stock Exchange, Inc. and the vote the global securities. The National Association of Securities depositary generally mails an omnibus Dealers, Inc. Direct participants proxy to us just after the applicable include securities brokers and record date. That proxy assigns Cede & dealers, banks, trust companies, Co.'s consenting or voting rights to clearing corporations and certain the direct participants to whose other organizations who directly accounts the securities are credited participate in DTC (each a "direct at that time. participant"). Other entities ("indirect participants") may access PAYMENTS. Principal and interest DTC's system by clearing transactions payments made by us will be delivered through or maintaining a custodial to the depositary. DTC's practice is relationship with direct participants, to credit direct participants' either directly or indirectly. The accounts on the applicable payment rules applicable to DTC and its date unless it has reason to believe participants are on file with the SEC. it will not receive payment on that date. Payments by participants to DTC ACTIVITIES. DTC holds beneficial owners will be governed by securities that its participants standing instructions and customary deposit with it. DTC also facilitates practices, as is the case with the settlement among participants of securities held for customers in securities transactions, such as bearer form or registered in "street transfers and pledges, in deposited name." Those payments will be the securities through electronic responsibility of that participant, computerized book-entry changes in not the depositary, the Trustee or us, participant's accounts. Doing so subject to any legal requirements in eliminates the need for physical effect at that time. movement of securities certificates. We are responsible for payment of PARTICIPANTS' RECORDS. Except as principal, interest and premium, if otherwise provided in this prospectus any, to the Trustee, who is or a supplement, purchases of the debt responsible to pay it to the securities must be made by or through depositary. The depositary is direct participants, which will responsible for disbursing those receive a credit for the securities on payments to direct participants. The the depositary's records. The participants are responsible for beneficial owner's ownership interest disbursing payments to the beneficial is in turn to be recorded on the owners. direct and indirect participants' records. Beneficial owners will not TRANSFER OR EXCHANGE OF SECURITIES receive written confirmations from the You may transfer or exchange the depositary of their purchase, but they debt securities (other than a global are expected to receive them, along security) without service charge at with periodic statements of their our office designated for that purpose holdings, from the direct or indirect or at the office of any transfer agent participants through whom they entered or security registrar identified under into the transaction. the Indenture. You must execute a proper form of transfer and pay any Transfers of interests in the taxes and other governmental charges global securities will be made on the resulting from that action. You may books of the participants on behalf of transfer or exchange the debt the beneficial owners. Certificates securities (other than a global representing the interest of the security) initially at our offices at beneficial owners in the securities 1850 North Central Avenue, P.O. Box will not be issued unless the use of 2209, Phoenix, Arizona 85002-2209 or global securities is suspended, as at our office or agency established provided above. for that purpose in New York, New York. The depositary has no knowledge of the actual beneficial owners of the Debt securities in the several global securities. Its records only denominations will be interchangeable reflect the identity of the direct without service charge, but we may participants as owners of the require payment to cover taxes and securities. Those participants may or other may not be the beneficial owners. Participants are responsible for keeping account of their holdings on behalf of their customers. 9 governmental charges. The Trustee the consolidated balance sheet of initially will act as authenticating FINOVA Capital and its consolidated agent under the Indenture. subsidiaries. SAME-DAY SETTLEMENT AND PAYMENT "LIEN" means any lien, charge, Unless the supplement otherwise claim, security interest, pledge, provides, the debt securities will be hypothecation, right of another under settled in immediately available any conditional sale or other title funds. We will make payments of retention agreement or any other principal and interest in immediately encumbrance affecting title to available funds. property. Lien includes any lease under a sale and leaseback PAYMENT AND PAYING AGENT arrangement. If the debt securities are not held in global form, we will make payment "SUBSIDIARY" means any corporation of principal and premium, if any, a majority of the Voting Stock of against surrender of the debt which is owned, directly or securities at the principal office of indirectly, by FINOVA Capital or by the Trustee in New York, New York. We one or more Subsidiaries or by FINOVA will pay any installment of interest Capital and one or more Subsidiaries. on debt securities to the record holder on the record date for that "RESTRICTED SUBSIDIARY" is any interest. We can make those payments Subsidiary a majority of the Voting through the Trustee, as noted above, Stock of which is owned directly by by check mailed by first class mail to FINOVA Capital or by one or more the registered holders at their Restricted Subsidiaries, or by FINOVA registered address or by wire transfer Capital and one or more Restricted to an eligible account of the Subsidiaries and which is designated registered holder. as a Restricted Subsidiary by resolution of FINOVA Capital's board If any payments of principal, of directors. premium or interest are not claimed within three years of the date the "UNRESTRICTED SUBSIDIARY" means any payment became due, those funds are to Subsidiary other than a Restricted be repaid to us. The beneficial owners Subsidiary. of those interests thereafter will look only to us for payment for those "VOTING STOCK" means stock of any amounts. class or classes (however designated) having ordinary voting power for the CERTAIN INDENTURE PROVISIONS election of a majority of the members Certain Definitions. The following of the board of directors (or any is a summary of certain terms defined governing body) of that corporation, in the Indenture and applicable only other than stock having that power to senior debt securities. Those terms only by reason of the happening of a are determined in accordance with contingency. generally accepted accounting principles, unless specifically stated LIMITATION ON LIENS. The Indenture otherwise. provides that FINOVA Capital will not create, assume, incur or allow to be "CONSOLIDATED NET TANGIBLE ASSETS" created, assumed or incurred or to means the total of all assets exist any Lien on any of its reflected on the most recent quarterly properties unless FINOVA Capital or annual consolidated balance sheet secures the senior debt securities of FINOVA Capital and its consolidated equally and ratably with any other subsidiaries, at their net book values obligation secured in that manner. The (after deducting related depreciation, Indenture contains the following depletion, amortization and all other exceptions to that prohibition: valuation reserves), less the aggregate of its current liabilities * Leases of property in the and those of its consolidated ordinary course of business or Subsidiaries reflected on that balance if the property is not needed in sheet. We exclude from assets the operation of our business. goodwill, unamortized debt discount and all other like intangible assets. * Purchase money security For purposes of this definition, interests that are non-recourse "current liabilities" include all to FINOVA Capital or its indebtedness for money borrowed, Restricted Subsidiaries except incurred, issued, assumed or to the extent of the property so guaranteed by FINOVA Capital and its acquired or any proceeds from consolidated subsidiaries, and other that property, or both. payables and accruals, in each case payable on demand or due within one * Governmental deposits or year of the date of determination, but security as a condition to the exclude any portion of long-term debt transaction of business or the maturing within one year of that date of determination, all as reflected on 10 exercise of a privilege, or to MERGER, CONSOLIDATION AND SALE OF maintain self-insurance, or to ASSETS. FINOVA Capital cannot merge participate in any fund in with or into, consolidate with, sell connection with worker's or lease all or substantially all of compensation, unemployment its assets to or purchase all or insurance, pensions, social substantially all the assets of security or for appeal bonds. another corporation unless it will be the surviving corporation or the * Liens for taxes or assessments successor is incorporated in the U.S. not yet due or which are payable and assumes all of FINOVA Capital's without a penalty or are being obligations under the debt securities contested in good faith and with and the Indenture, provided, and if adequate reserves, so long as immediately after that transaction, no foreclosure or similar default will exist. A purchase by a proceedings are not commenced. Subsidiary of all or substantially all of the assets of another corporation * Judgment Liens that have not will not be a purchase of those assets remained undischarged or by FINOVA Capital. If, however, any of unstayed for more than six the transactions noted in this months. paragraph occurs and results in a Lien on any of FINOVA Capital's properties * Incidental or undetermined (except as permitted above), FINOVA construction, mechanics or Capital must simultaneously secure the similar Liens arising in the senior debt securities equally and ordinary course of business ratably with the debt secured by that relating to obligations not Lien. overdue or which are being contested by FINOVA Capital or a MODIFICATION OF THE INDENTURE. The Restricted Subsidiary in good Trustee and FINOVA Capital may amend faith and deposits for releases the Indenture without consent of the of such Liens. holders of debt securities to do certain things, such as establishing * Zoning restrictions, licenses, the form and terms of any series of easements and similar debt securities. FINOVA Capital must encumbrances or defects if obtain consent of holders of at least immaterial. two-thirds of the outstanding debt securities affected by a change to * Other Liens immaterial in the amend the terms of the Indenture or aggregate incidental to FINOVA any supplemental indenture or the Capital's or the Restricted rights of the holders of those debt Subsidiary's business or securities. property, other than for indebtedness. Unanimous consent is required for changes to extend the fixed maturity * Banker's liens and set off of any debt securities, reduce the rights in the ordinary course of principal, redemption premium or rate business. of interest, extend the time of payment of interest, change the form * Leasehold or purchase rights, of currency, limit the right to sue exercisable for fair for payment on or after maturity of consideration, arising in the the debt securities, adversely affect ordinary course of business. the right, if any, to convert or exchange the debt securities or * Liens on property or securities adversely affect the subordination existing when an entity becomes provisions, if any. Unanimous consent a Restricted Subsidiary or is also required to reduce the level merges with FINOVA Capital or a of consents needed to approve any such Restricted Subsidiary, provided change. The Trustee must consent to they are not incurred in changes modifying its rights, duties anticipation of those events. or immunities. * Liens on property or securities DEFAULTS. Events of default under existing at the time of the Indenture for any series are: acquisition. * Failure for 30 days to pay * Liens in a total amount less interest on any debt securities than $25 million, excluding of that series. Liens covered by the exceptions noted above. * Failure to pay principal (other than sinking fund redemptions) * Liens securing indebtedness of or premium, if any, on debt FINOVA Capital or a Restricted securities of that series. Subsidiary provided those and similar Liens on indebtedness do * Failure for 30 days to pay any not exceed 10% of Consolidated sinking fund installment on that Net Tangible Assets, excluding series. certain preexisting indebtedness and those Liens permitted above. 11 * Violation of a covenant under under that series before maturity. It the Indenture pertaining to that may do so by depositing with the series that persists for at Trustee, in trust for the benefit of least 90 days after FINOVA the holders, either enough funds to Capital is notified by the pay, or direct U.S. government Trustee or the holders of 25% of obligations that, together with the the series. income of those obligations (without considering any reinvestment), will be * Default in other instruments or sufficient to pay, the obligation of under any other series of debt that series, including principal, securities resulting in premium, if any, and interest. Certain acceleration of indebtedness other conditions must be met before it over $15 million, unless that may do so. FINOVA Capital must deliver default is rescinded or an opinion of counsel that the holders discharged within 10 days after of that series will have no Federal written notice by the Trustee or income tax consequences as a result of the holders of 10% of that that deposit. series. SUBORDINATION * Bankruptcy, insolvency or The terms and conditions of any similar event. subordination of subordinated debt securities to other indebtedness of * Any other event of default with FINOVA Capital will be described in respect to the debt securities the supplement relating to the of that series. subordinated debt securities. The terms will include a description of If an event of default occurs and the indebtedness ranking senior to the continues, the Trustee or the holders subordinated debt securities, the of at least 25% of the series may restrictions on payments to the declare those debt securities due and holders of the subordinated debt payable. FINOVA Capital is required to securities while a default exists with certify to the Trustee annually as to respect to senior indebtedness, any its compliance with the Indenture. A restrictions on payments to the default under one series does not holders of the subordinated debt necessarily mean that a default or an securities following an event of event of default will have occurred default and provisions requiring under another series under the holders of the subordinated debt Indenture. securities to remit certain payments to holders of senior indebtedness. Holders of a majority of the principal of a series may control Because of the subordination, if certain actions of the Trustee and may FINOVA Capital becomes insolvent, waive past defaults for that series. holders of the subordinated debt Except as provided in the Indenture, securities may recover less, ratably, the Trustee will not be under any than other creditors of FINOVA obligation to exercise any of the Capital, including holders of senior rights or powers vested in it by the indebtedness. Indenture at the request, order or direction of any holder unless one or CONVERSION more of them shall have offered Debt securities may be convertible reasonable indemnity to the Trustee. into or exchangeable for common stock, preferred stock, other debt If an event of default occurs and securities, warrants or other of is continuing, the Trustee may securities of FINOVA Capital, or reimburse itself for its reasonable securities of any other issuer or compensation and expenses incurred out obligor. The supplement will describe of any sums held or received by it the terms of any conversion rights. before making any payments to the holders of the debt securities of the CONCERNING THE TRUSTEE defaulted series. The Trustee may, but need not be, one of the banks in one of FINOVA The right of any holders of debt Capital's credit agreements and from securities of a series to commence an time to time may perform other action for any remedy is subject to banking, trust or related services on certain conditions, including the behalf of FINOVA Capital or our requirement that the holders of at customers. least 25% of that series request that the Trustee take such action, and offer reasonable indemnity to the Trustee against its liabilities incurred in doing so. DEFEASANCE FINOVA Capital may defease the debt securities of a series, meaning it would satisfy its duties 12 DESCRIPTION OF CAPITAL STOCK The following summary of certain action, to issue preferred stock in provisions of the common stock, the one or more series, with the preferred stock, the junior designations, powers, preferences, participating preferred stock (the rights, qualifications, limitations "Junior Preferred Stock") and the and restrictions as the board rights to purchase the Junior determines. Thus, the board, without Preferred Stock (the "Rights") of stockholder approval, could authorize FINOVA Group is not complete. You the issuance of preferred stock with should refer to the certificate of voting, conversion and other rights incorporation and bylaws of FINOVA that could adversely affect the voting Group, as amended, FINOVA Group's power and other rights of the holders certificate of designations for the of the common stock or that could make Junior Preferred Stock and the Rights it more difficult for another company Agreement dated as of February 15, to enter into certain business 1992, as amended and restated as of combinations with FINOVA Group. See September 14, 1995 (the "Rights "-- Certain Other Provisions of the Agreement"), between FINOVA Group and Certificate of Incorporation, the Harris Trust & Savings Bank, as Bylaws and Delaware Law -- Preferred successor Rights Agent. To obtain Stock" below. copies of those documents, see "Where You Can Find More Information" on page SHAREHOLDER RIGHTS PLAN 2. If we issue capital stock of FINOVA In 1992, FINOVA Group issued one Capital, we will describe those Right for each outstanding share of securities in the applicable common stock. FINOVA Group has and supplement. will continue to issue one Right with each newly issued share of its common FINOVA Group is authorized by its stock (including stock issued on certificate of incorporation to issue conversion of preferred securities). 105,000,000 shares of capital stock, The obligation to continue to issue consisting of 5,000,000 shares of the Rights, however, will terminate on preferred stock, par value $.01 per the expiration, exchange or redemption share, and 100,000,000 shares of of the Rights. common stock, par value $.01 per share. As of July 31, 1998, there were Each Right entitles the registered 56,491,446 shares of common stock holder to purchase from FINOVA Group outstanding (excluding 2,063,229 1/200th of a share of the Junior treasury shares held by FINOVA Group) Preferred Stock. The purchase price is and no shares of preferred stock $67.50 per 1/200th of a share, subject outstanding. However, FINOVA Group has to adjustment under certain authorized 600,000 shares of Junior circumstances. Preferred Stock which have been reserved for issuance on the exercise The Rights will trade only with the of the Rights. common stock and FINOVA Group will not issue separate certificates for the COMMON STOCK Rights until the "Rights Distribution The holders of the common stock are Date." That date occurs on the first entitled to one vote per share. FINOVA to occur of the following events: Group's certificate of incorporation does not provide for cumulative voting * 10 days after a public in the election of directors. The announcement (the "Share board may declare dividends on the Acquisition Date") that a person common stock in its discretion, if or group of persons acting funds are legally available for those together has become the purposes. On liquidation, common beneficial owner of at least 20% stockholders are entitled to receive or more of FINOVA Group's common pro rata any remaining assets of stock, directly or indirectly FINOVA Group, after we satisfy or (becoming an "Acquiring provide for the satisfaction of all Person"), or liabilities as well as obligations on our preferred stock, if any. The * 10 business days after the start holders of common stock do not have or announcement of an intention preemptive rights to subscribe for or to make a tender offer or purchase any shares of capital stock exchange offer that would result or other securities of FINOVA Group. in a person or group acting together beneficially owning 20% PREFERRED STOCK or more of FINOVA Group's common Under FINOVA Group's certificate of stock, directly or indirectly. incorporation, the board is The board, however, may extend authorized, without stockholder that 10 business day deadline prior to the time the person or group becomes an Acquiring Person. 13 The Rights may not be exercised We may pay the redemption price in until the Rights Distribution Date. cash, common stock or any other method The Rights will expire on February 28, selected by the board. Upon 2002 unless we extend that date or, redemption, the right to exercise the unless we redeem or exchange the Rights will terminate and the holders Rights before then. will only have the right to receive the redemption price. The value of each 1/200th interest in a share of Junior Preferred Stock NO RIGHTS AS A STOCKHOLDER. Rights is intended to approximate the value holders, as Rights holders, have no of one share of FINOVA Group common independent rights as stockholders of stock, due to the dividend, FINOVA Group, including the right to liquidation and voting rights of the vote or to receive dividends, until Junior Preferred Stock, although there the Rights are exercised. can be no assurance the value will be the same. ANTITAKEOVER EFFECTS. The Rights have certain antitakeover effects. The HOW THE RIGHTS WORK. If a person or Rights will substantially dilute the group becomes an Acquiring Person, ownership interest in our shares of their Rights become void. The other any Acquiring Person. That dilution Rights holders will have the right to would impair the ability of the exercise their Rights, at the then Acquiring Person to change the current exercise price, for FINOVA composition of our board. It also Group common stock having a market would impact its ability to acquire value of two times the exercise price FINOVA Group on terms not approved by of the Right. That right to purchase, our board, including through a tender however, will not exist if the Rights offer at a premium to the market Distribution Date is due to a tender price, other than through an offer or exchange offer for all of FINOVA conditioned on a substantial number of Group's common stock and the Rights being acquired. The Rights independent members of our board should not interfere with any merger determine that the offer is at a fair or business combination approved by price, on fair terms and is otherwise the board, since we may redeem the in the best interests of FINOVA Group Rights before they become exercisable. and its stockholders. JUNIOR PREFERRED STOCK NOT The other Rights holders also will REGISTERED. The Junior Preferred Stock have the same exercise rights is not registered with the SEC or any described above if, after a person or other securities administrator. If the group becomes an Acquiring Person, Rights become exercisable, we intend FINOVA Group is acquired in a merger to register with the SEC the Junior or business combination or at least Preferred Stock exchangeable for the half of our total assets and earning Rights. power are sold. The exception is the same as the one noted in the above CERTAIN OTHER PROVISIONS OF THE paragraph, provided that the price CERTIFICATE OF INCORPORATION, THE offered to the shareholders for each BYLAWS AND DELAWARE LAW share of common stock is not less than FINOVA Group's certificate of that paid in the tender or exchange incorporation and bylaws contain offer, and the consideration is in the certain provisions that could make same form as that paid in the tender more difficult our acquisition by or exchange offer. If the requirements means of a tender offer, a proxy of this exception are met, then the contest or otherwise. This description Rights will expire. is only a summary and does not provide all the information contained in EXCHANGE OF RIGHTS. After a person FINOVA Group's certificate of or group becomes an Acquiring Person incorporation and bylaws. To obtain but before the Acquiring Person copies of these documents, see "Where acquires at least half of the You Can Find More Information" on page outstanding common stock, our board 2. may exchange all or some of the Rights at an exchange ratio of one share of Delaware law permits a corporation common stock for 1/200th of a share of to eliminate or limit the personal Junior Preferred Stock per Right, liability of its directors to the subject to adjustment. corporation or to any of its stockholders for monetary damages for REDEMPTION OF RIGHTS. We may redeem a breach of fiduciary duty as a all the Rights, but not some of them, director, except (i) for breach of the for $.005 per Right at any time before director's duty of loyalty, (ii) for the earlier of 15 days after the Share acts or omissions not in good faith or Acquisition Date or the expiration which involve intentional misconduct date noted above. The board may or a knowing violation of law, (iii) determine the conditions, terms and for certain unlawful effective date for the redemption. 14 dividends and stock purchases and NUMBER OF DIRECTORS; REMOVAL; redemptions or (iv) for any FILLING VACANCIES. FINOVA Group's transaction from which the director certificate of incorporation provides derived an improper personal benefit. that, subject to any rights of FINOVA Group's certificate of preferred stockholders to elect incorporation provides that no additional directors under specified director will be personally liable to circumstances, the number of directors FINOVA Group or its stockholders for will be fixed in the manner provided monetary damages for any breach of his in the bylaws. FINOVA Group's bylaws or her fiduciary duty as a director, provide that, subject to any rights of except as provided by Delaware law. holders of preferred stock to elect directors under specified BOARD OF DIRECTORS. FINOVA Group's circumstances, the number of directors certificate of incorporation and will be fixed from time to time bylaws divide the board into three exclusively by directors constituting classes of directors, with the classes a majority of the total number of to be as nearly equal in number as directors that FINOVA Group would have possible. The stockholders elect one if there were no vacancies on the class of directors each year for a board, but must consist of between 3 three-year term. and 17 directors. The classification of directors In addition, FINOVA Group's bylaws makes it more difficult for provide that, subject to any rights of stockholders to change the composition preferred stockholders, and unless the of the board. At least two annual board otherwise determines, any meetings of stockholders, instead of vacancies will be filled only by the one, generally will be required to affirmative vote of a majority of the change a majority of the board. That remaining directors, though less than delay may help ensure that FINOVA a quorum. Accordingly, absent an Group's directors, if confronted by a amendment to the bylaws, the board proxy contest, tender or exchange could prevent any stockholder from offer or extraordinary corporate enlarging the board and filling the transaction, would have sufficient new directorships with that time to review the proposal as well as stockholder's own nominees. any available alternatives to the proposal and to act in what they Under Delaware law, unless believe to be the best interest of the otherwise provided in the certificate stockholders. The classification of incorporation, directors serving on provisions apply to every election of a classified board may only be removed directors, regardless of whether a by the stockholders for cause. In change in the composition of the board addition, FINOVA Group's certificate would be beneficial to FINOVA Group of incorporation and bylaws provide and its stockholders and whether or that directors may be removed only for not a majority of the stockholders cause and only upon the affirmative believe that such a change is vote of holders of at least 80% of the desirable. voting power of all the then outstanding shares of stock entitled The classification provisions also to vote generally in the election of could discourage a third party from directors, voting together as a single initiating a proxy contest, tender class. offer or other attempt to obtain control of FINOVA Group, even though STOCKHOLDER ACTION BY WRITTEN an attempt might be beneficial to CONSENT; SPECIAL MEETINGS. FINOVA Group and its stockholders. The Stockholders of FINOVA Group must act classification of the board thus only through an annual or special increases the likelihood that meeting. Stockholders cannot act by incumbent directors will retain their written consent in lieu of a meeting. positions. In addition, because the Only the Chairman or a majority of the classification provisions may whole board of FINOVA Group may call a discourage accumulations of large special meeting. Stockholders of blocks of FINOVA Group's stock by FINOVA Group are not able to call a purchasers whose objective is to take special meeting to require that the control of FINOVA Group and remove a board do so. At a special meeting, majority of the board, the stockholders may consider only the classification of the board could business specified in the notice of reduce the likelihood of fluctuations meeting given by FINOVA Group. in the market price of the common Preferred stockholders may be given stock that might result from different rights from those noted accumulations of large blocks. above. Accordingly, stockholders could be deprived of certain opportunities to The provisions of FINOVA Group's sell their shares of common stock at a certificate of incorporation and higher market price than otherwise bylaws prohibiting stockholder action might be the case. by written consent may have the effect of 15 delaying consideration of a receipt by our Secretary between the stockholder proposal until the next 90th day before the meeting and the annual meeting, unless a special later of the 70th day before the meeting is called by the Chairman or meeting or the 10th day after the at the request of a majority of the first public announcement of the whole board. These provisions also meeting date. would prevent the holders of a majority of stock from unilaterally A stockholder's notice proposing to using the written consent procedure to nominate a person for election as a take stockholder action. Moreover, a director must contain certain stockholder could not force information, including, without stockholder consideration of a limitation, the identity and address proposal over the opposition of the of the nominating stockholder, the Chairman and the board by calling a class and number of shares of stock of special meeting of stockholders prior FINOVA Group beneficially owned by the to the time the Chairman or a majority stockholder and all information of the whole board believes such regarding the proposed nominee that consideration to be appropriate. would be required to be included in a proxy statement soliciting proxies for ADVANCE NOTICE PROVISIONS FOR the proposed nominee. A stockholder's STOCKHOLDER NOMINATIONS AND notice relating to the conduct of STOCKHOLDER PROPOSALS. The bylaws business other than the nomination of establish an advance notice procedure directors must contain certain for stockholders to nominate information about that business and directors, or bring other business about the proposing stockholder, before an annual meeting of including, without limitation, a brief stockholders of FINOVA Group. description of the business the stockholder proposes to bring before A person may not be nominated for a the meeting, the reasons for director position unless that person conducting that business at such is nominated by or at the direction of meeting, the name and address of such the board or by a stockholder who has stockholder, the class and number of given appropriate notice to FINOVA shares of stock of FINOVA Group Group's Secretary during the periods beneficially owned by that stockholder noted below prior to the meeting. and any material interest of the Similarly, stockholders may not bring stockholder in the business so business before an annual meeting proposed. If the Chairman or other unless the stockholder has given officer presiding at a meeting FINOVA Group's Secretary appropriate determines that a person was not notice of their or its intention to nominated, or other business was not bring that business before the brought before the meeting, in meeting. FINOVA Group's Secretary must accordance with these procedures, the receive the nomination or proposal person will not be eligible for between 70 and 90 days before the election as a director, or the first anniversary of the prior year's business will not be conducted at the annual meeting. If FINOVA Group's meeting, as appropriate. annual meeting date is advanced by more than 20 days or delayed by more Advance notice of nominations or than 70 days from that anniversary proposed business by stockholders date, then we must receive the notice gives the board time to consider the between 90 days before the meeting and qualifications of the proposed the later of the 70th day before the nominees, the merits of the proposals meeting or 10 days after the meeting and, to the extent deemed necessary or date is first publicly announced. desirable by the board, to inform stockholders about those matters. The If the board increases the number board also may recommend positions of directors and if we have not regarding those nominees or proposals, publicly announced nominees for each so that stockholders can better decide open position within 80 days before whether to attend the meeting or to the first anniversary of the prior grant a proxy regarding the nominee or year's annual meeting, stockholders that business. may nominate directors for the new position, but only those newly created Although the bylaws do not give the positions, if FINOVA Group's Secretary board any power to approve or receives the notice no later than 10 disapprove stockholder nominations for days following public announcement of the election of directors or proposals that change. for action, these procedures may preclude a contest for the election of Stockholders may nominate directors directors or the consideration of only at a special meeting by sending stockholder proposals if the proper appropriate notice for procedures are not followed, and of discouraging or deterring a third party from conducting a solicitation of proxies to elect its own slate of directors or to approve its 16 own proposal, without regard to stock, or in the amount of voting whether consideration of such nominees securities, outstanding of at least or proposals might be harmful or 20%, subject to certain exceptions. If beneficial to FINOVA Group and its the approval of FINOVA Group's stockholders. stockholders is not required for the issuance of shares of preferred stock PREFERRED STOCK. FINOVA Group's or common stock, the board may certificate of incorporation determine not to seek stockholder authorizes the board to establish one approval. or more series of preferred stock and to determine, with respect to any Although the board has no intention series of preferred stock, the terms at the present time of doing so, it and rights of such series, including could issue a series of preferred (i) the designation of the series, stock that could, depending on its (ii) the number of shares of the terms, impede a merger, tender offer series, which the board may (except or other takeover attempt. The board where otherwise provided by the terms will make any determination to issue of such series) increase or decrease shares with those terms based on its (but not below the number of shares judgment as to the best interests of thereof then outstanding), (iii) FINOVA Group and its stockholders. The whether dividends, if any, will be board, in so acting, could issue cumulative or noncumulative and the preferred stock having terms that dividend rate of the series, if any, could discourage an acquisition (iv) the dates at which dividends, if attempt in which an acquiror would any, will be payable, (v) the change the composition of the board, redemption rights and price or prices, including a tender offer or other if any, for shares of the series, (vi) transaction. An acquisition attempt the terms and amounts of any sinking could be discouraged in this manner fund provided for the purchase or even if some, or a majority, of FINOVA redemption of shares of the series, Group's stockholders might believe it (vii) the amounts payable on shares of to be in their best interests or in the series in the event of any which stockholders might receive a voluntary or involuntary liquidation, premium for their stock over the then dissolution or winding up of the current market price of the stock. FINOVA Group's affairs, (viii) whether the shares of the series will be MERGER/SALE OF ASSETS. FINOVA convertible into shares of any other Group's certificate of incorporation class or series, or any other provides that certain "business security, of FINOVA Group or any other combinations" must be approved by the corporation, and, if so, the holders of at least 66 2/3% of the specification of another class or voting power of the shares not owned series or another security, the by an "interested shareholder", unless conversion price or prices or rate or the business combinations are approved rates, any adjustments to the prices by the "Continuing Directors" or meet or rates, the date or dates as of certain requirements regarding price which the shares shall be convertible and procedure. The terms quoted in and all other terms and conditions this paragraph are defined in the upon which the conversion may be made, certificate of incorporation. (ix) restrictions on the issuance of shares of the same series or of any AMENDMENT OF CERTAIN PROVISIONS OF other class or series and (x) the THE CERTIFICATE OF INCORPORATION AND voting rights, if any, of the holders BYLAWS. Under Delaware law, of shares of the series. stockholders may adopt, amend or repeal the bylaws and, with approval FINOVA Group believes that the of the board, the certificate of ability of the board to issue one or incorporation of a corporation. In more series of preferred stock will addition, a corporation's board may provide FINOVA Group with flexibility adopt, amend or repeal the bylaws if in structuring possible future allowed by the certificate of financings and acquisitions, and in incorporation. FINOVA Group's meeting other corporate needs which certificate of incorporation requires might arise. The authorized shares of a vote of (i) at least 80% of the preferred stock, as well as shares of outstanding shares of voting stock, common stock, will be available for voting together as a single class, to issuance without further action by amend provisions of the certificate of FINOVA Group's stockholders, unless incorporation relating to the approval is required by applicable law prohibition of stockholder action or the rules of any stock exchange or without a meeting; the number, automated quotation system on which election and term of FINOVA Group's FINOVA Group's securities are listed directors; and the removal of or traded. The NYSE currently requires directors; (ii) at least 66 2/3% of stockholder approval in several the outstanding shares of voting instances, including where the present stock, voting together as a single or potential issuance of shares could result in an increase in the number of shares of common 17 class, to amend the provisions of the subsequent to that date, the board and certificate of incorporation relating 66 2/3% of the outstanding voting to approval of certain business stock not owned by the interested combinations; and (iii) at least a stockholder approved the business majority of the outstanding shares of combination. Except as specified by voting stock, voting together as a Delaware law, an interested single class, to amend all other stockholder includes (x) any person provisions of the certificate of that is the owner of 15% or more of incorporation. FINOVA Group's the outstanding voting stock of the certificate of incorporation further corporation, or is an affiliate or provides that the bylaws may be associate of the corporation and was amended by the board or by the the owner of 15% or more of the affirmative vote of the holders of at outstanding voting stock of the least 80% of the voting power of the corporation, at any time within three outstanding shares of voting stock, years immediately prior to the voting together as a single class. relevant date, and (y) the affiliates These supermajority voting and associates of that person. requirements make the amendment by stockholders of the bylaws or of any Under certain circumstances, of the provisions of the certificate Delaware law makes it more difficult of incorporation described above more for an "interested stockholder" to difficult, even if a majority of enter into various business FINOVA Group's stockholders believe combinations with a corporation for a that amendment would be in their best three-year period, although interests. stockholders may adopt an amendment to a corporation's certificate of ANTITAKEOVER LEGISLATION. Subject incorporation or bylaws excluding the to certain exceptions, Delaware law corporation from those restrictions. does not allow a corporation to engage However, FINOVA Group's certificate of in a business combination with any incorporation and bylaws do not "interested stockholder" for a exclude FINOVA Group from the three-year period following the date restrictions imposed under Delaware that the stockholder becomes an law. These provisions of Delaware law interested stockholder, unless (i) may encourage companies interested in prior to that date, the board approved acquiring FINOVA Group to negotiate in either the business combination or the advance with the board, since the transaction which resulted in the stockholder approval requirement would stockholder becoming an interested be avoided if a majority of the board stockholder, (ii) on that date, the approves either the business interested stockholder owned at least combination or the transaction which 85% of the voting stock of the results in the stockholder becoming an corporation outstanding at the time interested stockholder. the transaction commenced (excluding certain shares) or (iii) on or DESCRIPTION OF DEPOSITARY SHARES The following summary of certain Agreement") between us and a bank or provisions of the Deposit Agreement, trust company selected by us having the depositary shares and depositary its principal office in the U.S. and receipts is not complete. You should having a combined capital and surplus refer to the forms of Deposit of at least $50 million. Subject to Agreement and depositary receipts the terms of the Deposit Agreement, relating to each series of preferred each owner of depositary shares will stock that will be filed with the SEC. be entitled, in proportion to the To obtain copies of these documents, applicable fractional interests in see "Where You Can Find More shares of preferred stock underlying Information" on page 2. the depositary shares to all the rights and preferences of the GENERAL preferred stock underlying the We may offer fractional interests depositary shares. Those rights in shares of preferred stock, instead include dividend, voting, redemption, of shares of preferred stock. If we conversion and liquidation rights. do, we will have a depositary issue to the public receipts for depositary The depositary shares will be shares, each of which will represent evidenced by depositary receipts fractional interests of a particular issued under the Deposit Agreement. series of preferred stock. Individuals purchasing the fractional interests in shares of the related We will deposit shares of any series of preferred stock will receive series of preferred stock underlying depositary receipts according to the the depositary shares under a separate terms of the offering described in the Deposit Agreement (the "Deposit supplement. 18 DIVIDENDS AND OTHER DISTRIBUTIONS Whenever we redeem shares of preferred The depositary will distribute all stock held by the depositary, the cash dividends or other cash depositary will redeem as of the same distributions received for the redemption date, the number of preferred stock to the record holders depositary shares representing the of depositary shares representing the preferred stock. The depositary shares preferred stock in proportion to the to be redeemed will be selected by lot number of depositary shares owned by or pro rata as determined by the those holders on the relevant record depositary when less than all date. The depositary will distribute outstanding depositary shares will be only the amount that can be redeemed. distributed without attributing to any holder of depositary shares a fraction After the redemption date, the of one cent. The undistributed balance depositary shares redeemed will no will be added to and treated as part longer be outstanding. When this of the next amount received by the occurs, all rights of the holders will depositary for distribution to record cease, except the right to receive holders of depositary shares. money, securities or other property payable upon such redemption and any If there is a distribution other money, securities or other property than in cash, the depositary will that the holders of depositary shares distribute property received by it to were entitled to on the redemption the record holders of depositary upon surrender to the depositary of shares, in proportion, if possible, to the depositary receipts evidencing the the number of depositary shares owned depositary shares redeemed. by those holders, unless the depositary determines (after VOTING THE PREFERRED STOCK consulting with us) that it cannot Upon receipt of notice of any make the distribution. If this occurs, meeting at which the holders of the the depositary may, with our approval, preferred stock are entitled to vote, sell the property and distribute the the depositary will mail all relevant net proceeds from the sale to the information to the record holders of holders of depositary shares. the depositary shares representing the preferred stock. The record holders The Deposit Agreement also will may instruct the depositary how to state how any subscription or similar vote the shares of preferred stock rights offered by us to holders of the underlying their depositary shares. preferred stock will be made available The depositary will try, if practical, to holders of depositary shares. to vote the number of shares of preferred stock underlying the CONVERSION AND EXCHANGE depositary shares according to the If any series of preferred stock instructions, and we will agree to underlying the depositary shares is take all reasonable action requested subject to conversion or exchange, by the depositary so the depositary each record holder of depositary may follow the instructions. receipts may convert or exchange the depositary shares represented by those AMENDMENT AND TERMINATION OF depositary receipts. DEPOSITARY AGREEMENT The form of depositary receipt and REDEMPTION OF DEPOSITARY SHARES any provision of the Deposit Agreement If a series of the preferred stock may be amended by agreement between us underlying the depositary shares is and the depositary. However, any subject to redemption, the depositary amendment that materially and will redeem the depositary shares from adversely alters the rights of the the proceeds received by the existing holders of depositary shares depositary in the redemption, in whole will not be effective unless approved or in part, of the series of the by the record holders of at least a preferred stock held by the majority of the depositary shares then depositary. The depositary will mail outstanding. We or the depositary may notice of redemption within 30 to 60 only terminate the Deposit Agreement days prior to the date fixed for if (a) all related outstanding redemption to the record holders of depositary shares have been redeemed the depositary shares to be redeemed or (b) there has been a final at their addresses appearing in the distribution of the preferred stock of depositary's books. The redemption the relevant series in connection with price per depositary share will equal our liquidation, dissolution or the applicable fraction of the winding up and that distribution has redemption price per share payable on been distributed to the holders of the such series of the preferred stock. related depositary shares. 19 CHARGES OF DEPOSITARY MISCELLANEOUS We will pay all transfer and other The depositary will send to the taxes and governmental charges arising holders of depositary shares all solely from the existence of the reports and communications from us depositary arrangements. We will pay that we must furnish to the holders of associated charges of the depositary preferred stock. for the initial deposit of the preferred stock and any redemption of We and the depositary will not be the preferred stock. Holders of liable if we are prevented or delayed depositary shares will pay transfer by law or any circumstance beyond our and other taxes and governmental control in performing our obligations charges and any other charges stated under the Deposit Agreement. Those in the Deposit Agreement to be for obligations will be limited to their accounts. performance in good faith of duties set forth in the Deposit Agreement. We RESIGNATION AND REMOVAL and the depositary will not be OF DEPOSITARY obligated to prosecute or defend any The depositary may resign by legal proceeding connected with any delivering notice to us, and we may depositary shares or preferred stock remove the depositary. Resignations or unless satisfactory indemnity is removals will take effect upon the furnished. We and the depositary may appointment and acceptance of a rely upon written advice of counsel or successor depositary. We must appoint accountants, or information provided a successor depositary within 60 days by persons presenting preferred stock after delivery of the notice of for deposit, holders of depositary resignation or removal. The successor shares, or other persons believed to depositary must be a bank or trust be competent and on documents believed company having its principal office in to be genuine. the U.S. and having a combined capital and surplus of at least $50 million. DESCRIPTION OF WARRANTS We may issue warrants for the solely as our agent for the warrants purchase of debt securities, preferred and will not act for or on behalf of stock or common stock. We may issue the holders or beneficial owners of warrants independently or together warrants. This summary of certain with debt securities, common stock or provisions of the warrants is not preferred stock or attached to or complete. You should refer to the separate from the offered securities. provisions of the Warrant Agreement We will issue each series of warrants that will be filed with the SEC as under a separate warrant agreement (a part of the offering of any warrants. "Warrant Agreement") between us and a To obtain a copy of this document, see bank or trust company, as warrant "Where You Can Find More Information" agent. The warrant agent will act on page 2. PLAN OF DISTRIBUTION FINOVA Group and FINOVA Capital may civil liabilities under the Federal offer securities directly or through securities laws and other laws. The underwriters, dealers or agents. The underwriters' obligations to purchase supplement will identify those securities will be subject to certain underwriters, dealers or agents and conditions and generally will require will describe the plan of them to purchase all of the securities distribution, including commissions to if any are purchased. be paid. If we do not name a firm in the supplement, that firm may not Unless otherwise noted in the directly or indirectly participate in supplement, the securities will be any underwriting of those securities, offered by the underwriters, if any, although it may participate in the when, as and if issued by us, distribution of securities under delivered to and accepted by the circumstances entitling it to a underwriters and subject to their dealer's allowance or agent's right to reject orders in whole or in commission. part. Any underwriting agreement probably FINOVA Group and FINOVA Capital may will entitle the underwriters to sell securities to dealers, as indemnity against certain principals. Those dealers 20 then may resell the securities to the transactions and penalty bids in public at varying prices set by those accordance with Regulation M under the dealers from time to time. Securities Exchange Act of 1934. Over-allotment involves sales in FINOVA Group and FINOVA Capital excess of the offering size, which also may offer securities through creates a short position. Stabilizing agents. Agents generally act on a transactions permit bids to purchase "best efforts" basis during their the underlying security so long as the appointment, meaning they are not stabilizing bids do not exceed a obligated to purchase securities. specified maximum. Short covering transactions involve purchases of the Dealers and agents may be entitled securities in the open market after to indemnification as underwriters by the distribution is completed to cover us against certain liabilities under short positions. Penalty bids permit the Federal securities laws and other the underwriters to reclaim a selling laws. concession from a dealer when the securities originally sold by the FINOVA Group and FINOVA Capital or dealer are purchased in a covering the underwriters or agents may solicit transaction to cover short positions. offers by institutions approved by us Those activities may cause the price to purchase securities under contracts of the securities to be higher than it providing for future payment. would otherwise be. The underwriters Permitted institutions include may engage in any such activities on commercial and savings banks, any exchange or other market in which insurance companies, pension funds, the securities may be traded. If investment companies, educational and commenced, the underwriters may charitable institutions and others. discontinue those activities at any Certain conditions apply to those time. purchases. The supplement or pricing Any underwriter may engage in supplement, as applicable, will set over-allotment, stabilizing trans- forth the anticipated delivery date of actions, short covering the securities being sold at that time. LEGAL MATTERS Unless otherwise noted in a Group and FINOVA Capital, will pass on supplement, William J. Hallinan, Esq., the legality of the securities offered Senior Vice President-General Counsel through this prospectus and any of FINOVA Group and FINOVA Capital, or supplement. Brown & Wood LLP will act Richard Lieberman, Esq., Vice as counsel for any underwriters or President-Assistant General Counsel of agents, unless otherwise noted in a FINOVA supplement. EXPERTS Deloitte & Touche LLP, independent on Form 10-K. The financial statements auditors, have audited the financial are incorporated into this prospectus statements for FINOVA Group and FINOVA by reference in reliance upon their Capital incorporated in this report given upon their authority as prospectus by reference from our experts in accounting and auditing. Annual Reports 21 FINOVA -----END PRIVACY-ENHANCED MESSAGE-----